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CEO Blog – 2023 Year in Review


As part of the final CEO blog for the year, I would like to wish you all a happy, relaxing and safe festive season. The WoolProducers office will be closed from 20 December until 8 January, 2024, when we’ll return ready for a big year ahead.


As always, this year has been a busy one for WoolProducers, so I’ll take this opportunity to reflect on the year that was and some of the issues that WoolProducers has both addressed and advocated for on behalf of woolgrowers, demonstrating our commitment to our organisation’s vision to:


“Provide the Australian wool growing industry with leadership that encourages a financially, socially, ethically and environmentally sustainable future.”


WoolProducers continues to be the only legitimate national wool industry policy body representing growers in national and international forums, along with the only national wool representative body that consistently delivers industry-good outcomes.


There are many issues that we have dealt with this year, but the following is an insight into a small number of significant areas that we have covered.


Trade

This year has seen a number of challenges as well as opportunities for our industry, and we have worked hard to ensure the best outcomes for our growers.


2023 has seen a downturn in both seasonal and market conditions from the favourable environment that most wool and livestock producers have experienced over the last few years.


One of the main areas we focused on over the past 12 months has been the maintenance and enhancement of market access for wool in order to mitigate trade risks and future-proof the industry.


After securing a second grant under the Australian Trade and Market Access Cooperative (ATMAC) Program at the start of the year, we have been working on Phase two ‘Ensuring a Sustainable Future for Australia’s Wool Supply Chain through Domestic and Diversified Processing’.


This followed the successful completion of Phase One of this project, which was delivered by Deloitte Access Economic (DAE). Through a widespread process of domestic and international consultation as well as stringent economic assessment, DAE delivered a comprehensive Phase One report, highlighting a number of exciting opportunities for our industry.


Key findings included that the viability of increasing Australian early-stage wool processing depends on key costs, including labour, energy, water treatment and freight. Processing may require significant capital subsidy, including an estimated $800 million of worsted scouring investment.


Several countries present opportunities for diversification, particularly India, Vietnam and Bangladesh. The cost of expansion is not prohibitive and could add up to $1.3 billion to wool industry output and $1.8 billion in GDP by 2050 and mitigate the most serious risks the industry faces. However, expansion would be a complex process involving many moving parts.


Expanding early-stage processing to Australia could bring significant opportunities, including pursuing productivity gains along the supply chain, and technological innovations such as greater product traceability.


The Second Phase of this report seeks to deliver an action plan for industry and policy makers, focusing on two streams of work. The first stream will focus on domestic locations and developing an investment ready business case for early-stage processing in Australia, while the second stream will focus on international locations, assessing opportunities to diversify in offshore priority locations.


This report will be delivered by the end of the calendar year, with an anticipated public release in early 2024.


Another exciting development in terms of wool trade this year, was WoolProducers receiving a grant from AusHub Vietnam to engage an in-country resource to explore opportunities to expand wool trade.


WoolProducers Australia were one of three successful industry groups to receive this funding after completing a competitive application process.


Mr Kelvin Le was appointed in April and continues to identify pathways to expand trade opportunities for Australian wool to Vietnam and build on the recommendations and opportunities identified in the Phase one of “Ensuring a sustainable future for Australia’s wool supply chain” report conducted by DAE.


Vietnam has strong economic growth prospects with a forecast 7% growth in GDP in the coming year. Complementing the growing textile sector within Vietnam, imports of carded/combed wool have been growing in recent years. More recently, a major global wool spinning operation has established a facility in Vietnam.


While market development activities have taken place in Vietnam in the past, the partnership with AusHub is seeking to identify strategic opportunities for new and vastly expanded early and intermediate-stage wool processing.


The Australian Industry Hub (AusHub) is an initiative between the Australian Chamber of Commerce Vietnam (AusCham) and the Department of Foreign Affairs and Trade (DFAT) to facilitate access to markets in Vietnam for Australian Industry Groups in Food Fibre and Forestry.


WoolProducers are proud to have shown leadership in this space and appreciate the opportunity presented by the AusCham and DFAT through the AusHub industry representatives.


