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AWI chairman Wal Merriman defends wool body’s initiatives

Wal Merriman, October 19, 2015
The Woolmark logo

The Woolmark logo

As the chairman of the board of Australian Wool Innovation (AWI) I wish to respond to a recent piece written by Tarcutta, NSW woolgrower Grant Burbidge as it contains a significant number of factual inaccuracies.

R&D investment at AWI has not decreased as Grant suggests, but has in fact increased 220 percent over the last five years of my chairmanship; from $8.9 million (2009/10) to $19.8 million (2014/15) and the on farm investment has increased from $6.9 million to $13.7 million over that period.

I agree with Grant that returns from wool must improve to not only keep woolgrowers in the industry but to attract a new generation. It is important to lift productivity on farm as well as working for a better wool price. Lifting global demand for wool is the aim of our marketing activities.

Wool price has risen since marketing resumed

Grant claims that 83pc of the price of wool can be explained by the price of cotton or acrylic and therefore marketing cannot assist in lifting prices. This is simply incorrect, with Dr Elizabeth Nolan’s extensive report finding cheaper commodity fibres determine only 3-5pc towards the ultimate price of wool. AWI’s marketing and textile innovation aims to help Merino wool compete with cashmere, not cheap commodity fibres. There is no future in wool as a cheap input to the textile industry, hence our positioning of wool as an aspirational sustainable fabric worth paying more for.

To say AWI’s marketing success cannot be measured is also incorrect. The ultimate measure is the wool price and since marketing recommenced in October 2010, the Eastern Market Indicator has averaged 1084 cents clean, this is 371c/kg higher than the five years prior, when marketing was absent from key markets.

The HRH Campaign for Wool has now attracted almost 500 major retail and brand partners across a dozen countries, attracting consumers back to the many natural benefits of wool. The return has been measured at $4.80 per dollar invested. Woolmark Gold in China, the International Woolmark Price and No Finer Feeling campaigns are doing likewise. Increasing global Woolmark license revenue is another direct indication that an increasing number of corporations are joining us to sell wool and our marketing initiatives are having a positive effect.

Lifetime Ewe Management is increasing farm returns

In terms of increasing on farm returns, there is no better case study than Lifetime Ewe Management. From funding the core research over a decade ago, AWI has been instrumental in rolling out this course to almost 2,000 woolgrowers who have recorded on average a 15pc increase in weaning rates and a 50pc drop in ewe mortalities. The Lifetime Ewe Management course has now directly influenced over 20pc of the national flock and AWI aims to lift this to 50pc by 2018. LTEM is now the most successful research, development and extension program in the history of the sheep industry and has a significant waiting list. The benefit cost analysis of LTEM showed up to $44 returned for every dollar invested.

Increasing the reproductive performance of the Merino is now a major push at AWI. We will continue to invest in ways to explore genetic gains through programs such as the Lifetime Productivity Project. AWI has funded sire evaluation trials nationwide via AMSEA, bloodline analysis via wether trials as well as the development of many wool-related ASBVs. The fact that MerinoSelect can now progress under a commercial footing is a triumph for all those involved, including the major funders MLA and AWI.

Mulesing alternative research is ongoing

At an AWI consultation forum last year Grant voiced the need to find a mulesing alternative. The blowfly genome is now mapped, Skintraction has received APVMA approval, a proof of concept found for use of liquid nitrogen, ASBVs are available for breech wrinkle, colour and dag, and there is research into pre and post-operative pain relief. The issue has evolved considerably after an enormous and ongoing investment by woolgrowers.

As AWI chairman, I am concerned about Grant’s allegations the company did not release intellectual property relating to R&D activity upon request. I have spoken to AWI’s chief executive officer and the general manger of research, who do not recall any requests for IP.  Please resubmit your request and if it can be released we will certainly do so.

Wool Selling Systems Review is independent

The AWI Wool Selling Systems Review is the first examination of its type since the digital age began. It has created much discussion and the final report from the independent panel is due in December. The WSSR committee is made up of some of the most experienced minds in competition and digital transactions with likes of Graeme Samuels, Bernie Wonder, Colin Bell, Will Wilson and James Lillie. They report to industry in December.

Grant gives me far too much credit to suggest that I have any influence over the likes of these highly credentialled people, and the independent and skilled board upon which I serve. Similarly to suggest that the auditors of AWI’s most recent Review of Performance, Deloitte, is “guessing” that our marketing is making a difference is an insult to the organisation’s international reputation.

Wild dog investment is saving sheep, lifting productivity

There is no doubt the AWI wild dog program is making a difference to an insidious problem. Working with over 100 separate grower groups spanning over 2 million square kilometres, participating woolgrowers have reported a 70pc reduction in stock losses; a significant lift in productivity. Trialling baiting rates, helping fund and co-ordinate doggers and baiting is complimented with blue-sky research into early warning systems and novel modes of control. The return for every dollar invested in the area of wild dog has been measured at $8.60.

Similarly shearer training and wool handling are programs that will require further funding. With hundreds of shearers and wool handlers trained every year this is an essential service provided by AWI. The return on dollar invested for this area of AWI was measured at $2.60.

Since 2008, AWI has made significant headway across research, development and marketing, and I am very proud to have led an organisation that can be voted out directly by woolgrowers every three years and whose directors are democratically elected. Such transparency and accountability is yet to exist at most other equivalent R&D corporations, including the organisation that Grant himself was a director of.

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Comments

  1. Peter Small, October 24, 2015

    David, AWI is beyond the sophisticated discussion for which you and most thinking wool growers yearn. AWI’s focus is clearly on continuing wool tax to keep themselves all in a job; simple economics and never been any different for the last 80 years!

  2. David Sackett, October 22, 2015

    Overall Wally Merriman’s reply to Grant Burbidge’s comments is underwhelming and misses the main issue of the required productivity gains in the industry. Wool is a laggard.
    Of greatest concern is that AWI wants to attribute rises in the EMI to their wool marketing activities. Such comments are totally unsubstantiated, but if we take them at face value, it would be reasonable for the AWI leaders to resign when we see wool prices decline, because presumably the price falls will be due to inadequate marketing.
    The industry needs a much more sophisticated discussion of these issues than is currently being provided by AWI.

  3. Chick Olsson, October 19, 2015

    Good reply from Wal. The only issue is with wool prices; EMI was US1400 cents in 2011, now approximately US850 cents — a drop of almost 40 percent in real value $US terms — the only currency that wool is traded in. To talk about Australian EMI is not comparing apples with apples.

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