1. Introduction David Cottle (edited by Emma Doyle)
Learning objectivesBy the end of this first topic you should have:
An overview of the unit and the Australian wool industry An understanding of the need and requirements for the supply of high quality wool to the
market Knowledge of the main sectors and organisations that play a role in the industry
Key terms and concepts Clip Preparation – handling the wool from sheep’s back to bale to sale Wool Marketing – the process of optimising the returns from the sale of wool, including
promotion.
Introduction to the topic Australia is the world's largest wool producing country, accounting for about 21.5% of world production in 2008. The numbers of sheep farms, sheep and wool production have been declining in Australia (Figure 1.1) and the world. In 2009/2010 there were 73 million sheep shorn with an average fleece weight of 4.3 kg. In 2011-2012, the wool clip is forecast to increase to 75 million, with an average wool cut of 4.45 kg (ABARES 2011).
Since 1990 Australian wool production has fallen by about 65%, to around 342 tonnes in 2009/2010 (Figure 1.2). This together with 67,000 tonnes of sheepskins and fellmongered wool, wool exports had a gross value of A $2.3 billion in 2009/10.
Australia is the largest exporter of wool and the major market being China. China’s demand for Australian wool increased to around 77 per cent in 2009/10 due to lower European demand. In 2010/11, it is expected to fall back to around the average 73 per cent of the past few years. In 2009/10 India was Australia’s second largest wool export country. The projected growth of India’s processing sector is likely to increase competition with China for Australian greasy wool exports.
Figure 1.1 Number of Australian Sheep FarmsSources: ABARES, ABS, Woolmark.
Note: Sheep farms are those with with an estimated value of agricultural output of $22,500 or more that run sheep. From 2004/05 estimated value of agricultural operations is based on $40 000 or more with sheep
Figure 1.2 Australian Shorn Wool Production and Auction PricesSource: ABS, AWI Production Forecasting Committee, AWEX, The Woolmark Company.
value ($Am) greasy equivalent volume ('000 tonnes)
Figure 1.3 Australian Wool ExportsSource: ABS, The Woolmark Company.
Note: exports comprise greasy, scoured and carbonised wool, tops and noils.
1.1 Wool production Currently, specialised sheep producers account for only 30 per cent of Australia’s wool production. The majority of wool and sheep meat production occurs on mixed enterprise properties (Figure 1.4). The number of sheep shorn is forecast to increase in 2011/12 as the number of adult sheep increases because of ewe retention for flock rebuilding. The effect in wool production of the projected increase in sheep numbers is expected to be modest due to the changing composition of the sheep flock that has occurred over the past years. A meat production focus has resulted in an increase in cross-bred lambs and a lower number of Merino wethers. The profile of the Australian wool clip has changed significantly, with fine and superfine (less than 20.6 micron) and strong (< 22.5 micron) wool production has increased, whilst mid-micron wools have declined.
Figure 1.4: Cash Income for Specialist Wool ProducersSource: ABARE. Note: All figures expressed in 2008 dollars. 2007/08 figures are forecasts.
Wool's share of global fibre usage has declined significantly. The world market for fibres has tripled in 40 years, but synthetics have accounted for most of the growth. Natural fibres began to be replaced in the 1920s by artificial fibres, mainly rayon and acetate. Wool use has been regular in quantity but small in market share; from a near 10% of fibre use around 1960 falling to less than 2% (Figure 1.5).
Figure 1.5: World apparel fibre production by type Source: ABARES.
1.2 Fibre use trends Looking forward, the market picture is challenging for wool and for other fibres.
Growth in the consumer market for textiles is slowing in both developed and developing countries
Consumer spending per capita is moving away from clothing to housing, transport and education
When apparel is purchased, consumers and retailers want better value in terms of price and quality
New synthetic fabrics are competing on both lifestyle performance and cost points.
Major influences on demand for apparel textiles and wool into the 21st century have been identified (Topics 13 – Wool Price Determination: Macroeconomic and External Linkages, and Topic 16 – Global View of the Apparel Market, also see www.wool.com.au):
The global apparel market is projected to grow at 2.5 % per annum - below the rate of expected 4 % world GDP growth
The largest clothing sector will continue to be casual leisurewear (70 %) though its share will decline a little as 'smart casual clothing', sports apparel and active leisurewear segments develop
Overall, the consumer wants it all. Key Apparel Purchase Drivers are no longer fashion designers but practical consumer demand for:
- Casual looks - relaxed, less structured but not cheap or uniform fabrics - Comfort - looser fit, lightweight, soft handle, breath ability and stretch - Clothes that travel well - wrinkle resist, durable - Convenience - total easy care - Versatility - multi-occasions, seasons, individuality - Value for money - a genuine product difference or a cheaper product - Lifestyle brands - especially for young people, with confirmation of 'branding' as a global
trend Retail consolidation with the aim of forcing economies of scale, and so lower margins and
consumer prices, will increase buying pressure on apparel. Prices will continue to fall in real terms for many basic apparel categories
The textile supply chain will have fewer players with access to consumers and more emphasis on value for money, product innovation, exclusivity, strategic alliances for co-operative product development, linked international expansion, global sourcing and promotion
Pressures on wool prices and costs will continue, with ups and downs. The forces reducing prices paid for apparel and textiles include:
- consumer spending choices away from clothing - consumers seeking best prices - oversupply of fibre and excess processing capacity - retail competition - global manufacturing competition locating into lower cost countries - falling trade barriers for suppliers and markets Price and product demands are eroding the market share held by natural fibres. Greater
economies of scale and industrial investment in new technology for synthetic fibres (polyester, acrylic and nylon) have enabled volume growth through price discounting, particularly in Asia
Trends in some major markets (India – AWI 2003c.pdf, Japan – AWI 2003b.pdf and Russia – AWI 2002.pdf) are discussed in the readings for the topic.
1.3 Future consumers Young people dominate discretionary apparel expenditure globally. Young adults stress price and performance rather than textile fibre. They associate natural fibres with quality, but branded 'performance' products are further increasing the appeal of man-made fibres (Tencel®, wool-like Polartec®, Lycra®).
Younger adults have high regard for wool quality, softness and breathability - however 50 % see wool as difficult to care for and 42 % think wool apparel is itchy. Both consumers and retailers perceive that wool is used for formal wear and classic knitwear for older people.
Product pricing will continue to influence younger and older consumers, retailers and pipeline businesses with the option to use fibre alternatives. Wool is an expensive fibre to produce and to process compared to cotton or synthetics.
1.4 Marketplace prices for wool and other fibres The price of wool can fluctuate dramatically in response to short-term shifts in supply or demand (Topics 14-17). Upward movements in demand and prices are now more aligned with prosperity in key markets and/or with relative value of the Australian dollar. A low $A means buyers can afford to pay more in Australia for wool destined for export. This advantage declines as the $A strengthens relative to the US dollar. On a price basis Merino wool is in the luxury product class. Fibre competition, consumer demand, product and cost realities have reduced prices paid for wool. Sustained lower real prices have dampened the interest of farmers (in Australia and elsewhere) in supplying raw wool when land-use options exist, including grains, beef, prime lamb and timber.
Over the last four decades market and competitive pressures have forced all raw fibre prices down. Demand for synthetics has grown significantly as price has fallen and performance improved. AWI is undertaking many projects to ensure wool remains competitive, such as non-wovens and novel wool uses.
1.5 The place of wool in Australian agriculture To the Australian community and economy, wool continues to be a major industry. The business of producing and exporting Australian greasy wool and scoured wool and tops plus support industries employs an estimated 200,000 Australians. Exports of wool earned just over $2 billion in 2009-2010 (Figure 1.3).
There are more 'mixed enterprises' producing sizeable quantities of wool than specialists (over 50 % farm income from wool). As many sheep are located in grain-sheep regions as are located in 'wool areas'. Wool supply shifts up or down as producers with land-use options decide whether to place priority on grain, beef, lamb or wool.
Producers harvest and need to sell a range of wool types. The majority of clips are Merino based, but 'crossbred' wool from lamb production is significant. In an Australian clip of 60 bales (2,500 sheep, 11,000 kg greasy wool at 180 kg per bale) there would be about 50 bales of fleece lines, 6 of skirtings, and 3 bales of bellies. The wool from these sheep would make about 4,700 suits.
