In keeping with the provisions of the Agricultural Credit Act of 1987, Title 5 “State Mediation Programs,” the State of Utah has implemented the following voluntary mediation program.
It is important for farmers, ranchers and the agriculture community to understand what mediation is and how it is being implemented in Utah.
Mediation is a process used to solve problems and settle disputed issues related to any adverse decision action by any of the USDA Agencies. Mediation introduces a neutral third party into the participant (farmer/rancher) and agency discussions in order to facilitate discussion and generate alternative plans. All decisions are made by the participants and agency personnel. The participants and agency personnel come to mediation with the understanding that they will seek a mutually agreeable solution that, in the best way possible, meets the needs of all parties. Sometimes those discussions will result in an impasse, but the participants will still have opportunity to exercise other appeal rights or actions.
The Utah Agricultural Medication Program (UAMP) mediates agricultural disputes between farmers and ranchers and USDA throughout the State of Utah. The program is administered by the Utah Department of Agriculture and Food and has been certified by the U.S. Department of Agriculture.
The UAMP provides a voluntary alternative to litigation, arbitration, or formal appeals through the use of an impartial third party mediator. The mediator facilitates communication and assists the parties in resolving their disputes. Mediation allows disputing parties to discuss options in a controlled setting and provides all parties the opportunity to express their views and provide input toward the solution. The mediation process is an extension of the traditional negotiation process with the addition of a third party to assist in negotiations.
When the bills pile up, so do the misunderstandings between borrower and lender. Mediation brings the disputing parties together in a neutral setting with a trained, impartial mediation to work out a solution where everyone “wins”. Mediation provides a forum for borrowers and creditors to resolve their financial disputes and explore any options that can keep the family farmer in business and keep our rural communities viable.
The process promotes calm and rational discussion of the issues to identify goals and options, reduce fault-finding and construct a plan that will benefit borrowers as well as creditors. All participants in the mediation process get to speak and be heard. Mediation is an efficient and economical way to resolve disputes.
However, this is a voluntary settlement process. Mediation is not legally binding and the mediator has no power to find fault or impose a particular solution. The goal is to help all parties to reach agreement on an acceptable course of action.
Contact the Utah Agricultural Mediation Program at (801) 982-2200 to request mediation service. They will contact all of the parties involved to arrange their participation and will help assemble the necessary information.
The Utah Agricultural Mediation Program is authorized by the USDA Secretary of Agriculture. The program, certified by the U.S. Department of Agriculture, is administered by the Utah Department of Agriculture and Food.
The mediation process can be initiated by an agricultural producer that has received an adverse determination from the Farm Service Agency, the Natural Resource and Conservation Service, the National Forest Service, or any agricultural lender, by contacting UAMP.
The mediation process used by UAMP can be described by the following steps:
- Initial contact with parties
- Selecting a strategy to guide mediation
- Collecting background information
- Designing a plan for mediation
- Building trust and cooperation
- Beginning the mediation session
- Defining issues and setting an agenda
- Uncovering hidden interest of the parties
- Generating options for settlement
- Assessing options
- Final bargaining
- Formal settlement
Utah is a “voluntary” mediation state, which means that mediation will not take place unless all necessary parties agree to mediate the dispute. When a written request for mediation services is received by the UAMP, the other parties who are necessary in order to achieve a settlement are contacted to secure their agreement to participate. The agreement of a party to participate in the mediation process normally implies an agreement to forbear or abstain from taking adverse legal actions during the time the case is in mediation. If the other necessary parties do not agree to participate or do not respond within the allotted time, the requesting party will be notified that mediation has been declined.
The mediation process is terminated when a mutually agreeable settlement is reached by the parties. However, in keeping with the voluntary nature of the mediation process in Utah, the requesting party may terminate the mediation process at any time, with or without cause, by written notification to UAMP. UAMP may terminate the mediation process when a party fails to respond within 15 days to request for information or offer of settlement. Likewise, UAMP may terminate the mediation process at any time if it is determined that further efforts at mediation are no longer worthwhile.
Typically, the mediation process allows for a much quicker resolution of a dispute than litigation. Also, mediation is less expensive than litigation or the formal appeals process. But perhaps most importantly, mediation provides a mechanism for resolving disputes that does not destroy the relationship between disputing parties.
The mediation process encourages the participation of the disputing parties in the negotiations process. This is important since the parties are in a position directly communicating their needs from a settlement. Also, the mediator may be able to assist the parties in crafting compromise because information can be furnished in confidence to the mediator by both sides. This allows the disputing parties to reveal to the mediator reasons that a particular offer is not acceptable along with potential ranges for settlement.
Agreements reached in mediation typically have a very high rate of compliance. This is because the disputing parties actually participate in the development of the settlement agreement. Most other processes either impose a solution on the parties or very limited participation in the development of an agreement.
The benefit derived by the producer is dependent upon the outcome of the mediation process as well as the type of dispute. In credit mediation, if the outcome results in debt restructuring, the borrower maintains his way of life and continues to farm. If the outcome was reached voluntarily and was not imposed. Furthermore, voluntary liquidation often allows the borrower to retain assets that would have been forfeited under a forced liquidation because amounts received for assets under voluntary liquidation are typically much higher than when assets are sold under forced liquidation. Also, the borrower may not be faced with the negative social stigma typically associated with foreclosure or bankruptcy.
