WAFarmers Wool Section president Ed Rogister said shareholders should have made the levy split decision, not the board. A CLEAR east-west divide has emerged in voting for the percentage of woolgrowers’ income that will fund Australian Wool Innovation for the next three years.
The national WoolPoll 2012 roadshow finished up in New South Wales this week before voting closes in two week’s time on November 2.
Meetings drew mostly poor to average crowd numbers, except at Armidale and Yass in NSW and Darkan, Western Australia, where growers rallied to voice their disapproval over AWI’s decision not to fund the second phase of the Information Nucleus Flock.
While most state farming organisations have not endorsed a WoolPoll levy percentage, Western Australian farming bodies have been vocal in denouncing some of AWI’s recent decisions and what they believe is a lack of industry consultation.
This week the WA Farmers Federation called for growers to vote for a 1pc levy to send a clear message to AWI that its focus must be on research and development for growers, rather than marketing overseas.
This was one of two key issues to emerge during WoolPoll meetings, particularly from growers aggrieved that they did not have the opportunity to vote on the levy split.
Before WoolPoll voting opened, AWI’s board decided that the split would change from 50:50 to 60pc marketing and 40pc research and development (R&D). AWI would draw down its reserves by $42 million to increase spending on marketing by about $20m a year and on-farm R&D by about $2-$3m/year.
In making the 1pc recommendation, voted on at a joint wool and sheepmeat councillors meeting on Friday, WAFarmers Wool Section president Ed Rogister said shareholders should have made the levy split decision, not the board.
“The WAFarmers Wool Council is sending a clear message that we want AWI to focus its efforts on what its shareholder needs are, by listening to them rather than dictating,” he said.
“Our wool producing members want more money spent on R&D, especially on-farm as opposed to marketing and generic promotion.”
He said because marketing was not influencing wool prices, the focus needed to be on creating efficiencies on-farm.
“Unless wool goes back above 1100 cents a kilogram then you won’t have people growing it, and if you are in superfine, it’s not worth it,” he said.
The Pastoralists and Graziers Association had earlier called on its members to vote no more than 1pc to send a strong message to AWI that it needed to revisit its business plan.
AWI has recommended growers continue paying 2pc as the organisation ramps up its marketing spending. Chief executive Stuart McCullough said he and the board did not believe recommending more or less than 2pc was appropriate.
While the levy split emerged as one sticking point during the WoolPoll meetings, the value of AWI’s marketing efforts have received heavy criticism by the Australian Wool Growers Association.
AWGA is advocating a 1pc levy, combined with drawing down AWI’s $100m in reserves. But failing that, its second preference is 0pc, to counter the preferential voting system.
AWGA president Shane Edwards, based in WA, said AWI did not need the money at present but if the situation was to change, the next WoolPoll could revert to a higher levy.
Last week, AWGA director Martin Oppenheimer, NSW, wrote to the industry’s largest woolgrowers outlining his concerns that AWI needed to “evaluate its direction, cease wasteful generic promotion and start investing in research”.
“Everyone in the wool industry knows from bitter experience that generic promotion does not work. Remember the failed ‘red dress’ campaign,” he said.
“By contrast, targeted marketing efforts, such as the ‘HRH campaign for wool’, at a cost of only several million, appear tremendous value for growers.”
But speaking at a WoolPoll meeting in Orroroo, South Australia, last week, AWI chief strategy and marketing officer Rob Langtry said promotion was one of the key elements of the organisation’s role.
“AWI is a promoter of wool,” he said. “Promotion is not a bad thing. Promotion is putting your product in front of a key audience with the right sort of information and background that it becomes a compelling offering for them to accept and buy.
“We do promotion and quite proudly so, but it is one element of a marketing mix of activities we do.”
Mr Langtry’s personal view – and not AWI’s – was that a 0pc vote would be the fastest way to accelerate the complete demise of the industry.
He said it would also not give the Chinese, Italian and Turkish processors confidence there was a long-term market for wool products, and they would then move processing capacity to another fibre.
“On the 1pc, it would be a very difficult struggle to communicate with the amount of audience we need to to generate demand that will build the price up. If the current price is only breakeven, 1pc would not provide enough marketing presence to get the price up.”
He said while it was very difficult to gauge the lag time between marketing and its impact on greasy wool price – mostly because of fibre substitution and broader economic changes – it could be one to two seasons before marketing influences on price were realised.
WoolProducers Australia president Geoff Power encouraged growers to vote and have their say on the industry’s future but the organisation was not advocating a percentage.
But Mr Power said there were many projects that were vital for the industry’s future already under way – such as marketing into China and Russia, wild dog control and shearer and shed hand training – that would end in a 0pc or 1pc scenario.
He said with the R&D and marketing split, AWI had to find a balance, which he believed it could do by drawing down the reserves.
“It would be helpful if we knew the percentage of growers that had voted so we could concentrate on areas where there hasn’t been much voting,” he said.
“It’s important to have your say because it does say to government that we care about our industry and we care about our future. It’s a great reason to vote.”
The other sticking point at WoolPoll meetings has been the ongoing dissatisfaction with AWI’s decision not to fund INF2.
A group of New England woolgrowers wrote to chairman Wal Merriman to formally complain about the decision, saying it was a failed opportunity to capitalise on the latest in genetics and genomic research.
But AWI maintains it is continuing to invest in genomic research, with a project still being scoped by the New South Wales Department of Primary Industries. AWI is unlikely to reconsider the INF2 decision.
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