The document discusses share farming and orchard leasing arrangements in the Australian macadamia industry. It finds that around 525 hectares of orchards are currently being leased, a dramatic recent increase. Benefits are described for both owners and managers, with owners retaining ownership while managers gain scale and expertise. A sliding scale for splitting revenues is presented as production increases to incentivize both parties. A macadamia-specific lease agreement template has also been developed to aid communication and prevent issues.

1. Share Farming and Orchard Leasing in the Macadamia Industry
Prepared by: Robbie Commens
Australian Macadamia Society (AMS)

2. Leasing Orchards – recent RESULTS
68%
32%
Have growers asked you about
orchard leasing?
YES
NO
59%
41%
Have your growers (or you) undertaken any
orchard leasing in the last 2 years?
Yes
No
The industry is TALKING about leasing
orchards!
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3. Estimated area under lease
• 525 hectares
– Across all production regions
• Dramatic increase recently
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4. Benefits for both parties
Manager
• Access more land
• Scale of economies
• Utilise machinery
• Utilise skill and expertise
• Increase potential for
profitability
• Full time macadamia orchard
work
• RETURN ON INVESTMENT
Owner
• Stay on farm
• Increase value of orchard
• Help next generation of
growers
• Reduced labour inputs
• More spare time away from
farm
• Package for potential investors
• RETURN ON INVESTMENT
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5. Why Lease instead of share farm?
• Started with Share farm idea
• Risks with share farming agreement
– *Partnership risk
– Lease payment structure can be “open”
• Based on Grower Feedback and input -
– Incorporated share farm styled payment structure
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6. How did we do it?
• Partnered with stakeholders (NSW sugar, RDA)
• Regional workshop
– Acquired grower input
and feedback
• *Share farm payment structure
• VERY strong interest(>200 attended)
• Positive feedback
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HUGE amount
of grower and
industry input

7. How did we do it?
Economic Analysis / Viability
*Lease agreement based on a share farm payment
structure
• Costs
– Manager pays all input costs
– Owner pays rates
• Split gross income
• Initially focused on split
(70/30 ?)
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8. Production is the key to increase returns
NOT split to owner/manager
• Both parties should have a vested interest
in increasing production
As production increases
so too should the split to
Split based on 5 year average production both parties
0%
10%
20% 25% 25% 25% 30% 35%
100%
90%
80% 75% 75% 75% 70% 65%
0-1t/ha 1-2t/ha 2-2.5t/ha 2.5-3t/ha 3-4t/ha 4-5t/ha 5-6t/ha > 6t/ha
Owner Manager
This sliding scale has been well received, and has helped growers to
not focus purely on the “split”.
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9. Return on Investment is directly
linked to production
• As production increases
– Manager income increases
– Manager can afford to pay owner more income
– Owner income increases
0-1t/ha 1-2t/ha 2-2.5t/ha 2.5-3t/ha 3-4t/ha 4-5t/ha 5-6t/ha > 6t/ha
Return to Owner under share farming $- $195.00 $585.00 $1,072.50 $1,820.00 $2,925.00 $4,290.00 $5,915.00
NET Return to manager $(4,550.00) $(2,145.00) $(585.00) $227.50 $1,430.00 $2,925.00 $4,160.00 $5,135.00
$(6,000.00)
$(4,000.00)
$(2,000.00)
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
Owner Manager
LOSS!
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10. Macadamia specific lease agreement
• AMS invested in a Mac specific lease
agreement Contracts should;
• aid communication BEFORE the agreement
starts
• identify potential issues and solutions BEFORE
they occur
• help solve problems
• collect dust in bottom draw
Contracts SHOULD NOT ;
• prevent communication
• be used as a weapon
• create problems
• be referred to regularly (monthly)
Available to AMS members at no cost
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11. Details of the agreement
• Code of Practice
– To prevent orchards getting “mined”
– Independent Agronomic report
– Manager/tenant must agree to keep orchard at or
above
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12. Details of the agreement
Termination
• Clause to state termination cannot occur in the first
(INSERT NUMBER) of years from the start date
• Landlord (Owner) needs to give 12 months notice
– Notice needs to be given in month of June
• Manager needs to give 6 months notice
– Notice needs to be given between 1st Dec to 1st March
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13. Agreement can be altered
• Designed to save growers $$$$
• Clauses can be deleted or added
• Payment structure can change completely
changed
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14. Key points
• Growers and Managers should ALWAYS Remember –
– Regional differences, orchard differences
– EACH AGREEMENT SHOULD BE NEGOTIATED & ADJUSTED
CASE BY CASE
– Engage professional assistance
– *Formal agreements (not gentlemen agreements)
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15. Owner Case Study
• Greg and Liz Leggbagg
• Ewingsdale Orchard
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16. How can you progress this
opportunity further?
• Register of Interest
– Growers
• (spoilt for choice - >15 managers already registered)
– Managers
• Ask AMS staff for a copy of the agreement
• For further info talk, please contact me
– Robbie Commens
– 0488 432 226
– robbie@macadamias.org
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17. Thank you
• Albert Einstein
defined insanity as –
“doing the same
thing over and over
again but expecting a
different result”
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