Steve Harrison and I travelled to India to attend the inaugural India-Australia Wool Industry Joint Working Group (JWG) meeting which took place at the Ministry of Textiles boardroom on 22 March 2023. The meeting was convened under the 2012 Wool Memorandum of Understanding (MoU) between DAFF and the Indian Ministry of Textiles (MoT).


The JWG opened with both sides presenting on the current state of their respective domestic wool and textile industries, including key opportunities and challenges.


The Australian side presented on key industry metrics, such as trends in woolgrower numbers, fibre diameter and wool exports. Australia noted that in recent years, a pivot towards demonstrating wool sustainability credentials had been well received by stakeholders. This included a focus on investing in education and talent development to support a sustainable national wool workforce.


Australia also noted its interest in potential co-operation opportunities with India in workforce training and capability programs, as well as early-stage wool processing.


India presented on their key industry metrics, including wool imports and exports, sheep population trends, and the value of their woollen yarn, carpet and fabric sectors. India noted the strengths of their wool sector, including workforce availability, presence of a complete value chain and a large domestic market. India also provided on a list of cooperation opportunities, including workforce training programs for shepherds and shearers, genetic technologies for herd improvements and establishing infrastructure for early-stage wool processing and a research and development hub in Ludhiana.


Additionally, India sought Australia’s assistance to host delegations and fashion events in Australia to market and showcase their ready-made woollen products.


The Australian side noted its interest in cooperation with India on areas such as innovative wool processing and animal husbandry technologies, which Australia is a world leader in. Australia could also help build workforce capability through a potential shearer training exchange program and co-operate with India on sustainable outcomes such as reducing the environmental footprint of wool processing.


Discussions also centred on the volatility of Australian wool prices, which affected ready-made textile prices for domestic consumers. Australia noted that Australian agriculture was a free market economy, with the wool industry being price takers, rather than price setters.


Both sides also briefly discussed Australia and India’s supply chain differences for wool storage and baling capacity limitations and noted a relative inability to change this.


A further trip to India in October saw another industry and government roundtable, with myself being the Head of Delegation, with representatives from the Australian Government, DAE, AWEX and the Shearing Contractors Association. The Indian delegation included representatives from the Ministry of Commerce, Ministry of Textiles and various wool processing representatives.


This was a very successful meeting, and the fact that it was Chaired by the Indian Ministry of Commerce is an extremely positive sign. The level of exchange and good will has increased even in the 7-months since the last Aus-India meeting.


In return, a large Indian delegation, comprising senior industry and government representatives, attended the Global Sourcing Expo in Melbourne. Coinciding with this, another Australian-Indian Wool Roundtable took place in late November, to further deepen bilateral ties.


As part of this reciprocal trip, WoolProducers hosted Indian delegation in Victoria in November which included a trip to a property to see shearing and classing, AWTA and the Brooklyn Wool Stores.


The Roundtable on 22 November, again saw government and industry officials discuss a number of issues that will strengthen collaboration and relations between the two countries, including co-operation on industry sustainability frameworks and workforce capacity building programs (namely shearing and wool classing).


The October trip also included industry and government meetings in Bangladesh. While Bangladesh is not a traditional wool consumer (processor) with a heavy focus on cotton and synthetics, the potential for Australian wool is quite exciting, given the sheer size of their textiles industry.


Any development in relations with Bangladesh will take time and this is a very initial meeting to start building on this relationship, which hopefully will eventuate into trade in the coming years.


WoolProducers also participated in the May Joint China-Australian Wool Working Group in Kyoto, Japan in May, which was the first face-to-face meeting since 2019.


China remains our dominant and valued trade partner in wool and our good relationship continues, however issues regarding contamination of wool are still causing concerns with China. This led to WoolProducers initiating an across industry media release reminding growers of the importance of keeping contamination out of their wool, this media was supported by AWI, AWEX, AWTA, National Council of Australian Wool Brokers and the Australian Council of Wool Exporters and Processors.


