Contractor charges will increase by up to 5% this year, according to the latest price list published by the Association of Farm & Forestry Contractors in Ireland (FCI).

The association has reported that the increased costs are due to higher machinery and labour costs since the start of the year.

“A basic cost analysis will show that a 120hp modern tractor will require a minimum rate of €50 per hour in order to cover the operating and labour costs, irrespective of the work done,” Michael Moroney, FCI chief executive officer, said.

Moroney feels that labour and diesel costs attribute to 80% of the hourly cost of work.

He said that margins were extremely tight, given that only 10% were allocated to depreciation, finance and repair costs.

Debt levels

After the tough weather conditions of the last year, there are a number of concerns around farmer credit.

These were highlighted by the FCI which estimates that €60m is now owed to farm contractors long-term.

On an annual basis, they believe this amounts to €3.5m, based on a 6% interest rate.

The FCI stressed that the price list was only a guide and farmers should negotiate price rates with their own contractor directly.