AUSTRALIAN Wool Innovation has denied it is pitching its WoolQ platform to China – the industry’s biggest customer — but refused to say whether it had considered selling the digital hub.
In a recent edition of the AWI podcast, The Yarn, AWI’s Shanghai-based Country Manager in China, Jeff Ma said AWI has spoken to a lot of trade partners and top makers about WoolQ.
“And they all welcome the new idea of Wool Q as a digital platform for trading at this stage.
“And further down the road I think it is a great platform to educate the supply chain as well as the consumers about all the great benefits of the beauty and the versatility, sustainability and traceability of merino wool to the end user,” he said.
“So it is a very good platform and as you know digital retail online are accounting for 25 percent of the total retail sales in China.
“I see that will develop even faster post the pandemic may be grow to may be 40pc or 50pc within 3 to 5 years,” Mr Ma said.
“Local trade circles and supply chain partners are really excited to see WoolQ happen for our industry in China.”
The Yarn segment with Mr Ma can be heard here.
Sheep Central understands the option of selling WoolQ to Chinese interests has been discussed by AWI board members. However, when asked if AWI is assessing whether there is any potential interest in China or the global wool trade to buy WoolQ or partner with AWI in developing it, AWI’s chief operating officer John Roberts said the discussions in China “should not be misinterpreted as anything other than consultation.”
“Whilst WoolQ has been built to deliver benefits primarily to Australian wool growers this cannot be done without also delivering benefits to all participants up the supply chain.
“For this reason we will always encourage input and feedback from stakeholders right up the supply chain both on shore and off shore,” he said.
“This should not be misinterpreted as anything other than consultation.”
Mr Roberts said Chinese top makers have long held an interest in WoolQ from its inception.
“In fact, there were a large number of top makers globally who contributed in the Wool Selling System Review which lead to the eventual building of the platform.
“On this basis WoolQ is not necessarily being “pitched” to them, more so there have been regular updates on its progress and functionality,” he said.
Mr Roberts said WoolQ Market is the transactional component of the platform which offers online auctions, a 24/7 offer board and speciality tender catalogues is only available to registered Australian entities.
“Overseas processors wishing to buy wool on WoolQ would need to be registered and approved in the same way participants do when entering the open cry auction system.”
He said as the WoolQ platform became more brand and trade focussed, top makers and other middle stage processors of Australian wool will have the ability to showcase their businesses and products up and down the supply chain allowing for greater connectivity.
“One of the key objectives is to make it easier for companies and brands, particularly new entrants looking to incorporate wool into their collections, to seek out and connect with suppliers who can provide wool products they need.
“This does not have to be limited to processors and can also provide exporters and brokers who specialise in certain wool types or regions to offer their skills and services,” Mr Roberts said.
He said allowing wool growers to profile themselves and their credentials to meet the growing global demand for stories of provenance is also a major goal of WoolQ.
Brokers query AWI’s intent with AWI in China
However, National Council of Wool Selling Brokers of Australia president Rowan Woods said the first thing that sprung to his mind after reading The Yarn transcript was “what are they trying to do, sell WoolQ to the Chinese or something, are they?”
Mr Woods said a wool trading platform was only as good as its support from selling agents or brokers.
“We’ve never been engaged to support WoolQ, they’ve just gone and taken growers’ funds and developed this thing, whether we wanted them to, or not.
“They’ve spent an exorbitant amount of money on it,” he said.
“The brokers aren’t supporting it – it is not as if there is a new market out there created by WoolQ.”
Mr Woods said there are components of WoolQ that are “probably OK.”
“But at the end of the day it needs wool to survive and it hasn’t got it.
“AWI has not done anything that I’m aware of to really get brokers and AKA selling agents onside to push it along,” he said.
“If anything as brokers, we feel that we are being ‘gone around’, so to use growers’ funds to create a marketing platform we just see as a total waste of money.
“That money should be spent on other areas of concern – there are bigger fish to fry than just coming up with another electronic selling platform.”
Mr Woods said Mr Ma’s comments read like AWI was pitching WoolQ in China.
“I sounded very much like it to me and why do we want to give more power to one part of our market?
