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As the designated Industry Services Body for the Australian wool industry, AWI collects woolgrower levies and matching Australian Government funds for eligible research, development and extension.
A Statutory Funding Agreement (SFA) between AWI and the Australian Government is negotiated to ensure those funds are expended prudently and in line with levy payer and the Australian Government's expectations. The Department of Agriculture manages the SFA on behalf of the Australian Government.
The SFA prescribes the following:
- The functions and role of AWI
- How AWI is to operate
- The management and expenditure of levies and funds
- Research and development activities eligible to attract matching government funding
- Sanctions the government can impose should AWI breach the SFA
- Activities AWI is prohibited from being involved in
- How, when and to whom AWI must report and consult.
The SFA also requires AWI to undertake the poll of all eligible levy payers - the WoolPoll - to determine the rate of levy to be collected.
Before WoolPoll can be held, the SFA requires AWI to commission an external consultant to conduct an independent Review of Performance to provide woolgrowers with an independent assessment of the company's performance. The SFA outlines how this Review is to be conducted and who is eligible to conduct the review.
The levy rate determined by woolgrowers at WoolPoll forms the basis of the new SFA. In negotiating the SFA, both AWI and the Australian Government also consider the outcomes of the independent Review of Performance, and changes to government policy, to ensure ongoing improvements to the company's operations and return on levy payers' investment.
Click here to download the current SFA.
As wool was the first rural industry to identify the need for research and development, AWI is always mindful of its ultimate raison d'etre - to invest in research, development & marketing (RD&M) to identify new practices and technologies to be adopted by woolgrowers to enhance farm gate returns.
The AWI model is the culmination of almost eighty years of significant industry change and subsequent institutional evolution within the wool research and marketing bodies in Australia. In recent decades, Australia has stopped 'riding the sheep's back' (although Australia continues to be the largest producer (90%) of global fine apparel wool, and wool is the largest rural and sixth largest commodity export from Australia to China). Against this background of a changing industry, the wool industry research and marketing bodies have been continually evolved and refined over time.
AWI as an entity has delivered a relatively long period of stability to industry service provision since its establishment, perhaps indicative that the right model has been achieved. Despite this period of stability, AWI has continued to evolve and improve since its establishment in 2001 ensuring it is 'fit for purpose' and responsive to industry and government needs. Significant change has occurred within the business particularly since 2009.
If anything history has taught us that a key feature of the industry and organisation is change; hence the need to be responsive and adaptive. AWI continues to look at ways of improving the business model on a regular basis to ensure it remains responsive to industry and government.
Woolgrowers have the ultimate influence over their levies in AWI, through the ability to vote on the levy at WoolPoll every three years (including a zero option); and through a robust consultation and engagement plan to seek input on priorities and report on AWI’s performance.
AWI believes that its business model is the beneficiary of the many lessons learned by the industry over 80 years. These lessons, the commitment of the board to be responsive to industry, in addition to the statutory requirements of WoolPoll, the independent ROP and various reporting requirements, have driven a culture of performance and reporting within AWI at all levels of the business.
AWI investments are funded primarily through a wool levy paid by woolgrowers (currently 1.5 per cent of the sale price received for their shorn greasy wool) and a matching contribution from the Federal Government for eligible R&D activities (capped at 0.5 per cent of the value of gross national value of wool production). The sale of Woolmark licences contributes a further important source of income for AWI.
Sources and amounts of revenue for the past two financial years are shown in the table below
|Rents and sub-lease rentals||548||201|
|Sales of goods and services||242||398|
|Other operating revenue||79||14|
For further information, refer to the Financial Statements in AWI's Annual Reports
Woolgrowers collectively determine the rate of levy they pay. They vote every three years in WoolPoll on the percentage of wool sales they want invested in research and development and marketing. In the most recent vote - WoolPoll 2018 - woolgrowers voted for a 1.5 per cent levy for 2019/20-2021/22. In previous years it has been a 2 per cent levy. The wool levy paid by woolgrowers is collected by the Federal Government and passed on to AWI.
AWI is focused on delivering results for wool levy payers in line with the priorities identified through industry consultation and reflected in the company's Strategic Plan.
To maximise returns for levy payers, AWI has increasingly adopted an integrated approach to its business, underpinned by research-based marketing: marketing programs based on R&D outcomes, and R&D programs informed by consumer needs and trends.
In addition to its statutory funding obligations, AWI's operations are governed by the following:
AWI Constitution (PDF 255Kb)
Federal Government Levy Principles and Guidelines (Department of Agriculture website: PDF 183Kb)
Australian Stock Exchange's (ASX) Principles of Good Corporate Governance and Best Practice Recommendations (as far as applicable).
Review of Performance
A portal has been developed by AWI to report to woolgrowers on the implementation progress of the recommendations included in the 2015-2018 independent Review of Performance report.
REVIEW OF PERFORMANCE IMPLEMENTATION PORTAL
The information on this portal has been designed to present each of the 82 recommendation items provided by Ernst & Young and provide real time updates on the current progress made by AWI to implement each recommendation item.
The comments and status are updated regularly to enable woolgrowers to track AWI’s progress.
