People can be put off by the term share farming, believing it involves the sharing of all necessary assets to farm. In reality share farming can be the sharing of anything from a piece of machinery or staff to expertise

Before entering into a share farming agreement it is essential to make sure you have a good working relationship with your share farming partner. You may have different skill sets but do you have common goals, and can you work together? Understand from the outset why you want to enter into a share farming agreement together. 

As part of the agreement establish strategies for five, 10, 15 and 20 years and have an exit strategy. Establish at the outset who holds which responsibilities and also the identity of the business so that both parties are equally represented in the brand. This is particularly important if one partner is going to be more office based while the other is running the day-to-day operations.

Depending upon what is being shared there are different arrangements that lawyers can draw up which will be legally binding.

So what might a typical share farming agreement look like? Often machinery is shared between the two parties. The provision of land, buildings and if appropriate livestock and associated fixed equipment must be reflected in pre-agreed profit shares.

There may also be financial advantages from operating as a share farming agreement. Being a trading entity there are a number of potentially favourable taxation treatments including for income tax, capital gains tax, inheritance tax and VAT. 

A share farming agreement is also a route that young or new entrants into farming might have the opportunity to take. When a farmer is beginning to think about retirement introducing a new or young entrant into the business means knowledge and expertise can be shared with an agreed profit split that can change over time as the young or new entrant takes on more responsibility and starts investing into the enterprise.

Further information

Contact Savills Food & Farming