A TRANS-Tasman connection has proved that an equity partnership in the dairy industry can work and provide rewards for all involved.
Peter and Susan Love own 5 per cent of a 600-cow Western District dairy farm.
The New Zealanders don't know the physical items that make up their portion, but that is the way they like it.
"It is spread over everything, it leaves me less exposed," Peter said.
The Loves, with children Jamie, 19, Tayla, 13, and eight-year-old Bayley, farm in an equity partnership with Bruce and Sharon Johnstone at Minhamite, north of Hawkesdale.
Their business structure was examined last week as part of the ANZAC discussion group, a group of mostly dairy farmers from west of Koroit, who meet about six times a year on-farm.
Peter and Susan are also the farm managers and as a result have two incomes.
"Five per cent of the gross income minus 5 per cent of the running costs - that's our investment and the managers' wage," Peter said. In their agreement, they can expand their share when they want or can afford too.
"I can buy in small shares and it never exposes me to be negatively geared as far as the banks are concerned," Peter said. "To me that's a great advantage."
Other advantages of the equity partnership for the Loves include job security and financial security of owning "bricks and mortar" rather than livestock or plant and equipment.
On the other side of the partnership is Bruce and Sharon Johnstone. Bruce left New Zealand seven years ago and bought 405ha and converted it into a dairy farm. A year later they bought a 150ha run-off block for young stock and pushed milking numbers to 750 head. In 2009, the Johnstones were joined by the Loves.
"The farm is cut into 100 units or shares," Bruce said. "They have to be able to buy in more when they want to or when they can."
Having worked together in New Zealand, Bruce and Peter knew each other's strengths and weaknesses.
"We understand each other. That's the big thing, I emphatically trust the guy," Peter said.
For Bruce, he didn't want a "veranda manager", someone not involved with the daily work outside the office, and he knew Peter would fit the bill.
The involvement of only two equity partners was also attractive for Peter and Susan.
"I didn't want to be in an equity partnership fighting with other shareholders to increase my holding," Peter said.
Looking ahead, Bruce and Sharon are looking at investing the money from the sale of the out-block in 2009 into another equity partnership dairy farm.
"Instead of growing bigger we'll have a look at getting another one," Bruce said.
Peter and Susan's plan was to grow their stake in the existing property and they haven't ruled out investing in Bruce and Sharon's next venture.
