Sharemilking: Five tips to a better relationship

Sharemilkers head hopefully to greener pastures. It's important to be open and honest when negotiating your new agreement.

For a sharemilking business to thrive, both sharemilkers and farm owners must do their homework before entering a partnership agreement.

A DairyNZ-funded study last year showed that often neither party was well enough prepared.

In response to the study, which surveyed sharemilkers and owners, DairyNZ created a checklist, available at dairynz.co.nz/sharemilking. Here is a a summary:

1. What's your situation?

• Are you able to articulate your goals, values, key philosophies, and focus areas?
• Have you listed all the non-negotiables you need for the role to work (eg, location, size of the farm, return on equity)?
• Have you developed a business plan, and can you communicate your key farm management policies
(stock, people management)?
• Have you prepared a SWOT (strengths, weakness, opportunities and threats) analysis for you and your business?
• Understanding different operating structures; knowing the 'ins and outs' is important so you can work out how well the business opportunity fits with your needs and wants.

2. Get to know the other party:

• What are their goals, values, key philosophies, non-negotiables, farm management policies and core business plan components? Do they match yours?
• Could you work together to achieve a win-win situation?
• To learn more about a potential business partner, it can be helpful to speak with people in the area, or the person's former sharemilker/farm owners. It's important to find out how well you could work together.

3. What do I need to know about the farm?

• What are their goals, values, key philosophies, non-negotiables, farm management policies and core business plan components? Do they match with yours?
• Could you work together to achieve a win-win situation?
• To learn more about a potential new business partner, it can be helpful to speak with other people in the area, or with the person's former sharemilker/farm owners. It's important to find out how well you could work together.

4. Before signing an agreement

• Develop a budget and do a sensitivity analysis to see how the outcomes might change with fluctuations in milk price, production and farm expenses.
• Is the contract an up-to-date version?
• This is a legally binding document, so it's important to read every clause and consider what it means for you, how well it meets your needs and wants, and whether it is a profitable decision.
• Assess the rewards and risks, and get independent advice.
• Discuss the details with the other party. Be open about any concerns or issues you have and look to negotiate, where needed, to achieve the best outcome.
• Seek trusted, experienced third-party advice.

5. Keep the business partnership alive

It's vital to maintain effective communication between parties that spans the development, implementation and monitoring of agreed policies and business plans, including sharing key financial information. Consider holding regular meetings to satisfy each party's needs and wants.

- Carolyn Bushell is a senior developer (people and business) at Dairy NZ. This advice was published in Inside Dairy.