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 December 2019 showed a steady increase through 2020 following a fall in the first quarter of 2019 due to a fall in fuel prices. Like all we did not see the impact of the COVID-19 pandemic on the global economy in late 2019. As far as harvest and haulage costs are concerned the impact was clearly shown in a massive fall in fuel prices, some 29% making the previous fall in early 2019 look like a minor blip not the “dramatic” fall previously described. With inflation and wages flat during the pandemic, the impact on harvest and haulage cost index was equally massive, down 7% and 9% respectively.
The collapse in demand for fuel in the wider economy due to the pandemic is the reason for the fuel price fall. Indeed it was reported on 20th April that the West Texas Intermediate (WTI) crude oil futures price for May delivery had fallen to negative territory because there was not enough storage for the surplus oil. Although fuel prices are recovering expectations are that the index will not get back to “normal” until well into 2021, if not later.
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