The latest edition of the index indicates margins have increased again in the June quarter 2023. Logistics costs have continued to come down from their December quarter 2022 high, while log prices have remained high. It is expected that log prices will start to come down from 2024 following timber prices after the latter rose ~40% during and after the COVID-19 pandemic.
Margules Groome’s quarterly harvest and haulage cost index for Australian plantation operations is based on price indexation mechanisms used by industry, weighted by volume harvested (Figure 1). The previous index for March 2022 showed a rapid decrease in fuel price in the first half of 2023 which despite increases in inflation (CPI), wages and interest rates saw the harvest and haulage cost indices begin to trend downwards.
The New Zealand Government has set a plan in motion to decarbonise the economy with a net zero greenhouse gas emissions target by 2050. Part of this process involves the development and implementation of emissions reduction plans for energy and industry sectors – the key users of energy for process heat and electricity generation. Other users of fossil fuels (e.g. the transportation sector) are also exploring ways to adopt lower emissions or zero emission fuels and vehicles.
Margules Groome’s Australian Softwood Residual Log Price Index measures domestic softwood plantation residual log prices (excluding exports). The index is a measure of the residual log value to the forest owner once harvest and haulage costs are subtracted from mill door log prices. It is a measure of the forest owners log margins, or the spread between log prices and logistics (delivery) costs. It should be noted that there is no time lag between the indexes as shown.
Margules Groome’s quarterly harvest and haulage cost index for Australian plantation operations is based on price indexation mechanisms used by industry, weighted by volume harvested (Figure 1). The previous index for December 2022 an increase in fuel price as a result of the Federal Government having re-imposed the full fuel excise from late September. But the fuel price increases in the December quarter did not translate to an increase once tax credits and GST were considered, but a decrease. As a result, the harvest and haulage index plateaued. In March fuel prices decreased rapidly and continues to do so in April/May. Consequently, the harvest and haulage index turned downwards – a welcome relief to many.