Figure 1.6 Wool Conversion. Source: Australian Wool Innovation (2002) Future Fleece CD
Selling systems need to ensure that all types are transferred from sellers to buyers. Some 85 % of wool sold goes to the auction system. The Australian Wool Exchange (AWEX) conducts sales primarily in Sydney, Melbourne and Fremantle. There are some 55 brokers and agents in Australia. About 15 % of wool is sold 'privately' on-farm or to local wool handling facilities (Topics 9 and 11).
Two major wool brokers handle up to 60 % of wool, along with 40 to 50 smaller, independent handlers often in local centres. Transport, handling, testing, warehousing, dumping and selling systems are commercial activities in competitive marketplaces. The Australian wool marketplace is characterised by many sellers and fewer, but a competitive number of buyers (Figure 1.7). Some businesses are vertically integrated along stages of the pipeline and processing chain.
Figure 1.7 Pipeline participants. Source: Australian Wool Innovation (2002) Future Fleece CD
In recent decades, the number of wool processors has fallen reflecting global fibre market and wool use trends. Cost and return pressures apply along the pipeline as wool strives to compete against lower cost synthetic and cotton products. The need to invest in modern equipment and economies of scale brings processors to critical decisions such as factory location and whether to use wool. Early stage processors (scouring, topmaking) now only number in the hundreds worldwide.
The wool pipeline then fans out to about 1,500 spinners of yarn and 30,000 weavers and knitters. Hundreds of thousands of product manufacturers and distributors then work to sell to millions of selective, price conscious consumers. Value increases as wool moves through the complex supply chain (Figure 1.8) (Topic 18).
Figure 1.8 Value adding ($/kg) of pipeline participants. Source: Australian Wool Innovation (2002) Future Fleece CD
1.6 Wool quality along the supply chain This subject is addressed in detail later in Topic 15. Two definitions of quality are "fitness for purpose" or "no surprises at a given price". The Chant Link Report (1994) recommended that IWS (now Woolmark) should establish guidelines for high quality processes and practices (best practice) for all sectors of the wool pipeline from the wool producer to the mill, while private organisations such as AWEX should set and monitor most minimum product (greasy wool) quality standards, as well as conduct sampling site and show floor registration and wool classer registration (Topics 15 and 18).
Since the Reserve Price Scheme was abolished an increased quality consciousness and greater focus on customers and their requirements has emerged in the various areas of the industry (Figure 1.9).
These changes have led to a number of wool producers, supported in many instances by brokers, wanting to differentiate themselves in the market place as higher quality producers. Accordingly, a number of private quality management schemes evolved in the 1990s, mostly owned and operated by wool producers or brokers (see Topic 11) with varying success. This trend arose from a view that quality is a long term marketing tool to:
improve productivity reduce costs by eliminating waste and costly reworking improve financial performance limit liability improve customer satisfaction.
Figure 1.9 Wool Industry Functions and Interactions. Source: IWS (1995).
1.7 Wool industry quality systems A total wool industry quality system needs to: Introduce accountability, so that people recognise they are responsible for their actions Develop and implement processes, such as ISO 9001, that continuously improve the
industry Ensure that product specification and documentation meets the customer's needs Have an integrated quality system along the pipeline with feedback and traceback
mechanisms Give customers confidence in Australian wool by providing a quality product and
assurance.
Quality system approaches to continuous improvement are well accepted by companies in most industries and aim to: Motivate staff through involvement and recognition of their role in the business. Clear
instructions are available for all staff on what needs to be done Document all processes and procedures so everyone knows how the business should
operate Accumulate information and data which helps in the analysis of all aspects of the business Stabilise the production system to meet particular market segments. By knowing what the
company is doing and what impact management decisions can have, then outputs are better able to be controlled
Assess the potential of new technology as it becomes available. Once a quality system is stabilised, small scale trials can be conducted. The new technology, if adopted, can be incorporated into existing procedures
Provide assurance to international customers, leading to a preference for the assured product in the marketplace.
Australian wool producers and service organisations that intend implementing quality systems need to: Implement credible (documented and audited) wool systems that provide customers with
product assurances Select the quality scheme that best meets their situation Improve and seek to establish more communication links up and down the wool pipeline Seek proof of the benefits to customers of supplying wool through different quality systems
via market research and market premiums and discounts Undertake trials to assess different delivery systems and product characteristics.
Australian wool customers need to: Participate in general market research on customer requirements Adequately specify their requirements Develop direct lines of communication and feedback via commercial organisations Develop and implement quality systems within their own companies.
Improving industry linkages To ensure a quality product at the end of the wool pipeline, each customer must receive a quality product from their supplier and pass a quality product on to the next customer in the chain. However, the quality issues at each stage of the wool pipeline are different and often little understood by the other sectors. This makes the communication between sectors critical. Often, improving the linkages (communication) between quality systems at different points along the marketing chain allows for major improvements in quality.
Improvements in the following areas can help quality: Customer specifications and product descriptions Materials handling and contamination Industry documentation and information Quality assurance – trust between customers and suppliers.
Customer specifications and product descriptions For wool, the linkages between customer specifications and supplier descriptions are complicated by the change in the size of deliveries from farm lots (often less than eight bales) to mill batches (often greater than 200 bales) and the change of product descriptions from greasy fleece descriptions to clean top and yarn descriptions.
Provision of full description: Provide all objective test information (core and staple measurements), all subjective information (appraised product attributes and description of non measured characteristics) and required documentation (orders and contracts in hard copy and/or electronic form), according to customer requirements.
An appropriate level of specification: Ensure that for a given specification, variation within each delivery and between repeat deliveries will be kept below a predetermined maximum level which will consistently meet customer requirements. Prediction formulae are useful in achieving this end.
Preferencing Australian wool: The Australian wool industry will not supply a critical volume of quality managed wool unless customers specify a preference for wool from quality systems.
Materials handling and contamination Pack damage which may cause pack fibre contamination is important in materials handling (Figure 1.10).
Figure 1.10 Material handling and contamination. Source: IWS (1995).
Wool producers select the pack type and determine the weight of bales when pressed at wool harvesting. Brokers and merchants put core sample and grab sample holes in bales for testing. Some brokers provide recycled packs. Dumps press bales to size or density, strap them and then load them into containers. Traders determine the number of bales in a container. Processors unload the containers and empty the bales. Warehousing activities using forklifts and clamp trucks and bale hooks are undertaken at all stages. All of these activities have an impact on the condition of the pack and the likelihood of contamination.
1.8 Industry documentation and information The flow of information is the basis of feedback and traceback systems. It can be used to identify and then address quality problems through quality audits and corrective action. Feedback from processors to producers is one of the major challenges the wool industry faces given the small number of early stage processing mills (less than 1,000) and the large number of wool producers (Figure 1.8).
Quality assurance - trust between customers and suppliers Trust between customers and suppliers is built by having shared goals (for example, produce quality wool) and on delivering the quality assurances given via accredited quality systems such as the ISO 9000 series. Quality assurance is not a guarantee, but it does give the customer some assurance about the quality system through each stage of the marketing chain and the likelihood of receiving a consistent standard of product.
What is quality? “Quality” can also be viewed as providing requested products and associated services at a competitive price and in a timely manner.
From the customer's perspective wool quality covers such things as: accurate product description (diameter, yield, strength, etc.) no contamination (either in-bale or pack) accurate product identification and associated documentation timeliness of delivery appropriate packaging produced and supplied through a robust and highly creditable quality system (from
paddock to processor) meets customer order specifications the ability to handle and trace back customer complaints and to correct mistakes so they
do not occur again.
The benefits of improved quality to the customer include:
improved customer confidence, satisfaction and loyalty repeat business better market access better products improved process efficiency better employee motivation and morale increased capacity less waste decreased liability and warrant costs.
Quality systems: must be credible to provide customers with maximum confidence (quality assurance) must strive for continuous improvement (Figure 1.11) need sufficient volume of product covered by quality systems to ensure that customers
have adequate supply need customers cognisant of the systems and their objectives.
The major components of a good quality system are:
total commitment to quality improvement from senior management down high value placed on education and training to ensure that all people have the skills to
identify, solve and implement quality a strong customer focus and a desire and mechanism to better service their needs a well designed and documented quality system including: - quality manuals - process control, inspection and measurement at various stages of the process - quality records - document control - control of non-conforming product (corrective action plan) - Rigorous auditing, which can be either internal to monitor process improvement and meet
customer specifications, or external for the purposes of accreditation and certification.
