Share farming involves two parties on the same area of land (the land owner and the share farmer) carrying out separate farming enterprises in the one unit without forming a company or a partnership. Both parties share the benefits and the risks.
A legal agreement forms the basis of the sharing and ensures both parties are protected in the event of a dispute arising.
There is no fixed annual payment for the land. Each respective party can independently sell their share of outputs and equally cover their input costs.
Each of the farmers make separate contributions to the arrangement, such as land, machinery, labour and expertise.
Department of Agriculture
Share farming is approved by the Department of Agriculture and can be fully compliant with the terms of the Basic Payment Scheme. Participants are classified as “farmers”, so there is no change in their tax status.
The recognised share farming arrangement will be placed on a register with the Department. The register will contain details of all share farming arrangements to include: individual share farmers involved, their herd numbers, name and address of primary participant, registered address for correspondence and land details for the relevant scheme year.
Why choose share farming?
There are benefits to both parties once the division of duties and contributions are clearly defined. Trust is an essential part of the agreement. Share farming, share milking, contract rearing, and partnerships or farm relief services can all be alternatives if sourcing farm labour is an issue.
How to set up a share farming agreement
An “existing understanding” between a landowner and a farmer can develop into an actual share farming agreement. All elements of the agreement need detailed discussion before commencement and the actual agreement should be in place before farming commences. This will ensure all the practicalities are discussed and documented. It is vital to avail of professional legal advice and to also have a discussion with an agricultural consultant or Teagasc adviser to clarify all farming activities, such as cropping, livestock or both.
The following can all form part of the agreement:
The exact land involved, identified using folio numbers, acreage.The machinery necessary, livestock involved and who is responsible for providing both. All livestock should be listed using tag numbers, type of animal, average values identified under each herd number.All input and ongoing costs should be discussed and the basis of division of produce and costs should be agreed. Agree where produce is to be stored and disposed of.Decide who will keep and maintain the necessary records for the Department of Agriculture or any other statutory records required.If the EU supports are forming part of the agreement, each party’s contribution should be documented. Document how disputes will be settled, should they occur. ‘What are the benefits of share farming with my neighbour?’
Dear Money Mentor,
I am a sheep and beef farmer (59), and farm 130ac in Co Kildare. I am considering share farming with one of my neighbours as we help out each other at times already. I am aware it would mean I retain control of my land, but I am wondering if there are other benefits I should consider, both for me and for my neighbour?
Regards,
James
Dear James,
The main benefit, as you stated, is you retain control of your land and you can also ensure it is farmed to your liking and standards. If you are in receipt of any Basic Payment Scheme or other supports, Share farming is considered compliant with the terms of these. Share farming can lead to increased buying and selling power, higher returns and price increases.
The share farmer is responsible to maintain fences and keep structures in good condition, excluding fair wear and tear. You can also ensure the land is not being used for any other purpose. Share farming can offer more efficient use and sharing of labour.
Benefits to your neighbour can include flexibility, and no up-front or any other flat-rate payments. Input costs will be shared and increased area/scale allows more competitive purchasing and selling. It can also reduce fixed costs. Operating a share farming agreement can lead to better planning in both the short and long term for you both.
You should both have your own insurance. I am not sure if you are registered for VAT or not, but VAT-registered farmers and non-VAT-registered land owners can successfully operate a share farming agreement. There are Revenue guidelines around this, if applicable.
Trust is vital here, so do get the professional advice before proceeding. Such arrangements can work really well as long as the division of duties and contribution of facilities are clearly set out.
Best wishes,
Margaret
Read more
COVID-19 Credit Guarantee Scheme is available to farmers up to December 2021
Money Mentor: Long-term leasing of land requires good advice
Share farming involves two parties on the same area of land (the land owner and the share farmer) carrying out separate farming enterprises in the one unit without forming a company or a partnership. Both parties share the benefits and the risks.
A legal agreement forms the basis of the sharing and ensures both parties are protected in the event of a dispute arising.
There is no fixed annual payment for the land. Each respective party can independently sell their share of outputs and equally cover their input costs.
Each of the farmers make separate contributions to the arrangement, such as land, machinery, labour and expertise.
Department of Agriculture
Share farming is approved by the Department of Agriculture and can be fully compliant with the terms of the Basic Payment Scheme. Participants are classified as “farmers”, so there is no change in their tax status.
The recognised share farming arrangement will be placed on a register with the Department. The register will contain details of all share farming arrangements to include: individual share farmers involved, their herd numbers, name and address of primary participant, registered address for correspondence and land details for the relevant scheme year.
Why choose share farming?
There are benefits to both parties once the division of duties and contributions are clearly defined. Trust is an essential part of the agreement. Share farming, share milking, contract rearing, and partnerships or farm relief services can all be alternatives if sourcing farm labour is an issue.
How to set up a share farming agreement
An “existing understanding” between a landowner and a farmer can develop into an actual share farming agreement. All elements of the agreement need detailed discussion before commencement and the actual agreement should be in place before farming commences. This will ensure all the practicalities are discussed and documented. It is vital to avail of professional legal advice and to also have a discussion with an agricultural consultant or Teagasc adviser to clarify all farming activities, such as cropping, livestock or both.
The following can all form part of the agreement:
The exact land involved, identified using folio numbers, acreage.The machinery necessary, livestock involved and who is responsible for providing both. All livestock should be listed using tag numbers, type of animal, average values identified under each herd number.All input and ongoing costs should be discussed and the basis of division of produce and costs should be agreed. Agree where produce is to be stored and disposed of.Decide who will keep and maintain the necessary records for the Department of Agriculture or any other statutory records required.If the EU supports are forming part of the agreement, each party’s contribution should be documented. Document how disputes will be settled, should they occur. ‘What are the benefits of share farming with my neighbour?’
Dear Money Mentor,
I am a sheep and beef farmer (59), and farm 130ac in Co Kildare. I am considering share farming with one of my neighbours as we help out each other at times already. I am aware it would mean I retain control of my land, but I am wondering if there are other benefits I should consider, both for me and for my neighbour?
Regards,
James
Dear James,
The main benefit, as you stated, is you retain control of your land and you can also ensure it is farmed to your liking and standards. If you are in receipt of any Basic Payment Scheme or other supports, Share farming is considered compliant with the terms of these. Share farming can lead to increased buying and selling power, higher returns and price increases.
The share farmer is responsible to maintain fences and keep structures in good condition, excluding fair wear and tear. You can also ensure the land is not being used for any other purpose. Share farming can offer more efficient use and sharing of labour.
Benefits to your neighbour can include flexibility, and no up-front or any other flat-rate payments. Input costs will be shared and increased area/scale allows more competitive purchasing and selling. It can also reduce fixed costs. Operating a share farming agreement can lead to better planning in both the short and long term for you both.
You should both have your own insurance. I am not sure if you are registered for VAT or not, but VAT-registered farmers and non-VAT-registered land owners can successfully operate a share farming agreement. There are Revenue guidelines around this, if applicable.
Trust is vital here, so do get the professional advice before proceeding. Such arrangements can work really well as long as the division of duties and contribution of facilities are clearly set out.
Best wishes,
Margaret
Read more
COVID-19 Credit Guarantee Scheme is available to farmers up to December 2021
Money Mentor: Long-term leasing of land requires good advice
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