Some Of The Factors That Must Be Considered Before Going Into Farm Partnership
It is not a gainsaying that farming is one of the best businesses one can venture into during this period of recession. However, because it involves huge capital for the procurement of landed property and equipment, sometimes people come together to form partnership, cooperative or joint venture by contributing money and resources to finance the cultivation of certain crops with a view to sharing profit among the partners at the end of each planting season. This write up will concern itself on only partnership; while the issues of cooperative and joint venture: when, why and how, will be dealt with in subsequent articles. Partnership could be formed by friends, family members, neighbours etc.
Even though partnership is good, our candid advice to people is that nobody should go into a partnership without a deed. Therefore, this write-up intends to x-ray the factors that should be considered and written down in the farming partnership agreement.
It is a business suicide to venture into any business, even with your family members, without a written partnership agreement that states the duties, rights, profit sharing formula etc. in black and white. It is unwise to go into agric business only on trust without a formal agreement.
PURPOSE OF FARMING PARTNERSHIP AGREEMENT
The purpose of a farming partnership agreement is to protect the owner’s investment in the farming business; govern how the company will be managed; clearly define the rights and obligations of the partners, and determine the rules of engagement should a disagreement arise among the parties. A well-written partnership agreement will reduce the risk of misunderstandings and disputes between the owners.
SOME OF THE FACTORS THAT MUST BE CONSIDERED BEFORE GOING INTO FARM PARTNERSHIP
The scope of a farm partnership agreement varies with the primary goals and interests of the co-owners of an agricultural enterprise. Contents of the agreement specify the objectives, ownership structure, dissolution requirements and transition planning of the enterprise. An ideal farm partnership agreement covers the core issues, such as resource contributions, human resources, management roles, income distribution and type of partnership, asset ownership and transfer. It also establishes the operational framework for venturing into raining season agriculture, irrigation farming, livestock keeping or mixed farming.
Contact your lawyer for comprehensive drafting of a binding agreement that is enforceable or you can use any of our free templates
Farmland for Sale: N200,000 per acre at Odeda, Ogun State