Customer quality requirement The Chant Link research (Figure 1.12) identified that customers wanted:
Contamination free wools and systems to prevent contamination from any source, both pack and in-bale
Adequate and accurate description of the greasy wool Improved on-farm processes, particularly in relation to paddock and yard contamination Improved harvesting and clip preparation practices Improved sampling and in-store handling processes to reduce pack damage Increased integrity of display samples
Better identification systems or processes to detect urine stain and pigmented dark fibre An ongoing reduction in chemical residues on greasy wool to eliminate any potential
environmental impact Co-ordination and central management (within industry, not government) of important
industry standards Successful quality systems that cover a high proportion of the clip, are simple and cost
effective, have high integrity and external auditing Greater reliability in broker and private treaty merchants handling, interlotting and bulk
classing approaches Greater reliability in exporter mill lotting and post sale blending to meet customer
requirements. Improvements in wool dumping to reduce pack contamination and increase bale
identification.
Figure 1.12 shows that the main areas which require improvement (the biggest gap between the importance score and Australia's performance) are in contamination and on-farm practices, especially classing and clip preparation. However, part of the gap in clip preparation perception and performance may be due to mill lotting practices and incorrectly blamed on clip preparation. In this study, Australia was perceived to perform well in product description, sale rules and regulations, and in transportation from farm to store.
Figure 1.12 Perceptions of buyers and processors. Source: IWS (1995).
Benefits to customers The benefits that customers can expect from quality systems include:
Reduced risk of in-bale contamination Reduced risk of pack fibre contamination through either the use of non-offensive wool
packs (for example, nylon) or better sampling and handling procedures Improved documentation and communication procedures. Where non-conforming product
is identified, customers will have the assurance that there are procedures to deal with quality problems
Increased raw wool objective measurement.
From a customer perspective, some factors limit the timing and size of benefits. There are many producers and few customers making communication complex. A critical mass of wool is required to easily build processing batches consisting only of quality managed wool. It takes time for the newly implemented quality systems to gain credibility. The raw wool pipeline is complex so an integrated quality systems approach from the farm to the mill is required.
Role of the customer Improvements in wool quality have a greater chance of occurring if customers participate in Australian wool quality developments, including: improving product specification, preferencing wool from Australian quality systems, sourcing from Quality Systems which suit their needs (scope, type, size, quality issues, documentation, auditing, assurances, certification, performance measurement, corrective action and comparative trials), participating in market research on customer requirements, developing direct lines of communication/feedback via commercial organisations, and developing systems in the company (e.g. ISO 9000 series accreditation).
Supplier quality requirements Customers' quality needs are better met by:
Developing quality systems which continuously improve wool quality with respect to: - contamination - adequate clip preparation and batching practices - adequate and accurate product description
Implementing credible Quality Systems that are adequately documented and audited and use a brand or branding system which represents the attributes of the quality system in one symbol and used on the supplied documentation, or even on the product itself
Developing quantitative proof that there are benefits to customers who use wool that has passed through a quality management system
Achieving a critical mass Developing or selecting a Quality System which best suits their needs Improving communication, product description and information traceback and feedback Cooperating up and down the marketing chain.
The Australian industry must acknowledge that some of its quality problems such as contamination are caused at multiple points along the wool pipeline and the only way to realistically address these problems is through cooperation between the different sectors.
1.9 Quality standards and codes of practice
On-farm processes Animal health and husbandry are not subject to uniform, legislated quality assurance measures, although some individual groups have set specific guidelines. Similarly, breeding strategy is an individual wool producer concern, although again, some wool producer groups have formed around certain stud bloodlines and these groups sometimes set specifications on allowable genetic material.
In a growing number of cases, paddock (field) and yard contamination sources are specified
and audited by private quality assurance schemes associated with broker brands, but mostly the wool producer manages these aspects unsupervised.
Education and training (shearers, classers and shedhands) The Rural Industry Training Council and the wool industry set standards for shearer and shedhand training. Training is conducted by industry providers such as technical colleges along with some private training companies. Some emerging quality schemes do, however, require a certain level of training for shearers and shedhand staff before they commence.
Wool classers must complete an AWEX approved training program to be eligible to be registered (licensed) on the AWEX administered Wool Classer Registration Scheme. All clips offered for sale through AWEX managed sales must be classed by a registered wool classer. Classing standards are monitored by the Clip Inspection Service operated by AWEX. Any wool classer found to be consistently preparing wool outside of industry clip preparation standards contained in the Code of Practice is subject to demerit points leading either to retraining or possible deregistration by AWEX.
1.10 Harvesting and preparation Shearing shed classing procedures are governed by the industry-agreed Code of Practice for Clip Preparation Standards (Topic 7 Readings, AWEX 2004.pdf). Such standards may be varied where the private buyer (for example, a merchant or local processor) directs this to occur. AWEX is responsible for administering clip preparation standards on behalf of its members.
Shed processes as such have not usually been subject to particular controls, although they are subject to audit by private quality assurance schemes of the type run by some of the wool brokers and wool producer groups. For example, some private quality assurance schemes place lower limits on the ratio of shedhands to shearers to ensure the wool classer has sufficient time and resources to adequately perform his/her craft. The same schemes involve inspections of shearing sheds to ensure elimination of potential contaminants such as hay baling twine.
Bale identification has been by simple visual markings involving the wool producer property stencil, woolclasser stencil and bale numbers. Brokers, dumps or exporters typically renumber the bales after auction or private purchase in a sequence intended for a mill lot. Thus, two sets of bale numbers can sometimes appear on bales. In an attempt to overcome this situation, there has been considerable R&D work on electronic bale identification systems but they are not in place yet.
Each bale also carries a wool classer description of the contents (e.g. AAAM), depicting the main line from the farm. A wool classer specification describing the various lines of the clip is also consigned with the wool to the broker's/merchant's store. This description is superseded by objective measurements and subjectively appraised descriptions for sale purposes.
1.11 Packaging wool on farm There are specifications for four types of wool packs, with minimum manufacturing standards set by Australian Standards (AS/NZS 4546:2004).
Only those packs which meet standards can pass through Australian Customs and thus be imported into Australia. There are no regulated export controls on packaging.
1.12 Transportation and sale Strict government road transport regulations apply for the transportation of all goods, including wool.
Sampling The procedures for core and grab sampling are set by Standards Australia and IWTO (International Wool Textile Organisation). If wool is sold by sample, the sampling procedures must be followed correctly with measurements of the sample conducted by AWTA Ltd. AWEX registers sampling sites and show floors. It also audits show floors and has appointed AWTA Ltd to conduct audits of sampling sites.
In-store handling Handling at broker and merchant stores is the subject of a voluntary Code of Practice set by the wool broking industry. Many brokers have obtained or are seeking ISO 9000 certification for their operations.
Preparation for sale Lines of wool which comprise four bales or more can be offered for sale as an individual sale lot. Designated superfine lines may be offered for sale as smaller lines (three bales or less). Smaller lines are often sent for interlotting or bulk-classing to be matched (sometimes objectively) with other similar wool to build up lot sizes.
Bulk-classing and Interlotting: Wool prepared for sale via bulk-classing or interlotting must meet industry-agreed clip preparation standards. In addition, IWTO sets ranges of objective measures acceptable for interlotting. A combined AWTA Ltd certificate is supplied for interlotted wools describing the characteristics of the lot, provided its component wool lots are within IWTO accepted ranges.
Sample Appraisal: Wool is sold by sample and AWEX has responsibility for monitoring clip preparation standards. Prior to auction, a subjective Clip Inspection Service is conducted in which lots may be checked to establish whether published minimum standards have been met by classers. Appraisal of non-measured characteristics to produce an AWEX ID is carried out by registered appraisers.
Sample Security: Sample security is part of AWEX registration criteria for sampling sites and show floors and is also referred to in relevant Australian Standards.
Show Floor and Sampling Site Registration: AWEX registers sampling sites and show floors and audits show floors and has appointed AWTA Ltd to conduct audits of sampling sites.
