Sharemilkers shafted on TAF deal

Last updated 10:15 14/05/2012
THE PROVIDER: It's the cows and the sharemilker that actually provide the milk.

THE PROVIDER: It's the cows and the sharemilker that actually provide the milk.

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Lyn Webster

Farming profits not for get-rich-quick investors Day off? Yeah right Sunny skies, growing grass makes for happy farmer Canine helper worth his weight New mother a force to be reckoned with Hard slog on a bog Many trials and rewards of going it alone So much for a cruisy day off Helicopter harassment a farmer's burden Calling the shots is liberating

Go to any TAF (Trading Amongst Farmers) meeting and hint that dairy farmers might accidentally sell out to outside investors and end up receiving milk price only while corporate speculators reap the dividend – and the farmers curdle.

Co-operative history shows overseas farmers fall into that trap, ultimately struggling to survive as milk returns are held down at the expense of profit/dividend to investors. Fonterra farmer shareholders are scared of this happening and so they are dilly-dallying around the final decision on TAF and all its (confusing) implications.

So why, then, am I as a 50/50 sharemilker suddenly finding myself working just as hard as ever for just half the milk price? The very thing that keeps the farmer shareholders awake at night has already happened to me – and I don't think it's fair.

When I went sharemilking, the idea was if I owned the cows and someone else owned the farm, we'd split the cheque 50/50. Each party's obligations are specified in a contract. The milk cheque was made up of two components – milk price or return on basic commodities and value added, which was the bit extra we shared if the milk ended up in a higher value product than just plain old powder. The value added was a reflection of investment made by shareholders in the technology and equipment needed to make milk into something more exciting. I think I deserve a cut of that because a vital component is the milk that I milked out of my cows. The expensive stainless steel is lost without it. In reality, sharemilking should be a joint effort with the rewards split fairly.

In the buildup to TAF, some wit decided to call the value added component a dividend and whether the farmer shareholder wanted to still split the dividend (ex-value added) with the sharemilker suddenly became at the farmer's discretion.

Upon moving to the Coromandel and starting a new 50/50 contract, I was suddenly denied any share of the dividend and subsequently delayed signing the contract and as a result of that, I have actually lost my job.

Working for milk price only is the pits. Arguably milk price is looking pretty healthy – or was.

The latest from the pundits has future milk price dropping. It is also under intense scrutiny from the powers that be with the Commerce Commission wasting time examining it with a fine-tooth comb. But basically, when you are working for milk price only, any interest you have in the doings of Fonterra just disappears – who cares what it invests in next when you are only a milk price taker?

Any enthusiasm for the company and its progress just disappears. I asked a consultant why sharemilkers have lost out on a share of the dividend and he more or less said that's how it is in the Waikato now. All new contracts for sharemilkers are milk price only. I don't know if that is the truth or not, but I do know that if I was one of two applicants for a job and the other guy said he'd do it for milk price only, who would get the job? Not I.

So now I lease a farm. And guess what? As I am only leasing the shares, I am working for milk price only. I have decided to concentrate on increasing production and buying my own shares so I can get the dividend – but that is only me being falsely positive. In reality, I'm living the farmer shareholder's worst nightmare – being a milk price taker. A nightmare they've inflicted on me without a care.

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- Waikato Times


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