Share Farming. Can it work?

[e3120]

If you want to farm it but the landowner wants/needs to be called a farmer, get a CFA drawn up. Everyone knows where they stand, then.

A farse, I know.

 

[ollie989898]

I agree, think trust will be the biggest thing. Would it work with the estate growing grass/crops etc if they are not wanting to be too involved with the day to day running ? would I be best to take on management and send them the bill?

In my experience the actual land owner will want little to nothing to do with it. Much of the time they are retired people who can't actually manage it now but need to be farming for tax reasons.

You won't be getting a free lunch. The reality of it is they will be paying bills for your inputs and then charging you a bill in return which is weighted in their favour so as to give them a relatively fixed income of X per acre. They just obtain a stack of invoices in the process and generate a bill for you at the end of the year to let you buy the 'crop'.

 

[chipchap]

You can’t have a better relationship when one party holds all the cards

Perhaps you underestimate your hand?

 

[Spud]

Share farming is about sharing. That includes expenses, benefits, and risk. Most landlords want to minimize risk, so in this case cannot expect big rewards.
I've done this with potatoes and it's worked well, but trust must exist.
In simple terms, work out the value of what each party can provide, put the expenses into percentages and split the profit (or loss) by the same percentage.
Happy to discuss on dm if you wish

 

[devonbeef]

if you are

In my experience the actual land owner will want little to nothing to do with it. Much of the time they are retired people who can't actually manage it now but need to be farming for tax reasons.

You won't be getting a free lunch. The reality of it is they will be paying bills for your inputs and then charging you a bill in return which is weighted in their favour so as to give them a relatively fixed income of X per acre. They just obtain a stack of invoices in the process and generate a bill for you at the end of the year to let you buy the 'crop'.

if borrowing money to stock this place with machinery and livestock , i would want for to sure i had a sensible escape plan which did not end in bankruptcy , i have no doubt with some owners it could work, but equally no doubt many would have it weighted in their favour and not care to much for you.

 

[Spud]

if you are

if borrowing money to stock this place with machinery and livestock , i would want for to sure i had a sensible escape plan which did not end in bankruptcy , i have no doubt with some owners it could work, but equally no doubt many would have it weighted in their favour and not care to much for you.

You're misunderstanding how share farming works

 

[devonbeef]

You're misunderstanding how share farming works

no doubt your right , but the fact your the side who does not own the property does put you in the higher risk especially if you are financed up to the hilt to fund your side of the bargain

 

[Spud]

no doubt your right , but the fact your the side who does not own the property does put you in the higher risk especially if you are financed up to the hilt to fund your side of the bargain

If you're in that deep, stop digging

Risk is shared regardless of who owns what

The landowner getting a few lollipops for providing the land is no different to the fert supplier or feed co sending a bill.

Put less in = take less risk = get less reward

 

[Dry Rot]

The Scottish Land Matching Service (https://slms.scot/) purports to act as a 'marriage bureau' for this sort of thing. When I first heard about it, it was based in Dingwall, about 100 miles south of John O'Groats. It sounded interesting -- and it's a "free" service.

It now has an office in Edinburgh as well and appears to be operated by the NFUS. Has anyone heard about it? Or even used it? It has a register of people looking for land but doesn't seem to have one for the landowners, unless I missed it... I thought it might be interesting to see what pops up as I'm old, have land and all the machinery, but they've advised me to continue with what I'm doing and go for grass lets.

 

[SteveHants]

if you are

if borrowing money to stock this place with machinery and livestock , i would want for to sure i had a sensible escape plan which did not end in bankruptcy , i have no doubt with some owners it could work, but equally no doubt many would have it weighted in their favour and not care to much for you.

Share farming might include the landlord "renting" the new farmer the kit and/or already owning some or all of the stock and the share farmer buying the stock in "installments" - see above for how this might work with sheep initiatives I've known about.

 

[ollie989898]

if you are

if borrowing money to stock this place with machinery and livestock , i would want for to sure i had a sensible escape plan which did not end in bankruptcy , i have no doubt with some owners it could work, but equally no doubt many would have it weighted in their favour and not care to much for you.

It only works if there is mutual trust and respect with both parties. The person doing the work is trusted to do a good job and look after the place/land, not run it into the ground.

 

[j6891]

The Scottish Land Matching Service (https://slms.scot/) purports to act as a 'marriage bureau' for this sort of thing. When I first heard about it, it was based in Dingwall, about 100 miles south of John O'Groats. It sounded interesting -- and it's a "free" service.

It now has an office in Edinburgh as well and appears to be operated by the NFUS. Has anyone heard about it? Or even used it? It has a register of people looking for land but doesn't seem to have one for the landowners, unless I missed it... I thought it might be interesting to see what pops up as I'm old, have land and all the machinery, but they've advised me to continue with what I'm doing and go for grass lets.

Yes im working my way through with them just now. As you can there are lots more people wanting an opportunity than actual opportunities. What I've found the issue so far is any potentials are not that keen once the opportunity has been offered. It is 100% about finding the right person which at the moment is appearing like a needle in a haystack but I am hopeful this is a way forward for the industry to get fresh blood in.

 

[glasshouse]

Yes im working my way through with them just now. As you can there are lots more people wanting an opportunity than actual opportunities. What I've found the issue so far is any potentials are not that keen once the opportunity has been offered. It is 100% about finding the right person which at the moment is appearing like a needle in a haystack but I am hopeful this is a way forward for the industry to get fresh blood in.

