WOOLPRODUCERS Australia’s intent to investigate early stage wool processing options in Vietnam has received qualified support and calls for collaboration from other Australian industry players.

The peak wool grower body last week announced it had won funding to establish a strategic partnership with AusHub Vietnam to explore early stage processing options in the country.

The Australian Industry Hub (AusHub) is an initiative between the Australian Chamber of Commerce Vietnam (AusCham) and the Department of Foreign Affairs and Trade to facilitate access to markets in Vietnam for Australian industry groups in food fibre and forestry. AusHub Vietnam has allocated funding for an in-country wool industry representative to work with WoolProducers Australia for a 12-month period.

Australian Wool Innovation chief executive officer John Roberts said the more early stage wool processing that occurs and in a variety of locations the better it is for Australian wool growers.

“If Vietnam was to develop early stage wool processing that would be a good thing.

“But how that happens is dependent on a number of factors including potential investors, finding a location and getting development approval,” he said.

Mr Roberts said AWI does not invest in early stage processing.

“However, we are happy to provide technical advice for companies seeking to work with wool or expand their capacity.

“We have worked in Vietnam for many years and work with many companies there to get more wool on their spindles and into their production lines.”

Mr Roberts said since launching the “Out Of Vietnam” program in 2012 and successfully working with the supply chain to promote greater wool usage, AWI now had more than 85 supply chain partners incorporating wool into their production systems.

“AWI is happy to share their experiences work with WPA and others in the AusHub Vietnam and look forward to providing support.

“AWI would welcome the expansion of early stage wool processing, how that happens is a matter for market forces to determine,” he said.

“Any and all expansion in global early stage processing capacity would be a welcome development because it would drive more demand for wool.

“Right now processing is concentrated in China with significantly smaller capacity in places such as India, Italy and Czechoslovakia.

ACWEP calls for consultation on offshore investigations

Australian Council of Wool Exporters and Processors president Josh Lamb said demand for products made from Australian wool would drive more early-stage processing.

But he said this is an individual commercial decision, not something that can be ‘forced’.

“Vietnam has a rapidly developing mid-stage processing sector already, but have shown little interest in early stage processing to date.

“It is astonishing that WPA would be pursuing these opportunities for the Australian wool industry without any exporter or processor consultation or any real knowledge of how our sector operates and the commercial sensitivities associated with it,” he said.

“The Australian wool export industry is worth between $3.5-4 billion per annum and every one of those dollars passes through an exporter or processor, conversely not one dollar passes through WPA.

“Does WPA realise they are potentially undermining existing export relationships from Australia?” Mr Lamb said.

Mr Lamb said WPA also just recently delivered a paper, ‘Ensuring a sustainable future for Australia’s wool supply chain,’  on increasing local processing in Australia, something the industry would very much like to see happen.

“Now pursuing that same opportunity in other countries seems counterproductive especially when considering the risk of EAD outbreaks and the need for local processing to mitigate that threat.

“WPA is an industry leader in EAD and work around that framework, and they’ve also done a lot of work with traceability,” he said.

“In 2021, WPA launched the ‘Trust in Australian Wool’ campaign that was very well received by the global industry.

“These projects are adding value to the wool grower, trying to influence global market forces is not.”

WPA to consult with Australian exporters and traders

WPA general manager Adam Dawes said WoolProducers intended to consult with Australian exporters and traders in the process of investigating early-stage processing potential in Vietnam.

“Yes; however, given that the work is looking to target early stage processing, there may be a need to develop new relationships, as we would be talking entirely new processing capacity.

“Engagements that we have had with Australian Chamber of Commerce staff have indicated that there are commercial interests in Vietnam that are keen to explore opportunities for early stage processing of wool in 2-3 different sites across Vietnam,” Mr Dawes said.

“These entities were not known to some key industry players within Australia, so there are new relationships worth developing in addition to engaging with the existing trade.

“The AusHub strategic partnership allows to look for new opportunities in addition to expanding current arrangements,” he said.

“It is our intention that the AusHub resource will work closely with existing AWI/Woolmark Company resources in Vietnam.”

Mr Dawes said the Vietnam investigations will not take WPA’s focus off its intention to explore domestic early-stage processing development.

“Not at all, in fact (as per the Phase 1 ATMAC report), Vietnam presents a great opportunity for combing and carding operations to integrate with on-shore Australian scouring.”