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Covid-19 causing ‘significant’ cashflow difficulties for contractors

Many farm and forestry contracting companies are now experiencing significant cash flow difficulties as a result of the COVID-19 crisis.

That is according to the Association of Farm & Forestry Contractors in Ireland (FCI), who acknowledged that the consequences of the virus outbreak are already having “disastrous” impacts on cash-flow on many Irish.

This, the association added, is now being converted into increasing debt to the many farm and forestry contracting businesses that it represents and who provide essential farm machinery services to more than 80% of all Irish farmers.

“Our concern now is for the future impacts on many farm and forestry contracting businesses as there is huge uncertainty around farm product prices” said FCI national chairman, Richard White.

“This will have significant consequences for payments for farm & forestry contracting services during 2020,” he added.

Postpone carbon tax increase of €6/t

The FCI has called on Minister for Finance and Public Reform, Mr Paschal Donohoe, TD, to postpone the planned introduction of the proposed carbon tax increase of €6/tonne on all green diesel used for agriculture, which is due to be introduced on May 1st.

“We are very disappointed that 20 days later from our most recent request, the Minister nor his officials have recognised or even acknowledge the urgency of this situation.”

“Because of the current Covid-19 national health advice, many of our FCI members are now unable to get direct access to their customers to receive payments in the normal way, due to social distancing restrictions.

FCI members are being advised to encourage their farmer customers to make direct bank payments or staged payments to their bank account for current work completed.

“However, this approach will not be practical for many of our FCI member customers, especially their older farming customers,” he added.

‘Open for business’

White said that all farm and forestry contracting operations will continue to be “open for business” as essential service providers during the current pandemic.

 “Our FCI members are adhering to the best health advice practices as outlined by the Health & Safety Executive (HSE).”

“We have instructed our FCI members to inform and instruct their machinery operators about the new levels of machinery and personal safety and social distancing, in compliance with HSE guidelines. And we have also provided them with business advice and safety protocols.”

Due to the many unknown aspects of crisis, some of the current restrictions will extend into the grass silage harvesting season, the FCI added.

It said the cash-flow requirements of the silage harvest are enormous, given the fact that a modern harvesting team will have a diesel fuel requirement of in excess of 3,000 litres per day. 

The association has told Minister Donohoe that it is concerned about the longer-term impacts of this new cash-flow challenge on the farm contracting sector if farm product prices experience an ongoing reduction.

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