Have you considered share farming?

The Irish dairy industry is going through an exciting evolution. The abolition of milk quotas in April 2015 has paved the way for expansion; it has also raised some challenges along the way.

Milk price volatility is likely to be a part of Irish dairying for the foreseeable future. However, there is a genuine feeling of optimism surrounding the industry – with evolution comes opportunity.

There is no doubt that collaborative farming models, including share farming, have a huge role to play in the future of Irish dairy farming.

What is share farming?

Share farming can play a role in certain situations in the Irish dairy industry. It operates where two parties carry out separate farming businesses on the same land without forming a partnership or company.

The principle is that the landowner will provide the land and infrastructure – such as the milking parlour, wintering facilities and roadways – for dairying. Typically, the share farmer will provide the livestock, labour and take responsibility for running the farm.

It can operate where an existing farmer wants to remain dairy farming, but take a step back from the day-to-day running of the farm.

Share farming can also play a role where existing farmers start dairy farming on new blocks of land and use the share farming model to operate the farm.

Share farming also can afford a young farmer with limited capital an opportunity to start farming.

Last week, Gurteen Dairy farm in Bandon, Co. Cork open it’s gates to facilitate a Teagasc share farming open day.

A large crowd attended the farm, where Tom Curran, a Teagasc farm management specialist, gave his views on the topic.

The farm was set up to demonstrate the operation and the financial performance of a share farming arrangement. The owners of the farm, Shinagh estates, (Drinagh, Bandon, Barryroe and Lisavaird Co-Op’s), operate the farm along with share farmer John Sexton.

Reasons for share farming

There are many benefits and advantages to both the landowner and the share farmer. Curran said: “The key to success is a good understanding of people, be it with family members or another farmer, the relationship has to be managed and nurtured.

When talking about share farming, it is important that both the landowner and share farmer have a strong working relationship which is both effective and beneficial to both parties.

“The relationship must be built on trust and good open communication. There must be respect for each party including their families, farm and their property. Without this respect the arrangement will be unsuccessful” he said.

Benefits to the farm owner:
  • Farm owners currently dairying can continue to farm but can release assets, such as cows, from the business;
  • They can take a step back as the share farmer supplies the labour – share farmer signs up for a longer period, ensuring no employees leave at short notice;
  • Owners have the opportunity to work with an experienced, motivated farmer with excellent knowledge and the acquired skill-set;
  • Landowners can avail of the tax incentives that they receive from leasing their land long-term;
  • Farmers who have sons or daughters – share farming is an excellent way to start the succession process;
  • They stay as an active farmer securing their entitlements from the Basic Payment Scheme.

“A pay off resulting from share farming is a healthy work-life balance where two farmers, working together, achieve great results and even in some cases increase scale dramatically,” Curran said.

Benefits to the share farmer:
  • The share farmer has access to a developed farm;
  • They can invest in productive assets which will increase in value over time;
  • They get to make calculated decisions and run the business;
  • The share farmer has security, having not invested in land for a long period;
  • It is an excellent platform for a young farmer who wants to kick start their career in farming with limited capital for investment.

“Research shows that farm safety can be improved by share farming; both parties are conscious of each others families ensuring that measures are put in place to ensure each others safety” according to the Tegasc specialist.

Curran concluded by saying: “The government has been supportive in terms of revenue and the CAP payments paid to encourage young farmers to get involved in farming.

“There are also taxation benefits, in terms of the restructuring relief, for amalgamating fragmented farms,” he said.