New guide contracting prices for 2019/20 have been published by the National Association of Agricultural Contractors (NAAC).
The prices give a national average to help steer contractors and farmers. However, businesses are warned not to rely too heavily on these guide prices as it is important that contractors know their individual costs and are therefore clear what they need to charge to continue to run a viable business.
Annual machinery costs continue to climb, alongside tyres and labour, and 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, contractors must carefully plan and cost their operations to try and ensure a profit margin so they can run a sustainable business. 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 but a successful business, with longevity, is one that costs its operations carefully and refuses to work for less than a realistic price. There is little point being a busy fool, working all hours for little benefit.
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.
The full guide can be found on the NAAC website: https://www.naac.co.uk/contractor-charges/