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Some ag contracting services up in price by 5% in 2023 – FCI

The Association of Farm & Forestry Contractors in Ireland (FCI) has today (Monday, March 27th, 2023), published its ‘FCI Contracting Charges Guide for 2023’.

The body is “satisifed” that the averaged price guide continues to provide “fair and reasonable guidance” for both farm & forestry contractors and their client farmers.

However, you must remember that this is only a guide, as the FCI has stressed in a statement.

These FCI guide figures are produced on an annual basis and are compiled by collating an average figure for each operation from a panel of FCI contractor members from across Ireland.

Because of the local differences, the actual guide charge may vary between regions, across soil types, distance travelled, size of contract undertaken, size and type of equipment used, as well as the scale of the work.

This year sees the 2023 FCI Contracting Charges Guide include excluding and including VAT columns as an increasing number of farmers are moving towards VAT registration, especially those that have moved to limited company status.

This 2023 charges guide reflects what the association has described as “some modest” increases in some charges up to 5%, while others are “virtually unchanged”.

What is driving up prices?

A spokesperson, in the statement, said:

“The charges guided reflect some of the significant increases in costs of machinery replacement, tyres, and lubrication oils, insurance and labour costs that have been experienced by FCI members, throughout 2022 and with more expected into 2023. “

“The 2023 FCI Contracting Charges Guide also reflects some changes to farming practices with 98 activities of work listed compared with 94 in 2022.”

“While the guide charges in some sectors have been consolidated, to give greater clarity, new areas have been added, including grain crimping, liquid nitrogen application, and bagging silage services.”

The increasing costs of new machinery for farm & forestry contractors, the spokesperson added, continue to impact on the sustainability of many Irish agricultural contracting businesses.

“Sustained investment in new technology in the sector is vital for survival and to deliver improved economic output and ongoing efficiencies that Irish farmers have come to expect.”

Machinery parts

Additional machinery, replacement parts and tyre cost increases during 2022 and now into 2023 are “driving up” machinery purchasing and ownership costs.

The quoted costs of a new self-propelled silage harvester for a contractor operation, has increased by more than €80,000 since 2022, the association outlined.

The cost of replacement silage trailers has increased by almost €10,000 in one year, while hedge-cutters are being quoted with similar price increases, to name but a few items impacted by sector cost inflation, the spokesperson added.

Interest rates

Increasing interest rates are also impacting on the affordability of larger machines used in agricultural contractor fleets.

Interest rates on farm machinery purchases have increased from 4% to almost 8% in the past year, a factor that many agricultural contractors had not factored into their 2023 costing.

Fuel

The major variable cost each year continues to be fuel cost. Many contractors faced fuel cost increases of more than 60% in 2022 compared with 2021.

While fuel costs have stabilised in recent weeks, we cannot predict what the fuel market will be like as we face into the busy sowing season, followed by silage harvesting.

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