The 68-page report, now available on wool.com/wssr includes a number of significant findings or recommendations including the need for:
- cost savings associated with a merger of the Australian Wool Testing Authority (AWTA) and Australian Wool Exchange (AWEX),
- greater transparency of all selling costs,
- the potential for a tax-equivalent R&D investment to be made by AWTA given it’s current tax-free status
- potential problems with the current commission buying arrangements in the auction system,
- a differentiated approach not necessarily requiring sample display of all wool and making greater use, where appropriate, of sale by description.
The report said many of the issues raised in WSSR submissions and others such as centralisation of selling could be addressed with the development of an online wool exchange portal or WEP.
“Such a development would cater for new selling and buying options, enable growers to compare available selling options and a more efficient exchange of information,” AWI said in a statement today.
The panel said the WEP would be a central point for industry participants to get information, to find alternative live selling and buying options and provide the tools to make meaningful comparisons of these alternatives. The WEP could also provide market reporting services for the diverse trading conducted through links to its platform as well as provide other services valued by the industry such as training options for market participation or anything else concerned with the broader industry.
The WSSR panel believes a steering committee of industry stakeholders, including AWI, AWTA, AWEX, wool exporters and brokers will be needed to further develop the WEP concept.
“This group would take responsibility for guiding the development of the WEP assisted by R&D backing from AWI.
“The role of the Steering Group should be to complete a full business assessment of the WEP,” the WSSR report said.
“This will require consultation with stakeholders concerning the design and functions of the WEP, quantitative estimation of the demand from potential users for WEP services and related benefits and a more detailed costing of capital and recurrent costs than what has been possible in the current Review, investigation of the options for future pricing and financing of the WEP and appointment of a developer, preferably through a tender process.
“Effectively, the Steering Group will have overseen a cost-benefit study which, assuming the results warrant doing so, leads to the WEP being passed to a developer to transform into a commercially viable product ready for the market place,” the report said.
“The Steering Group could also usefully consider options for future ownership of the WEP.”
AWI said the WSSR report was the most significant examination of the wool selling system since the digital age and the review commissioned by the AWI board had examined in detail the opportunities for innovation in the exchange of wool from the farm gate until it passes the ship’s rail for export. The estimated total cost of this exchange of wool last financial year has been estimated at about $300 million.
AWI chief executive officer Stuart McCullough said the review involved some of the greatest competition and business minds in Australia.
“This very significant review was conducted at arms length to AWI.
“It involved almost 100 submissions and many more issues raised from a wide variety of viewpoints and much discussion and debate,” he said.
“This review explores some great opportunities to reduce the cost of selling wool for growers, reduce the barriers for those wanting to buy wool and to help bring the wool industry into the digital age.”
The Wool Selling Systems Panel included Fox & Lillie managing director James Lillie; Graeme Samuel AC, Monash Business School, Monash University; Bernard Wonder PSM, consultant and director; and William Wilson, director of Australian Investor Relation Services. John Roberts, director of Eubindal Pty Ltd was the executive officer and secretariat for the panel.
The Wool Selling Systems Report will now be discussed as part of ongoing consultation with shareholders.
The final WSSR report is available by clicking here.