When you are selling, buying or leasing a rural property one of the things that you should take time to consider is what grass or supplements will be available for the incoming farmer’s stock. This is a matter for both the landowner, when selling and leasing, and the prospective purchaser or lessee to establish – regardless of what time of year settlement is to occur.
Often in rural land agreements there’s provision for a determination of the average grass cover that’s to be left at settlement, and the mechanisms to be applied if there’s a shortfall. Frequently it’s agreed that an independent farm consultant measures the available pasture and, in the event of a feed shortfall, requires that supplementary feed be purchased and transported to the property, or for a cash payment to be made as compensation. Each of these options needs careful consideration depending on when settlement will occur and what the availability of feed will be.
Good husbandry provision
Alternatively, the agreement may not even address the matter, or provide that the vendor or lessor shall farm ‘in a good and husband-like manner in accordance with normal agricultural practice in the district’. This general and broad rule of thumb approach provides that the farmer will use his/her best endeavours to farm in a prudent manner. However, while enforceable, this provision for good husbandry raises the debate of what is good husbandry in a particular situation and location. Each farmer farms differently – whether it’s stocking levels, stock types, or stock and pasture welfare.
In entering into a sales agreement, or a lease, the incoming farmer needs to have certainty as to what feed will be available at a given time. Make sure you contact us (before you sign the agreement) to discuss how to best protect your position to ensure you know where you stand.
Also to be considered when negotiating the sale or lease is whether the incoming farmer should seek early access in order to prepare the planting ground with winter crops, or to arrange for the destocking of some or all of the pasture to ensure suitable feed is available on settlement.
Lessors need also to consider what feed, including supplements, is being left for the incoming lessee at the start of the lease, and to establish what feed the outgoing lessee will leave at the end of their lease. One provision could be that the tenant is required to leave sufficient pasture as was present when the lease began. If the pasture wasn’t measured, this is difficult to enforce. Or if the landowner or outgoing lessee destocks early, this may result in the incoming lessee having to destock early themselves in order to match the grass cover at commencement date.
Some pre-thought and negotiation by the parties when entering into a farm sale or a lease agreement will reduce the likelihood of dispute and allow a smooth transition for all, as well as sufficient pasture and/or feed for your stock.