Advantages of Contract Farming

The advantages of a Contract farming agreement:

  • Use of specialists whose reward depends on their achievement
  • No capital cost of machinery or depreciation charges
  • Generally avoids employment costs/HR regulations
  • Continue as a farmer for purposes of SPS/ELS
  • Inheritance tax (Business Property Relief), income tax and VAT benefits (compared with Farm Business Tenancy)
  • Inheritance tax (Agricultural Property Relief) for farmhouse if used for business
  • Very flexible and adaptable
  • Not governed by statute - virtually all terms can be agreed between the parties
  • Reduced involvement means less stress compared with in-hand farming
  • Good return - should be more than an FBT but also more risk and less secure
  • Allows absent farmers to carry on by using an agent to manage the CFA

FBT agreements are also an attractive option if the landowner wishes to have no input in the farmed area or are maybe an outlying parcel where the farmers own time is compromised. Andrew has built a very strong, trustworthy relationship with all the landowners.