Share farming and contract farming agreements: Share farming
Share farming, which is less common, has the distinguishing feature that both the landowner and the share farmer can be seen to be separate occupiers of the same land, each occupying it for the purposes of farming. There are two farming businesses on the land.
They operate separate businesses which in combination result in the agricultural output of the land (for example, grain, milk, meat, or wool). Each is then rewarded by a pre-agreed share of the value of that gross output (usually its sales). The agreement between them will define their separate activities and responsibilities and so define who is liable for which costs, such as maintaining fixed equipment or fertilisers. Each business will have its own bank account, will draw up its own entirely separate business accounts and be responsible for its own tax and VAT returns. Typically, the share farmer will provide the working machinery and moveable equipment. Livestock is usually held in undivided shares. The landowner provides the land, the fixed equipment and fixed machinery.