10.1. Export price measures have a long history with an index of export prices one form or another having been published by the ABS since 1901.
- The first index was compiled annually from 1901 to 1916-17 as a current weighted unit value index.
- The method of calculation was changed in 1918 to incorporate fixed weights. The index was published up to 1929-30.
- An index of export prices was not published again until 1937, when a new series was introduced. This series continued until 1962.
- A fixed weights index was introduced in August 1962 with a reference base of 1959-60 = 100.0. It was replaced by an interim index which was published from July 1969 until June 1979.
- The index then progressed to a reference base of 1974-75 = 100.0 and was published in this format up until August 1990.
- The current export price index was introduced in September 1990 and index numbers were compiled from July 1989. From September quarter 1997 the index has been compiled and released quarterly.
Nature and purpose
10.2. The current Export Price Index, Australia, was reviewed in 1990. It is a fixed weights index compiled on a reference base of 1989-90 = 100.0, with the weights based predominantly on Australian exports for 1988-89.
10.3. The index measures changes in the prices of all exports of merchandise from Australia, including re-exports (goods which are imported into Australia then exported without alteration). The index numbers for each quarter relate to prices of exports actually shipped during that quarter.
Composition and weighting
10.4. Table 10.1 (EPI items by AHECC), Table 10.2: (EPI items by SITC) and Table 10.3 (EPI items by ANZSIC) set out details of the items included in the index and their relative weights.
10.5. The commodities represented in the index were selected predominantly on the basis of their export values for 1988-89. Weights were allocated in accordance with these values. In a number of cases, adjustments were made to reflect more current information.
10.6. The commodities represented constitute approximately 95 per cent of the total value of exports recorded for 1988-89, taking into account the fact that many of the commodities carry not only their own weight but also the weight of unpriced commodities whose prices are considered to move in a similar manner.
10.7. The commodities included in the current index have been combined into broad index groups in three ways. Index numbers are produced for groupings defined in terms of:
- Sections (2 digit), Chapters (2 digit) and Headings (4 digit) of the Australian Harmonised Export Commodity Classification (AHECC), 1988 edition and updated to July 1990, Table 10.1;
- Sections (1 digit) and Divisions (2 digit) of the Standard International Trade Classifications (SITC), Table 10.2;
The industry of origin is not necessarily identical with the industry from which the exports are made. For example, exports made by traders or by marketing authorities are classified to the appropriate producing industries rather than the wholesale trading industries from which they are actually exported. The ABS introduced a new industrial classification, the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition, which will be incorporated in the index as soon as practicable.
- Divisions (1 digit) and Subdivisions (2 digit) of the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition, on an industry of origin basis, Table 10.3.
10.8. In general, prices are obtained from major exporters of the selected commodities included in the index. The prices used in the index are the prices at which the goods physically leave Australia, i.e., the prices are free on board (f.o.b.) at main Australian ports of export.
10.9. As the prices used in the index are expressed in Australian currency, changes in the relative value of the Australian dollar against overseas currencies (in particular the major trading currencies such as the US dollar, Japanese yen, pound sterling and German DM) can have a direct and significant impact on the price movements of the many commodities that are sold in terms of prices expressed in overseas currencies. Forward exchange cover is excluded from the prices used in the index.
10.10. The prices collected and used in compiling the index relate to specified standards, grades, types, etc., of each commodity with the aim of incorporating in the index price changes for exports of representative goods of constant quality. Wherever possible, prices to specific major export markets are used for each of the goods priced, in order to lessen the impact of price variations attributable solely to changes in market destinations. In most cases, prices are combined using fixed weights between markets. Weights between markets are reviewed from time to time and revised where necessary.
Special pricing considerations
10.11. A high proportion of Australian-produced greasy wool is sold through the auction system and the bulk of auctioned wool is exported. Thus auction prices are considered appropriate for use in the Export Price Index. The price series used is the wool market indicator price. In order to allow for the delays involved between sale at auction and shipment from Australia, this indicator is incorporated in the index with a lag of six weeks. Scoured wool and wool tops are treated in the same fashion as other commodities in the index, that is prices are obtained from major exporters.
Goods shipped at an unknown price
10.12. Where the price of exported goods is unknown at the time of shipment, the price used in the index on an interim basis is generally that for similar goods exported from Australia. When it becomes known, the price for the goods, adjusted to a free on board basis and expressed in terms of Australian dollars, is used in the index. This may result in revisions for the period in which the estimated price is used.
10.13. Some agricultural commodities are sold and exported for only part of the year. The practice adopted in such cases is to repeat the last reported price until shipment of the next season's exports occur. Where the commodity is sold in terms of currency other than Australian dollars the repeated foreign currency price is converted to Australian dollars using the exchange rate applicable at that point in time.
10.14. In practice a wide range of the commodities included in the index are not exported on an ongoing basis, especially in the case of exports to a particular destination. It is thus necessary to estimate a price for the commodity in the months in which it is not exported. Prices are estimated using the following methods:
- movements in world commodity prices (e.g. London Metal Exchange prices);
- movements in the prices of similar products exported by that or other exporters; and
- the last reported price adjusted for subsequent movements in exchange rates.