Teagasc has published Guidelines to forming a Farm Partnership, a booklet intended as guidance for farm families considering forming a registered farm partnership (RFP) with the Department of Agriculture, Food and the Marine (DAFM).
It is also intended as guidance for professionals such as accountants, solicitors and agricultural consultants to help them form RFPs for farmer clients.
A partnership is a business arrangement where profits are shared among the partners.
Since 2002, partnerships have been used to amalgamate two or more farming businesses into one structure, known as inter-family partnerships (between two farm families).
But the most common partnership is an intra-family partnership (within a family), a transition arrangement to gradually introduce a successor to the family farming business.
Why should two or more farmers (inter-family) consider forming a registered farm partnership?
To combine two businesses into one larger operation, share workload and make more efficient use of labour, and improve their work-life balance. There is potential to increase scale and technical efficiency, and to increase farming competence through utilisation of different skill sets.
There is reduced isolation, through working with another farmer, and a positive farm safety impact. It creates flexibility to allow partners to work off-farm, and provides a business structure for young farmers to enter an arrangement with an existing farmer who has no successor.
Why should farm families (intra-family) consider forming a registered farm partnership?
For gradual transfer of management and responsibility for running the farm from parents to successor, and so that a son or daughter is formally recognised in the farm business at an earlier stage.
Partnership also ensures that parents are still active in the farm business and can provide support, advice and experience to their successor; and no transfer of land is required. Other advantages are improved work life balance; new ideas, farming methods, skills and abilities introduced to the business; income tax benefits; and DAFM scheme benefits.
What is success built on?
A partnership, like any collaborative arrangement, must deliver benefits to all partners, to become established and to remain successful during its lifetime.
Success is built on strong core values which include:
Who can form a registered partnership?
All farmers can form registered partnerships regardless of the farm enterprise.
A registered farm partnership (RFP) must be made up of at least two people, one person from category A below and one or more person(s) from categories A or B.
A farmer who has been farming in his or her own right for two years preceding the date on which the partnership is established.
A person with an appropriate agriculture qualification whose contribution to the farm partnership entitles him/her to at least 20% of the profit sharing arrangement.
Other persons, aside from those described in categories A and B above, for example, co-owners, family members or a person with or without land, who wish to make an investment may also be registered as participants in the partnership but will not have access, in their own right, to EU and State support scheme benefits, that may accrue to membership of the Farm Partnership Register.
A person may not, at any one time, be a partner as a natural person and as a shareholder or director in a company that is a partner in the same RFP. Similarly, at any one time, a person may not be a shareholder or director in more than one company that are partners in the same RFP.
Who should be a partner in the partnership?
Anybody actively involved in the running of the farm business may be named as a partner in the partnership. In family situations, this may include a husband, wife and son or daughter. Co-owners (spouses) of the land included in the partnership may choose to be included as partner in the partnership or to remain outside the partnership (if not involved in the farm operations).
Where a co-owner chooses to remain outside the partnership, they may apply to the minister of agriculture for an exemption.
An RFP/COE form is completed as part of the registration process to obtain this exemption.
What do research and operating models tell us about partnerships?
Research in Norway and Ireland, and operating models in France, have shown that joint farming ventures (including partnerships) have many benefits for the farmers who operate through them. They can provide:
Guidelines to Forming a Farm Partnership can be downloaded from the publications section of the teagasc.ie website.
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