Farmers across Ireland will see an average minimum 5% increase in agricultural contracting service charges in 2022.
That is according to the Association of Farm & Forestry Contractors in Ireland (FCI), which has published its FCI Contracting Charges Guide for 2022.
The body is “satisfied” that this averaged price guide continues to provide “fair and reasonable” guidance for farm and forestry contractors and their clients.
However, it stressed that one must remember this is only a guide.
FCI produces these guide figures on an annual basis. It collates an average figure for each operation from a panel of members across Ireland.
Because of the local differences, the actual guide charge may vary between:
- Across soil types;
- Distance travelled;
- Size of contract undertaken;
- Size and type of equipment;
- Scale of work.
Contracting charges 2022
This year’s hikes come on the back of “significant” increases in costs of machinery, tyres, fuel and lubrication oils, insurance, and labour costs FCI members experienced throughout 2021 and into 2022.
The FCI said the increasing costs of new machinery for farm and forestry contractors and their client farmers impact the sustainability of many agricultural contracting businesses.
It believes “sustained” investment in new technology in the sector is “vital” for its survival and to deliver improved economic output and efficiencies on Irish farms.
FCI stressed that additional machinery, replacement parts and tyre cost increases during 2021 and into 2022 are driving up machinery purchasing and ownership costs. “This forces the need to examine machine operating costs critically,” it said.
Establish your costs
Michael Moroney, FCI chief executive officer, said:
“FCI always advocates that all contractors should prioritise a detailed year-end analysis of their 2021 costs of operation in working out their individual charges for 2022.”
“To ensure the sustainability of the business, charges must be based on a realistic examination of the true cost of the operating tractors and a full host of machinery, as well as the costs of running a modern progressive rural enterprise.”
He said an FCI silage cost analysis has shown that a modern contractor silage fleet will require a minimum rate of €140/acre to cover the depreciation, labour, and operating costs, which will also include a further carbon tax increase in May 2022.
“Contractors need to look closely at all costs to establish sustainable and realistic rates for their services when investing in modern farm equipment,” he added.
“Putting time and effort into establishing your operating costs, as a farm and forestry contractor, has never been more important.”
“FCI advocates developing a clear understanding of the actual costs of the machine operations.”
“While this 2022 guide is helpful to both contractors and farmers in providing a guide to national averages, each contractor must now establish individual baseline costings.”
That’s Farming will publish segments from the FCI’s 2022 guide.
See last year’s rates.