Industry Issues

Flexolt

Early in the year WoolProducers were the only organisation to provide a submission of support into the registration of an oral lousicide, which has since gone on to be registered and commercial released.


The development of an oral lousicide is exciting for growers, as provides flexibility in management and also adds another tool to combat the persistent and costly issue of lice.


While we don’t engage in commercial arrangements regarding policy issues, to avoid accusations of conflicts of interest in policy determination, we do support innovation of any products that deliver tangible benefits to woolgrowers.


Other submissions that we have provided this year to assist in innovation and product development/evolution have included Updating the guide for determining a minor use and Trade Advice Notice on lignocaine and bupivacaine in the product Tri-Solfen Wound Anaesthetic & Antiseptic Solution for use on sheep to the APVMA, along with the Proposed amendments to the Poisons Standard to the Therapeutic Goods Administration.


Live Export

WoolProducers provided a submission into the Phase out of Live Sheep Exports by Sea public consultation in May this year. While red meat is an important but secondary consideration to the wool industry this ill-informed policy decision has many ramifications for the wool industry and the broader ag sector, particularly as the current government can provide no justification for this decision other than it was an ‘election promise’.


WoolProducers does not usually advocate on the live export industry due to the focus on red meat, however given the principle (or lack of) of this government decision we have been spending considerable time on this issue in recent months, including participating in numerous industry meetings, advocacy, meeting with the government appointed panel and providing a submission in to the public consultation.


In 2018, the Board of WoolProducers were horrified by the footage from the Awassi Express showing sheep in awful conditions en route to the Middle East and for the first time considered the position of the wool industry on the support or otherwise of the trade. At that time WoolProducers resolved the following policy position; “The wool industry continues to support the live export of sheep contingent on adherence to animal welfare standards underpinned by science.”


Since that time the industry has rightly undertaken significant reform with a number of industry and government processes put in place to ensure the welfare of exported sheep, including the Northern Hemisphere moratorium, increased pen space, improved ventilation and the requirement of independent government observers on vessels. This has seen voyage mortality rates drop from 0.47% in 2018 to a record low of 0.13% in 2022 – demonstrable evidence that the trade has improved and that the Australian live export industry has the highest standards of animal welfare in the world.


The Australian Government shutting down a legitimate industry due to perceived concerns about animal welfare, when the industry is meeting and exceeding government-set metrics on animal welfare, is counterintuitive to establishing a thriving economy and makes no sense economically or logically.

The precedence of closing an entire trade based on nothing more than ‘an election promise’ which is not based on science or evidence, should be a concern for all involved in agriculture, regardless of if they are directly involved in the trade or not.


When governments start basing decisions on ideology and can shut down an entire industry because activists have made some emotive claims, it is easy to envisage that an industry practice such as mulesing, or the use of a chemical such as glyphosate could also be ceased on the whim of a government. This demonstrates that this decision does have implications for us all.


Biosecurity Protection Levy

As part of the May federal budget, the Australian government proposed a new Biosecurity Protection Levy (BPL), which will be paid by all producers in agriculture, forestry and fisheries. The levy would be set at an equivalent rate of 10% of the industry-led agricultural levies of 2020-21 and is proposed to commence on 1 July, 2024.

WoolProducers provided a submission into the BPL consultation, opposing the imposition of this levy.


WoolProducers supports and is an active advocate for the notion of a ‘shared responsibility’ framework for Australia’s biosecurity system. As per the endorsed National Biosecurity Statement (NBS), stakeholders in this system include the Australian government, state and territory governments, representative bodies (industry), research organisations and individuals.


We also support a sustainable funding mechanism for Australia’s entire biosecurity system, however this support is predicated on genuinely shared responsibilities, which includes funding across the spectrum of stakeholders, both the beneficiaries and risk creators with respective contributions being proportionate and equitable.

Under this BPL proposal, producers will be directly subsidising Federal Government regulatory functions, which is simply not the responsibility of industry and producers.


Industry already contributes considerably to this system through existing national subscriptions, national and state levies and private investment. Industry also contributes towards biosecurity system policy development and determination, particularly through Peak Industry Councils, such as WoolProducers.


