[1] The modern agricultural sense of the word stems from the same origin, in that a medieval land-"holder" (none "owned" land but the king himself under his allodial title) under feudal land tenure might let it (i.e. lease it out) under a contract as a going concern (not as a sub-infeudated fee), that is to say as a unit producing a revenue stream, together with its workers and livestock, for exploitation by a tenant who was licensed by the contract, or firma, to keep all the revenue he could extract from the holding in exchange for fixed rents.
It is related to other Old English words such as feormehām ("farm"), feormere ("purveyor, grocer"), feormian ("to provision, sustain"), and feorh ("life, spirit").
To determine the maximum rent they are willing to pay, the tenant estimates the long-term average yearly gross value of the revenue stream, based on past records and accounts, adjusting for any new circumstances affecting the future.
They must ensure their ability to enforce debt payments, including resorting to legal action and paying standard fees for bringing a lawsuit under the government authority that is the farm's lessor.
[6] Within the Roman Empire, these private individuals and groups which collected taxes in lieu of the bid (i.e. rent) they had paid to the state were known as publicani, of whom the best known is the disciple of Jesus Matthew the Apostle, a publicanus in the village of Capernaum in the province of Galilee.
Know that I have granted the Hundred of Normancross to the abbot and monks of Thorney to be held in fee-farm for an annual rent of 100 shillings which I order them to pay to my sheriff at Huntingdon.
[9] The iltizam (Ottoman Turkish: التزام) is a non-heritable tax-farming system and was established under Sultan Mehmet II; however this changed by the 18th century and holders of grants-for-life (malikâne) developed their own landowning class.
Though such arrangements in some respects seem similar to the feudal system, there are significant disparities, including continuance of state power and, at least in the case of pronoia, theoretical time limits on the grant.
Systems of tax farming similar to the Roman model were used in Ptolemaic Egypt, various medieval Western European countries, the Ottoman and Mughal empires, and in Qing dynasty China.
As a result, tax-farmers often abuse the taxpayers in various ways, tending them to switch their economic activity from strategic long-term projects to short-term revenue generation.
[citation needed] In Bangladesh and India tolls on bridges and roads and dues from public properties such as lakes and forests are often leased to private persons or firms.
In addition, a tenant is often required as a term of the lease to make an early rent payment, which must be financed from his own resources until the revenue stream subject to the farm has started to be collected.