AWI funding slashed

Wool growers are not the only ones disappointed by falling returns as the industry’s research, development and marketing body tightens its belt.

Wool marketing and research is likely to be slashed after a dramatic drop in funding.

Australian Wool Innovation collected just $40 million in levies in the past financial year, a massive drop from the $101 million it sourced in 2021/22.

And while the organisation is trying to maintain programs designed to lift profitability of growers, the latest operating plan for the current financial year will see another $10.5 million drawn down from its reserves.

Five years ago, AWI held more than $103 million in reserves but at the end of 2022/23, those reserves had slipped to just $83.8 million and is expected to be back to about $73 million by the end of this financial year.

Australian Wool Innovation CEO John Roberts. Picture: Supplied

AWI chief executive officer John Roberts said revenue from the 1.5 per cent of income that wool growers pay as a levy and the strength of the wool market were the major contributor to AWI’s finances. The other major contributor is the Federal Government who matches funding.

“In contrast to the time when growers contributed a levy of 2 per cent, we are this year having to draw down a further $10.5 million from our reserves to maintain critical programs,” Mr Roberts said.

“That level of drawdown cannot continue and cuts in programs are likely in 2024/25.”

Mr Roberts said there were plenty of opportunities for the Australian wool industry but there were also threats.

“There needs to be investment by the industry in research and development and marketing to address them (threats),” he said.

“This is AWI’s role, but the company has been hindered in the past few years in this respect due to reduced income.
Mr Roberts described the AWI operation as “a lean, efficient and transparent”.

“But just like any business with a reduced income, we have had to make tough choices about what projects to invest in or not invest in.”

AWI said cuts would be proportional across all its expenditure to maintain a 60:40 split in money spent on marketing:research and development.

Wool Producers Australia chief executive officer Jo Hall said growers determined what they believed was an appropriate amount of their income to be dedicated to research, development and marketing.

This would be the case at the next WoolPoll in 2024.

“Growers are facing a number of issues that will impact their decision including a drop in income due to the falling marketing, higher input costs including labour for wool harvesting and government imposed costs such as mandatory electronic tags and the proposed Biosecurity Protection Levy,” Ms Hall said.

“In 2021, wool growers determined that 1.5 per cent was an appropriate amount to allocate for research, development and marketing.

“At 1.5 per cent, it is still one of the highest levies being paid across all agriculture sectors and AWI had over $100 million in reserves at the time.”

Ms Hall said AWI, like growers whose income was affected by a falling market, had to make decisions in the best interest of the business.

“This may include both cutting back on expenditure and drawing on reserves,” Ms Hall said.

“It is also the Board’s responsibility to set the strategic direction of the company and ensure that any cuts in expenditure align with industry priorities.”