Dairy farms can be run solely by their owners. Sometimes, however, farm owners want to step aside and let someone else take over running all, or some of, the farm.
Federated Farmers has the information, the contracts, the advice and the networks that will enable you to complete this process and run a sustainable and profitable business.
There are several arrangements that can be made:
- Contracting a sharemilker, either 'variable order' or 'herd-owning'
- Employing a contract milker
- Employing a farm manager
- Employing a dairy farm worker
- Employing a dairy trainee.
Both parties to a contract should do their homework before signing up. Talk to those people listed as referees. Getting the right person in the job, and the right job for you, makes all the difference to your business and career.
Industry stakeholders, such as DairyNZ, have a wealth of technical and dairy farm management resources that are also available to you as a levy payer. Make good use of these for the benefit of your productive business.
Federated Farmers partners with law firm DLA Phillips Fox to provide members with excellent advice on all legal matters relating to their farm business. This includes contract and estate law. The purpose of the freephone service (0800 327 646) is to provide members with a quick 'heads up' on various legal issues that might be concerning them. Practical advice on how best to deal with legal issues immediately, or, alternatively, when to seek the appropriate advice from local lawyers is provided to members. A 'triage' call is a starting point, but not a substitute for taking appropriate legal advice from local lawyers when required.
The calls that relate to sharemilking and contract milking seem to revolve around interpreting various clauses, finding out who is responsible for paying what, dispute resolution procedures and terminating the agreement.
Most of the other calls commonly relate to boundaries/neighbour issues, fencing queries (e.g. who pays for fence construction), general commercial problems including the consequences of breaching an agreement or how to go about remedying the situation.
In relation to employment, it appears that the most common query concerns disciplinary issues. This is closely followed by questions about employment agreements, Holidays Act queries, general employment and health and safety. Questions about quad bikes are quite common in relation to health and safety.
Uncommon problems facing dairy farmers
Some of the stickier situations can be addressed before the issue arises by forward-thinking sharemilkers and farm owners. One situation is the amount of supplement left on farm at the end of a contract. This should be discussed and decided upon (and written down) at sign-up, but often needs re-negotiating around April, when farmers can assess the season. They may be able to substitute the number of bales settled at sign-up with something that provides the same amount of energy for the cow, if the bales have already been eaten due to challenging conditions.
A change in management practice can also produce its challenges, which can be discussed with the Federation's legal team or other experienced farmers in your area.
The advent of Trading Among Farmers (TAF) could bring an increase in calls to the legal helpline as sharemilkers come to grips with dealing with the ability for the farm owner to own shares that are not tied to milk production and the ability to change shares on a daily basis, especially where the sharemilker is paid a portion of the dividend.
Communication between both parties is key on any farm.
Each year, many dairy farmers make a decision about who will milk the cows next season. The 'Ensuring a viable progression path in the dairy industry' study, commissioned by Federated Farmers, carried out by AgFirst and funded by DairyNZ last year, set out a series of questions that should be answered before making this decision.
For farm owners, these questions are based on how much day-to-day involvement they want in running their farm, how much of their own capital they want to use for other things and the amount of risk they want to share. This can lead them to choose from sharemilking, contract milking, equity partnership, farm manager, dairy farm worker or dairy trainee type of arrangements.
A clear understanding of each of these is required before a decision can be made, and the bare bones are as follows:
- Equity partners are willing to share in land ownership.
- Sharemilkers work for a share of the profits gained from the business, while sharing in some of the costs. They may own some of the machinery used. A herd-owning sharemilker brings and milks their own cows on the farm owner's land, while a variable order sharemilker milks the farm owner's cows. This sharemilker is covered by the Sharemilking Agreements Act 1937 and the Sharemilking Agreements Order 2011.
- A contract milker is usually paid on an agreed number of dollars/cents per kilogram of milk solids produced. These people are not covered by the Sharemilking Agreements Act 1937 or the Sharemilking Order 2011.
- A farm manager, while having control of the management side of the farm, is a direct employee of the farm owner.
- The dairy trainee and the farm worker are also employees. Both of these positions will be under the direct supervision of the employer, who may be the farm owner, the farm manager or the sharemilker.
Stepping into or up in the industry
The questions those in this group need to answer have to do with money and risk. If they have money and a tolerance for risk, they could choose herd-owning sharemilking, equity partnership, leasing, or farm ownership.
If they have no money but are willing to share some financial risk, including milk price volatility, then a variable order sharemilking position may be good. If they are not willing to share in milk price volatility, then a contract milking position may be suitable. For those not keen to take any financial risk, then a farm manager position may be ideal.
The trainee and worker positions are excellent for learning the ropes of looking after cows and working on farm.
Talk to your banker, accountant, friends and other farmers about what step you should take.
Federated Farmers offers contracts for all of these positions.
Farming is a highly complex business requiring the same legal and administrative capabilities and resources as any other profession.
Federated Farmers has a range of contracts and agreements specifically developed to cover all the legal requirements of running a modern agricultural business.
These documents have been tried, tested and have proven their worth. Tens of thousands are used every year by members, especially the employment and dairy agreements.
Prices for members generally range between $50 and $70 for most documents, non-members pay the full cost, which is between $150 and $200, depending on the document.
Federated Farmers members can access these at preferential rates, just scan the QR code above.
Provincial and Industry Support
It is hugely important to the Federation to be able to provide provincial and industry support from farmers, to farmers, around the country. In each of the 24 provinces and seven industry groups that Federated Farmers represents, there is a network of farmers who are willing to help.
- Your provincial president and provincial representatives
- Your industry group chairperson or representative
- Call a policy advisor or board member
These people are accessible and able to provide advice and direction.
More than 7500 dairy farmers and sharemilkers reap the benefits of being part of the Federated Farmers and industry networks.
Federated Farmers has a team of more than 20 specialised policy advisers and subject matter experts whose sole focus is gaining the best outcomes for farming and New Zealand economic growth. The policy staff are happy to give advice on policy-related issues, by ringing 0800 327 646. We produce quick summary Fact Sheets, written by policy staff, for members in easy-to-understand language.
Do you need to hire staff or are you looking for work? We have a free and specifically tailored farming recruitment website www.ruraljobs.co.nz. Advertise your vacancy, search potential candidates, or list your own profile for work wanted.
This site also provides information on salaries, immigration, employment legislation, ACC and Health and Safety. Customised employment contracts and agreements can be bought online here.
Members of Federated Farmers save up to 66 per cent on these products. Visit www.ruraljobs.co.nz to find out more or phone us on 0800327646.