Ciaran and Sarah Tully emigrated to New Zealand 20 years ago as Ciaran was frustrated with the lack of opportunities to progress in the UK dairy industry. At that stage, he was an award-winning farm manager, but wanted to run his own business.

Today, the Tullys milk 310 cows on a 110ha farm in Ngatea on the North Island of New Zealand and have three children – Declan, Aidan and Liam.

They own 30% of this farm and the rest is owned by a group of investors who pooled their money together with the Tullys to purchase the farm in 2008.

Profits from the farm are split in proportion to the amount invested, after Ciaran and Sarah have received a management fee via a lower order share-milking contract.

Ciaran and Sarah had previously been share-milking for 10 years, which allowed them to build up a herd of 550 cows that they then sold to purchase their 30% stake in the farm.

Last week, Ciaran and Sarah took time out from a holiday visit to Ireland to talk to me about their experience of share farming.

Opportunities

The Tullys feel there are huge opportunities in Ireland, but potential share farmers would have to be excellent at being able to sell both the benefit of an opportunity and their ability to potential farm owners.

Ciaran said: “I see great energy among Irish farmers and many have experience on 200-cow and larger farms, which is a great start. The skill level of the person managing any dairy business is the biggest driver of profitability and this is what you have to first develop.

“The second thing is to sell it to a farm owner. This means becoming a top-class grass, cow, people and business manager, which takes five years plus experience working on good farms. Then the challenge is to find a farm owner to work with and to be clear on what the benefits are to both parties – it has to be a win-win.”

Ciaran recommended that farming competitions are great at both up-skilling farmers who enter and at promoting the winners, which helps them find opportunities.

The Tullys were runners-up in the New Zealand annual Sharemilker of the Year award and said this was a huge boost to their career.

Ciaran suggested that setting up a similar competition in Ireland would be a huge boost to helping people progress here.

Sarah’s advice was to be absolutely clear on what you want to achieve and why, as this creates the motivation and drive to make these happen.

This clarity comes from sitting down and setting specific goals.

Ciaran and Sarah sit down monthly to review their business progress and have an annual meeting away from the farm to review their long-term goals.

They also make a point of discussing their goals with people they respect, such as farming friends, to get their opinions and advice.

Sarah advised that it’s not easy to build up a farming business without land; there will be setbacks, and you must have clear goals and understand what you want to get over these challenges.

Creating wealth without owning your own land

Ciaran and Sarah created huge wealth in dairy farming before they owned any land by saving any money earned carefully and eventually being able to buy cows and go share-milking.

After they first arrived in New Zealand, Ciaran worked on a 330-cow dairy farm for 18 months to earn a wage and improve his farming skills.

Ciaran then went contract milking where instead of a salary, he received a set fee per kilogramme of milk solids produced on the farm.

This meant Ciaran was rewarded for any extra production of the cows (while sticking to a planned meal feeding plan) and allowed him to earn more than a farm manager.

However, Ciaran and Sarah found that year very difficult and subsequently worked off-farm for a year. They were still adamant dairy farming was what they wanted to do and the following year Ciaran again got a farm manager’s job.

After five years of salary and contract milking and with extra savings from Sarah’s full-time nursing job, they finally had a significant enough pot of money to make a move.

Ciaran and Sarah could afford to take out a loan and buy their own herd of 550 cows and go share-milking.

The Tullys provided the cows and labour to a farm and the farm owner provided all the facilities to milk the cows – land, parlour, roadways, etc.

They split the milk cheque and main variable costs such as feed and fertiliser 50/50. The Tullys bought their cows during a lull in the market and two years later, the price of cows dramatically increased, which created huge extra wealth for them.

Combined with good fertility (low empty rates), this allowed Ciaran and Sarah to keep growing their stock numbers – increasing their net worth all the time.

In the two years before they bought their stake in a farm, they made over 20% of a return on their farming investment (all livestock) due to a good milk price and a high-performing herd.

This means if they had €200,000 for example invested in stock, they were making €40,000 back every year – a return you very rarely see in farming, as typically someone milking cows has to invest huge money in facilities, etc.

Now that the Tullys own land, they have invested in depreciating assets such as buildings and are getting a much poorer return on their money – typically less than 5%. So for every €200,000 invested, they are getting less than €10,000 back.

Looking back, the Tullys told me they would have liked to have kept on their herd-owning share-milking contract, as it is an excellent way of creating wealth, but the people they bought the farm with wanted them 100% involved in their farm.

They like the security of now owning part of a farm, but encourage others to really stress-test land ownership if it’s a goal and carefully assess return and what it delivers.

Ciaran Tully

“Our first year contract- milking was a very challenging year; we didn’t get the production we hoped for and made very little money. I took a year out from farming after that and worked as a mechanic. Progression is not always straightforward or easy and you have to cope with big challenges.”

Sarah Tully

“Sometimes you have to make sacrifices. You might like to live and farm in one area, but moving away and farming somewhere else where there are better opportunities may be the essential step in allowing you to live where you want in the future.”

Ciaran Tully

“We use a decision-making matrix when evaluating an opportunity. Establish what’s important to you from personal, financial, family and other viewpoints and evaluate every opportunity against this criteria.”