He will be joined by Cheshire rider Connor Behan who will participate in his first full year on the roads.
Farquhar could field up to five riders in the North West 200 Supertwins races in May.
Jeremy McWilliams and Michael Rutter are set to ride for the team again.
Launching his new team, Farquhar said: "Retaining Jamie was always a main priority so I'm delighted to have done just that and thanks to the input of John (Duggan), we've been able to add a 600cc Supersport machine to the stable.
"He did a great job for the team in his debut year in 2012 and I have every confidence he'll progress even further up the results in 2013 and continue to make a huge impression on the road racing scene.
"My personal involvement as a rider may have come to an end but I'm busier than ever and am really relishing my new role, eagerly looking forward to the first meetings in April.
"Today's announcement is just the first part of the jigsaw for KMR Kawasaki in 2013 and we've still got some big plans for the season to be announced so watch this space!"
Meanwhile Lee Johnston will ride Superbike and Superstock bikes for Team Rapido Sport Ducati at the international road races and in the British Superstock Championship.