What is a Farm Agreement?

A farm agreement is a document stating the business relationship of two farmers that will share the profit from a farm. The landowner which is called the Farmer is the one who will provide the land to be tilled to another farmer which is the Contractor who is going to give labor and provide machinery. This is a form of business partnership that will happen by sharing the common profit of the farm. Landowners sometimes do not have time to till their land and they can negotiate with other farmers to do it for them. The contractors will pay the landowner a certain price for letting them use the farm and have a harvest. It is up to the two parties to negotiate about how they can divide profits and how much will be given to the landowner.

Whether you are going to enter a contract farm agreement, poultry farm agreement, dairy share farm agreement, farm lease agreement, farmland lease agreement, or farm land rental agreement, all go the same, the landowner and the contractor should both profit from the harvest that they are going to get from the land. Whether the profit will be high or low, they should agree on how to share the profits. Farmworkers are used in this kind of relationship in farm agreement because sometimes farmers need a partner that can help them in tilling their land. There are certain reasons why they engage in this kind of agreement. It is beneficial for them and even to the other party.

To invest in a crop share is not bad because you can get profits from your land with you doing nothing. You just wait for the harvest that is done by the contractor and you will have some money out from your farm. If you are a person who has other business, you can have a benefit from your land without having to work for it every day. Your income is sure because the contractors have to pay you a certain amount for the particular hectares that they will get tilled. It is a good farm cash lease. You do not have to till the crop yourself and you can have money. Like in the farm management agreement, your farm can give you returns even if you do not have the time to till it.

Benefits of a Farm Agreement

In all types of contract farming, you can get benefits. It is also true with a farm agreement. Contract farming opportunities are everywhere because landowners and contractors benefit from them. Would you like to know some of the benefits of a farm agreement? Consider and read the following:

Learning New Skills: Because you are having a partnership with another farmer, it will be a great chance for you to learn new skills. The contractors may have some methods that you have not used on your farm. They may have strategies and techniques that can advance your farm. They may have innovative ideas that can improve your harvest. Engaging with them will make you know of ways that you have not done before. As you see how they do farming, you can learn their ways. It is good for you and your farm because you can apply new skills that can enhance your harvest. You can use their techniques so that your crops will be better when it is your time to till your land. Learning new skills is always good. A new skill means a new benefit. Or to be more exact, a new skill can denote money. Thus, you can have a better income or more money can go into your pocket.Having New Technology: Maybe your farm is not that advanced. Maybe you use old equipment for your harvest. If you will engage with contractors, they may have the latest technology today. They may have the latest machinery that can make your farm have a great harvest. The newest technology to improve crops may be introduced to your farm through them. This is your chance to be aware of the latest technology. You can be sure that you will have a more perfect harvest if you will use better technology. You can ensure a better profit because the harvest will be better. Your farm will not be left out with the latest technology. So, it is surely good to have contractors till your farm. You will always have something new to learn from their farming methods.Getting New Markets: The contractors may have their market where you can sell your crops. They have their connections that can help them to have consumers. It is very good that you will have someone who can help you to sell your harvest, someone who can introduce you to new markets. If you will work alone, you will rely on a simple market that you know. But your products can have new markets through the help of contractors. They can even help you with a marketing plan or a marketing strategy. This will make you build good connections with consumers and you can have regular customers for your products. New markets mean new profits. Who will not want that? So, get contractors so that you can have help in marketing your products.Having a Working Capital: Landowners and contractors share profits from the harvest. But when it comes to capital, the contractors help the landowners when it comes to machinery and other costs. This is a great advantage for landowners who lacks capital for their farm. Through the help of contractors, their needs will be sustained. They do not have to make a business loan agreement with banks to get business loans. They can rely on the contractors as their business partners who can help them in getting a good harvest. And the capital has no interest because it is the responsibility of contractors to spend on machinery and other things. This gives a lot of convenience on the part of landowners. They can surely get returns from their farms without having to sweat on anything.Expansion of Business: On the side of the contractors, they can easily benefit from the agreement because it will be easy for them to expand their business. Contractors may even do business with different farmers at the same time. It means that they can harvest from multiple farms and get multiple profits. Nothing is hindering them to have farm agreements for many farms. Thus, they can expand their business for as long as they want. They can work with different farmers all at once. This is a good example of a business that can be easily achieved if contractors will just be hardworking and honest in their business. Imagine the profit that contractors can get. A farm agreement is truly beneficial for them.

