Last year was a tough one for farming, and that squeeze follows through to all businesses that pass through the farm gates.
There is a trend across Ireland and Europe of contractors exiting the business. There are many factors at the back of this, such as high machinery costs, a scarcity of skilled labour and extremely tight margins being most referenced. Farmers place a huge reliance on contractors, but with ever-increasing costs, is there a sustainable and viable future for contractors? To find out more, we catch up with the Association of Farm & Forestry Contractors in Ireland (FCI) and some full-time contractors.
John Hughes, national chair of the
Association of Farm & Forestry Contractors in Ireland (FCI).
John Hughes, FCI national chair
“The agricultural contracting sector is made up of many different sizes and types of businesses, either sole traders, limited companies, or farm-based operations that all provide machinery services to Irish agriculture. From a one-person operator to the large professional companies, there are variations in terms of the scale of many contracting businesses, but never in terms of commitment to getting the work done in the most efficient and cost-effective way.
“The value of the agricultural contracting sector to the Irish economy is worth more than €900m and will increase into the future. The big question is how will we achieve this increased contribution to farm output against the backdrop of decreasing numbers of skilled machinery operators? The reality is that the demographic of the agricultural contractor is aging and with less new entrants this is likely to lead to a shortage of agricultural contractors in some areas.
“It is my view that all the stakeholders within the Irish agricultural sector need to work together to keep all of the separate business entities, especially agricultural contractors, on which the sector has become hugely dependent, in business for the future.
“For this to happen, the FCI believes that a new strategy of working, and a new level of respect for the commitment and enterprise of agricultural contractors, will be required by farmers and their agricultural contractors.
“Every business requires a steady flow of funds to stay in business. Agricultural contracting is no different. Contractors will have to focus on getting invoices out to farmer clients on a more regular basis, like all other services to farming, and these invoices will also have to be paid on time.
“Financial management must take equal priority to getting the work done, and so too must operator safety and welfare.
“Using the agricultural contractors as a way to fund the survival in some cases or the expansion in others, of a farming enterprise, is not doing either farm or the contractor any favours. Increasing costs must be managed and accountable if the contracting business is to survive, while not compromising on nurturing new skills and supporting new investments that will deliver greater efficiencies and traceability.”
Technology
“Technology has become a tool to help the agricultural contractor sector to achieve better efficiencies, more accuracy and more traceability, all clear objectives for a progressive farming sector.
“With GPS technology, more accurate driving has ensured savings in agro-chemicals, improved fertiliser use, and ensured greater germination of seeds to ensure better crop yields. All of which has been good for the sustainability of agriculture and the environment. Robotics will come in time, but who will be controlling these machines? The current education system hasn’t recognised the future requirements for skilled machinery operators. At FCI we can predict a shortage of production because who will fill this void of skilled machinery operators?
“To achieve our objectives, it is up to all agricultural contractors to pull together and to recognise that any objective that is achieved will be of benefit to all contractors.”
“Most contractors now have good machinery and provide a good service, but it’s the timely collecting of money and the office work is where contractors are falling down," says Pat Hehir.
Pat Hehir, Clare Agri Contracting
Clare Agri Contracting is based two miles from Ennis, and covers a 40-50km radius, with most of its work being in the east of the county. Headed up by Pat Hehir, he initially went contracting in a partnership in 2010, before going out on his own in 2017. Pit silage and slurry is his main business, with fertiliser and lime-spreading and reseeding also part of the business.
What are the biggest challenges contractors are facing?
“A lot of Irish farmers are in the 65-70 years of age bracket, and there’s lot of them with no succession plans. The morale of farmers is quite low at the minute and I honestly believe that the Green Party has done a lot of damage to rural Ireland.
“Farmers are poorly paid for the work they do, and this affects contractors. Money is very tight in farming at the minute. There are a lot of contractors owed a lot of money from last year, and it’s tough, because we have bills too.
“The price of machinery is a huge problem right now. The investments contractors have to make to keep fresh machinery is serious. Any 180hp tractor is now costing €150,000, plus VAT. Over the last 10 years they have gone up by €60,000 to €70,000, and rates haven’t changed accordingly.”
“I do see a future in the business, but the way farming is going, there will be less farmers and less contractors," says Pat Hehir.
How big of an issue is labour for your business and what’s your outlook on the future of skilled labour?
