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Quick fire questions with an expert - Is share farming your way in?

Insights
Following from our top tips on share farming, we asked Andrew Robinson, partner at Armstrong Watson accountants and financial advisers, Hexham, the questions you want answering.
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Your questions about share farming, answered by an expert! Check it out here... #GetIn2Ag

Share farming can be complicated...our expert answers your questions to clear it all up! #GetIn2Ag

What is the key to a successful share farming agreement?

Trust between both parties. Having it all down in black and white, with how income and costs are to be split is vital. It may seem too prescriptive at the start but it stops any potential for disagreements in the future.

 

How hard is it to have the initial conversation?

The last share farming agreement we were involved in was out to tender and the terms would not work so we met face-to-face. We negotiated and arranged a workable deal. It was an open, honest meeting and both parties compromised to make it work.

Andrew Robinson

What about once the agreement is up and running?

Maintaining full transparency about all income and expenses to all parties makes the arrangement simple and allows the share farming agreement to work.

Which sectors does share farming work in?

They exist in many sectors. They can be more straightforward in the arable sector – because you are never quite sure how much labour you are going to provide for livestock farming – but for an arable crop you know roughly what the annual operating costs will be.

What if it does not work?

It needs to be clearly stated how either party is going to give notice or end the agreement. This is quite critical – you need a method for how it will be unwound.

Who provides what, and how do both parties benefit?

Both parties bring their own contributions to a share farming agreement, and these should be clearly defined from the start.

 

Typically, these are:

 

  • Major maintenance of the house and buildings
  • Property insurance
  • Expertise
  • Working capital

Owner

  • Land
  • Farm buildings
  • A house (where applicable)
  • Fixed equipment
  • Long-term care of land

Operator

  • Labour
  • Machinery, and possibly some semi-fixed equipment
  • Expertise
  • Working capital

Benefits for the owner

It allows a retiring farmer to reduce their time spent working within the business without diminishing their interest and status as a farmer.

Benefits for the operator

It allows a young farmer with little capital to become an active farmer and build up equity and profit without purchasing land.


Top tips!

Have you seen our top tips on how to enter the world of share farming?

 

Click here to find out more.

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