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17 SEPTEMBER 1999 ------------------------- JOINT VENTURES MAY HAVE ROLE IN DAIRYING ONE man, one tractor and one feeder could easily feed several dairy herds a day in some areas,

drastically cutting labour and machinery costs. But although joint ventures have proved popular in the arable sector, they have not been widely embraced by milk producers, says Tom Chapman,

farm business adviser with accountants Grant Thornton. "Joint ventures are quite radical for the dairy industry. But, more and more, they are going to prove to be one of the solutions

to keeping costs down." Such schemes are very flexible and can be adapted to suit circumstances, adds Mr Chapman. "Businesses who wish to remain independent but are looking to

drive down costs should consider sharing the use and running costs of one machine with a neighbour – for example, a feeder wagon or a muck spreader. From here it is an easy step to move on

to sharing labour and other items of machinery." Others who could join the 14,000 farmers who quit the industry last year should consider more radical action and enter into a full

contract farming agreement, whereby one farmer does the work for the second, says Mr Chapman. "The landlord retains his trading status and benefits from economies of scale, a more

powerful position in the market place and often improved management skills being used in the business." The contractor benefits by expanding his business without a large capital

investment. He should also be given incentives to maximise profitability, says Mr Chapman. "It can bring rewards to both parties." &#42 MACHINERY SHARE SAVINGS _Two farms

sharing tractor, feeder wagon, muck spreader, fertiliser spreader_ _ Farm Farm _ _ A B_ _Gross margin a cow 690 700_ _Herd size 122 130_ _Dairy gross margin 84,180 91,000_ _Sundry receipts

5,000 4,800_ _Gross margin 89,180 95,800_ _Present costs _ _Paid labour 18,000 18,600_ _Power & mach 17,000 17,100_ _Sundries 13,000 13,200_ _Property charges 15,000 15,000_ _Interest

14,000 14,500_ _Depreciation 14,000 14,300_ _Tot overheads 91,000 92,700_ _Net profit -1,820 3,100_ _Costs after joint venture_ _Paid labour 12,000 12,500_ _Power & mach 7,000 7,100_

_Sundries 13,000 13,200_ _Property charges 15,000 15,000_ _Interest 14,000 14,500_ _Depreciation 7,000 7,000_ _Overhead costs 68,000 69,300_ _Shared costs* 13,071 13,929_ _Tot overheads

81,071 83,229_ _Net profit 8,109 12,571_ _*Includes £10,000 paid labour, £10,000 power & machinery and £7,000 depreciation._