Ben Roche, Teagasc
The MPP scheme is a Department of Agriculture/Teagasc development that has been modelled on the French GAEC partnership scheme. There are 38,000 GAECs operating in France.
French dairy and livestock farmers have much in common with their counterparts in Ireland, namely, smaller-scale family farms.
The GAEC facilitates two or more farmers to operate their farms as one business without losing out on EU/DAFM supports.
The key issue is that each farmer in the arrangement should be treated no less favourably than a farmer farming on his own. That is what is also being attempted in Ireland.
There is a view that MPPs are over-regulated. That’s possibly the case because of the strict rules that were initially in place for MPPs, but the requirements were revamped and freed up in 2008.
Lorcan Dooley, who recently completed a Masters degree under a Walsh Fellowship on new entrant/parent MPPs, identified that farmers find the registration requirements relatively easy.
The main complaint that farmers make is that they don’t like the requirement of having to pay an annual fee for renewal of their certificates of registration.
Currently, the fundamental requirement for a MPP to exist is that:
There must to be a minimum of two eligible partners.
The MPP has to be involved in dairy farming.
The MPP has to operate as a partnership and comply with the Partnership Act.
All the land, with certain exceptions, is required to be farmed through the partnership. The farms are required to be within 100km distance of each other.
MPPs are held on a register and issued with a certificate of registration to show evidence of their existence and status.
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Regulations governing French GAECs are actually more restrictive than MPPs in Ireland; e.g. the distance between farms is much more restrictive and activities that partners can engage in outside the GAEC are very much curtailed.
The French GAEC and MPP schemes can only operate by having a registration system to uphold their integrity.
This registration means the GAECs and MPPs are properly regulated and so can qualify for grants and other supports from the EU or the government.
Learning from abroad
There have been wonderful opportunities for us in Ireland to learn about the various forms of collaborative farming that operate abroad. The wheel has only to be invented once.
All of the developments that have taken place in Ireland, partnerships, share farming, contract rearing and cow leasing, were based on research and experience from other countries such as France, Britain, Denmark, Portugal, Canada, NZ, Australia and the US.
However, it would be a mistake to blindly introduce and follow imported models without careful consideration and amendment where necessary.
So, for example, share farming as operated by the tillage sector has been tailored to suit Irish farming. Other operational models were examined and deemed unlikely to serve Irish farming well.
It is important to recognise that collaborative farming models that work well in other countries do so because they were designed to take into account local landownership patterns and other particular circumstances in those countries.
Land ownership patterns in New Zealand are entirely different to Ireland. The main differences are that farms are large (average NZ dairy herd size = 400 cows vs 60 in Ireland), with more land available for purchase. There is no capital gains tax and there is less attachment to land.
On the income side, older farmers can more readily afford to retire in New Zealand than is the case in Ireland as they have been operating larger businesses.
Land ownership patterns in England are also very different to Ireland. The landlord-tenant system still plays a prominent role and farm size is also considerably larger than in Ireland.
Contract farming in England has many problems and a more suitable share milking arrangement is being worked on by Teagasc (we will look at this in a future Shared Passion, Better Future article).
We have to be careful as introducing and promoting too many models, where each is designed essentially to bring about the same outcome, might only serve to confuse.
What are the
issues in Ireland?
Average farm size at 32.7 hectares is small. Farms tend to be fragmented. The amount of land changing hands every year through purchase/sale is only a fraction of 1%.
The market value and annual rental cost of land is very high. In Ireland, we love to own land. The average age of landowners increased from 51 to 55 years between 2000 and 2010. Milk production partnerships in Ireland are essentially equity partnerships. They are two or more farmers pooling their equity to get a better return.
In New Zealand, the concept has been developed further where up to 10 investors with a manager (who can be one of the investors) pool resources and, in many cases, borrow within the partnership. At this level, a corporate entity is formed as millions of euro can be invested within the equity partnership that can own multiple farms.
According to Adrian Van Bysterveldt, a New Zealand dairy farm specialist, in 2011, the percentage of dairy farming carried out in equity partnerships in NZ involving unrelated individuals was 6%. The percentage in arrangements where related individuals are involved is much greater.
It is interesting to note that share milking can also facilitate multiple farm ownership.
The percentage of dairy farming operating in share milking arrangements is 34.8%. There are 11,675 dairy farms in NZ with an average herd size of 393 cows owned by approximately 9,633 owners.
These corporate multiple-owned entities and also multiple share milking farms owned by individuals are about wealth creation and they are, to some extent, replacing family farming in New Zealand.
Most would agree that the desire in Ireland is to maintain family farming so we must be careful which business structures we promote in the future.
COLLABORATION
Teagasc have appointed Tom Curran as an additional person to work on the development of collaborative farming. Macra recently employed a land mobility officer to work in this area also. Teagasc and Macra have agreed to work closely in the whole area of collaborative farming.
See further details at www.teagasc.ie.
SHARING OPTIONS