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Wool Stocktake : AWI Annual Report 2017-18
CHAIRMAN’S REPORT When I was first elected to the AWI Board on 19 November 2004 the EMI stood at 735c/kg. The price that Australian woolgrowers received for their clip had been on the decline for quite a while. I believed that the Australian wool industry needed to start marketing its great fibre, otherwise this industry might decline into irrelevancy. A return to marketing was the mandate on which I was elected by the company’s shareholders, and that is what Isetouttodo. There were plenty of challenges at the time and there have been plenty of challenges since then, not least the Global Financial Crisis and the depressed economic circumstances that it unleashed across the world. However, we have weathered these challenges well and the company firmly grasped the opportunities that marketing has to offer. This year, the EMI broke through the $20/kg barrier for the very first time, and today is just shy of three times the level it was back in 2004. Where would we be now if AWI had backed away from marketing? Where would we be now if we hadn’t started promoting Australian wool and reconnecting with supply chain partners and consumers? 2017/18 was an extremely good year for Australian woolgrowers, with the EMI rising by 36% from 1507c/kg at the end of June 2017 to 2056c/kg 12 months later. This good year follows on from another positive year in 2016/17, when the EMI rose by 16% from 1297c/kg. It is important to note that supply increased in both these years. The price rises are clearly demand-driven. AWI’s marketing in key northern hemisphere markets has helped promote Australian wool as a luxury fibre for which consumers and the textile trade will pay an appropriately premium price. Australian woolgrowers of all microns have benefited from the increase in prices. Confidence has returned to the industry and producers who have shown commitment to wool are now taking advantage of the higher demand-driven wool prices. Producers who run mixed enterprises, such as those in the wheat-sheep zone, are also finding that having a wool enterprise not only helps manage their risk in an increasingly variable climate, but it is also an increasingly important and profitable enterprise in its own right, especially given the high input costs of cropping. AWI accountable to woolgrowers AWI is directly accountable to woolgrowers. It is wool levy payers that vote every three years at WoolPoll to determine the rate of wool levy they will pay to AWI; it is woolgrowers who have chosen to become AWI shareholders that directly elect Directors to the AWI Board; and AWI consults year-round with woolgrowers to identify their priorities and guide AWI's activities. AWI’s Constitution was designed ‘fit for purpose’ to ensure accountability to all woolgrowers, not a few; and AWI Board members have responsibilities under the Corporations Act, making them accountable to shareholders of AWI. Indeed, the recent independent Review of Performance by Ernst & Young concluded that “ultimate accountability for AWI’s performance and operations should rest in its Board of Directors, which is accountable to the company’s shareholders and to the Government. As such, we do not agree that there should be any ‘oversight’ bodies established that would derogate from the Board’s role”. Ernst & Young also reported that AWI’s “governance documents and practices have been procedurally adequate”. However, while the Review of Performance stated that “AWI has performed well in many regards”, we welcome these regular three-year reviews so that we can refine our processes and approach to deliver even better results for woolgrowers. So, in everything the company does, in every decision it makes and in every project in which it invests – whether it be marketing or R&D – woolgrowers are front of mind for the AWI Board, management and staff across the world. AWI delivering results for woolgrowers During the past year, AWI has delivered for Australian woolgrowers some very positive results, that are summarised in this Annual Report. In the marketing space, we have worked with large and influential trade and brand partners in key markets of Europe, the USA and Asia, including the increasingly important Chinese market, to build demand for Australian wool products. In the R&D space, we have collaborated in product development with many high-profile textile manufacturers and brands, such as Ralph Lauren and Nike, and in new product areas such as footwear that incorporates wool and water-repellent outerwear made from 100% Merino wool. In the on-farm R&D area, we have invested in the issues that woolgrowers have said most concern them, such as flies, worms, wild dogs and shearing, and we are investing in cutting-edge farm automation technology to take some of the hard work out of wool-growing and help attract a new generation to the industry. I provide to AWI shareholders my assurance that AWI, your R&D and marketing company, will continue to be driven by woolgrowers, continue to operate for the benefit of woolgrowers and continue to deliver results for woolgrowers. Wal Merriman Chairman, Australian Wool Innovation 31 August 2018 8 UP FRONT
AWI Annual Report 2016-17