DECLINING TERMS OF TRADE

Nobody requires reminding of the increased input costs, plus overhead costs (especially labour, insurance and compliance) experienced by the rural sector, resulting from inflation and supply chain issues. While most commodity prices have maintained recent past levels, some such as wool have decreased. Declining terms of trade describes increases in income failing to keep pace with increasing costs. This is illustrated by the following figures which compare the Cost of Production and financial ratios from the RMS client analysis, published in the July 2019 News Bulletin No. 127, with the current values.