Some good reasons to have a Farming Partnership Agreement
I was reminded this week of the importance of Farm Partnership Agreements.
A partnership is automatically formed when two or more people come together to farm for profit. Without an agreement the legislation is the only fallback provision – and that dates back to 1890 so doesn't reflect current business practices.
Among other good reasons to have an agreement are control and decision making. Two out of three equal partners would take the decision-making power with majority consensus.
Profit is split equally each year, which could include an increase in value of land.
Partnerships automatically end if one partner dies, so an agreement can make sure the partnership can continue and keep trading.
An agreement can avoid partnership disputes involving expensive litigation by setting out things like who owns what, what happens when partners want to leave, or how it should end.
Melanie Holt is a rural chartered surveyor and agricultural valuer with Moule & Co
