FOR ASPIRING FARMERS
What does share farming cost the farmer and the owner?
By Sam Marwood
Here's what each side gives up. For the farmer it's the cash to carry, and a season with no wage under it. For the owner it's the certainty of rent, and day to day control.
For the farmer: cash flow
You're funding your share of the inputs months before there's any revenue, and you're doing it without land to secure borrowing against. That's particularly so in cropping.
That gap is the reason capable sharefarmers stall, and it has nothing to do with how well they farm.
For the farmer: risk without the asset
You're running an enterprise, not holding a job, so there's no payment you can count on. In a bad season you can work a full year and take home very little, and unlike an employee you have no wage to fall back on.
For the owner: certainty
A tenant pays rent whatever the season does. A sharefarmer pays a share of what the season produced, and some seasons produce very little.
For the owner: control
The owner is handing over day to day control to someone running their own business on their land. That's the deal. If the owner can't resist directing the work, they want an employee. Calling it share farming will cause problems with more than the relationship.
For both of you: the paperwork
Cropping share farming agreements are well developed in Australia, with model codes and checklists to work from. Livestock arrangements are much less well documented.
If you're doing this with stock, expect to spend more on getting the agreement right. You're not starting from a template the industry has already refined.
What to do about it
Before you talk terms, ask your accountant how you finance your share of the inputs when you have no land to secure it against. Model the numbers too, because a farm that can't carry two incomes can't carry this.
Read more: Share farming: how it works, with an example and How is a share farm split?.
This is general information, not tax or legal advice.
The full guide, You Can Own a Farm, is free at cultivatefarms.com/resources.
You can build your own plan at cultivatefarms.com/plan.