Costs and pricing

Forestry Harvesting Costs in Australia: Building a Rate per Cubic Metre

Harvesting is sold per cubic metre or per tonne, and the rate has to carry a chain of machines rather than one. Cost per cubic metre is total system cost per hour divided by system production per hour — and the system produces only as fast as its slowest stage.

Commercial investigation — harvesting contractors modelling rates and forest managers assessing them.

The sensitivity is severe. At a machine operating cost of $280 per hour and production of 25 m³ per hour, machine cost is $11.20/m³. If productivity falls to 18 m³ per hour, it becomes $15.56/m³ — a 39 per cent increase with no change in the hourly cost.

That is the whole argument for measuring production before signing a rate, and for modelling the entire chain rather than the machine in front of you.

You are pricing a system, not a machine

A harvesting rate has to carry every stage between the standing tree and the truck. In cut-to-length that is a harvester and a forwarder. In full-tree it is a feller buncher, skidders, a processor and a loader — four machines whose combined capital can exceed $1.9 million on the indicative figures used in this guide.

The system produces only as much as its slowest critical stage. A chain with a 100 t/h feller buncher, an 80 t/h skidder, a 65 t/h processor and 55 t/h of truck supply delivers 55 t/h. Every machine's fixed cost is carried by that 55 — not by its own rated capacity.

What goes into the rate

Cost components in a harvesting rate

Component	Notes	Frequently understated because
Depreciation	Purchase less residual, over the ownership period, divided by productive hours.	Productive hours are forecast optimistically.
Finance and insurance	Fixed annual cost regardless of production.	Treated as overhead rather than per-cubic-metre cost.
Fuel	Driven by terrain, extraction distance and stem size.	Quoted per hour rather than per cubic metre.
Operator	Including on-costs, training and shift structure.	Skill spread between operators is larger than between machines.
Service and repairs	Rises non-linearly with machine hours.	Modelled from new-machine experience.
Head consumables	Chain, bar, sprocket, measuring wheel, rollers, knives.	Species-dependent; eucalyptus is far harder than pine.
Tyres, chains, bogie tracks	Significant in wet or steep country.	Treated as a one-off rather than a running cost.
Transport and mobilisation	Between coupes, and to and from the region.	Counted once rather than per move.
Downtime	Lost contribution while a machine is stopped.	Almost always omitted entirely.

Productive hours, engine hours and the gap between them

Costing on engine hours understates cost per cubic metre, because engine hours include idling and machines routinely record 15-30 per cent more of them than productive hours.

Four measures need separating: scheduled hours (the machine was rostered), engine hours (the engine ran), productive hours (the machine produced), and delay hours (waiting on a truck, breakdown, fuel, operator, weather, road or a downstream bottleneck).

Mechanical availability — available scheduled hours divided by total scheduled hours — is worth tracking alongside them. Raising availability from 85 to 95 per cent is often worth more than a five per cent gain in theoretical production, and it is usually cheaper to buy, because it comes from dealer support and maintenance discipline rather than from capital.

Stand and site factors that move the rate most

Factors that change harvesting cost per cubic metre

Factor	Direction	Why
Average stem volume	Smaller stems raise cost sharply	Cycle time per stem is broadly fixed, so smaller stems mean more cycles per cubic metre.
Extraction distance	Longer raises cost	Directly reduces forwarder or skidder turns per hour.
Slope	Steeper raises cost	Slows travel, may require winch assistance, restricts machine choice.
Assortment count	More assortments raise cost	Slows bucking decisions and forwarder loading.
Species	Eucalyptus raises cost over pine	Higher feed force, debarking demand and consumable wear.
Stocking	Lower stocking raises cost	More travel between stems for the same volume.
Ground conditions	Wet raises cost	Reduced trafficability, rutting limits, seasonal shutdowns.

The arithmetic

Worked examples

Not market rates — the output of one hourly cost divided by different production figures.

Productivity sensitivity at a fixed hourly cost

The clearest demonstration of why production measurement matters more than rate negotiation.

Total machine operating cost: $280/hour
Production at plan: 25 m³/hour
Machine cost per cubic metre: $280 ÷ 25 = $11.20/m³
Production at 72% of plan: 18 m³/hour
Machine cost per cubic metre: $280 ÷ 18 = $15.56/m³

A 28% productivity shortfall produces a 39% increase in machine cost per cubic metre.

The hourly cost did not move. This is why a contractor who negotiates hard on rate but does not measure production is solving the wrong problem.

Utilisation and depreciation per hour

The same effect on the fixed-cost side.

Purchase price: $800,000
Expected resale after 5 years: $300,000
Annual depreciation: ($800,000 − $300,000) ÷ 5 = $100,000/year
At 2,500 productive hours: $100,000 ÷ 2,500 = $40/hour
At 1,250 productive hours: $100,000 ÷ 1,250 = $80/hour

Same machine, same purchase price, double the depreciation cost per productive hour.

Utilisation is the variable that most often turns a viable rate into an unviable one.

Common questions

Frequently asked questions

How much does harvesting cost per cubic metre in Australia?

There is no single figure, because the rate has to carry a specific machine chain working a specific stand. What can be stated is the arithmetic: total system operating cost per hour divided by system production per hour. The sensitivity is what matters — at $280 per hour, 25 m³/hour gives $11.20/m³ and 18 m³/hour gives $15.56/m³. Build the number from your own machines, stand data and contracted hours.

Why is my harvesting rate not covering costs?

The three most common causes, in order: production below the figure used to build the rate; costing on engine hours rather than productive hours, which understates cost per cubic metre by 15-30 per cent; and a downstream bottleneck — usually trucking — capping system output below the machine capability the rate assumed.

Should I quote per cubic metre or per tonne?

Follow the mill and the contract, but understand what each does to your risk. Per cubic metre ties your revenue to measured volume, which makes harvester measuring accuracy a revenue control. Per tonne exposes you to moisture and species density variation. Either way, insist on knowing how the measurement is taken and reconciled.

What is a good machine availability figure for harvesting?

Availability is available scheduled hours divided by total scheduled hours. A machine scheduled for 200 hours that loses 20 to breakdown is at 90 per cent. Raising availability from 85 to 95 per cent frequently delivers more than a five per cent production gain, and it is bought through dealer support, local parts holding and maintenance discipline rather than through capital.

How do I cost downtime?

As lost contribution, not as repair cost. If a machine earns $4,000 gross contribution per productive day, a part with a ten-day lead time instead of a one-day dealer repair costs $36,000 in lost contribution on a single failure — frequently more than the price difference between the machines you were comparing.

Does eucalyptus cost more to harvest than pine?

Generally yes, on the consumable and head side. Eucalyptus places higher demands on feed force, debarking, roller wear and structural loading, which shows up as chain, roller and knife consumption per cubic metre. Model consumables by species rather than carrying a single figure across a mixed contract.

Equipment