Commenting James Bannister, NAAC Chairman stated: “As fuel prices double and continue to climb, machinery costs spiral and labour remains at a premium for skilled operators, it will no longer be possible for agricultural contractors to retain static prices. Looking at the escalation in input costs, with spring work potentially only days away, professional contractors will have no choice but to increase costs to sustain their own businesses”.
Contractors are always trying to find the right balance to retain a loyal customer base, whilst keeping pace with rising inflation, but offering the cheapest service is now a clear road to heading out of the industry. Machinery replacement costs and keeping good labour were already causing a massive headache for contractors, before the current fuel hikes. In the last few days red diesel prices have leapt from 80ppl to well over a pound and climbing, with fuel getting harder to source.
“Only the foolish will try and cling to stationary prices this spring, as any contractor that understands their own costs will recognise that price increases are vital to keep pace, earn a living and retain some stability and longevity in their business,’ said Jill Hewitt, NAAC Chief Executive. ‘Many farmers now rely on their contractor to take on roles that they may no longer have the labour, skills or machinery to complete – but contractors cannot be expected to bankroll their customers and the industry must brace itself for price rises.”
The expectations on contractors continue to escalate. Environmental protection, specialist training, record keeping and having the latest technology on board, all require a new level of expertise and equipment. However, it is currently the costs of the basics that are forcing tough decisions.
“Contractors, like the rest of agriculture, are being forced to look hard at their bottom line and escalating business expenses will need to be passed on’, said Meurig Raymond, NAAC President. ‘A successful contractor will need to cost individual operations carefully and accurately and for a farmer to bring in a reliable, professional contractor that has trained staff, working safely, with well-maintained kit, this will come at a cost.”
The NAAC has recently launched a new on-line pricing tool for its membership, with Andersons Consulting, to allow contractors to evaluate each operation, taking into account all costs, so that they can see the cold, hard facts for each job. This will allow quotes to be made, backed up by statistics, to get to a price that is realistic for the current economic climate.
It will become increasingly apparent that ‘you get what you pay for’ and the farmers and contractors must work in partnership to ensure all businesses can remain viable, productive and sustainable, today and in the future.