Contract Farming

Communication has been the key to building our contract farming business

This coupled with having the management, machinery, and staff in place to deliver the results, but without good communication farmers and landowners wouldn’t have known about us, and then trusted us with their valued assets. Once established, good communication for us means consulting with the customer on what their wishes and priorities are, together discussing cropping plans and budgets, and then updating them on progress through the growing season and, of course, marketing and planning for the following season.

Going back a step

What is contract Farming?

Put simply, a mutually beneficial arrangement between a landowner and a contract farmer, who is responsible for supplying the machinery, labour and management to grow the crops (or livestock) on that land. The usual structure is that an account belonging to the landowner is used to pay for the input costs of the growing crops. From this the contractor is paid an ‘at cost’ fee for the machinery and labour supplied. The surplus is then used to pay an established “prior charge” to the landowner and then afterwards any surplus is split between the two parties at a pre-agreed ratio. Using this format ensures that the landowner remains a bona fide farmer, important in respect of HMRC, and the contractor is incentivised to farm in a sustainable and profitable manner.

What are the benefits to a landowner considering a contract farming agreement?

Use of the latest machinery and technology that they may not otherwise be able to utilise

Release of their own working capital to invest else where

Time released to put to other enterprises or priorities

Retention of their farming status, which is essential for agricultural property tax relief

Clear and transparent accounts, which are simple to administer and provide relief from volatile markets, and creation of any tenancies or complex partnerships

Economies of scale and larger purchasing power.

Why choose North Farm Contracting?