AWI chairman Wal Merriman

AUSTRALIAN Wool Innovation chairman Wal Merriman has hit back at calls for WoolProducers Australia to be enshrined as an oversight body to the grower levy-funded research, development and marketing body.

The Victorian Farmers Federation Livestock Group last month initiated a national campaign to legislatively enshrine WPA to oversee AWI’s levy spending in a similar structure to that which the Sheepmeat Council of Australia and Cattle Council oversights Meat & Livestock Australia.

In a letter to wool growers in the March AWI newsletter Mr Merriman said such a move would undermine the fiduciary duty of the AWI board and hinder the decision-making of the people directly elected by wool growers.

“Should we be forced down this route, individuals who have not been elected by shareholders would assume power, without being held to the same level of accountability as AWI board directors.

“We believe this would be a detrimental step, and make it difficult to attract directors with the skill sets we need to comply with the Statutory Funding Agreement AWI has with the Federal Government.”

In the letter, Mr Merriman said since Senate Estimates earlier this month, some wool lobby groups had called for greater oversight of the AWI board, but he said there are six woolgrower industry bodies “who we choose to treat equally and keep well informed by way of the AWI Woolgrower ICC.”

These bodies include the Australian Association of Stud Merino Breeders, the Australian Superfine Wool Growers’ Association, the Australian Wool Growers Association, WoolProducers Australia, the Pastoralists & Graziers Association and broad wool grower representatives. The Department of Agriculture and Water Resources is an observer of the ICC.

“In 2017, we will expand this group to include other innovative wool grower groups like the A-SHEEP Group from the Esperance area.

“I am very proud of what we have been able to achieve, our accountability and our transparency,” Mr Merriman said.

Mr Merriman said importantly, the direct elections at AWI provide the democratic right to nominate and vote for a representative.

“This is a system that in the past has brought us directors like Ian McLachlan, Brian Van Rooyen, Jock Laurie, Roger Fletcher, Meredith Sheil and Colette Garnsey.

“Anyone wishing to stand for the AWI board can do so once they have collected 100 shareholder signatures supporting their nomination,” he said.

Mr Merriman said wool growers directly set the levy rate every three years through a Wool Poll vote.

“These two democratic votes hold both AWI and the board directly accountable to wool growers.”

Cost-benefit analysis on regional relocation

In the letter, Mr Merriman also said AWI will undertake a cost-benefit analysis of relocating its Sydney headquarters to a regional location, but defended the recent AWI board decision to relocate its former headquarters within Sydney.

“In January 2014 the board of AWI considered a relocation as our previous lease was expiring.

“It was decided to keep a Sydney location and in September 2015, AWI moved to its current site and in doing so saved 30pc in rental costs,” he said.

“Many of AWI’s on farm research staff, extension networks, wild dog staff, lifetime ewe and shearer trainers live in regional Australia.

“However, in response to the call to relocate, AWI will undertake a cost benefit analysis to ensure the view of the board remains correct.”

Ex-gracia payments to save $10m over 5 years

In the letter, Mr Merriman also said AWI had initially saved $700,000 by a difficult decision in February 2016 to make seven senior staff roles redundant and pay the entitlements owed to these people.

“In the case of two employees an ex-gracia payment was made to mitigate potential legal action.

“Anyone who knows me knows that I don’t give money away unnecessarily but sometimes a cost must be incurred to make a saving,” he said.

“Given these positions have not been replaced, the saving thus far has been $700,000 and will be $2.3 million every year after that ($10 million over the next five years).

“This significant saving allows us now to invest in new areas such as finding a viable shearing alternative and other high level strategic targets,” Mr Merriman said.

“Last week after briefing the AWI Woolgrower Industry Consultative Committee (ICC) we sought their endorsement of the actions undertaken as part of these redundancies, which they all provided.”

Click here to read Mr Merriman’s letter.

Source: AWI.