The Association of Farm and Forestry Contractors in Ireland (FCI) has said it has received reports from contractors of restricted supplies of ‘green’ diesel.
The group also said it had concerns that there may be some stockpiling of the fuel higher up along the supply chain, but added that it does not have hard evidence for this.
FCI has written to the finance, agriculture and transport ministers calling for supplies to be prioritised for farm and forestry contractors in the coming weeks in the event of a shortage.
CEO of the FCI, Michael Moroney explained to Agriland that they cannot gauge at this stage if the shortage is “real or artificial”.
Given the high costs of the fuel and to make it easier to provide a contracting service, FCI has also requested that carbon tax be removed from ‘green’ diesel for five years.
Along with reducing costs for contractors, Moroney stated that this will allow adequate time for the development of market-ready zero carbon systems as an alternative to the internal combustion engine.
Green diesel
Moroney outlined that some contractors are on restricted green/agri diesel supplies at present due to limits imposed by a number of suppliers.
“I’m hearing people saying there’s a maximum of 5,000L. I’ve even heard people saying a maximum of 500L, which is very little use because your typical contractor tractor will have a fuel tank capacity of 300L.
“In any normal working day that full tank capacity will be used. So 500L per contractor isn’t a whole pile of use in today’s world. We don’t know why they are being restricted,” the FCI CEO outlined.
The FCI estimated that contractors spent about €260 million on ‘green’ diesel last year, based on an average price of 75c/L.
“If we take today’s price that people are quoting at €1.40/L, which is almost double that figure, straightaway we’re up to a figure of about €455 million. It’s a 75% increase in the cost of diesel in a relatively short period of time.”
Moroney estimated that a silage contractor could be looking at an increase in excess of €100,000 in fuel alone between 2020 and 2022.
“If contractors can’t charge accordingly, the reality is they go out of business because it is not sustainable to charge the same rate as 2020 when you’re dealing with a fuel cost that is 75% higher than 2021.”
The FCI CEO has urged contractors to “do their homework” and make business decisions on the costs that they have to deal with at present.
Contractor
James Geoghegan, who operates a contracting business in Westmeath, told Agriland that his fuel bill will increase by €80,000 this year.
“All we can do is pass that on. Luckily enough the farm gate price has increased substantially on beef and dairy. So hopefully the money is in the system.
“If milk hadn’t gone above 40c/L, I think it would be a total wipe out this year.”
Geoghegan estimated that the cost of cutting silage this year will increase by €20 to €30/ac at current fuel prices.
“The problem at the moment is we don’t know what the price of diesel is going forward so it’s very hard to quote for jobs when you don’t know what’s happening.”
Geoghegan explained that he has experienced restrictions on the amount of diesel he can currently buy.
“I ordered 3,000 litres for this week and I got 1,000. Luckily the pressure is slightly off as the hedge cutting has finished up and we are fairly up to date on slurry so we can pull back a bit on the fuel we are using.”
“1,000 litres for us will just fill three tractors for the day,” he stated.
However, Geoghegan said he has major concerns for the upcoming silage season.
“In mid-May, we would be using 1,500 litres a day. Bigger contractors would be using maybe 2,500 to 3,000 litres every day. When that pull comes on in May if there’s not a guaranteed supply the silage is not going to be cut.
“I’m starting to get afraid really of what could happen because we all have finance, we have to pay bills. If we don’t get a run at silage and get paid on time, there’s not going to be too many contractors left after this summer,” Geoghegan warned.