“We are okay for labour right now, but it’s getting tougher each year. Machinery is getting so advanced that you need skilled labour to operate it. We are seeing that the next generation needs more training to be able to understand working on wet land and on hilly ground, it doesn’t come as naturally to them as the last generation.
“Young people have far more distractions nowadays, the phone and social media is a problem. There isn’t near as many young people interested in machinery any more as they were 10 years ago. If labour becomes more troublesome, contractors will have to look at bringing in drivers from overseas.”
What is the biggest area that you feel agricultural contractors are falling down on?
“Most contractors now have good machinery and provide a good service, but it’s the timely collecting of money and the office work is where contractors are falling down. We need to base our businesses on the New Zealand system, where bills are sent out every month and paid 28 days later. Contractors are the same as every other business, they need regular cashflow to survive. It’s gone to the stage where contractors should be setting up their farmer clients on direct debit systems. Collecting money is an awful job, no one wants to have to go around begging for what they are owed. Lots of contractors who have got out of the business in recent years will all tell you that getting paid was they’re biggest problem.”
What do contractors need to do to future-proof themselves?
“I think that the way rules and regulations are going, contractors will have to get up to speed with technology. Whether this will be providing traceability maps for slurry and fertiliser placement, or yield mapping, they will need to be able to provide this type of information. Younger farmers will want data, so contractors will need to be able to produce it, and charge accordingly for it.”
Would you advise a young person to start up a contracting business?
“With the direction of farming in Ireland, I think a young person should think long and hard before getting into the business. I honestly believe there are much more opportunities for young people to set up contracting businesses overseas.
“If you look to America as an example, lots of contractors over there are in the 70s and there is great potential to establish very scalable businesses over there.
“If a young person loves the business, and really wanted to get set up at it, the first thing I would say is to set up a proper system to send out bills and collect your money. Try and walk before you jump, thread carefully and get to know your customers and their needs. Build relationships with your customers and don’t over stretch yourself with machinery investments.”
Do you see a long-term future in contracting?
“I do see a future in the business, but the way farming is going, there will be less farmers and less contractors. There’s too much red tape and regulation in farming nowadays. I know in Clare, a lot of farmers got out of sucklers, and there’s lot of smaller farmers thinking of throwing in the towel. This all has a knock-on effect on contractors. Unless anaerobic digesters get going in rural Ireland, contractors in certain areas of the country will struggle to survive. There will be much less contractors around in 10 years’ time, but they will be much bigger in scale. Contracting is going the same way as the haulage business. But with the way farming is going, there won’t be as much of a need for contractors in certain areas, because the farmers won’t be in it. I’m hearing farmers with good land on about planting it, because they are struggling to make a living off it. It’s getting harder to buy new machinery, and if you look at the trends in Europe, there’s more and more contractors exiting the business everyday.”
Michael Quigley of Quigley Agri Contracting.
Michael Quigley, Quigley Agri Contracting
Based in Kildangan, Co Kildare, Quigley Agri Contracting is a second generation contracting business, first established by Francis Quigley in the 1970s and now headed up by his son, Michael. The business carries out complete grassland and tillage services and to a lesser extent, plant hire during the winter and on the shoulders of the year. Michael and his team cut in excess of 5,000 acres of silage annually, made up of grass, whole crop and maize. The modern fleet comprises seven tractors, three full time staff and further four or five seasonal staff during the summer.
What are the biggest challenges contractors are facing?
“Right now, there are several challenges. Weather and the availability of skilled operators being two of the biggest. Simply because both are beyond our control. We are facing into another bad spring, when good weather is critical. The knock-on effect of a bad spring/early summer leaves us on the hind foot all year, playing catch up with work. I remember when there was a smooth transition from spring sowing to maize planting to grass silage to the cereal harvest and then maize and winter crops. With the weather in recent years this hasn’t been the case. The cost of machinery, spare parts, interest, insurance and fuel, etc, are crippling. A tractor that cost me €115,000 in 2018 is now costing me €150,000 on buying price alone, excluding the high interest rates of current. On the other hand, all farming sectors are struggling this year, which has a direct effect on the contracting sector.”
How big of an issue is labour for your business and what’s your outlook on the future of skilled labour?
