How to build a good dairy collaboration
© Adobe Stock Dairy farmers looking for ways to grow their business need to do their homework if they are to avoid getting into bed with the wrong collaborator.
Liam Hennessy, dairy farmer and financial specialist with Irish farm development co-operative the FDC Group, helps farmers explore the possibility of working together.
He said it is important for farmers to prepare for a collaboration opportunity to have the best chance of success.
See also: 4 successful livestock collaborations to learn from
Top tips for collaboration
- When you act in good faith, people want to act in good faith with you
- Know when to be flexible – you can move like the currents in terms of fashion but be solid as a rock when it comes to principles, and you will find the right collaboration
- Appreciate the ecosystem you must navigate through and look for people who are going to help you do that.
Source: Liam Hennessy
“First, understand your own priorities, objectives and non-negotiables,” says Liam.
A farmer’s next step is to identify their own strengths and weaknesses and those of their business. They also need to develop a track record and reputation.
“It is extremely important how you conduct yourself in business. You can’t buy your reputation,” he said.
Stakeholders
Farmers should also consider the ecosystem they are operating in.
This forms the scaffolding around any joint venture and includes banking and financing, physical agricultural factors, and compliance and regulations.
They also need to consider their relationship with all stakeholders involved.
“My experience is that the most effective collaborators are the ones who bring people on the journey,” said Liam.
“I’m always concerned about the maverick who wants to operate outside the rules, because we all love a maverick, but they are an unknown quantity.”
5 scenarios to avoid
Liam alerts dairy farmers to five situations where farmers working together are likely to fail:
1. Financial pressure
Here, someone is in a cycle of debt that cannot be sustained with their business, and they have heard that a collaboration might help them out.
2. The story keeps changing
In this scenario, a potential partner keeps giving different reasons for wanting to join forces.
One day, they say they want to get out of cows because they have no successor.
The next day, maybe they do, but another day, there is something else.
3. Expectation that contracts are going to regulate behaviour
The signs are not good if one side insists on putting clauses in the contract to try and stop the other party behaving in a certain way.
“Is a piece of paper going to stop them doing what they want to do? [This behaviour] undermines the [trust in] collaboration,” said Liam.
4. Passive or obstructive “trusted” advisers
Negative voices can also undermine the collaborative process.
Stakeholders (from family members to the vet, or consultant) are a huge part of this type of arrangement and need to be on-side.
5. Dubious reputation
It is very difficult to get around a bad reputation, said Liam.
He advised anyone thinking of collaboration to ask direct questions and consult a trusted person who knows the third party in the same area.
“A good person won’t say something bad about someone, but neither will they let you enter into a collaboration they have a reservation about,” he explained.
Negotiation
Potential collaborators who show consideration are a “huge green flag” for Liam.
This means checking there is enough financial provision for the other party.
He also said success is more likely when both parties are prepared to negotiate among themselves.
“If you’re looking for me to come in and negotiate, well, I’m going to go away eventually and then you’re going to have to do it, and you’ll have no track record between you.
“So I like it when people are prepared to talk with each other,” said Liam.
He said some of the best collaborations are where the farmer is negotiating with a collaborator on behalf of a successor.
“[You also need] clarity of desired outcomes for all parties, including what they are going to do after their career in farming,” he added.
Liam Hennessy was speaking at the Positive Farmers Conference in Cork (15-16 January).