Share Farming
Share Farming In a share farming agreement, two independent businesses operate on the same land. Each party contributes resources such as land, labour, livestock, or machinery and they share the output (crops, milk, or livestock) and the associated income.
The key distinction here is no legal partnership is formed, instead they operate under a share farm agreement. Both parties remain separate business entities, filing individual accounts and taking responsibility for their own portion of the inputs and outputs. This model works particularly well in tillage and dairy sectors where yields can be clearly divided. It allows younger farmers to build capital and experience while giving landowners a continued role in the farm without full responsibility. The arrangement is not and cannot operate as a de facto con-acre arrangement as both parties must share risks and rewards.
From a tillage perspective, the appeal of the agreement to growers is that it allows a new way of accessing land which increases scale in a controlled manner. Properly managed, this increase in scale will reduce production costs through increased purchasing/ selling power and will lower machinery costs and reduce fixed costs per acre. For the landowner the share farming agreement offers the opportunity to leverage all the advantages attained by grower and also tap into the expertise of the grower to increase output. The increased output at lower costs increases the overall output benefit of both parties in the agreement.
In the case of share farming arrangements within the dairy industry, the share farmer will often provide the livestock and labour while the land owner provides the land and facilities. Costs are divided in line with the agreement and the milk cheque is then divided according to the agreed ratio. There are alternative scenarios also in operation where the landowner also provides the livestock and these may then be purchased by the share farmer over the life-time of the arrangement. At the outset, capital investment may be required to scale up the farm to provide for the two incomes – one for the landowner and another for the share farmer.
Finding the right individual’s for such an arrangement will require careful consideration. From the land owner’s perspective, it is vitally important that any potential share farmer has good stockmanship skills, is capable of managing and running the farm efficiently and to a high standard, has excellent quality cows so that output can be maximised and has the attributes that you think would align with your goals. Given that the output is divided between the landowner and share farmer, it is vitally important that any potential share farmer can maximise output efficiently and economically, thus increasing the financial return for both parties. The initial set up costs for the share farmer are often less than the capital that would be required in the case of operating on a leased farm and therefore it may be a more financially viable first step towards running their own business. All parties should familiarise themselves with the agreement and assess whether it is a viable option for the future.
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Collaborative Business Structures discussed by Tom Curran at the Share Farming Open Day
Share Farming Open Day held at Gurteen Farm
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Gurteen Share Farming explained by Paidi Kelly at the Share Farming Open Day
Share Farming Open Day held at Gurteen Farm
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Performance to date of Gurteen Farm discussed by Grainne Hurley at the Share Farming Open Day
Share Farming Open Day held at Gurteen Farm
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Converting Gurteen Farm from a Drystock to a Dairy Farm discussed by Padraig French
Share Farming Open Day held at Gurteen Farm
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Michael Hennessy and Ollie Whyte - National Tillage Conference 2012