Sharemilking agreement gets a major makeover

The creation of sharemilking contracts in the dairy industry has been critical in its growth, with the system providing a production incentive, a profit sharing goal and clear defined roles for each party in the contract.

The lower order contracts allow a realistic starting point to for some to start for the ultimate goal of farm ownership, and many have achieved this through years of hard work and many sacrifices.

With improved profitability of the sheep, beef and deer sectors, is there an opportunity for these other livestock operations to set up a similar scheme to allow financial incentives to draw  young hardworking enterprising people into their businesses as well? Your views?

With about 40 percent of New Zealand dairy farms operating sharemilking contracts, Federated Farmers has released its Variable Order Sharemilking Agreement 2012.  “We are pleased the Variable Order Sharemilking Agreement 2012 is now available from Federated Farmers,” says Ciarán Tully, the Federation’s Sharemilkers chairperson in a press release.

“The Variable Order Sharemilking Agreement is one area where Federated Farmers has a statutory role under the Sharemilking Agreements Act 1937, which has been a valuable document, protecting both the rights of sharemilkers and those of their farm owners, but there have been issues that needed clarification.

“The resulting Variable Order Sharemilking Agreement 2012 is a product of good faith bargaining which will stand up in the courts. Most importantly, it is written in plain-English that makes it easier for farmers to understand.  “Aside from making it more user friendly, current obligations relating to farm practices, such as the Resource Management Act, have been incorporated.  These have the potential to cost farmers money if things are not done correctly.

“Critically, the Variable Order Sharemilking Agreement 2012 acknowledges the need to keep children safe from farm hazards.  “The farm house will be required to have stock proof fences and there must be provision of a safe place for children to be in, if they are at the milking shed while their parents work.    

 “For Fonterra suppliers, the new method of payment has been taken into account. “For those with herds of not more than 300 cows and who agree not to share dividend revenue from the Dividend Related Payment Adjustment, the minimum percentage of income derived from milk supplied to Fonterra will be 22 percent. “The arbitration and conciliation clauses have also been updated.  While it is disappointing every time a relationship breaks down, these things do happen. Our role is to speed things through to as amicable an outcome as possible.