Wherever you find yourself in your dairy career - be it starting out as a new business owner or as a farm owner wanting to step back from day-to-day operations, determining the best operating structure to help you succeed with your future plans is an important step.

• Looking to progress

  The pathway to farm ownership is no longer linear, and for some people farm ownership is not the ultimate goal. There are a range of progression options available and these are changing constantly as farmers modify operating structures to reach their goals.

  To help you consider different operating structures based on the questions below, use this decision tree:

  • What amount of equity do I have to invest?
  • Am I willing to stay in a 5 year+ investment?
  • Am I willing to share my business with others?
  • What level of financial risk am I willing to take on?
  • How dependent is my income on milk price fluctuations?

  Whatever decisions you reach before signing an agreement or contract, ensure you have sought independent legal advice, understand the potential impact on your financial position and what obligations you’ll need to meet. DairyNZ have created a due diligence process to help you follow the right steps before signing contracts and agreements called Do your homework

• Becoming self-employed

  Self-employment can be very rewarding and satisfying but it is also important to remember that with self-employment comes varying degrees of risk and liability.

  As a business owner, you will:

  • No longer get sick leave, holiday pay, rostered days off
  • Potentially have a whole new set of skills to learn:
    • recruitment
    • people management
    • budgets and financial management
    • health and safety
    • rosters
    • GST and tax requirements
    • herd records
    • responsibility (and potential liability) for areas such as contaminants, health and safety, effluent, PAYE and employment records
    • negotiating

• Stepping back from active farming or succession planning

  As a farm owner you may be looking to re-evaluate your options and how you are running your business. Traditional pathways such as herd owning sharemilkers are still viable and may fit with your farming philosophies and business model, but there are other operating structures or hybrid models.

  To help you consider different operating structures based on the questions below, use this decision tree:

  • Do I want/need to release capital?
  • What level of involvement would I like in the farm?
  • Do I want to be responsible for employing staff?
  • Do I want to share milk price risks and rewards with others?
  • Do I want to be involved in farm management decisions?
  • Am I willing to share land ownership?

  Whatever decisions you reach before signing an agreement or contract, ensure you have sought independent legal advice, understand the potential impact on your financial position and what obligations you’ll need to meet. DairyNZ have created a due diligence process to help you follow the right steps before signing contracts and agreements called Do your homework.

Pre herd owning

Dairy farm businesses that don’t own or part-own a milking herd.

Read more

Herd owning

Dairy farm businesses that own or part-own a milking herd.

Read more

Leasing

A farm owner leases their property and infrastructure to another party.

Read more

Equity partnerships

An equity partnership is a joint business venture.

Read more

What next?

• Have a detailed read through the options that interest you via the links above.
• Do your homework - this is also known as due diligence and simply means finding out everything you can about a business before you commit your money and time. Find out more here.
• Talk to someone - talk to experts, other farmers, and people you trust. Good advice and support can make all the difference because 'she'll be right' does not work when it comes to finances. Find out more here.