Federal committee tackles wool woes

15 Sep, 2006 08:45 PM
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WOOL exporters have meet with the House of Representatives Economics Committee to discuss the future of declining wool scouring and processing in Australia.

Scoured wool exports from Australia have fallen 6.4pc over the past nine seasons and total early stage wool processing has dropped 10.3pc.

In May, Treasurer Peter Costello asked the Economics Committee to inquire and report into the current and future directions of Australia's service industry.

The Australian Council of Wool Exporters and Processors (ACWEP)- a Federation of Australian Wool Organisations (FAWO) member - presented their submission last week in Melbourne.

The submission included the changing patterns of wool processing in Australia, trade barriers, environmental issues and China's dominance in the industry.

In the 2004-05 season, the weight of greasy wool exports from Australia had fallen 239 million kilograms since 1996-97.

According to the ACWEP submission, the decline has seen Australia move from a pre-eminent early stage wool processor 10 years ago to where it produces less wool tops than Uruguay, whose wool production is about 10pc of Australia's.

The decline has largely been attributed to a decline in Australian wool production, poor returns for growers and the emergence of low labour cost regions such as China and India.

Greasy wool exports to China have risen by 78m/kg over the past nine seasons and early stage processed wool exports to China have fallen by 18.3pc.

But according to FAWO executive director Peter Morgan, the industry is not asking for money to help resurrect the domestic early stage wool processing.

Dr Morgan said most manufacturing sectors in the Australian economy were in some sort of trouble.

"The simple thing is to ask for a bucketload of money, which is something we did not do," he said.

Any emotional arguments about keeping early stage wool processing alive in Australia were also kept out of the submission.

"But it is hard to imagine being the biggest wool producer in the world and not having some form of wool processing industry," Dr Morgan said.

He believed the government could play an important role in helping the industry in the form of bilateral or multilateral trade agreements.

"In particular where they discriminate against semi-processed wool," Dr Morgan said.

In China there is a 1pc tariff on greasy, scoured and carbonised wool and a 3pc tariff on tops.

This is compounded by a 13pc value-added tax on greasy wool and 17pc on all forms of early stage processed wool.

India remains the country with the highest tariffs on all forms of wool.

The total tariffs and duties for imports into India for greasy, scoured and carbonised are 5.1pc and 35.6pc for tops.

Animal health issues also featured heavily in the ACWEP submission.

Dr Morgan said an outbreak of a disease like foot and mouth could see a ban on Australian greasy wool imports from infected regions.

But early stage processed wool would able to be exported, he said.

Dr Morgan said tightened international environmental laws would also play a significant role in Australia.

He said while Australia could never beat China on labour costs, it did have the advantage of regional areas and high environmental standards for manufacturing commodities.

"Most wool processing takes place in regional towns, so it is a key employer," Dr Morgan said.

Economics committee chairman Bruce Baird said the government was keen to investigate whether there were opportunities to improve Australia's exports.

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