“Labour is arguably the largest concern now. Last year was the first year ever that we struggled sourcing drivers. I always had guys calling me up looking for a job, but now that simply doesn’t happen. The unsociable hours during the peak season don’t help. I don’t see this changing in the short-term either. I’ve focused on grounds work lately, as it allows me to keep on three staff members full-time, plus it’s less weather-dependant and more consistent. I feel that there needs to be an education system put in place to train operators and offer them a qualification. I feel this would encourage young people into the sector. There are many different skills required to run a modern contracting business.”
What is the biggest area that you feel agricultural contractors are falling down on?
“There are a number of areas contractors could improve on, but given the current uncertainty, it’s hard to know what is achievable. Rates being one. If an accountant was to look at the books of an average contractor, they’d say that pit silage should be at least €200/acre to make ends meet. It’s a challenge because we know it’s simply not in it for the farmer to pay such rates. There are several smaller improvements contractors could make inside their own businesses too. This could be managing costs better, modernising bookkeeping systems, etc.”
What do contractors need to do to future-proof themselves?
“It’s important that contractors stay sharp and aware of their costs. More thought needs to go into decision-making, especially machinery buying decisions. For example, does it stack up to be running top-spec, new tractors just for trailer work where lesser might do?
“There is an element of moving with the times too in terms of technology. But if we are to invest in the latest tech and add value to the services provided, I think it’s fair to agree that it should come at an additional cost?”
Would you advise a young person to start up a contracting business?
“I think given the current costs it would be next to impossible to start out from scratch and establish a modern fleet of machinery and run of work. It would take years to grow the business to any suitable scale. If I had any advice to newcomers, it would be to treat it as a proper functioning business, charge properly, provide a good service and get paid. As far as lifestyle goes, it can be stressful and unsociable especially in recent years, given the tight working windows. But, like everything, it has its good days too, we’re just overdue some.”
Do you see a long-term future in contracting?
“As long as there are farmers then there will be a need for contractors in one form or another. However, I envisage rising costs and the associated challenges pushing more good operators out of the sector. Inevitably this leaves room for others to grow.”
"The cost of machinery, spare parts, interest, insurance and fuel, etc, are crippling," says Michael Quigley.
Last year was a tough one for farming, and that squeeze follows through to all businesses that pass through the farm gates.
There is a trend across Ireland and Europe of contractors exiting the business. There are many factors at the back of this, such as high machinery costs, a scarcity of skilled labour and extremely tight margins being most referenced. Farmers place a huge reliance on contractors, but with ever-increasing costs, is there a sustainable and viable future for contractors? To find out more, we catch up with the Association of Farm & Forestry Contractors in Ireland (FCI) and some full-time contractors.
John Hughes, national chair of the
Association of Farm & Forestry Contractors in Ireland (FCI).
John Hughes, FCI national chair
“The agricultural contracting sector is made up of many different sizes and types of businesses, either sole traders, limited companies, or farm-based operations that all provide machinery services to Irish agriculture. From a one-person operator to the large professional companies, there are variations in terms of the scale of many contracting businesses, but never in terms of commitment to getting the work done in the most efficient and cost-effective way.
“The value of the agricultural contracting sector to the Irish economy is worth more than €900m and will increase into the future. The big question is how will we achieve this increased contribution to farm output against the backdrop of decreasing numbers of skilled machinery operators? The reality is that the demographic of the agricultural contractor is aging and with less new entrants this is likely to lead to a shortage of agricultural contractors in some areas.
“It is my view that all the stakeholders within the Irish agricultural sector need to work together to keep all of the separate business entities, especially agricultural contractors, on which the sector has become hugely dependent, in business for the future.
“For this to happen, the FCI believes that a new strategy of working, and a new level of respect for the commitment and enterprise of agricultural contractors, will be required by farmers and their agricultural contractors.
“Every business requires a steady flow of funds to stay in business. Agricultural contracting is no different. Contractors will have to focus on getting invoices out to farmer clients on a more regular basis, like all other services to farming, and these invoices will also have to be paid on time.
“Financial management must take equal priority to getting the work done, and so too must operator safety and welfare.
“Using the agricultural contractors as a way to fund the survival in some cases or the expansion in others, of a farming enterprise, is not doing either farm or the contractor any favours. Increasing costs must be managed and accountable if the contracting business is to survive, while not compromising on nurturing new skills and supporting new investments that will deliver greater efficiencies and traceability.”
