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Wool Selling Systems Review

Wool Exchange Portal build to begin

The AWI Wool Exchange Portal working group (WEP-WG) has endorsed the construction and implementation of a digital wool exchange platform for the longer-term benefit of the Australian wool industry.

The business case developed by the group has identified $38 million in consolidated industry benefits over the first 15 years of such a digital selling platform.

WEP-WG Chairman, Will Wilson has presented the group’s findings to the AWI Board. The main recommendation being to now move to the “discovery phase”, where industry moves to build the portal.

The WEP will deliver greater pricing efficiency and increased competition within the wool selling system as well as providing all industry participants with a one stop port where all buying and selling options can be transparently evaluated and future price realisation mechanisms can be accommodated and made available.

The Wool Selling Systems Review (WSSR) has been commissioned by AWI on behalf of their shareholders, Australian woolgrowers.

The key objectives of the WSSR are to improve the returns that woolgrowers receive for their wool through:

  • evaluating whether greater efficiencies and cost savings within the exchange of ownership between the seller and the first buyer are attainable
  • understanding the potential for increased competitive tension throughout the wool selling process and how it can be achieved, and
  • determining whether there is sufficient transparency within the exchange of ownership to allow woolgrowers to make the most informed commercial decisions about their wool growing enterprise.

The WSSR focuses on all the processes and costs that sit within the exchange of ownership process from the shearing shed through to the ships rail.

The AWI Board selected a Review Panel to drive the WSSR and provide direction and leadership. The WSSR Review Panel declared that the review process must be a highly consultative one that encourages buy-in from all sectors of industry, and in particular Australian woolgrowers.

Key dates

Release of Issues Paper 10 December 2014
Due date for initial submissions 27 February 2015
Release of Panel Discussion Paper 6 July 2015
One-day Stakeholder Workshop 21 July 2015
Due date for final submissions 4 September 2015
Release of Final Report 1 February 2016

Final Report

The Review Panel provided its Final Report (PDF 1.5Mb) to AWI in January 2016. AWI released the Panel’s Final Report on Monday 1 February 2016 (the following working day after the AWI Board’s January Board meeting held on Friday 29 January 2016).

This Report comprises six sections:

  • Section 1 deals with the objectives and conduct of the Review.
  • Section 2 provides data and information on the wool industry.
  • Section 3 describes the wool selling institutions.
  • Section 4 describes the wool selling system.
  • Section 5 deals with issues covered by the Review.
  • Section 6 deals with the Wool Exchange Portal.

Discussion Paper

The Review Panel released a Discussion Paper (PDF 401Kb) on 6 July 2015 to generate further discussion about the wool selling systems.

The Discussion Paper presented the Panel’s preliminary views on potential options to improve the efficiency of the wool selling systems and, in turn, woolgrower profitability. In doing so, the Panel identified the following as ‘priority areas’, which are expanded upon in the Discussion Paper:

  • Operational efficiency in selling Australian wool – the logistics and costs of transporting, storing, testing, auctioning or use of other selling methods, and delivery to the ship’s rail for export.
  • Pricing efficiency of selling Australian wool – ensuring that price realisation – the price in the market – reflects the underlying demand for, and supply of, Australian wool.
  • Consolidating and improving the choices on offer to woolgrowers and buyers using available technology – this will facilitate the growth of alternative trading pathways not used intensively to date, and at a reduced cost.

The Discussion Paper assisted individuals and organisations to prepare submissions on the Panel’s preliminary views expressed in this Discussion Paper and following discussions at the stakeholder workshop on 21 July 2015.

Below is a list of submissions that were received and reviewed by the WSSR panel following the release of the Discussion Paper. (The WSSR Panel reserved the right to not make public any submissions that it deemed to be inappropriate or not constructive.)

  1. A & J Farran (woolgrowers from Edenhope, Vic)
  2. R. B. Crawford (woolgrower from Moulamein, NSW)
  3. Geoffrey Beath of Bryton Wool
  4. Talman Pty Ltd
  5. NZX Australian Agribusiness
  6. W. C. Freeman from Wingham, NSW
  7. United Wool Company Pty Ltd
  8. Australian Superfine Wool Growers' Association Inc
  9. Australian Council of Wool Exporters and Processors
  10. Australian Wool Testing Authority Ltd
  11. i-Trade Wool
  12. Ming Ho Wool Industry Company Ltd
  13. The National Council of Wool Selling Brokers of Australia Inc
  14. Peter Small
  15. Stephen Blair
  16. Techwool Trading Pty. Ltd
  17. WoolProducers Australia
  18. NSW Farmers’ Association
  19. G.Schneider
  20. Modiano Australia Pty Ltd
  21. Australian Merino Exports Pty Ltd
  22. David Ritchie
  23. Australian Wool Exchange Limited (AWEX)
  24. Private Treaty Wool Merchants of Australia
  25. Zhejiang Redsun Wool Textile Ltd.
  26. WAFarmers Federation
  27. PJ Morris
  28. Australia Council of Wool Exporters and Processors (ACWEP), Inland WoolBrokers Association (IWBA), The National Council of Wool Selling Brokers of Australia (NCWSBA)

Issues Paper

The Review Panel released an Issues Paper (PDF 575Kb) on 10 December 2014 to assist individuals and organisations to prepare submissions to the inquiry.

