New report tells story of $500m AWI marketing spend

Wool producers have spent more than $500m on marketing in the past decade, but a damning new report shows the real impact it’s had.

A damning new report shows the massive spend on wool marketing in the past decade has done little if anything to lift wool prices.

The report, commissioned by WoolProducers Australia attempted to gauge the impact of the more than $500m spent on marketing by Australian Wool Innovation over the past 10 years.

And the findings of the economic analysis by Episode 3 showed marketing had “no meaningful impact on the Eastern Market Indicator”.

The release of the report comes as AWI is in the process of developing its new strategic plan for spending over the next three years, on the back of a levy vote where growers chose to devote 1.5 per cent of their wool prices to the research, development and marketing body.

The profitability of the wool industry is also under the spotlight as increasing numbers of farmers turn away from Merinos and to other enterprises.

In an open letter to growers distributed on Thursday night, WPA president Steve Harrison said the findings from the report, combined with current wool prices, showed “our current marketing efforts have little to no impact on the price we receive for our wool”.

“Over the past 10 years we have spent over half a billion dollars of our levies on wool marketing, yet the EMI has remained largely unchanged,” Mr Harrison said.
“It’s painful to see increasing occurrences of Merino flock dispersals, as many producers choose to leave our industry in favour of ‘more profitable’ enterprises.

“With WoolPoll now past us, and the AWI three-year strategic planning cycle underway, it’s an opportune time to have a say on how your levies are spent.”

The work from Episode 3 showed the key factors that drove wool prices were:

THE $A: Chinese Yen exchange rate

THE global raw materials index

THE global energy index

THE volume of wool produced in Australia, and

A GLOBAL economic growth indicator.

The report noted there was “nothing in this study that indicated the wool marketing spend was influential on the price trends for Australian wool”.

While the analysis was completed in September last year, and before the Wool Poll vote, Mr Harrison said the WPA board had decided to delay its release to allow “clean air” and for growers to make their own decision on the levy spend.

It was released now to again give the chance for growers to have input on the new AWI strategic plan.

Mr Harrison said the report would add weight to a reassessment of the AWI levy spend, which is currently distributed with 60 per cent going to marketing and 40 per cent to research/on farm work.

“The other side of the profitability equation is cost of production,” he said.

“We do have control over that, so why aren’t we investing more to make wool growers more efficient?

“Consideration of this report is just the first step in an essential series of discussions to determine how we allocate our levies and marketing strategies moving forward.”

AWI has been contacted for comment.