SHARE FARMING

1

INTRODUCTION

A typical share farming agreement involves the

owner or tenant of farm land (the landowner) and

a working farmer (the share farmer), who enter

into a contract to jointly farm the same land

2

The share farmer may be a neighboring farmer or

someone with agricultural training who does not

own land or hold a tenancy but who wishes to

farm on his or her own account rather than as an

employee or contractor.

3

Share farming differs from traditional contract

farming in so far as both parties share the risk and

the profits on a pre-agreed percentage. The

existing farmer simply provides a proportion of his

farmland for the partner to work.

4

FEATURES

The landowner provides the farm land and buildings,fixed equipment and machinery, major maintenanceof the buildings and his expertise,

The share farmer provides labour, field and mobilemachinery and his expertise, other costs such asseed, fertilizers and feed are shared.

If there is a livestock enterprise then ownership ofthe animals is shared on the basis that each partyowns a share in each animal,

Each party is rewarded by a share in the produce ofthe farm which he or she is free to sell as he or shelikes,

Each party produces his own accounts and isresponsible for his own tax and VAT returns.

5

WHY A FARM OWNER MIGHT ENTER A

SHARE FARMING ARRANGEMENT ?

To invest in land assets that are utilized profitably

and increase in capital value, while needing the

management skills, stock and plant provided by

another party;

He/she owns all the assets required but wants less

involvement in the day-to-day operation and

management of a dairy business, while wanting

continued involvement in management direction;

A step towards farm succession

6

SOME REASONS FOR SOMEONE

WANTING TO BECOME A SHARE

FARMER ARE

An improved ability to grow net worth through

increased operating profit and asset creation;

Greater job satisfaction through additional

responsibility and direct gain from the outcomes

of business decisions;

An opportunity for significant involvement in

farming for someone with the skills but limited

access to the capital required to own a farm.

A gradual path in terms of skills acquisition

7

INGREDIENTS OF A SUCCESSFUL

ARRANGEMENT

The potential for providing reasonable financial

returns for each party, which is reviewed prior to

commencement using actual data and reviewed

during the agreement period;

Compatible philosophies, this can be established

in early discussions and reinforced when

establishing an annual budget that forms the basis

of the income and cost sharing;

8

Cont..

Both parties’ personalities are suited to a share

arrangement – communication, empathy and

mutual respect are integral components of

success.

Extremely clear income and cost sharing

arrangements that are frequently discussed,

preferably at regular monthly meetings.

The issue of ‘control’ is specifically discussed and

individual roles are clarified and acknowledged by

both parties in advance of any decision making.

9

Cont….

Both parties agree to methods of communication -

for example when and how regular meetings will

occur, and how owners and share farmers will

interact between times (just drop-in or phone

prior to catching up)

A written agreement – which will not overcome

shortcomings in any of the above, but is likely to

expose them and, where possible, help avoid

conflict during and at the end of the agreement,

or even identify incompatibility before an

agreement commences.

10

11