News

AWI engagement found lacking by minister and industry

Terry Sim, August 25, 2021

AUSTRALIAN Wool Innovation has been told it could improve its stakeholder engagement and consultation as Minister for Agriculture David Littleproud expresses disappointment over his recent dealings with the levy and taxpayer funded body.

Sheep Central has been told AWI ignored the Minister’s request four weeks ago to release key WoolPoll 2021 voting information to levy payers as soon as possible.

Instead, after weeks of criticism from industry bodies AWI today has released the VIM, along with the latest independent AWI Review of Performance by international professional services firm Accenture.

The review found that AWI is meeting its requirements for governance, collaboration and research, development and extension, but could improve its stakeholder engagement, consultation and strategic focus.

Mr Littleproud said when he approved the WoolPoll ballot paper, voter instructions and information memorandum on 3 August, he strongly encouraged AWI to release the VIM as soon as possible, so levy payers had sufficient time to review it and make an informed decision.

“I am also disappointed that AWI announced its intended levy rates (on 19 July) before I was given an opportunity to consider or approve the voting pack and I will be writing to them to express this,” Mr Littleproud said.

WoolProducers Australia president Ed Storey yesterday said he wrote to AWI and Minister Littleproud on the 19th of July asking for the WoolPoll information to be released as soon as possible, given AWI had publicly started campaigning for a 2 percent levy. The current levy rate is 1.5pc.

“We have recently been advised that the information will be released in electronic form early next week,” Mr Storey said.

“Given the minister signed off on the VIM and other relevant information on August 3rd, we don’t understand why it couldn’t have been released earlier, rather than four weeks after the Minister signed off on it.

“All WoolProducers Australia has wanted is as much time as possible for levy payers to inform themselves of the relevant reserve levels, budgets etc to make an informed decision before they consider their levy preference for this year’s WoolPoll,” he said.

Mr Storey said he was disappointed that he had been told the information would not be released until next week.

“I don’t understand why AWI ignored not only our request, but also the request of Minister Littleproud.”

The minister has encouraged all rural development corporations to conduct themselves transparently and actively engage with stakeholders. Mr Littleproud was asked directly if he would support a further Australian National Audit office of AWI, to which he replied: “I support independent reviews of AWI.”

The minister said he will be requesting regular updates on AWI’s implementation of the latest Review of Performance recommendations.

Latest review found improvements were needed in consultation

Mr Littleproud’s comments come as a survey in the latest review of AWI’s performance found a large amount of levy payers indicated that AWI’s communication with them is average, and that grassroot wool growers are not appropriately consulted.

The review found 53 percent of wool growers surveyed do not know who their Wool Industry Consultative Panel representative is, and therefore do not feel represented in industry consultation. About 43pc of wool growers surveyed agreed that mixed farming wool producers need a greater representation at the WICP.

The ROP by Accenture found that AWI could improve its stakeholder management as well as its strategic focus and that it should give a very high priority to developing a stakeholder communication strategy and to improving engagement with the industry.

Among the key principles assessed in the review, the Accenture consultants found that AWI, under its Statutory Funding Agreement performance principles, was part-meeting its stakeholder engagement, board independence, organisational culture obligations and monitoring/evaluation obligations. The review found AWI was meeting its overall governance, collaboration and research, development and extension obligations under the SFA.

Mulesing and WoolQ should be RD&E priorities

The review also found that flystrike and mulesing must be seen by AWI as an industry priority for research, development and extension.

“The issues associated with mulesing are consistently identified as a significant risk to the industry. Many believe AWI should develop a strategy to solve the mulesing issue.

“However, AWI is not able to take an industry stance, rather providing options for woolgrowers whether they choose to mules or not. It is clear this issue is impacting industry wide progress,” the review found.

The review has recommended that the AWI board commission an independent report to measure current, and predict future trends, in international sentiment towards mulesed wool. The report should model the financial and economic impact of these trends on wool price and wool production to inform AWI RD&E expenditure and assist in communications with growers and the supply, and be published in whole or in part on Wool.com for all levy payers to access where appropriate.

The reviewers found that the WoolQ program as part of AWI’s traceability portfolio has been a subject of contention.

