Changes Ahead for AU Wool: New Selling System Discussed

March 25, 2016

Proposed changes to Australia's wool selling system have been met with resistance from some wool buyers and exporters. The new system is being discussed as the government-and-grower-funded body Australian Wool Innovation embarks on a restructure.

AWI began its review of the wool selling system more than a year ago and considered dozens of submissions from wool growers and buyers. It says the aim is to modernize the system and reduce costs to wool growers, while also increasing transparency.

AWI is consulting with industry about the changes, and said it would bring together a panel of experts by May to drive the digital transformation. A business case will be delivered to the AWI board by November 2016.

Wool buyer Chris Kelly, from the National Council of Wool Selling Brokers, said more than 90 percent of buyers were against the change saying the current open-cry auction was already modern and based on pre-sale wool testing. He said buyers should be included in the decision-making process.

"I think the fact they're saying we are well behind, and lagging behind, it's not the case at all," he said. "We are highly digitized. The only time we don't have a computer is when we're sitting in the saleroom, and that's the most important part of the transaction in our mind. Up to that point and after the sale, everything is digitized."

The physical presence of the wool, and ability to test wool prior to sale, was critical, according to Kelly.

"We've got clients that expect us to look at the wool, they expect us to guarantee the wool," said Kelly. "Our market is a bit more specialized than just bread and butter Chinese types; we cater to the Japanese and the Italians who are far more pressing in their types, and it takes more time and more effort. Those companies, knowing that the type is a bit different, pay the premiums and that's where you see the premiums in the market. If they take that away from us, we're coming down to a lowest common denominator."

Reprinted in part from ABC Rural