Research and Development

Report applies pressure to re-think AWI wool marketing spend

Terry Sim January 31, 2025

A Wear Wool Not Waste video billboard in New York’s Times Square– was it worth it? Image – AWI.

AUSTRALIAN Wool Innovation is under increased pressure to rethink its levy-funded marketing spending after the release of a report that showed it has had no meaningful impact on grower prices.

WoolProducers Australia has released an Episode 3 report that found that AWI’s wool marketing spend did not have a meaningful impact on the wool price benchmark – AWEX’s Eastern Market Indicator.

The report concluded that the key variables that drive fluctuations of the EMI are the AUD:CNY exchange rate, the global raw materials and global energy indices, Australian wool production, and a global economic growth indicator. None of the EP3 models analysed showed that AWI’s wool marketing spend had a meaningful impact on the EMI.

WoolProducers president Steve Harrison.

WoolProducers president Steve Harrison said with current wool prices and the cost of production the industry is in a profitability crisis and growers are continuing to leave the wool industry in favour of other enterprises.

“It appears that our current marketing efforts have little to no impact on the price that we receive for our wool.

“The other factor of profitability is cost of production – we do have control over that, so why aren’t we investing more to make wool growers more efficient?” he said.

“Over the past 10 years we have spent over half a billion dollars on wool marketing, yet the EMI has remained largely unchanged.

“With WoolPoll now past us, and the AWI three-year strategic planning cycle underway it’s an opportune time for all woolgrowers to have their say on how their levies are spent”, Mr Harrison said.

Mr Harrison said the WPA board decided not to release the report before the recent WoolPoll levy ballot last year because it would be “unfair” to AWI, despite commissioning the report to evaluate the impact of the levy spend on wool prices and assist with the lead-up to AWI’s three-year strategic cycle planning. AWI lobbied for a 2pc vote at the 2024 WoolPoll to maximise its marketing spend, but growers maintained the levy at 1.5pc.

Mr Harrison said the report was received in late October 2024 “and the (WPA) board thought it would be unfair to AWI to release this report before the WoolPoll results were announced.”

He said the board had a long debate about the fairness of not giving growers all the information it had available on the marketing spend issue before WoolPoll and “in the end we went with the former (not releasing it) … and the instruction was to present the report to the AWI board after WoolPoll.”

WPA recently offered to present the report to the AWI board, but was told to distribute it through AWI’s Wool Industry Consultation Panel and Wool Consultation Group members.

When asked if he regretted not releasing the report before the 2024 WoolPoll ballot, Mr Harrison said: “being the chairman I take the direction of my board.”

Mr Harrison said he hoped the report influenced AWI board deliberations on whether to continue the current 60:40 marketing: R&D levy split, but believed AWI has missed an opportunity to make a decision on the split by refusing WPA’s “olive branch”.

“Consideration of this report is just the first step in an essential series of actions to determine how we allocate our levies along with our marketing strategies moving forward.

“It may be the case that AWI needs to undertake a more thorough analysis of return on investment to growers when determining where levies are spent, and that can only be measured in terms of grower profitability,” he said.

Click here to read the full ‘Factors influencing the Australian Wool Price’ report.

Vacating marketing space not in growers’ interests – AWI

AWI chairman Jock Laurie and chief executive officer John Roberts did not respond to direct questions about the WoolProducers/Episode 3 report or whether the current marketing: R&D split should be reviewed.

But a statement from an unidentified spokesman said AWI marketing is split between creating demand and awareness plus defending the fibre from the greenwashing by synthetics.

“We believe that vacating the space from promoting and defending wool is not in Australian wool growers’ best interest,” the spokesman said.

“The Wear Wool, Not Waste and Wear Wool, Not Fossil Fuel campaigns are not sales campaigns, they are about creating awareness with consumers, brands, retailers and governments that wool is natural, biodegradable and microplastic-free.

“This has been very important in changing perceptions in Europe where proposed changes to product labelling failed to acknowledge the negative impacts from synthetic fibres,” the spokesman said.

“Other campaigns especially in China clearly demonstrate increases in wool sales when there is targeted collaboration.

“The (Episode 3) report will be considered as AWI consults on its next strategic plan and will be discussed when industry representatives meet in Sydney for the Woolgrower Consultation Group (WCG) and Wool Industry Consultation Panel  on the 11th and 12th of February.”

AWI is justified in flipping its marketing:R&D ratio

Martin Oppenheimer and daughter Cecilia wearing wool for a charity walk.

New South Wales wool grower and stud breeder said AWI was now justified in reducing its marketing budget and boosting on-farm research and development after the release of the WoolProducers Australia report.

He said it is disappointing that the report was not released before the WoolPoll levy ballot last year.

But he said the independent report gave AWI the opportunity to now switch the current 60:40 marketing: R&D levy spend to 40 percent on marketing and 60pc on on-farm R&D, and potentially increasing the federal government’s matching R&D contribution.

Mr Oppenheimer is a past chairman of the Australian Wool Growers Association and AWI’s Wool Carbon Alliance with more than 40 years industry experience. He said the Episode 3 report cast doubt about claims by AWI on the value of its marketing spend.

“The key point moving forward is that now there is the opportunity to be proactive and do something to actually benefit the wool industry, and that is to change the levy from 60:40 …. To flip it to 40:60.

“The big ticket items like Wear Wool nor Waste, America’s Cup and Times Square advertising, and those sort of programs cease immediately in favour of business-to-business programs working with training retail staff about the benefits of particularly Merino fibre, they go forward, but the big ticket items cease immediately.

