A new guide showing contracting prices for 2019 to 2020 has been published by the National Association of Agricultural Contractors.
The prices in the new guide give a national average to help steer contractors and farmers.
Annual machinery costs continue to climb, alongside tyres and labour. The guide says it is vital that contracting prices reflect these increases.
Capital investment is now very significant on farms and, to manage cash-flow and depreciation, over 90% of farmers are bringing in the services of a contractor to take some of the investment burden for specialist, high capital cost machinery, alongside the need to bring in skilled labour which is in short supply.
However, NAAC says contractors must carefully plan and cost their operations to try and ensure a profit margin so they can run a sustainable business.
It says all costs such as downtime, insurance, depreciation, labour, machinery servicing and maintenance must be calculated to try and ensure customers are charged appropriately to maintain a viable business model.
Like every industry, there is fierce competition in the contracting sector which can result in prices being driven down.
NAAC says a successful business, with longevity, is one that costs its operations carefully and refuses to work for less than a realistic price.
Contractors are advised to use the prices as a guide but take into account their own costs, and variations in the types of land, customer size, machinery and scale of the business to work out their charges.
