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 Wool must find value or find the door: Allan Myers 

Wool must find value or find the door: Allan Myers

25 Sep, 2008 02:20 PM
One of the sharpest minds to ever grow wool has outlined the simple case for its survival as a significant Australian industry. Allan Myers QC grew up surrounded by fine wool producers and is now a significant grower himself.

But his fears for this once great industry have driven him to offer a rare public opinion.

The top Melbourne-based QC has amassed a net worth valued in the hundreds of millions by making apt business decisions and providing valuable legal advice across three decades.

But it is as a producer of 1500 bales of superfine/fine wool a year from his Western District Merino flock that he asks the same question many have asked before - why can't growing such a wonderful natural fibre be more profitable?

The reply to this enduring question challenges various wool fundamentals.

"Everyone in the wool chain must realise they are better off paying more for raw wool," Mr Myers said.

"Growers and manufacturers have to get together to promote particular wools to create more perceived value and move away from the auction system.

"I also believe it's finally time Australian Wool Innovation was scrapped completely, along with Woolmark and the industry fully commercialised.

"Paying a 2pc levy has essentially been giving away our profit and we have nothing to show for it."

Despite these concerns he will continue to grow wool for what he terms "idiosyncratic" reasons but can't see why anyone would continue growing fine wool for pure financial motivation given the current state of the wool industry.

* Extract from an exclusive special report in selected Rural Press weekly newspapers, September 25 editions.

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Date: Newest first | Oldest first
Finally a woolgrower saying it like it is.The levy should be scrapped.

We are not getting a return on our investment - only interference in the growing of our product.

Posted by Brad , 25/09/2008 7:25:07 AM
This is exactly the direction the new candidates for the board of AWI, including myself, wish to head asap.

Icebreaker: in NZ is a way forward for fine wool growers.

Wool needs better promotion than it's currently getting. And united leadership.

Allan, encourage all woolgrowers to vote to make it happen in November.

Posted by George Falkiner, 25/09/2008 8:18:03 AM
Re: George F's comments - the AWGA candidates agree with Allan that AWI must be scrapped?

Will you publicly announce that if you become a director, you wll move immediatley to wind up AWI?

Of course not.

More hot air from stud breeders with no international marketing experience. The AWGA motto appears to be: Criticise everything. Denigrate everyone. Do nothing.

Posted by Sir George, 25/09/2008 9:12:37 AM
The Merino Company (TMC) provides a real alternative. It is the only business model that will diverge from the auction spot pricing available to Australian woolgrowers.

TMC aims to develop consistent demand and pricing stability for participating woolgrowers by securing long-term marketing contracts with the world’s leading retail and apparel brands.

TMC provides its pool participants up-front payment and certain cashflow, stable and sustainable returns based on customer contracts, transparency and information about where your wool goes and to customers – a differentiated wool solution.

Posted by Felicity McDonald, 25/09/2008 3:37:03 PM
Driza-Bone Activ is Australia's answer - a fantastic range of natural high performance active wear made from 100pc Australian Merino wool.
Posted by Laura, 25/09/2008 3:47:48 PM
An interesting comment from a lawyer.
Posted by Broomy, 25/09/2008 8:32:12 PM
Have no doubt that everyone in the wool chain does indeed realise they are better off paying more for raw wool. The problem is that the people managing the marketing for the last 19 years were politicians and appointees of politicians. Politics and book theory, not trading expertise, controlled the market. Why, for example, did Australia's minister for agriculture in 1996 not know that if, as principal supplier of a commodity, you foreshadow a possible price cut this will depress trading in that commodity? Every operator in the trade on hearing such an announcement will immediately set about minimising his stocks so as to minimise losses when the price cut comes. Without speculative stocks on hand traders will cut their promotion of their products. Trading opportunities will be missed.

The simpletons in the Howard government believed that the solution to the price problem was to cut supply. That, after all, was what they learned at university. But nobody taught them that if you halve supply you bankrupt half of your clients, nor that this does not happen in an orderly fashion. All of your clients must come close to bankruptcy until half of them have dropped out. Near bankrupt clients do not have any capital to raise the price of the commodity. All they can do is plan ahead for a further reduction in supply.

When in early 2006 wool traders were trying to lift the price to a viable level our government again threw its spanner into our works with ABARE's outrageous and erroneous price forecast of 673c. The only science that could possibly have produced that figure was "pin the tail on the donkey". Yet this was the Australian government's official advice to the world. It was that forecast which caused the further collapse in supply which sees us again bankrupting our clients for want of product.

Thank you Allan Myers for some very sound comment, and thank you for your idiosyncrasy in sticking with wool. Wool prices can recover, but only if people produce enough of it to keep our remaining traders in business. Merino wool is and always was an eminently marketable product. The unique physical characteristics which made wool so readily marketable twenty years ago are still the same unique physical characteristics, even more marketable today than they were then.

Wool was wiped out by incredible stupidity in the management of the marketing during and after the time when the politicians were the management, especially between 1996 and 2002.

Posted by Ted O'Brien, 25/09/2008 11:51:49 PM
Lille Fox Lempriere are running a wool pool similar to what we had in the wheat industry and that is where the answer to the wool industry lies. Whilst ever we have the adversarial auction system the slide will continue. Myers is wrong to conclude that promotion is unwarranted.
Posted by Realist, 26/09/2008 7:19:08 AM

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QC and fine wool producer, Allan Myers, says AWI and the Woolmark should be scrapped. Photo by JESSICA SHAPIRO.
QC and fine wool producer, Allan Myers, says AWI and the Woolmark should be scrapped. Photo by JESSICA SHAPIRO.
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