Technology
“Technology has become a tool to help the agricultural contractor sector to achieve better efficiencies, more accuracy and more traceability, all clear objectives for a progressive farming sector.
“With GPS technology, more accurate driving has ensured savings in agro-chemicals, improved fertiliser use, and ensured greater germination of seeds to ensure better crop yields. All of which has been good for the sustainability of agriculture and the environment. Robotics will come in time, but who will be controlling these machines? The current education system hasn’t recognised the future requirements for skilled machinery operators. At FCI we can predict a shortage of production because who will fill this void of skilled machinery operators?
“To achieve our objectives, it is up to all agricultural contractors to pull together and to recognise that any objective that is achieved will be of benefit to all contractors.”
“Most contractors now have good machinery and provide a good service, but it’s the timely collecting of money and the office work is where contractors are falling down," says Pat Hehir.
Pat Hehir, Clare Agri Contracting
Clare Agri Contracting is based two miles from Ennis, and covers a 40-50km radius, with most of its work being in the east of the county. Headed up by Pat Hehir, he initially went contracting in a partnership in 2010, before going out on his own in 2017. Pit silage and slurry is his main business, with fertiliser and lime-spreading and reseeding also part of the business.
What are the biggest challenges contractors are facing?
“A lot of Irish farmers are in the 65-70 years of age bracket, and there’s lot of them with no succession plans. The morale of farmers is quite low at the minute and I honestly believe that the Green Party has done a lot of damage to rural Ireland.
“Farmers are poorly paid for the work they do, and this affects contractors. Money is very tight in farming at the minute. There are a lot of contractors owed a lot of money from last year, and it’s tough, because we have bills too.
“The price of machinery is a huge problem right now. The investments contractors have to make to keep fresh machinery is serious. Any 180hp tractor is now costing €150,000, plus VAT. Over the last 10 years they have gone up by €60,000 to €70,000, and rates haven’t changed accordingly.”
“I do see a future in the business, but the way farming is going, there will be less farmers and less contractors," says Pat Hehir.
How big of an issue is labour for your business and what’s your outlook on the future of skilled labour?
“We are okay for labour right now, but it’s getting tougher each year. Machinery is getting so advanced that you need skilled labour to operate it. We are seeing that the next generation needs more training to be able to understand working on wet land and on hilly ground, it doesn’t come as naturally to them as the last generation.
“Young people have far more distractions nowadays, the phone and social media is a problem. There isn’t near as many young people interested in machinery any more as they were 10 years ago. If labour becomes more troublesome, contractors will have to look at bringing in drivers from overseas.”
What is the biggest area that you feel agricultural contractors are falling down on?
“Most contractors now have good machinery and provide a good service, but it’s the timely collecting of money and the office work is where contractors are falling down. We need to base our businesses on the New Zealand system, where bills are sent out every month and paid 28 days later. Contractors are the same as every other business, they need regular cashflow to survive. It’s gone to the stage where contractors should be setting up their farmer clients on direct debit systems. Collecting money is an awful job, no one wants to have to go around begging for what they are owed. Lots of contractors who have got out of the business in recent years will all tell you that getting paid was they’re biggest problem.”
What do contractors need to do to future-proof themselves?
“I think that the way rules and regulations are going, contractors will have to get up to speed with technology. Whether this will be providing traceability maps for slurry and fertiliser placement, or yield mapping, they will need to be able to provide this type of information. Younger farmers will want data, so contractors will need to be able to produce it, and charge accordingly for it.”
Would you advise a young person to start up a contracting business?
“With the direction of farming in Ireland, I think a young person should think long and hard before getting into the business. I honestly believe there are much more opportunities for young people to set up contracting businesses overseas.
“If you look to America as an example, lots of contractors over there are in the 70s and there is great potential to establish very scalable businesses over there.
“If a young person loves the business, and really wanted to get set up at it, the first thing I would say is to set up a proper system to send out bills and collect your money. Try and walk before you jump, thread carefully and get to know your customers and their needs. Build relationships with your customers and don’t over stretch yourself with machinery investments.”
Do you see a long-term future in contracting?
