Rising diesel prices will flow through to the supermarket shelves and push housing further out of reach Australia-wide, the president of Timber NSW and one of the state’s largest hardwood operators warned, amid mounting pressure on the harvest and haulage contractors trucking critically important timbers nationwide.
Yesterday, Andrew Hurford spoke to Birdie Tanner (from 46 minutes until 53:20 minutes), host of ABC North Coast Breakfast Radio — broadcasting from the heart of the country’s hardwood supply chain — where fuel prices in Armidale cracked $3.39 a litre late last week, making it amongst the hardest hit by the fuel surge.
That includes Anthony Dorney, the fourth generation of the Bulahdelah family business, who is now selling precious cattle to pay for his fuel. Speaking to The Daily Telegraph, Dorney said his fuel bill has blown out from $220,000 to well over $400,000 since the conflict in the Middle East erupted.
On Monday, the Dorney Group sold two lots of cattle to keep its 25 trucks rolling and was preparing to offload a further $100,000 worth of stock. “The last load of fuel we got just before the (Middle East) war was $1.48, and now it’s over $3,” he told the paper. “If you don’t pay it, you don’t get any fuel.”
And Hurford said the pattern was playing out across the region. “The people who feel that first are the truck drivers, the harvest and haulage contractors who transport critically important timbers from the forest to our mills,” he said. “The contractors are filling the pinch.”
Unlike other industries, the operators — working for the state-owned NSW Forestry Corporation — carry costs for an entire quarter before payment arrives. When diesel spikes, there is nothing to absorb it. “It’s quite difficult, no one wants to pay more for things, there is pressure in the system, and unfortunately, the harvest and haulage contractors fill the pinch first,” Hurford said.
“Some people are selling cattle just to pay their fuel bill. Some people are parking their cars, others are doing shorter hauls — really, there are no quick answers,” he said. “Forest contractors need to carry costs for a quarter.”
Hurford wants the federal government to temporarily suspend the 50-cent-per-litre fuel excise. There is a direct line, he argues, from diesel at the pump to inflation at the checkout and interest rates set by the Reserve Bank.
“We feed that cost in — whether that is in timber or food, producers price that in and try to pass that on. It creates inflation, which leads to the RBA putting interest rates up,” he said. “As a temporary relief measure, it will have an impact on the cost of our food and building our homes.”
The construction sector has no clean way out of the same pressure. Timber prices that rise to cover fuel costs push housing further out of reach for buyers. Prices held flat push pain back down the supply chain instead. “We’ve already got a well-understood housing crisis, which is in no small part due to affordability. If we keep lifting the cost of those materials, it just moves it further beyond the ability of people to pay,” Hurford said.
“Whilst we need to pass those costs on, we will have pressure to hold some of those costs back. There will be pain throughout the whole economy.”
Ninety-one per cent of Australia’s energy still relies on fossil fuels — and Hurford said neither the timber industry nor the broader economy has any near-term alternative. “We know the nation runs on trucks and on diesel, whether it’s farmers producing food or harvesters producing timber. Transport companies don’t have the capacity — because fuel is such an enormous cost of what they do — to absorb that cost,” he said.
“It’s a cost-of-living pressure for everyone. Something needs to give.”
