AUSTRALIA’S wool growers should have been given more options to pay a lower wool levy while they battle and recover from the drought, a former Australian Wool Innovation director has claimed.
The former director and NSW wool grower Paul Cocking also believes the current board should implement the recommendation of the Ernst&Young review to institute a 10-year director term cap.
Australian wool growers currently pay a 2 percent levy on their gross wool sales until 2019 and in November this year in WoolPoll 2018 will choose from five options – 0, 1.5pc, 2pc, 2.5pc and 3pc – to continue the tax until 2022.
AWI decided the five options its shareholders will vote on, while ignoring a suggestion from wool grower bodies and state farming organisations for the inclusion of a 1pc option. The proportion of levy payers that opted for a 1pc levy in WoolPoll 2012 was 29.18pc and in WoolPoll 2015 it was 23.63pc. However, the AWI board wants its shareholders to vote for the 2p option this year, despite increased revenue being expected due to higher wool prices.
Former AWI director Paul Cocking said he would have preferred the 1pc option was included in the levy range for WoolPoll 2018 to allow growers to have two options below 2pc.
“The problem is that the majority of growers are doing it hard – in Queensland and in New South Wales – because of the drought, and the NSW growers are paying the most wool tax.
“They are asking them to give more at the hardest time,” he said.
Mr Cocking said otherwise the board should consider putting some levy monies toward drought assistance.
“There will be a mechanism somewhere whereby they could do it.
“Growers are hurting, especially in New South Wales and Queensland, they are on their knees,” he said.
“These wool prices are great, but skinny sheep aren’t making much money.”
10-year director term cap needed for board succession
Mr Cocking lost his AWI board seat when chairman Wal Merriman used open proxies to defeat him in favour of South Australian grower James Morgan.
Mr Cocking said a 10-year director term cap was crucial at AWI for board succession planning.
“They could bring that in tomorrow themselves if they wanted it – I’m sure it could be added to the board charter.
“They could then go to shareholders with a resolution, with a firm recommendation that it be accepted.”
Mr Cocking said AWI’s shareholders should also be more involved in deciding how the levy income was spent. Currently, levy expenditure split is 60pc to marketing, and 40pc to research and development.
“At the moment they basically have no say – they haven’t got a direct line of input that is good enough to have any influence to change the mix.”
He favoured more on-farm research and development to reduce the cost of wool production.
“History tell us that excess funds is wasted in these type of organisations.
The marketing department previously have done a very good job when funds were tight by working with brand partnerships and that’s where the best marketing programs come from,” he said.
“We are never going to have enough money in the pot for blanket generic wool marketing and advertising.”
Answers wanted at WoolPoll roadshows
If AWI runs any WoolPoll roadshows this year, Mr Cocking said AWI should justify where it was going to spend levy money and outline how it was going to implement the review recommendations.
“I feel they are just playing at ‘go slow’ tactics.
“We need some clarity on this.”
Mr Cocking expected that AWI’s failure to immediately comply with the review’s 82 recommendations could affect the WoolPoll2018 result.
“Wool growers don’t want to destroy AWI, they want AWI to understand what the wool growers want – they want better value for their money.”
He said AWI declaring they need a 2pc levy was like power companies saying they had not met their targets “while they are price-gouging customers.”
“It’s wool growers and tax payer’s money.”
Mr Cocking is strongly considering standing again for the AWI board.
First WoolPoll roadshow event in Tasmania
Mr McCullough told Sheep Central in an email response to questions that a series of WoolPoll roadshow events are scheduled between September 17 when voting opens and November 2018 2 when the ballot closes.
A full roadshow list was not provided, but the first event on September 11, from 10am-1pm will be held in Tasmania at The Grange Function Centre, 4 Commonwealth Lane, Campbell Town. Lunch will be provided.
Mr McCullough said the WoolPoll roadshow events are designed to provide growers with balanced and objective information to assist them in understanding the alternative levy rate options to empower them when voting. The sessions will be collaborative in style and are designed with ample free discussion time, because AWI believe it is important for shareholders to have the opportunity to ask questions about the company, its performance, the WoolPoll options and the board’s levy option.
Mr McCullough did not respond to the proposal for AWI to offer drought assistance. Mr Merriman could not be contacted.
For more information on WoolPoll2018 click here.