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Our Sharemilking System Minimize

Scott came to work for Forgey’s River-View Farm right out of high school in 1990.  He had very little farming background although his grandfather did farm.  We hired him because we needed someone to haul manure and mix TMR in our confinement dairy.  His brother-in-law was my herdsman at the time, and recommended him for the job.  We laugh now as we look back, because I didn’t really feel he would last, as he couldn’t even back the TMR mixer out of the feed room!  We began experimenting with MIG in the spring of 1991, and turned the cows out on pasture in the spring of 1992.  One of the things, which quickly followed that change, was the need for less labor.  Scott’s job was on the line but a decision by my herdsman to seek employment outside farming kept him on as milker trainee.  He was soon milking the afternoon shift and began handling some of the rotation of the paddocks. Later when he and Darla got married they moved into the herdsman house on the farm.  I did bring in additional help for a period of time but finally realized that there was potential for Scott and I to do all the work.  The only change that needed to happen was the transition from him looking at the farm as a job, to looking at the farm as his future.


As we discussed his future he related that he would like to have ownership in something so that he could be building equity. I wanted that to be individual ownership and not a total partnership.  My reasoning was that in a partnership if there was dissatisfaction between partners, splitting up the partnership could be a challenge.  With individual ownership taking ones’ personal items and moving on could be relatively easy. 


Scott & Darla were at first fearful of being able to generate enough income to pay for their new assets.  We decided on Scott purchasing heifers and I would give him a guarantee lease that would allow him the assurance that the cows would generate enough income to get them paid for.  I, on the other hand, wanted him to learn the costs of ownership and the challenges it involves.


Since we had not brought any animals into our herd in the last twenty years, and since we had been selecting the herd for seasonal production for about three years at the time, I agreed to sell him thirty heifers in January of 1996 from my group of upcoming springers. He had his pick of the entire group and got a three-year loan from the local bank.  With the guarantee lease he didn’t have to have a co-signer on the note, although the lender probably didn’t know the risk of a seasonal herd.  The flip side of the lease was that Scott had to pay the costs of raising his replacements.  Those costs started three days after a calf was born and continued until they were sold or came into the milking string.  He continues to maintain the identity of his animals separate from mine. I believe the lease was a good way to teach the ups and downs of ownership and Scott was able to pay off the three-year loan in two years.


In the fall of 1997 we began discussing our sharemilking plans. I had been farming since 1961.  Helen and I had struggled with excessive debt in the late 1980’s and now we could see light at the end of the tunnel.  I had read extensively about the New Zealand sharemilker system, and felt it had a lot of potential in our working relationship with Scott & Darla.  Darla was working off the farm and had no real involvement in the operation. I wanted to see if Scott had the stamina to operate the farm and I wanted to do it while I still had the ability to handle most of the work if he decided it wasn’t going to work out. 


I agreed to remodel the milking facilities so that one person could milk about 80 cows in an hour.  Our agreement was that Scott would take over the management of the entire herd.  Scott was to provide all the labor for management and milking of the entire herd.  He was to receive 24% of the milk sales from the farm and I was to receive 76%.  Any sale of livestock is based on individual ownership.  At that time he owned about 20% of the animals in the total herd.  In exchange for Scott’s management and labor I provide all the veterinary services and medicine, semen, forage feed, soil fertility, as well as all equipment, fuel and repairs to operate the farm. This included those costs for his animals as well as mine. On the flip side he provides all the electricity for the milking facility, milking supplies; including soap, acid, teat dip, and rubber ware.  He also split the cost 50/50 of all grain, minerals, and salt for the entire herd and milk replacer for all calves.  The idea behind all this was to create a feeling of conservative cost controls on Scott’s part, while providing the adequate financial needs to assure that nothing is shorted that would reduce returns.  We provide a residence for Scott & Darla but they pay their own utilities.


Scott and Darla decided that she would stay home to provide the extra labor that was needed for herd management.  I feel that this was a good decision since she has become deeply involved in managing the herd.  It has also allowed them free time between milking and in the winter when things are slower.  They have also decided to start a family and now have a daughter Allison, who was three years old in October. 


I like our sharemilking system, which allows us both to maintain our individuality while working together to benefit both of us.  Towards the end of each season we discuss our plans and goals for the next season. Should his percentage of herd ownership change we can adjust our percentages accordingly   Scott must provide the labor for milking and the last two seasons has hired a part time person to milk four evenings a week.  I’m usually available when he needs time away so I help him when he needs a morning off or someone to manage pasture for a day.  I occasionally need help with a maintenance project or at harvest and he helps me as well.


We have 270 grazable acres.  Our herd reached the limits of our land base to produce adequate pasture for all cows and replacements in 2001.  We are in a small valley with only 300 additional grazable acres joining our farm.  With our rapid expansion from within our own herd we were looking at our options. A young farmer who inherited 160 tillable acres adjoining us came to us in March of 2002 and said he was loosing money farming and was looking for a job off the farm and would lease us the land. Land leases are high in our area and to secure the lease we had to pay $100 per acre per year but were able to secure a five year lease.  I am paying the lease costs but Scott is planning to hire a full time person to assist with the expanded herd management in 2004.


A 27 acre parcel of land which also adjoins our farm came up for sale in the fall of 2002 and Scott and Darla are now land owners with a mortgage.