AUSTRALIAN Wool Innovation has again been urged to release its complete revised WoolPoll 2018 budget assumptions after the company claimed a drop in wool production could mean a 36 percent reduction in its levy income from 2019-22.

Debate on the wool levy income impact of expected season-induced lower greasy wool production has been raging in the Australian industry recently as wool growers vote on five levy options – 0, 1.5pc, 2pc, 2.5pc and 3pc – in the WoolPoll ballot up to November 2.

In a media release on the AWI website and Twitter today, the AWI cautioned eligible levy payers to strongly consider their vote at WoolPoll, given the recent significant decrease in wool production anticipated in the coming seasons as a result of the drought.

AWI director Don Macdonald highlighted the organisation’s concern that some within the industry are calling for a reduced levy of 1.5 percent. Grower bodies calling for a 1.5pc levy for 2019-22 include WoolProducers Australia and the Australian Wool Growers Association, while AWI is seeking retention of the current 2pc levy.

“The combined impact of a reduction to a 1.5pc levy rate (which equals a 25pc reduction) and the anticipated 15pc production decrease, will result in a 36pc drop in your company’s income,” Mr Macdonald said.

“Maintaining the current levy is critical to ensure AWI can continue to invest in current and new projects for the next three years.

“Due to the most recent supply figures published by AWTA, AWI anticipates a decrease of 15pc in production in 2018/19 and it will take time for the industry to rebuild,” he said.

AWI is basing its latest 2019-22 levy income projections on a forecast annual wool production of 293 million kilograms at an Eastern Market Indicator of 1850 cents a kilogram. This was confirmed by AWI chief executive officer Stuart McCullough today, who also said AWI’s reserves at the end of the last financial year stood at $122 million and 2017-18 income from levy, Woolmark and interest was about $90 million.

However, in the WoolPoll 2018 voter information memorandum on the www.woolpoll.com.au website, AWI’s WoolPoll 2018 budget has assumed an annual wool production of 352 million kilograms for 2019/20, with a 2pc annual increase, although the Australian Wool Production Forecasting Committee’s updated forecast of shorn wool production for 2018/19 is 322mkg greasy. AWI’s levy rate modelling for the next WoolPoll period of 2019/20 to 2021/22 assumed a forward wool price benchmark of EMI of 1700c/kg as the 2017/18 season average, although the voter information memorandum also quotes the 2017/18 EMI average as being 1734c/kg clean and reaching a record high of 2073c/kg. The current EMI is 2023c/kg clean. No attempt appears to have been made by AWI, either on the WoolPoll 2018 website or through the media to fully inform all wool growers of AWI’s revised WoolPoll budget assumptions, although revised figures have been discussed with WPA directors in attempt to convince them of the merits of a continuing 2pc levy last month. WPA was also told it could not release AWI’s revised figures.

Mr Macdonald said with the anticipated reduction in wool supply, if the levy is lower than 2pc AWI would not be balancing its financial responsibility with its capacity to deliver benefits for growers.

“To ensure responsible financial management, particularly in meeting contractual and operational commitments, AWI has a policy to ensure it maintains adequate cash reserves to meet the costs of winding up the company should a cessation in levy occur at any time,” he said.

However, despite AWI finalising its 2017-18 accounts, the company is still refusing to release the audited figures until its 2018 annual general meeting on November 23, to allow its shareholders to make a more informed WoolPoll decision.

Come clean AWI – AWGA

AWGA director Martin Oppenheimer said AWI has to “come clean with their numbers”.

“What are they using?

“Are the WoolPoll papers out of date and if so, what are the numbers they are using for their projections?

“According to our calculations, and we’ve spend a bit of time on it, I can tell you it doesn’t make any sense – it’s not adding up,” he said.

“If they are trying to mislead wool growers then that is not satisfactory.”

“We have to have real numbers and real explanations as to why growers have to vote for different levels,” he said.

Mr Oppenheimer said AWI is “under-reporting” the EMI with a forward estimate of 1850c/kg clean.

“What are the numbers they are using and are they saying the drought is going to go on for 3.5 years?

“Are they saying the EMI is going to fall, because AWGA doesn’t believe that and we don’t see the drought going on for that long and we don’t see the EMI falling dramatically, particularly with the lower supply,’ he said.

“If anything it (the EMI) might increase with a lower supply and finer average micron of the national clip.

“Our outlook is much more realistic, you could say optimistic, but realistic,” he said.

“Why are they suddenly being so pessimistic and downbeat?

Mr Macdonald said AWI has shown industry leadership by outlining the revenue projections to its industry stakeholders, including briefing woolgrower representatives at AWI’s Woolgrower Industry Consultative Committee (ICC) in Sydney this week and industry forums which are currently underway.

“We believe it is prudent to balance our financial responsibility with our capacity to deliver benefits for growers and we will continue to maintain AWI’s industry leadership position and act in the best interests of woolgrowers.”

Growers who haven’t received their WoolPoll 2018 voter kit should call the voter helpline on 1800 990 365. All eligible levy payers are able to vote, with voting closing on Friday, 2 November.