Risk creators need to start proportionately contributing to the biosecurity system in a more holistic manner, acknowledging that there has been a recent increase in fees paid by importers in real terms. The proposed “increases” to fees and charges associated with import clearance activities are merely to recover costs associated directly with those activities. WoolProducers again call for the imposition (at the very minimum) of an importation or container levy, as has been introduced by New Zealand with no negative impacts to trade relations.


The lack of consultation by Government both before and after the announcement of this levy, has caused much confusion amongst producers and industry.


In the first instance, in the context of the target audience (i.e., Australian primary producers), calling this new charge a ‘levy’ is misleading, given a number of aspects of this proposal do not align with levy principles and guidelines, set out by the Department. If the government is to pursue the establishment of this “charge” it will need to be renamed as either a tax or a charge, which better articulates what the function of this proposal is and would be more readily understood by Australian primary producers.


The BPL poses a number of issues specific to the wool industry, including the fact that woolgrowers currently pay one of the highest agricultural levies, meaning that they will be contributing at a disproportionately higher rate than other commodity levy payers, in fact at a rate that is 2.4 times higher than the average.


Further, the wool industry is relatively unique in that levy payers vote every three years on the rate of levy that they pay towards research, development and marketing (RD&M), with the next vote taking place in the second half of 2024. There is a real risk that woolgrowers may elect to reduce their RD&M levy as they will not make the distinction between the two levies and will only notice that they are expected to pay more from the proceeds of the sale of their product. The BPL risks industry investment in innovation, marketing and development, a key asset of Australian agricultural industries.


WoolProducers are also concerned that the consultation, despite claims made by the government, does not include an adequate Regulatory Impact Statement (RIS), and urges the Government to undertake one, to not only assist industry’s understanding, but we also firmly believe that it will help Government understand the complexities and risks of this proposal knowledge of which is currently clearly lacking.


National Wool Declaration Review

This year saw the review into the National Wool Declaration (NWD). WoolProducers provided a submission into this process, again calling for the removal of ceased mulesed (CM) category, due to the static nature of this category and in order to simplify the document. However, the downstream supply chain maintain that the CM category continues to attract a premium and is viewed in the same way as non-mulesed declared wool.


We also called for the removal of the liquid nitrogen (LN) category as the procedure is not, by definition, mulesing and should not have its own category on that basis, which we argued in the last review when it was introduced. The declaration rate of less that 1% of all declared wools of LN, proves that the decision to include this category was justified.


WoolProducers also called on AWEX to investigate the NWD being made a condition of sale, which has been a long-standing policy to increase usage of the document.


I represented growers on the NWD Industry Consultative Committee, who ultimately made the recommendation to the AWEX Board not to make any significant changes to the document as this version had not been in use by the trade for long and we did not want the NWD to lose integrity in the trade by constantly changing it. This recommendation was accepted by AWEX, who have also made the decision to investigate making the NWD a condition of sale through the ACCC.


Traceability

Wool

WoolProducers have been working with AWI, AWEX, AWTA, Australian Council of Wool Exporters and Processors (ACWEP) and the National Council of Wool Selling Brokers (NCWSB) to work on establishing the Australian Wool Traceability Hub.


The thinking behind the AWTH is that there will be two streams – one for EAD traceability and one for provenance, however, there seems to be a complete lack of understanding that regardless of what level of traceability is being aimed for that there needs to be the four key components to achieve traceability, being:


  • identification of the product

  • identification of the source of the product

  • ability to identify where that product is and where it has been

  • widespread adoption

WoolProducers have voiced concerns that the current draft model that is being worked on is overly complicated in order to achieve traceability for an Emergency Animal Disease (EAD) response, which is our main priority. With AWEX rolling out eBales, all that is needed is a Property Identification Code (PIC) to be linked to an eBale. We do not need grower profiles or other ancillary functions.


Whilst we are supportive of collaboration between industry players, in fact this is something that WoolProducers ensured was in the Best Practice Consultation Guidelines that sit under AWI’s Statutory Funding Agreement (SFA), to avoid duplication of expenditure of grower funds, we are getting increasingly uncomfortable with the level of growers dollars that may spent trying to salvage something from the $7.5 million that has already been spent on WoolQ that to date has yielded nothing.


