Contract farming and ‘grey areas’ of liability

Potential pitfalls, disputes and consequences of contract farming arrangements have been spelled out by a farm insurance company.

Farmers & Mercantile (F&M) point to responsibility for “grey areas” such as the maintenance of fuel or liquid fertiliser tanks, environmental liability or equipment supplied by the landowner yet only ever used by the contractor, such as grain-drying equipment.

Company director Nigel Wellings said that with growing numbers of landowners contracting their farm operations and more farmers taking on contract work, it was necessary to understand the point where the insurance liability passes from landowner to contract farmer.

He said a written Contract Farming Agreement (CFA) needed to spell out everything, from who is responsible for health and safety requirements, to ensuring adequate public and employers’ liability cover, through to agreeing responsibility for crop and input insurance.

“In simple terms, there is no real defined boundary between the responsibility of the landowner and contract farmer,” said Mr Wellings.

“Even when a good, transparent CFA is agreed, this does not absolve landowners from their responsibilities.

“The contract farmer is effectively a tenant on the landowner’s property and accordingly the landowner must ensure all health and safety policies are agreed and adhered to, and that both the contractor and landowner have adequate cover for all on-farm activities.”