Product description Testing standards for the main objective measures of wool are set by IWTO (www.iwto.org). AWTA Ltd tests the wool which is paid for by the wool producer. Wool offered for sale by sample must be measured for yield, diameter and vegetable matter. Other measures such as staple length, strength and position of break of combing wools, clean colour and coefficient of variation (CV) of micron can be supplied. If additional tests are done, the results must be supplied with wool offered for sale by the wool producer. Full details are available in the AWTA reading Testing the Wool Clip (AWTA 2002.pdf), and in the Wool Metrology Unit.
Contamination (in-bale and pack) Industry groups encourage wool producers to use wool packs which are non-contaminating (for example, nylon) and therefore eliminate pack-induced contamination. However, no organisation in the wool industry has the power to ban particular packs or, for example, to force wool producers to only use nylon packs.
Sale The auction sale is governed by rules and regulations set by AWEX covering data transmission, catalogue formats and sample display procedures.
Post-sale functions Mill lotting: (assembly of wool lots suitable for a particular mill) is the province of exporters. The process and standards of mill lotting is subject only to the buyer-seller (mill-exporter) specifications in the sale contract. Often, the mill specifies a set of performance criteria for the scoured and carbonised wool or wool tops they require, rather than the parameters of the raw
wool lots which they are buying to make the product.
Information and data transmission: The transmission of both objective and subjective characteristics of the sale lots are handled by AWEX see //www.awex.com.au/network/hange). The wool industry controls the standards of electronic communication.
Dumping: The dumping operators have a voluntary Industry Code of Practice. In some instances individual dumps are seeking ISO 9002 certification of their processes. There are at present no regulations on the number of bales which can be placed in a container, although the weight of shipping containers is subject to a particular maximum imposed by shipping and stevedoring regulations.
Industry documentation and information flows Greasy wool is likely to change hands at least once and to pass through several operations prior to delivery to the mill which commences processing of that wool. The industry's documentation and information flows (Figure 1.13) are designed to ensure that the product reaches its proper destination. The documentation process aims to ensure that traceability of wool is possible at all stages.
Figure 1.13 Greasy Wool Documentation and Linkage. Source: IWS (1995).
1.13 Key quality issues The main issues that need considering along the supply chain are summarised below:
better understand the wool market and what the market needs, know your present product - what wool are you growing and why? Be market responsive by seeking out information on customer requirements and
responding to it.
Production and Breeding Strategies
breeding objectives sheep husbandry (nutrition, crutching, etc) minimise chemical residues on greasy wool implement a quality system for harvesting, preparation and packaging
- high quality preparation - non-contaminating wool packs - procedures to reduce dark fibre - accurate product description and documentation - documented procedures
Provide the maximum amount of information to customers
full range of objective measurements assurance of unmeasured characteristics
- quality systems- packaging - dark fibre
use emerging technology (for example, curvature).
Summary of key quality areas in Wool Production Eliminate pack fibre, dark fibre and non-wool contamination Provide a clean, environmentally friendly product to the world Provide the full range of available objective measurements Participate in a quality scheme.
Wool brokingBrokers need to consider the following areas:Assembly for Sale Improved communication and feedback with producer clients. Receival of wool into store
standard of packaging, documentation lotting of lines
Sampling procedures
non-contaminating according to Australian and IWTO standards security and display
Rehandled wool
bulk classing objective and subjective interlots reclassing
identification and documentation damage in-store safety
Sample management
identification display and security reliability of appraisal
Data compilation, storage and catalogue preparation
accuracy and accessibility electronic transfer
Post sale delivery
Orders, countermarking and assembly
Shipment preparation Dumpers and shippers need to consider the following areas:
Scheduling improved data collection and monitoring of all wool flows
Receipt of wool into dumps improved verification of bales into the store to identify incorrect bales increased exporter time allowances for the return or repackaging of damaged or incorrect
bales increased use of electronic bale identification methods improved source store documentation
Unitising improved data availability on yields, bale weights etc. improved bale marking systems
Handling improved in-store handling procedure including conveyor systems
to reduce the potential for forklift damage to bales
Dumping increased use of standard unit configurations, - improved strap quality control improved control on bales/unit configuration to avoid bale damage
Container Loading improved container loading procedures to reduce incorrect allocation of bales to containers
and overloading of containers
Traceback System improved information data bases to assist traceback procedures
Transport, handling and warehousing Eliminate pack damage during sampling and handling Monitor preparation standards Maintain the integrity of bulkclass, interlotted and reclassed wool Ensure sample security Communicate with producers on the quality standards required by customers and on how
to monitor performance (for example, improved bale identification). The broker also needs to manage producer clients who consistently fail to perform to expectations.
Purchasing and selling Exporters need to consider the following areas:
Continuous communication between customer and supplier to ensure requirements are clear
Improved customer knowledge of availability and pricing
Purchasing: appropriate specification use of objective measurement use of quality systems.
Limitations in purchasing preparation, measurement, identification critical mass.
Batching of wool to meet order specifications objective measurement processing prediction.
Delivery and shipment; directions to dump response to customer complaints dealing with time constraints imposed by clients when the scheduling of shipping is not
uniform matching of the dump to mill and exporter requirements to ensure that containers are not
overloaded improve in-store procedures to avoid bale damage increase the use of electronic bale identification methods
Risk management. Provision of information to customers. Feedback to suppliers. Quality system development.
Buying, selling and trading operations Establish lines of communication with the customer to obtain feedback on the adequacy
of deliveries, to improve the specification of orders and to obtain information about changes in the customer's processing, information technologies and market environment.
Train wool appraisal and buying staff in such areas as wool technology, emerging selling systems and market changes. Improve the ability of customers to accurately specify their requirements.
Improve the preparation standards of some producers and re-handlers.
Early Stage ProcessingScourers need to consider the following areas:
Contamination resulting from production and delivery systems prior to mill receival Variable raw wool deliveries, resulting from poor clip preparation and incorrect bale
markings and identification Incorrect raw wool deliveries arising from acceptance and use of poor or inadequate
raw wool specifications The need for full test data and information to allow monitoring of product and processing
performance Environmental concerns in early stage processing Internal quality systems and training for the mill Communication and feedback networks between parties and the role of IWTO Blue and
Red Books.
Summary of key quality areas in Early Stage Processing Contamination control, particularly from the wool production and delivery systems Variable raw wool deliveries resulting from poor clip preparation and incorrect bale
markings and identification Incorrect raw wool deliveries arising from the acceptance and use of poor or inadequate
raw wool specifications Increase the use of full test data for all wool. Full test data allows for the improved monitoring of product and processing performance Reduce the environmental impacts of wool processing.
1.14 The Australian wool industry sectors
Wool production Most of Australia's approximately 35,000 wool growing properties are family owned and have been operated by successive generations of producers. Some of the largest properties are owned by investment or superannuation companies. Approximately 85 % of wool producers produce fewer than 100 bales and contribute to less than 45 % of the national clip annually. On the other hand, 4 % of wool producers produce more than 200 bales and contribute over 25 % of the national clip.
The major activities undertaken by wool producers include: genetic selection of breeding stock, animal nutrition, animal health, preparation for shearing, shearing, clip preparation, packaging, marketing. This unit addresses the last three activities.
Wool selling There are various marketing options available to the Australian wool producer for sale of their wool clip (Topic 9). These include:
public auction private treaty public tender electronic selling forward selling.
A very small number of wool producers and cooperatives have retained ownership beyond the greasy stage and are selling semi-processed wool such as tops, while others have formed alliances to produce fabrics and other products for niche marketing to consumers (Topic 11).
The auction system In Australia, about 85% of wool is sold at public auctions which are mainly conducted under the auspices of AWEX. There are various rules and regulations which govern the conduct of AWEX sales held in eight selling centres in Australia. The three major wool auction centres are at Yennora, Sydney (NSW), Melbourne (VIC) and Fremantle (WA) with smaller centres at Brisbane, Newcastle, Goulburn, Geelong, Portland, Adelaide, Albany, Launceston. Superfine wool auctions are also held at Newcastle (NSW) and Launceston (TAS), but with far less frequency. Wool producers offer wool for sale through an agent (the broker) at public auction to the highest bidder.
The main method of offer is sale by sample, where buyers can examine the sale catalogue which details objective measurements and other information pertaining to the lot in question. Also, buyers can view a display sample which is representative of the sale lot.
The actual physical location of the wool bales may be in one of the 200 storage locations around Australia, while the samples are transported to one of the eight selling centres where the wool is auctioned.
