The contractor`s total income was very similar to that of the farmer with £386/ha (£362/ha in 2017). It is important that a CFA agreement also means that the landowner remains actively involved in the management of farms, which will allow him to maintain his status as a “farmer” and continue to receive and apply for the basic premium scheme and environmental liability rules. Subsequently, this will change, with the new Agriculture Act pointing out that financial support to farmers will likely be determined by the Environmental Land Management Scheme (ELMS). According to Richard Means, director in Strutt & Parker`s agriculture department, a well-structured CFA will remain a very good tool for managing a farm, as both parties can benefit from incentives, use their skills and achieve economies of scale. “From a tax point of view, what happens in practice is important and not what is in the written agreement. You can`t rely solely on a written agreement to justify a full trade agreement. Contractual agricultural agreements can be structured in such a way that farmers can continue to actively engage in agriculture where it might prove difficult, giving them the opportunity to step back and focus on other business opportunities. Preliminary results from Strutt & Parker`s annual survey of contractual agricultural agreements, which covers 19,400 ha of land mainly in the east of England, East Midland and south-east England, showed that the average divisible surplus of agreements for Harvest 2018 reached its highest level in four years. In the last two or three years, the trend has already been towards an increase in contractors` royalties, which are trying to obtain higher guaranteed yields to reflect higher labour and machinery costs. Strutt & Parker publishes a separate analysis of CFA agreements that contain roots, showing higher yields in 2019, for both the farmer and the entrepreneur. In recent years, contractual agricultural agreements (CFAs) have been a model of cooperation in the field of agriculture, but as agribusiness is facing a period of significant change, questions arise as to how best to prepare for the future. In this case, an agriculture/harvest agreement was reviewed, under which the tenant entered into “contracts” with a producer to produce a crop that he then purchased.

The entrepreneur, who is usually another farmer, carries out all the farms and crop management. However, the imminent reduction of basic premiums, combined with the introduction of ELMS, will undoubtedly have an impact on the establishment of future agreements, as they will have an impact on crop rotation. The court found that the agreement was a deception, as the documents were finalized after the crop was grown. In reality, the agreement was a lease during which the third “contractor” cultivated the harvest for his own account. “The overall goal of a CFA is to improve business efficiency by improving business performance.