AWI spending to be cut by up to $12m

A shrinking national flock combined with low wool prices will generate lower levy income, forcing a cut by up to 20 per cent.

Wool research, development and marketing spending will be cut by up to 20 per cent next financial year as producers exit the industry en masse.

A shrinking national flock combined with low wool prices will generate lower levy income for Australian Wool Innovation, forcing the cut of up to $12m.

It comes as AWI is seeking feedback for priorities for its strategic plan for the next three years.

The income shortfall for the current financial year will come from AWI reserves, which have already been drawn down from $124m in mid-2019 to $80.6m in July this year.

AWI has said it will need to dip into reserves again this year to fulfil its commitments for the current financial year but declined to nominate how much more the kitty would be raided.

A spokesman for AWI said there would be no significant cuts “at this point”.

“Although levy revenue is tracking to be lower than budgeted, we have been able to offset this shortfall through additional co-funding opportunities and higher interest earned than anticipated,” the spokesman said.

“We are looking at a reduction for next fiscal year in expenditure of between $10-12m, as a result of lower income and no drawdown from reserves in 2025-26.”

The spokesman said AWI was working on its 2025-26 operating plan and “the resourcing required”.

WoolProducers Australia chief executive Jo Hall said AWI would have to adjust its activities to match its budgets, just like wool growers.

“It is incumbent on AWI to maximise levy payer and taxpayer contributions through its expenditure to try to ensure that it is profitable enough for wool growers to stay in the industry,” Ms Hall said.

“AWI will need to look across its programs and make the necessary cuts.

“While this is a decision of the board, the wool industry is currently at a crossroads and what is done in the next couple of years is crucial to its longevity.

“There must be new thinking applied to the industry as we haven’t seen that for a long time.”

Ms Hall said there needed to be more investment in programs that helped growers become more efficient, and “less in smaller investments such as sheep show attendances and sponsorships that don’t deliver bang for buck for the majority of growers”.

Last week, AWI held two days of grower consultations over priorities for the next three-year strategic plan which comes into place in July this year.