How to Write a Farm Agreement

Do you need a share farm agreement template or farm lease agreement template? Are you going to write a farm agreement? If that is your problem, we can help you. We have some steps that you can use in writing a farm agreement. They are the following:

  • Step 1: Details of Parties

    The first thing that you have to write in a farm agreement is the name of the landowner or the Lessor and the name of the contractor or the Lessee. Write the contact information of both parties. A farm agreement has a good element if it has written the details of the two parties carefully. Their contact information should be clear so that both parties will know how to reach each other.

  • Step 2: Farm Description

    The next thing is you have to describe the farm that is going to be leased by the contractor. You should include the number of hectares of the farm. You should also write the type of the farm. If possible, you should include a map to provide better details for the farm. You can also write the name of the farm if it has any. Whether you have a dairy farm, poultry farm, or fruit farm, you need to give a clear description of the farm to make the agreement clear.

  • Step 3: Length of Term

    Then you should write the length of time or the duration of the agreement. This date will dictate how long will the contractor till the farm of the landowner. They can agree to have a length of the term of months, a year, or years. If they think that they will have a good relationship, they can have the agreement for a long time. But if they do not trust each other that much yet, they can have the agreement for months as a trial engagement. The farm agreement will be valid at the said time duration. They should also write if the agreement is renewable or not.

  • Step 4: Rental Price

    This is the amount that the contractors have to pay the landowners for the tilling that they have to do on the farm. The price is given per hectare of land. This price is dictated by the landowners and can be agreed upon by the contractors. The rental price can be paid in advance or after the harvest is done. The price is not included with the profits that the landowners can get from the harvest as their share. So, be said, this price is agreed upon by the landowners and contractors.

  • Step 5: Farm Maintenance

    Every farm needs maintenance. The landowners and the contractors should agree on who will pay for the maintenance of the farm. Usually, the maintenance is paid by the landowners, but some landowners pass the responsibility to the contractors. If the contractors will have to pay for the maintenance, there should be a specific amount that they will pay. Otherwise, the excess amount should be paid by the landowners.

  • Step 6: Liability Insurance

    You have to be clear if the contractors should have liability insurance. Landowners attest that they are not responsible for the contractor’s operation. If any damage will be done, there should be an indemnification that will pay for the damage. Having liability insurance will settle their dispute because the damage will be paid rightfully. Everything can be settled through it.

  • Step 7: Farm Requirements

    There should be a restriction in the contract that will state the type of crop that can be permitted on the farm. The type of product should be clear. If landowners and contractors agree to plant mango on the farm, the only crop that can be harvested on the farm is mango only. The contractors have no right to plant other types of crops. Farm requirements should be clear and limitations should be written.

  • Step 8: Law Compliance

    Both parties should ensure that the agreement is compliant with all the applicable laws. They should write the governing laws that they will apply in their deal in the agreement. These laws should conform with the state laws. Both parties must keep these laws to avoid being law-breakers. One of the parties can bring the case to the court of law if this happens.

  • Step 9: Condition of Premises

    The exact condition of the farm should be written in the agreement. This is to ensure that the contractors will not do something bad that can destroy the farm. If after the harvest, the farm will be in a bad condition, the landowners can ask for payment for the damages. So, the condition of the farm should be mentioned diligently. You have to state if it is in a good condition or needs some upgrades.

  • Step 10: Alterations and Subletting

    These are the restrictions that are given on the improvements that can be done to the property. What are the limitations for the contractors to improve the harvest? What can they do to improve farming in that particular land? How far can the landowners permit the contractors in making changes to the farm? Can a contractor be permitted to use the land with a third party? You have to be clear with these things.

  • Step 11: Dispute Resolution

    You need to have a good relationship with the other party, whether you are landowners or contractors. To make this possible, you have to set a dispute resolution that will settle everything if a dispute may happen. You have to know how you will do arbitration. Though you and the other party may have a dispute, you have to fix everything and start anew if it is possible.


How much do contractors pay landowners?

The average price that contractors pay landowners for cropland or pastureland is $125 – $3140 per acre. It depends upon the condition of the farm and its location.

Is having a farm agreement the best way to get profit from a farm?

It may not be the best way on how you can get profit from your farm, but is a good way of how you can have income from your farm, especially if you are a busy man. If you want to have the profits of your farm alone, you can till your land and have the profits by yourself only. Both are good because a farm agreement can be proved to be beneficial.

If you are way too busy to handle your farm, your best resort is to have a farm agreement. Get contractors who can till the land for you. You can have profits with you doing nothing. Just have a great business relationship with contractors and you can continually have income from your farm. Are you needing a template for a farm agreement now? This post has 16+ SAMPLE Farm Agreement in PDF. Have any of them. You do not have to spend a cent because they are free. Download now!