The body representing farm contractors has said that some of its members have had to reduce their workforces due to a loss of anticipated work.

The Association of Farm and Forestry Contractors in Ireland (FCI) said that contactor businesses are facing "a perfect storm" of reduced work due to a lack of grass to be cut, and cash-flow challenges later in the year.

The FCI is called for an "urgent meeting" with the Department of Agriculture, Food and the Marine to discuss the challenges faced by its member businesses.

The association has also called for the government to establish a dedicated loan scheme through the Strategic Banking Corporation of Ireland (SBCI) for farm contractors to provide affordable working capital finance to contracting businesses.

The FCI said that the drought has resulted in farmers closing off fewer fields for silage, in turn reducing demand for contracting services.

As a result, contractors are experiencing a "substantial reduction in anticipated work" while continuing to meet the fixed costs of running their businesses.

"Some contractors have already been left with no option but to reduce their workforce," the association said.

The FCI is warning that a more significant cash-flow challenge may come later in the year, as the full effects from the drought and resulting fodder shortage are felt by farmers.

"Even in a normal year, contractor accounts can be delayed when farm businesses experience financial pressure.

"This effectively means that farm contractors become an informal source of credit to the agricultural sector, carrying outstanding accounts while continuing to finance their own input-heavy businesses," the organisation said.

According to the FCI, there is a "clear need" for a financing mechanism designed around the operating model of farm and forestry contractors.

The group said that such scheme should allow contractors to manage the period between undertaking work and receiving payment, while reducing their reliance on overdraft facilities, merchant credit and other short-term financing.

FCI chairperson Norman Egar commented: "When a farmer experiences a cash-flow shortage, in many instances it becomes an outstanding contractor account.

"The contractor is then effectively financing agricultural production.

"2026 represents the perfect storm for Irish agriculture. If we do not get support now, this could be the final nail in the coffin for many farm contracting businesses," Egar warned.

Anne Gleeson Hanrahan, FCI managing director, said: "When the farm sector comes under financial pressure, that pressure does not stop at the farm gate.

"We are asking government to recognise that reality and to put in place a practical financial mechanism that will allow viable contracting businesses to get through this difficult period", she added.