Responding to the recent changes in agricultural subsidies, many farmers are reassessing the structure of their operations. Joint ventures can be an attractive option. Whether you are looking to expand or find an alternative means of farming your own holding, our consultants are well placed to advise on the full range of farming arrangements – some of which are listed below.

Traditional Contract Farming
Contract Farming arrangements provide the formal platform for one farmer / contractor to undertake all the labour and machinery work on another farmers holding. Meanwhile, it
ensures the landowner / occupier maintains working farmer status and continues to be involved in buying and selling while having less management responsibilities. Both farmer and contractor are paid a fixed fee with an uplift based on profit generated. For the contractor this provides the ideal opportunity to expand with little or no capital outlay.

Contract Option Agreement
In some situations, the Contract Option Agreement offers a more simplified structure than a formal CFA. This may suit smaller farming units that wish to use the services of a contractor.

Brown & Co’s Contract Option Agreement encourages contractors to cap or reduce their charge. With the option to purchase crops at harvest, contractors stand to benefit from
any uplift in the sale price of the crops.

For the farmer, the agreement is simple to administer, cash flow is more flexible and he/she can retain all single payment scheme and environmental monies. The final return is dependent on the crop purchase option price, plus a bonus or reduction reflecting market price.

For the contactor, this new agreement provides the opportunity to expand, at little cost and within an agreement that is simple to manage and administer.

Machinery Rings
Members cooperate by providing labour and machinery services at pre-agreed contract rates. Work is organised on an operation by operated basis to suit individual requirements.

Machinery Sharing
Neighbouring farmers often help each other by loaning, or hiring, machinery and equipment on an ad hoc basis. In some cases specific machines are purchased by two farmers with 50% of the value sitting on each balance sheet, while repair obligations and running costs are also shared.

Machinery Joint Ventures
Generally labour and machinery is shared and a separate business established in a bid to operate more efficiently and perhaps provide a vehicle for future expansion into other contracting work.

For all joint ventures to work they must be for the right reasons and between the right people. Our consultants have a wealth of experience advising on all such arrangements, from initial discussion through to formal agreement and then ensuring ongoing objectives are met by remaining involved.

Share to Farm Programme – Yorkshire and Humber Region
The Brigg office, led by Philip Dunn, is now one of the nominated advisors chosen to deliver the Share to Farm Programme, as funded by Yorkshire Forward, to assist all joint venture advice in the Yorkshire and Humber Region.

The project provides for subsidised advice for both establishment, and the first three years of mentoring any new farming joint venture, from the simplest of machinery sharing agreements through to the formation of stand-alone labour and machinery sharing companies.

For further information, contact Philip Dunn 01652 654833 or philip.dunn@brown-co.com.