Milk partnerships still worth considering
As a result of the reforms, quota sales were regulated and exercised through the relevant co-op or milk purchaser, with sellers and buyers operating independently, and unknown to each other. Other regulations made it difficult for large quota holders to expand, with priority being afforded to younger and smaller quota holders.
In tandem with these reforms came the introduction of milk production partnerships (MPPs), which enabled farmers to combine their milk quotas, outside of the quota trading scheme. On a practical level, it catered for situations such as two farmers coming together to create one bigger dairy herd, leading to work sharing and improved lifestyle.
It catered for older farmers to wind down slowly, while retaining the profitability of milk production through the involvement of a partner taking up the heavier work effort, as well as facilitating family partnerships which brought structure to farm family arrangements.
At this stage, what is the future for Ireland’s milk production partnerships?
This is a question I recently posed to Ben Roche, farm structuring specialist at Teagasc. Roche reminded me of the recent study undertaken by Teagasc on the benefits of partnership. These are as follows:
*Partnerships facilitated development of larger farm enterprises/increased scale, by managing two previously independent enterprises together.
* Partnerships were formed to access increased milk quota.
* Partnerships helped to increase efficiency, by consolidating land and facilities, and by developing new management strategies and business plans.
* Farmers were assisted to share their workloads to cope with the extra work involved in up-scaling and applying new technologies on the farm.
* Farm partnerships introduced new skills, specialisations and occupational preferences to enhance the operation of the farm.
* New diversification activities were fostered on the farm, by bringing in new expertise and business interests.
* Partnerships facilitated off-farm work.
* Farm partnerships were used to share decision-making power between members of farm families (eg, spouses).
* Partnerships reduced isolation in farmers’ working lives, and improved farm safety.
* Family circumstances and needs were facilitated where, for example, farmers had childcare responsibilities.
* Farm partnerships allowed farmers time off to pursue other interests and take holidays, improving their quality of life.
Roche admits that access to milk quota was a sweetener which got many of the currently registered farm partnerships on board, but the other benefits that have arisen would be considered by most partners to have subsequently outweighed the initial advantage of access to quota.
With the abolition of quota only 18 months away, farmers should remember that partnership is an option.
Dotted throughout the country, you can find situations where one farmer has sufficient farmyard infrastructure for expansion, but is caught for land, while a neighbour may have the land bank for expansion, but poorer building infrastructure.
The concept of partnership is simply about getting better results from working together.
Although the development of partnership farming over the past decade has been primarily in the dairy sector, the benefits of partnership farming are not exclusive to dairying.
On the tax front, partnerships can qualify for stock relief at 50%, this previously only applied to milk production partnerships, but thanks to amendments in the 2013 Finance Act, it has been extended to registered partnerships involved in other forms of farming.
Partnership farming is well supported by current agricultural policy initiatives. For example, grants under the Targeted Agricultural Modernisation Scheme cater for higher grant ceilings in the case of partnership applicants. Similarly, the AOES and REPS schemes allow for each partner to qualify for payments.
The support for partnerships has now been extended to other modes of farming, with potential roadblocks to partnership being lifted.
In CAP reform, for the first time, special provisions and recognition will now be granted for farmers who are farming in partnership.
So partnerships more relevant than are ever, and with an extension of support for partnership farming from dairying into other forms of farming, it is likely that there will be an increase in the numbers of farmers farming in partnership in coming years.
