The Sharemilking Act of 1937
Looking back to learn lessons from the past to secure the future of our industry
Are we repeating the mistakes of 100 years ago in how we treat our Contract Milkers?
I’m not the first New Zealander involved in the dairy industry who has gone overseas and been told by international dairy farmers that our sharefarming model is the envy of the global industry. And I truly mean that - and it always blows me away that no one else, despite the envy, has managed to make it work quite as successfully as us.
The History
Some plucky farmers back in the 1930s within the New Zealand Dairy Farmers’ Union and The New Zealand Farmers’ Union worked together, alongside the New Zealand Government, to set out minimum standards for Sharemilkers and fair terms for both sides. Back then, like now for contract milkers, sharemilkers were easy targets to be exploited. They had uncertainty on term length, there was no requirement for a written agreement, they could be evicted without just cause and there was no certainty on the number of cows, the farm area, the equipment they were using or the house they would be living in. By stabilising this, the Sharemilking Act had a lasting impact on the New Zealand Dairy industry, enabling growth of the sharemilking model.
Abruptly due to a sharp down turn in milk price 10 years ago, we saw Sharemilking nearly halve from 13% of all farm management arrangements to 7% in just one season, to be replaced with the completely unregulated Contract Milking. Today its estimated they sit at about 14.5% of all management arrangements, very close behind Herd Owning Sharemilking at 21.3% (Dairy Statistics 2023-24, with variable order sharemilking sitting around 7%.
Why I am reflecting on this Act today?
Because today’s contract milkers are facing the same issues as the Sharemilkers of the early 1930s – highly unregulated arrangements that sit outside any employment laws and rely on the contract milker having deep enough pockets to enter litigation. We have lost sight of the benefits that Sharemilking had for our industry over the last 90 years and seem hell bent on pulling that ladder up behind us in a truly capitalist fashion. And while it wasn’t always perfect, it dealt with the significant succession issue faced by dairy farmers worldwide, enabling the next generation to build up enough capital to buy farms with the aging generation supporting the younger one.
But isn’t Contract Milking safer than Sharemilking?
Now – I can hear you all tutting “but contract milking gave those sharefarmers more certainty from the fluctuating milk price” – and you aren’t completely wrong, but you aren’t completely correct either. Fluctuating milk price also has indirect implications including reducing spending on feed (directly impacting milk income for a contract milker), reduced spending on capital fertiliser and urea applications (impacting grass grown, directly impacting milk income for a contract milker) and infrastructure (including housing, the cowshed, laneways and fencing which all need to be repaired and maintained in a way that they still perform their basic functions, often at a cost to the contract milker). Contract milkers are not actually immune to milk price fluctuations
Where to from here?
We urgently need to work on promoting educational pathways for contract milkers to understand how to protect themselves better and we need to do better as farm owners in how we look at the contract milking system (and not as a loophole in the law to exploit our up and coming). And in the very near future we need to seek changes to the Sharemilking Act to have contract milkers included and get some protections in place to preserve this very crucial piece of the New Zealand Dairy Industry for future generations. Watch this space.
