Margules Groome’s quarterly harvest and haulage cost index for Australian plantation operations is based on actual price indexation mechanisms used by industry weighted by volume harvested. The previous index published in June 2019 showed a dramatic fall in the first quarter of 2019 contrary to earlier predictions of a moderate rise due to a 5.6% fall in fuel prices. Fuel prices then increased strongly in the second quarter of 2019, moderated in the third quarter and look to be on track for a slight increase in the fourth quarter 2019 meaning they will end the year flat since June 2019. The index has consequently followed suit with the index indicating that costs have increased only 0.4% over the 6 months to December 2019. With fuel costs flat, much of the cost increase is due to lifts in inflation and wages (CPI and wage price indexes, ABS June & September 2019). The index is forecast to end the year ~4.7% higher than the last peak in June 2014, an average increase of ~0.9%/a.
Assuming fuel prices increase at a moderate pace, inflation continues to pick up to approach the lower end of the RBA target band of 2-3%/a and wages also increase comensurately, Margules Groome is forecasting a steady increase in the index over the next 12 months in the order of 1.8%/a.
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