| | Calling the Farm Debt Mediation Service before there’s a crisis can give the family more control over their future.
Looking back, the warning signs were there all along for this Alberta farm couple. First, the bank was reluctant to renew their operating loan, doing so only after some uncomfortable hemming and hawing. Next, poor crop prices caused the couple to miss a loan payment. Finally, their bank manager told them their financial situation was more perilous than they’d realized, and that the help of Agriculture and Agri-Food Canada's Farm Debt Mediation Services (FDMS) was urgently required.
While this couple felt devastated, things could have been a lot worse. The bank had actually done them a favour by referring them to the FDMS. A less obliging lender might have simply called the loan and started seizing collateral. For many this bad news comes in a “Notice of Intent to Realize on Security.”
To Doreen Acorn and Peter Frixel, this is a familiar story. Acorn, a mediator and Frixel, a consultant, advise farmers and ranchers through FDMS’s Alberta office. In this role, they’ve helped scores of farm families’ cope with financial crises like the one described above and emerge to farm another day.
Service is free of charge
The FDMS can act quickly once it’s called in, and its services come at no charge to the farmer.
“Unfortunately, most people wait too long to ask for help,” says Frixel. “They often come to us only once they’ve received a formal demand for payment from their lender. At that point, however, the loan has almost always gone to the financial institution’s asset-recovery branch, so their local loans people have very little flexibility with the account. That leaves the farmer with very limited options for dealing with the family’s predicament.”
Acorn agrees, noting that many farmers delay calling the FDMS in the hope that matters will improve of their own accord. They rarely do.
“The earlier they apply to us,” says Acorn, “the more control they have over their situation and the financial choices they can make, such as reorganizing their operation, downsizing and so on.”
When a farmer applies for help, FDMS staff move fast. As soon as the application is approved—usually within a day or two—FDMS can put a legal stay of proceedings in place so creditors can't force the sale of the farmer's assets. Then, an FDMS consultant like Frixel will begin working with the farmer to find solutions to the problem. The FDMS also provides a mediator like Acorn to help the farmer and creditors reach an agreement.
Resolve the issue, look to the future
Some farm families feel a stigma attached to asking for help, as if they were unique in doing so. Frixel always stresses with FDMS clients that many families have gone through such reorganizations.
“I find it helps to tell people how other farmers have dealt with similar situations,” Frixel says. “Rather than dwell on what went wrong, we focus on where they want to be in five years, and what we can do tomorrow and next month to take them in that direction.”
This process begins with an analysis of the farm’s financial situation. That’s the first step to finding solutions that work for the farmer and are acceptable to the creditors. Mediation meetings normally occur within 45 days of the application’s approval. The consultant attends as an advisor to the farmer, but the meeting itself is under the direction of the mediator.
“As a mediator,” says Acorn, “I’m an impartial third party who focuses on finding an agreement that will be fair to both the creditors and the farmer. The first thing I do is try to put the farmer at ease; a mediation meeting isn’t a trial or a legal process, and it’s also completely confidential.”
Acorn will encourage the farmer and creditors to discuss how the problem affects them. This step often clears up assumptions or misunderstandings, and paves the way for a win-win solution. Often, both parties will bend a little to reach an agreement both can live with.
“I’ve rarely seen a meeting that doesn’t end with a resolution,” Frixel says. “The FDMS is staffed by people who have a great deal of experience with both farmers and creditors, and the process has proven itself very effective over the years.”
Agreement leads to better times
Once an agreement is reached, it’s written up and reviewed, then signed by all parties. It’s now legally binding, and it lets everyone know exactly what’s expected of them. The creditors and the farmer can be confident that the agreement will benefit both parties. The farmer will feel the relief of having a practical plan for financial recovery in place.
As for the couple described at the beginning of this story, they took their banker’s advice and applied to the FDMS. They went through the mediation process and arranged an agreement with their creditors.
In the end, it all worked out. Two years after the meeting, they’d paid back everything they owed, and were still farming. This happy ending was made possible by the FDMS, the dedicated work of people like Doreen Acorn and Peter Frixel, and the faith placed in them by a farm couple who needed help.
To find out more about the Farm Debt Mediation Service, please visit Agriculture and Agri-Food Canada's website at www.agr.gc.ca/fdms or call 1-866-452-5556.
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