In publishing the FCI Contracting Charges Guide for 2024 the Association of Farm & Forestry Contractors in Ireland (FCI) is satisfied that this averaged price guide continues to provide fair and reasonable guidance for both Farm & Forestry Contractors and their client farmers. However, it must be emphasised that this is only an information guide.
FCI has produced these guide figures on an annual basis by collating an average figure for each operation from a panel of FCI Contractor Members from across Ireland. Because of the local differences the actual guide charge may vary between regions, across soil types, distance travelled, size of contract undertaken, size and type of equipment used as well as the scale of the work done.
For these reasons there are bands in each segment of the guide. This year again sees the 2024 FCI Contracting Charges Guide include excluding and including VAT columns as an increasing number of farmers are moving towards VAT registration, especially those that have moved to limited company status.
This 2024 charges guide reflects some slight increases in some charges up to 4%, while others are virtually unchanged.
The 2024 FCI Contracting Charges Guide continues to reflect some changes to farming practices with now 102 items of work listed up from 98 in 2023. While the guide charges in some sectors have been consolidated, new areas have been added including grain crimping, liquid Nitrogen application, and bagging silage services.
rish farming organisations and Teagasc, now acknowledge that Farm & Forestry Contractor service providers are the most tax-efficient, economical, safe, and reliable choice for their farming businesses.
This is reflected in the continuing increases in spend among Irish farmers in contractor services, which increased to €7,097 per farm in 2023, up from €5,682 in 2022, a massive 25% increase, according to the most recent Teagasc National Farm Survey 2022 data.
Irish dairy farmers now spend an average of €15,784 annually on agricultural contractor services, an increase of 19% compared with 2022.
“Farmers know that their dedicated land-based FCI Contractor continues to provide the best, and most cost-effective and lowest emission choice in providing machinery services for their Irish farming and forestry businesses,” said Ann Gleeson Hanrahan, FCI managing Director.
“Many agricultural contractor businesses are multi-generational and because of this Irish farmers value the highly skilled and professional service from their contractors.
“The 1,500 contractors on the FCI database work on an average of three farms each day. This amounts to 4,500 farmer and Agricultural Contractor interactions each day or 27,000 each 6-day week of the working season between farmers and their Agricultural Contractor.
With a 30-week working year of direct farm work, this equates to over 800,000 farmer and Agricultural Contractors interactions each year, across 137,000 Irish farms. That’s how connected contractors are to their farmer clients,” said Ann.
“Our FCI members are ambitious to be part of a movement that can harness that deep connection with farmers to sustain and enhance biodiversity on Irish farms. Our sector brings a unique opportunity to deliver change on farms by using the best technology to enhance crop and animal management, in a sustainable and cost-effective way.
These are unique partnerships to give farmers access to new technology options with skilled operators in a cost-effective and low Carbon emission way that has the potential to further power the growth of many successful and sustainable farm businesses,” she added.
“FCI contractors aim to provide their farming clients with a professional, prompt, safe, and efficient service, using modern equipment. There are new challenges to source and retain skilled machine operators coupled with optimising the potential of modern machinery on Irish farms.
FCI contractors have the skills to use precision farming technology to meet the traceability needs required for Ireland’s modern world-class food producing industry against the background of lower sector emissions and the adoption of new CAP strategies.
The increasing costs of new machinery for Farm & Forestry Contractors and their client farmers continues to impact on the sustainability of many Irish agricultural contracting businesses.
“Machinery costs have risen by more than 30% in the past three years, while spare parts prices have risen by even larger amounts,” according to FCI National Chair, John Hughes.
“For modern agricultural contractor businesses, sustained investment in new technology is vital for survival. The expectation that new machine systems will deliver improvements in efficiency is what drives this investment.
If the necessary efficiencies cannot be delivered in the field with new machines, then the improved economic outputs and efficiencies that Irish farmers expect will not be achieved,” he added.
Additional machinery, replacement parts and tyre cost increases experienced during 2023 and continuing into 2024, along with higher interest rates, are driving up machinery purchasing and ownership costs.
This machinery inflation is being experienced across Europe among the contractors who like FCI participate in CEETTAR, the European Contractors Association.
During early 2023 FCI produced an online Fuel Costing Index Calculator to allow contractors to establish their break-even charge rates for a range of services that they provide. The calculator is open to all contractors and is available to download on your smartphone at www.fcicalculator.ie with no charge.
The aim was to help contractors to identify their break-even costs and develop their businesses against a background of knowing their costs. FCI would like to see as many contractors as possible using the FCI cost Calculator.
To use the FCI calculator at www.fcicalculator.ie all you need to know are your overall annual costs across a number of cost headings for your business. This information is easily available from your accountant.
Once you key in the financial cost figures and also your overall agri-diesel consumption in litres, you will get an index value that is unique to your agricultural contracting business alone.
You then move to the Calculate the Break-Even Charge Rates section, and you have a number of options to choose from including rate per hour for work such as hedge cutting, rate per acre for silage harvesting, for example and rate per tonne for transporting grain from the field to the farm.
FCI advocates that all contractors should prioritise a detailed year-end analysis of their 2024 costs of operation in using the FCI Fuel Costing Index Calculator tool on their smartphones to work out their individual charges for 2025.
To ensure sustainability of the business, charges must be based on a realistic examination of the true cost of the operating tractors and a full host of machinery, as well as the costs of running a modern progressive rural enterprise.
“An FCI silage cost analysis using sample member figures from the Fuel Costing Index Calculator, has shown that a modern contractor silage fleet will require a minimum rate of €170 per acre just to cover the depreciation, labour and operating costs which will also include a further Carbon Tax increase due in May 2024.
Contractors need to look closely at all costs to establish sustainable and realistic rates for their services when investing in modern farm equipment,” added John Hughes.
Ann Gleeson Hanrahan, FCI Managing Director said, “Putting time and effort into establishing your operating costs, as a Farm and Forestry Contractor, has never been more important.
All contractors need to develop a clear understanding of the actual costs of their machine operations. That’s why is very useful for each contractor to now establish individual baseline costings.”
“Contractors have new and additional costs in 2024, with the combination of the minimum wage increase impact along with the new legal requirements around the provision of pension funding for employees.
These are additional increased costs that contractors have to factor into their 2024 operational costs,” said Ann.
Fuel prices have risen slightly as we start into 2024 against a background where they stabilised in 2023, but reduced, following significant increases close to 50% in 2022, adding thousands of euros to the costs of contractor operations, with no additional output result.
The huge hike in the cost of AdBlue, the emission lowering additive, was another extra cost factor for 2023 and continues without any reductions into 2024. FCI estimates that with the increase AdBlue costs, the machines of Irish Farm & Forestry Contractors are now consuming more than €10 million worth of AdBlue based on the sector consumption of more than 350 million litres of diesel fuel, annually.
Skilled operator availability and at what cost, remains another huge unknown as we enter 2024. There is a noticeable scarcity of young people joining the sector. FCI is disappointed that the recently announced apprenticeship scheme for agriculture did not include its request for structured training for tractor and machinery operators for the sector.
The high cost of contractor insurance and the requirement to have comprehensive insurance cover, in addition to employers’ and public liability, coupled with lack of competition, continue to drive up costs in the sector.
Typically, in Irish conditions, business insurance is costing Farm & Forestry Contractors between 6% and 7% of turnover which amounts to close to €50 million in premium payments per year from the sector.
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