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Wool Stocktake : AWI Annual Report 2007-08
AWI has this year been working hard to take advantage of these market trends, and the launch of the new program to support the Woolmark and introduce a new premium Merino brand will allow us to do more. We are breathing new life back into the Woolmark by giving it focus and investment. By more closely associating the Woolmark with Australian Merino, we believe that we can close the gap between the more negative consumer perceptions of wool and the positive consumer perceptions of Merino – the softer, more comfortable fibre that Australian woolgrowers produce today. The Australian wool industry has a fantastic natural story to market. We have been telling our international retailers and brands that our farmers have the production systems, heritage and know-how to continue to offer the best wool in the world, long into the future. They, in turn, are telling the world’s consumers. Australian Merino woolgrowers are actively engaged in the creation and adoption of best practice production methods, environmentally responsible processing and supply chain transparency. Australia has the most visible and highly developed wool marketing system in the world. No other country has a trained and registered wool-classing workforce of 23,000 people that can prepare clean white wool for the world’s processors. No other country has objective laboratory test results attached to nearly every bale that is exported. AWI’s Verification of Australian Merino (VAM) supply chain integrity offer is the world’s best wool textile traceability system – from Australia’s woolgrowers to retail brands, Australian wool can be traced. VAM relies on rigorous independent testing from the wool off the sheep’s back to the finished garment. Using the VAM process, AWI has already verified the authenticity of over one million garments made from Australian Merino wool. Now, while international textile manufacturers and retailers are welcoming Australian Merino wool as a great natural and versatile fibre, the feedback provided to me during my recent visit to the US is that they need confidence from the Australian wool industry that it will meet its commitment to phase out mulesing by 2010. AWI, as instructed by the Australian wool industry, is developing alternatives to support the industry’s commitment. An increasing range of alternatives are coming available to growers. These choices include animal husbandry techniques, clips, breeding and selection options, and intradermal injections including the two new ‘FSP’ chemicals under investigation by AWI which could be available in 2009, none of which leave an open wound. It is pleasing to see that an increasing number of woolgrowers are deciding on and implementing new flystrike management strategies. Surveys show that 68 per cent of producers are now actively tackling the issue, with 34 per cent of producers not mulesing any of their lambs in 2008 and another 34 per cent mulesing only a portion of their flocks. The amount of wool from non mulesed sheep is expected to rise in 2008/09 to 55.7 million kg greasy. I fully understand that there is concern among growers about mulesing. I also acknowledge that there are concerns about other issues, such as declining sheep numbers, the price that you are being paid for your wool, and the fact that parts of the country are still in the midst of, or struggling to bounce back from, drought. “The wool industry does face challenges. Your company, AWI, is up to these challenges but we will need your support. It is important that, here in Australia, members of the wool industry work together.” AWI is an organisation that has changed dramatically in the past few years, especially this past year. Following the integration of The Woolmark Company into AWI in October, we are running an expanded global marketing company. AWI has transitioned from being an Australian R&D organisation into an international fibre research and marketing company. Of course, we also still operate in the earlier parts of the wool supply chain, working with Australian woolgrowers to help them compete profitably in international markets through the development and adoption of on-farm innovations. We are providing tools to help woolgrowers identify the best animals from which to breed to suit their needs; initiatives to improve the numbers, quality and productivity of shearers and wool handlers; better ways to help woolgrowers maintain healthy, productive animals; and improved information and products for growing healthier and more productive pastures. But our main focus is to increase the demand for Australian Merino wool. Income earned from the licensing of the Woolmark will enable us to do more. We are providing our knowledge about wool through the supply chain to our business-to-business partners; our innovations are being ‘pushed’ into the market place from AWI or ‘pulled’, based on a request from within the supply chain; and we are providing product marketing support to companies wishing to highlight the intrinsic benefits of Merino. We have made changes to our business to make sure that we can effectively compete on a global scale. Our positive profit position for the year of $5.5 million is a consequence of the capitalisation of the Woolmark brands. A value of $10.0 million has been placed on the brands by independent experts Lonergan Edwards and validated by PricewaterhouseCoopers as part of the audit process. I believe that we are now in a strong position to meet the challenge of building a new place for Australian Merino in the global marketplace, for the benefit of you, the Australian woolgrower. As Chairman of AWI, I take very seriously the responsibility of managing and investing Australian woolgrowers’ funds. Every woolgrower works very hard and capably to invest in the future and I have committed to extracting value from the supply chain through to the retailers, to make sure that your businesses have every opportunity to be profitable today and in the future. One of the most important things for any company, especially a large international company like ours, is corporate governance. The Board has a major role to play in this respect and I thank my fellow Directors for their contributions. It is no secret that we have some differences on the Board, but it is really up to AWI’s shareholders to elect Directors with the qualifications and professionalism required to run an international business. I would also like to acknowledge the immediate past Chairman, Ian McLachlan, for his tremendous efforts between 2002 and 2008. Finally, I also thank the management and staff for their hard work managing their way through a difficult year dominated by a challenging integration process. Brian van Rooyen Chairman Australian Wool Innovation 18 September 2008 AWI 07/08 ANNUAL 9
AWI Annual Report 2008-09
Annual Report 2006-07