Q. I am in my 60s, and dairy farming. My children all have full-time jobs and help me at the weekends, but I cannot see any of them full-time farming.
I do not want to stop farming, but I want to scale back and enjoy life more, while at the same time continuing to make a reasonable living. What are my options for scaling back next year?
A. This situation is common.
You should speak with your family, and discuss your wishes and plans for the future, and ascertain whether or not any of them would like to get more heavily involved in the day-to-day running of the farm. You might be surprised with their answers and suggestions.
They might have ideas that you may not have considered.
If none of your children wish to become more involved with the farm, one of the more obvious options available to you is to employ someone.
This may not be what you would ideally hope for, when thinking of scaling back.
But if you decide to employ someone, you should be aware that you will have to comply with employment legislation.
For example, you must provide an employee with a note of their terms and conditions of employment within two months of commencement of employment.
Aside from employing someone, there are other options available to you to allow you to continue working while reducing your workload and hours.
One of the options is to enter into a partnership with another farmer, whereby you would pool all of your resources with another farmer, and he or she would do the same, for the benefit of the partnership.
Assets such as land, buildings, basic farm entitlements, are made available for use by the partnership, and would automatically return to you if the partnership should end.
If you choose to go down this route, it is obviously very important that you chose your partner wisely. Ensure that you both have similar work ethics and farming practices. It is also important that a written agreement is put in place in advance of entering into a partnership.
A well drafted partnership agreement will also ensure that the other partner has a carefully structured plan to follow, if one partner becomes seriously ill or dies. It will secure everyone’s legal positions, and ensure the continuity of the farming business.
If you decide partnership is not for you, perhaps you could consider the contract rearing of heifers. The arrangement in simple terms involves a dairy farmer entering into a contractual agreement with another farmer, and the replacement stock are reared on the other farmer’s holding.
The targets should be specifically defined in a written agreement. Will the heifers be weighed and, if so, by whom and at what stage?
There are different types of contracts but the most common arrangement is per animal per day, or per kilogram of live weight.
Benefit of farming in partnership or by contract agreement include that you will continue to be regarded as a farmer, while operating in your own right.
While a partnership operates under one herd number, you can still retain your herd number, which can be reactivated if you cease to farm in partnership.
As a contract rearer, you maintain your herd number, and the stock are transferred from the owner’s herd number to your herd number.
However, the contract rearing agreement provides proof that you do not own the stock, but are simply rearing them for the owner. From a basic payment entitlement viewpoint, you can continue to be paid your basic payment entitlements as a contract rearer, as you do while farming in your own right.
Under the partnership arrangement, the basic payment entitlements are paid to the partnership, and divided in accordance with the profit sharing ratio. However, most arrangements ensure that the partners continue to be paid their full individual basic payment entitlements.
It is essential that you draft up a written agreement in relation to farm partnership and contract rearing.
If you enter into a successful relationship with a farmer in relation to contract rearing or partnership, and over the years it is working well, in time one or some of your children may also continue to enjoy the benefit of such a relationship.
If they are pursuing full-time careers in other areas of life, and still have an interest in farming, they may wish to continue such an arrangement as a means of earning additional income and also maintaining their interest in farming.
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