Sale by private treaty Sale by Private Treaty is a system whereby wool producers can negotiate a sale directly with private treaty wool merchants. Currently, 15 % of the clip is sold in this manner. Wools for private treaty sales are generally assessed using either a guidance test or the traditional visual assessment. There are three main types of sale offered by this section of the wool industry:
1. Private sale on the farm to private wool buyers who often represent larger wool buying companies. The buyer will probably visit the property during shearing, appraise the clip, take a sample for guidance tests and then quote a firm price on the wool. In some cases the wool is then resold through the public auction system.
2. Private commission on the show floor where the wool producer prepares and delivers the clip to a private treaty show floor. A grab sample is displayed immediately upon receivable and the merchant receives a commission upon sale.
3. Private treaty direct to processor where sales are negotiated direct by the wool producer or by an agent, who might be a private treaty merchant acting on behalf of a wool processor. In some cases this is done on a forward contract basis.
Sale by public tender Some brokers offer tender sales where buyers put in a "private bid" for the wool and at the completion of the tender, the wool is sold to the highest bidder at a price one cent above the second highest bidder. This method of sale accounts for only a small proportion of the clip.
Electronic selling Most brokers now offer producers the facility to list their wool on a computer system to which buyers have constant access. The major electronic system is called Woolink, and it is operated by the AWTA Ltd. AWEX have a system called Eclipse which is not widely used or supported yet.
The sale of semi-processed wool Producers are able to have their greasy wool commission processed into top prior to sale to "add value" prior to disposal. Some brokers, merchants and traders offer such an option. Some wool producers or cooperatives have also taken the next step of commissioning the conversion of their wool into a latter stage (yarn) or finished product (fabric or knitwear) in an attempt to capture niche markets (Topic 11).
Wool broking About 85 % of Australian wool is currently sold by auction through the agency of a wool broker. The remaining 15 % is handled directly from the wool producer by private buyers, or increasingly, by a range of other selling methods such as electronic selling, tenders, direct sale to the processing mill and forward offers by brokers and merchants.
The wool broker acts as an agent for the wool producer in the sale of the wool. After the wool producer delivers the wool to the broker, the broker samples the wool for testing and show floor display. Test results are listed in the sale catalogue. The auction, where buyers bid a price for the wool, is conducted by the broker. Charges are deducted by the broker from the sale value of the wool for the services provided.
Wool purchasing In Australia, there are approximately 55 wool broking companies with the largest two companies controlling about 62% of the market. Most brokers selling through the auction system are represented by the National Council of Wool Selling Brokers of Australia.
The major services performed by wool brokers in Australia include: receiving wool from the wool producer, grab sampling, weighing and core sampling the wool (under supervision of a registered test house officer), warehousing the bales, lotting the wool for auction, preparing the sale catalogue for the auction, displaying a sample of wool from each lot, appraising the wool, selling the wool, invoicing buyers for sold wool, removing samples from the show floor, delivering the wool to the dump, receiving payment from the buyers, preparing the account sales and forwarding payment to the wool producer.
The wool broking firms also provide some optional services to improve the value of the wool producer's clip including: sheep classing, clip preparation and quality control of the shearing shed, bulk-classing, reclassing of clips, interlotting of wool, sampling of wool not sold under sale by sample and dumping of wool prior to shipment.
Overseas and local demand for wool is largely channelled through wool exporting (buying) companies. Since buyers for overseas mills also perform an export function, their formal association is called the Australian Council of Wool Exporters, which represents many wool buying firms at a national level. (See Organisations section)
Exporters operate in three main ways: A forward seller. The overseas processor or merchant solicits offers from several
exporters to select the best price for delivering wool at a fixed point in the future. Alternatively, the exporter may offer wool to the processor or merchant knowing that the processor usually buys such types or quantities about that time, for either prompt or delayed shipment. This is the most common function of the wool exporter.
Merchant. They may purchase wool for which they have no orders in the hope that the market will rise, enabling them to clear stocks at a profit.
Commission basis. They purchase wool of a specified quality, type and price for a processor or merchant on an order for a predetermined and agreed rate of commission.
Added to these firms buying wool through the auction system, there are several large and many small firms buying wool privately. The private buyer travels to wool growing properties to purchase wool direct from the wool producer. Many of the larger private buyers belong to the Private Treaty Wool Merchants of Australia.
The major activities offered by exporters include: provision of market quotes to customers, obtaining orders from customers, valuation and purchase of wool against firm offers or on a commission basis, batching of wools to meet customer's specifications, arrangement for dumping, transportation and shipping as required, arrangement of appropriate documentation and test certificates, financing and stock holding.
There are around 80 wool exporters operating in the Australian market. Of these the top 16 account for over 80% of wool purchases at auction. In addition there are an estimated 200 private treaty merchants in Australia. Two companies dominate the private buying market so most firms are quite small.
Wool testing Australian Wool Testing Authority Ltd (AWTA Ltd) provides commercial tests certified to International Wool Textile Organisation (IWTO) Standards. It is an Australian company limited by guarantee and has a Board comprising representatives of the main wool industry sectors. From low levels of testing in the early 1960's, pre-sale objectively measured wool now routinely makes up over 99 % of all auction wool. Most combing wools are also now measured for staple length, staple strength and position of break. Bales of scoured and carbonised wool are also sampled and tested.
Wool dumping The dumping of wool is undertaken by about 15 companies operating within Australia. Wool dumping is the compression of farm bales into dense, compact modules. The reduction of volume provides cost savings in the transport and handling of Australian wool exported overseas. Dumping may involve compression of 1, 2 or 3 bales into a single steel strapped module.
The major functions conducted by wool dumps are: planning, scheduling and receipt of wool to be dumped, quality inspection of packs, countermarking of bales, dumping or compressing and strapping of bales into a dumped unit, container loading, clearance of containers at terminals and delivery of the container to the terminal.
Wool processing The level of early stage processing undertaken in Australia increased considerably in the 1980s but has declined recently. In 1993 more than 25 % of the clip was processed before export.
The early stage processing industry consisted of about 25 firms in 1993. The Early Stage Processing unit covers recent changes in the industry.
The Australian Wool Processors Council is the organisation which represents the interests of Australian processors.
The majority of early stage processing and virtually all later stage processing is conducted overseas. The major functions involved in early stage processing vary depending on whether the organisation processing the wool is a trader, merchant processor or a commission processor. However, in general they cover: obtaining orders from customers, purchase and batching of raw material, preparation for processing, processing - scouring, carbonising, carding and combing and delivery to customers and post-sale service.
The costs of transferring wool from the sheep's back to the mill are given in the Readings (AWI 2002a.pdf).
1.15 Industry organisations There number of participants in the industry include: growers (~10,000 with more than 3000 sheep, ~55,000 with less than 3000 sheep) wool classers (~24,000 owner classers, ~15,000 professional) shearers (~6,000 full time, ~14,000 part-time) shearing contractors (~600) brokers (~35) private treaty merchants (~26) wool exporters (~40)
Organisations which service this Australian wool industry have undergone much restructuring over recent years. Given the complexity of the linkages and wool ownership changes before wool reaches the final customer, special efforts are needed to facilitate communication and feedback in the industry. The major organisations which coordinate wool industry activities are described in Section 1.16.
1.16 Major organisationsThe Australian Wool Industries Secretariat (AWIS) Victorian Wool Centre 691 Geelong Road Brooklyn Victoria 3012 [email protected] Phone: 03 9318 0077 Fax: 03 9318 0877 AWIS provides administrative support and advisory services to the following member organizations: Australian Council of Wool Exporters (ACWE) Australian Wool Processors Council Inc.(AWPC) Private Treaty Wool Merchants of Australia Inc. (PTWMA).
AWIS also provides administrative and advisory support to the: Federation of Australian Wool Organisations (FAWO) Australian Superfine Wool Grower's Association Inc. (ASWGA).
and secretarial support to the: National Council of Wool Selling Brokers (NCWSBA).
ACWE represents the interests of wool buying firms which traditionally have serviced most of their wool supplies from the auction selling system. Today, most of these firms export either greasy or semi-processed wool, including tops, to customers overseas. It is recognized by Government and other industry sectors as being the national representative voice for auction buying interests and represents its members on various industry committees and at meetings with other industry sectors. State and regional based associations of auction buyers date back to the 1890s, with the first national representative body established in 1946. The national body took its current name in 1986.