Once they do the sums and work out the capital they need and the rent demanded they just move to france

 

[Dry Rot]

Yes im working my way through with them just now. As you can there are lots more people wanting an opportunity than actual opportunities. What I've found the issue so far is any potentials are not that keen once the opportunity has been offered. It is 100% about finding the right person which at the moment is appearing like a needle in a haystack but I am hopeful this is a way forward for the industry to get fresh blood in.

I am still making my mind up abut the Scottish Land Matching Service (SLMS) as the initial web site stated that they were based in Dingwall which is hardly central for Scotland. I then discovered it appeared to be run by the National Farmers Union for Scotland (NFUS).

I had a bad experience with the NFUS many years ago when I was breeding sheep and losing lambs. The local MOD bombing range was being run by a civilian manager for the RAF as his private nature reserve. I am very much a believer that those who want to get things done had better do it themselves, especially in the Highlands, so I was doing voluntary fox control at the time. The range manager, because of his LACS's views, was violently opposed to any control on the range which was composed largely of over 1,000 acres of neglected gorse scrub (so the ideal fox habitat).

I went to the NFUS for help as I was at that time a member and believed the secretary was ex-RAF, so apparently perfectly positioned to negotiate. I got a very rude reply that I was "not a proper farmer" and he wouldn't help me! (I am in fact third generation from a farming family, experienced, with a BSc degree in land management!). I also approached the NFU Mutual (?) for insurance, run in those days by the NFUS, but was point blank refused a quote, probably for the same reasons!

The interesting part is that later the manager for the MOD was, according to the infallible local gossip, sacked for theft (shell casings are brass and valuable). The new RAF manager had no problems with fox control and invited me onto the range! (I have reason to believe that MI5 had this time by checked me out!). I declined with thanks as by then I had sold the sheep and moved on!

So you could say I don't have a lot of faith in anything essentially run by the NFUS. At least, NFU Mutual is now a separate business so things have improved. The Dingwall branch of the SFMS appears to be run by one person and they now have a similar set up in Edinburgh, again one person. Its record to date is not impressive. A sharing arrangement is such a personal thing that I will be making my own arrangements. I think perhaps anonymous advertisements might be the best initial approaching asking for a brief outline of what the sharer had in mind for a rough sketch of what is on offer -- acreage, land, buildings, machinery, etc. This would at least filter out those with grandiose ideas and no knowledge or those with problems with joined up writing.

 

[Tim W]

Share farming can work well ---i'm currently involved in 2 agreements
Key is ;

• trust (you build it over time)
• adaptability ---nothing goes to plan in farming and both parties need to acknowledge this and be prepared to shift expectations
• All parties need skin in the game & to have potential profits
• Keep talking regularly so problems/resentments don't grow
• Understanding that the agreement is not for ever ---it will end at some stage ---as long as this is structured and not sudden there is no problem

I am seeing more estates interested in this approach and i'm sure it will develop further over the next few years

 

[Salopian_Will]

I think a Share Farming Agreement needs an even better relationship between Landlord and Farmer than a tenancy.

You need to find out the landowner’s motive in not granting a new tenancy. The 1995 Act is much more flexible than the old 1986 Act.

Two things come to mind:

1. There is no guarantee that the 100% IHT relief will persist for let land, particularly under a Labour Government. My personal view is that the TFA have done the sector no favours in pushing for FBTs to only have relief for tenancies > 10 years. It has just pushed landowners to not let at all, as per the OPs post.
2. Traditional Estates cannot get IHT relief on a lot of the non-farming assets. If they can demonstrate that the wider estate is predominantly a trading entity they can get Business Property Relief on the whole, hence wanting to be seen as actively farming.

 

[chipchap]

Two things come to mind:

1. There is no guarantee that the 100% IHT relief will persist for let land, particularly under a Labour Government. My personal view is that the TFA have done the sector no favours in pushing for FBTs to only have relief for tenancies > 10 years. It has just pushed landowners to not let at all, as per the OPs post.
2. Traditional Estates cannot get IHT relief on a lot of the non-farming assets. If they can demonstrate that the wider estate is predominantly a trading entity they can get Business Property Relief on the whole, hence wanting to be seen as actively farming.

Unfortunately capital taxation is a huge consideration for landed estates, and planning for the long term is an absolute necessity to preserve value. It is unfortunate that the regime can change in the future with unknown consequences.
However it is no good going to a man who has nought seeking a contribution.

 

[Dry Rot]

Unfortunately capital taxation is a huge consideration for landed estates, and planning for the long term is an absolute necessity to preserve value. It is unfortunate that the regime can change in the future with unknown consequences.
However it is no good going to a man who has nought seeking a contribution.

Hopefully the sharer will have youth and fitness to offer. The landowner would be wise to have a good 'get out' clause, but that applies to both sides.

I've mentioned this before, but there was (is?) a share practice in my native Devon called 'half crease'. Briefly, the landowner supplies the sheep and the sharer lambs them. When the lambs are sold, the profits are shared. I am sure there is more to it than that but I think of this every time I look at the machinery sitting idle in my shed. If the NFU could supply the introductions, I'd conduct the interviews myself. I don't need a match maker and it makes me suspicious that the NFU thinks it should be one.

 

[glasshouse]

Share farming can work well ---i'm currently involved in 2 agreements
Key is ;

• trust (you build it over time)
• adaptability ---nothing goes to plan in farming and both parties need to acknowledge this and be prepared to shift expectations
• All parties need skin in the game & to have potential profits
• Keep talking regularly so problems/resentments don't grow
• Understanding that the agreement is not for ever ---it will end at some stage ---as long as this is structured and not sudden there is no problem

I am seeing more estates interested in this approach and i'm sure it will develop further over the next few years

Only as long as the drip of money lasts

 

[Tim W]

Only as long as the drip of money lasts

Of course...all parties have to be profitable