Paul and Lisa Mumford were thinking about their future and how to make changes so they could continue living on their farm, but step back from day-to-day dairy work.
Their employee, Aaron Thomas, was looking for a new challenge in the dairy industry, but wanted to stay involved in the Won Wron farm.
“We considered a few options,” Paul said.
“Do nothing. That wasn’t an option.
“Bring in a sharefarmer. That was a possibility.
“Employing a contract manager was another possibility.”
“In all of this, we knew we had to find out what Aaron’s plans were for his future,” Lisa said.
Some frank conversations facilitated by farm consultant, Matt Harms, have led to the trio developing a new structure for running the farm.
It came into effect on July 1 this year.
Aaron’s role has changed from farm employee to contract manager. The process was facilitated by good record keeping on the part of Paul and Lisa, a clearly articulated goal from Aaron, and the assistance of farm management consultant Matt Harms.
“Data is king,” Paul said.
“We use the Farm Monitoring Program to establish benchmarks and monitor historical data.
“That’s how we’ve worked out the agreement between Aaron and ourselves.
“The historical data led our conversations and resulted in this arrangement.”
Matt said the development process took three months from initial idea inception to contract signing.
“It was quite a quick transition to the new structure, because there was so much back story [record keeping], the relationship between Paul, Lisa and Aaron was long standing, and Paul, Lisa and I knew the business quite well,” Matt said.
Aaron has worked for 16 years for Paul and Lisa.
Facilitation over the three months involved two face-to-face meetings, and a couple of phone conversations between Matt and each other person.
“Paul and Lisa knew what they wanted to do,” Matt said.
Aaron did too.
“It made it seem a simple process, because Paul and Lisa’s business was very familiar to me.
“It could easily be double that time and amount of work in different circumstances.”
Matt developed contracts that prescript the roles and responsibilities of everyone going forward, what the involvement of each party is in the business, and structures around that.
“We were able to build into the new system, the strengths and weaknesses of everyone,” he said.
“Structure is very important. There’s no point someone thinking they have a level of responsibility in management that they don’t have.
“That would clearly be a mismatch of each parties expectations.”
There are quarterly reviews built into the business model and the contract will be formally reviewed annually.
Paul and Lisa made a decision that means they are able to step back from milking and organising the day-to-day workforce, while still being the owners and ultimately responsible for inputs and outputs.
As contract manager, Aaron is responsible for hiring, managing and paying staff and organising workflow on a daily basis.
In this role, he’s paid a monthly fee, out of which he pays staff wages.
“We all worked out the fee on a production basis,” Paul said.
“We calculated it based on the historical production data.”
Paul and Lisa decided to manage that output as a monthly payment to Aaron, which provides him with financial stability, paid from the milk cheque.
“Then it’s an easy transaction for profit and loss,” Paul said.
“It’s deducted from the milk cheque every month and paid to Aaron.”
Paul and Lisa wear the risk of any financial fluctuations in the business.
In deciding the contract manager’s financial recompense, Matt spoke to both parties separately.
The resulting annual figure that each party suggested differed by seven cents.
It was seven cents Paul and Lisa were happy to sign over to Aaron.
Know the numbers
The farm is a gross of 445 dryland hectares, at Won Wron, on a mix of steep and flat country. Paul and Lisa own 235ha and lease the remainder.
The lease blocks enable them to harvest fodder.
“Pasture growth averages 7.5 tonnes of dry matter per hectare,” Paul said.
“We harvest to produce enough silage and hay to feed 1tonne/cow per annum.
“Over the last three years we’ve built up a reserve of one year’s silage and hay.”
The first cut of silage is pit-stored, and any ongoing excess is made into round bales.
Contractors are employed to harvest fodder.
The self-replacing milking herd is 450 registered Jersey cows, under the Gelbeado Park prefix.
“Historically it’s been 400 head, producing 180,000 kg of milk solids,” Paul said.
“But we decided to increase milking numbers this year.
“We’ve always chosen to understock, but the numbers have always indicated 450 is our optimum milking number.”
Between 2016 to 2018, the Mumford’s Won Wron farm was a Focus Farm, and Paul credits that participation as a key factor in the growth of their business.
“Being a focus farm was the best thing for our business,” he said.
“We were a Focus Farm when we and the district were deep in drought. We were in financial distress.
“We had to lay everything on the table, for others to peruse and comment about.”
The couple owned two dairy farms at the time. Ultimately, being a Focus Farm caused them to reduce their holdings to one farm.
“We were trying to keep both farms afloat, to the detriment of this one,” Lisa said.
“Being a Focus Farm taught me to get your farming system right for the farm you own,” Paul said.
“This farm was subsidising the other farm. Labour was also an issue.”
The Won Wron farm is spring calving, and was being used to winter-graze the other herd when the second farm got too wet. That wasn’t helping with fodder management either.
A 50-stand rotary dairy plant was installed in December 2002, and renovated 18 months ago as part of Paul’s intention to step back from milking.
All cows wear collars to manage feeding, health and fertility.
The dairy includes auto-drafting and automatic cup removers.
“It’s now a one-person dairy,” he said.
“Before the renovations, we always needed to be two labour units in the dairy.”
Although the milking herd is entirely registered stud cows, Paul principally breeds for production.
“This season we produced 2.2 million litres of milk.”
He will continue to focus on breeding the best Jersey genetics.
The herd is joined in a nine-week period using artificial insemination.
An empty cow will be carried through for one joining period, so long as she maintains her productivity.
Opportunity within harmony
While the historical production numbers indicate a 2.4 labour units, Paul and Lisa have always employed above this number.
As well as themselves, they employed three equivalent full-time labour units including Aaron.
Aaron has been with them for 16 years, beginning as a farm labourer, then progressing in his career and participating in dairy and farming courses.
“The numbers say we should employ 2.4 labour units, but we have a group of employees who work well together,” Paul said.
“So we’re prepared to pay to keep them.”
As well as the additional EFT labour, the couple pay above-award rates and offer flexible workplace conditions.
They also ensure an atmosphere at team meetings where everyone can contribute.
Roles and responsibilities are allocated across the team.
“We identify who has an aptitude for certain tasks and responsibilities,” Paul said.
“Some people like to feed out, some like to milk, others are interested in animal health.”
Under the new arrangement, where Aaron is employed as a contract manager, he takes over the financial responsibility and management of labour.
Paul and Lisa, as owners, are financially responsible for all other inputs to the farm and managing the farm.
“The new system is going to challenge us, but we can now choose what jobs we want to do on the farm,” Paul said.
“We also have opportunities to do other things outside of farming.
“And the new structure gives Aaron the opportunity to achieve more.”