WAFARMERS and WoolProducers Australia (WPA) have each urged woolgrowers to vote for the 1.5 per cent levy option as first preference in WoolPoll 2018 with voting now open.
Beneficiary of the revenue raised, Australian Wool Innovation (AWI) has recommended woolgrowers maintain the current 2pc levy for the next three financial years.
Voting in WoolPoll 2018 opened Monday and will continue until Friday, November 2, with woolgrowers having options of 3pc, 2.5pc, 2pc, 1.5pc and 0pc to choose from as a mandatory amount to be automatically deducted from wool cheques to help fund AWI.
The WoolPoll result will be announced at AWI’s annual meeting in Sydney on Friday, November 23 and the new levy will take effect from July 31, 2019.
That meeting will also be the first opportunity for most woolgrowers to peruse AWI’s audited accounts for 2017-18 – middle year of the current three-year 2pc levy period – to access how accurate its previous revenue and expenditure forecasts have been in relation to wool’s sustained record price run which started last year.
AWI has been criticised for basing its WoolPoll information projections for income, expenditure and closing reserves on an Eastern Market Indicator (EMI) price of 1700 cents per kilogram when the EMI is currently 2094c/kg.
It has argued 2pc is required for “building resilience” and to continue its activities in research and development, international promotion of wool and “enhancing profitability” within the Australian wool industry.
But WAFarmers and WPA have questioned an apparent planned 25pc increase in AWI expenditure for the next three-year period under a 2pc levy compared to 2016-17, the last financial year for which audited AWI results are available at present.
WAFarmers livestock council vice president Steve McGuire said on Friday taking 2pc of woolgrowers’ income was unnecessary when a 1.5pc levy would provide sufficient funds for AWI to operate.
“AWI’s spending has increased from $70 million in 2015-16, $88m in 2016-17 to a budgeted $110m for the current financial year,” Mr McGuire said.
“AWI is proposing to maintain this $110m expenditure over the next four years (this year plus the next three under the new levy), which would mean it would be spending nearly half a billion dollars over that time.
“AWI is required to have enough reserves available to cover the winding up of the company and provision for a disease outbreak.
“At the end of the last financial year, the reserve amount stood at approximately $121m.
“Even with a $10m drop, AWI would still have sufficient reserves to cover the statutory reserve requirements.
“WAFarmers does not think an expenditure of half a billion dollars over four years is necessary and the 1.5pc levy rate, along with government matched funding contribution plus the significant reserves held, will provide sufficient funds for AWI to complete the appropriate research, development and marketing required.”
Mr McGuire confirmed AWI representatives, including chairman Wal Merriman and board member and WoolPoll panel member Jock Laurie, had lobbied him during an earlier phone conference for WAFarmers to support a 2pc levy.
“They said they were worried about the impact the decline in wool production - falling bale numbers and the drought over east basically - might have on revenue over the three years if woolgrowers went for less than a 2pc levy,” Mr McGuire said.
“They produced figures which predicted wool production could drop by as much as 15pc (the Australian Wool Production Forecasting Committee’s August report forecast a 5.7pc drop in wool production for 2018-19 over 2017-18.)
“But then they produced figures that showed wool prices could go up by 15pc so that basically answers their concerns about production as far as I’m concerned.”
Mr McGuire said it was “incredibly important” all woolgrowers voted in WoolPoll and were not complacent.
“WAFarmers strongly encourages wool growers to consider choosing as their first preference a 1.5pc levy rate,” he said.
WPA president Richard Halliday said on Monday the peak body also recommended levy payers choose 1.5pc.
“According to the WoolPoll voter information memorandum 1.5pc offers projected annual income of between $85.8m and $88m per year for the next three years which is ample money for AWI to conduct their current business as well as invest in relevant new areas,” Mr Halliday said.
“A 2pc levy will see an expenditure of $110m per year over the next three years which, coupled with the budgeted expenditure of $111.2m for this financial year, means that AWI is intending to spend nearly half a billion dollars in woolgrower and taxpayer money during the next four years.
“Even a $100m annual expenditure represents a 28pc increase over the $78m average of the past three years, while $110m would represent a staggering increase of over 40pc on the average of the past three years.
“We feel this is too much.
“A 1.5pc levy is actually supporting a substantial increase in the amount AWI has to spend, even under a scenario where production volumes incur a significant shock.
“It should enable the board of AWI to do most, if not all of the programmes they are keen to do,” Mr Halliday said.
“The reality is that AWI has never had so much money, given the current healthy state of the reserves and the continued strong prices.
“Whilst the concerns of production are valid, we believe that one of the best ways to contribute to increasing production is leave that extra half a per cent in woolgrowers’ pockets by voting for 1.5pc,” he said.
In an AWI statement on Monday Mr Laurie urged woolgrowers to have their say on a levy through WoolPoll but did not nominate which option they should choose, although he has previously argued for 2pc.
“We understand growers in parts of the country are currently experiencing drought, which is why the board is focused on building resilience into their research, development and marketing investments,” Mr Laurie said.
“We are focused on building resilience within the industry, particularly through AWI’s investments, while times are good.
“We believe it is prudent to balance our financial responsibility with our capacity to deliver benefits for growers.”
WoolPoll panel chairman and South Australian farmer Sydney Lawrie this week encouraged woolgrowers to vote as soon as they received their voter information kits.
“At a time when wool prices are on a sustained high it’s never been more important for growers to have their say on the levy rate for the next three years,” Mr Lawrie said.
