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They would share in the expenses for seeds, fertilizers, and pesticides. Farm management agreement has been helping numerous farmers for years. Sometimes, they do not have enough capital to run their farms and through it, they have found a help. They could find somebody, growers to be exact, to help them to produce profit with their property. All they have to do is to make an agreement with them and they could later share the profits that they could get with the farm. It is a good partnership or partnership agreement that many farmers has been doing for a long time. It is common in custom farming. Whether you have a blackberry farm or a pepperidge farm, your farm can be leased and produce profits without you exerting much effort.
3+ Sample Farm Management Agreement
What is a Farm Management Agreement?
A farm management agreement is an agreement between growers and the owner of the land property or the farmers in cultivating a farm. This farm may include livestock or a certain type of produce. It can also referred to as farm management contract. It is a way where farmers would let a grower take over their farm for a particular time or until the crop harvest. It is a form of farm lease agreement. It can also be known as crop share agreement because both party will share on the profits of the crops. It is commonly done in a state farm or fleet farm using holistic farming. You can have a farm management company that could help you in cultivating your farm.
Sometimes this agreement could serve as an employment contract to the growers as they would be in charge in tilling your land. Croptivity is up to them and the farmers would just wait the time of harvest. When it comes, the two parties will have to divide whatever profits that the farm could give. Ranch management or agricultural management has been tried by farmers because sometimes they have no time to do the farming or they are lacking on capital. Sometimes they simply want a helping hand or a partner that could help them with the work. Property management could be hard in some times that we would need somebody to help us through.
Options in Farm Management Agreement
When we are about to enter into a farm management agreement, we can have the following options for the things that we can do:
This is an agreement between two parties to share the farm’s output. No standard contract is followed in this type of agreement. All the terms are given by both parties – how they will share the farm’s output and what they will give as a contribution for the farming. This agreement becomes successful when both parties have great skills in farming or when both have complementary sources. In share farming, the parties do not share profits. They get their profits through their own output with the shared land. It has the following benefits:
- It is a kind of joint venture that is most flexible.
- The grower can begin with a small share. They can advanced with an equity share whenever they like, through stock or materials ownership. The equity will depend on how the farm will profit, the commodity prices, and land market.
- For the owner, it can be an alternative investment.
- It would not involve the owner in the everyday work in the farm.
- The farm can have a new enterprise. The owner can have the skills on the things that they do not have expertise.
- It suits a farmer that is near on his retirement.
- It suits someone who lacks a capital.
This is a joint venture between an owner of a land and a contractor. They use separate bank account that is used to pay the inputs and to receive the income from the farm. Commonly, the landowner provides the land and the bank account. While the contractor is in charge of the labour and the machinery. In this type of agreement, parties share the profits. After calculating all the cost, they will divide the surplus with the agreed ratio. It has the following benefits:
- The cost of production is decreased because the machinery is a surplus.
- The physical input of the farmer can be decreased while they live in the farm.
- It gives capital for other investment plans.
- The landowner can keep on trading as a farmer.
- Contractors can have profits per acre.
- It suits those who want to expand their farm, but do not have much capital.
- It suits landowners with multiple farms.
Tips on Farm Management Agreement
A farm is one of our greatest investment, so we have to take care of it. Apply these tips as you engage on a farm management agreement:
How to Make a Farm Management Agreement
Maybe you have a farm and you want to lease it to a contractor. The only problem you have is you do not know how to create a farm management agreement. You can use the following steps in writing your farm management agreement:
Step 1: Find a grower or a contractor for your farm.
If you do not have enough capital to keep your farm running or you just simply do not have time to work for it everyday, you may want to find a contractor or a grower that could lease your land. Use your connection to find the right person. They might know of someone who could want to do the work for your farm daily. You can also use the internet to find the perfect person. If you will find somebody or a couple of persons that could be your prospect, have an interview with them. You should know if their skills would fit the needs of your farm. You must know if you can entrust it to them. The person you will choose should be trustworthy and someone who has the perfect skills that will help you in running your farm.
Step 2: Talk about the terms that you will have in your agreement.
After selecting the right person, negotiate with them. Talk things that are needed to be done in your farm. Decide on the contribution that both of you will have for the farm. Agree on how you can divide the cost of the production or how you can share capitals. Know also how you can divide profits. Make sure that both of you agree on common things. Take note of everything that you have talked about and turn it into a draft.
Step 3: Pick a template and write your agreement.
Choose from the many downloadable templates that are available in the internet. After finding the perfect one that you can use for your agreement, edit it. Write everything that you have agreed upon. Proofread it. You can consult a lawyer for the perfect advise for your agreement. Show the agreement to the lawyer. After everything was done, you can present it to the contractor for his signature.
What are the Qualifications of a Farm Manager?
Farm managers usually have a bachelor’s degree. But if you have a small farm, you can choose someone who has the agricultural experience. The skills are more important than a degree. But most times, you should get a farm manager who has a degree.
Is it Essential to Have a Farm Management Agreement?
Yes. It is so essential. What happens if a dispute will arise? Or if the contractor will not pay you with the profits of your produce? Even if you are a small farmer, you must remember that you have to sign an agreement first before entering a commitment with a contractor. It will dictate all the terms that you need in your engagement. You will know how to price the farm’s output and the contractor will be committed to pay you.
For How Long Should a Farm Management Agreement Will Last?
It is completely up to you. You can make an agreement that can last for years. Or you can make a one-time agreement. It is also good if you will use an agreement that can be renewed each year or every time of the harvest. What is important is that you find the right contractor so you can prolong the agreement.
Farm management agreement is so advisable because it can make a landowner to have profit from their property without them doing anything. If you have a land investment, maybe it is time for you to resort in this kind of agreement. You can make a good use of your land and you can have a great profit. Just find the right contractor and your land will yield its increase. You will have a good source of income that can help you in your everyday lives.