The AWPC represents the interests of early stage processors (scourers, carbonisers and top makers) and later stage processors (spinners and weavers) of wool products in Australia. AWPC is recognized by Government and other industry sectors as speaking for the processing sector. It is a member of all relevant industry advisory bodies and provides advice to government on wool industry issues. AWPC took its present form in 1988 with the amalgamation of the Wool Scourers and Carbonisers Association of Australia and the Wool Textile Manufacturers of Australia under the one umbrella body.
PTWMA was formed in 1971 and represents the interests of merchants buying wool direct from growers. This may include, but is not limited to, buying wool forward on the sheep’s back, on farm at shearing, on farm by tender or on consignment at store door. PTWMA has developed and promoted a standard Private Treaty Contract which has been supported by all grower groups. PTWMA is recognized by Government and others as speaking on behalf of the private buying sector, and it is a member of all major wool industry bodies.
FAWO provides Australia’s membership of the Australian National Committee of the International Wool Textile Organisation (IWTO). With virtually all industry sectors as members, FAWO can also be regarded as the peak industry body in Australia and is used for addressing major and local issues.
Member Organisations Australian Council of Wool Exporters Inc Australian Wool Processors Council Inc Private Treaty Wool Merchants of Australia Inc The National Council of Wool Selling Brokers of Australia Ltd Australian Wool Testing Authority Ltd Australian AWEX Ltd Wool Producers
Associate Members Australian Superfine Wool Growers Association Inc CSIRO Textile & Fibre Technology Australian Wool Innovation Pty Ltd Australian Wool Handlers The Woolmark Company SGS Australasia Agriculture Western Australia Department of Natural Resources & Environment Interactive Wool Group Pty Ltd University of New England/Sheep Industry CRC
ASWGA is an international association of growers and processors founded to promote the development and marketing of superfine wool. The association represents the majority of superfine growers as well as overseas manufacturers. ASWGA is recognised by all major wool bodies as the voice of Australia's superfine wool industry.
NCWSBA represents the interests of wool brokers and is recognised by Government and other industry sectors as speaking for the broking sector. NCWSBA recently merged with the ACWE.
AWEX was formed after the Australian Parliament passed legislation in December 1993 requiring the then statutory wool marketing authority - the Australian Wool Corporation - to divest itself of the responsibility of administering wool marketing arrangements in the Australian Wool Industry. In response, commercial interests representing the wool buyers and sellers in Australia established AWEX as a public company limited by guarantee to manage wool marketing arrangements in the Australian wool industry. AWEX commenced operations in February 1994 and provides the major industry framework for the exchange of ownership of wool in Australia. AWEX provides regular market reviews on its website: www.awex.com.au
Today, the Australian wool industry, through AWEX, manages its own affairs in a de-regulated marketing environment, free of Government intrusion. The successful management of industry self-regulation is based on the direction, membership and organisational structure of AWEX, which is a services organisation. The membership of AWEX represents 95% of first-hand wool
traded in Australia each year and includes Australian and International wool brokers, exporters, private treaty merchants, processor, wool producers and associates. The AWEX Board represents each of these classes of membership and is responsible for policy setting in relation to the implementation of functions.
Until recently AWEX collated all the wool auction data. This is under review and it is possible that auction data may be held by individual brokers for their clients in future.
Australian Wool Testing Authority Ltd (AWTA) is the largest independent wool testing organisation in the world with laboratories in Sydney, Melbourne (Figure 1.15) and Fremantle and sampling offices in other selling and handling centres. It was established in 1957 by the Commonwealth Government of the day in response to requests from the Australian wool industry. Royal Assent was given to the enabling legislation to create AWTA as a statutory authority reporting to the Minister for Primary Industry on 12th September, 1957.
In presenting the Bill, the Minister for Primary Industry, the Hon. William McMahon said:‘The purpose of the Bill is to establish a Wool Testing Authority to control and administer a wool testing service in Australia. The legislation is the result of many months of investigation by a committee of wool buyers, brokers, scourers, fellmongerers and carbonizers, C.S.I.R.O. and officers of my Department, which examined in detail the possibilities of starting a testing service in Australia, the need for which has been felt for many years. The Australian Council of Woolbuyers was largely instrumental in the formation of the Committee and wide support for the proposals has been evident all through the negotiations.’
Figure 1.15 The atrium of the AWTA Ltd Head Office building is designed to symbolise the interior of a shearing shed. Source: AWTA website (www.awta.com.au). With
The first meeting of the Authority was held on 12th December, 1957. Following the formation of the Australian Wool Board in 1962, AWTA was established as a separate Division within that organisation on 1st July, 1963. AWTA subsequently retained the same status within the Australian Wool Corporation when it was formed by the amalgamation of the Australian Wool Board and the Australian Wool Commission on 1st January, 1973.
AWTA Ltd was established as a Company Limited by Guarantee on 14th May, 1982 to enable the functions of the statutory AWTA to be transferred to the private sector. The new company commenced operation on 1st July, 1982. The new structure ensured that the industry retained an independent and impartial Test House, dedicated to providing the service and accuracy required, but at a minimum cost.
AWTA's history is synonomous with the transformation of wool production, marketing, valuing and processing from a reliance on subjective appraisal to objective systems of assessment. Traditionally, the hand and the eye were the major tools used to determine the value and processing attributes of wool. This necessitated large showfloor areas and storage space, and time consuming and costly handling and inspection by brokers and buyers.
Today:
Virtually all Australian wool is now measured prior to sale Wool is prepared for sale according to objective rather than subjective clip preparation
standards, with some growers preparing classed lines on the basis of individual fleece measurements
Wool is generally displayed for sale in sample boxes rather through the old showfloor technique
Wool is valued and bought with the aid of actual measurements for Fibre Diameter, Yield, Vegetable Matter Content, Length, Strength and sometimes Colour, with Coefficient of Variation of Fibre Diameter also available.
Measurement has also facilitated computerisation and the expansion of electronic data processing and market reporting, and the establishment of auction and individual clip databases which provide information to all segments of the industry, with each having equal access to that information on a commercial basis. To-day, wool processors can confidently expect that wool purchased to their price and processing specifications, with the benefit of AWTA Ltd certification, will perform to their requirements, and growers are assured of being paid according to the objective specification of their wool.
International Wool Textile Organisation (IWTO) is the international body representing the interests of the world's wool-textile trade and industry. As such, its membership covers the woolgrowers, traders, primary processors, spinners and weavers, market support bodies, wool testing authorities as research organisations of wool and allied fibres in its member-countries, for whom it provides a forum for discussion of problems of joint concern and acts as their spokesman with all those bodies and authorities towards whom a common approach is deemed necessary. It is the central office for the co-ordination of standards, codes of practice and interaction between all wool/textile industry segments.
Recent industry reform As well as the formation of Woolmark (TWC) and AWI (see below) the Australian Wool Research and Promotion Organisation (AWRAP) was replaced with private sector arrangements on 1 January 2001. Following the continuing low demand and prices for wool and a successful 'no confidence' motion in the Board of AWRAP (in November 1998), the wool industry Future Directions Taskforce was established to undertake a major inquiry into the future of the Australian wool industry. The Taskforce presented its findings in June 1999. While most of the recommendations of the Taskforce report were focused on individual farm businesses and what they could do to improve their profitability, there were recommendations for Government to consider, including the future of AWRAP and wool tax arrangements.
On 23 September 1999, the Minister for Agriculture, Fisheries and Forestry announced an Eight Point Plan for progressing those recommendations of the Taskforce report that related to industry services and levy arrangements. A key element of the Plan was to conduct a grower ballot, called WoolPoll, in 2000 to give woolgrowers the opportunity to vote on their preferences for future industry services and associated wool tax arrangements. The final result of WoolPoll was released on 6 April 2000 and showed 61% of votes, based on an optional preferential voting system, supporting the service model involving a 2% levy rate. On 1 May 2000, the Minister announced the next stage in the wool reform process and the reduction of the wool tax rate from 4% to 3% from 1 July 2000 to cover the costs of transition. The 1 May announcement included the establishment of a Woolgrowers' Advisory Group (WAG) and the Interim Advisory Board (IAB) to drive the next stages in the reform process. The IAB and WAG worked in conjunction with the Government's Office of Asset Sales and Information Technology Outsourcing (OASITO) throughout the process.
