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University of Minnesota Extension

Farmer-Lender Mediation

Seeking solutions in difficult times

Credit is essential to farmers. In fact, the need for investments in land and equipment requires most farmers to carry debt. Unfortunately, debt can lead to farm foreclosures and major lifestyle changes.

What is Mandatory Farmer-Lender Mediation?

Mediation is the use of a trained neutral facilitator, a mediator to assist in the negotiations of parties in a dispute. Mediation is an informal and confidential process that generally requires less cost and time than adversarial court litigation.

A farmer in debt has the opportunity to renegotiate, restructure, or resolve farm debt through Mandatory Farmer-Lender Mediation. During a 90-day period, creditors in mediation may or may not collect on the debt. The use of the term mandatory does not mean that the farmer must use mediation. It means that no creditor can start a proceeding to collect a debt against a property until the offer of mediation has been extended and, if the farmer so chooses, completed.

The goals of Farmer-Lender Mediation are to:

  • Achieve open communications between the parties in order to resolve differences.
  • Create a non-hostile environment.
  • Define the rights and responsibilities of the debtor and creditor.
  • Treat all parties with dignity and respect.
  • Produce agreements that are acceptable to all the parties involved.

​​​​​​​How does mediation work?

A creditor with a secured debt of more than $15,000 against an agricultural property must offer Farmer-Lender Mediation before proceeding with foreclosure, repossession, cancellation of contract, or collection of a judgment.

The first step is an orientation meeting if the farmer chooses to take advantage of the mediation offer. The farmer, creditor, financial analyst and the mediator meet to explain the process and to determine if financial information needs to be prepared.

What is the role of the mediator?

The mediator leads and manages the discussion as a neutral party without making decisions or judgments. Mediators are trained to use conflict resolution skills to facilitate effective negotiation.

The mediator ensures that all participants in mediation get to speak and be heard, helps to define issues, emphasizes common goals, keeps the discussion focused and moving forward, looks at all options, and reduces fault finding.

The mediator may advise, counsel and assist the parties on ways to come to an agreement, but does not tell the parties how they should conduct their business or personal affairs. The mediator does not take sides or decide how the dispute should be resolved.

​​​​​​​What are the outcomes of mediation?

Successful mediation requires compromise on the part of both the debtor and the creditor.

Farmers may have to:

  • Change operation to make it profitable.
  • Liquidate assets.

Creditors may need to:

  • Restructure debt and security.
  • Reschedule loan payments.

The parties involved retain control over the outcome of the negotiations in a joint decision-making process, regardless of the specific outcomes of the mediation.

Trust is built and solutions are uncovered when parties meet face-to-face to exchange information in an orderly way. The parties have strong incentives to make their agreements work because they created the agreements themselves.

Commonly reported results:

  • The farmer becomes more prepared to make decisions about the future.
  • Communication between lenders and borrowers improves.
  • Frustration and tension between parties are minimized.

If mediation does not result in an agreement, the parties are free to pursue whatever course of action is available to them, usually with a clearer understanding of the facts, the issues and the positions of the other parties.

​​​​​​​How does mediation begin?

Creditors begin the mediation process by sending our Farmer-Lender Mediation office a notice of debt of $15,000 or more. Our office then sends information to the debtor, including a Request for Mandatory Mediation Form.  Debtors must return that form within 14 days if they want mediation.  Make sure to identify all the creditors necessary for your farming operation.

Send the form to:

Statewide Mediation Coordinator
Mary Nell Preisler
1526 170th Avenue
Bejou, MN 56516

If you do not return the request form within 14 days, you will waive your mediation rights.

Be as prepared as possible. Review your position carefully and the reasons you hold that position.

University of Minnesota Extension administers the Mandatory Farmer-Lender Mediation Program and has provided mediation services to more than 24,000 cases since 1986.

Remember, to take advantage of the mediation opportunity, the debtor must request services within 14 days of a creditor's notice.

Other choices

Mandatory Farmer-Lender Mediation is one of four types of mediation services provided for under the Omnibus Farm Bill. Under certain circumstances, farmers/debtors may also choose to participate in:

For more information

If you have questions or would like more information about Mandatory Farmer-Lender Mediation, contact the Statewide Mediation Coordinator, Mary Nell Preisler, director, Farmer Lender Mediation, preis002@umn.edu or 218-935-5785.

Reviewed in 2023

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