“I’m sure growers would like to see their money spent in other areas than to promote a wool-selling platform to ‘the other end’.”
Mr Woods said Australian brokers were concerned AWI would try to sell wool direct into China on WoolQ by bypassing brokers.
“I think they are on the wrong track altogether.”
Get out of WoolQ says former AWEX chairman
New South Wales wool grower and former AWEX chairman John Keniry said AWI should get out of WoolQ and trading wool.
“There is no justification for taking taxpayers’ money – matching funds – or levy payers’ money to do that, it’s like AWI trying to become what used to be the wool corporation – that’s finished,” he said.
“If it’s not being very well used, you’ve got to say ‘well what’s the need for it’?
“Why are they buying into something to provide a service using levy payers’ money to do something that is already done?”
Mr Keniry said he supported comments by Australian Wool Growers Association director Robert Ingram that AWI’s WoolQ investment, estimated at $5.5-$7 million, has breached AWI’s Statutory Funding Agreement with the Federal Government, because it did not address a market failure and competed with existing wool-selling systems. AWI last month rejected Mr Ingram’s proposal to put a resolution to the body’s 2020 annual general meeting to end WoolQ spending.
Under the SFA, levy funds may only be applied to research and development activities, marketing activities and other activities related to the industry, for the benefit of shareholders and levy payers. ‘Marketing activities’ are defined as the marketing, advertising and promotion of products of the industry and ‘other activities’ means AWI activities supported by levy payers and shareholders and that relate to a function for which there is market failure.
WoolQ was conceived, developed and started trading wool while there were already two wool marketing systems in Australia – the open cry auction system and AuctionsPlus. WoolQ opponents have therefore argued there was no industry market failure in selling systems. The creation and development of WoolQ was never approved by levy payers by resolution nor voted on by AWI levy payers as a whole.
Mr Keniry said if WoolQ had any value then it should be sold.
“They can sell it to anybody and if it has any value, people will use it.
“But there is no case to subsidise the thing using levy payers’ money,” he said.
“If it adds any value to what the Australian Wool Exchange does, sell it to them.”
AWGA director calls out Minister on WoolQ ‘market failure’ stance
In response to questions put to Minister for Agriculture David Littleproud and the Department of Agriculture, Water and Environment, a spokesperson said AWI is an independent company governed by a board of directors.
“Decisions about the expenditure of funds are ultimately a matter for the AWI Board.
“The department does not consider that AWI’s investment of levy funds in the development of WoolQ is a breach of AWI’s Statutory Funding Agreement with the Commonwealth,” the department spokesperson said.
“The Statutory Funding Agreement would not prohibit the expenditure of levy funds on activities undertaken internationally.”
However, Mr Ingram today called upon Mr Littleproud to respond to the department’s conclusion on WoolQ’s status under the SFA.
“AWGA calls on the Minister to respond, how can that conclusion be reached?”
AuctionsPlus disappointed with lack of collaboration
AWI has consistently argued that WoolQ addressed a lack of electronic or digital development in wool trading and proceeded to develop and implement it as a trading platform in competition to existing well-supported wool selling systems – open cry auctions and AuctionsPlus.
AuctionsPlus chief executive officer Angus Street said the propriety of wool levy payer and potentially taxpayer funds being spent on WoolQ and as a wool trading platform was a matter for the Federal Government to work through with AWI and its levy payers.
“From our perspective we have been running wool auctions on and off for the best part of a decade.
“There has been a bid and offer platform, previously known as WoolTrade and now AuctionsPlus Wool, for well over ten years,” he said.
“Both services have been open to all brokers, buyers and producers throughout that time.
“You would assume that AWI were made aware of these commercial services when they completed their market failure analysis during the WoolQ project approval.”
On the issue of AWI also using levy payer funds to promote WoolQ in preference to other selling systems to Australia’s biggest wool customer, Mr Street said it is unfortunate that there isn’t more collaboration when promoting Australian services.
“At the end of the day AWI have made that decision and we as a business focus on delivering value and benefits along the wool value chain.
“We are excited to continue our investment in digital wool services and welcome feedback from all stakeholders on how we can assist drive transparency, add value to current selling channels and improve efficiencies.”