There are reservations among Australian wool brokers about Australian Wool Innovation’s development of WoolQ, according to the National Council of Wool Selling Brokers of Australia. These reservations raise questions about why AWI has agreed to fund the development of WoolQ.
John Colley, President of NCWSBA, said that the Board of NCWSBA discussed WoolQ and expressed concerns about why AWI had decided to proceed with its development.
“The Australian wool market is thriving, as can be seen by the remarkable rise in wool prices over the past 18 months. This rise has brought greatly improved profitability to Australian woolgrowers. It is underpinned by the robust competition in auction rooms around Australia.”
“The bidding in these auction rooms is intensely competitive and fully transparent, as any grower who attends the auctions or receives the daily market reports from Australian wool brokers and from AWEX can see.”
Mr Colley continued, “Despite claims that there is ‘market failure’ in our competitive wool selling system, it is hard to see where those market failures exist. There are none of the classic economic measures of market failure: there are many brokers and buyers who compete intensely; there are few barriers to entry to becoming a broker or a buyer; information is freely available; and there are clear property rights to facilitate the transfer of ownership of wool.”
“Furthermore, there are already existing digital services for elements proposed by AWI to be part of WoolQ, such as the woolclasser e-speci and electronic trading of wool”, he said.
“With regard to the e-speci, we understand that AWEX and AWI are each developing their own, competing e-speci apps. NCWSBA is concerned that two industry-funded organisations are separately developing their own e-speci apps, rather than working collaboratively. This seems to be a waste of resources.”
According to AWI’s own assessment, released in June 2017, WoolQ will bring a net benefit of $38 million over 15 years. This equates to just $1.60 per bale per year for all wool sold in Australia, or only 0.1% of the average value of a bale of wool.
“AWI’s stated aim when it initiated the Wool Selling System Review in 2014 was to improve the returns that woolgrowers receive for their wool”, Mr Colley said.
“Yet AWI’s own analysis suggests that the WoolQ will only bring a net benefit of 0.1% of the value of a bale of wool. How does this return justify the spending of the $3.6 million that AWI says it will spend to develop WoolQ? It would be much better spent in reducing the cost of shearing, which accounts for over 70% of the cost of getting wool from the sheep’s back to the ship.”
NCWSBA represents the majority of Australian wool brokers, with members accounting for around 90% of wool sold at auction in Australia in 2016/17. It is the only national organisation representing Australian wool brokers in Australia and internationally. More details about the organisation can be seen at www.woolbrokers.org.
Wool brokers in Australia provide an extensive range of essential services to the Australian woolgrower, including finance, advice on marketing, sheep selection, transport, handling and storage of wool, upfront payment of all costs for the sale of wool and guaranteed payment for their wool.
John Colley, President
Chris Wilcox, Executive Director