A cow-leasing system set up by herd-leasing buisness CowBank is designed to be long term win-win for both the land owner and the share partner/employee.

The five-year lease allows the sharefarmer to gain equity through the herd while deferring tax payments. For the owner, it allows them to have key people with "skin in the game".

CowBank director rod Banks said sustainability was the key to the whole plan.

"One of the key things for us is the continuation of the herd - as part of our leasing plan we require people to rear heifers to keep the herd going in the long term."

"Our approach comes from having more experience with the industry than some. We have been through two droughts and we're still here, so I think that shows we're on the right track."

"What we are doing is creating equity with a very soft asset like a cow."

"The sharefarmer can grow equity with a soft asset behind a tax shield - they pay off the principle rather than tax, defering tax payments, while they develop an asset."

"Once they have developed that asset they can use that as equity for another purchase, so it is a pathway up through the industry."

He said CowBank used a carrot-and-stick approach to make its plan work.

"The carrot is that a young guy can build a $200,000 herd into $350,000 asset, of which he has $250,00 equity, which will allow him to go and buy a farm at the end of it."

"On the other side, if he leaves after 12 months, he won't have paid off much of the principal and will have little capital to gain."

"He's probably been salary sacrificing for nothing and that's the stick part of the equation," Mr Banks said.

The system works by the sharefarmer taking out a loan according to his situation, whether it is $100,000 as a herd manager or $200,000 as a farm manager which is invested into the herd.

They then get a small percentage of the milk cheque and 10pc return on their investment in as many cows as their stake has leased.

For instance, if they invest enough to lease 160 cows, they will get 10pc return on those animals.

Mr Banks said the system was attractive as it gave the shareholder a stake in the business and an incentive to lift profits.

"Unlike hiring an employee, the sharepartner has a real interest in seeing the business grow, which is an advantage for the lanholder, while the stake can allow a younger farmer to get some skin in the game and build himself up."

CowBank acts as a facilitator and acts to ensure all arrangments are fair and equitable for both parties. It charges a monthly payment from the sharepartner on the lease of each cow of 2.25pc of the cow's value.

One of the differences between the CowBank system and other leasing programs, is that the herd remains on-farm at the end of the arrangement.

"At the end of these agreements the share partner doesn't walk away with cows, the landowner will either compensate the share partner with cash or purchasing new cows."

Mr Banks said it was most common for business partners to roll over and begin a new arrangment following the end of the lease.

"Most of our business in the past couple of years has been written with existing clients."

"Dairy has the cash flow to support higher levels of debt and it is the same with any form of debt - you can use it to allow you to your equity faster."

He said it was important for both prospective parties to enure they were going in with someone which they could work with.

"In particular, the landowner need to support the sharepartner through the tough periods - that is vital for the lease to work."