Government support needed as ‘perfect storm’ leaves contractors in cash-flow crisis

The Association of Farm and Forestry Contractors in Ireland (FCI) has called for an urgent meeting with the Department of Agriculture as farm contractors face mounting financial pressure arising from the drought conditions and resulting reduced agricultural activity and fodder shortages.

Farm contractors are facing a two-fold financial challenge: a substantial reduction in work at present, followed by the risk of a serious cash-flow crisis later in the year.

FCI National Chair, Norman Egar, said:

“When a farmer experiences a cash-flow shortage, in many instances it becomes an outstanding contractor account. The contractor is then effectively financing agricultural production.”

“2026 represents the perfect storm for Irish agriculture. If we do not get support now, this could be the final nail in the coffin for many farm contracting businesses,” he added.

FCI are therefore calling on Government to establish a dedicated SBCI working-capital loan scheme for farm contractors, designed to provide affordable working-capital finance to viable contracting businesses.

The current drought conditions have resulted in farmers closing off fewer fields of grass for silage, in turn reducing demand for essential contracting services.

As a result, contractors are experiencing a substantial reduction in anticipated work while continuing to meet the fixed costs of running their businesses.

FCI have found that 71% of farm contractors have harvested at least 250 acres less silage this year compared to 2025.

Some contractors have already been left with no option but to reduce their workforce.

However, FCI are warning that a more significant cash-flow challenge may come later in the year, as the full effects from the drought and resulting fodder shortage are felt by farmers.

Even in a normal year, contractor accounts can be delayed when farm businesses experience financial pressure. This effectively means that farm contractors become an informal source of credit to the agricultural sector, carrying outstanding accounts while continuing to finance their own input-heavy businesses.

Previously, SBCI agricultural cash-flow schemes have demonstrated that state-supported access to competitively priced working-capital finance can provide an important alternative to more expensive short-term credit arrangements.

FCI believes there is now a clear need for a financing mechanism specifically designed around the operating model of farm and forestry contractors.

Such a scheme would provide affordable working-capital finance to viable contracting businesses, enabling them to manage the period between undertaking work and receiving payment, while reducing their reliance on expensive overdraft facilities, merchant credit and other short-term financing arrangements.

FCI Managing Director, Ann Gleeson Hanrahan said:

“When the farm sector comes under financial pressure, that pressure does not stop at the farm gate. It moves through the supply chain, and contractors can ultimately be left carrying the cost”.

“We are asking Government to recognise that reality and to put in place a practical financial mechanism that will allow viable contracting businesses to get through this difficult period”, she added.

“We are not seeking preferential treatment for contractors. We are seeking recognition of where financial pressure ultimately travels within the agricultural supply chain – to contractors,” she concluded.