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400 acres, 40 miles away.

Discussion in 'Cropping' started by Lexion1000, Feb 9, 2019.

  1. Daniel

    Daniel Member

    So for the landowner they are an active farmer, they keep the land in good order, can pass the land on to their kids on their death, and as they are 'in business' they can claim their pickup truck as an expense, sneak lots of home expenses through as office expenses etc?

    For the contractor, lots of work, gets to justify a bigger Quadtrac and might make a profit, might make a loss, probably is lying to himself about his true costs in order to have the biggest Lexion.

    I've got an FBT, but then I've always suspected i'm a mug.
     
    Flat 10 likes this.
  2. Lexion1000

    Lexion1000 Member

    The end result for the contractor is not dissimilar to an fbt but with more office work imo.
     
    Brisel and Flat 10 like this.
  3. T Hectares

    T Hectares Member

    Location:
    Berkshire
    Yep, nothing wrong with well structured CFA's, with a contractors first charge that actually covers costs:eek:
    Or a FBT on a sensible rent and terms as a way to expand a business, they should work well but in reality...
     
  4. Clive

    Clive Staff Member

    Location:
    Lichfield
    not all of us run Quadtracs, it can be done profitably ................ but a lot don' t, as you rightly point out there is a lot of chasing the economies of scale rainbow
     
    ollie989898 likes this.
  5. Clive

    Clive Staff Member

    Location:
    Lichfield
    and that's the key - first charge must cover the REAL costs (not the ones you kid yourself are possible) - that de risks things meaning your only risking the season, market prices and your ability to grow and market a profitable crop ................ same risk as a landowning farmer takes

    Its not all great for the Landowner either - unlike the guaranteed income of a FBT they are taking a risk in exchange for their improved tax status
     
  6. T Hectares

    T Hectares Member

    Location:
    Berkshire
    Yep, all CFA's I've previously been involved in have had a first charge to cover costs (not been in that world for three years now)
    To suggest that a contractor should charge less than his costs is something of an insult to a professional diligent contractor...

    Should add, I'm also a reformed Quadtrac owner, and life is fine with a mere 240hp tractor and funnily enough my manhood is still the same size :rolleyes:
     
  7. ajd132

    ajd132 Member

    Location:
    Suffolk
    Do people think cfa’s are fit for purpose going foward?
     
    tjhooker likes this.
  8. Clive

    Clive Staff Member

    Location:
    Lichfield
    What alternative for a tax fearing landowner who can’t farm themselves ?

    FAS (farming as a service) is probably the future though but unsure how the tax man would deal with it

    I think CFA works well if the people are right and respectful of each other’s need to gain from the arrangement, certainly better than FBT’s imo

    All arrangements seem to work best without agents as well ................
     
    snarling bee and ajd132 like this.
  9. lloyd

    lloyd Member

    Location:
    Herefordshire
    A local estate near me has a contractor do all the work for a fixed fee
    and has priority with contractors combines.(very reasonable I've been told).
    The landowner decides what crops to grow and markets them himself.
    He keeps all profits for himself so i can't get my head round why CFAs
    are at all attractive to the landowner.
    He also employs a very good agronomist so his time spent farming
    is limited whilst also having full tax advantages.

    Can you explain the advantages of CFAs that I've missed.
     
    tullah and ollie989898 like this.
  10. ajd132

    ajd132 Member

    Location:
    Suffolk
    What is FAS?
     
  11. Clive

    Clive Staff Member

    Location:
    Lichfield
    “Farming as a service”

    Farmings equ of software as a service which is the model many tech companies have moved to rather than selling you software these days (ms office is a good example)

    See smallll robot co model etc for example, basically not buying but paying for your use of the service

    It creates the question - will we even need farmers in the future though ? Or just landowners and service providers (which might be the machinery / decision algorithm manufacturers)

    It’s a few years away yet though !
     
    ollie989898 likes this.
  12. ajd132

    ajd132 Member

    Location:
    Suffolk
    Yep I understand
     
  13. tjhooker

    tjhooker Member

    They are certainly a sounder, fairer structure than an FBT, where only sometimes-bonkers ‘market forces’ dictate detrimental, short-term land management strategy. CFAs encourage both parties (farmer / contractor) to work positively towards one goal - a satisfactory return. They are based on personal relationships, are transparent and should possess the flexibility to change as the political landscape changes - which I really like. The involvement of Agents often destabilises this and are one of the largest threats to their future success IMO (best avoided from the start...!!)
     
    Clive, ajd132 and Lexion1000 like this.
  14. Lexion1000

    Lexion1000 Member

    The landowner in your example sounds like he is still actively managing his farm but using contractors to do the work. Most contract farm owners are looking for someone else to take over all of the management and organise all of the work. The contract farmers also bring in expertise that the land owner might not have. The end result might be more profitable for him if his farm ends up being managed well.
     
    Last edited: Feb 11, 2019
  15. lloyd

    lloyd Member

    Location:
    Herefordshire
    So the CFA clients are more likely to be wealthy landowners
    who might be interested in the environment and good land management
    than the hassle of growing crops?

    Obviously the existing definition of working farmer to qualify
    for IHT has allowed CFAs to exist!

    Thankyou for reply
     
  16. Beowulf

    Beowulf Member

    Location:
    Scotland
    Farming As A Service (FAAS, very well named) sounds synonymous with Stubble to Stubble contracting to me, or am I mistaken?
     
  17. Flat 10

    Flat 10 Member

    Location:
    Fen Edge
    I don't charge enough for the management expertise I bring to the table in the Contractors charge. (I know that's my profit share but its still rankles).
     
    Lexion1000 likes this.
  18. Flat 10

    Flat 10 Member

    Location:
    Fen Edge
    @Rob Holmes does the man who drove to scotland still do it? And is he a timely farmer?
     
  19. tjhooker

    tjhooker Member

    Not totally accurate - The common scenario here for the inception of a CFA is of a farmer without farming succession - they are of an age and wish to retire / do less / enjoy life but the family decision has been made for the children to seek a career elsewhere. Not having to worry about the weather or selling at the top / bottom of the market has allowed our farming clients the time to add a lot of value to their lives and family businesses. How they choose to work the current UK tax system is totally their call, we’re just keen to facilitate that, if the agreement fits :)
     
  20. Rob Holmes

    Rob Holmes Moderator

    @Flat 10 He doesn't do it any more, not going to divulge the circumstances on here, but it wasn't to do with distance, timeliness or finances. Other factors influenced why he doesn't do it now
     
    Flat 10 likes this.

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