The FCI has produced an online Fuel Costing Index Calculator to allow contractors to establish their break-even charge rates for a range of services that they provide.
To use the calculator, you need to know your overall annual costs across a number of cost headings for your business, and this information is easily available from your accountant.
Once you key in the financial cost figures and also your overall agri-diesel consumption in litres, you will get an index value that is unique to your agricultural contracting business.
You then move to the calculate the break-even charge rates section, and you have a number of options to choose from, including rate per hour for work, such as hedge cutting, rate per acre for silage harvesting, for example, and rate per tonne for transporting grain from the field to the farm.
All of the figures combine your overall cost index with the level of fuel consumption for each operation in an agricultural contractor fleet to deliver a break-even figure that you need to work from in order to remain profitable and sustainable.
The body advocates that all contractors should prioritise a detailed year-end analysis of their 2022 costs of operation in using the FCI Fuel Costing Index Calculator tool on their smartphones to work out their individual charges for 2023.
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.
Min breakeven price of €140/ac
Outgoing CEO, Michael Moroney, commented:
“An FCI silage cost analysis using sample member figures from the Fuel Costing Index Calculator, has shown that a modern contractor silage fleet will require a minimum break-even rate of €140 per acre, just to cover the depreciation, labour and operating costs which will also include a further the return of excise and a further carbon tax fuel cost increase due in May 2023.”
“Contractors need to look closely at all costs to establish sustainable and realistic rates for their services when investing in modern farm equipment.”
“Putting time and effort into establishing your operating costs, as a farm & forestry contractor, has never been more important,” he said.
“FCI advocates developing a clear understanding of the actual costs of the machine operations.”
“While this 2023 guide is helpful to both contractors and farmers in providing a guide to national averages, each contractor must now establish individual baseline costings,” he remarked.
The calculator is accessible to all contractors and is available to download on smartphones at www.fcicalculator.ie or through the homepage of the association’s website, www.farmcontractors.ie, with no charge.
Previous farming news article on That’s Farming:
Some ag contracting services up in price by 5% in 2023 – FCI