Meetings planned to push for solutions around industry progression
OPINION: Federated Farmers is hosting a series of meetings later this month to look at solutions to arrest the decline of the traditional progression pathway for young dairy farmers to farm ownership.
The initiative was put forward by Waikato Federated Farmers landowner/sharemilker employer section chairman John Numan.
With a declining number of 50:50 sharemilking agreements becoming available, he felt it was time Federated Farmers had a conversation with the people who offer those positions.
Numan's idea is to hear the dairy farm owners' views rather than make assumptions.
The Business Return on Investment is obviously an issue but there are other factors as well. Surely the industry has the potential to think outside the usual square and in doing so create balanced opportunities for all involved.
Many land owners have progressed through the 50:50 system, which has been a well-recognised process and one initially unique to New Zealand.
Numan believes that sound, open-minded budgeting and better understanding of alternatives to the usual standard agreement would be an advantage. Emotions need to be left out of it.
The meetings are intended only for landowners, contract and sharemilker employers rather than all interested dairy partners. It needs to be a non-threatening environment where we can create some honest and open communication.
One school of thought is that if fewer share and contract milkers get the chance to work up to owning their own farms there are implications for increased overseas investment and ownership.
The meetings might also delve into whether applicants for sharemilker positions are getting the right help to develop the best skill set.
DairyNZ offers numerous learning opportunities now which were not available in earlier 50:50 times. These include Biz Grow, Pasture Plus, Mark and Measure and numerous tool kits and /or budget options as well as various human resource tool kits.
The responsibility of housing has unfortunately become more of an issue with the higher use of drugs by some of the farm support staff employed by the contract or 50:50 milker. Fairness around remediation costs associated with a contaminated home and/or insurance costs is a point of debate.
Numan's motivation is to facilitate a chance for landowners to explain why they do or do not offer sharemilker positions - what's lacking, what's working well, what's not working.
With a consensus or collaborative view on what might be required to see more 50:50 positions offered, then the industry is in a better position to pursue 'A, B, or C' to get change happening.
Another aspect that might be discussed is a different model of income-sharing that is payout-sensitive, based on return on investment.
Waikato Federated Farmers sharemilker farm owners' section chairman Tony Wilding says this is not a new idea but one now being promoted by former MAF economist and now independent consultant Brian Cloughley.
A problem with current milksolids payout volatility is that at low payouts sharemilker equity gets hammered and cash flow can become an issue. When payouts are high, the return on investment gap widens the eyes of some of the landowners, and hence they may not engage with a Herd Owning Sharemilker (HOSM) agreement.
Without going into too much detail on the model, the principle of a "variable rate" HOSM is that herd owners get a higher percentage at a low payout, and a lower percentage at a high payout.
Wilding believes its complexity to administer would probably mean uptake of such a model would be limited. But it could encourage larger, corporate-type farms to consider bringing HOSM back as a viable option to run their farms.
The meetings with dairy farm owners are at:
Te Awamutu (Te Awamutu Club, 542 Alexandra St, March 22, 7pm)
Morrinsville (Kereone Rugby and Sports Club, Campbell Park, Thames St, March 28, 7pm)
Putaruru (Central Kids Kindergarten Association, 6 Glenshea St, March 29, 7pm)
- Chris Lewis is Waikato Federated Farmers president.