“A basic analysis shows that a modern 120hp tractor will now need a minimum rate of €50/hour [including the operator] to cover operating and labour costs, irrespective of the work done.”
That was the message from Michael Moroney – the chief executive of Association of Farm & Forestry Contractors in Ireland (FCI) – when putting contractors’ rates into perspective.
He explained: “80% of that hourly cost is accounted for by labour and diesel costs, with just 10% allocated to depreciation, finance and repair costs – leaving a very tight operating margin.”
In the association’s recently published guide to charge-out rates, it referenced a figure of €45/hour for a 100-150hp tractor and operator. It pointed to a ‘guide’ rate of €55/hour for a 150-200hp tractor and operator.
Michael added: “The FCI always advocates working out individual charges based on the cost of the operation.
But there are some consistencies in terms of operating costs that transcend all regions. These include machinery depreciation and finance costs, as well as initial machinery purchase costs.
He added: “The increased cost of new machinery is impacting on the sustainability of many contracting businesses.”
He says that the FCI is also aware that some contractors are now making individual arrangements with customers regarding diesel (i.e. separate fuel surcharges or using on-farm diesel).
Meanwhile, in related news, a delegation from the FCI is in Brussels this week to meet with members of European Commissioner for Agriculture and Rural Development Phil Hogan’s cabinet to discuss “issues of competition, funding and the environment”.
Pictured below are Michael Moroney (FCI chief executive), Richard White (FCI national chairman) and Norman Egar (FCI vice-chairman) at the Berlaymont Building – the EU Commission’s headquarters.
The FCI was joined at the meeting by Jerome Roche from CEETTAR – the umbrella body for agricultural contracting associations across Europe.