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Wool industry stakeholders urge settlement of AWI-AWEX WEP rift

by Terry Sim, 18 September 2017
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WOOL Industry stakeholders have urged settlement of the rift between the Australian Wool Exchange and Australian Wool Innovation over data and ownership of the proposed Wool Exchange Portal.

AWI has revealed that the Australian Wool Exchange – whose members include brokers, exporters, processors, growers and private treaty merchants – has proposed that AWI continue to build the WEP at wool growers’ cost, but pay AWEX $1 million per annum to cover WEP operational costs as part of an part-AWEX ownership proposal

However, AWI has rejected the AWEX deal, which last week prompted AWEX chairwoman Robyn Clubb to release a Members Update on the issue. Industry stakeholders have since called for resolution to the impasse between AWI and AWEX over the WEP.

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WoolProducers Australia chief executive officer Jo Hall said WPA supported the primary purpose of the WEP; to increase net returns for growers, ultimately increasing Australian wool consumption.

“WPA also believes that grower funded service providers, AWTA and AWEX must remain involved in discussions regarding the WEP but retain their independent roles.

“WPA is extremely disappointed that it appears that AWI and AWEX are unable to work together on this issue,” she said.

“It is incumbent on these industry service providers to ensure that there is no duplication in the expenditure of growers funds

“We are still hopeful that a mutually beneficial arrangement can be reached to ensure a favourable outcome for wool growers.”

AWI and AWEX fall-out over data

After Ms Clugg released her Members’ Update, AWI told Sheep Central that after three years of extensive discussion and consultation with all aspects of the Australian wool industry, the WEP has now reached a build phase with the approval of the AWI board.

The AWI statement said the AWI board thanked the many members of the WEP Steering Committee “for their diligence, professionalism and ultimate consensus, including wool growers, agents, exporters and AWEX.”

AWI said the AWI board sent a proposal to AWEX about two weeks ago, stating that for the WEP to proceed for the benefit of Australian wool growers it was requested that the WEP have access to wool sale:

–  Typing data of every lot at every centre

– Pricing data of every lot at every centre

– Access to the wool classer registration database to cross check registration validity

AWI said it currently pays AWEX $76,000 a year for very similar data, but on an ‘on call’ or ‘data request’ basis only.

“In other words, not seamless and continuous.”

AWI said the AWEX reply to these data requests raised concerns, including the potential loss of data and that data being used to create a competitive market reporting business to AWEX.

“It is important to note that AWI have offered – by way of a formal legal undertaking – a warrant that states we will not use the data for a competitive business to AWEX,” the AWI statement said.

AWEX have offered to AWI:

– That AWI continue the build phase of the WEP with wool growers’ funds.

– When complete, AWI hand over “some ownership and operational control” to AWEX of the WEP.

– AWEX also proposed that AWI pay AWEX $1 Million dollars per annum to cover operational costs of the WEP.

“Given its charter to act in the best interests of Australian wool growers, the board of AWI rejected the offer,” AWI said in the statement.

Exporters support both bodies

Australian Council of Wool Exporters and Processors president Matt Hand said the council supported AWEX and AWI.

“In principle, we don’t object to production of the WEP because we don’t object to any progress in the industry that might lead to greater efficiencies and ultimately benefit wool growers – that’s what we would like to see happen.

“Whether the WEP delivers that or not is yet to be seen.”

Mr Hand said AWEX’s position to not supply data to the WEP is entirely their decision.

“If they see it can hurt themselves then they have to acting a way that protects their members and shareholders.

“But my fear is that if AWI has to reproduce the data it adds another layer of cost to the industry and that’s not what this is about,” he said.

“This is about gaining efficiencies in that first transaction, getting wool to the point of sale.”

Mr Hand said the exporters supported AWI and AWEX for different reasons.

“They are not one and the same; we don’t often see them as competitors, because AWEX is a neutral exchange body and they represent their members for a bunch of reason and AWI represents wool growers.

