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.
Contract farming essentially involves having work carried out on a pre-arranged basis by a professional contractor or local farmer, helping them to spread their fixed costs, such as labour and machinery, across a larger acreage. 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 effects of which are often difficult to analyse effectively.
Contract farming agreements can be structured to allow you to remain actively farming and give you the opportunity to step further back from day-to-day labour in order to pursue other business opportunities.
Contract farming also offers an alternative to letting land under a Farm Business Tenancy. You will also be in full control of your property whilst helping to retain a number of taxation relief.
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 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 we can assist with all day-to-day management, book keeping and payment scheme claims.
Grazing Licences & Crop Sales
An alternative to Contract Farming agreements, preferred by some farmers, are grazing licences and standing crop sales. These tend to relate more to grassland and forage crops but can be tailored to suit individual’s needs.
Where farmers continue to grow crops, but they have more crops than are required for that year, then a standing crop can be sold. This can be carried out in a number of ways ranging from informal tenders to ‘at the gate’ auctions. These sales are often undertaken for crops such as Maize, wholecrop cereals, grass silage or hay but can be used for other crops or in other situations.
Grazing licences are designed to give the licensee (purchaser of the crop) the right to enter the land to remove the crop by grazing or mowing, while the licensor (farmer) produces the crop by undertaking operations such as applying fertiliser and sprays etc. Licences can be drawn up to suit individual requirements ensuring that obligations under environmental schemes are not breached. The licensor retains full responsibility for all farming activities to produce the crop and for meeting the cross compliance requirements of the Basic Payment Scheme