Contract Farming

Contract farming agreements have grown in popularity over the past decade as farm profit margins have become tighter due to changing farm support levels, decreasing market prices and increasing costs. This trend looks set to continue following the recent announcement of the Common Agricultural Policy reforms to be implemented from 2005. With the move to an area-based payment which is decoupled from production there will still be a need to maintain land in good agricultural condition.

Contract farming essentially involves having work carried out on a pre-arranged basis by a professional contractor or local farmer, helping then to spread their fixed costs, such as labour and machinery, across a larger acreage, while the benefits for the farmer and landowner include access to modern high powered equipment, the latest cultivation practices and indirect savings in labour, machinery and operating costs. The effect of which are often difficult to analyse effectively.

With the need to be actively farming in 2005 in order to validate the historical element of your decoupled Single Farm Payment, contract farming agreements can be structured to allow you to take full advantage of this and give you the opportunity to step further back from day-to-day farming in order to pursue new business opportunities.

Contract farming also offers an alternative to letting land under a Farm Business Tenancy, which, since the 1st December 2003, will attract Stamp Duty Land Tax if the lease is for more than 7 years or the total rental income exceeds £150,000 over the term of the lease. You will also be in full control of your property whilst retaining a number of taxation relief benefits.

There are a number of flexible arrangements that can be set up to suit a wide range of farm types and sizes, including Contract Milking and Share Farming arrangements for livestock farming. Lister Haigh Limited can offer a range of professional services to suit your needs, from formalising an "over-the-hedge" agreement through to a fully managed scheme where all day-to-day management, book keeping and support claims are taken care of.

Contact John Haigh or Tom Whitehead at our Knaresborough office on 01423 860322.