Question: I studied agriculture in college and am now working full-time in an agri-related job. It is a small farm and while my parents do most of the work on a daily basis, I help out when needed in the evenings and at weekends.

Our agricultural adviser has suggested that I be added to my parents’ herd number but I am not sure. What are the options and what are the benefits and drawbacks?

Answer: Firstly, I think it is important to make a distinction between joint herd numbers and farm partnerships.

A joint herd number is like a partnership except you do not have the legal formality. Generally, people form joint herd numbers by adding the young farmer’s name to the parents’ existing herd number and opening a joint bank account.

By contrast, a farm partnership is generally registered with the Department of Agriculture. The main benefit of a registered farm partnership is that the partnership can qualify for a double TAMS grant while a joint herd number does not.

There has been a surge in the number of people applying for joint herd numbers or registered farm partnerships because of the rate increase in the Young Farmer Top Up, now called the Complementary Income Support for Young Farmers (CIS-YF).

In the last round of CAP, under the BPS system, this payment equated to a top up on entitlements of approximately €68/ha up to a maximum of 50 hectares, ie €3,400 per year for a maximum of five years.

However, this was increased in the new CAP to an average of €155/ha in 2023, ie up to €7,750 per year for a maximum of five years.

Registered farm partnership

Many parents and young farmers wish to form registered farm partnerships so they can double the TAMS grant. Currently, the TAMS grant would amount to 40% grant on maximum Capital Expenditure spend of €90,000, ie €36,000 grant.

But by forming a registered farm partnership with a young trained farmer who has the Green Cert, the partnership can qualify for a 60% grant on the first €90,000 and 40% on the balance of €160,000 Capital Expenditure spend.

So, a building costing €160,000 would qualify for a grant of €82,000 if an existing farmer forms a partnership with a young trained farmer.

This 60% grant is also extended to female farmers between the ages of 40-66 years in 2023, subject to conditions.

To form a registered farm partnership you need to have at least two partners, one who has been farming in his/her own right for two years prior to forming the partnership and the other either a new entrant young trained farmer or a person (individual or company) who has been farming in their own right for two years ie have a herd number and claim entitlements for the previous two years and a new entrant with the appropriate agri qualifications who has not been on a herd number for five years or more and who is entitled to a minimum of 20% of the profit share and who works in the farm partnership for at least 10 hours per week.

Legal rights in a partnership

Under the Teagasc Farm Partnership Agreement, ownership of land and entitlements does not change by going into a registered farm partnership.

Often I find people think going into a partnership involves assets passing to the child or successor; that is not the case. The owner licenses the land and entitlements into the partnership, ie making them available for use by the partnership.

They can take back the assets if they dissolve the partnership through death or otherwise.

Another aspect worth highlighting is that a partnership is not a separate legal entity like a company. There is a look through approach to the individual partners within the partnership.

There is also joint and several liability within a partnership. That means if one of the partners run up partnership debts, any of the partners can be on the hook for them.

There are protections built into the Teagasc partnership agreement to prevent significant debts being run up without the knowledge of the other partners.

Furthermore, if a farm is being run in a partnership, generally any debt must be taken on by the partnership rather than the individual partners, which is not something all parents are comfortable with.

Summary

A joint herd number is a partnership but without the legal framework. Consequently, I would recommend putting a legal framework in place through a registered partnership to avoid any conflict in the future.

There is also a grant available from the Department of Agriculture to cover 50% of the cost of putting the partnership in place to a maximum of €1,500 contribution. In my experience, the vast majority of partnerships work out as planned.

It is important to ensure that proper planning and advice is obtained beforehand to avoid any misunderstandings down the road.

Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, Aisling Meehan, Agricultural Solicitors and Tax Consultants does not accept responsibility for errors or omissions howsoever arising. E-mail aisling@agrisolicitors.ie