400 acres, 40 miles away.

Daniel

Member
Horses for courses. Lots of farmers need to be seen to be actively trading for tax purposes. They can put lots of items against the business as well as staying in the game whilst sharing in a bigger contractor’s economy of scale. More snouts in the trough of course.
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 think they mostly are ! Only slightly less so that FBT’s which are the ultimate mugs game

However in partnership with the right land owner they can work well ...... you have to be picky about who you work for !
I've got an FBT, but then I've always suspected i'm a mug.
 
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.
The end result for the contractor is not dissimilar to an fbt but with more office work imo.
 

T Hectares

Member
Location
Berkshire
There are some people out there that could make nearly anything look like a mugs game because of how they approach and do it.
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...
 

Clive

Staff Member
Location
Lichfield
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.
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
 

Clive

Staff Member
Location
Lichfield
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...
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
 

T Hectares

Member
Location
Berkshire
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
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:
 

Clive

Staff Member
Location
Lichfield
Do people think cfa’s are fit for purpose going foward?
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 ................
 

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.
 

ajd132

Member
Location
Suffolk
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 ................
What is FAS?
 

Clive

Staff Member
Location
Lichfield
What is FAS?
“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 !
 

ajd132

Member
Location
Suffolk
“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)
Yep I understand
 

tjhooker

Member
Do people think cfa’s are fit for purpose going foward?
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...!!)
 
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.
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.
 
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lloyd

Member
Location
Herefordshire
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 their farm ends up being managed well.
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
 

tjhooker

Member
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
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 :)
 

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