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Wool Stocktake : Annual Report 2006-07
CHAIRMAN’S REpORT The past year was one in which a number of key AWI projects and initiatives, some of them in the development stage for a considerable time, came to maturity and started delivering clear results. It’s especially signiﬁcant that these achievements can be reported in the year marking the 200th anniversary of the ﬁrst export of Merino wool from Australia. AWI’s system is that we work directly with designers, manufacturers and retailers to help them access the products and innovations they want, and the partners they need. This is now working very well. AWI has successfully transformed itself into a company that acts as a global ‘co-ordinator’ of innovation for Australia’s producers to increase demand for Merino wool. We go out into the marketplace, ask the players directly how we can help them do business, and come up with creative solutions. That means putting a new product or fabric before a designer, or a clothing company in touch with a supplier who can make a new fashion line, or working with retailers to help them tell the story of Merino wool in their marketing campaigns. There’s no limit to how much demand for Merino we can generate with this partnership strategy. It delivers measurable results for far less expenditure than the generic advertising promotion of wool that used to be done in the past. The merger between AWI and Australian Wo ol Services will soon be completed. It was a long time coming and not without delays and frustrations, but we can now do our work without duplication of effort or confusion as to who is responsible for what. As well, we can use the industry’s ﬁnancial resources and skills base to revamp the Wo olm a rk brand in order to exploit its full potential. We ’ v e ﬁne-tuned our research and development efforts in the past year, allocating more resources and effort to ‘off-farm’ innovation in such things as new fabrics and processes. But we haven’t neglected the crucial ‘on farm’ research that helps our shareholders to produce more Merino of a ﬁner quality, more efﬁciently, and in a way that is ecologically sustainable. I’m conﬁdent that shareholders are solidly behind all of these strategic changes and can see clearly the increasing demand for Merino wool, and the beneﬁts of increasing interest among designers, manufacturers, retailers and the consumer. Shareholders demonstrated that strong support when they voted in November 2006 to keep the wool levy steady at two per cent. It was a vote of conﬁdence in the direction AWI was taking. Ongoing ﬁnancial support for AWI from the federal government is also an endorsement of our new strategy and its potential for real returns. There are, of course, challenges and risks ahead. As always, there is the spectre of drought and the debilitating effect that has on our producers. There are other issues, including looming tariff problems in the China export market. And a very strong Australian dollar has major effects on our industry. The mulesing issue is also still with us, but AWI won a landmark commitment from the animal rights movement in the past year that they would not threaten our industry’s retailers over the practice until at least 2010. We won that court battle. It was expensive, but to actually win the war we need to re-double our efforts to come up with an alternative to surgical mulesing. In the past year, however, there was signiﬁcant progress: a mulesing clip developed by AWI is being ﬁeld tested, as is a new intradermal injection procedure going through product development. Breeders are busily working on the problem and the sooner they are successful, the better. This is all part of the general challenge to make the Merino wool industry as environmentally friendly as possible: from the humane treatment of animals, through to sustainable pastures, to ‘green’ processing of fabrics and beyond. Retailers and consumers tell us this is the way they want to go. We have heard that message. We endorse that message. At AWI we are working hard so that all shareholders can be proud of the wool they produce and market Merino, a natural wonder ﬁbre that has a proud history and an exceptionally bright future. Ian McLachlan AO Chairman, Australian Wo ol Innovation 20 September 2007
AWI Annual Report 2007-08