Collaborative Farming

What is a Farm Partnership and what are the requirements to set one up?

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Calling All Farmers – Have You Considered All The Pros and Cons of Collaborative Farming?

Calling All Farmers – Have You Considered All The Pros and Cons of Collaborative Farming?

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According to the Department of Agriculture there are currently 850 formally registered Farm Partnerships Agreements who reap the benefits of the structure including shared knowledge and experience, a better quality of life and an ability to maintain off-farm work.

But what is a Farm Partnership and what are the requirements to set one up?

A farm partnership is where there are two or more farmers join their individual resources with the intention of obtaining numerous benefits.

A partnership must have the following qualities:

  1. One of the partners must be a farmer who has been farming in their own right for two years preceeding the date on which the partnership was established.
  2. One of the partners must have an appropriate agricultural qualification whose contribution to the farm partnership entitles him/her to at least 20% of the profit sharing arrangement.

The Collaborative Farming Grant Scheme provides a financial payment to parties qualifying for the grant. The amount of the payment is 50% of the vouched cost for each of the legal, advisory and financial services secured in the drawing up of the Farm Partnership Agreement, up to a maximum payment of €2,500. The scheme is only open to new partnerships which are registered with the Department of Agriculture and which have a farm partnership registration number.

A written agreement is highly recommended as it formalises the arrangement and forces the parties to discuss issues that may have been sidelined, such as succession rights. Family partnerships with a father and son/daughter account for two thirds of Milk Production Partnerships thus streamlining the hand-over of the farm to future generations. It is extremely important that succession rights be considered for the remaining one third where there are two or more unrelated farmers coming together to establish the partnership. Who will inherit the farm?

At a recent Teagasc Conference it was noted that while the advice of an accountant is always sought to fine tune all financial issues associated with setting up a partnership there were very few examples of partnerships that had sought legal advice prior to establishment.

Legal advice in these instances cannot be underestimated for a number of reasons, including, but not limited to, the following:

  1. Is there an exit strategy if there is a necessity to dissolve the partnership? Have you planned for the possibility that the Partnership may not be a success?
  2. Have all of the potential partners been adequately advised of their unlimited liability? There is a possibility that each partner will be liable for the losses incurred by their co-partner, for example in the event of a fraud being committed.
  3. Have the eventual successors of the partnership been identified where there are two unrelated parties entering into the agreement? As outlined above, where there are members of one family entering into the agreement it can be an ideal move towards passing on the farm to future generations and securing its ownership for the future.

It is better to identify potential pitfalls before entering into an agreement and it is therefore vitally important that you discuss the arrangement with your legal advisor before it is drafted.

-Tanya Brady

If you wish to discuss your Farm Partnership Agreement you can call the office on 071 91 45928 or email office@mccannysolicitors.com.

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