“WoolQ is an online platform where wool growers, classers, brokers and buyers can access digital tools to support all stages of the wool growing and selling cycle. While there was considerable initial support for the WoolQ concept at the end of the Wool Selling Systems Review in 2017, support for the project has wavered and meant key outcomes have not been met.

The review recommended that AWI re-set the intent and direction of the Wool Q program and conduct an internal review to create an ongoing stakeholder engagement strategy for the program, including re-engagement with the groups involved in the initial WSSR.

The review also recommended AWI should implement a set of go/no go criteria for each component of WoolQ, including timing.

AWI board culture has improved

In terms of AWI’s implementation organisational culture recommendations in the 2018 ROP, the report found that at board level:

“The majority of stakeholders interviewed believe board culture has improved in the 2019 2021 period and all board members feel able to perform their duties in a supportive board environment.

“However, approximately 40pc of levy payers perceive board culture as being an inhibitor to potential candidates. And approximately 43pc believe a board role involves agri-politics.”

The reviewers found most AWI staff identified AWI culture as positive and leadership as positive role models.

“However, small groups within the organisation report items of concern.

“Staff interviewed appeared to be engaged and driven to AWI’s mission with regular internal collaboration and constructive conversations.”

Review finds no evidence of agri-political activity

Despite recent claims on interference in the nomination of 2019 director election aspirant Chick Olsson and AWI’s payments to sheep breeder bodies, another key finding of the review was “no evidence of agri-political activity.”

“While there is acknowledgement of the agri-political nature of the industry there was no clear evidence of board or AWI executive members bringing this into board decisions.

“Additional coaching on impartiality and risk management by an independent coach has improved the culture of the board since 2018.”

The reviewers found that the external perception of AWI board roles is still negative and some elements of organisational culture can improve, with 57pc of stakeholders surveyed saying that industry division or agri-politics was a high or very risk. In surveying levy payers on their primary reasons for not wanting to run for the AWI board, Accenture found 44pc believed a board role is agri-political, 39pc perceive the board’s culture is not open or constructive and 29pc believe there is possible negativity with the election process.

On governance transparency, the review found that increased reporting on corporate governance in the annual report as well as the implementation of 2018 review recommendations has improved transparency.

“While, levy payers are concerned about the transparency of investment activities, the independent review found no evidence of mismanagement or the need for additional controls.”

On transparency of finances to levy payers, the review found that as per the current rights of AWI shareholders outlined in the AWI constitution, financial reporting through annual reports is appropriate and in line with AWI obligations.

“While some levy paying representatives desired for more transparency of finances there is no obligation for AWI to increase reporting.

The AWI board follows ASX best practice with an annual external independent board review of performance and independence and well as standards and processes to maximise independence of the board,” the report said.

“Some levy payers identified concerns in financial management which was investigated. Independent review demonstrated clear and accountable guidelines for the use of levy payers and government co-payments at all levels of the organisation.”

AWI’s performance has been appropriate – AWI

AWI CEO Stuart McCullough.

AWI today said the Accenture review found that “AWI’s performance has been appropriate” and the company “has shown notable improvement.”

AWI said Accenture also found that “while board culture has seen significant improvements since 2019, external perception lags behind the improvements.”

AWI has said it fully accepts the 14 recommendations, has already completed four and will complete the others as soon as is practical.

AWI’s chief executive officer Stuart McCullough said he is pleased with the report card, but also acknowledges that AWI must continue to work hard on behalf of Australia’s wool growers.

“For wool growers, the report means that their company, AWI, is being rigorously evaluated every three years, so opportunities for AWI to do better can be identified and addressed.

“As well as being complimentary on many things that AWI does, the most recent report also highlighted AWI’s positive response to the previous (2018) review of performance,” he said.

“In contrast to the 2018 review’s 509-page report containing 82 recommendations, this year’s review has resulted in a 60-page report containing 14 recommendations.

“While we will address these new recommendations expeditiously, the fewer recommendations in the latest review is a demonstration of both how seriously we’ve considered these reviews and, importantly, how far AWI has come in improving its performance.”

Mr McCullough said it is great to see recognition of the hard work AWI’s staff does across all areas to deliver the best possible outcomes for wool growers.

“Notable achievements including strong results in the on and off-farm research areas as well as marketing programs that lead to more sales of wool.

“At the same time we can and will do better to improve our stakeholder engagement as well as monitoring and evaluation and we will step up our efforts in that regard.”