“I do see a future in the business, but the way farming is going, there will be less farmers and less contractors. There’s too much red tape and regulation in farming nowadays. I know in Clare, a lot of farmers got out of sucklers, and there’s lot of smaller farmers thinking of throwing in the towel. This all has a knock-on effect on contractors. Unless anaerobic digesters get going in rural Ireland, contractors in certain areas of the country will struggle to survive. There will be much less contractors around in 10 years’ time, but they will be much bigger in scale. Contracting is going the same way as the haulage business. But with the way farming is going, there won’t be as much of a need for contractors in certain areas, because the farmers won’t be in it. I’m hearing farmers with good land on about planting it, because they are struggling to make a living off it. It’s getting harder to buy new machinery, and if you look at the trends in Europe, there’s more and more contractors exiting the business everyday.”
Michael Quigley of Quigley Agri Contracting.
Michael Quigley, Quigley Agri Contracting
Based in Kildangan, Co Kildare, Quigley Agri Contracting is a second generation contracting business, first established by Francis Quigley in the 1970s and now headed up by his son, Michael. The business carries out complete grassland and tillage services and to a lesser extent, plant hire during the winter and on the shoulders of the year. Michael and his team cut in excess of 5,000 acres of silage annually, made up of grass, whole crop and maize. The modern fleet comprises seven tractors, three full time staff and further four or five seasonal staff during the summer.
What are the biggest challenges contractors are facing?
“Right now, there are several challenges. Weather and the availability of skilled operators being two of the biggest. Simply because both are beyond our control. We are facing into another bad spring, when good weather is critical. The knock-on effect of a bad spring/early summer leaves us on the hind foot all year, playing catch up with work. I remember when there was a smooth transition from spring sowing to maize planting to grass silage to the cereal harvest and then maize and winter crops. With the weather in recent years this hasn’t been the case. The cost of machinery, spare parts, interest, insurance and fuel, etc, are crippling. A tractor that cost me €115,000 in 2018 is now costing me €150,000 on buying price alone, excluding the high interest rates of current. On the other hand, all farming sectors are struggling this year, which has a direct effect on the contracting sector.”
How big of an issue is labour for your business and what’s your outlook on the future of skilled labour?
“Labour is arguably the largest concern now. Last year was the first year ever that we struggled sourcing drivers. I always had guys calling me up looking for a job, but now that simply doesn’t happen. The unsociable hours during the peak season don’t help. I don’t see this changing in the short-term either. I’ve focused on grounds work lately, as it allows me to keep on three staff members full-time, plus it’s less weather-dependant and more consistent. I feel that there needs to be an education system put in place to train operators and offer them a qualification. I feel this would encourage young people into the sector. There are many different skills required to run a modern contracting business.”
What is the biggest area that you feel agricultural contractors are falling down on?
“There are a number of areas contractors could improve on, but given the current uncertainty, it’s hard to know what is achievable. Rates being one. If an accountant was to look at the books of an average contractor, they’d say that pit silage should be at least €200/acre to make ends meet. It’s a challenge because we know it’s simply not in it for the farmer to pay such rates. There are several smaller improvements contractors could make inside their own businesses too. This could be managing costs better, modernising bookkeeping systems, etc.”
What do contractors need to do to future-proof themselves?
“It’s important that contractors stay sharp and aware of their costs. More thought needs to go into decision-making, especially machinery buying decisions. For example, does it stack up to be running top-spec, new tractors just for trailer work where lesser might do?
“There is an element of moving with the times too in terms of technology. But if we are to invest in the latest tech and add value to the services provided, I think it’s fair to agree that it should come at an additional cost?”
Would you advise a young person to start up a contracting business?
“I think given the current costs it would be next to impossible to start out from scratch and establish a modern fleet of machinery and run of work. It would take years to grow the business to any suitable scale. If I had any advice to newcomers, it would be to treat it as a proper functioning business, charge properly, provide a good service and get paid. As far as lifestyle goes, it can be stressful and unsociable especially in recent years, given the tight working windows. But, like everything, it has its good days too, we’re just overdue some.”
Do you see a long-term future in contracting?
“As long as there are farmers then there will be a need for contractors in one form or another. However, I envisage rising costs and the associated challenges pushing more good operators out of the sector. Inevitably this leaves room for others to grow.”
"The cost of machinery, spare parts, interest, insurance and fuel, etc, are crippling," says Michael Quigley.
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