Australian Wool Innovation reports $10.9 million loss but ramps up marketing as COVID-19 shutdowns end

Australian Wool Innovation’s annual loss more than doubled to $10.9 million last financial year while its marketing spend ramped up as industry weathered “wildly” fluctuating wool prices. The national wool research and marketing body handed down annual report on Tuesday, revealing it had bolstered its marketing spend by more than $10m in the year ending June 30. AWI chief executive John Roberts said the decision to boost marketing expenditure from $29.08m to $38.5m — up 24 per cent — was hoped to make sure wool was in consumers’ minds as the world slowly returned to normal after COVID-19 shutdowns. “We increased. . . investment in all our portfolios but especially in the marketing area as consumer spending returned to some normality,” he said. “Following a period during COVID when we prudently cut back on marketing, this past year we bolstered initiatives to develop and implement campaigns with high-profile and influential brand partners to ensure wool product was available at retail and at the front of consumers’ minds.” In his chairman’s report, AWI chair Jock Laurie said the Eastern Market Indicator had fluctuated to a low of 858¢ in 2021-22 to finish the year at a “stable and relatively stable” 1400¢/kg average. “Australian wool production volumes are continuing to recover. . . with the 2021/22 season ending with 5.3 per cent more wool tested than the previous year,” he said. “While there has been somewhat of a recovery in global markets following COVID, there are still plenty of global challenges. . . such as international shipping and logistic issues, and energy prices.” AWI reported a total loss of $10.96m, while its retained surplus fell from $110,520 to $99,559. However, the company’s operating revenue increased to $65.27m — an $8.38m increase after last year’s dipping to its lowest revenue total in its 20-year history at $56.89m. Of this, $43.75m was generated by the wool levy paid by farmers on the sale of their wool — up on last year’s contribution of $33.64m. It also earned $4.82m in licensing fees, $1.61m in royalties and $491,000 on the sale of goods and services. The Federal Government wound back its funding of AWI by more than $3m in 2021-22, cutting its contribution from $16.58m to $13.93m. The increase in wool levy funding would come as a surprise to many after Australian woolgrowers last year voted to keep the status quo and pay a 1.5 per cent levy on the sale of their wool until 2024 Farmers vote every three years on how much of their wool income should be invested in research, development and marketing undertaken by AWI through a method called WoolPoll. The AWI report revealed it had cost $529,434 to orchestrate the vote last year, when woolgrowers voted in a 1.5 per cent levy rate for the second time. In 2018, the levy was reduced to 1.5 per cent for the first time, marking the lowest levy in WoolPoll’s then-11-year history. The reduced levy rate — coupled with drought and the COVID-19 pandemic — meant AWI’s revenue plummeted to its lowest level in its then-20-year existence (to $56.89m) in 2020-21. AWI last year campaigned for a 2 per cent levy rate, telling woolgrowers any lower would mean “AWI’s ability to deliver for growers would be limited”. Despite this, the company’s total expenditure on research, development and marketing ramped up from $60.78m to $76.18m. The reduced levy rate — coupled with drought and the COVID-19 pandemic — meant AWI’s revenue plummeted to its lowest level in its existence (to $56.89m) in 2020-21. AWI last year campaigned for a 2 per cent levy rate, telling woolgrowers any lower would mean “AWI’s ability to deliver for growers would be limited”. Despite this, its expenditure on research, development and marketing ramped up from $60.78m to $76.18m. This included the $38.5m on marketing, $13.94m on sheep production, $9.75m on support and administration, $6.19m on processing innovation and education, $4.37m on consultation and $3.40m on supply chain traceability. The report also revealed the number of woolgrower shareholders had declined from 21,480 to 19,776 with the biggest number per State or Territory in New South Wales. WA had the fourth-highest number of shareholders, at 3197, down from 3477 last year, behind NSW, Victoria (4743) and South Australia (3305). National wool levy payers totalled 66,610. It was a year of change for AWI, with both a new chair and new CEO appointed within a period of last than 12 months — starting when NSW farmer Jock Laurie was named chair in June last year. He replaced Colette Garnsey, who stepped down prematurely and before the November AGM after three years in the role. Former AWI COO Mr Roberts was also named chief executive in March after acting in the role since October 2021, replacing Stuart McCullough — who was moved into an international marketing role with a salary estimated about $400,000. In Senate estimates late last year, it was revealed his salary would remain similar to his former CEO role but would not include the annual short-term performance incentives that have represented 15 to 20 per cent of his package — totalling about $50,000 each year. Directors’ salaries increased in 2021-22, from $464,087 to $526,171. The report revealed Mr Laurie received a nearly $100,000 pay rise after taking on the chair role, with his director base fee increasing from $56,253 to $140,632. A deeper dive into AWI’s activities revealed it had spent $2.14m on shearer and wool handler training in 2021-22. Other projects of note included a $500,000 spend on examining automation in shearing, $300,000 to develop a flystrike vaccine, and $310,000 producing its Beyond the Bale magazine. AWI failed to reach many of its retail and student educational goals in 2021-22, blaming difficulty on a lack of “AWI resources due to a combination of restructure and natural attrition, and COVID-19”. AWI this year released a new three-year Strategic Plan outlining the company’s key research, development and marketing priorities, in line with the Wool 2030 Strategy and Sheep Sustainability Framework.