AUSTRALIAN Wool Innovation’s wool exchange portal or WoolQ will go live with the launch of its eSpeci module next week, despite renewed criticism from the nation’s peak wool broker body.
AWI chief executive officer Stuart McCullough said AWI will launch its eSpeci software module on March 15 and WoolQ will be completed by November this year.
He said the consultation and subsequent industry engagement processes at all stages of the WoolQ project over the past 3.5 years have, not only identified the issues, but more than adequately stress-tested the premise of a digital platform for the Australian wool industry.
“WoolQ will continue to work with all interested parties individually to communicate the great number of benefits and opportunities that this software will offer,” he said.
However, the National Council of Wool Selling Brokers of Australia this week reiterated its reservations about AWI’s development and funding of WoolQ.
NCWSBA president John Colley said there are already existing digital services for elements proposed by AWI to be part of WoolQ, such as the woolclasser e-speci and electronic trading of wool. Wool handler AWH and marketing services company AWEX are also developing e-speci apps.
“With regard to the e-speci, we understand that AWEX and AWI are each developing their own, competing e-speci apps.
“NCWSBA is concerned that two industry-funded organisations are separately developing their own e-speci apps, rather than working collaboratively,” he said.
“This seems to be a waste of resources.”
Mr Colley said the most commercial of the e-speci apps will survive and he was looking forward to the release of the apps.
“I wish we had it 10 years ago.”
But he said the competing e-speci developments was “a ludicrous situation”.
“It’s a complete waste of money within the industry.”
No market failure in wool marketing – brokers
Mr Colley said the body’s board had discussed WoolQ and expressed concerns about why AWI had decided to proceed with its development.
“The Australian wool market is thriving, as can be seen by the remarkable rise in wool prices over the past 18 months.
“This rise has brought greatly improved profitability to Australian wool growers,” he said.
“It is underpinned by the robust competition in auction rooms around Australia.”
“The bidding in these auction rooms is intensely competitive and fully transparent, as any grower who attends the auctions or receives the daily market reports from Australian wool brokers and from AWEX can see.”
Mr Colley said despite rhetoric behind WoolQ’s development that there is ‘market failure’ in Australia’s competitive wool selling system, it was hard to see where that market failure existed.
“There are none of the classic economic measures of market failure: there are many brokers and buyers who compete intensely; there are few barriers to entry to becoming a broker or a buyer; information is freely available; and there are clear property rights to facilitate the transfer of ownership of wool.
“The brokers combined are in support of technological improvements that benefit the wool grower and benefit the industry, but what we are not in favour of is expense that is not warranted or not justified, unless it can be proven to actually add value.”
Brokers query WoolQ value to industry
According to AWI’s own assessment, released in June 2017, WoolQ will bring a net benefit of $38 million over 15 years. This equated to $1.60 per bale per year for all wool sold in Australia, or only 0.1 percent of the average value of a bale of wool.
“AWI’s stated aim when it initiated the Wool Selling System Review in 2014 was to improve the returns that wool growers receive for their wool”, Mr Colley said.
“Yet AWI’s own analysis suggests that the WoolQ will only bring a net benefit of 0.1pc of the value of a bale of wool.
“How does this return justify the spending of the $3.6 million that AWI says it will spend to develop WoolQ?” he asked.
“It would be much better spent in reducing the cost of shearing, which accounts for over 70pc of the cost of getting wool from the sheep’s back to the ship.”
“They (AWI) should be focussing on the real costs which are in harvesting, which are in shearing, which in some areas are now approaching $9 a head,” he said.
“There have been no improvements, no research and development, that has been meaningful or added value for the grower in that field.”
Mr Colley said AWI’s increased levy funds from the higher wool prices should be funding a program to reduce shearing costs.
Members of AWI’s Woolgrower Industry Consultative Committee were told in October last year that AWI had committed to allocate additional resources to its wool harvesting program to fast track shearing innovations. Following a consultation forum in Dubbo in May this year, AWI reported it had developed a short, medium and long-term plan for its wool harvesting program that will address OH&S issues, such as shed design and catch and drag, efficiencies around wool at the table, mobile shearing, multifunction sheds and robotics. AWI said it had also conducted a national and global search for new wool harvesting technology ideas. No further details were available from AWI this week.
WoolQ registration process concern
Mr Colley said he was also concerned about the WoolQ registration process.
He said the WoolQ registration process raised a legal question.
“They (AWI) are really trying to gain as much information as they possibly can and we would make growers aware by what they are doing as to what the registration actually means.
“The reality is that wool growers need to be absolutely informed about what they are committing to,” he said.
“It is up to each individual wool grower as to whether they should register or not, but they should be fully aware of what they are doing when they register.”