Contractors hopeful farmers can absorb their price hikes – for now

Agri-contractors are being hammered with spiralling price hikes across the board, from fuel to tyres to machinery, and say they have no other option but to pass them back on to farmers

WORKING in the agricultural contracting business for over 20 years, Micheal O’Mahony says the past few months have been the most challenging to date.

Micheal, who works in the family business, Tony O’Mahony Agri and Plant Hire, has been impacted by spiralling fuel costs which have increased by 50% in the last year as well as lengthy delays for parts, which in one case saw a piece of machinery off the road for 10 weeks.

His father set up the agri-plant and haulage business in Kilbrittain in 1972. Micheal, along with his brothers Sean and Diarmuid have been involved for over two decades and said the fuel price hikes have been on their radar for months now through their  haulage work.

‘But for the agri contracting work, they really only kicked in during silage season,’ he said.

His team of 20 would service farmers primarily from Ballinhassig to Macroom but centred around Bandon and Kilbrittain areas and he said the only way the business can remain sustainable is by increasing their own charges as they can no longer absorb the costs.

The cost of machinery has also skyrocketed, he said.

A tractor he purchased in December has now increased by 15%. Sourcing parts of machinery is also a huge issue, he said, especially for the lesser known brands.

‘We were waiting 10 weeks for a part to come from the UK for a hedge cutting machine during which time it was sitting idle. The costs across the board are increasing including for tyres,’ he pointed out.

AdBlue, a urea solution used in diesel engine vehicles, including agricultural and non-road mobile machinery (NRMM) to help them meet emissions regulations, has also tripled in price.

‘It’s gone from 30 cent a litre to 90 cent a litre,’ he said.

The only positive, he said, is that dairy prices remain strong.

‘We have also tried to make our business more efficientthrough better planning with staff and machinery undertaking planned maintenance, self-drive hire equipment, use of GPS on some equipment to save on fuel, fertiliser and seed,’ he said.

‘But it’s hard to know where the price hikes will end,’ he added.

For Jim Deasy, Aherla Farm and Plant Contracting, the situation is the same.

He’s been in the business for 25 years, and he said it’s the most challenging period he’s experienced.

‘The work hasn’t changed, but the costs have, including the cost of machinery and parts. I’m lucky as I’m a mechanic myself which helps but it’s cruel at the moment trying to make things pay.’

Niall Canty, CCS Contractors Aherla, said it was impossible to avoid fuel price hikes.

‘But it’s the volatility of prices that’s the big thing. They are moving substantially all the time which makes it hard to plan. If you don’t get your figures right there’s an awful lot at stake as we’re already working with very tight margins.

As long as milk prices stay strong, things should be ok, he said.

‘But if prices collapse, that’s when we’ll have serious problems. We’re depending on the farmers.’