Lower Order Sharemilking in New Zealand

The objective of this paper is to describe the principal features of lower order sharemilking in New Zealand. The paper outlines the nature of sharemilking in general and lower order sharemilking in particular. The legislation underpinning lower order sharemilking and the reasons for it are described. The legislation operates through "Orders" and the paper reports the obligations of employers and sharemilkers under the most recent (2001) Order. Statistics on lower order sharemilkers are presented. A case study shows the nature of the returns to lower order sharemilking. The paper concludes with comments on the likely future of lower order sharemilking in New Zealand.Sharemilking, lower order sharemilker, Sharemilking Agreements Act, Livestock Production/Industries,

A Critique of the Use of the Balanced Scorecard in Multi-Enterprise Family Farm Businesses

Business strategy is very important to small and medium family businesses as many are both fragile and vulnerable; strategy provides a solid foundation for survival. Various studies have identified that businesses that engage in strategic management outperform those that do not. Despite this knowledge the uptake of many aspects of strategic management by farm businesses has been slow. Although the development of business plans is now common there is often a disconnect between monitoring and strategy. The Balanced Scorecard (BSC) was applied to case study farms during both the planning process and as they implemented and controlled their strategic choices to determine areas of difference that restrict or enhance it as a management tool for both family and farming businesses. The BSC was immediately applicable in the strategic management process for those businesses with current business plans. It could be used to test the degree of balance between the goals already identified in their plans. It was able to be used to critique the control measures they had in place and to determine how well they could be used to derive the causal chain from the operational level to family goals. In some instances either outcome or driver measures were recognized as being missing, in others the wiring within the balanced scorecard revealed some strategic measures without linkages.Farm Management,

Lower Order Sharemilking in New Zealand

The objective of this paper is to describe the principal features of lower order sharemilking in New Zealand. The paper outlines the nature of sharemilking in general and lower order sharemilking in particular. The legislation underpinning lower order sharemilking and the reasons for it are described. The legislation operates through "Orders" and the paper reports the obligations of employers and sharemilkers under the most recent (2001) Order. Statistics on lower order sharemilkers are presented. A case study shows the nature of the returns to lower order sharemilking. The paper concludes with comments on the likely future of lower order sharemilking in New Zealand

Farm Investments: Alternative Ownership Structures that Address the Liquidity versus Profitability Conundrum

Investing in farmland is fraught with conflicting signals. Oltmans (2001) concludes that while investing in land may generally be profitable it is seldom, if ever, feasible on a cash flow basis. He argues that the non-depreciable nature of land and long-term capital gains are incompatible with the capital recovery terms sought by investors and lenders. He also notes that literature on this subject tends to focus on either the returns (profitability) or the cash flow (feasibility) but not on both simultaneously. To assist in the debate it is helpful to split the farm into two businesses that are often, but not necessarily, linked - the property business, where success is measured by changes in asset values over time and is driven by smart purchase and sale decisions, and the farming business, where success reflects effective and efficient sustainable operation of the resource base. By determining the profitability, liquidity and wealth creation for three ownership structures (land leasing, sharefarming, equity partnerships) from the perspective of both the farming entity and the passive investor (property owner or non-managing equity partner) it is possible to identify for each player the measures most relevant to their expectations from the investment and the factors which most influence them. If the assets of the property business and the farming business are owned by different parties there is no need for an aggregate measure of business performance. The challenge is to determine 'fair' returns to each player; is profit, cash flow or wealth creation criteria the basis for such a comparison? For the property business investors the opportunity cost of capital comes from the farming 'rent' and what they believe the property business will deliver over time (many expect at the very least an inflation proof investment). The opportunity cost of capital for the farming business investors must allow for depreciating assets. Historically the property business has out performed the farming business although its returns have been three times as volatile as farming returns (Nartea and Basanta(1998), Brown (1999))

Farm Investments: Alternative Ownership Structures that Address the Liquidity versus Profitability Conundrum

Investing in farmland is fraught with conflicting signals. Oltmans (2001) concludes that while investing in land may generally be profitable it is seldom, if ever, feasible on a cash flow basis. He argues that the non-depreciable nature of land and long-term capital gains are incompatible with the capital recovery terms sought by investors and lenders. He also notes that literature on this subject tends to focus on either the returns (profitability) or the cash flow (feasibility) but not on both simultaneously. To assist in the debate it is helpful to split the farm into two businesses that are often, but not necessarily, linked - the property business, where success is measured by changes in asset values over time and is driven by smart purchase and sale decisions, and the farming business, where success reflects effective and efficient sustainable operation of the resource base. By determining the profitability, liquidity and wealth creation for three ownership structures (land leasing, sharefarming, equity partnerships) from the perspective of both the farming entity and the passive investor (property owner or non-managing equity partner) it is possible to identify for each player the measures most relevant to their expectations from the investment and the factors which most influence them. If the assets of the property business and the farming business are owned by different parties there is no need for an aggregate measure of business performance. The challenge is to determine 'fair' returns to each player; is profit, cash flow or wealth creation criteria the basis for such a comparison? For the property business investors the opportunity cost of capital comes from the farming 'rent' and what they believe the property business will deliver over time (many expect at the very least an inflation proof investment). The opportunity cost of capital for the farming business investors must allow for depreciating assets. Historically the property business has out performed the farming business although its returns have been three times as volatile as farming returns (Nartea and Basanta(1998), Brown (1999)).Farm Management,

A Critique of the Use of the Balanced Scorecard in Multi-Enterprise Family Farm Businesses

Business strategy is very important to small and medium family businesses as many are both fragile and vulnerable; strategy provides a solid foundation for survival. Various studies have identified that businesses that engage in strategic management outperform those that do not. Despite this knowledge the uptake of many aspects of strategic management by farm businesses has been slow. Although the development of business plans is now common there is often a disconnect between monitoring and strategy. The Balanced Scorecard (BSC) was applied to case study farms during both the planning process and as they implemented and controlled their strategic choices to determine areas of difference that restrict or enhance it as a management tool for both family and farming businesses. The BSC was immediately applicable in the strategic management process for those businesses with current business plans. It could be used to test the degree of balance between the goals already identified in their plans. It was able to be used to critique the control measures they had in place and to determine how well they could be used to derive the causal chain from the operational level to family goals. In some instances either outcome or driver measures were recognized as being missing, in others the wiring within the balanced scorecard revealed some strategic measures without linkages