A Landlord With Debt
KAURI DAIRY, FROM THE DAUGHTER'S CHAIR
// THE SETUP
You grew up on the second farm and left it at eighteen. You have a career in Auckland that you are keeping. The plan your father and the accountant have drafted gives you that farm, through a new entity you will own, with a sharemilker to run it, a lease back to the family trust that will own the land, and a share of the family's debt to service. Your brother gets the home farm and will run it himself. Your father's guarantee comes off; the accountant's email says "in due course."
The bank's reply, which your father read to you on the phone with some heat, treats your entity as a new loan on its own file. It wants to stress it at a $6.50 payout, which your father says will never happen and the accountant says happened twice in the last fifteen years. It wants to meet you on the farm before calving. It has noticed that owner drawings across the business rose 65% in two years, and you know some of that was your father funding your brother's first sharemilking contract, and some of it was not.
You have not met the sharemilker; nobody has, yet. You have not seen the lease. The accountant has asked for your signature on the draft by Friday so the bank's timetable holds.
A farm, a lease, a sharemilker you did not choose, and a payout you cannot set. What do you say yes to?
NZ dairy breakeven typically sits around NZ$6.30–6.80/kgMS all-in. A landlord entity's margin lives in the gap between the sharemilking agreement, the lease, and the payout, none of which the landlord sets.