AUSTRALIA’S Department of Agriculture Fisheries and Forestry has allowed the nation’s wool grower levy funded body to change the scope of a high priority performance review recommendation on consumer attitudes to mulesed wool, denying growers key market knowledge.

Accenture’s independent review of performance of Australian Wool Innovation Limited in 2021 recommended (Recommendation 2.2) that AWI commission an independent report to measure current, and predict future trends, in consumer sentiment towards mulesed wool in relevant global markets.

AWI was also told to include economic modelling to determine the impact of these trends on wool price and production, with the mulesed wool report to be used to inform AWI RD&E expenditure and assist in communications with wool growers and the supply chain. If commercially viable, the report should be published on Wool.com for levy payers to access, the review recommended.

However, negotiations initiated by AWI with DAFF allowed AWI to circumvent the original ROP recommendation, changing its scope so it was dominated by a survey on broader environmental sustainability issues, effectively muting the mulesed wool component. DAFF has effectively supported AWI in not releasing the full final survey report or doing the economic modelling, despite at one stage in talks stipulating that AWI not mark the recommendation has complete until the modelling and additional statement was done.

Peak grower body group WoolProducers Australia has been denied a full copy of the report despite requests dating back to October 2023 and in November 2023 it applied under Freedom of Information for details of the survey questions used by AWI’s contractor Pragmatic Research in the “Buyer Views on Mulesed Wool Survey June 2023” report, a copy of the final report and correspondence between DAFF and AWI. Click here to view the FOI documents.

AWI has only agreed to release a survey overview and executive summary to its AWI’s Wool Industry Consultative Panel and publish these on wool.com, and is refusing to release the full report.

What did AWI’s ‘independent’ survey find?

The ultimate survey canvassed the views of 198 wholesale and retail wool users in 27 countries and claims to be the first of its kind to offer a comprehensive and accurate view of the attitudes of wholesale and retail users of wool to sustainability issues.

According to the executive summary, key findings in the survey included that environmental sustainability was important to most aspects of wholesale and retail businesses, with recycling and renewing the main considerations.

Animal welfare and mulesing were found by the survey to be mid-tier priorities, with animal welfare standards (46 percent) and using non-mulesed wool (45pc) comparatively less of a priority, although still a consideration for almost half the sample.

The survey conducted by Pragmatic Research and Advisory Services found that price, look and feel and care are the main challenges, and animal welfare and mulesing are lower-level concerns.

“Price (8.2) and product look, feel and care requirements (7.0) are the main challenges for selling wool products.

“Attitudes around mulesed wool (6.8) and animal welfare standards (6.1) were seen as relatively less of a challenge,” the report said.

Where are the questions on consumer sentiments on mulesed wool?

An analysis of the FOI documents shows that only two of the environmental sustainability survey’s six questions mention mulesed wool and no question directly asks what are consumers’ sentiments and attitudes to mulesed wool. The documents also show that AWI’s bias toward the importance of environmental sustainability was established by the statement: “Thank you for agreeing to take part in this brief survey about how environmental sustainability issues affect your business and customers.”

The FOI documents indicate DAFF agreed to an amended scope of the survey and the need to do the recommended economic modelling on the trends in consumer sentiment towards mulesed wool was avoided by AWI.

Neither DAFF or AWI has been able to fully explain what “commercially viable” means in the context of the original ROP recommendation, although AWI seems to have linked this to the issue of identifying respondents and the potential public release of the report.

However, the survey’s terms and conditions ask that respondents understand and agree that the answers that they submit may be made publicly available as part of the aggregated survey results, “but that my personal information, as well as the identity, details and any identifying information of my brand, will be kept confidential and non-identifiable.”

DAFF told Sheep Central that “it engaged with AWI on its response to this recommendation from the 2021 review of performance and the department is satisfied that AWI has responded to the recommendation.”

However, the department has refused to directly answer further questions around why the scope amendment was requested by AWI.

“The questions go to officer level discussions between DAFF and AWI.

“We are satisfied that AWI has done what it needed to in order to meet the requirements of the recommendation from the review of performance,” DAFF told Sheep Central.

How was the survey scope changed?

AWI changed the scope of the survey from the recommended scope of “consumer sentiment towards mulesed wool in relevant global markets” (plus economic modelling), to understanding the views of respondents “around the issue of mulesed wool within the broader context of sustainability issues and the impact these have on running their businesses and meeting consumer demand.” The project’s objectives also list five particular foci, with understanding where animal welfare standards and the use of mulesed or non-mulesed wool fits within sustainability listed lowest.

However, DAFF has told Sheep Central it “does not consider the scope of the recommendation was “watered down”.

“In discussions between the department and AWI, it was agreed that economic modelling on the outcomes of the survey would not be cost-effective and would be unlikely to generate useful data to inform investment decisions.

“The report on AWI’s 2021 independent review of performance was written by the independent organisation that conducted the review, not the department, so the department does not have a definition of “commercially viable” in this context,” DAFF told Sheep Central.

Why did AWI change the scope of the recommendation and survey?

AWI chief executive officer John Roberts made a consolidated response to Sheep Central’s questions.

He admitted: “AWI consulted with DAFF on the independently run survey.”

“That survey dealt with a range of factors impacting buyer attitudes about wool.

“It provides enormous insight,” Mr Roberts said.

“Simply asking questions on one factor would have been one dimensional and of little value.

“Instead, the survey that was commissioned placed a series of factors in a wider context,” he said.

