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Contractors to put €20/ac fuel levy on silage cutting

Agricultural contractors are planning to add a fuel surcharge of at least €20/ac to silage cutting charges this season in an attempt to recoup the rocketing cost of diesel.

Diesel prices have increased by 55pc since April 2009 to 95-98c/l and an additional carbon tax of 1.5c/l plus VAT will be applied to the fuel from May 1 this year.

Tom Murphy of the Professional Agricultural Contractors association (PAC) described escalating fuel prices as a serious problem for contractors, which was forcing them to increase charges further this year.

"The contractors are going to add a fuel surcharge to the farmers' bills for silage cutting this year to take account of the additional costs," he said.

"Fuel represents 25pc of contractor costs and this means that their costs have increased by nearly 50pc," Mr Murphy pointed out.

"The increase in carbon tax from May 1 is a further liability. A reclaim system for farmers is not available to contractors.

"It is a very serious situation, no doubt about it, but the Government appears to be powerless. They should be allowing contractors the same rebate as farmers because that cost is now going to have to be passed on to farmers."

Drogheda-based contractor Paul Shevlin from the newly formed Farm Contractors of Ireland (FCI) said contractors in that association would be adding a fuel surcharge of at least €20/ac for silage cutting this year. Ploughing and sowing charges have already been increased by €3/ac this year.

It is understood that some contractors will offer farmers the option of supplying their own diesel to the contractor, if a delivery of fresh diesel to the farm can be arranged to coincide with the silage cutting.

This could provide some benefit to farmers who can reclaim on carbon tax, a concession which is not available to the contractors.

However, not all contractors will offer this alternative choice.

"I don't think it is practical for the farmer to supply the diesel for silage, because it would have to be supplied directly from the oil distributor to avoid any problem from farm storage contamination," said FCI's Paul Shevlin.

Indo Farming