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Beyond the Bale : June August 2009
June – August 2009 BEYOND THE BALE Upfront AWI wool industry day: Sydney, 20 May 2009 From Brenda McGahan, CEO AWI grower representative groups, came to Sydney where we discussed the big issues facing the industry and we presented a draft of AWI’s new Operating Plan. Key suggestions are still to be incorporated into our plan. The goal AWI outlined is to increase the L demand for wool by actively selling Merino wool and its attributes through investments in marketing and R&D. Growers were told that part of what was different this time was that AWI would live within its means and that grower funds would be leveraged with funds from marketing and R&D partners. THE THREE OPERATING PLAN THEMES ARE: 1. Marketing and selling Merino wool. 2. Investing in marketing and R&D in fewer and more focused projects. 3. Evolving into a leaner commercially oriented operation and cutting the cost of doing business. Our goal is to increase sales of Merino wool through greater efficiency and a clear commercial focus. By leveraging marketing funds with significant retailers and using the famous Woolmark logo along with our other brands, we aim to get more wool moving in knitwear, apparel and homewares markets. By working business to business to consumer (B2B2C), AWI can make more Merino wool available at retail through targeted campaigns. AWI has already invested $9.8 million in market research and $4.9 million in brandrelated PR in the period 2006-07 to 2008-09, so we will work with the brand assets we have created. The Woolmark will be at the centre of the branding and licensing strategy, along with a whole suite of brand options, used when and where appropriate. The longer-term partnership model developed in on-farm research is now being used in marketing partnerships with key supply chain partners in key consuming and manufacturing markets. Combine on-farm and post-farm research Our first R&D aim is to increase fleece value and the second is to reduce costs specific to wool production. Growers heard the key research areas of reducing the cost of production – lice, worm and dog control, genetic improvement and lowering the cost of wool harvesting – were a top priority, going from 23 to 45 per cent of research spend. Again, there is an emphasis KEY POINTS FROM THE DAY One company, one brand, one direction … one voice. AWI is cutting the cloth to fit and running more like a commercial company. Selling more Merino wool under a threetiered Woolmark system, using our many brands where appropriate. Matching funding from project partners for integrated on-farm and post-farm research. A focus on best animal welfare science. on leveraging funds with other research entities for the biggest return on investment. Animal welfare Board member Dr Meredith Sheil spoke of the latest animal welfare science and how we need to balance our commitment to supply retailers with unmulesed wool against the capacity of Australian farmers to achieve this without a major increase in flystrike in their sheep. Many growers are managing without mulesing wherever possible. However, where growers still face a risk of flystrike AWI is proposing they adopt a ‘Replace and Remove’ program to address welfare concerns: ‘Replace’ traditional mulesing with improved welfare practices, such as clips, mulesing with analgesia, or intradermal technology when available; ‘Remove’ involves combining this with enhanced breeding to improve flystrike resistance over time. Under this program, growers are encouraged to declare their welfare practices through the National Wool Declaration. This provides transparency and choice in the marketplace so that retailers can source wool that meets their needs. AWI’s job is to continue to support a fast-tracked R&D program to document progress and promote the high welfare standards of Australian woolgrowers to the world. During discussions, some growers commented on the development of the so-called ‘silver bullet’ technologies trialled last year, known as FSP1 and FSP2. A report from the South Australian Research and Development Institute (SARDI) on these unsuccessful trials is available from AWI. For ast month a group of some 80 woolgrowers from across all states and 3 GROWER FEEDBACK Woolgrowers joined discussion groups to debate the merits of the new Operating Plan and a spokesperson from each group addressed the meeting. Here is a summary of what they said: Operating Plan Impressed with greater transparency and running AWI more like a commercial company. Integration between on-farm and post-farm research seen as logical, as is the matching of funds from other research entities. Liked the idea of a self-funding global sales force, but thought it may not be achievable. Growers would have liked more time to review and have input into the Plan. “I am very pleased with the new direction and as long as AWI delivers the outcomes then I’ll be happy.” Frequency of elections The election process and the annual campaigning detracts from AWI’s core business. The AWI board should propose election changes and present them to shareholders. Overall sentiment was that a change in the election process was needed – look to change WoolPoll to every five years, elections every two to three years, move from a board of nine to six. Communication AWI should actively work with industry groups to help communicate its messages. Happy with the current tone from AWI of less 'spin'. Not enough good news stories in the media. Keen to see the website used as a communications medium across the wool supply chain. Enjoyed seeing the staff speak about their role in the company. "We need more days like this. I look forward to the Operating Plan delivering the bacon." those interested in obtaining a copy please call the AWI Helpline, 1800 070 099. Transparency and opportunity AWI staff told growers of their role in the company, those selling Australian Merino wool overseas also appeared via recorded messages outlining the market they deal with and the goal to make the global Woolmark sales network self-funding. The day was complemented by a visit from the Director-General of the UN Food and Agriculture Organization Dr Jacques Diouf and the Federal Agriculture Minister Tony Burke to commemorate 2009 as the UN International Year of Natural Fibres – an opportunity for wool’s profile to be lifted on the world stage.
April May 2009
September November 2009