Contractors highlight cash-flow concerns caused by Covid-19

The Association of Farm & Forestry Contractors in Ireland (FCI) has informed the Minister for Finance and Public Reform, Paschal Donohoe that many agricultural contractors are now experiencing significant cash-flow difficulties as a result of the Covid-19 crisis.

The organisation is, as a result, calling for a postponement of the €6/t carbon tax increase that is due to come into effect next week.

The consequences of the virus outbreak are now being converted into increasing debt to the many contracting businesses, the FCI warned.

These same businesses provide essential farm machinery services to more than 80% of all Irish farmers, the representative group added.

“Our concern now is for the future impacts on many farm and forestry contracting businesses as there is huge uncertainty around farm product prices,” said FCI national chairman Richard White.

This will have significant consequences for payments for farm and forestry contracting services during 2020.

“It has for this reason and against this ever changing financial background that FCI has requested the Minister for Finance and Public Reform, Paschal Donohoe, to postpone the planned introduction of the proposed carbon tax increase of €6/t on all green diesel used for agriculture, which is due to be introduced on May 1, 2020.”

White added: “We are very disappointed that, 20 days later from our most recent request, neither the minister nor his officials have recognised or even acknowledged the urgency of this situation.”

Also Read: FCI asks finance minister for postponement of Carbon Tax increase

Due to the many unknown aspects of this coronavirus crisis, some of the current restrictions will extend into the grass silage harvesting season.

The cash-flow requirements of the silage harvest are enormous given the fact that a modern harvesting team will have a diesel fuel requirement of in excess of 3,000L per day, the organisation says.

FCI said it has informed Minister Donohoe that it is concerned about the longer term impacts of this new cash-flow challenge on the farm contracting sector if farm product prices experience an ongoing reduction.

By postponing this increase subject to a stakeholder review in advance of the Budget 2021, this action will defray the need for additional cost increases from agri contractors for their services to Irish farmers in 2020 and beyond.

This additional cost will become an issue of critical importance to the Irish farming and food industry as it struggles to cope with the new challenges of Covid-19 during all of 2020 and beyond, the organisation says.