MyFarm syndicate structure

A MyFarm syndicate is a farm business owned by two or more parties (typically 5 – 15 investors). The investment is usually structured as a Limited Liability Partnership with ownership issued in proportion to the sum invested. The business owns land, plant and stock and will employ a manager to run day-to-day activities. 

The objectives of typical MyFarm syndicates are to provide a secure investment (capital is protected) that grows in value over time (as a result of productivity and property improvements) and that generates regular and reliable cash returns to investors (equivalent to or greater than bank deposit returns).

STRUCTURE

Each farm business has a Limited Partnership Agreement, a Shareholder Agreement and a constitution which governs all aspects of the operation of the business and defines the relationship between the parties. At the outset MyFarm’s role is to ensure investor expectations are clearly defined in the agreements and all investors have common goals for the business, including:

• confirming the investment is medium/long-term
• ensuring sound decision making processes
• defining exit provisions

FARMLAND IS A TANGIBLE INVESTMENT

Farmland is a tangible investment which you can “stand on” and “see develop”.  Typically 65 - 70% of an investment is into farmland which, if managed well, will increase its productivity and earnings potential over time, 10 - 15% is Fonterra shares which earn a dividend and have the potential to increase in value, 12 - 15% is invested in livestock and less than 10% is tied up in working capital and plant/machinery.
 

GOVERNANCE

MyFarm Syndicates give investors more control than other more traditional forms of investment. For example, unit holders can be a Director of the General Partner which governs the business or elect Directors from the investment group.

The role of unit-holders who elect not to be Directors is to ensure the Directors are maintaining good governance of the business which includes providing MyFarm guidelines within which to manage and allowing them to deliver on their management responsibilities.  Unit holders will receive 10 day milk production graphs, monthly management reports and can attend farm field days and quarterly conference calls as well as the AGM. Directors normally meet quarterly and their role includes;

• Electing a Chairperson
• Approving the annual business plan
• Monitoring the business and management performance
• Considering compliance issues
• Addressing major matters affecting the business through recommendations to unit holders.

The syndicate Chairperson is in contact with MyFarm every 10 days in the first year and thereafter at least monthly.  He/she will;

• Chair all meetings
• Be involved in receiving recommendations from MyFarm and discussing these before recommending to unit holders
• Approve accounts, and; will often have delegated authority from the directors to execute documents such as bank loan agreements.
   

THE MANAGEMENT TEAM

Each syndicate will be allocated a farm supervisor who is, in essence, the general manager of the business responsible for achieving performance.  (Read more about MyFarm farm management here) Assisting him or her will be a farm administrator who ensures the business meets its obligations on time and provides financial reports to investors. (Read more about MyFarm administration here) 

The on-farm manager is crucial to performance and may be employed as a contract milker, variable order sharemilker or staff member.  See the ‘Vacancies’ section of the MyFarm website for more details.

Updated December 2012