Share farming can provide a foot in the door
Recent statistics show that 58 per cent of farms in the UK are now in the hands of the over 55s, while only three per cent are held by the under 35s, writes Ellie Watkins.
Farming is vulnerable to an inward pressure where many farmers are retiring without any successors, leaving the farm to be consequently engulfed by neighbouring larger farmers.
On one side of the spectrum, there are potential young entrants but farmers are unwilling to retire allowing the potential successor to take over. On the other side, there are landowners and farmers wishing to take a step back but may not have anyone to step up to the helm.
Some of these issues could potentially be dealt with by share farming agreements. Generally speaking, a share farming agreement involves a landowner and a working farmer (the share farmer), who enter into a contract to jointly farm the same land.
Share farming provides an opportunity for the landowner to retain ownership of his land and buildings, keep an interest in the farming business but renounce a degree of control and step back from some of the day-to-day work on the holding.
Share farming agreements can be drawn up to suit the individual circumstances and can be used for all types of enterprise. Share farming differs from contract farming in the sense that both parties share the risk and the profits on a pre-agreed percentage. Essentially this allows the share farmer to get a foot in the door of farming without requiring a large amount of capital to begin with.
Crucially, the share farmer needs to demonstrate what they can bring to the business in terms of knowledge, experience and physical labour. This can be translated into an annual payment and the proceeds can be split accordingly.
Frequently, the landowner provides the land, buildings, fixed equipment and finances significant repairs to these, while the share farmer provides the labour, machinery, mobile equipment and expertise. The costs for feed and fertilisers are shared, while livestock ownership is shared via a ratio. Each party has their own separate bank account and is responsible for their own tax, VAT and production of accounts. A successful share farming agreement can offer huge benefits to both parties and, with professional advice, can be tailored to meet the needs of most individual circumstances.
* Ellie Watkins BSc (Hons) is a graduate surveyor with Halls, Kidderminster
