Farm part­ner­ship: Fo­cus on the po­ten­tial ben­e­fits

Good place to start is to talk through the prac­ti­cal­i­ties

Irish Examiner - Farming - - NEWS - Stephen Cado­gan

“A part­ner­ship is sim­ply a busi­ness ar­range­ment that ben­e­fits ” all par­ties in­volved

A part­ner­ship with an­other farmer can im­prove your work-life bal­ance and grow your farm busi­ness, says Tom Cur­ran of the Tea­gasc Ru­ral Econ­omy De­vel­op­ment Pro­gramme, in his ar­ti­cle in the cur­rent edi­tion of the Tea­gasc/agri­cul­tural Trust To­days Farm mag­a­zine.

A part­ner­ship is sim­ply a busi­ness ar­range­ment that ben­e­fits all par­ties in­volved. There is no time limit, dis­cus­sions should take place over what­ever time pe­riod is re­quired by each part­ner to get their head around the idea. The key is­sue is to work through the var­i­ous steps in bring­ing two farms to­gether into one busi­ness, where the prof­its will be shared on an agreed ba­sis.

What is the first step?

>> The ini­tial ap­proach is not easy. How do you ap­proach an­other farmer about the pos­si­bil­ity of work­ing with them in a part­ner­ship or some other busi­ness ar­range­ment?

Firstly, you must think care­fully about the ben­e­fits that could be gained by both par­ties. These ben­e­fits can in­clude more labour avail­abil­ity, both par­ties en­abled to take time off, and op­por­tu­ni­ties to in­crease scale, im­prove ef­fi­ciency, and en­hance the work-life bal­ance. In most cases, a farmer al­ready has some­one in mind they would be happy to work with, be­cause they al­ready have ex­pe­ri­ence of work­ing with them in some ca­pac­ity. At the end of the day, in mak­ing that ini­tial ap­proach, all you can do is sug­gest that you are in­ter­ested in work­ing to­gether in part­ner­ship.

Fo­cus on the ben­e­fits and give the other party time to di­gest what you have said.

What comes next?

>> If the ini­tial ap­proach is suc­cess­ful and the other farmer is in­ter­ested in ex­plor­ing the idea of a part­ner­ship, a good place to start is to talk through the prac­ti­cal­i­ties. This will lead to de­vel­op­ment of a phys­i­cal plan that sets out where the farm­ers are now, and what changes are needed to bring them to­gether. These steps may in­clude dis­cus­sion on: Land: lo­ca­tion, qual­ity, link­ing-up.

Farm in­fra­struc­ture: link­ing

■ road­ways, water sys­tems, pad­dock size.

Farm build­ings: Milk­ing fa­cil­i­ties,

■ an­i­mal hous­ing, slurry and soiled water stor­age. Live­stock: val­u­a­tions, sales,

pur­chases, breed­ing pol­icy, etc.

Ma­chin­ery: val­u­a­tions,

sales, pur­chases. Es­tab­lish­ing the cap­i­tal

cost of any works re­quired to bring the farms to­gether, and pri­ori­tis­ing the in­vest­ment and set­ting time­lines around those pri­or­i­ties.

What should the fi­nan­cial plan ■


>> Us­ing the in­for­ma­tion from the phys­i­cal plan, a sixyear busi­ness plan should be drawn up to show what the busi­ness can de­liver in terms of cash­flow and po­ten­tial in­come to both par­ties. In­cluded in this fi­nan­cial plan will be a pre­dic­tion of tech­ni­cal per­for­mance based on the pre­vi­ous per­for­mance of one or both farm­ers. This plan should be up­dated each year with ac­tual per­for­mance once the part­ner­ship is up and run­ning.

How can part­ners es­tab­lish a ■

healthy work­ing re­la­tion­ship? >> A healthy re­la­tion­ship is based on good com­mu­ni­ca­tion, hon­esty, trust, re­li­a­bil­ity and trans­parency.

At the be­gin­ning, it is very use­ful for each part­ner to do a per­son­al­ity pro­file. The fo­cus of this is for each part­ner to an­swer the ques­tion: how well do you work with oth­ers? The pro­file will es­tab­lish each part­ner’s per­sonal at­tributes, val­ues and life skills. It is vi­tal in­for­ma­tion which will en­sure that both are on the same page with re­gard to the farm busi­ness. One of the key ad­van­tages of work­ing with an­other per­son is the in­crease in skills and abil­i­ties brought to the farm busi­ness. A skills as­sess­ment is done by, firstly, iden­ti­fy­ing the skills needed to run the busi­ness ef­fec­tively and, sec­ondly, each part­ner writ­ing down their own skills.

The third part is for each part­ner to rate their own abil­ity on each of the skills iden­ti­fied. This process is very worth­while. It can help to iden­tify key strengths, ar­eas where up-skilling is re­quired and it can also feed into the dis­cus­sion on roles and re­spon­si­bil­i­ties within the busi­ness.

What ser­vices can help with

setup of a part­ner­ship?

>> Up to this point, the farm­ers them­selves and their fam­i­lies were in­volved, plus the in­put of their Tea­gasc ad­viser when draw­ing up the phys­i­cal and fi­nan­cial plan. For the fol­low­ing steps, the farm­ers will need the ad­vice of their re­spec­tive solic­i­tors, ac­coun­tants, bank­ing in­sti­tu­tions.

In get­ting the part­ner­ship struc­ture es­tab­lished, each farmer will need to get the ad­vice of their ac­coun­tant, from a tax per­spec­tive.

They will also need to speak with a so­lic­i­tor who will ad­vise on the le­gal agree­ment and the key el­e­ments re­quired in that doc­u­ment.

Key set-up tasks in­clude: Com­plet­ing the le­gal part­ner­ship

■ agree­ment deal­ing with farm as­sets, profit share, and exit pro­vi­sions. Com­plet­ing the on-farm

agree­ment deal­ing with roles, re­spon­si­bil­i­ties, time off, draw­ings, salaries. De­cid­ing on a part­ner­ship


Set­ting up a cur­rent

ac­count in the name of the part­ner­ship. Ex­plor­ing any is­sues in

re­la­tion to in­sur­ance. Mak­ing changes to herd


En­sur­ing ba­sic pay­ment en­ti­tle­ments

■ are trans­ferred in ac­cor­dance with any changes to herd num­bers.

A tem­plate part­ner­ship agree­ment is avail­able at the fol­low­ing link: www.tea­­ral-econ­omy/far­m­man­age­ment/col­lab­o­ra­tive­farm­ing/ reg­is­tered-farm­part­ner­ships/reg­is­tra­tion­doc­u­ments/

In most cases, a farmer in­ter­ested in a part­ner­ship al­ready has some­one in mind they would be happy to work with, be­cause they have ex­pe­ri­ence of work­ing with them in some ca­pac­ity.

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