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Farm Loan Mediation FAQs | South Dakota Department of Agriculture

Farm Loan Mediation FAQs

Corn Field SunetQ: What is Farm Loan Mediation?

Mediation is a process in which conflicting parties meet, identify issues and work together to find possible solutions. This informal and confidential process is facilitated by a neutral third party, the mediator. The mediator does not make decisions for the parties involved.

South Dakota is one of twenty-nine states certified by the USDA to use mediation to assist their producers in resolving financial disputes. The mediation process assists farmers, agricultural lenders and USDA agencies to discuss options in an unbiased setting outside the traditional legal process.

The South Dakota Farm Loan Mediation Program began on May 30, 1988. It has received over 4,100 requests for mediation.

Q: What is the Mediation Process?

If the borrower owes $50,000 or more, agricultural lenders are required by law to request mediation before taking any legal action on a loan. Once mediation is requested, the borrower is notified that a request has been filed. The borrower can participate in mediation or waive their right to mediate.

After the Director mails the notice of Mediation, the borrower will indicate his intent to proceed with mediation by responding in writing within 10 days. If the borrower wishes to proceed, a mediation session will then be scheduled. All parties involved are contacted with the date, time and location of the mediation. A borrower who fails to respond within 21 days of receipt of the notice is considered to have waived mediation.

The mediation sessions are under the control of the mediator. All information provided by the parties during the mediation must be held in strict confidence by the mediator. Each participant must have the opportunity to speak and state his or her position. All parties to the proceedings must make a good faith effort to resolve the dispute.

If the participants reach a tentative agreement, the mediator prepares a written agreement. After the details are reviewed and approved by all agreeing parties, those parties and the mediator are required to sign the agreement. If an agreement is not reached, the parties may request another mediation session.

Q: What is the Cost of Mediation?

Participants are charged $50.00 an hour for the first hour and $25.00 for each additional hour or fraction of an hour.

Q: Who are the Mediators?

Mediators provided by the South Dakota Agriculture Mediation program are contracted with the state to provide this service. Each mediator has undergone training on the mediation process, mediation skills and agricultural farm finance issues. The mediators are neutral parties in the mediation and do not make decisions regarding the mediation.

Q: How long will the process take?

The total mediation period will be for a term of 42 days after the date the Director issues the notice to the borrower. During that time the mediation session will be held. An extension of the initial 42-day mediation period may be acquired when all parties agree to extend the time period for the mediation.

Q: What are the advantages of mediation?

  • All information shared during mediation is confidential.
  • Participants create their own mutually agreeable solutions.
  • Provides a time-saving, affordable alternative to appeals and litigation.
  • Helps restore communication between disputing parties.
  • Results in longer lasting, successful resolution of the dispute.

Q: How do I prepare for mediation?

Preparation is the key element for mediation to be successful. It is very important that you are prepared for the mediation meeting in order to make the most of the time and money you put into it.

Q: Where can I find financial help?

The Department of Agriculture provides help to farmers and ranchers through the Ag Finance Counseling program. Finance counseling can help producers understand their financial situation and make informed decisions. This assistance is free of charge to the producers. Click for more information on the Ag Finance Counseling Program.

For information on the Farm Loan Mediation Program, contact:

Julie McClelland, Mediation Specialist
P: 773-4181