Rising fuel prices, skilled operator availability, insurance costs, and debt are among the challenges agricultural contractors in Ireland face.
According to the FCI, fuel prices increased by close to 50% in 2021 compared with 2020.
As a result, this has added thousands of euros to the costs of contractor operations, with no additional output result.
The body said the “huge” hike in the cost of AdBlue, the emission lowering additive, is another extra cost factor for 2022 as contractor-owned tractors are “significant” consumers of these products.
FCI estimates that increased AdBlue prices alone will add more than €5 million in costs for Irish farm and forestry contractors in 2022.
It has based this figure on the annual sector consumption of more than 350 million litres of diesel fuel.
Skilled operator availability and costs
According to FCI, skilled operator availability and at what cost remains another “huge unknown” in 2022.
It acknowledged that there is a “noticeable” scarcity of young people joining the sector.
It hopes that the proposed apprenticeship scheme for agriculture will include its request for structured training for tractor and machinery operators for this sector.
Ag contracting challenges: Insurance
The body highlighted that the following continues to “drive-up” costs in the sector:
- High cost of contractor insurance;
- The requirement to have comprehensive insurance cover;
- Employers’ and public liability;
- A lack of competition.
According to the body, typically, in Irish conditions, business insurance costs farm and forestry contractors between 6% and 7% of turnover. In turn, this amounts to close to €50 million in premium payments per year from the sector.
Michael Moroney, FCI Chief Executive Officer, has urged the recently formed Dáil Cabinet Sub-Group on Insurance Reform to tackle this “very significant” cost for contractors immediately.
Furthermore, the body stated that a “significant minority” of contractors also have outstanding debt from 2021, despite a “profitable” farming year.
FCI encourages all contractors to issue monthly or weekly invoices followed by monthly statements to manage cash flow.
While this long-term farm debt level is reducing, it outlined that this continues to cost the sector close to €3.5 million/year in interest.
The association has published its FCI Contracting Charges Guide for 2022.