“And there be a bigger spend on some of the key issues to bolster production and improve the cost of production issues that the industry is going through at the moment,” he said.

“The AGRISTA report highlights some of those things so that’s probably the first place to go to.

“But the net effect would be that you would reducing the marketing spend by about $12 million, you would increasing R&D and extension by about $15-$16 million and if the government was happy with the arrangements that they would be chipping in an extra $6-$7 million dollars which would be quite helpful at the moment,” Mr Oppenheimer said.

“It’s all based on having research and programs that are actually going to make a difference to stop the decline in wool production, increase the price and reduce the cost of production.”

Mr Oppenheimer said the next meetings of the WICP and WCG in February would be the ideal opportunity to get industry approval of a new R&D agreement with government enabling a new 40pc marketing: 60pc R&D split spend to be implemented after 1 July for the next three years.

“That helps the company and provides more money for projects that hopefully we can see a benefit from.

“This report is very timely in that it reminds is that the marketing effort makes little to no difference to the price of wool and it’s really driven by the macroeconomic conditions at the time,” he said.

“It would have been better to have these sorts of concepts put up to the growers prior to WoolPoll, but it wasn’t to be, that report was not released back then for various reasons and AWI was asking for 2pc.

“1.5pc was the decision of the growers and now is the time to be looking at the break-up of the spend on growers’ levy money to actually give a return to growers,” Mr Oppenheimer said.

“The industry is in crisis at the moment and this is potentially one way to move it forward and give growers confidence to not only stay in wool but also increase their flocks.

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

  1. Kieran Ransom, February 7, 2025

    An extract from ‘The Farmers Club’ newsletter 28 January. re Kevin Bell insight into AWI. “Interestingly, Kevin had a stint on the AWI board, and this is what he said in 2010 after he left: “Kevin Bell, a former director who left three months ago, described the board politics as poisonous and said its members included some very strange and nasty people who are very powerful and they seem to have time and money and ego”. ”

    No wonder the wool industry is in chaos.

  2. Don Cameron, February 4, 2025

    There is no transparency here.

    To illustrate the danger the current AWI management poses to wool growers, AWI lobbied for a 2 percent vote at the 2024 WoolPoll to maximise its marketing spend in spite of a history of poor results.

    WPA commissioned consultants to evaluate the impact of the wool levy spend on wool prices. The consultants analysis concluded the $500 million had virtually no impact on wool prices.
    In other words, the $500 million was wasted and AWI must inhabit some far-flung parallel universe because they lobby for more.

    Wool growers voting at Woolpoll desperately needed an alternative viewpoint to counter the endless stream of propaganda pushed out by the snouts in the trough at AWI HQ.

    However, the WPA board kept the damning report secret until after the Woolpoll. The disgraceful decision of the WPA board to deprive wool growers across Australia of just the information they needed to assess the competence or otherwise of AWI is incomprehensible.

    The WPA board’s lame excuse that it didn’t want to be unfair to AWI is beyond ridiculous, and makes one wonder just who is up who, and where and when.

  3. Don Cameron, February 4, 2025

    The man in the mirror episode well illustrates the incompetence of AWI management, so no surprises here in this most recent of numerous reports. Wool grower funds have been splurged for decades on various dubious causes and it has been painful to see the large cast of those with their snouts in our trough. The man in the mirror has cast a long shadow over the Australian wool industry…

  4. Don Mudford, February 3, 2025

    Is the wool trade avoiding wool from Australia due to this country’s policy on mulesing? 30-plus micron wool in the EU is $11/kg greasy on farm.

    • Paul Swan, February 4, 2025

      Don,

      Sorry to be slow to catch up to this, and I don’t normally get involved in the politics of grower levies, but do like to challenge a ‘factual’ statement if probably not factually correct. So, I am wondering if you can share with all the basis of the statement that 30+ micron wool in the EU is worth $11/kg greasy on farm – which you made in the context of a question about wool industry avoiding our wool because of a policy on mulesing. Unlike the EU, the British Wool Marketing Board publish their market indicator (https://www.britishwool.org.uk/price-indicator) and as you’ll see it was most recently 109 pence per greasy kg on farm (all non-mulesed, and mostly > 30 um). 109 pence per pound greasy is about $2.20 Australian.

      • Paul Vallely, February 8, 2025

        Paul, while your response addresses Don’s comment on pricing, may I draw your attention to his core suggestion that ” …. the wool trade is avoiding wool from Australian due to this country’s policy on mulesing.”
        When I was buying wool for Italy until recently, I saw contracts stipulate the wool was not to be sourced from Australia. I assure you this was due to the mulesing issue.
        To reinforce this, my wool testing service based in the EU performs wool testing for a number of supply chains in countries such as the Netherlands and Germany. Many of these chains promote their wool as grown from non-mulesed sheep. The customer is not interested in the fact they don’t need to mules. Further, their marketing often draws attention to the prevalence of mulesing in Australia.
        Perhaps grower levies might more prudently be spent on the provision of market intelligence to growers, particularly what’s happening globally. While growers should not be told how to manage their sheep, they should receive factual and timely intelligence on the market ramifications of their management decisions.

  5. Brendan Mahoney, January 31, 2025

    As a wool grower, I would like all the 1.5 percent levy sent to WPA to do with as they see fit.
    AWI is controlled 100pc by the federal government, that is where the problem lies. The government has no intention to help the sheep industry. Certainly not Labor anyway.

  6. Brenton Hinkley, January 31, 2025

    What a surprise, not. AWI are asleep at the wheel.
    Time to get their snouts out of the wool growers’ money trough.

Get Sheep Central's news headlines emailed to you -
FREE!