This week’s budget announcement has seen a €6/t increase to the carbon tax. Previously at €20/t, it is now at €26/t, which will result in an increase of 2c/l to 3c/l on diesel and petrol prices. However, the increase in agricultural diesel prices by 1.5c/l will come into effect on 1 May 2020, just in time for the silage season.
Although there is a tax relief from the carbon tax available to farmers, it’s believed that agricultural contractors will not be eligible for this.
Significant increase
Irish agricultural contractors burn 150m litres of fuel to harvest 5m acres of grass silage each summer. Based on the tax being 1.5c/l, this means Irish contractors will be forced to fork out a further significant €2.25m. And this figure only represents the silage harvesting campaign. Irish agricultural contractors burn in the region of 340m litres annually. That means they will be hit with an additional tax of €5.1m.
So what does a 1.5c/l rise in agricultural prices mean for individual contractors?
Power-wise, a 150hp tractor is now almost at the lower end of a modern contracting outfit. A 150hp tractor burning 15l/hr clocking up 1,000 hours per year will now cost an additional €225 to run for the year.
A 200hp tractor is realistically more in the power bracket of a high-output contracting fleet. Depending on the work, this kind of tractor will burn in the region of 22l/hr. Many busy contractors will clock up 1,500 hours per year, so this increased carbon tax will cost the contractor an additional €495 per tractor. Many Irish contractors will run a fleet of six to eight tractors.
This increase in carbon tax is also going to have a big effect on larger machines such as self-propelled silage harvesters or combines. Contractors in Ireland typically clock up anywhere from 250 to 450 drum hours (cutting hours) on foragers each year. At the higher end of the spectrum, 450 drum hours burning 45l/h will cost an additional €304.
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