WOOLPOLL 2009 is about much more than the wool levy. It's about the very future of Australian Wool Innovation (AWI), our peak research, development and marketing corporation.
AWI's governance, management and cost structures require urgent attention. A vote for zero levy at WoolPoll 2009 could just trigger that positive change.
The AWI constitution is flawed and this is a view supported forcefully recently by the independent performance review of the company commissioned in the lead up to WoolPoll 2009.
The constitution contains no requirement to ensure a logical proportion of AWI directors have vital commercial skills - including corporate governance and professional commercial and legal skills - nor does it bar the election of directors with serious commercial conflicts of interest.
The annual board election bunfight devastates AWI productivity during several months each year and creates populist election platforms which influence post-election decisions in a way that is not in the best interests of a majority of growers.
The current board will not attempt to change the corporation's constitution because those flaws facilitated its election.
Quite apart from its constitution, there are other important reasons why AWI needs a major overhaul.
Wool volumes and AWI revenue are declining rapidly in tandem. A total of 70 million sheep will be shorn this year compared with 100 million in 2004 and 170 million in 1990.
The total could easily fall to 40 million within a few years if producers continue their swing to increased lamb and crop production.
The magnitude of the recent and prospective revenue decline in wool production and AWI revenue requires an urgent lateral re-think about AWI, its mission and its operations.
In deteriorating situations, failure to act early and decisively results in lost opportunity and least benefit outcomes. The industry learned that lesson while witnessing the demise of The Woolmark Company.
The present AWI board has cut some costs but it has not addressed fundamental structural change.
There are several options for change in my opinion. My preferred option is to merge AWI into Meat and Livestock Australia (MLA), a process that would eliminate constitutional challenges and deliver overhead savings and the benefits of MLA synergies worth millions of dollars annually.
The present board is also making poor decisions and exhibiting poor leadership and governance. Its recent statements on mulesing have been totally populist and eschew any industry vision or leadership.
AWI's stance will encourage some growers to revert to or continue mulesing using a proprietary pain relief product on lambs.
While some growers will elect to mules their sheep, increasing numbers are ceasing mulesing without the dire animal welfare outcomes reported in statements by some AWI directors.
AWI would be displaying real leadership if it actively encouraged growers who can cease mulesing to do so and thereby meet growing and legitimate market demands for non-mulesed wool.
Now to WoolPoll 2009. During recent weeks AWI board members have been on the national hustings recommending that growers vote to maintain the two per cent levy.
For a grower producing 100 bales per year of average quality wool, a two per cent levy would amount to a payment to AWI of about $10,000 over the next three years, a very substantial cost.
The AWI recommendation precedes the release of the WoolPoll 2009 Voter Information kit so there is no way for a grower to make an informed decision at this time.
This is poor process and poor governance. The current board has simply thrown the ethical precedents of all WoolPolls since 2000 out the window.
AWI has said it intends to increase its spending on marketing to 70pc (now 60pc) with a corresponding decrease in spending on productivity-oriented and quality-oriented on-farm research to just 30pc of income from grower levies and the Federal Government's matching R&D funds.
This revised split would apply across all levy rates. The result of this decision is that actual expenditure on on-farm research will decline by up to 40pc, because declining wool production is simultaneously shrinking AWI's levy revenue stream.
Such a massive reduction in investment in productivity gains will put the industry even more out of step with faster moving, more adaptive agricultural sectors which have embraced the challenges of change.
AWI justifies reduced expenditure on productivity research by saying it will increase expenditure on marketing. Increased marketing activities are unlikely to have a major positive impact on either demand for, or the price of, wool.
Does any grower seriously believe AWI's investment in marketing will increase the wool price? Rapidly declining national wool production over the past decade or so has failed to deliver increased market prices.
Sadly, because of declining levy income, the funds available for marketing will also fall in absolute terms.
While it may make some growers feel good to see wool being "promoted", the industry’s marketing track record is depressing and the dollar budgets available to AWI are a mere drop in the bucket in world market terms.
There are many positive alternative ways to invest money earmarked for marketing.
For my part, a vote for zero levy will provide the impetus for change and will send a clear message not only to AWI but also to Federal Government regulators. There won't be another chance to send those messages for another three years.
I encourage all woolgrowers to think about the issues and to vote accordingly.
* Dr John Keniry, a chemical engineer, leading agribusinessman and woolgrower from Cumnock, NSW, was chairman of the WoolPoll panels in in 2000, 2003 and 2006. He was voted off the board of AWI at last November’s annual general meeting. He is currently chairman of the Sheep and Pork CRCs.
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