With farming buoyant, it should be a good time for agricultural contractors.
But contractors face many challenges.
Since 2000, the Professional Agricultural Contractors of Ireland (PAC) has represented its members on many issues. Indeed, Tom Murphy, director of PAC, has represented contractors since the late ’80s.
The PAC chairman is Michael Sheehan, an experienced contractor based in Clonmel, Co Tipperary.
This week we feature Michael and Tom’s commentary on some of the main issues facing agricultural contractors today.
* Is the number of people in the business falling or rising? Are there particular regional problems?
>>The number of agricultural contractors has fallen over the years, with many smaller operators leaving the business. The remaining businesses have had to grow in order to service the farming sector. With regard to regional problems, the border counties have always reported that Northern contractors working in the Republic and not charging VAT are a problem.
* VAT is a hot issue. Do all contractors have to register? How much more competitive is an unregistered contractor?
>>Contractors and farmers who provide contracting services must be VAT registered if their annual turnover exceeds €37,500. The turnover required to make repayments on contracting machinery means that most contractors should be VAT registered. The current rate of VAT for agricultural contracting services is 13.5%, so a black economy contractor is at an advantage.
* Is tax non-compliance widespread in agri contracting? How can it be policed better?
>>Our members inform us that black economy operators are widespread and that they undermine the prices charged by tax compliant contractors. For years PAC has campaigned for official registration for agricultural contract service providers. This may be closer than we think. After a meeting of PAC and Revenue officials in relation to the supply of green diesel, Revenue has agreed to look at a registration scheme for agri contractors.
* Can contractors use the cheaper green diesel?
>>Agricultural contractors supplying mechanical services to farming can use green diesel. Although green diesel has always been considerably cheaper than regular diesel, it has risen in price and now stands at an all-time high. The addition of carbon tax to green diesel is incomprehensible, particularly as agriculture has been named as a key player in the economic recovery of Ireland. Fuel is a major overhead for contractors and all price increases must be passed on to the farmer. Failure to do so will put them out of business.
* PAC says some machinery repossessions are illegal. Why?
* How should a contractor approach the threat of repossession?
>>Every situation is different. Ideally contractors should never let it get to the stage where the lender terminates a lease, thus triggering the repossession process.
That said, we in PAC do understand the pressures which contractors are under and how it’s sometimes easier to bury your head in the sand. Contractors should contact PAC, or their financial adviser, as soon as they know they will have difficulty making a repayment. It is much easier to negotiate with lending institutions before a lease has been terminated.
Should a contractor receive notification that a lease has been terminated do not ignore it, there may still be a chance to negotiate. There are some golden rules, but there isn’t space in this article to go into them all. Contractors finding themselves in difficulty are welcome to ring our office at 090-6437518.
* How does availability of laundered diesel affect contractors? Is the new registration system for traceability of marked diesel in place yet?
>>The availability of laundered diesel doesn’t affect agricultural contractors directly. It is its unrestricted availability that is of concern to PAC. In February, PAC addressed the Joint Oireachtas Committee on Transport and recommended that only registered agricultural contractors and farmers be allowed access to green diesel. Registration would not only deny access to green diesel to unregistered operators, but allow for cross referencing with all government departments to ensure compliance in other areas.
* What are the main current health and safety issues for contractors?
>>Whilst statistics show farming has a high incidence of accidents and fatalities, as a group, agricultural contractors do not. Agricultural contractors as a rule employ experienced operators and maintain machinery to a high standard, thus reducing the likelihood of accidents. Pressure during intense working periods, such as silage harvest, can lead to stress, which can cause accidents. PAC advises vigilance, especially when working near children, travelling on the public roads, working with slurry and chemicals. Personal health is also an issue particularly in relation to stress, noise levels and exposure to the vagaries of the Irish weather. PAC has a qualified health and safety practitioner available to advise on all safety concerns.
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