A scoping study phase considered a number of possible options, with the agreed new arrangements taking the form of a company established under Corporations Law, Australian Wool Services Ltd (AWS), with a number of subsidiaries, including Australian Wool Innovation Pty Ltd (AWI) and TWC Holdings Pty Ltd. AWI manages the wool levy and funds R&D and innovation, and TWC Holdings has taken over the work of The Woolmark Company, concentrating on the commercial development of the Woolmark brand and its sub-brands, and the commercialisation of intellectual property matters. AWS and its subsidiaries commenced operation on 1 January 2001, meeting the target date set by the Minister. Woolgrower reaction to the new arrangements was positive, with over 36,000 woolgrowers applying for shares, representing over 70% of wool tax received at the time of conversion. As of June 2001, share applications represented about 80% of wool levy receipts.
From 1 July 2001, the wool levy rate was reduced to 2%, in line with the WoolPoll ballot result and has remained since the last WoolPoll in 2009. The new privatised arrangements provide for:
increased contestability and competition in the application of wool levy expenditure woolgrowers to have a more direct say in levy expenditure and shareholding in the
commercial activities of the company and accountability to the Commonwealth in the expenditure of wool levy funds, and the
Commonwealth matching R&D contributions.
Recently there have been negotiations between the Boards of AWI and Woolmark to re-merge the two subsidiaries to better align research and promotion. This could be regarded as the wheel turning full circle, with growers once again finding some level of wool promotion activity.
beyond. They specialise in the commercialisation of wool technologies and innovations, technical consulting, business information and commercial testing of wool fabrics.
Through ownership and licensing of the Woolmark, Woolmark Blend and Wool Blend they provide unique worldwide quality endorsement. Their brands and symbols are protected by rigorous and extensive control checks and recognised globally as unrivalled signs of quality and performance. If a wool product carries their brands, it carries their guarantee of product quality. They work with textile processors, designers and retailers in both the apparel and interior textile markets throughout the world. They operate globally. The Woolmark Company is constantly seeking new opportunities through global strategic alliances in all major markets.
Australian Wool Innovation Limited (AWI) is a research and development company owned by, and working on behalf of, Australian woolgrowers. AWI invests funds in wool research, development and innovation activities aimed at increasing the long-term profitability, productivity and sustainability of Australian woolgrowers. AWI invests in the areas of wool production, textiles, trade development and corporate affairs.
AWI investments are funded through a levy paid by woolgrowers (currently two per cent of the sale price received for their shorn greasy wool) and a contribution from the Australian Government, capped at 0.5 per cent of the value of total greasy wool sales.
In the on-farm area, AWI works with woolgrowers to help them compete profitably in the international markets for wool and sheep meat through the adoption of on-farm innovations. In the textiles area, AWI works in the science arena with organisations and companies to develop new and improved wool products for the fashion apparel, sports, activewear, protective clothing, medical and filtration markets.AWI also provides a vital link between the research and development chain and the market by forming business to business relationships to commercialise wool innovations and build the demand for Australian wool.
WoolProducersWoolProducers is the peak agri-political body for wool producers in Australia, formed in July 2001. WoolProducers replaces the old Wool Council of Australia, which no longer exists. WoolProducers represent some 14,000 wool producers from across Australia and aims to provide a strong, unified voice that enables wool producers to determine and drive change in their industry.
The WoolProducers Executive consists of 11 elected members. Six are elected by postal ballot of all grower members conducted by the AEC. The remaining 5 are elected by grower members through their membership of State Farm organisations (i.e. one member from each State organisation). WoolProducers in general is supportive of higher levy levels to support research and development.
The Australian Wool Growers Association’s executive has close links to AWI's former board, ousted in a shareholder ballot by former Defence Minister, Ian McLachlan, and four other candidates in October 2002. Several AWGA members were advisers to the former Maree McCaskill-chaired AWI board. AWGA were recently reformed after it ceased operating in 2001.
AWGA Chairman in 2003, Will Crozier from Victoria, wanted growers to cut their levies from 2% to just 0 - 0.5% when they voted in WoolPoll 2003. He believed the AWI board was focusing too heavily on on-farm research and not doing enough to get new products out into the market to
create new demand for wool. He also saw "the current drought situation, dangerously low sheep numbers, insurance and workers compensation issues forcing shearers out of the industry and the technological impact on marketing the wool clip are also important to growers.”
AWGA is currently in dispute with AWI over the stance taken with PETA over the mulesing issue.
The reserve price scheme worked well for about 20 years. However a combination of a sharp fall in demand and a high reserve price (set during a period of high demand in the late 1980s), resulted in the scheme being suspended in February 1991, when the size of the AWC stockpile had reached 4.7 million bales. The Government, with the agreement of the industry, decided that the scheme could no longer be maintained.
The Australian Wool Realisation Commission (AWRC) was initially responsible for the disposal of the wool stockpile. In December 1993 the disposal of the stockpile became the responsibility of Wool International (WI), a statutory corporation of the Commonwealth Government. WI was required to sell the stockpile in accordance with a statutorily imposed disposal schedule, the last bale of stockpile wool to be disposed of by 31 December 2000. At 30 June 1998, under the management of WI, the stockpile had been reduced to 1.2 million bales. By October 1998, equity in the wool stockpile had reached a level significantly higher than the wool debt and, therefore, ongoing Government involvement in stockpile management was no longer justified.
On 15 October 1998, the Commonwealth Government announced a freeze on sales of wool from the stockpile, and an intention to privatize WI by 1 July 1999. On this date WI became WoolStock Australia Limited, a public company limited by shares allocated to previous holders of units of equity in WI. WoolStock Australia took over the assets and liabilities from WI and is fully accountable to its shareholders for the efficient management and sale of the stockpile. The principal activities of WoolStock are selling the stockpile, and making distributions to unit/share holders. By 9 August 2001 the stockpile was completely sold.
Summary This introductory topic gives an overview of the wool marketing system and the large number of participants in the Australian wool industry involved in wool quality control, clip preparation and marketing. It outlines the roles and interactions between the main organisations in the industry and their influence on wool quality. The main websites available for pursuing further wool industry information are given.
