I Want to Help a Young Farmer With a Contract Farming Agreement
- AuthorJCP Solicitors
"I have a young farmer friend who has expertise and ideas, but little capital and I want to give her the opportunity to work my livestock farm on a contract basis. Is this complex?"
Joint Venture Farming Agreements can work well for all involved – allowing you to step back from some of the hands-on work and giving another farmer a chance to take on management. These agreements will often take the form of either a contract farming agreement or a share farming agreement. Whichever one is chosen, it is important to set up a detailed agreement, stipulating in particular:
- That you retain full control of the business, and are treated as a farmer/owner for tax purposes and for the payment of subsidies
- The contractor provides labour, machinery, livestock and hands-on management
- How the parties will be paid and how that will be calculated
- That you provide land, buildings and fixed equipment used by the livestock, as well as funding fertiliser, concentrates, vet services and medicines
- How long the agreement should be for and how it can be terminated
It is vital to get the details of this agreement right at the start of your relationship. It is often worth having a consultant prepare a business plan for the joint venture so that there is clarity and each party knows what to expect. As far as the agreement is concerned, you should seek detailed advice from an experienced lawyer.
The question posed is based upon a hypothetical situation.