Wool is in a perfect storm: McCullough

With continuous rising prices bringing cheer to most growers, wool was the talk of the town at last week’s Wagin Woolorama.

There was no better time for Australian Wool Innovation (AWI) executives to visit WA and rally some support for their marketing plan, which not always gets growers’ full approval.

Beverley wool grower Alan Cleland, who was at the AWI Growers Update meeting, said he was not sure money spent on marketing was a good investment.

“I am keeping an open mind on AWI’s direction with marketing, ” Mr Cleland said.

AWI chief executive Stuart McCullough was pulling no punches when he spoke of the new $420,000 campaign — No Finer Feeling.

“It is expected to be worth $4 million in media value and $1 million in actual merchandising sales, ” Mr McCullough said.

And if that was not enough to build grower confidence, he said the other factors on the swelling list of reasons behind higher prices were low supplies, current fashion trends, health conscious consumers and Chinese affluence.

“We are in a perfect storm, ” Mr McCullough told growers, processors and industry representatives.

He said the most significant demand growth for Australian wool was from the Chinese uptake for domestic consumption.

“They purchase 75 per cent of our clip and consume half of the total, ” he said. “It is scary how fast China is moving.”

Mr McCullough said he could not see wool slipping below 1200c on the Eastern Market Indicator while China’s luxury market continued to grow at a phenomenal pace.

While the challenge of marketing globally continues to be quite daunting, wool does have offshore allies, including the Prince of Wales, who has committed to a five-year program to educate consumers on the benefits of wool.

Prince Charles’ message is that the properties of wool are amazing.

But what is more amazing to woolgrowers is how the price of the commodity is holding up.

Mr McCullough said the continuous prise rise against a high Australian dollar defied all logic, “but it’s no time to rest”.

“We are continually working towards defining the market place and develop co-branding opportunities.”

He said other ventures included health care and wellness usages.

And for the sceptics who shake their heads at the thought of spending levy funds on marketing, there is potential on the horizon for more investment in on-farm research and development projects.

Mr McCullough said he expected an extra $15 million could be divided up into the 50/50 marketing/research split.

“However we look at re-investing, we must abide by the split according to the Government’s Statuary Funding Agreement, ” he said.

The other way to change how levy money is invested will be at the next 2012 WoolPoll vote.

AWI executives who are making the marketing decisions will be hoping prices remain in their favour and growers will vote with confidence.

WAFarmers executive officer Lucy Radzikowska, who was also at the meeting, questioned how fairly AWI board nominees would be appointed by a nomination committee which is expected to be appointed only by the existing board.

“It would better to see the nomination committee appointed independently of the existing board because of the potential for conflicting interest, ” Ms Radzikowska said.

AWI chairman Wal Merriman, who was out talking to growers at Woolorama, said the State farming organisations would not play a part in forming the nomination committee.