There doesn’t seem to be a proper banking system in this country,” Timmy O’Brien, chairman of the Farm Contractors Association of Ireland (FCI) told the association’s first annual general meeting held in Portlaoise on Sunday last.

“The banking system is practically non-existent,” he said.

“It is the banks’ job to lend money; it is not the job of contractors, co-ops, fuel suppliers and merchants. If businesses hadn’t given credit to their customers in recent weeks with the fodder crisis, the whole country would have come to a standstill,” he added.

He told the meeting that FCI would continue to fight to get a carbon tax rebate for contractors, in the same way that it is offered to farmers. “It is unfair that farmers can get this rebate against their tax returns and agricultural contractors cannot,” said Timmy.

He also addressed the issue of invoicing for contractors. The fact that farmers can write a cheque for contractor services up to €5,000 without the need for an invoice is fuelling the black economy according to the chairman, and creating an unfair market for tax compliant contractors.

He said that FCI will be continuing in its efforts to get this changed, supporting legitimate contractor businesses.

Timmy told the meeting that the cost of fuel and doing agricultural contracting work in Ireland is a lot more than in other countries, as we are dealing with heavier crops and tougher conditions due to wet weather.

The cost of harvesting 12 to 15 tonnes of fresh grass per acre is significantly higher than the six tonnes per acre of crops in other countries. Our weather also means higher tilling costs and overall crop production costs are higher in Ireland, he claimed.

Dick Bowler from the British National Association of Agricultural Contractors (NAAC) spoke to FCI members in a meeting that followed the AGM.

He told them of the survey that NAAC had carried out in Britain among contractors to identify the prices being charged for member activities. NAAC asked their members to complete a questionnaire on the charges they would like to get for their contracting services. They then averaged the returned figures and sent them back to members as guideline figures.

Over time, the figures have been considered more reasonable and are being accepted by farmer customers. FCI committee agreed to carry out a similar exercise among its membership over the coming months.

Eric Drésin, director of the European contractors association (CEETTAR), addressed the meeting and said that there were 100,000 contractor businesses in Europe, employing some 450,000 people in skilled work. He said that CEETTAR aims to get full recognition for contractors within the EU to provide for fair competition.

He urged contractors to improve the services that they offer their customers to ensure the future of their businesses.

On the issue of diesel costs, Eric Drésin said that, across Europe, diesel fuel costs were 30% of the costs of running a contractor business. He said that in Irish conditions the figure could be as high as 50% of all costs.

Jim Deeney of the Credit Review Office (CRO) gave the contractors advice on how to deal with refusals for credit when buying new machinery. He accepted that the work of the Credit Review Board was a well-kept secret. He told the meeting that when smaller businesses such as contractors are refused credit on amounts from €1,000 to €500,000, the banks should refer the customer to the state-funded CRO as part of an appeals process.

He said that the following eligibility criteria apply for those seeking a review:

The business is a small or medium sized enterprise (SME), sole trader or small to medium-sized farm.

The business has applied for credit facilities from €1,000 up to €500,000 with one of the participating banks.

The credit facility was refused and the business has exhausted the bank’s internal appeals process.

He said that each review will only apply to a specific declined credit application up to €500,000 and not to any other borrowings which may exist. Therefore, applicants who may have total borrowings above this limit are not excluded from the review process.

Jim told the meeting that 54% of credit applications to AIB that were initially refused were overturned by the CRO and the borrower received the money.

In the case of Bank of Ireland, he said that the figure was even higher at 57%.

He said that the CRO had examined 250 cases since its establishment and achieved a 56% success rate in getting credit for smaller businesses.

He advised contractors seeking credit to produce proper business plans, use management accounts rather than tax accounts and to keep in touch with the lending institution.

“Bankers can live with bad news, but they can’t live with surprises, so make sure that you let the bank know if you have a repayment problem,” he said.

The CRO review process applies to credit application from Bank of Ireland and AIB. You can get more information about the Credit Review Office at www.creditreview.ie or by telephone on 1850 211 789.

FCI membership grows

One year on and the membership at Farm Contractors Association of Ireland (FCI) now stands at 128 contractor businesses, the FCI treasurer Christopher Weldon told the association’s AGM.

The fledgling association reported an income of €25,600 for the year. After operating expenses the association was left with a small surplus of €4,983 to carry forward for 2013.

The existing committee was returned unopposed at the AGM.

The new committee is as follows:

President: John McCarthy, Cork.

Chairman: Timmy O’Brien, Cork.

Vice-chairman: John Sheehy, Limerick.

Secretary: Peter Farrelly, Meath.

Assistant secretary: Norman Egar, Wicklow.

Treasurer: Christopher Weldon, Meath.

Assistant treasurer: Paul Shevlin, Louth.

PRO: Richard White, Tipperary.

Regional chairman west: Eamonn Burke, Galway.

Regional chairman south east: John Hughes, Kilkenny.