Time to update farm form

British farmers are used to dealing with uncertainty – sudden changes in the weather, input prices or market demand all keep them on their toes. However, given current supply chain, labour and regulatory challenges, farmers can be forgiven for craving certainty wherever they can find it. Reviewing your farm partnership agreement is a relatively low hassle way of achieving precisely that.

Many farming business remain the traditional set-up of a family partnership. Some operate without a formal partnership agreement in place and, where this is the case, the provisions of the Partnership Act 1890 apply. Framed in the 19th Century for working practices at that time, it can be a pretty out-dated and cumbersome piece of legislation to rely on if there are changes that need to be made to partnership arrangements. Famers like their informality but this is one case where a formal agreement makes a lot of sense.

Most farming families do have partnership agreements in place but often they were drawn up by parents or grandparents upwards to 50 years ago and so do not account to the realities of modern farming and 21st century families. Even if some or all of a farm business is incorporated as a limited company, there may be a farm partnership in place in parallel. All this means it is sensible to ensure existing partnership agreements are up-to-date and fit for purpose.

A robust partnership agreement should, amongst other things, set out what happens in the event of an unexpected death, how the value and benefit of farm assets are shared within the partnership and, more important these days, what happens if a member of the family does not want to work within the farm business in the future.

One of the reasons that farm partnership agreements are not drawn up or are not revised is that, for understandable reasons, many people fear awkward conversations and perhaps fundamental differences of view being aired. However, a structured approach can help. We use a farm partnership questionnaire to encourage individual family members to work through different aspects in a logical way; knowing that others in the partnership are going through the same exercise is helpful and encourages open discussion. The whole process is not as onerous as people imagine. Once latent issues are discussed and incorporated in the partnership agreement, the resulting peace of mind is not to be underestimated.

So, if you craved some certainty in 2022, then a good place to start is to dig out your farm partnership agreement and make a New Year’s resolution to bring it up-to-date.