The rise of the corporate farm

Global dairy prices have fallen during the last two years, meaning lower payouts for farmers.

The value of exported dairy products fell $1.5 billion between December 2013 and March 2016, a 37 per cent drop.

Most of New Zealand’s dairy product exports are sold by Fonterra, whose forecast milk price for 2016/17 is at $4.25, well behind the $8.40 peak three years prior.

DairyNZ says for the average dairy farm to break even, the price needs to be $5.25.

Knowles says herd ownership agreements, or 50-50 sharemilking, amplifies young farmers’ ability to save enough money ‘‘to get to the next step’’.

‘‘Farmers need to recognise if we’re going to bring in new owners, we need to be fair and remember the history of how we all made it to farm ownership.’’

While Knowles believes farm ownership is still a possibility, she acknowledges the special circumstances young farmers face today.

‘‘Potentially it will wake them longer to achieve what they want to achieve,’’ she says.

As sharemilkers face fewer 50-50 agreements, rising land value, and shrinking number of dairy farms, they are growing increasingly uncertain about their own career goals.

AgFirst’s report found fewer sharemilkers intending to buy a dairy farm ‘‘due to seeing farm ownership as a goal beyond their reach’’.

However, there are ‘‘increasing instances’’ of sharemilkers content to remain in the position until retirement or a change of career.

AgFirst managing director James Allen said the divergence from the traditional progression pathway is made worse as land becomes more of an inhibitor.

‘‘The average farm size continues to increase and the sheer value of the farm is getting quite big,’’ he says.

‘‘Those larger farms are more difficult to purchase. That will continue.’’

But like others in the industry, Allen believes the opportunities in dairy farming outweigh a potential corporate take-over and there is even the the possibility of a return to the smaller type operations.

‘‘The family farm, for now, is the cornerstone for investment,’’ he says.

‘‘And I don’t see that changing in any hurry.’’