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Saturday 3 December 2016

Farmers facing major Contractor price hikes

PAC says increased fuel costs and limited credit will see charges go up sharply

Published 15/03/2011 | 05:00

Contractors say a rise in charges is unavoidable and that the costs have to be passed on to the farmer
Contractors say a rise in charges is unavoidable and that the costs have to be passed on to the farmer

Soaring fuel costs and limited credit lines are set to push contracting charges upwards in the coming months, according to the Professional Agricultural Contractors (PAC).

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Here some of the association's members outline their current situation and their predictions for the months ahead.

Timmy O'Brien, from Churchtown, Co Cork, filled a 7,000-litre diesel tank at 85.78c/l including VAT 10 days ago.

"That's 10c/l dearer than it was at the same time in 2008, which was a dear year," he points out. "And it's 30c/l up on last year."

The contractor says an increase in charges is inevitable.

"Take a tractor agitating slurry using 25 litres of diesel per hour. In February 2009, I paid 44c/l for diesel excluding VAT so agitating cost [me] €11 per hour in diesel," he says. "This year I paid 75c/l excluding VAT so that hour's work cost €18.75 in diesel."

"Based on those figures, I would have to increase my charge by at least €7.50 an hour. That is based on the increase on diesel price alone."

Midlands-based contractor Tom Porter says diesel prices make up 20-25pc of the hourly charge for his digger work.

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"The charge will have to go up this year to cover the higher diesel price or else the farmer could provide the diesel himself," he says.

However, he points out that there are added complications when using fuel supplied by the farmer.

"You would have to be sure that your machine is full going into farmer's yard and he has enough diesel to refill your tank at the end of the job," he says.

Louth-based contractor Paul Shevlin bought diesel at 88c/l including VAT this week, a price that had increased by 8c/l on a quote in the previous week.

He maintains that higher diesel prices will add at least €2/ac to any contracting job this year.

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"The tractor I use for sowing uses nine litres of fuel an hour and the jobs I'm doing around now, like sowing, will cost €2/ac, or 10pc, more than last year," he says.

"But that's only to cover fuel. The prices of all oil products, like grease, engine oil and other oils, are all going up too.

"The tractor will cost about €5 an hour more than last year when everything is take into account.

"For a silage outfit using 5,000 litres a day in the busiest week of the year, diesel will cost an extra €1,500 per day compared to last year."

Noel Bailey, from Co Laois, says there are only a few options for contractors and farmers this year.

"The first is to put a surcharge on the bottom of the bill, the second is to let the farmer buy the diesel or else we will have to get paid for jobs as we finish them," he says.

"We can't get credit so we can't give credit. It's not that we don't want to give credit but we simply can't anymore."

Kells contractor Philip Heary is of the same opinion.

"We can't be unwilling bankers anymore," he says.

"We can't afford to wait 30, 60 or even 90 days for money [from farmers].

"At the moment, I can't even quote prices to farmers for ploughing next week, power harrowing in a fortnight or silage in May. Green diesel could be €1 tomorrow; next week it could be €1.50."

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