The sharemilking system that has underpinned the expansion of the dairy farming sector may be threatened by a trend to bigger dairy units, especially in the South Island, farmers say.
In the North Island, farmers wanting to build up to farm ownership have traditionally contracted with landowners to provide the cows
and labour and split the profits from milk sales, often 50-50.
But during a period of rising milk payouts, profits have been higher for farm owners who employed a manager or contract milker rather than a 50-50 sharemilker.
A Canterbury sharemilker, Shane Thornley, said the tradition was under threat.
"On big corporate-owned farms, the trend has been towards managers rather than sharemilkers, which is a tragedy," he said.
Amuri Basin sharemilker Elizabeth McCraw-Neill, also spokeswoman for the Amuri Dairy Employers Group, said that in the current situation, when the milk payout was starting to drop but costs were not, sharemilkers were more valuable because they carried more of the costs.
When the money was really good, there were more contract-management arrangements and the owners could take more of the profits.
The number of people moving this year had fallen because of the payout drop signalled for next season.
"People are tending to hang tight. There's a little less confidence.
"But while the payout will drop 25 per cent, it's still pretty good."
Last season there were 195 dairy conversions in the South Island, most of them in Canterbury. This season about 58 are predicted, the majority in Southland.
Tony Bywater, director of the Animal and Food Sciences Division at Lincoln University, said it would be crazy to lose the sharemilking system.
"It provides a career path that doesn't exist in other sectors of agriculture. We've got plenty of examples over the last few years of young people accumulating very large sums of capital, and running big businesses through sharefarming."
There were more different types of arrangements in place on dairy farms than there were five or 10 years ago.
"All sorts of things are going on. For example you see people sharefarming on several farms."
He said the downside of sharemilking was that people on farms where there had been a big increase in the herd size were now in a high-risk, high-return situation because of the potential volatility in the value of their basic asset - the cow.
- NZPA
