Leasing a dairy farm can have benefits for both parties. It allows the lessee to progress their dairying career without borrowing heavily to buy land, and it allows a landholder to step away from active involvement on the farm while generating an income and retaining ownership of the land.
Dr Pauline Brightling, who manages The People in Dairy program for Dairy Australia, says a successful leasing relationship involves respect and trust, but is built on robust discussion and a written agreement.
"A written agreement is essential because it defines the expectations of both parties," Dr Brightling said. "A lease clearly states who will be responsible for what, particularly regarding financial issues. There are many issues that need to be discussed and clarified. It is important for both parties to talk about their concerns and how they might go about working them out," she said.
Common issues that can cause conflict if not discussed and clarified in a lease at the outset include:
- Plant and equipment maintenance versus capital replacement.
- Farm repairs and maintenance and weed control.
- Level of fertiliser applied.
- Pasture re-sowing and cropping.
- Effluent systems.
- Access by the leaser.
Some people draw on the experience of a trusted farm advisor to facilitate the discussion and come up with an arrangement that works both ways.
"The discussions involved in preparing a lease agreement gives both parties an understanding of each other's perspective, and that's a very good foundation for building the relationship," Dr Brightling said.
Once the general conditions are agreed upon, the next step is to have them incorporated into a formal lease agreement. A solicitor may be involved in this step.
The People in Dairy website has information about leasing, including a checklist for developing an agreement. For more information visit People in Dairy or telephone (03) 9620 7283.