Letter to the editor: ‘Contracting is not very profitable. Is this the final nail in the coffin?’

I felt it necessary to write to you to highlight the cost that carbon tax is going to impose on the agricultural sector this year…and in the years ahead. I’m an agricultural contractor in Co. Kerry. I do all services, including silage and slurry.

Cost of carbon tax

The current carbon tax was introduced in the last budget. It will take effect from May 1 [2020] and will cost [up to] 2c/L.

That seems like a small amount but, over the course of a 12-month period, it will cost anything from €3,000 to €6,000 per annum for an agricultural contractor. Will it go up year-on-year?

People may say ‘just pass it on’ [to the farmer/customer] but it’s not that simple. The customers we work for are under financial pressure.

In many cases, they are selling products as prices beneath the cost of production – e.g. beef and tillage farmers, where BPS [Basic Payment Scheme] payments make up to 120% of their [net] income.

Bottom line for a contractor

The bottom line here is that we – as contractors – already have modern equipment that has been designed to be as carbon-efficient as possible, especially with the introduction of AdBlue. That’s a cost we’ve already had to absorb.

If each of us had a herd number we could get a rebate, or if I had a haulage business I could also get a rebate [from the state].

So my question is: Why is there one law for one sector – e.g. the haulage industry – and another law for us?

Believe me; agricultural contracting is not a very profitable business. Is this the final nail in the coffin?

From Neilus O’Connor, Co. Kerry