Recent independent reviews of performance
In compliance with the Statutory Funding Agreement (SFA), an independent review of performance of AWI was undertaken prior to the 2018 WoolPoll.
In 2018, the Government took the lead in contracting and managing the independent consultant (Ernst & Young) undertaking the review. The review also considered some additional matters that were raised by industry and government.
AWI welcomed the expanded review and fully cooperated at every stage to ensure the consultants had access to all the information required to make their recommendations.
In summary, 82 recommendations were suggested, with the areas of monitoring and evaluation, consultation and governance being the focus. The recommendations range in levels of importance from 'mandatory', 'critical' and 'recommended' and provide the company with timing suggestions for completion helping to pave the way for greater consultation, transparency and accountability.
The Report also included important context about the scale of the Australian wool industry and the scope of AWI’s research and development role, including:
- The significant contribution of the wool industry to the Australian economy, including a $4.3 billion contribution to exports in 2017/18 (up from $1.9 billion 2009/10) and the employment of 200,000 people. This has seen the gross value of the Australian wool clip double since AWI recommenced a focus on strategic targeted marketing investments to drive demand for wool.
- EY’s finding of a gap between perception of AWI operations, policies and procedures, compared to the evidence they have reviewed. This has highlighted the need for AWI to focus on better explaining our processes and procedures and ensuring targeted open two-way consultation and communications.
- The range of forces impacting on the Australian wool industry and AWI’s role, including changes in processing, consumer behaviour, design trends, digital disruption and emerging markets.
- The current healthy state of the wool market for Australian growers, assisted by the Marketing and R&D activities of AWI.
In compliance with the SFA, in 2015 AWI conducted an independent review of performance prior to the 2015 WoolPoll.
The authors (Deloitte Private) of the 2012-2015 independent review concluded that organisational improvements, including engagement and collaboration, governance and operations, strategy and structure had created value for woolgrowers in several ways:
- Increased market demand through AWI’s marketing and promotion activities
- Higher wool prices, in part attributed to AWI’s marketing and promotion activities
- Improved on-farm and off-farm productivity through AWI’s R&D activities
- Cost savings as a result of AWI’s on-farm and off-farm R&D activities.
The report contained eight recommendations. Review AWI's Response and Implementation Plan (PDF 48Kb).
In compliance with the SFA, in 2012 AWI conducted an independent review of performance prior to the 2012 WoolPoll.
Key findings by the authors of the 2009-2012 independent review included:
- "the performance of AWI as judged by this Review represents a significant turnaround from the company's performance as described in the 2009 Review and there is clear evidence of the very significant efforts of the Board and senior management to establish, document and communicate the processes and procedures consistent with good corporate governance."
The overall findings of the independent review of performance were that AWI has
- complied with its SFA requirements
- delivered operations against the relevant Strategic and Annual Operating Plans
- made significant progress in the implementation of the recommendations from the previous (2006-2009, 2010/11 and 2011/12) reviews of performance.
The report contained four recommendations. Review AWI's Response and Implementation Plan (PDF 50Kb).
Following completion of the 2009/10 independent review of performance AWI volunteered to conduct an additional independent review of performance in 2010/11.
Key outcomes of the 2010/11 independent review included progress in the following areas:
- Strategic direction; strategy setting process; internal structures for planning and evaluation; staff performance management; board governance.
Major recommendations included:
- expanding the biennial stakeholder survey to cover all stakeholders; and
- implementation of monitoring and evaluation framework.
Minor recommendations included:
- public release of Annual Operating Plan; greater integration of stakeholder engagement in planning; clarification of AWI role's in the global industry context; and improved strategic planning framework documentation.
View the 2010/11 Voluntary One Year Review (PDF 1.44Mb).
As a requirement of the SFA, AWI conducted a one-year-on independent review of performance for 2009/10, to assess progress with implementing recommendations from the 2006-2009 three-year review.
The 2009/10 one-year-on independent review of performance noted significant progress by AWI in all areas assessed.
Key outcomes included progress in the following areas:
- Position and role in the industry; company structures and processes; and conducting the one-year-on independent review of performance
- The review concluded that AWI had addressed all recommendations of the 2006-2009 independent review of performance.
Areas identified for improvement included:
- Strategy setting process; measurement and reporting; internal structures for planning and evaluation; consultation and engagement; corporate governance; appointment of directors; risk, fraud and intellectual property; documentation and communication.
View the 2009/10 One Year Review (PDF 816Kb).
In compliance with the SFA, in 2009 AWI conducted an independent review of performance prior to the 2009 WoolPoll.
Areas identified for improvement included:
- Position and role in the industry; company structures and processes; strategy; measurement and reporting; internal structures for planning and evaluation; consultation and engagement; corporate governance; appointment of directors; risk, fraud and intellectual property; documentation and communication
- A specific recommendation was that AWI conduct a one-year-on independent review of performance for the 2009/10 period. This requirement was enforced by a special clause in AWI's 2010-2013 SFA, negotiated following WoolPoll 2009
View the 2006-2009 Three Year Review (PDF 328Kb).