Fuel price hikes threaten margins

IFA Inputs Project Team Chairperson, Chris Hayes, said the increase in fuel costs was now posing a real threat to margins, with many sectors finding it impossible to pass on these extra costs.

IFA Inputs Project Team Chairperson, Chris Hayes, said the increase in fuel costs was now posing a real threat to margins, with many sectors finding it impossible to pass on these extra costs.

“Agri-fuel costs have doubled in the last three years, and this is putting major financial pressure on all farmers. Also, oil companies are putting further pressure on some farmers by tightening credit terms and looking for payment within 14 days,” he told the Leitrim Observer.

He said 2011 is seeing farm incomes coming under increasing pressure in many sectors, with higher input costs and lower prices projected.

The Inputs Project Team Chairperson said contractors provide a valuable service and he recognised that contractors have to cover their costs, which are also affected by the hikes in fuel prices. However, he saw no justification for the scale of the increases that have reportedly been sought by contractors.

IFA’s own analysis is that 35-40 litres are used in cutting an acre of silage.

“Based on a 10c per litre increase in fuel in the last 12 months, an increase of w3.50-€4.00 per acre would be more appropriate,” he said, “On the carbon tax, IFA has put forward a number of practical proposals to the Minister for Finance to offset the imposition of the additional tax on farm diesel, as the Budget measures are totally inadequate to deal effectively with the problem. Under the Programme for Government, a clear commitment was given to ‘exempt farm diesel from further increases in the carbon tax’.”