Rates And Expenses (Part 1)

I thought we might have a look at perhaps the most important aspect of being a relief milker, namely the financial aspect. Deciding upon your rates is going to be a crucial aspect of your trade. The financial compensation you receive should not only reflect your experience, role, skills, and workload, but it will also impact your overall income and job satisfaction. Working out your rates can be a bit of a balancing act. In this five-part series, we will have a look at how you can try to get that balance about right, along with a few other things.

Know Your Worth

Firstly, it’s important to have a clear understanding of your worth as a relief milker. You don’t want to be underselling yourself and working for peanuts – you are providing a service, not charity. Conversely, you don’t want to be greedy and price yourself out of the market, because you risk farmers overlooking you in favour of somebody else who has more realistic expectations. Here are a few factors to consider when choosing your rates.

Experience

Your level of experience in the dairy sector, the number of years you have been involved in farming, the variety of farms you have worked on, and your primary role(s) (e.g. farm worker, 2IC, manager, contract milker). A relief milker who has over ten years experience in dairying and who spent a number of those years as a sole charge farm manager is understandably going to be able to justify a higher rate than somebody who has only two years experience as a farm assistant.

Skills

Highlight any specialised skills or certifications you possess, such as proficiency with milking equipment, pasture management, or expertise in animal health and welfare. The more skilled you are, the more valuable your services will be.

Travel Distance

What is the maximum distance you are prepared to drive in order to reach your jobs? We’ll delve into this side of things in more depth in Part 3.

Market Rates

You may wish to ask around and research the prevailing rates for relief milkers. This information can help you establish a competitive starting point for negotiations. However, at the end of the day, the ‘market rate’ is what farmers are prepared to pay. That can range anywhere from $23 per hour to $100 per hour, or from $60 per milking to $200 per milking. Personally, I don’t place too much emphasis on ‘market rates’. They can give you a rough idea of what other relievers are earning, but I wouldn’t get too fixated on them, simply because rates can vary so widely that the term ‘market rate’ essentially becomes irrelevant.

Self Employed Or Employee?

Another thing you will need to decide upon is whether you are going to be relief milking as a self-employed business or as an employee, or can you have a foot in both camps? The IRD has a useful little guide entitled “Self-Employed Or An Employee?”, which will help you come to a decision.

Self-Employed Or An Employee?

If self-employed, you will be invoicing the farmers, and then you will be responsible for declaring your income tax from those paid invoices at the end of each financial year. You will also need to cover your annual ACC levies. Depending on how much income you anticipate earning each year, you may have to register for GST, as well. At the time of writing this, the threshold is $60,000. However, you can also choose to register voluntarily even if your expected income is less than $60,000. By doing this, you can claim GST on business-related expenses, such as work clothing. The following link can provide some further clarity regarding GST registration.

Business Govt NZ

You may find it simpler just being an employee. You will be on a PAYE system and your income tax and ACC levies will already be deducted from your gross earnings by the farmer, prior to you receiving your net earnings. You won’t need to worry about paying separate ACC levies each year or registering for GST.

It can be a good idea to contact the IRD (and even ACC) to discuss with them whether it’s best to be self-employed or an employee, and to make sure that you are going to be put on the correct tax rate, because the last thing you want is to fall foul of the tax department. Farmers won’t mind which employment status you choose – they are more focused on getting the right person for the job.

Sole Charge Vs Assisting

Sole charge milkings are where you will make the higher rates, to reflect the increased responsibilities. So, once you have gained the necessary confidence and experience as an assistant, and you want to maximise your income, then set your sights on milking sole charge. You can still earn good money as an assistant milker, but it obviously won’t be as much as if you were milking and running the shed (and farm) by yourself.