The Association of Farm and Forestry Contractors in Ireland (FCI) has called on the government to introduce a scheme to support contractors in purchasing machinery.
In its pre-budget submission, the FCI said that the combination of “inflationary pressures and depressed output prices” in some farming sectors has brought into focus “the need for targeted and timely support for contractors”.
The association said that tractor purchase costs have increased by more than 50% between 2015 and 2023.
It added that replacement costs for modern high-technology machines that deliver “improved work rates, fuel economy and lower emissions”, have increased by almost 100%.
“The agricultural and forestry contractor sector is now locked in a cost/price squeeze situation which is threatening its survival,” FCI said.
Contractors
Non-farming agricultural contractors are currently not eligible to get up to 60% grant aid for machine purchases under the Targeted Agricultural Modernisation Scheme (TAMS).
The FCI said that schemes have been introduced in Germany and the UK where contractors can apply for grant aid to purchase machinery.
The association said that a new Targeted Agricultural Contractor Modernisation Scheme (TACMS) could provide grants of up to 65% of the investment costs in machinery and equipment for contractors.
According to FCI, the contracting sector employs up to 20,000 people in rural Ireland, between full-time and part-time skilled machine operators.
The Teagasc National Farm Survey 2023 showed that farmer spending on contractor services was valued at over €990 million last year, which is up by 76% compared to 2015.
Due to the current levels of industry uncertainty, the lack of investment support and increased regulation some contractors are choosing to leave the sector.
The association said the Department of Agriculture, Food and the Marine (DAFM) should establish a national register of agricultural and forestry contractors, along with a new committee to examine the supports needed to sustain the sector.
It said the new TACMS scheme could offer training support grants to facilitate upskilling and training of new entrants to the sector.
The pre-budget submission also said that the definitions of agriculture and farming within taxation must be expanded to include contractors.
The FCI called for a temporary reduction in the VAT rate for select agricultural contractor services currently at standard rate or 13.5% rate.
It added that the reduced excise duty level on agri-diesel must be maintained and VAT currently charged on carbon tax must be removed “as it is double taxation”.
The submission also seeks the extension of the 90% agricultural relief available for farm transfers to transfers of agricultural and forestry contracting businesses.
Challenges
Meanwhile, Independent Laois-Offaly TD Carol Nolan said that she is engaging with the Minister for Agriculture, Food and the Marine Charlie McConalogue on providing greater supports for the contracting sector.
She said that recent increases in fuel excise duty has hit contractors hard, along with increased machinery purchasing costs.
“Cost escalations of this magnitude are simply unsustainable particularly as contractors have to partner with farmers who are obligated to reduce emissions and thereby reduce farm activity in order to meet 2030 targets.
“If we want to maintain a functioning, productive and high-quality tillage sector then government needs to recognise that this is inseparable from supporting a functioning, productive and high quality agri-contractor sector. The two go hand in hand,” she said.