Support your local agri-contractor
Spare a thought for these people who provide such an important service.
For the most part, agricultural contractors — many of them family businesses — depend on the income from their agricultural-contracting services.
Pressure is being exerted from all sides.
Their incomes were lower than expected due to lower acreage of silage harvesting in May, and because many farmers had silage left over this spring.
Later crops became bulky and heavy, soaked with rain.
Travelling conditions deteriorated, and many contractors had to reduce load sizes to prevent field damage while extracting grass.
This has led to additional transport, and with fuel prices now the highest ever, having more than doubled in 10 years, contractors are definitely feeling the pain.
In the boom years, many agricultural contractors diversified and had income from dump-trailer hire, excavating, road-sweeping and other ancillary works.
This income also dried up, leaving many carrying-over borrowing for equipment that is now idle.
Banks were previously willing to lend to these businesses, based on the goodwill built up over years of business growth, but this goodwill, too, seems to have evaporated.
For any contractors under pressure, the advice has to be to engage with your bank early, in order to prevent nasty surprises.
The other important advice is to keep up to date with Revenue payments, and not to fall into arrears on tax liabilities. The Revenue do not offer debt forgiveness, and they don’t take much account of a previous good record.
Other good habits are early invoicing and actively asking clients for early payment. Contractors should not be in the business of providing credit.
Preparing a cash-flow projection — as simple as estimating money-in versus money-out — will point to any speed bumps ahead.
The Professional Agricultural Contractors of Ireland and the Association of Farm Contractors in Ireland have been active in lobbying for leniency for contractors facing this year’s ‘perfect storm’ of setbacks.
Some good advice is available online from these two organisations, regarding contractors’ rights in the event of repossessions, and it would be advisable for any contractor facing such an event to be up to speed on their rights.
Any contracting business being closed down is bad news all round. This devastating loss for the business owner may never be overcome.
From a bank’s perspective, repossession of machinery simply reduces, or even eliminates, a contractor’s ability to earn money to meet repayments.
The cessation of the business reduces local employment and reduces competition for those of us in the farming community.
For the above reasons, we should rally round our contractors this year.
As always, each individual’s circumstances should be looked at for the best advice.
Your comments on this, and on other farm-finance issues, are welcome.
