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Diligence Needed in Sharemilking Contracts

13 July 2016

NEW ZEALAND - Sharemilking career paths are changing in New Zealand, according to the DairyNZ and Federated Farmers-resourced Dairy Progression Pathways report, undertaken by AgFirst.

Federated Farmers Sharemilker Farm Owners’ Section Chairperson Tony Wilding says the report shows opportunities for progression still exist but the career pathways have been changing and will continue to do so.

"While the number of traditional herd owning sharemilking (HOSM) agreements is slowly declining, the scale of them has increased and other options to invest in cows and land in equity ownership are continuing to emerge,” says Tony.

Richard McIntyre, Federated Farmers Sharemilkers’ Section Chairperson agrees. “Sharemilkers need to be better equipped to survive the climate of volatility through contracts that are flexible allowing them to manage risk.

"As sharemilking contracts evolve, it is important that the risk remains relative to reward.

"The report also highlights the need for improved due diligence prior to entering contracts. A number of failed sharemilking relationships can be traced back to a lack of due diligence at the start.” 

The Pathways to Progression report shows that sharemilkers continue to make up 35 per cent of the industry, but HOSM has declined to 17 per cent from 25 per cent in 1995. This may be due to milk price variation and the challenges it presents for sharemilkers and farm owners.

The number of farmers planning to purchase a dairy farm after sharemilking has also dropped to 47 per cent from 70 per cent 20 years ago.

TheCattleSite News Desk

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