Contract farming options

[Snacker]

Currently own and farm 800acres of arable land. My next door neighbour has approached me about farming his 200acre of arable land. He is going to keep the SFP and wants it to look like he is still actively farming. He is happy to receive £130/acre. But wants as little paper work to do as possible.

My though was to invoice him £400/acre for seed, fert, spray, and contracting work.
And him to invoice me £530 acre equivalent grain. =£130acre to land owner.

Is this possible and would this count as him actively farming.

 

[SillyPhily]

Why not just contracting, why do you take the risk?

 

[Bojangles]

Currently own and farm 800acres of arable land. My next door neighbour has approached me about farming his 200acre of arable land. He is going to keep the SFP and wants it to look like he is still actively farming. He is happy to receive £130/acre. But wants as little paper work to do as possible.

My though was to invoice him £400/acre for seed, fert, spray, and contracting work.
And him to invoice me £530 acre equivalent grain. =£130acre to land owner.

Is this possible and would this count as him actively farming.

And so the door slams shut on another young farmer. No wonder there ain't SFP to go to the new guys when the ones that ain't doing nowt can't take their snouts out the trough IMO

 

[Chae1]

Currently own and farm 800acres of arable land. My next door neighbour has approached me about farming his 200acre of arable land. He is going to keep the SFP and wants it to look like he is still actively farming. He is happy to receive £130/acre. But wants as little paper work to do as possible.

My though was to invoice him £400/acre for seed, fert, spray, and contracting work.
And him to invoice me £530 acre equivalent grain. =£130acre to land owner.

Is this possible and would this count as him actively farming.

He has to be seen to have an element of risk. Start a seperate bank account take seed, fert, contracting costs etc out of account then pay in money for crop harvested. Then split profit.

They don't like the word rent, buying standing crop isn t really seen as risk taking either.

 

[Thick Farmer]

You have to take it on so you can tell all your mates down the pub that you farm 1000 acres.

 

[DRC]

You have to take it on so you can tell all your mates down the pub that you farm 1000 acres.

No, your still sat on your arse in a tractor, while your mates are in the pub

 

[Kevtherev]

Wish I had a neighbour to offer me 200 acres!
It's all snaffled up round here by the big units sad really

 

[Sussex Martin]

He has to be seen to have an element of risk. Start a seperate bank account take seed, fert, contracting costs etc out of account then pay in money for crop harvested. Then split profit.

They don't like the word rent, buying standing crop isn t really seen as risk taking either.

Agree with the above, it's the only way without risking his SFP.

 

[Fox Red]

And so the door slams shut on another young farmer. No wonder there ain't SFP to go to the new guys when the ones that ain't doing nowt can't take their snouts out the trough IMO

Farming is going down the same road as Tesco!!!

 

[Bojangles]

Currently own and farm 800acres of arable land. My next door neighbour has approached me about farming his 200acre of arable land. He is going to keep the SFP and wants it to look like he is still actively farming. He is happy to receive £130/acre. But wants as little paper work to do as possible.

My though was to invoice him £400/acre for seed, fert, spray, and contracting work.
And him to invoice me £530 acre equivalent grain. =£130acre to land owner.

Is this possible and would this count as him actively farming.

If you dress it up to look right then I'm sure it may work out for you both but What you are talking about is not legitimate and if either of you had a tax inspection you would have to potentially answer some tricky questions

 

[Brisel]

If you dress it up to look right then I'm sure it may work out for you both but What you are talking about is not legitimate and if either of you had a tax inspection you would have to potentially answer some tricky questions

Quite right.

Contracting agreement with a fee plus profit share, or a share farming agreement with you putting in the labour & machinery & him buying seed, fert, sprays then dividing the income by 50% & the costs by 50%. He has to take some risk or it's just another sham tax dodge.

http://www.forsters.co.uk/cmsfiles/pdf/NwsltNov08_BPR_GrazingLand_RM.pdf

 

[Snacker]

Why not just contracting, why do you take the risk?

He doesn't have storage and we don't have a weight bridge. Also don't want to have to try and keep grain separate.

 

[hindmaist]

You do all the work and management and bill him quarterly.He does his own farm assurance.You organise seed,fert etc but the bill goes to him.You harvest the crop for him and sell enough of it,on his behalf,to give him his £130/acre profit.The cheque goes straight from the merchant to him.If there isn't enough crop,you'll have to send some of your own.If there's a surplus of crop,you keep it for yourself.To keep within the tax rules you would need to value,invoice and account for the shortfall or surplus.Just as you would if you swapped a bale of hay for a neighbours bale of straw.Or if you did a bit of ploughing for a friend in return for him doing a bit of sowing for you.Rules are rules.

 

[Rob Holmes]

You do all the work and management and bill him quarterly.He does his own farm assurance.You organise seed,fert etc but the bill goes to him.You harvest the crop for him and sell enough of it,on his behalf,to give him his £130/acre profit.The cheque goes straight from the merchant to him.If there isn't enough crop,you'll have to send some of your own.If there's a surplus of crop,you keep it for yourself.To keep within the tax rules you would need to value,invoice and account for the shortfall or surplus.Just as you would if you swapped a bale of hay for a neighbours bale of straw.Or if you did a bit of ploughing for a friend in return for him doing a bit of sowing for you.Rules are rules.

.... or profit share the surplus?

 

[hindmaist]

.... or profit share the surplus?

If the£130 is a fair "rent",would there be a need to share any surplus or shortfall? I suppose its a detail which could be incorporated into the deal if it suits both parties.

 

[Rob Holmes]

I've seen in some agreements a "Contractors Prior Charge" which is effectively a rent

 

[Bojangles]

If the£130 is a fair "rent",would there be a need to share any surplus or shortfall? I suppose its a detail which could be incorporated into the deal if it suits both parties.

But remember it has to appear like the owner is the farmer! Smoke and mirrors!!

 

[Brisel]

I've seen in some agreements a "Contractors Prior Charge" which is effectively a rent

Do you mean a "Farmer's Prior Charge?" Contractor's fee is supposed to cover most but not all of their costs which motivates them to work hard for the profit share.

 

[Rob Holmes]

I thought it was "Contractor's Prior Charge"? (but could be wrong) Where contractor pays farmer before any work is carried out

 

[SillyPhily]

He doesn't have storage and we don't have a weight bridge. Also don't want to have to try and keep grain separate.

Ahhh sorry, just trying to say alot of risk is loaded on you maybe pay costs (and yours as contract charge) split profits?
Better than broad acre spread sheet farming.
Can your kit take a 25% jump in work? remember to price in accelerated work/wearing out