AWI auction criticism slated

Three leading Australian wool bodies have hit back at Australian Wool Innovation, saying it has a short-sighted view of the present wool auction system.

Australian Council of Wool Exporters and Processors president Chris Kelly, National Council of Wool Selling Brokers of Australia president Simon Hogan and the Inland Woolbrokers' Association president Wayne Beecher all disclaimed AWI's opinion that it makes no sense that "95 per cent of Australia's wool is marketed through the open-cry auction system".

They also took a strong position against AWI chief executive Stuart McCullough's statement that "there has been no modernisation in the present wool action system in 100 years".

Mr Kelly said he was not sure of the criteria on which Mr McCullough's statement was based.

"What we do know is that the wool auction process of today is very different to that of 50 years ago, when wool bales were placed on show floors with their tops opened for inspection by wool buyers and all information relating to the exchange of ownership was recorded manually, while auctions were conducted in an absence of electronic technology," he said.

Mr Kelly said there had been numerous examples of progressive modernisation, including sale-by-sample and presale testing, which was introduced in 1972.

"The progressive replacements of large show floors of bales by sample boxes that occupy much less space and contain a random sample drawn from all bales in each lot led to the use of objective test data to assist the valuing process," he said.

"Sale-by-separation led to the progressive reduction in the number of wool selling centres from 13 to the current three."

Mr Kelly said these changes gave wool exporters and processors a more accurate prediction of the expected processing performance of each consignment.

"This eliminated the need for sorting prior to processing at the wool plants," he said.

"The wool industry was one of the first to extend the use of computers and electronic technology from the traditional finance and accounting functions to assist in improving the efficiency of the business operations within an industry."

Mr Kelly said advances in IT technology allowed the electronic exchange of data related to the testing, sale and export of wool to evolve quickly during the 1980s to the stage where high speed, cost-efficient, error-free exchange of data happens in all sectors of the wool pipeline.

"If Mr McCullough was referring to the open-cry (which is only one part of the exchange of ownership), it must be noted that the wool industry has investigated or implemented alternate methods, ranging from sealed electronic tenders, electronic offer boards, digital imaging of samples, and electronic replication of the open-cry process since the 1970s," he said.

Mr Kelly said none of the other technologies developed to date have demonstrated the ability to extract the same level of competition while selling more than 250 lots an hour with instantaneous price discovery and to attract the necessary buyer and seller confidence.