Trade

Wool selling review seeks buy-in to implement change

Terry Sim, February 13, 2015
AWI wool selling review executive officer John Roberts

AWI wool selling review executive officer John Roberts

Australian Wool Innovation’s review of the wool selling system wanted to influence some change on behalf of woolgrowers, a Victorian Farmers Federation sheep forum was told in Geelong this week.

At the National Wool Museum on Tuesday, executive officer of the review panel, John Roberts, said this was the review’s key difference with other previous reports on the wool industry.

“We also want to influence some change, we don’t want it to be just a report, that we’ve seen before and nothing has happened.

“I think a key part of this is to actually have a bit more implementation,” he said.

“To do that we really must be highly consultative – we are engaging stakeholders throughout the whole chain.”

The panel has met with brokers, the AWTA, grower groups and exporters, and would engage the Chinese and India market.

“We are looking at all stakeholders in the industry.

“By getting people’s buy-in that is the only way we can actually progress some change.”

Review will look at entire supply chain

Mr Roberts told the sheep producers at the forum the review would look at the entire supply chain from the wool shed to the ship — all the costs, processes, systems and structures, except for the wool levy.

“We’ve got no pre-conceived ideas of where this is going to land.”

“Look we might get to the end of it and say ‘it’s a pretty hunky-dory system and we don’t need to change’ – I would be pretty surprised if that was the case.”

Mr Roberts said there was a lack of good hard economic data on the wool industry.

“So we are going to be commissioning some hard research so we can evidence a lot of this stuff.”

The review panel had met six times since August with the key objective of improving woolgrower’s returns by examining costs, potential efficiencies, levels of competitiveness and transparency in exchange of ownership.

“So at the moment you know you pay a wool levy, you know you pay a broker’s service charge, but there are a lot of other costs in there that ultimately probably come out of your pocket that you may not be levied directly.”

Growers might be able to make more informed decision about how they sell their wool if they had more knowledge of all the wool-selling costs, he said.

But he said the review would look at the potential economic benefits of merging AWEX with the AWTA.

“A lot of it will depend on what comes back in the submissions.”

Mr Robert said the review had to be careful in looking at the issue of financial benefit.

The review would have done its job if it could illustrate what costs could be reduced.

“We can’t control the market, that’s not what this review is about.”

Wool levy will not be included in review

Mr Roberts said the wool levy was not included in the review because it was the one levy that growers have a vote on, he said.

“We’ve said in the review that you have the ability to highlight other issues that we haven’t alluded to.

“We have clearly stated in the start of that document (issues paper) that the levy exists and that given the fact that growers are afforded the ability to vote on it, we are not making it part of the review process.

“So it is not in the scope and we won’t change that.”

He said the review panel decide after it was appointed by AWI not to include the wool levy in the review’s scope.

“By all means it can be brought up in submissions, but given it is not part of the scope I don’t know whether we would be changing that.”

Review is an opportunity to inform growers on charges

Ag Concepts Unlimited managing director Robert Hermann said the most exciting thing about the issues paper was that finally it would be explained to woolgrowers what they were paying in charges. Growers were not aware of at least half the charges that come out of their pockets and the review should “push hard” on the transparency of growers’ costs, he said.

“Once they understand that then you can get some commercial change and commercial activity.”

Harrow district wool grower Michael Craig said urged growers to read and make submissions to the wool selling review issues paper on the AWI website. He said growers did not know what the processor was charged past the broker to market their wool.

“At the end of the day we are paying for it.”

Mr Roberts said submissions to the review close on February 27, when a researcher would be contracted. The issues raised in submissions would be weighted and a discussions paper covering the key focus areas would be put out by the end of March. A two-day facilitated stakeholder workshop would be held in May to “thrash out those issues we’ve identified.”

“Then we will call for final submissions from industry and we will put together our final report.

“Which will be submitted to AWI to go to growers and government, no later than November.”

Review is independent of the AWI board

Mr Robert said the review was independent.

“It is a set of fresh eyes and it is going to be very impartial.”

He said the AWI board had no influence over what issues the review would study.

“No influence, I keep them abreast, I brief them once every one to two months on what’s happening.

“They can’t have any influence over what we do or what directions we go – it is definitely stand-alone arms’ length.”

In a facilitated session to inform the VFF submission to the review, growers raised the issues of transparency, minimising the brokers’ service charge, rationalising AWTA testing and wool inspections, on-farm wool testing, standardised invoicing and sale by description efficiencies.

Woolgrowers at the forum also queried how the review could implement change in commercial charges by companies, raised the possibility of centralising wool-selling centres and alternative methods of price discovery to the auction system.

 

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