Share farming is an arrangement where two parties, a landowner and a share farmer, carry on separate farming businesses on the same land without forming a partnership or company. Each makes separate contributions, for example land, machinery, labour and expertise and takes a share in the produce or gross output. Each party to the arrangement contributes their own costs of production. The share farmer and landowner keep their own accounts and calculate their own profits as separate and independent businesses. However each business is very closely linked.
The arrangement is not and cannot operate as a de facto conacre arrangement as both parties must share risks and rewards The details of the share farming arrangement are set out in a written legal agreement. As both individuals remain separate business entities they may continue to claim the Single Farm Payment, REPS etc, in their own name and also maintain their separate tax affairs as normal.
The appeal of the agreement to growers is that it allows a new way of accessing land which increases scale in a controlled manner. Properly managed, this increase in scale will reduce production costs through increased purchasing/ selling power and will lower machinery costs and reduce fixed costs per acre. For the landowner the share farming agreement offers the opportunity to leverage all the advantages attained by grower and also tap into the expertise of the grower to increase output. The increased output at lower costs increases the overall output benefit of both parties in the agreement.
All farmers and landowners should familiarise themselves with the agreement and assess whether it is a viable option for the future.