Research, marketing, staff levels cut as AWI revenue takes a dive
Wool research and marketing programs will be decimated as grower funding falls to its lowest level since the Australian Wool Innovation was formed in 2001.
WOOL research and development and marketing programs will be decimated, with just $25.8 million collected from growers this financial year.
Grower funding will fall to its lowest level since Australian Wool Innovation was formed in 2001, with a triple whammy of low prices, smaller volumes and a reduced levy of 1.5 per cent contributing to the dive.
This year’s decreased income will come on top of a drastically reduced levy amount of $35-$36 million collected in 2019-20, about half what was expected.
AWI chief executive Stuart McCullough said 2020-21 would “be a tough year for everyone, markets and wool growers”.
“AWI operates in a lean, efficient and transparent manner, but just like any business with a reduced income, we have had to make cutbacks in staffing and projects,” Mr McCullough said.
“While we have had healthy reserves, some of which we are using, the reality is that we can’t provide the level of R&D and marketing that we have done in previous years.”
A breakdown of the 2020-21 budget, which was released last week, shows $22.8 million allocated to marketing and $10.9 million on sheep production research. The remainder of the $56.9 million spend next financial year will be on administration ($9.8 million); processing innovation ($6.5 million); consultation ($3.8 million) and traceability ($3.1 million).
Mr McCullough said the repercussions of COVID-19 were expected to last for “a few years” and would impact AWI operations.
“AWI has and will work towards striking the right balance between cost cutting and smooth operations,” he said.
Wool Producers Australia president Ed Storey said he imagined the AWI board was “working hard to find the appropriate mix of spending for the situation”.
“When growers voted for a 1.5 per cent levy (instead of 2 per cent), they chose the level of R&D and marketing they wanted,” Mr Storey said.
“That decision, along with other decisions like producers choosing not to sell wool at the moment (due to low prices) and the low prices themselves all have an impact on the AWI business.
“I imagine the board is working hard at the moment to retain programs and get the best bang for the buck.”
In its peak in 2017-18, grower levies generated $72 million funding for AWI activities, which is matched by the Federal Government.
Spending cuts will see AWI draw $12 million from reserves this season, and a further $15 million drawdown in 2020-21. It will deplete levy reserves, which closed 2018-19 at $123 million.
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