ReferencesABARE, 2002, The Australian Sheep Industry, Report to the Australian Sheep Industry CRC.Australian Wool Innovation, 2002, Future Fleece CD, Australian Wool Innovation Ltd.Australian Wool Testing Authority Ltd (AWTA), Atrium of AWTA Head Office. Image retrieved
from AWTA website, http://www.awta.com.au, November 8th, 2006.Cottle, D. (ed) 1991, Australian Sheep and Wool Handbook, ISBN 0 909605 60 2, Canesis
Network Ltd.Department of Primary Industries and Environment (DPIE), 1988, Government Support of
Wool Promotion, Department of Primary Industries and Environment.International Wool Secretariat (IWS), 1994, The Chant Link Report, Cited by IWS, 1995.International Wool Secretariat (IWS), 1995, Wool Quality Guide, IWS.Longworth, J. and Brown, C. 1995, Agribusiness Reforms in China – The Case of Wool, CAB
International, Oxon UK, ISBN 0 85198 951 9.Roche, J. 1995, The International Wool Trade, WOODHEAD Publishing Cambridge, England,
ISBN 1 85573 191 6.Teasdale, D.C. 1995, ‘The Wool Handbook – The A to Z of Fibre to Top,’ ISBN 0 646 24034
X.The Woolmark Company, 2005, Figures prepared by K. Stott on behalf of the Australian
Glossary of terms A more extensive glossary is in Cottle (1991) and the AWTA publication Testing the Wool Clip (see Readings AWTA 2002.pdf)
Bale A single closed package of wool carrying clear marks of identification. It may be a conventional woolpack, which is a dense bale (unwrapped or wrapped) of pressed wool secured by metal bands. It must be in condition fit for shipping according to the industry code of practice on packaging. It must weigh at least 100kg. Maximum weight is 200kg, with a 2% tolerance to 204kg
Belly frib The hard yellow portion of the belly, shorn off the brisket area of a sheep
Belly or belly wool Wool shorn from the belly of the sheep, usually heavy in condition and often containing vegetation. In the case of male sheep the portion around the pizzle is stained with urine. The abbreviation is BLS
Black wool Wool that is naturally pigmented a dark colour. Popular in the home craft industry
Blend A line of wool made by thoroughly mixing wool types. May be done in a grower’s woolshed, a broker’s store, at a scour or at a mill
Brand Coloured mark used as identification, on a wool bale or on a sheep's back or side
Bulk The volume of space occupied by wool fibres under a prescribed load – used to describe the wool’s filling capacity or resilience. Can be applied to loose wools, sliver or yarn, and is expressed as cm³/gm. It is an objective measurement
Burr Refers to the varieties of burr found in wool, such as clover burr and Bathurst burr. Greater emphasis is given to the presence of burr which present special problems during processing, e.g. burr medic, as they cling to wool and therefore are difficult to remove
Buyers Are employed by wool merchants and processors. They collect, assess and value wool sold by farmers. There is a wide range of jobs in this area, from country buying to working as a valuer for a wool exporting company
Carding Manufacturing process that uses bristle-covered or fine toothed rollers to separate individual fibres out from clumps, tangles and/staples. Arranges and aligns them ready for the next textile process
Classers Sort wool into particular classes, based on breed, age, colour, length and micron (diameter)
Classer Registration
Scheme operated by AWEX that gives recognition to those who have attained high wool classing standards. Identified by a registered Australian stencil
Coefficient of variation of diameter
The coefficient of variation of a range of wool fibres. All wool fibres vary in diameter as a result of changes in season, environment and animal health. CV helps describe this variation and so helps the processor determine processing performance
Colour Measured on clean processed wool fibre by a colorimeter and is represented by the tristimulus values X, Y and Z. The Y value is an indicator of the wool brightness and the difference between Y and Z (Y-Z) represents the level of yellowness. If the Y value is high, the wool will be bright, but if it is low, the wool will appear dingy. If the value of Y-Z is low, the wool will be white, but if it is higher, the wool will be yellow
Cotts Matted fleece with severe entanglement of shed and/or broken fibres
Count An old system of describing the weight/length balance and, therefore, the fineness of yarn. Now replaced by Tex, which describes yarn in grams per kilometre
Crimp Natural undulations of the fibres along the wool staple. More crimped wools tend to be finer
Curvature A way of measuring the crimp of wool fibres, and measures how much fibre bends along a short length of wool. Values range from 50 to 150 degrees per millimetre. Lower figures are associated with increased processing efficiency and sleeker, softer fabrics with greater depth of yield shade after dyeing
Dags Excreta contaminated wool from around the sheep’s hind quarters. Dry dags can be machine crushed to recover wool
Dagging Removing dags from sheep by machine or blade shearing to control stain or fly strike
Drawing Drawing out of a sliver of fibre to make it thinner and longer. It is part of the spinning process
Fadge Wool contained in a pack, with or without a cap, or bale weighing under 100 kgs
Frib The hard yellow portion of the belly, shorn off the brisket area of a sheep
Gilling Process of aligning fibres approximately parallel in the sliver. Wool can be blended in gill box, and a thick sliver can be thinned so it can be handled on a spinning frame. Used in worsted and semi-worsted processing
Greasy wool Unwashed wool containing wool grease and other impurities
Handle The feel of wool to the touch, e.g. soft handle or harsh handle
Hard heads and twigs
Presence of hard heads and twigs is stated as percentage of the total vegetable matter. It includes large head burrs covered in readily removed spines. Do not contribute to loss of wool during processing
Lustre Natural sheen or shine from surface of fibres. More common is coarse woolled breeds such as Lincoln and English Leicester breeds. The smooth surface can cause problems with slippage during processing. Dies to more vibrant colours
Micron A micron is one millionth of a metre and is the standard measurement of textile fibre diameter. Typical Australian wools are fine. Symbol used is 'µm'
Medullation Medullated fibres are hair-like fibres that have a medulla or air-filled core of cells. They do not take dyes and show up white in the final product
Moit Vegetable matter other than seeds or burrs
Noil Short and broken fibres removed during combing. The combed wool that remains is know as ‘tops’
Pressers Pack the wool into bales ready for freighting; involves operating a mechanical press
Rovings A very thin sliver of combed wool drawn down from wool tops, and ready for further drafting and spinning into worsted yarn.
Second cuts Practice of shearing protruding fibre a second time. Produces low value, short fibre
Semi-worsted A yarn making system that uses some of the worsted system’s features to make a strong smooth yarn for tufted carpet and outer knitwear. It is not combed to remove short fibres or vegetable matter, so the wool needs to be sound and free of vegetable matter
Shearers Cut the wool from sheep with a handpiece. They generally work in teams, or gangs, led by a shearing contractor
Skirting Removal by hand of shorter, discoloured edge and collar of neck wool from the perimeter of a fleece spread out on a skirting table
Skirting table Large, rectangular, slated table on which fleeces are thrown so they are spread out for skirting. Slats allow locks and second cuts to fall through
Slipe wool Wool removed from the skins of slaughtered animals, by a process other than shearing
Sliver Band or ribbon of twisted fibres produced by card and used in worsted or semi-worsted yarn
Slubbings The output of a woollen card in the form of very thin slivers ready to be spun into yarn
Sound Wool with high tensile strength.
Soundness Tensile strength of a staple of wool. A laboratory test breaks a staple and measures breaking force in Newtons per kilotex and position of break along the staple
Specification Document supplied by a wool broker and completed by a wool grower which accompanies each wool consignment. Sets out line descriptions, bale numbers etc.
Suint Secretion of the sweat glands of a sheep. Largely sodium and potassium carbonates and chlorides. Highest quantities in strong woolled sheep
Tenderness Weakness caused by a reduction in fibre diameter at some point along the staple. Result of the seasonal growth pattern of wool or of stress suffered by the sheep, such as extreme climatic conditions, pregnancy or disease
Terminal (crossing) sire
Ram breeds used to produce prime lambs
Tex Yarn count measurement of weight in grams per kilometre of yarn
Top Continuous, untwisted ribbon of wool produced from combing machine where all fibres are laid parallel and short or weak fibres and vegetable matter have been combed out
Urine Stain Urine stained wool from the crutch area of ewes and the pizzle area of male sheep; found in ram and wether bellies and ewe crutchings. It is unscourable and must be kept separate
Vegetable matter (VM)
Seed, burr, shive and moit content of wool expressed as a percentage of the original greasy wool sample
Warp Yarns that run lengthways in woven cloth
Wax Lanolin secreted from sebaceous gland of sheep
Wool handlers Pick up and sort the wool into different grades. Also known as shed hands
Woollen Textile manufacturing process that uses generally shorter wool that are carded, condensed as slubbings, the spun into yarn. The random lay of the fibres produces bulky products, e.g. blankets, tweeds and heavier woven and knitted apparel
Worsted Textile manufacturing process using good style, long sound wools. After carding, wool is gilled to align fibres, then combed to remove short fibre and residual vegetable matter, gilled again to form a top, drawn out to form a roving, then finally spun and twisted. Yarn is made into high quality, smooth surfaced fabrics, e.g. worsted suitings
Yield The amount of clean fibre, at a standard regain, that can be obtained from the greasy wool. There are four core test yields that are normally calculated from the wool base for commercial trading purposes International Wool Textile Organisation (IWTO) Schlumberger Dry Top and Noil Yield (SCH DRY). The most common yield The IWTO Schlumberger dry combed tested yield predicts the yield of a wool after it has been combed on a Schlumberger comb without the addition of processing oil. It is based on the production of 8 parts combed sliver (top) to 1 part short fibre (noil) with an allowance for fibre loss IWTO Scoured Yield 17% Regain (CD 17%). This is the washing yield. It represents the product after scouring, before any further processing takes place (i.e. includes VM plus wool). Allowances (2.27%) are made for residual grease and residual dirt. A regain of 17% is usedJapanese Clean Scoured Yield (JCSY) This is a washing yield which is similar to the above except for the regain allowance (1.5%) made for the scouring residuals. Also this yield has the vegetable matter deducted but no allowance is made for fibre loss during processing. This yield is the basis for trade with Japan Australian Carbonising Yield 17% Regain (ACY) This yield is calculated from wool base and vegetable matter base and allows for the expected loss of fibre during the carbonising process. It is widely used as the basis of trade in carbonising and carding types
Yolk Combined secretions of sweat and sebaceous glands that coats wool fibre. Desired yolk or grease is clear. Undesirable yellow types are referred to as cakey and fatty yolk
