Develop business plans with your neighbours
Develop business plans with your neighbours
EQUITY share propositions – a joint farm ownership of land, stock and machinery – which are currently in vogue in New Zealand, may be a way forward for groups of UK producers to modify their management practice to stay competitive.
As New Zealands national herd has increased, units have become larger, with more staff, which has resulted in dairy farms becoming more business-like in their approach.
Ken Bartlett, farm business consultant with the Kerry Group and Teasgasc, told conference delegates that it is commonplace to see written short and long-term business plans devised between groups of people. These show what the farm is aiming for, targets for finance and production, and how individuals will achieve these goals.
Fostering relationships is important to the success of these operations, said Mr Bartlett. "Investors must have pride in the business, its income, and respect for each others knowledge and skills."
Ideally, one of the equity share holders will manage the dairy on a day-to-day basis and will be responsible for meeting returns on shareholder investments, as well as constantly communicating between all parties involved, including staff, he told conference delegates.
Usually the system lasts for five years and is then re-examined, with shareholders buying more or selling shares in the dairy, said Mr Bartlett.
However, technical excellence will help to ensure profitability as well as a structured business plan. "The main variables that need to be monitored on a pastoral based dairy farm are the condition of cows from drying off to calving and the amount of pasture grown that is used," he explained.
EQUITYSHAREFARMING
• Structured business plan.
• Joint farm ownership.
• Technical excellence important.