QLike many other dairy farmers across Ireland I wish to expand my dairy enterprise in 2015. However, the capacity to expand will be limited by being able to access additional land. Young people are getting access to land in New Zealand and Britain through share milking and contract farming. Why are these not available in Ireland?

AThis is a topic that I studied for two years as part of my Nuffield Scholarship. I travelled to New Zealand, USA, Britain, France and Northern Ireland to study the farm structures in place and to come up with similar arrangements for Ireland.

Farming in Ireland is set to be revolutionised with the abolition of milk quotas and the introduction of a reformed CAP system. While these changes will bring challenges, in terms of milk price volatility and reduced subsidies, they should also bring about opportunities.

These opportunities can come about through making better use of resources, i.e. land, money and people.

For example, an older generation landowner has land and savings, but is scaling back his farming activities as he does not have the same energy nor a family member to take over.

On the other hand, a younger generation farmer, having just finished agricultural college, has no land or savings but plenty of knowledge in operating a grass-based, low cost system of farming. These two are ideal to form a contract farming arrangement.

Contract farming arrangements were recently covered in the Shared Passion, Better Future series. Under a contract farming arrangement a landowner farmer pays a contractor to carry out aspects of the farming operation such as managing a dairy herd.

The landowner receives a rental equivalent and will continue to be regarded as a ‘farmer’ for tax purposes and for EU and Department of Agriculture schemes.

The contractor receives a bigger share of the profit to incentivise him to make as much money as possible from the land. Contract farming works well in Britain and should work well in Ireland given that both countries have a similar tax regime and both are subject to EU environmental regulations and the Single Payment scheme.

A farmer/landowner could grow crops such as grass and fodder beet and sell these to a neighbouring farmer. Again, the landowner would continue to be regarded as a ‘farmer’ for tax purposes, etc.

The neighbouring farmer’s animals could graze these crops during the winter months, thus freeing up his milking platform.

Equity partnerships work well in NZ and the US and could also work well in Ireland. This could see a dairy farmer, grain farmer, beef farmer, and new entrant or farm manager coming together to form a farming company or partnership.

Each partner would contribute their respective assets, skills and expertise. For example, the dairy farmer could look after the milking herd, the grain farmer could provide feed, the beef farmer could look after replacement stock and the new entrant could assist in the day to day farming activities.

While share farming and milking models work well in New Zealand, the use of the share farming model has been phased out of Britain as its operation is deemed to be overly complex.

A report of the Dairy Development Centre for Wales states that in Britain the Single Farm Payment and Environmental Scheme payments add complexity. It suggests the division of income would need to be closer to 70:30 in favour of the share milker in Britain to cover higher costs compared with the NZ 50:50 share milker arrangements. Accordingly, it would be difficult to convince a farmer landowner to enter such an arrangement where his return may be less than that which he would receive from leasing his land.

There is very little (if any) change required from a legal and tax perspective to implement various Collab Farming Arrangements in Ireland and I am involved in putting together some of these arrangements at present.

There are a number of Collab Farming Arrangements already operating in Ireland such as the Milk Production Partnership model, contract heifer rearing and cow leasing. However, the level of Collab Farming Arrangements in Ireland is low. This can be attributed to a number of factors including:

CAP reform and uncertainty about Single Farm Payment entitlements.

Milk Production Partnerships being over regulated, due to a large extent to adherence to milk quota policy.

Education among farmers and professionals, where there is a lack of standardised ‘templates’ and examples of these systems working in practice.

Younger farmers being unaware and/or uninformed about landowners, intentions, concerns and issues relating to land ownership and transfer.

However, given the imminent changes in milk quota and the Single Payment scheme, these issues can be addressed by farmers and policy makers. It is ultimately up to farmers to put these arrangements into practice on the ground.

Specifically, the younger generation farmers need to put themselves into the shoes of the older generation landowners and demonstrate to them that they can make more money and enjoy a better quality of life by getting these younger people involved.

Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, Aisling Meehan, Agricultural Solicitors, does not accept responsibility for errors or omissions howsoever arising. Email ameehan@farmersjournal.ie