Increase the levy
Local wool producer challenges lower contribution support
Finley farmer Bruce Atkinson believes more can be done to support the wool industry through an increased producer levy.
Mr Atkinson said he was disappointed to learn last week that voters had given the most support to a levy of only 1.5 per cent.
With the levy dictating the amount of funding Australian Wool innovation will receive for the next three years, he said the figure should have been at least two per cent.
The Australian Wool Innovation (AWI) is responsible for research into wool, assist manufacturing and promotes the product.
Mr Atkinson said a 1.5 per cent levy may only have short term benefits financially to wool growers.
‘‘I’m not sure if that (a 1.5 per cent levy) is the correct way to go long term and that has a big question mark over it,’’ he said.
‘‘If we have this wrong then we have to wait another three years before we can review the levy we pay.
‘‘It’s not the end of the world but if there’s enough discontent for 1.5 per cent then there will be a big push for two per cent and it will probably get up.
‘‘It’s not a die in the ditch outcome though, and while wool prices are high we’re probably deriving enough revenue with 1.5 per cent.
‘‘But who’s going to say wool prices will remain where they are?’’
Mr Atkinson said with only a 1.5 per cent levy, the industry could miss out on vital wool promotion, which he strongly supports.
‘‘The 1.5 per cent may appear to generate the same amount of revenue as the two per cent given the increase in value of wool — in dollar terms it would be a similar number after what it was historically.
‘‘But there are lot less wool growers contributing, so in actual fact it could well be a decrease in revenue to AWI.
‘‘The two per cent would help the AWI generate sufficient funds to run the programs it does.
‘‘I wouldn’t like to see it starved for resources simply because wool growers weren’t contributing enough.
‘‘Effectively 1.5 per cent may not contribute as much to the revenue and we don’t know what the future of the (wool) price will be.
‘‘Conceivably AWI won’t have the resources we expected and be able to perform the functions we expected, so there is a risk it will be under resourced.
‘‘Wool is a niche, premium, discretionary product so people need to be encouraged to buy it.’’
Prior to the decision made at WoolPoll 2018, the AWI was promoting two per cent as the levy rate.
Mr Atkinson said he believes some industry discontent with AWI operations may have affected the result.
‘‘There’s been quite a concerted drive to change the composition and what AWI does so there’s been discontent towards AWI.’’
Mr Atkinson said there has recently been a small decline in wool prices, he believes it’s come from external factors affecting most commodity trade.
‘‘Pretty much most commodities are dropping except for coal. There’s instability in world trade at the moment which is a big factor.
‘‘The Chinese are heavily involved in the wool industry and anything that will upset them with upset Australian wool growers.
‘‘I think world trade instability is sort of contributing to the decline in wool value.’’
The wool levy is expected to come into effect from July 1, 2019.
Kristin King was one of three winners in this week’s Finley Christmas Shopping Bonanza draw.