Farming: Contractors’ farm operation prices are set to rise

Farmers who use contractors to help out with their farming operations should expect price rises for most services over the coming months, with fuel and machinery cost inflation driving the increases.

Jill Hewitt

Commenting on the back of its national survey of contracting prices, which was released this week, the National Association of Agricultural Contractors (NAAC) said that with fuel prices at record highs and the costs of labour and machinery escalating, rises were inevitable.

“Spiralling input costs are putting increasing pressure across the farming industry, but nowhere more so than agricultural contractors,” said the NAAC’s chief executive, Jill Hewitt.

“In a sector that has no farm payment safety net, plus cut-throat local competition, the pressure is on to find the right balance to retain a loyal customer base, while keeping pace with rising inflation.”

She said that while fluctuations in fuel prices meant that it hadn’t been easy to draw this year’s survey together, the NAAC was aware that many in the industry used the published prices as a benchmark for setting their charges.

“We encourage farmers to use an NAAC member for their work, as our members are professional, well informed and have access to safety management and a contractors costing tool, which helps members to accurately work out the prices they need to charge for their work,” said Hewitt.

She said that the current survey had been carried out based on a pound per litre for fuel – but said that contractors were being advised to calculate their fees carefully to ensure they were covering costs and leaving a margin at the end of the day.

The survey, she pointed out was only an average figure and farmers should expect their contractors’ prices to vary – and to be prepared for further fuel surcharge if prices continued to fluctuate.

“These are difficult times for everyone,” said Hewitt, “and it is vital that contractors work closely with their customers to ensure all businesses can remain viable and productive.”

And she said that profit shouldn’t be a dirty word if contractors wanted to keep pace with new technology, training and investment to supply the professionalism, machines and skills she said were increasingly being demanded to meet farmers’ sustainability and environmental targets.

The survey follows the release of a new pricing tool created for the NAAC by farm consultants, Andersons which Hewitt said would allow contractors to evaluate each operation, considering all costs, so that they can see the facts for each job.

“The tool takes account of variables such as depreciation, repair costs of individual machines, yard costs, insurance and office staff, before breaking each job down, taking into account fuel costs, area of work, work rate, labour, downtime and profit.

She said this would allow quotes to be made, backed up by statistics, to set a realistic price.

“Inevitably farmers will get what they pay for in their contractor going forward and if an efficient, professional service, with well-maintained reliable machinery is needed, then a partnership approach will be vital.”