The Association of Farm & Forestry Contractors in Ireland (FCI) has revised and updated its 2022 Contracting Charges Guide to reflect the increasing diesel and input costs.
A statement released by the FCI said: “We have been tracking agri-diesel prices with our members on a weekly basis since March 2022. This week’s (week 24) quotes are the highest this year and the highest on agri-diesel prices record, averaging €1.49/l including VAT. This is a €0.24/l increase since the end of April, a 20% increase in overall fuel costs since the start of the silage season.”
The sharp rise in diesel prices over the past fortnight come as a result of how the markets have reacted to fears of further sanctions being placed on Russian oil and the decision of some oil-producing countries not to increase production in an effort to offset the Russian shortfall.
“This means that the daily cost of filling a 350-litre diesel tank for a contractor’s tractor will have increased from €262.50 in January 2022 to €521.50 at the start of June.
“The cost per day to fill a self-propelled silage harvester with a 1,200-litre tank has risen from €900 to €1,788 or a 98% increase in fuel costs,” the association stated.
It was also outlined that no other sector of the Irish economy has experienced such high levels of fuel cost inflation as has been experienced by farm and forestry contractors.
“The removal of the excise duty on agri-diesel has been insignificant for farm and forestry contractors.
The increase in the cost of agri-diesel has been more significant than road diesel cost increases, where the bus and road haulage sector has benefitted from fuel rebate subsidies.”
According to the FCI, the result is a doubling of annual fuel costs for the sector from €260m to €520m based on the latest prices.
The updated 2022 Contractor Charges Guide comes in response to these spiralling input costs, which are not only restricted to fuel increases but to machinery, parts and labour to mention a few.
The FCI stated that the 5% increase in charges introduced at the start of the year are no longer adequate to meet the challenges outlined. It is worth noting that this time round the FCI has included VAT on all guided rates given that the majority of Irish farmers are not VAT-registered.
Michael Moroney, FCI chief executive officer, said: “FCI continues to advise all contractors to examine current costs of operation by monitoring fuel consumption levels, to establish their individual charges for 2022.
“The most recent FCI silage cost analysis has shown that a modern self-propelled silage fleet will require a minimum rate of €170/ac, including VAT, just to cover the depreciation, labour and operating costs and the further carbon tax increase introduced in May 2022.
“Baling charges, when 30% plastic price increases and VAT are included, can now require a charge of €20 per bale,” he added.
Moroney also highlighted the importance that contractors are aware of the impact that the increased charges will have on their VAT liabilities.