Sheep

2023 has seen WPA dedicate significant time to the mandatory roll-out of electronic identification of sheep.


WoolProducers support for mandatory eIDs is also contingent on the establishment of a multi-species database, national harmonisation and equitable cost sharing arrangements between industry and government for the establishment and maintenance.


It is therefore, beyond frustrating that 17-months after the announcement of this roll-out that we do not seem to be on track to meet these three contingencies.


While some states have announced financial incentives for tags, many have not. WoolProducers maintains that the best way to get this roll-out underway is to get tags in ears and phase in over a reasonable timeframe, as happened in Victoria.


It is unbelievable that woolgrowers may be in a position of having to double tag older sheep to send to slaughter with an eID when they are already tagged with a visual tag. This is the prospect that currently faces all sheep producers as soon as 2027. WoolProducers strongly advocated against this position at the Sheep and Goat Traceability Taskforce, however, was outvoted by every other grower and government representative.


Sheep Sustainability Framework

2023 also saw the launch of the second Annual Report of the Sheep Sustainability Framework (SSF).


Led by Sheep Producers Australia (SPA) and WoolProducers Australia, the SSF is underwritten by four themes: caring for our sheep; enhancing the environment and climate; looking after our people, our customers and the community; and ensuring a financially resilient industry. Within those themes are nine focus areas and 21 priorities - monitored and measured by 58 data-driven indicators.


The report delivered on the world-first commitment of the Australian sheep and wool industry to create a data-driven yearly snapshot of sustainability performance.


WoolProducers are proud to be a custodian of this important framework, which for the first time will enable industry to be proactive in areas of concern. This level of transparency should be embraced by industry and viewed as a way to stay ahead of the curve when it comes to public perceptions.


WoolProducers Independent Director Elections

Finally, I am thrilled to have Angus Hobson, Skye Ward and Simon Riddle joining our Board to help set the strategic direction of our organisation and contribute to our robust policy setting processes on behalf of industry. Their skills will be of enormous benefit to both our organisation and the wider industry.


In the first contested election in a number of years, we had five nominees put themselves forward, and in addition to Angus, Skye and Simon, Stacey Lugsdin and Helen Carrigan also ran in this year’s election.


Both Stacey and Helen had served on the WoolProducers Board previously, with Stacey being an Independent Director for the last four years including the last two as Vice President and Helen, representing NSW Farmers Association, before her and husband moved to Victoria earlier this year, seeing Helen put her hand up as an Independent.


On behalf of WoolProducers, and also in a personal capacity I would like to thank and acknowledge Stacey and Helen for their commitment to WoolProducers and the wider industry.


Industry Advocacy

WoolProducers have also had around 30 meeting with both sides of government and departmental representatives, including representation of woolgrowers at Ministerial roundtables, covering issues such as trade, EADs and natural disasters.

WoolProducers also regularly represents the interests of woolgrowers across numerous topics in both National Farmers Federation and Animal Health Australia forums, along with other industry meetings as they arise.


WoolProducers has a small team of dedicated staff and volunteer directors, who deliver immense outcomes on behalf of industry, as evidenced in the above snapshot of this year.


Steve Harrison has just completed his first year as WoolProducers President, in which has been a busy year and a baptism of fire in many respects. I would like to thank Steve for his dedication, leadership and guidance during this time, in what in many ways is a thankless job.


Steve has been supported very ably by Stacey Lugsdin as Vice-President this year, and I would also like to thank Stacey for her insights and support across a range of issues, including chairing the Finance, Audit and Risk Committee.


I would also like to thank Adam Dawes for his work and commitment to WoolProducers and the broader industry as he is integral in delivering so many of the outcomes of our organisation.


Finally, I would also like to thank Siobhan Wakely, our executive support for her assistance and problem-solving abilities, who makes our lives much easier.


I look forward to working with the management team and Board and the opportunities and challenges that 2024 will bring.

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