Director warns against 1.5pc levy vote

Director warns against 1.5pc levy vote

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AWI director and chairman of its audit and risk committee, David Webster, has urged woolgrowers to support AWI's preferred 2 per cent wool levy option in WoolPoll 2021.

AWI director and chairman of its audit and risk committee, David Webster, has urged woolgrowers to support AWI's preferred 2 per cent wool levy option in WoolPoll 2021.

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Under its statutory funding agreement, AWI is required to retain a level of funds as reserves to cover contracts and projects it has committed to.

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WOOLGROWERS voting to retain a 1.5 per cent wool levy at WoolPoll 2021 could see Australian Wool Innovation (AWI) run its reserve funds down to bare legal minimum in the potential three-year levy period.

That is the view of the only Western Australian woolgrower on the AWI board, currently its longest serving director and chairman of its audit and risk committee, David Webster.

Mr Webster, who is also a director of Australian Wool Testing Authority Ltd, expressed this view with just over three weeks left for woolgrowers to vote in WoolPoll 2021 for their preferred levy option and the period for which it will apply.

He pointed out "a massive bite" was about to come out of existing AWI reserves under the existing 1.5pc levy - it remains in place until June 30 next year - to fund a post-COVID-19 pandemic wool marketing push back into the "western hemisphere" - essentially North and South America and Europe.

Mr Webster said AWI was confident of replicating the success it achieved last year with its subsidiary The Woolmark Company's timely digital brand marketing campaign featuring the 'Merino sisters' in China as that country emerged from the COVID-19 lockdown.

"We committed heavily to programs in China last year and we achieved very positive results," Mr Webster said of AWI's return to marketing Australian wool to post-pandemic global markets.

"We were prepared to spend the money to make those program happen well.

"We worked closely with our Chinese partners and relied very heavily on their advice (on when to launch the campaign for best effect) and had a very successful campaign.

"Now, with the western hemisphere coming out of lockdown, we are going to need to apply the same sort of pressure to marketing globally.

"We have to have the equivalent programs we ran in China in the past 12 months ready to go in western hemisphere markets once consumers start spending."

But Mr Webster said there were indications returning to western hemisphere markets would not simply be a resumption of pre-COVID-19 wool trade.

"There is a big job to be done in the western hemisphere (reclaiming previous markets share and assessing new areas to move into)," he said.

"The world is unsure how this (emerging from the pandemic) will unfold.

"Our research tells us there is a focus on product development, they (textile industries) are asking for more and more product development, which signals to us there are going to be changes and potentially additional uses for wool.

"We are particularly getting a message now out of the Americas, Northern Europe and China, wanting product development, so that is signalling to us that coming out of COVID we are going to see a possible change away from traditional uses of wool.

"The signals are there, so there is a lot of work to do and there will be a big drawdown (on reserves to pay for product development and market development) in this coming year.

"Effectively, retaining a 1.5pc levy will see those reserves come right back down to about $6m in 2024-25 approximately, leaving very little in accessible reserves."

Under its statutory funding agreement, AWI is required to retain a level of funds as reserves to cover contracts and projects it has committed to.

"All surplus funds would be completely eroded and, in my opinion, that's not a good way to run a business," Mr Webster said.

"Coming back to 1.5pc (at WoolPoll 2018) was fully understandable, but we are now coming out of that.

"We will use up our reserves to reactivate our markets and that will leave us in a very lean position in 2024-25, so we would hope that growers support the board's recommendation of a 2pc levy.

"The board will respect whatever the end result (of WoolPoll 2021) is, but the facts are, if growers do decide to go with 1.5pc it will seriously restrict the board and management of the company to do what is needed."

Opponents of returning to a 2pc wool levy often point to AWI's development of WoolQ as an example of money received under a 2pc levy they think could have been better spent.

But Mr Webster defended the development of WoolQ as necessary for a digital future for the wool industry.

He said moves by the European Economic Union, China and North America towards carbon-neutral economies will demand supply-chain traceability, not just for wool, but for all agriculture and manufacturing, with a carbon-footprint declaration on the end product at the retail outlet increasingly likely.

"I'm not saying these moves are right or wrong, I'm simply pointing out this is the environment we will need to operate in," Mr Webster said.

"Europe is already saying they want a traceability tagged on garments in the next year or so, so there is a degree of urgency and the vehicle to do that is WoolQ.

"They (2pc levy opponents) take issue with WoolQ, but WoolQ is absolutely critical for the industry, not just because it offers an optional selling system, but in the delivery of data.

"WoolQ is the vehicle to record and deliver data, it's built already, it incorporates a block-chain system which effectively is a 'truth ledger'.

"It's not simply a selling platform, it's where a modernised wool industry will go - WoolQ is about traceability

"It is very much a vehicle about data, all the woolgrower's data is fed through it so he can tap in there remotely at any time and pull out everything he needs.

"For the coming generations of woolgrowers WoolQ will be their communication stream."

Additional AWI funding has also been provided to run shearing schools, Mr Webster pointed out, so at least learner stands can be filled on shearing teams while COVID border restrictions effectively prevent New Zealand shearers coming to Australia and shearers moving between States.

"We are training more young people than ever, we are going to have more schools and our retention rate is now clearly picking up so learners can get a stand pretty quickly," he said.

"(The shearer shortage) is a significant problem that has to be dealt with and funding has been increased for it evenly spread across Australia."

Mr Webster also urged woolgrowers to support Tuesday's independent Board Nomination Committee (BNC) recommendation of new board candidate, Georgia Hack, because of her marketing and retail background.

The BNC report described Ms Hack as a "senior marketing leader with extensive marketing and brand experience and broad global contacts in the retail and fashion spheres".

"I'm saying the board's first priority is the replacement of our marketing director Collette Garnsey (a board member with marketing and retail skills since 2011 who resigned as chairperson in June, Ms Garnsey has said she intends to retire from the AWI board at the November 19 annual general meeting)," Mr Webster said.

"There is a very good candidate recommended by the BNC which we would hope will be strongly supported by woolgrowers.

"She's comes highly credentialed with the capabilities and capacity to deliver for woolgrowers.

"Collette brought a huge amount to the table with her experience right through to retail, so she knew what you had to deliver there.

"That person is critical on the board and it is important for growers to know that."

Mr Webster asked voters to consider board candidates carefully to ensure AWI remained a company operated for woolgrowers.

"Woolgrowers own AWI - not wool brokers, not wool exporters, not anyone else in the industry," he said.

"It should only be controlled by growers.

"Agri-politics has no place in determining board positions, it's a commercial decision.

"It is the constitutional right of grower shareholders to determine the outcome (of a board election)."

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