Key findings highlighted by AWI include:

  • Evidence of a strong collaborative culture, with over 200 collaborations completed in the last few years, on a number of different issues (e.g. EU Product Environmental Footprinting project) and strong engagement with Meat and Livestock Association in particular.
  • Strong marketing activities (e.g. Luna Rossa Prada and China digital campaigns) have provided clear gains for the global wool industry with an opportunity to strengthen overall ‘wool’ brand management.
  • There has been improvement in stakeholder engagement over the last three years especially through enhanced industry consultation mechanisms via the Woolgrower Industry Consultative Panel (WICP) & Woolgrower Consultation Group (WCG).
  • Research programs are meeting short term objectives and have real areas of strength.

Review recommendations highlighted by AWI include:

  • Increase mixed farming and Next Generation representation on the Wool Industry Consultative Panel.
  • Commission an independent report to measure current, and predict future trends, in consumer sentiment towards mulesed wool in relevant global markets.
  • The AWI board should oversee the strategic planning for the 2022/23 period and beyond by ensuring alignment to the Wool 2030 Strategy, and, alignment of AWI’s vision and purpose with shareholders and levy payers.
  • Changes to board tenure and board nomination processes are yet to be fully discharged. While key changes have been enacted or planned, the impact of these changes will not materialise in the timeline of this review. Thus, the impact of these activities should be included in the next review of performance.
  • Undertake an internal review of the WoolQ project.

AWI said progress on the review recommendations will be updated on rop.wool.com as it was for the 2018 review.

The full Accenture review report can be found here.

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Comments

  1. Peter Small, August 26, 2021

    Excellent article on the machinations of our industries research and so called marketing organisation, AWI. And yes Donald Cameron is perfectly correct: we only see Ministers coming to life when there is an election looming; or so it seems. As wool growers, isn’t it time we started to be honest with ourselves? Any analytical reading of this article, and many many before, must raise serious questions. Exactly what it is we as wool growers are actually funding?
    Questions such as:
    1. Do AWI shareholders have any real power?
    2. Is the AWI board in the “hands of” the Minister, or the wool grower shareholders?
    3. Which raises the question: is AWI a statutory authority? If so, it makes this whole shareholder nonsense a bit of a farce.
    4. Is AWI responsible to the Minister or to the shareholders?
    5. We read mention of “Wool Industry Consultative Panel” (WICP) who are these people and how are they selected? Are they appointed by AWI, the Minister, or the shareholders and who do they report to?
    6. We read about stakeholders, by who decides who the stakeholders are?
    7. Who selects the company to do the Review of Performance (ROP) and are they reporting to the Minister, the AWI board or the shareholders? Who pays for the ROP? If it’s the growers, why are we the last to know its contents?
    8. Are our overseas customers regarded as stakeholders and are their views sought in the performance review?
    9. If our overseas customers are regarded as stakeholders or at least of some importance, why didn’t the performance Review make any mention our customer’s universal concern about the availability of non-mulesed wool?
    10. Did the performance review consult with staff of The Woolmark Company and did they hear any concerns about their reporting to Sydney about consumer concerns about mulesing and why wasn’t that reported in the ROP?
    11. Wasn’t it some 20 years ago that AWI gave un undertaking to the wool industry that mulesing would by now be phased out and why didn’t the performance review address this issue? It is only mentioned as an area that needs more research and may be of risk.
    Perhaps some of the answers to why the AWI board fails to hear what its staff around the world are reporting back to Sydney is on page 48 of the Review of Performance.
    “While a majority of staff reported positive sentiment, small groups of staff report outcomes that need to be addressed:
    –14% don’t feel comfortable that reporting bullying or harassment would not have any impact on the reporter.
    –Just over 19% say diverse perspectives are not valued or encouraged.
    –Just over 12% feel they can’t voice opinions freely including to management”.
    And
    “Levy payer perception of board culture is still quite negative
    AWI culture has pockets of concern”.

  2. Donald Cameron, August 26, 2021

    Is this trying to steal Senator Glenn Sterle’s thunder? Me thinks Minister Littleproud’s efforts, as always in matters AWI, are too little too late, or having a bob each way. Irrespective, his record of inaction on AWI speaks for itself. Is there an election on the horizon?

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