Sharing the wealth through succession requires a long conversation

Share-farming, once a pivotal part of the dairy industry, is back on the negotiating table thanks to good prices and a positive long-term outlook.

With a shortfall of liquid milk in Queensland now approaching 200 million litres, and rising transport costs associated with trucking supply from Victoria, northern NSW dairy producers are once again in a lucrative position - for the first time since deregulation.

But the long, hard slog to get to this point has absorbed Norco producer Ken Bryant's entire working career. It proved a challenge that was witnessed by his own children, who have no interest in doing the same.

At the age of 60 Mr Bryant plans on stepping back and fortunately his milking assistant, Jai Wooldridge, is interested in moving forward.

Aged 33, Mr Wooldridge first came to the Bryant family farm at Bexhill in 2008 as a work experience school student.

His parents owned a small beef enterprise at Eltham and his dad was the local milko. A young Jai helped with the rounds and got to experience the life of a dairyman from behind the gate.

When Mr Bryant's assistant moved-on, a young Mr Wooldridge leapt at the opportunity.

"I'd always wanted to run a dairy farm," he says. "I just thought it would never happen."

Now he has entered into a formal share-farming agreement, beginning with the purchase of cows - about 10 per cent of the herd so far - with the intention of owning all of them within a decade. At that point he will consider leasing the farm's assets.

As it stands Mr Wooldridge has a share in the reward, along with the risk of lower production due to a wet and muddy summer.

The sudden collapse in demand for Wagyu/Friesan bobby calves is another headache to do with cash-flow and the logistics of feeding more head.

"We may make a loss in some months but there is still cashflow," says Mr Bryant.

Bringing such a complex deal together requires outside help from a host of professional service providers that include consultants, accountants and lawyers.

Smooth transition from one generation of farming to the next requires specialist support, argues Victorian dairy consultant Phil Shannon.

"There is no generic process," he says. "And with dysfunctional families it is impossible. Fortunately, most are functional."

Mr Shannon says the premise of succession should take as its motto: "Inheritance is a gift, not a right".

"If you want to succeed and build money you've got to do the hard yards," he says.

To make the transition to the next generation he advises that farmers start the process sooner, rather than later.

"Those who start the discussion early are more prepared to step away. Those who don't, can face the risk of depression and a battle of self-worth. They haven't planned how to fill their day when they stop farming."

As for up and coming dairy farmers Mr Shannon remains upbeat.

"The new generation should be excited," says Mr Shannon. "There is money to be made."

"Land values at the moment don't make sense based on feed production and yet they keep going up. Plant and equipment are necessary evils, unless you use that equipment as a key plank in making money - through contracting.

"Stock, on the other hand, have the ability to keep making new stock.

"Smart share farmers may not be able to invest in land but if they are careful with their money and invest smartly they will come out on top.

"Invest in assets that work. Cows' natural ability to increase is real wealth.

"A good share arrangement should be a win-win for all parties but the original farmer has to train themselves let go."

Mr Shannon noted the definition of "share" farming involved not only splitting income and costs but also the potential for risk. Documentation of investments and clear communication about contributions must be made from the start

"Do the share arrangement properly," he advises. "Don't do it yourself."