The Issues Paper contains and outlines:

  • the scope of the WSSR
  • matters about which the Review Panel is seeking comment and information, and
  • information about how you can get involved in the WSSR.

The Issues Paper was designed to disaggregate all the phases within the area of scope to allow targeted submissions. It provides background on each of the following phases:

  • Phase 1 - Wool Preparation 
  • Phase 2 - Delivery & Testing 
  • Phase 3 - Wool Appraisal 
  • Phase 4 - Price Realisation
  • Phase 5 - Invoicing & Payment
  • Phase 6 - Export Process
  • General (this refers to issues raised that do not sit only within one of the above phases)

Individuals and organisations were encouraged to make submissions on any, or all, of the above six phases. The Review Panel also encouraged submissions that do not sit within any of these six phases but still sit within the overall scope of the review.

Below is a list of submissions that were received and reviewed by the WSSR panel. (The WSSR panel reserved the right to not make public any submissions that it deemed to be inappropriate or not constructive.)

  1. ICS (Mr Andrew Woods)
  2. Kym Baty (wool classer)
  3. Don Pratley (woolgrower from Bathurst, NSW)
  4. David Abbott (woolgrower from Armidale, NSW)
  5. A & J Farran (woolgrowers from Edenhope, Vic)
  6. John Buxton (woolgrower from East Gippsland, Vic)
  7. Australian Wool Testing Authority (AWTA)
  8. Peter Small (woolgrower from Hamilton, Victoria; and Chairman of Quality Softwools Australia)
  9. Richard Bell (woolgrower from Taralga, NSW)
  10. Edward. H. Wymer
  11. Colin Agar (woolgrower from Penshurst, Vic)
  12. R. B. Crawford (woolgrower from Moulamein, NSW)
  13. Australian Merino Exports Pty Ltd and United Wool Company Pty Ltd
  14. Fred Tuddenham (wool classer from Herne Hill, Vic)
  15. W. C. Freeman from Wingham, NSW.
  16. Pastoralists & Graziers Association of WA
  17. Symbotic Pty Ltd
  18. Grant Burbidge (woolgrower from Tarcutta, NSW)
  19. Dr John Williams (Managing Director of the Food and Fibre Supply Chain Institute)
  20. Edward. H. Wymer (supplementary submission)
  21. G. Schneider Australia Pty Limited
  22. David Ritchie
  23. David Upperton (woolclasser and woolgrower)
  24. Raymond Ltd, India
  25. Ag Concepts Unlimited Pty Ltd
  26. Alistair McDougall (woolgrower and Chairman of Slamp Pty Ltd)
  27. Alix Turner (woolgrower from Wayo, NSW)
  28. The National Council of Wool Selling Brokers of Australia Inc
  29. Australian Wool Network
  30. Nekan Trading (Pty) Ltd
  31. John Coughlan (woolgrower from Cudal, NSW)
  32. Modiano Australia
  33. Elders
  34. Tom Silcock (woolgrower from Telangatuk East, Vic)
  35. Victorian Farmers Federation
  36. WoolProducers Australia
  37. Allen F Sheridan (woolgrower from Bengworden, Vic)
  38. i-Trade Wool
  39. Financial & Energy Exchange Ltd
  40. Ausfine Pty Ltd
  41. Gordon Litchfield of Gordon Litchfield Wool Pty Ltd
  42. Stephen Blair
  43. Andrew Dennis of Rosewood Wool Services
  44. Dynon Wools (Aust) Pty Ltd
  45. Chris Lang
  46. Ted O’Brien
  47. Don Belgre Pty. Limited
  48. Jock Munro (woolgrower from Rankin’s Springs, NSW)
  49. Yarra Wool
  50. Michael Field (woolgrower and Managing Director of T.A. Field Estates Pty Limited of Jugiong, NSW)
  51. Wayne Beecher of Beecher Wool Services
  52. Steve Bryce of Bale Out Pty Ltd
  53. Business Council of Co-operatives and Mutuals
  54. New England Wool Pty Ltd
  55. Techwool Trading Pty Ltd
  56. Tianyu Wool Pty Ltd
  57. NSW Farmers’ Association
  58. AuctionsPlus
  59. Motohiro & Co., Ltd.
  60. Australian Wool Exchange Limited (AWEX)
  61. Australian Council of Wool Exporters and Processors (ACWEP)
  62. Sistema Moda Italia and Italian Wool Trade Association
  63. Private Treaty Wool Merchants of Australia
  64. Australian Superfine Wool Growers’ Association (including appendices from Stanford Graduate School of Business and John Powell of Optimal ICM)
  65. Jemalong Wool Pty Ltd
  66. Western Australian Farmers Federation (WAFarmers)
  67. Westcoast Wools
  68. WoolConnect Ltd

Further information

John Roberts, WSSR Executive Officer
Phone 0400 107 950

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