Joint Venture Farming Agreements

In calculating each party`s contributions, it is important to use realistic assessments. Use market values to value assets. Estimate the work and management of what any party could gain elsewhere, or how much it would cost to stop the services provided by each party on the farm. Interest rates on investments should be roughly the long-term interest rates. However, for land, a lower interest rate can be used, as land usually has a long-term capital increase in addition to the annual rental yield they can get. The joint venture`s contribution would only reflect the annual return and a lower investment rate can therefore be used. .