The Association of Farm and Forestry Contractors in Ireland (FCI) is concerned at a potential 50c/L increase in the cost of green diesel in Budget 2022, by removing the excise duty differential between agricultural diesel and diesel in the transport sector.
The FCI is calling on the Department of Finance and the government’s Tax Strategy Group to carry out a financial and technical assessment of the actual costs to Irish farming’s competitiveness if the difference between the two fuels is removed.
According to the association’s figures, the farm and forestry contracting sector consumes upwards of 340 million litres of diesel annually, close to 62% of all diesel fuel consumed in Irish agriculture.
John Hughes, FCI national chairperson, explained that increasing the price of green diesel by 50c/L to close the differential will in turn increase the Carbon Tax on green diesel.
According to Hughes, these new costs will increase the cost of diesel to contractors by more than €170 million annually.
“Contractors have no alternative power sources to the diesel engine to power their machines and they will be forced to pass any significant fuel cost increases on to their farming clients in the form of substantial increases in contractor charges in 2022,” the FCI chair warned.
He added: “There is simply no commercially available alternative to diesel-powered tractors and harvesters to achieve the government’s objective of de-carbonising the Irish economy.
“Our members are environmentally ambitious, they have made significant financial investments in new machinery using AdBlue technology, at additional cost, to lower emissions from available diesel engine technology.
“The Irish farming and food industry and the Irish economy will be the loser, as will the national balance of payments if we are not able to sustainably produce food in a competitive way,” Hughes argued.
The FCI says that its 1,000 members each work on an average of three farms a day, amounting to 3,000 farmer-contractor interactions a day, or 18,000 each week during the working season.
“This enormous level of annual direct interactions and work throughput between farmers and their contractor clearly shows why contractors are at the heart of the agri-food system, supporting farmers and forest owners with mechanisation services,” Hughes commented.
“Fuel taxation strategies need to take this into account, as over 80% of Irish farmers depend on farm and forestry contractor services to achieve their production targets,” he concluded.