J o h n S e x t o n i s t h e s h a re farmer in the 100-cow sharefarming arrangement set up by Te a g a s c a n d S h i n a g h Estates in Bandon, Co Cork. After years of being an employee on dairy farms, John now owns his own cows. He is 18 months into the share- farming arrangement on the 34-hectare farm at Gurteen, near Bandon, which is owned by Shinagh Estates Ltd, which is in turn a company owned by the four West Cork dairy co-ops.
In 2015, Shinagh Estates invested € 250,000 to convert what was then an out- farm into a 100-cow dairy unit. John explains the project in an article in the current edition of Today’s Farm, the bi-monthly magazine produced by Teagasc and the Agricultural Trust.
“The aim was to demonstrate how a share- farming model could provide a good income for the farm’s owners but also enable a person with some capital to start a dairy farming business,” says John, in the article compiled by Paidi Kelly of Teagasc Moo- repark, and John McNamara, Teagasc adviser, Clonakilty. “The f arm shouldn’t be confused with either the agricultural college in Tipperary or the nearby Shinagh Dairy Farm, which was set up by Shinagh Estates and Teagasc in 2011, to show how leasing land can facilitate profitable expansion. The Shinagh Dairy Farm is a great success, but it required very substantial startup capital and other models, like the one at Gurteen, are needed, to help people make a start in dairying.
After a lengthy selection process, which took into account his education, energy, enthusiasm and experience, John Sexton was selected for the share-farming model. Share- f arming ar rangements can last any period of time, but typically contracts are signed for a minimum of three years.
In this case, the contract is seven years long, which was the timeframe John required to secure the debt on his 93 cows, which he provided for the arrangement, as well as being responsible for the ongoing farm management. “In theory, I could move on before the end of the agreement, in which case I must g i ve a t l e a s t s i x m o n t h s ’ notice,” says John.
His home place is a fragmented 28- hectare farm at Donoughmore, Co Cork, where he has 36 heifer calves f ro m 2 0 1 7 , a n d 3 0 i n - c a l f heifers born in the spring of 2016.
This amounts to € 52,000 worth of young stock (depending on market values) to go with the equity he has in the herd at Gurteen.
“The aim is to build equity a n d p o t e n t i a l l y m o ve t o another opportunity at the end of the cur rent agreement,” says John.
His departure would generate an opportunity for someone else.
The principle of share- farming is that the landowner provides the land and infrastructure ( milking parlour, wintering facilities, roadways, etc) for dairying, and the share farmer will provide some or all of the livestock, all the labour and management Level 6 Certificate in Dairy Herd Management, Clonakilty (two years)
Farm Assistant with William Kingston, Skibbereen, 220 cows (six months)
Farm Assistant with Alastair and Sharon Rayne, New Zealand, 700 cows (one year)
Herd Manager for Grasslands, New Zealand, 800 cows (one year)
Farm Manager for Ed Dale, England, 450 cows (three years)
“I always chose to work for excellent farmers and in different countries to improve my farming and business skills,” says John. of the farm. Machinery can be provided by either party. Each party gets a percentage of the milk cheque.
In this case, the split is 60:40 to John.
Stock sales are his, as he owns the cows, and all of the Basic Payment goes to Shinagh Estates.
Shinagh Estates cover costs relating to their assets, such as roadway repairs, while John covers costs relating to his assets, such as animal health costs.
Costs associated with producing milk from the farm, such as feed and fertiliser costs, are split in the same ratio as the milk cheque. All of these splits are described in the legally binding share-farming agreement, templates of which are available on the Teagasc website. Teagasc developed this tem- plate specifically for dairy share-farming in Ireland. “It is vital that both parties complete a business plan and seek the advice of a Teagasc advisor, solicitor and tax accountant during the formation of the ar rangement,” says Tom Curran of Teagasc.
In some share-farming arrangements, income and costs are split at source, such as for milk sales, the milk processor will issue a milk statement to both the share farmer and farm owner with their percentage of the milk for that month.
The financial expenses are monitored using a specially modified version of the Teagasc cost control planner programme.
For inputs, the supplier may invoice each party for their share, for example, if ordering six tonnes of fertiliser, three tonnes will be invoiced to each party. Alternatively, income and expenses can be split at farm level. For example, the milk cheque is paid to the farm owner, and they then pass this on to the share farmer, recording the transaction with a short invoice and receipt. Or the fertiliser is charged to one account and, at the end of the month, the farm owner and share farmer meet up, to keep accounts up to date. This is how the Gurteen share farming is operated, with Shinagh Estates being the initial point of contact for suppliers.
“On top of the legal agreement between the two parties, there are other principles of how share farming works, which need to be adhered to for a good working relationship,” says John McNamara, Teagasc adviser, Clonakilty. These principles are: Respect for John to look after the farm as if it was his own, and respect for Shinagh
John Sexton is the share farmer in the 100-cow share-farming rrangement set up by Teagasc and Shinagh Estates in Bandon, Co Cork. How it works will be described at the Share Farming Open Day next Wednesday at Gurteen, Bandon, Co Cork.