WOOLPOLL voters have been urged to “think very carefully” by the Australian Wool Innovation (AWI) local board member before adopting the advice of WAFarmers and WoolProducers Australia (WPA) on levy options.
Continued global growth in “awareness” of wool and particularly Merino as a consumer-identifiable label – the basis of most new markets opened, new product research and development (R&D) and new processing technologies since 2010 – could be at risk into the future, David Webster warned shortly after WoolPoll voting opened.
Following WAFarmers’ and WPA’s recommendation to vote for a 1.5 per cent wool levy option rather than maintaining a 2pc levy – in place since 2001 and recommended by AWI to continue – could cap the local “on-farm” R&D spend as well as AWI’s “back up” support for international collaborative partners helping drive new wool demand, Mr Webster warned.
A rising wool usage “trend line”, starting from about 2012 and the most sustained growth in demand for wool in Australia’s history, according to Mr Webster, “would almost certainly stall” if a majority of woolgrowers voted for 1.5pc over the 2pc option.
#Woolprices have been at a historic high, but the number of #sheep#farmers voting in the #WoolPoll is at an all time low. Should sheep farmers pay a 2% levy or nothing at all? Read here: https://t.co/v1mMovQHhj#NSWFarmers#TheFarmerpic.twitter.com/fHbAzytHzh— NSW Farmers (@NSWFarmers) October 7, 2018
Mr Webster has been a director of both AWI and the Australian Wool Testing Authority since 2008 and chairman of AWI’s finance and audit committee for the past eight years.
Much of his working life was in wool growing, livestock and cropping enterprises in the Great Southern where his family still farms.
No longer actively involved in farming, he is now chairman of a Mid West iron ore exploration company.
Mr Webster pointed out high prices woolgrowers currently enjoyed were driven by rising demand outstripping supply, which had remained “roughly static” for about the past 12 years, and that AWI’s strategies of promoting awareness of wool and identifying and encouraging new markets was largely responsible for that.
“We (AWI) have to spend money to make money – to get that significant improvement in product and in marketing,” he said.
“The biggest focal point of our budget for a number of years was building awareness.
“I’ve always said we’ll match our budget to 2pc, we don’t need more than 2pc to do the job.
“It would be very easy to go back to 1.5pc, but if you back off from marketing and the follow up, you impact on awareness.
“I think that investment by growers (2pc levy) has paid a massive dividend – you’ve got a wool price that’s three times what it was when we started this process, which is pretty extraordinary.
“I understand nobody wants to pay a levy, but this is one that is working really well for the grower.”
Woolgrowers have until Friday, November 2 to vote on options for the compulsory levy that helps fund AWI’s operations, including R&D and marketing.
The R&D levy component is matched by Federal government funding.
Mr Webster said only about 10pc of AWI’s R&D budget went overseas.
“It’s not big – we’ve linked up with laboratories around the world who are doing the product research,” he said.
Most of the R&D spend was “on farm” in Australia on a range of projects aimed at benefitting woolgrowers.
“In dollars per capita spent on R&D, we spend more here (in WA) than anywhere else,” Mr Webster said.
He said restricting the amount of revenue available to AWI to split between R&D and marketing might impact on future spending on some projects like development of automated shearing.
But a potentially far greater impact on their incomes could flow from AWI’s reduced ability to promote wool awareness, to market it internationally and to support collaborative partners, he said.
“Most woolgrowers don’t realise it, but they are actually in the fashion industry,” he said.
“China takes about 80pc of our wool, but what people don’t realise is that by about 2015-16 China started to absorb up to 50pc of that 80pc – so effectively China consumes 40pc of the overall wool market (for its domestic apparel market).
“The critical factor people don’t understand is the movement of that (extra) 40pc.
“Effectively, nearly half the wool sold in the world today is to new people with money, who were not wool users traditionally.
“So much of this (growth into new markets) is driven by projects we (AWI) have around the world – with adidas, with the car industry, in leisure wear or in next-to-skin wear for example – and is with new people with money.
“As the market has risen, old traditional users who pay a low price have dropped off the bottom and you’ve got new people (paying a higher price) coming in at the top.
“The market is strong (but) if you want to bring it back to a position of weakness, blurt out what you intend doing ahead of time (calls to cut the levy to 1.5pc).