Wool industry on brink of collapse

By Boyd Champness

MOST wool farmers and wool businesses were on the brink of collapse or no longer viable, according to a scathing Federal Government report.

The Wool Industry Futures Directions Taskforce released its much-anticipated report on Australias flagging wool industry last week, saying the industrys collapse was imminent unless changes were introduced immediately.

“The central message for woolgrowers and other wool businesses is this: there is nobody out there to save you; but there are ways you can save yourself if you are sufficiently determined, resourceful, flexible and innovative,” Taskforce chairman Mr Ian McLachlan told The Age newspaper.

Mr McLachlan said farmers who could not reach the profitability levels of the top 20% of wool growers within a short period “should consider exiting the industry” in the interests of themselves and their families.

There were no real surprises in the report, which has been in the making since November, which called on the wool industry to cut costs, merge organisations, disband with generic promotion and encourage unprofitable farmers to sell up.

The Taskforce called for the abolition of the troubled Woolmark Company – the grower funded promotional arm that took over from the International Wool Secretariat – and the Australian Wool Research and Promotion Organisation.

These two bodies would be replaced by a privatised company called Australian Wool Services (AWS), with growers given one share in the new company for every $100 of grower levy paid between 1 July 1999 and 30 June 2000.

While the Woolmark Company has considered its days numbered for some time, the Taskforce also called for the Australian Wool Exchange (AWEX) – the body that auctions Australian wool, provides market information and develops quality assurance standards – to be scrapped.

AWEX chairman John ONeill defended his organisation saying it had delivered results where others had failed. “It (this report) will be discussed with members,” Mr ONeill told The Weekly Times.

“Meanwhile operations and activities including auction sales will continue.”

In the report, the taskforce attacked the AWEX, accusing it of becoming an inhibitor rather than a facilitator.

“It has come to see itself as a business in its own right rather than a facilitator,” the report said.

“Its desire to control the introduction of electronic selling – and receive a revenue stream in the process – is an example.”

Most industry leaders believed the AWEXs role will become redundant once electronic auction selling is introduced.

The recommendation that stirred the strongest response from grower groups was the proposal to merge the Australian Wool Testing Authority (AWTA) in with the yet-to-be-formed AWS, with some industry sources concerned that grower ownership would undermine the testing houses independence.

But both the AWEX and the AWTA look set to dig their heels in, saying it is up to members to decide their future, and with any changes requiring 75% of support from members the battle has just begun.

While a bun-fight over mergers and closures looks inevitable, generic promotion of wool looks certain to be scrapped.

“Generic promotion of wool is well past its use-by date. You cant sell concepts, you can sell products,” Mr Ian McLachlan told The Age.

Federal Agriculture Minister Mark Vaile has indicated that the Government is likely to accept the recommendation to replace the three statutory bodies with the AWS.

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