“In terms of what AWI views as ‘commercially viable’, AWI has the strong view that we were not going to force participants to identify themselves.”

“We wanted honest and forthright feedback from as many participants around the world as possible,” Mr Roberts said.

“That was achieved and showed the diversity of opinion.”

“It is worth noting that the survey report has been shared with the AWI board and senior management to inform their knowledge in this area,” he said.

“More generally, the findings reflect the feedback AWI gets regularly from our overseas offices and key contacts.

“That market intelligence and the differences from Europe to China for example are shared at the quarterly Wool Industry Consultation Panel,” Mr Roberts said.

“The summary is available on wool.com as well.

“In terms of providing price information – AWI regularly publishes in Beyond The Bale price breakdowns on different types of wool as reflected in the National Wool Declaration.”

Sheep Central also asked Mr Roberts whether AWI had renegotiated a changed scope of the survey for other reasons – possibly for breeder political and industry image concerns — consistent with AWI chairman Jock Laurie’s position in a recent media interview where he said he “needed to move the heat from the animal welfare conversation,” while claiming to position AWI as supplying market signals to wool growers.

Why is economic modelling on mulesed vs non-mulesed wool important?

Accenture made the recommendation, noting on page 27 in its 2021 ROP report that:

“The issues associated with mulesing are consistently identified as a significant risk to the industry…….. It is clear this issue is impacting industry wide progress.”

“The continued slow progress around a mulesing solution is also at a critical juncture for the industry with buyers in Europe and the US starting to pay premiums for non-mulesed wool and refusing to purchase mulesed wool, with this likely to become increasingly important to wool price in the next 2–5 years.” (sources AWI documents, Stakeholder interviews, Levy payer survey, Accenture analysis).

Premiums are regularly paid for non-mulesed wool in the auction system, and especially under direct contracts with processors and brands, and some brands now avoid Australian wool because many growers continue mulesing.

Under AWI’s Statutory Funding Agreement with the Commonwealth, Performance Principle 10.2 (a) states that AWI must at all times ensure RD&E priorities and activities (Marketing Activities and other Activities) are strategic, collaborative and targeted to improve profitability, productivity, competitiveness and preparedness for future opportunities and challenges through a Balanced Portfolio.

However, despite this performance principle, and the obvious importance of understanding current and future demand for mulesed vs non mulesed wool to AWI’s marketing expenditure, to Australian wool growers, AWI levy payers and the industry, DAFF does not consider AWI has contravened the SFA by not completing the original ROP recommendation.

“We do not consider that AWI is in breach of its Statutory Funding Agreement with the Commonwealth,” DAFF told Sheep Central.

What does WoolProducers Australia think?

WoolProducers Australia chief executive officer Jo Hall said WoolProducers believes that all recommendations should be completed as intended by the consultant that undertook the independent Review of Performance (ROP) every three years.

“Under the Statutory Funding Agreement between AWI and the Commonwealth, which AWI must adhere to to obtain matching taxpayer dollars for R&D, Section 10.6 requires AWI to conduct a triennial Independent ROP to assess how AWI is performing and if there are areas for improvement.

“AWI and DAFF, then agree on an approach to address recommendations from the review.”

Ms Hall said there is absolutely no point in these triennial ROPs being conducted if AWI, enabled by DAFF, can then alter the recommendations to deliver something that does not meet the intent of the recommendations, as it will not improve the areas that have been independently identified that need to be addressed.

“If this is how DAFF manages SFAs and the requirements for ROPs, there is no point in having Section 10.6 of the Statutory Funding Agreement.”

Ms Hall said WoolProducers sees the changing of the scope of the survey as a missed opportunity to inform growers of Australia’s wool customers’ views on the contentious issue of mulesing.

“To claim that mulesing is a mid-tier priority when buried amongst a lot of other issues that wool growers have no control over and gloss over the fact that nearly half of respondents (45 percent) identified mulesing as a priority is not helping growers.”

“The survey results did not seem to resonate with what WoolProducers hear about customer sentiments regarding mulesing, so no we don’t believe that the release of the executive summary meets the full extent of the recommendation, that’s why unfortunately we had to undertake an FOI process to try and get this information as it was not forthcoming from AWI.”

Ms Hall said WoolProducers does not believe that the survey meets the intent of the independent recommendation as what was delivered does not seem to match what is stated in the 2021 ROP report.

“The questions didn’t allow for the original intent of the recommendation to be fulfilled.

“Given the survey structure and design (i.e “Environmental sustainability”) there is every chance that it was not answered by the right people within the companies surveyed.”

Ms Hall said there is also a lack of clarity in relation to the survey’s animal welfare and mulesing questions.

“How many respondents answered to one, but not the other?”

She said in terms of “sustainability” issues attributed that can be influenced at the farm gate level, mulesing and animal welfare rated the highest in the survey, assuming that carbon footprint and water relate to processing.

“Is it not important that we try and contribute to supply chain sustainability on the matters to which we have the greatest influence?

“Biodiversity came in as the lowest priority (27 percent)- but there are lots of initiatives in that space.”

Ms Hall said the survey’s prioritisation of mulesing and animal welfare in terms of their importance to industry is not consistent with materiality assessments of Australia’s Sheep Sustainability Framework.

“The initial and recently completed (23/24) SSF materiality assessment both found that animal wellbeing and welfare and animal husbandry and handling were the two most important issues.”