One of the downsides to the recent weakening of Sterling against the Euro and other world currencies has been the associated strengthening of input costs.
A case in point is fuel, including red diesel.
Specifically, these rising input costs will see the cost of agricultural contracting services climb in the coming months.
Publishing the National Association of Agricultural Contractor’s (NAAC) 2017 charges, the Association’s Chief Executive Duncan Russell commented: “Whilst prices have not risen significantly since last year, the time is coming that increases are inevitable. We are seeing rapidly increasing machinery purchasing costs, alongside hikes in spare parts and tyres, which simply cannot continue to be absorbed by the contracting sector.”
He added: “Farming customers are demanding the latest kit, fitted out in many cases with technology to assist them in decision-making and precision application, which all costs.
“Whilst contractors like to work with their customers to provide the professional service they require, this needs to become a closer partnership to allow contractors to make the massive investment in capital costs required to purchase and maintain multi-million pound fleets of machinery.”
Commenting, NAAC Chairman and contractor Martin Hays said: “I just want to provide a good service, on-time to my customers. This is what most contractors want, whilst earning a living. However, as machinery costs continue to climb, alongside the costs of other inputs I have no option but to look hard at my charging schedule. And other contractors should be doing the same.”
He added: “Machinery costs are not static, so neither should our charges be.
“Whilst we may be doing ok this year, when it comes to upgrading or trading machines and tractors in the coming months and years we may easily find our costs have fallen behind and we cannot make up the shortfall.
“Farmers will have exactly the same problems and we need to work together so that contractors can make those long-term investments in labour and kit to keep the farming industry sustainable for the future.”
Contractors in Northern Ireland agree with these sentiments. But this is not the only challenge they face at the present time.
“Getting money in is extremely difficult,” said the owner of a Co Armagh contracting business.
“In some cases, I am waiting up to six months for payment. This is killing my cash flow.
“Contracting businesses should not be used as banks by farmers.”