DairyCo

Contract Management

Published 24 September 10

Contract management has important applications within the dairy industry with the supply of herdsmen and herd managers as part of a contract herd care service.

Contract management terms offer several advantages:

• The possibility exists to terminate the agreement or easily change the contract herdsman if a farm manager is unsatisfied with the service or if agreed objectives have not been met.
• The contract agency will provide regular inspections, meeting with the client and the contract staff to ensure work is carried out to the expected standard outlined in the agreed schedule of services. They can also provide technical support or help with other management issues and may directly provide worker training.
• Depending upon the terms of the contract, the agency may also be responsible for relief cover at no extra charge if the contractor is ill or injured.
• The agency provides insurance to indemnify the farmer against damage to his livestock or property caused by any proven negligence of the contract worker.
• Upon the end of the contract, housing provided for the contract worker is guaranteed to be handed back with vacant possession. The farmer is also indemnified against any damage to the property.
• Budgeting and administration are simplified as contracts are agreed in advance and are fixed for a year, so a client simply pays a monthly fee.
• Contract milked herds tend to exhibit above average performance levels, claimed to be due to higher-motivated contract staff with better herd management skills. Recruitment is undertaken by the agency, with the expertise in people management required to secure a high standard of candidate.

However, this option may have several drawbacks, contract workers tend to be highly-motivated and may select only the more modern, labour efficient farms. Many contract herdsmen are paid on a performance-related basis, requiring them to be given a large degree of autonomy to make day to day herd management decisions to have most influence on herd productivity, which may be at odds with a farmer's particular management style. Compared to employing someone directly, the service could prove to be significantly more expensive.