Currently, farm contractors are facing a two-fold financial challenge which includes a substantial reduction in work, followed by the risk of a serious cash-flow crisis later in the year, the Association of Farm and Forestry Contractors in Ireland (FCI) has said.

The current drought conditions have resulted in farmers closing off fewer fields of grass for silage, in turn reducing demand for essential contracting services.

As a result, contractors are experiencing a substantial reduction in anticipated work while continuing to meet the fixed costs of running their businesses.

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FCI has found that 71% of farm contractors have harvested at least 250 acres less silage this year compared to 2025.

Some contractors have already been left with no option but to reduce their workforce.

Cash-flow challenge

FCI warns that a more significant cash-flow challenge may come later in the year, as the full effects from the drought and resulting fodder shortage are felt by farmers.

Even in a normal year, contractor accounts can be delayed when farm businesses experience financial pressure, according to FCI.

This effectively means that contractors become an informal source of credit to farmers, carrying outstanding accounts while continuing to finance their own input-heavy businesses.

Therefore, FCI has called for an urgent meeting with the Department of Agriculture as farm contractors face mounting financial pressure arising from the drought conditions and resulting reduced agricultural activity and fodder shortages.

SBCI loan scheme

It is also calling on Government to establish a dedicated SBCI working-capital loan scheme for farm contractors, designed to provide affordable working-capital finance to viable contracting businesses.

Previously, SBCI agricultural cash-flow schemes have demonstrated that state-supported access to competitively priced working-capital finance can provide an important alternative to more expensive short-term credit arrangements.

It would enable contractors to manage the period between undertaking work and receiving payment, while reducing their reliance on expensive overdraft facilities, merchant credit and other short-term financing arrangements.

“When the farm sector comes under financial pressure, that pressure does not stop at the farm gate. It moves through the supply chain, and contractors can ultimately be left carrying the cost,” FCI managing director Ann Gleeson Hanrahan said.

“We are asking Government to recognise that reality and to put in place a practical financial mechanism that will allow viable contracting businesses to get through this difficult period.”