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Thursday, 29 October 2009
Page: 7691


Senator FIERRAVANTI-WELLS (6:29 PM) —I seek leave to table my study leave report entitled From the farm to the wardrobe: a snapshot of the Australian wool industry, August 2009, as a report to the Senate.

Leave granted.


Senator FIERRAVANTI-WELLS —I first thank the government for granting me leave to table my report as a report to the Senate. Having commenced my work and research in October last year, I have watched the report evolve to 620 pages of what I have termed ‘War and peace on wool’. Indeed, the photo on the front—a merino sheep in an elegant wardrobe—encapsulates the two ends of this complex industry. In my report I acknowledge the many people, both here and in Italy, who took the time to speak with me and provide me with information. To my ‘wool family’—and you know who you are—thank you for your guidance, support and commitment. Thank you also to the Senate IT staff, and in particular John Baczynski, who helped me with the logistics of the report; to my staff, and in particular Gemma Iafrate, who persevered with me in this venture; and to my husband, John, for his support and understanding. Cuddling lambs across the countryside meant that lamb was off the Wells’s household menu for a while! It is unusual to prepare such a study leave report. I suspect it is one of the longest ever tabled and I am very proud to do so.

Over the years I often asked myself why Australia produces the best wool in the world, yet we sell it to the Italians and then buy the clothes back. I myself have been guilty of this, as I suspect have quite a number of my Senate colleagues, judging by their suits. And so I decided to get the answer for myself. I admit that I had only seen sheep in paddocks and never touched one in my life. I thank Senator John Williams, former shearer, who kindly demonstrated the finer points of shearing to me during my visit to Inverell last December.

The wool industry has historically been important to the Australian economy. It is worth approximately $2.6 billion and provides employment across regional Australia. But it faces many challenges, which I traverse in my report. In particular, continued negative media, especially around the mulesing issue, has compounded its difficulties.

The challenge for the industry is to manage transition and change whilst there is still a core base of breeding ewes that can continue to produce the commercial quantities of wool that are required to supply Australia’s existing markets, and in particular the Italian market, before we embark on new opportunities. Continued business with Italy remains the leading opportunity to continue wool’s presence in the premium apparel market. In times of continued economic pressure and much more environmentally aware consumers, wool is well placed to re-establish its position within the textile markets.

In researching my report, I came at it as a consumer. I enjoy wearing wool and would like to ensure it remains a viable product into the future. But what has become apparent to me is that the wool industry has failed to start with a clear view of the needs of the consumer and the properties of wool and work back and produce what the consumer wants. It has always been a production oriented business. However, things have changed, and so too must the industry.

What happens on the farms of Australia affects what happens on the catwalks of Milan and what happens on the catwalks of Milan affects what happens on the farms of Australia. If the consumer does not demand wool and if the designers do not use wool in their apparel, there will be less wool for sale. Australia remains the largest producer of wool. We supply 85 per cent of the world’s merino wool, so there is an 85 per cent chance that the wool in apparel will be Australian. However, this is under challenge with the Chinese industry in very much a growth phase. Regrettably, this has been allowed to happen at the expense of Australian wool growers and at the expense of our traditional relationships.

My report is lengthy and a comprehensive analysis of the industry. The table of contents alone covers nine pages and outlines the many different and complex aspects of what wool is about today. The report also has an addendum which includes my comments following the release of Australian Wool Innovation’s 3 year review of performance final report released on 1 September 2009. The review of AWI undertaken for the WoolPoll process vindicates much of my criticism of AWI. It is very clear that AWI’s problems are systemic and ingrained. Its standing and reliability as an effective organisation have been compromised to the point where it is best for the Australian government and industry stakeholders to start afresh with the establishment of a broad skills based, industry-wide body.

In addition to wider wool industry participation covering the spectrum, including wool growers, processors, testing and certification bodies, such a body should also include the broader wool industry stakeholders such as the textile and apparel sector, the fashion industry, research and educational stakeholders, trade development and marketing expertise. Many stressed to me the need for an umbrella organisation to undertake the functions currently spread between AWI and other wool bodies and others not being met. In short, we need a go-to body for the whole wool industry.

Mulesing is one of the most important issues facing the wool industry. One thing that is clear is that the issue has been badly handled since the beginning. Irrespective of the merits of pro- or anti-mulesing, the reality is that the 2004 undertakings were given and the perception is that, whilst ever mulesing continues to be an issue, there will be a negative perception about wool. There needs to be a reality check. Two recent incidents—the decision by the Ermenegildo Zegna Group not to award its coveted award this year and resume the award next year for non-mulesed wool only and the comments by key Australian wool buyers such as China’s Sunshine Group about ceasing mulesing—provide a salutary warning about the future demand for non-mulesed wool. Regrettably, rightly or wrongly the long-term continuation of this practice is not sustainable.

I make 10 recommendations in my report which broadly fall into three categories: firstly, the need for the Australian government to review the current wool industry representation and research and development options, including abolishing AWI and establishing a broad skills based, industry-wide body or reviewing and substantially restructuring AWI by changing the voting eligibility, voting system and selection process for directors. There should also be a review of the wool levy system, the current grant criteria and an audit of AWI Ltd research and development, innovation and marketing projects against the key legislative criteria of their benefit to Australian wool growers and to the Australian community generally.

Secondly, I have made a series of recommendations to strengthen the relationship between Australia and Italy on wool. Australia and Italy are the premium ends of wool. Australia produces the best fine and superfine merino wool and Italy is our flagship manufacturer and brand leader. I suggest that a memorandum of understanding between Australia and Italy be established with a view to a closer working relationship and more direct cooperation between the two countries, including between Australian and Italian wool industry bodies; between key Australian and Italian fashion, textile and apparel bodies; between Australian and Italian tertiary, vocational and research institutions in the textile-apparel areas and especially in wool; greater cooperation on technical issues such as reclassification of wool as a primary product and the standardisation of veterinary certificates; and greater grower awareness of their Italian textile, apparel and fashion markets.

Thirdly, there are technical recommendations, including that Australian government and wool industry support be given to AWEX to ensure that on-farm audits are fully implemented as soon as practicable; that the Australian government examine the previous role of EFIC regarding credit in the wool industry and consider the re-establishment of a similar facility; and that licensing parameters for the use of Woolmark be reviewed, noting that the 2008 TCF review recommended a new Australian ethical quality mark be devised which will have important repercussions for the mulesing issue and for ethical and quality labelling.

In conclusion, I cannot but say that this is an industry which, despite its challenges, does have a future. Whilst many in the industry are facing difficulties, they still retain their passion and commitment to wool, and it is this passion and commitment which I believe will see the industry through these difficult times and into the future.