Share Farming Agreements
What is share farming?
Also referred to as profit sharing, share farming is where each party is providing different, but complementary, resources to the share farming arrangement in the form of land, machinery, equipment, livestock, labour and management expertise.
Share farming allows farmers to operate a farm business without providing the upfront capital required to own the farmland. The most common example being when a farmer who owns the land and fixed equipment enters into a share farming agreement with another farmer who can provide the labour and machinery.
Why consider a share farming agreement?
There are a number of reasons why farmers consider share farming agreements. Some of these include;
- The buying and selling of agricultural land can be very expensive.
- A farm owner may be too old, infirm or busy with off farm activities to be able to dedicate the time and energy it takes to farm their land.
- A farmer may have an expensive (and more efficient) piece of equipment that another farm owner does not.
- A person may be young and energetic, but in need of farming land and/or farm management experience.
- The farm has potential to be scaled up and more profitable but needs additional labour and equipment to do it.
These types of agreements, where both parties can split the expenses but still maximise profits, can be a great way to scale up farming activities, or share responsibilities that may be too much for one person. However, in order for these agreements to be effective, it needs to be done right so that both parties are protected. The best way to do this is to have an agreement in writing. This is what is called a Share Farming Agreement.
What is a Share Farming Agreement?
Share Farming Agreements are a contract – a legal document that sets out the agreement. These agreements make sure that both parties are on the same page and are essential for outlining the key responsibilities of both parties within the share farming arrangement. They also help to prevent disputes.
In a share farming arrangement, the independent farmer will commonly be treated as an independent contractor, and the landowner is allowing the share farmer to use all or part of their land.
Why document a share farming arrangement?
Every arrangement is unique and contracts can vary depending on how the share of the farm is split, who will be responsible for what, and what are the minimum standards of farming that will be required from the independent contractor. This is why your Share Farming Agreement should be customised to reflect your specific arrangement.
If you would like to know more about how we can help you with your Share Farming Agreements, please contact us today.
If you would like to know more about how we can help you with your Share Farming Agreements, give us a call on 02 6977 1155 or send us an enquiry through our CONTACT US page.
