AWI hopes for wool price lift

24 Mar, 2014 01:00 AM
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Discussing AWI's marketing programs at last week's Stud Merino Breeders' Association of WA AGM were the association's vice-president Steven Bolt (left), AWI corporate communications manager Marius Cuming and association president Kevin Keatley.
However we do know this benchmark has to rise perhaps to around the $12 mark given input costs.
Discussing AWI's marketing programs at last week's Stud Merino Breeders' Association of WA AGM were the association's vice-president Steven Bolt (left), AWI corporate communications manager Marius Cuming and association president Kevin Keatley.

AUSTRALIAN Wool Innovation (AWI) knows it has a hard job keeping all woolgrowers happy due to its wide brief.

Not only does it need to invest in research and development on and off farm, but it has to market the product worldwide to ensure demand and prices stay strong.

Speaking at the Stud Merino Breeders Association of WA annual general meeting last week AWI corporate communications manager Marius Cuming covered these areas of the company and explained to growers the rationale behind its marketing campaigns and research and development.

The company knows to keep woolgrowers in the industry it must ensure the Eastern Market Indicator (EMI) stays above $10, but it acknowledges rising costs mean this may not be enough.

Mr Cuming said the EMI had been sitting above the $10 benchmark for the past three years

“However we do know this benchmark has to rise perhaps to around the $12 mark given input costs,” Mr Cuming said.

Prices may not have risen at the farmgate in a couple of years, but Mr Cuming said global demand for Australian wool has risen.

“The foreign exhange rate has largely masked the increase in demand for Australian wool, as global demand is measured in US dollar terms,” he said.

Over the past 10 to 15 years, in US dollar terms, the EMI price trend has increased by 11 per cent per annum.

Mr Cuming said the reason this hasn’t been evident is because 14 years ago the Australian dollar was worth US45 cents compared to about 89 cents now.

To ensure this global demand continues to rise Mr Cuming said AWI was committed to strong marketing campaigns targeting the top end of the fashion industry.

Mr Cuming said the company was continually asked why it was marketing wool at the top end, and he explained it using a simple analogy of a pyramid of champagne glasses.

“Imagine the world textile trade as a pyramid of champagne glasses, if you want to influence the global textile trade you need to pour from the top,” he said.

“At the bottom you have the likes of Target, then in the middle you have Sportscraft and similar and at the top is Armani.

“Therefore you have Target looking at Sportscraft for a lead and similarly Sportscraft looking at the designers above it.

“That’s why we target the top of the chain as it is those designers who are setting the trends for the next four to five years.

“Just like the stud industry is looking at influencing the Australian sheep flock, we are working to influence the global textile trade.”

He said campaigns like No Finer Feeling were working and attracting strong interest in the textile industry.

“There are 40 brands signed up for the No Finer Feeling campaign including the likes of Zegna, Armani, Benetton, which is proof people are wanting to join,” he said.

“In terms of the International Woolmark prize the winning design is sold in leading stores around the world and the aim of this project is to increase wool garment sales by 700,000 garments a year.”

The company has often been criticised for pushing more money towards marketing and spending less on research and development, but during his presentation Mr Cuming showed that investment in on-farm and off-farm research and development had increased 270 per cent since 2009/10 from $9 million to $24 million.

“And even since the change from a 50:50 split in marketing and R&D to a 60:40 split the R&D spend had gone up 7.5pc from $22.6 million in 2012/13 to $24.3 million in 2013/14,” Mr Cuming said.

AWI’s main areas of on-farm research and development are flystrike, shearer and woolhandler training, wild dogs, genetics and genomics and extension programs.

Interesting areas in the flystrike research include looking at sniffer dogs to detect odour differences for at risk sheep and liquid nitrogen achieving proof of concept as a mulesing alternative.

Mr Cuming said the liquid nitrogen research was interesting and involved finding the extra flap of skin and treating it with liquid nitrogen.

“It freezes the skin and pulls it together similar to mulesing,” he said.

“As liquid nitrogen is already used on humans and approved for human use it means there are a lot less regulations and that welfare groups accept it automatically.”

Mr Cuming said AWI was heavily investing in wild dogs research, as a recent report found that at the current rate of progress in 30 to 40 years it won’t be viable to run sheep in the pastoral areas of Australia.

Every dollar invested in wild dogs equated to a return of $8.60 to woolgrowers.

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Jodie Rintoul

Jodie Rintoul

is Farm Weekly's livestock manager

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