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Structure of our dairy venture

May 20, 2008

This year on the farm is not just for fun! There will be lots of hard work and hopefully some decent earnings to be made too.

On the legal side of things, we've set up a limited liabilty company to run our expenses and income through, and to make it easier to split the profits. Since we're going into business with my brother and his wife, there are four of us as shareholders in the company.

This company has entered into a sharemilking contract with the farm owner (a trust administered by my parents) which means that our company receives a set percentage of gross revenues from milk sold and bobby calves in return for providing labour and paying certain expenses (such as cleaning chemicals) to run the farming operation.

We need to purchase some of our own equipment such as motor bikes, protective clothing, and filters, and we need to cover expenses for things such as fuel and cleaning chemicals. But other equipment and expenses (such as tractors, the cowshed and milking plant, electricity, etc.) are covered by the farm owner.

We expect there to be about 350-360 cows to milk so there will be plenty of work to do throughout the year. A farm of this size in New Zealand would normally have around 2 to 3 labour units depending on experience. We've got a little extra manpower but less experience than one would typically have in order to take on a sharemilking contract such as this. Actually, normally it wouldn't be possible to sharemilk at all without a few years of farm labouring and management experience - we've only managed to skip that part due to the family connection.

So with the legal issues sorted out, we're just about ready to go! Our official start date is on the 1st of June.

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Broken fence to the neighbour's property
An early start on Christmas morning
Cooking dulce de leche
Milk payout drops to $6
Payout to drop further?
Grass cut for silage in front of Mount Taranaki
Sore fingers
Fertiliser truck driving up a grassy hill
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