The issue of contractor charges is always a contentious one because there are many variables involved in setting a fair rate for machinery services in Ireland. For the contractor, it is important to understand the basis of the machinery costs in order to establish a viable rate for the contractor service to stay profitable.

Every industry and service needs to generate a profit in order to be self-sustaining. Farm and forestry contracting is no different to any other sector. That means that the notion of achieving a profit to allow for re-investment must be basis on which the contracting business is established.

Cost management

At the Association of Farm & Forestry Contractors in Ireland (FCI) we have looked at some of the basic machinery costs, namely the ownership cost associated with owning and running a modern 120/130hp tractor. There are various approaches to take in this exercise, and the end result will often be close to the same.

The AHDB Cereals & Oilseeds is a division of the UK Agriculture and Horticulture Development Board (AHDB), has produced a very useful excel table that every contractor should know about and should use to establish their costs. Just plug in your own tractor figures and you’ll probably be alarmed by the cost result.

Their figures show that a new tractor costing €100,000 to buy will cost in the region of €50/hour to operate. That figure is arrived at through including the costs of depreciation, insurance, as well as fuel and labour costs. Their estimates show that when Irish cost conditions are included in the excel sheet; then there is clearly no advantage in owning such a tractor, costing €50/hour when most Irish contractors are charging out their tractor and driver at €40/hour.

This clearly shows the great value that Irish farmers are getting from their local contractors, but can this situation last? Tractor purchasing costs have risen yet again with the introduction of the EU Tractor Mother Directive in 2018. Fuel costs are also predicted to rise again this year and the 25% labour cost component associated with providing a tractor service is also rising as operators are getting scarce on the ground.

Contractors need to give more attention to establishing their costs than seeking more work for their machines. Their primary machine cost is that of the tractor and operator. Modern machinery demands careful management to be cost effective and to have a sustainable contracting business. You need to know your costs first before you decide a charge figure. Every contractor needs to establish their own machinery operating costs first rather than basing charges on a figure that they believe will be lower than those of their neighbouring contractor in order to get more work.

Labour is a growing issue

The labour issue is growing more serious as skilled farm machinery operators are looking to other industries to improve their work life balance. The high seasonal peak workloads and the emergence of some new deadlines, that are not related to the natural climate or seasonal deadlines, are introducing new pressures on contractors and their machinery operators.

Each time we come to a Government-imposed work deadline the pressure zones open up once again with contractors and their operators are forced to work longer hours in difficult conditions in order to meet the justifiable needs of their farming customers. The new 15 June deadline for splashplate slurry spreading will be yet another crisis time for farmers. Contractors and their operators will bear the brunt of the pressure to get the slurry spread before this new deadline date.

Deadline dangers

This new deadline comes on top of the hedge-cutting deadline and the autumn slurry spreading deadline and the spring slurry and muck spreading deadline dates. These dates are artificial and are in danger of causing more environmental and health and safety problems than solving them.

The rush to spread slurry while taking account of the practical weather conditions has meant that some contractors and their operators are working very long days. This puts an additional health and safety risk on farms as storage capacity cannot always take account of changing weather conditions.

Farm Contractors Ireland (FCI) members believe that there needs to be a concentrated effort at improving slurry storage capacity through grant aid on farms, rather than supporting the purchase of low emission slurry systems that require skill and experience to get the best from. That skillset is seen in farm contractors across the country who can get the most value and best spreading performance from such machines.

Increased cow numbers have not resulted in bigger silage pits and FCI members are seeing the dangerous growth in height of silage pits on many farms. These higher pits often mean that loader drivers are working on unstable surfaces at heights upwards of 9m (30ft).

FCI believes that in this situation farmers should be grant-aided to improve the capacity of their silage pits in order to make them safer for those at the silage harvest. These pits will also then be safer for those who are removing the silage at feeding time from what are often moving silage pit fronts.

Contracting Charges Guide 2018

FCI has produced a Contracting Charges Guide for 2018. The Association is confident this new averaged charges guide acts as a reasonable guide for both contractors and farmers. However, it must be remembered they are only a guide.

These figures are being 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 charge may vary considerably between regions, across soil types, distance travelled, size of contract undertaken, size and type of equipment used as well as the amount of product spread.

FCI always advocates working out individual charges based on the cost of the operation; this guide is helpful to both contractors and farmers in highlighting a national average. Agricultural contractors offer a wide range of machinery services to their customers and have been proven to be the best and most economical choice for many Irish farming businesses. FCI farm contractors strive to offer the best service to their customers, with skilled operators and modern machinery. While on occasion the dedicated land-based contractor may not always be the cheapest option, an amateur may end up costing your farm business more in the long run.

These are the average charges surveyed from FCI members, the actual charge may vary considerably between regions, soil types, distance travelled, size of contract undertaken, size and type of equipment used, amount of product applied etc. The FCI is also aware that many contractors are now making individual arrangements with their customers regarding diesel (eg separate fuel surcharge, fuel used on-farm etc). The charges quoted do not reflect this and such individual agreements may make a significant difference to contracting charges.