WITH Australian wool exports valued at about $3.6 billion this financial year, Agriculture Minister Barnaby Joyce has reminded the chief industry body to know “where your wealth comes from”.
Speaking at Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) Outlook 2017 conference in Canberra today, Mr Joyce said Australia Wool Innovation objection to moving head office to a regional location was “garbage”.
His remarks followed AWI chairman Wal Merriman’s comments the service provider would not make a submission to a new Senate inquiry into rural research and development out of cities, made during the last week’s Senate estimates hearing.
Mr Merriman said AWI was based in Sydney due to it being a “historical” position dating back to when the company first formed.
“You just cannot promote yourself in a tin shed at Dubbo or somewhere else,” he said.
It was revealed the rent of AWI central Sydney offices, located at The Rocks, costs about $50,000 a month.
Last week, Mr Joyce launched a new push to move public service agencies to the regions.
“I couldn’t help but be a bit upset when people start talking about living at a shed in Dubbo – that’s where your wealth comes from, places like Dubbo,” he said.
“I get frustrated when people say you couldn’t work in a regional town, and that you need to work in Sydney – it is rubbish.
“In the world of the internet, you can work wherever you like and it will save you a lot more money and be a lot better for the nation if we can spread the level of investments evenly around.”
The conference was a launching pad for ABARES’ commodity forecast which expects the wool market’s exceptional price rises to continue in 2016–17 and 2017–18 before easing as wool production increases over the medium term.
Driven by stronger processor demand for fine wool set against limited supplies, the Australian Eastern Market Indicator (EMI) wool price is forecast to rise by eight per cent to 1,360 cents a kilogram this financial year.
The wool market’s exceptional price rises this financial year have far exceeded AWI’s forecast EMI of 1225c/kg clean average for this financial year.
Mr Merriman said allocation of the extra revenue, estimated to be about $5.5m above forecasted wool levy revenue, would be discussed at the upcoming Industry Consultative Committee on 23 March.
He said AWI were pursuing the online Wool Exchange Portal as a potential investment, and would “have another go” at shearing innovation.
Market growth has been helped by excellent seasonal conditions in most parts of the country which has improved sheep nutrition, resulting in production of stronger and slightly broader wool types.
This has reduced the proportion of fine wool in the national clip and contributed to higher average prices for these wools.
ABARES forecast the EMI to rise by a further 6pc to average 1440c/kg in 2017–18, strengthening by economic growth in major wool-consuming countries such as the United States and China.
Over the medium term, the EMI is projected to decline in real terms to 1262c/kg in 2021–22, as a response to global supplies of fine apparel wool increasing and increased production.
Moderate world wool demand
Last year, imports to the world’s largest importer of finished woollen apparel, United States, fell 10pc, and 9pc in value to US$8.8b, due to slower economic growth and subdued clothing consumption.
In 2016 in the European Union economic growth and consumer confidence remained relatively weak and, together with a lower euro, negatively affected consumer demand. As a result,
Similarly European Union imports of woollen apparel fell by 3pc in volume and nearly 4pc in value terms to €1.36b, the response of weak economic growth and consumer confidence.
Australia’s major customer China, accounting for 76pc of Australian exports in 2015–16, is expected to have consecutive growth in exports this financial year, despite slow demand in the early part of the year.
This the reported “hand to mouth” inventory demand by wool processors and textile manufacturers after a run-down in stocks in 2016.
Growth in wool demand is expected to continue in 2017–18 as consumer demand improves in response to assumed higher rates of economic growth in the major wool-consuming economies.
Over the medium term, global consumer demand for woollen apparel is forecast to grow.