Outcome that result in voluntary debt settlement or loan restructuring allow the borrower to continue with feasible operations that in turn generate the cash flows necessary for debt service. This results in a performing loan for the lender for the lender that is therefore profitable. If the outcome results in voluntary liquidation, the lender benefit by avoiding time and expense associated with foreclosure. Also, in situations where equity positions are approaching zero or have totally eroded, the lender stands a much greater change of having a debt fully satisfied if liquidation is voluntary.
In non-credit disputes, the producer is provided with a mechanism that allows for an inexpensive non-threatening process to resolve a dispute in a timely manner. Mediation provides the producer with a neutral confidential setting where he/she can explain and discuss the nature of the dispute from his/her own standpoint. Furthermore, the mediation process does not pose the intimidation factor that is often present in litigation or appeal.
Settlements in mediation help to keep causes out of the USDA appeals process as well as State and District courts. This translates into substantial savings to USDA in the form of administrative costs. However, the greatest benefit derived from mediation is intangible. This is the benefit of improved communication that results in strengthened ties and relationships. This mediation process tends to leave the parties with a greater sense of satisfaction than litigation because the process is designed to increase the understanding of all the parties.
UAMP serves in an impartial third party role to ensure that the mediation process moves forward in a fair and orderly manner. UAMP can advise, counsel, and assist the parties in their efforts to reach a mutually agreeable solution: but UAMP cannot and will not tell the parties how they should conduct their business or personal affairs. Nor can UAMP impose any particular agreement on the parties. Instead, it is UAMP’s responsibility to ensure that all participants in the mediation process are given the opportunity to speak and be heard.
- help define the issues
- emphasize common goals
- keep negotiations focused
- facilitate the development and discussion of options
- reduce fault-finding
Mediators that represent none of the parties are assigned in each case to preside at a meeting of the disputing parties. In mediation, the mediator acts as a neutral facilitator and aids the parties in generating and evaluating options. The mediator may caucus (i.e., communicate privately) with any of the parties, before, during, or after the meeting in an effort to facilitate the settlement process.
The mediator is impartial, knowledgeable in the meditation process, and familiar with agriculture.
The Utah Agricultural Mediation Program (UAMP) mediates agricultural disputes between farmers and ranchers and USDA throughout the State of Utah. The program is administered by the Utah Department of Agriculture and Food and has been certified by the U.S. Department of Agriculture.
The UAMP provides a voluntary alternative to litigation, arbitration, or formal appeals through the use of an impartial third party mediator. The mediator facilitates communication and assists the parties in resolving their disputes. Mediation allows disputing parties to discuss options in a controlled setting and provides all parties the opportunity to express their views and provide input toward the solution. The mediator does not impose his/her own judgment on the issues or that of the parties. Thus, the mediation process is an extension of the traditional negotiation process with the addition of a third party to assist in negotiations.
Benefits of Mediation
- Mediation provides a confidential forum to discuss complex issues.
- Mediators are neutral - they do not make decisions - they help the parties find solutions.
- Mediation builds strong working relationships with producers, their lenders and government agencies they work with.
- Decisions are made rapidly by involved parties - streamlining government involvement.
- Mediation supports stability and diversity in rural economies.
- Since the program was reauthorized in 2000, eight more states have a USDA Certified State Agricultural Mediation Program, bringing the total to 33 states, an increase of nearly 32 percent.
- To maintain a successful program, funding must keep pace with the program’s growth.
- This program is growing for a good reason - it works. The number of mediation clients has increased from approximately 3,300 in Fiscal Year 2001 to more than 5,200 in Fiscal Year 2006.
- Appropriations from Congress were $4,207,500 in Fiscal Year 2006.
Key Components and Issues
- Neutrality. It is critical that mediation programs are neutral in practice as well as in perception. Producers must have confidence that the program settles disputes in a fair manner.
- Confidentiality. Confidentiality is vital to the integrity and success of the mediation process. Without its absolute guarantee, participants may be apprehensive, or unwilling, to discuss personal financial and emotional matters.
- Autonomy. USDA certified mediation is a state and federal partnership. State agricultural mediation programs are not federal programs. To address the difference in state needs, priorities and expectations, state program autonomy is essential and was in fact, intended by Congress.
- In 1988 Congress authorized USDA to help develop and participate in Certified State Farm Mediation Programs under the USDA Farm Loan Mediation Program, part of the Agricultural Credit Act of 1987.
- In 1992 Congress increased federal matching funds to 70 percent in support of state programs.
- In 1994 Congress expanded the program under the USDA Reorganization Act, authorizing USDA to offer mediation as an option as part of the informal appeals process with respect to adverse decisions on USDA farm program issues.
- Mediation programs assist agricultural producers, their creditors and various USDA agencies to address loan problems, USDA adverse decisions and other disputes. The programs do this in a confidential and non-adversarial setting outside the traditional legal process of foreclosure, bankruptcy, appeals and litigation.
The purpose of the Coalition of Agriculture Programs (CAMP) is to serve as a presence and voice for the use of mediation in rural disputes. CAMP serves as a clearinghouse and forum for sharing ideas; examining commonalities and differences; and for enhancing decisions about the conduct of rural mediation programs.