“So these two entities shouldn’t be in competition in any way, that’s how we land in neutral territory because we support each body for different reasons and in different areas,” he said.

Mr Hand said exporters would like to see the language change between AWI and AWEX, and the dialogue “open up between the two so they can land on common ground” for the industry and wool growers’ benefit. He said the two organisations seem to be “digging their heels in” and not moving forward.

Brokers urge AWI to “give a bit of ground”

National council of Wool Selling Brokers of Australia executive director Chris Wilcox said the body is not making any comment about the WEP.

“But with regard to the AWEX position, we think it is very reasonable for the owner of data, such as AWEX, to take a position and we think it is a reasonable position.

“That applies not only to the data that AWEX might hold, but also o6ther industry data, such as AWTA test data.

“Therefore we think if AWI and the WEP group are keen to go ahead, they should be cognisant of that; who owns the data and be sensitive of that issue and work through those organisations to address those issues and those concerns.”

Mr Wilcox said the NCWSBA is “not in favour of or against the WEP”.

“But the way I understand the AWEX position is that they have approached AWI with alternative methods of dealing with the issue and it has been rejected.

“Well, perhaps AWI and the WEP committee need to look at that more closely for the benefit of all.”

“If the shoe was on the other foot, I’m sure that they would be concerned about ensuring that they were protecting their intellectual property right.”

Mr Wilcox urged AWI to “give a bit of ground” on the data issue.

“AWEX has concerns about that data ownership and what that might do to its IP rights and we think that is very fair enough.”

Chris Kelly from AME said AWEX would be suitable to run the WEP.

“They are independent, their membership base is very widespread and it is industry, which is not what AWI is.”

Growers want dispute resolved

New South Wales wool grower John Keniry, who has served as an AWEX chair, AWI director and Sheep CRC chairman, said he supported the WEP concept as another channel through which to sell wool. But the ownership and running of the WEP was a job for the private sector, he said.

“It’s not for compulsory levies to be invested in developing and then owning it, because I think there is a risk that they could significantly lose money.

“My view is that AWI might have had some justification to get the process started, but if indeed, there are millions and millions being spent, I don’t think they are entitled to spend that amount of wool grower levy money,” he said.

WEP working group member Rob Lawrance said AWEX did make an application build the WEP, but after reviewing the applications of other groups containing “commercially sensitive” information. Levo was eventually granted the ‘build’ contract.

Despite the AWEX-AWI, Mr Lawrance would still like to see AWEX involved with the WEP.

“Because we are all working hopefully to a common goal, which is the benefit of the wool industry, as opposed to integrated established groups (such as AWEX).”

He personally was “desperate” to work with AWEX on the WEP.

“I am at a loss to understand their motives behind this, because we are not compromising their model, which is market reporting.

“The WEP will allow a very good format and medium for them to promote their commercial product, which is market reporting,” he said.

“We’re not regulating or registering classers; we are wanting to engage with classers.”

Mr Lawrance said the WEP was prepared to pay for the AWEX data and “acquiesce” to terms to ensure AWEX’s business model was not compromised.

However, Mr Lawrance believed the WEP would still go ahead.

“The reason it’s going ahead is that it is a good idea – the growers want it and will benefit from it.

“We will continue to make representations to AWEX to submit their data as they have stipulated for a year-and-a-half and for the last half of the last meeting,” he said.

“We hope that they see the light and not acquiesce, but we hope that they decided that they should, for the benefit of industry, give us the data and let us liaise with the wool classers.”

Mr Lawrance said AWTA has not voiced any concerns.

 

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  • Edward Wymer September 20, 2017

    Mr Lawrance believes that the Wool Exchange Portal is a good idea. That is an opinion evidently held by many people who don’t know much about wool, who believe the wool buyers don’t need to handle the sample. Wool buyers will still buy the wool without the sample, but at lower prices obviously, to be on the safe side.

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