Like many sectors of Irish agriculture, agricultural contracting is at a crossroads.

The issues that face the sector include lack of Government acknowledgement and support, as well as doubtful financial sustainability at a time of high machinery cost inflation, coupled with the thorny issue of succession.

There is now a requirement for a new initiative or else we will watch the agricultural contracting sector decline, and with it a decline in farming output.

The viability of the agricultural contracting sector is now more important than two decades ago because of the growth in dependence among Irish farmers on their contractor service.

This has come about because of a combination of factors, including more specialisation in terms of farm enterprise and fewer young people entering farming and agricultural contracting, as career choices.

Farm structures have also changed significantly. The recent Central Statistics Office (CSO) agricultural census report showed that the average age of Irish farmholders in 2023 was 59.4 years.

The census also reported that over the 10-year period between 2013 and 2023, the number of farmholders aged 65 and over, has increased sharply from 37,705 to 50,392 (+33.6%).

So, who is available to do the work, only agricultural contractors? There is ample anecdotal evidence to show that there are in the region of 1,200 agricultural contracting businesses operating in the 26 counties.

Department of Agriculture and further Teagasc studies would indicate that there are an additional 4,000+ farms that provide some form of agricultural contracting services to their neighbouring farms.

The more recent CSO figures for 2023 show that there were 5,246 farms that declared that they were involved in agricultural contracting, as a gainful non-agricultural activity, compared with 4,900 in 2016, a 7% increase (see Table 1).

This also comes against the background where that same CSO census showed that there were 201,260 tractors on Irish farms in 2023, of which 47% or 94,592 tractors had an engine power ranging from 81hp to 134hp. The CSO data does not differentiate between farmers and contractors in terms of tractor ownership.

So tractor availability is not an issue, neither is tractor power, the issue is around who is or will be available to operate them. Contractor tractors now account for in the region of 20,000 or 21% of those working tractors, and the average size of the contractor tractor is now nearer to 200hp than 150hp.

One anomaly from the 2023 CSO census data is that 4,969 farms reported owning at least one combine harvester and only 1,554 farms reported owning tillage machinery. It is difficult to believe that there are three times more combine harvesters than tillage machines on Irish farms.

We also know from FTMTA registration data that 950 new and used combine harvesters were registered in Ireland for the first time since 2013.

From that, we can deduce that the remaining combine harvesters, that is in the region of 4,000 machines, are ten years old or older. These older machines will not be in the hands of agricultural contractors and they cannot deliver near enough harvesting output to meet the challenge of 400,000ha of tillage crops that are being planned as part of the Food Vision 2030.

Tillage report

Part of the Government’s response to the lack of support for the agricultural contracting sector is to provide attractive grant aid support for farmers to buy their own machinery under programmes like the TAMS.

That has failed to deliver the machine output as can be seen from the latest Teagasc National Farm Survey 2023 data which shows that spending by Irish farmers on contractor services as direct costs have risen from €4,162 to €7,340 between 2015 and 2023.

That’s an increase of 76%, while at the same time, investment in new machinery on farms has also increased.

What is interesting is while that increase in spending on contractor services is high, it remains at 14% of all direct costs over that time, indicating that farmers can appreciate the value, which is more than a monetary one, that they get from their contractor service.

When we look at what’s happening in terms of machinery investment on farms, much of it grant aided to the exclusion of bona fide agricultural contractor businesses, we see that machinery overhead costs, across all farms, which include machinery depreciation and machinery operating costs, have risen from €9,865 to €15,623.

That converts to an increase of 58% and now accounts for 37% of overhead costs on Irish farms, more than double the percentage cost of contractor services in terms of percentage.

Traditionally, agricultural contractors have been providers of land drainage machinery services since the start of the Land Project in the 1960s. Today, many contractors report little or no land drainage activities.

This is despite the fact the CSO Census Report 2023 carried a new module in the Farm Structure Survey, as part of the CSO’s efforts to enhance reporting on Agricultural Environment Indicators (AEI).

The CSO report says that good quality soil supports biodiversity, contributes to carbon sequestration and storage, and provides essential ecosystem services.

The CSO figures show that in 2023, the total estimated agricultural area which was subject to drainage was 587,276ha. There is no support policy or incentive to maintain and sustain land drainage schemes, many of which are now more than 50 years in the ground and subject to poor performance.

Activity in this sector, which is part of the key towards increased sequestration and lower carbon farming, is at a snail’s pace and agricultural contractors know this.

The good news recently is that there is now an acknowledgement of the role of the agricultural contractor as evidenced by the section of the Food Vision 2023 Tillage Report. The remit of the Food Vision Tillage Group was to produce a detailed plan and recommendations to sustainably grow the sector to 400,000ha by 2030.

Services

Among the strengths of the sector was listed the availability of good contractor services for tillage farmers.

The threats included the relatively high investment costs for tillage machinery and the costs of adopting new technologies on relatively small farms coupled with the availability of competent operators to operate increasingly specialised tillage equipment.

The report has accepted that contractors play an important role in the tillage sector and provide a valuable service to growers with tillage farmers spending in the region of €47 million on contractors and transport services between 2014 and 2019 or 20% of direct costs.

It added that the use of contractors achieves economies of scale, delivers practical efficiencies and allows the use of modern equipment in a sustainable way to support sustainable and cost-effective tillage farming businesses.

The report’s authors believe that viable and professional contracting services will continue to be very important in the delivery of economic and environmental goals for tillage farmers. The report noted that skilled labour is critical to operating a successful contracting business.

Its authors added that in recent years contractors have been reporting increasing difficulty in recruiting and retaining skilled machinery operators.

Supports

The reports recommended investigating the setting up of a National Register of Agricultural Contractors and examining supports for contractors including training support.

The issues are clear and now the aspirations of the Food Vision 2030 Tillage Report will demand an intensive examination of the agricultural contractor sector to identify the best support mechanisms to ensure its viability.

Farmers know the value of their contractor sector, that is evidenced by the growing use of contractor services.

Contractors were supported in the 1960s and 1970s to invest in new silage harvesting systems and tractors, at a time when farming was less dependent on their services.

They provided smaller farmers with cost-effective access to new technology in the form of silage harvesting after years of fodder crises due to poor weather.

The challenges are different today, agriculture needs lower carbon options and more traceability and they are equally too costly on many farms.

Agricultural contractors can deliver new technology options in the most cost-effective way, evidenced by the uptake of auto-steer and GPS control for contractor machines spreading fertiliser.

The Department of Agriculture, Food and the Marine now needs to act fast with policies and initiatives before the decline in the agricultural contractor sector becomes terminal and irreversible due to policy indifference and neglect.