Contractors report restrictions on ‘green’ diesel supplies
The Agricultural and Forestry Contractors Association of Ireland (FCI) said it had received reports from contractors of tight supplies of ‘green’ diesel.
The group also said it was concerned there was fuel storage higher up the supply chain, but added it had no hard evidence of this.
FCI has written to finance, agriculture and transport ministers asking that supplies be prioritized for agricultural and forestry contractors in the coming weeks in the event of shortages.
FCI CEO Michael Moroney explained to Agriland that they cannot assess at this stage whether the shortage is “real or artificial”.
Given the high fuel costs and to facilitate the provision of a contracted service, FCI also requested that the carbon tax be removed from “green” diesel for five years.
As well as reducing costs for contractors, Moroney said it would allow ample time for the development of market-ready zero-carbon systems as an alternative to the internal combustion engine.
Moroney pointed out that some contractors currently have limited green/agri-diesel supplies due to limitations imposed by a number of suppliers.
“I hear people say there is a maximum of 5,000 litres. I have even heard people say a maximum of 500L which is very unhelpful as your typical contractor tractor will have a fuel tank capacity of 300L.
“During a normal working day, this full capacity of the tank will be used. So 500L per contractor is not a whole lot of use in today’s world. We don’t know why they are restricted,” the FCI CEO pointed out.
The FCI estimated that contractors spent around €260m on ‘green’ diesel last year, based on an average price of 75c/L.
“If we take today’s price that people quote at 1.40 €/L, which is almost double, we immediately arrive at a figure of around 455 million euros. That’s a 75% increase in the cost of diesel in a relatively short time.
Moroney estimated that a silage contractor could be looking at an increase of over £100,000 in fuel between 2020 and 2022.
“If contractors can’t charge accordingly, the reality is they go out of business because it’s unsustainable to charge the same rate as in 2020 when you’re dealing with a fuel cost that’s 75% higher than that of 2021.”
The CFI CEO urged entrepreneurs to “do their homework” and make business decisions about the costs they currently face.
James Geoghegan, who operates a contracting business in Westmeath, said Agriland that his fuel bill will increase by €80,000 this year.
“All we can do is pass that on. Fortunately, the farm gate price has increased significantly for beef and dairy products. So I hope the money is in the system.
“If the milk hadn’t gone above 40c/L, I think it would be total obliteration this year.”
Geoghegan estimated that the cost of cutting silage this year will increase by €20 to €30/acre at current fuel prices.
“The problem at the moment is that we don’t know what the price of diesel will be in the future, so it’s very difficult to advertise jobs when you don’t know what’s going on.”
Geoghegan explained that he has faced restrictions on the amount of diesel he can currently buy.
“I ordered 3,000 liters for this week and received 1,000. Fortunately the pressure is slightly reduced because the hedge trimming is finished and we are quite up to date on the slurry, so we can reduce a little the fuel we use.
“1,000 liters for us will be enough to fill three tractors for the day,” he said.
However, Geoghegan said he has big concerns for the upcoming silage season.
“By mid-May we would be using 1,500 liters per day. Larger contractors would use perhaps 2,500 to 3,000 liters per day. When this demand occurs in May, if there is no guaranteed supply, the silage will not be cut.
“I’m starting to get really scared of what might happen because we all have finances, we have to pay bills. If we don’t get the silage and if we don’t get paid on time, there won’t be too many contractors left after this summer,” Geoghegan warned.