The Farm Debt Mediation Bill will tackle the "unfair and unbalanced scenario" where banks "hold all the power" over farmers, says Damien O'Connor.
Cabinet has approved legislation which would require the creditors of farmers – such as banks or other loan-providing organisations – to provide mediation to farmers who have defaulted on debt, before any enforcement action is taken.
The Minister for Agriculture said the bill was in the system for years but had been "revamped" into a "really good piece of legislation" by the Government, after New Zealand First MP Mark Patterson brought it to their attention.
O'Connor told The Country's Jamie Mackay that he hoped the bill would bring a more measured approach to tackling farmer debt.
"I'm not saying [banks are] totally irresponsible, but from time to time the farmers feel totally exposed. What this bill does is just bring some balance back to that power and says there's a process of mediation that must be fair to both parties".
Mackay suggested that perhaps farmers were getting "special treatment" with the bill, as other businesses, in sectors such as tourism, can encounter similar hurdles.
Listen to the full interview below:
O'Connor admitted that there may be a need for mediation processes "in other areas where the banks intervene," but that farm debt was a complicated issue.
"Farm debt is quite complex. It does involve the family commitment, and it often leaves the farmer without any other kind of option".
"Farmers have often been cash positive, and they have been able to pay their bills, but the bank will arbitrarily intervene and say 'no sorry we're selling you up'".
With the new bill, O'Connor said a mediator would then be able to step in on the farmer's behalf.
"It doesn't guarantee what the outcome will be, but it does guarantee a fair process".