Farming making sense

A bank account should be set up by the farmer, paying for the inputs and receiving all income. This creates the margin and keeps the agreement separate from the current sole trading operation.

The Contractor receives a basic fee throughout the year. With the farmer taking a basic return at the year end. Any surplus margin as calculated in accordance with the agreement is then divided between the two parties.

CFAs suit farmers looking to reduce capital tied up in machinery or cut down the physical involvement in the farm. The contractors benefits from economies of scale and receive a guaranteed fee per acre.

The farmer continues to claim BPS and retains full possession and tenure. The contractor can own all or part of the breeding stock and hire them back to the agreement, giving the potential to build up the herd while allowing you to further release capital.

To retain APR, day to day decision making must be with the farmer and not the contractor.

Responsilbility for cross-compliance and any stewardship agreements remains with the farmer so the contractor will have to be aware, and potentially carry indemnity for, any potential breaches.

Arable CFAs may be harder for new entrants to take on because of the capital requirements for machinery, but in livestock situations they can be a good option.

The agreement should carefully details who will be providing which elements of the farming enterprise.