Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Sharemilking remains a viable career path – new report

Sharemilking remains a viable career path – new report

Sharemilking as a career path is alive and well, according to a report recently released on progression in the dairy industry.

The DairyNZ and Federated Farmers-resourced Dairy Progression Pathways report, undertaken by AgFirst, explores the latest trends and statistics relating to sharemilking and examines the issues created by milk price volatility.

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.

Federated Farmers sharemilkers’ section chairperson Richard McIntyre 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,” says Richard.

“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 Dairy Progression Pathways report shows that sharemilkers continue to make up 35 percent of the industry, but HOSM has declined to 17 percent from 25 percent 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 percent from 70 percent 20 years ago.

DairyNZ’s strategy and investment leader for people and business, Mark Paine, said opportunities for progression include making the most of alternative business structures and undertaking better due diligence before taking on a new contract.

“Refinement and improvement in these areas would lead to better outcomes for farm owners and sharemilkers,” says Mark. “Successful business partnerships typically share business plans and have a common understanding of the goals and directions of each other’s businesses.”

He says those currently sharemilking should take heart.

“Our industry has many options for connecting with other farmers and rural professionals who are willing to share their knowledge and experience,” says Mark. “Share what you want to achieve in the future and position yourself to strike when the opportunity arises. Others have succeeded and opportunities are out there.”

To view the Dairy Progression Pathways report, go to www.dairynz.co.nz/pathways.

Dairy Progression Pathways: key findings

• The percentage of sharemilking agreements in the industry remains relatively static at around 35 percent, but the percentage of HOSM has declined to 17 percent compared with 25 percent in 1995. Over the past five years, the number of HOSM positions has declined by 50 per year.

• The variation in milk price within seasons is causing problems with setting appropriate percentages for sharemilking agreements.

• Timing of entry and exit is a critical feature for sharemilkers in terms of maximising equity gain (or minimising loss).

• The percentage of sharemilkers intending to purchase a dairy farm at the conclusion of their sharemilking career has declined from 70 percent in 1996 to 55 percent in 2011, and to 47 percent in 2016. This will require a re-setting of goals for some sharemilkers.

• There is evidence of the market adapting to the milk price volatility, through an increase in variations to the standard clauses in sharemilking agreements.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Stats NZ: Consents For New Homes At All-Time High

A record 41,028 new homes have been consented in the year ended March 2021, Stats NZ said today. The previous record for the annual number of new homes consented was 40,025 in the year ended February 1974. “Within 10 years the number of new homes ... More>>

Stats NZ: Unemployment Declines As Underutilisation Rises

The seasonally adjusted unemployment rate decreased to 4.7 percent in the March 2021 quarter, continuing to fall from its recent peak of 5.2 percent in the September 2020 quarter but remaining high compared with recent years, Stats NZ said today. ... More>>

ALSO:

Digitl: The Story Behind Vodafone’s FibreX Court Ruling

Vodafone’s FibreX service was in the news this week. What is the story behind the Fair Trading Act court case? More>>

Reserve Bank: Concerned About New Zealand's Rising House Prices

New Zealand house prices have risen significantly in the past 12 months. This has raised concerns at the Reserve Bank of New Zealand – Te Putea Matua about the risk this poses to financial stability. Central banks responded swiftly to the global ... More>>

Westpac: Announces Strong Financial Result

Westpac New Zealand (Westpac NZ) [i] says a strong half-year financial result has been driven by better than expected economic conditions. Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on ... More>>

MYOB: SME Confidence In Economic Performance Still Cautious

New insights from the annual MYOB Business Monitor have shown the SME sector is still cautious about the potential for further economic recovery, with two-in-five (41%) expecting the New Zealand economy to decline this year. The latest research ... More>>