WA wool selling status quo supported

19 Jun, 2015 02:00 AM
Mal Edinger, author of Westcoast Wools' submission to the Wool Selling Systems Review, believes WA woolgrowers would be disadvantaged if the Western Wool Centre was to close in any move towards centralised selling.
Growers will be disadvantaged due to an inability to view samples...
Mal Edinger, author of Westcoast Wools' submission to the Wool Selling Systems Review, believes WA woolgrowers would be disadvantaged if the Western Wool Centre was to close in any move towards centralised selling.

HOME-grown wool broker, buyer and exporter Westcoast Wools is leading the call for the Western Wool Centre (WWC), along with the Melbourne and Sydney centres, to be retained.

"The auction selling system of three selling centres has proven to be the most transparent, capable of gaining maximum value and accepted means of growers marketing their woolclip," Westcoast Wools stated in a submission to a review of the national wool selling system.

Any move by industry towards a central selling centre - most probably in Melbourne - or towards sale by description without physical wool samples would put WA farmers at a disadvantage, Westcoast Wools' director and author of its submission Mal Edinger said last week.

He said the disadvantage would be most pronounced at times when the market was running hot, such as last week, when WA growers could normally expect to get good prices for their wool.

Under a centralised system, whether an open-cry auction or online, WA's freshly-shorn clip would end up in direct competition with the Eastern States' larger old wool stockpile in times of good prices, Mr Edinger said.

There was a significantly increased risk of a mix-up occurring in sending wool samples interstate and ultimately an overseas wool processor not getting what they thought they were buying from Australia.

"As far as our business is concerned, we are supporting our wool growers 99 per cent of whom want the continuation and retention of auctions at the Western Wool Centre," Mr Edinger said.

In the Westcoast submission Mr Edinger argued there were four main reasons the industry should not move to centralisation.

"WA's efficient procedures can have grower's proceeds in their bank within 21 days of receival. Under a centralised selling system this would most likely increase to several weeks,'' he said.

"Growers will be disadvantaged due to an inability to view samples to check on any classing issues or the ability to physically attend the auctioning of their wool.

"With the elimination of skilled wool buyers, auctioneers and general redundancies (caused by centralisation) the ability to attract young people and therefore ensure the future of the wool industry will be greatly reduced.

"There will be no savings in regards to receiving, lotting and testing of growers' clips. In fact the transportation and the subsequent risk in losing samples would only add to growers' costs."

He said growers already had alternative viable and effective marketing strategy options, including "computer-based selling, in-store price or direct purchase on-farm by a private merchant".

"We are firm believers in the old adage if it isn't broken, don't try and fix it," Mr Edinger said in the submission.

However, growers and the industry might benefit from some research into shorter wools and shearing every eight months and encouraging broader wool production, he said.

"There has been a definitive fashion switch away from the traditional suit to more casual attire.

"This casual attire requires shorter wools so some research into shearing every eight months could greatly benefit growers.

"We (also) have an oversupply of the finer microns.

"We need to convince studs with the ability and bloodlines to provide broader micron rams to ease this oversupply.

"The Chinese still buy 22.5 micron and 24.1 micron wools.

"However the quantities of these types available on any given auction day is too few for an exporter to sell any quantity with confidence."

Techwool Trading managing director Rod Franklyn also supported the three centre selling system in a submission.

"At present, quantities offered in all centres are sufficient and do not warrant centralisation," Mr Franklyn said.

While a logistical "bonus" for exporters, centralised wool storage could put pressure on warehousing costs with a possible "negative effect" on any intended savings, he said.

Some wool buyer and exporter submissions have also strongly argued that wool sample boxes be retained if the review ultimately results in moves to streamline the selling process.

"The appraisal and physical inspection of the wool is the basis upon which we conduct our business," Tianyu Wool Australia general manager Peter Carey argued in his company's submission.

"Whilst there are certain fleece wool types that can be adequately described for use in the commodity/volume sector of the market, we would have no confidence in the description of wool for use in the knitwear market," he said.

WAFarmers sent a shock wave through the local wool industry in March when it said in a submission that the WWC at Bibra Lake should be amalgamated with the Sydney and Melbourne centres into a national selling centre located in Melbourne.

It argued wool bales should continue to be stored in Perth, Sydney and Melbourne, with the wool sampled and tested at the three locations and with samples sent to a national selling centre.

The author, WA Farmers executive officer Kim Haywood has since met with WA wool broker representatives and explained that the submission was written with the aim of generating other submissions in response.

An initial issues paper put out in December by the Wool Selling Systems Review (WSSR) panel canvassed views on a range of possible options, including centralised selling and sale by description, to cut costs and improve returns to wool growers.

Publication of a second discussion paper has been delayed until the end of the month to allow for further research.

The review was commissioned by Australian Wool Innovation which expects the final WSSR report later this year.

It is estimated up to 85 per cent of Australia's wool clip is sold by auction at the three centres.

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Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly


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