How does 50:50 sharemilking work?

The sharemilker receives half the milk income and in exchange owns the herd and carries a defined set of costs, typically labour, animal health, breeding, shed expenses and often part of the electricity and dairy costs. The farm owner provides the land, the buildings and the plant and carries the costs attached to those, including rates, insurance on structures, repairs and maintenance and fertiliser. The split of income is the headline, but the split of costs is what determines whether the deal works.

What is variable order sharemilking?

Any agreement at a share other than half, most often somewhere in the twenties or low thirties, where the sharemilker does not own the herd. A lower share comes with a lighter set of costs to carry, so the percentage on its own says very little about whether one agreement is better than another. Two agreements at the same percentage can be quite different businesses depending on where the cost lines fall.

Why look at both sides of the agreement?

Because the same milk income is being divided, and a change that improves one side comes out of the other unless production or costs change. Seeing both columns from one set of numbers makes it obvious what a shift in the share percentage or in who pays for what is actually worth, which is a more useful basis for a conversation than each party modelling their own half separately.

Sharemilking Income Calculator NZ

This works out what a sharemilking agreement pays each side, from one set of numbers, with both columns shown together. The share percentage is the headline of any agreement and it is not the thing that decides whether the deal works. What decides that is where the cost lines fall. A fifty percent share where the sharemilker carries labour, animal health, breeding and shed costs is a very different business from a fifty percent share drawn differently, and two variable order agreements at the same percentage can be nothing like each other once you see who is paying for what. So this page takes the milk income, splits it at whatever share you set, and then lets you put each cost on the side that actually carries it. Showing both parties at once is deliberate. The same milk income is being divided, so anything that improves one side comes out of the other unless production or costs move, and having the two columns in front of you makes the size of a proposed change obvious in a way that each side modelling their own half separately never does. Nothing here is a standard agreement, because there is no standard agreement: use your own contract.

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Milk solids produced

kgMS

Milk price

/kgMS

Sharemilker share

Sharemilker stock and other income

Costs, put on the side that carries them

Sharemilker: labour

Sharemilker: animal health and breeding

Sharemilker: shed, feed and other

Owner: rates, insurance, repairs, fertiliser

Owner: interest and rent

$166,375.00

sharemilker income, after the costs that side carries

Owner income$12,375.00

Milk income in total$804,750.00

Sharemilker per kgMS$1.91

Owner per kgMS$0.14

Before tax and drawings on either side. The cost lines here are examples of where they commonly fall, not a standard agreement, because there is not one.

Line	Sharemilker	Owner
Share of milk income	$402,375	$402,375
Stock and other income	$42,000	$0
Costs carried	-$278,000	-$390,000
Left over	$166,375	$12,375

How it works

Milk income is the milk solids multiplied by the price. The sharemilker receives the share percentage of that, and the owner receives the rest. Each side then has its own costs deducted, and any stock or other income the sharemilker earns is added on that side. What is left is what each party has before tax and drawings. The per kilogram figures divide each side by the same production, which puts both in the units the industry talks in and makes the split legible at a glance.

Why the percentage tells you so little

Because it only describes the income half of the agreement. Move labour from one side to the other and a fifty percent agreement changes value by more than several percentage points of share would. That is why comparing two offers by their headline share is close to meaningless, and why the cost lines on this page are separate inputs rather than being bundled into a preset. Set them the way your own contract sets them, then change the share and see what it is actually worth.

Worked example

A farm producing 87,000 kilograms of milk solids at $9.25 generates $804,750 of milk income. On a fifty percent share the sharemilker receives $402,375 and so does the owner. The sharemilker adds $42,000 of stock and other income and carries $278,000 of labour, animal health, breeding and shed costs, leaving $166,375. The owner carries $390,000 of rates, insurance, repairs, fertiliser, interest and rent, leaving $12,375. Both figures are before tax and drawings. Moving $30,000 of costs from one column to the other shifts each side by that full amount, which is worth more than moving the share by three percentage points.

Related calculators

Contract Milking Rate: the other way to run someone else's farm.
Dairy Payout Income: the income being split.
Break Even Milk Price: what either side needs to clear.
Milk Solids kgMS: getting to the production figure.

Data sources: no standard sharemilking agreement or cost split is supplied, because there is no standard one: the share percentage and every cost line are set by the contract between the parties. The milk price default comes from the same maintained Fonterra constant the other dairy pages use.