In 2015 during a panel discussion in Melbourne on the Wool Exchange Portal (WEP), Monash University professor and panellist Graeme Samuel said "the inevitability of it (the WEP) will be like mobile phones; it will come and either we get with it, or else let it take us over".
With the final details yet to come, the industry remains cautious, unsure as to whether this is just a marketing lemon or something that might be of use.
Regardless, the WEP’s introduction will mark the wool industry’s adoption of a tool to help transparency at a time when the grain industry is debating the validity of stocks reporting and the beef industry has not long come through inquiries into pricing transparency.
Some key questions that people were left hanging with after last year’s forums, such as the one attended by Professor Samuel in Melbourne, are now being answered, such as how much users will pay.
This income ($150 annual sign-up and $2.50 transaction fee) will help cover operating costs.
With an extra $5.5 million from levy revenue due to improved wool prices, the expected $3.6m one-off cost to build the portal will be easily covered.
Whether it is then successful in generating enough revenue from fees and subscriptions will depend on uptake, which in turn will depend on grower education and the system’s effectiveness.
The transparency the system brings by reporting brokers’ fees should make broker fees more competitive, also benefiting those not using WEP.
Less clear are the flow-on effects that might come from how the 15 per cent of growers use the system. While 15pc might be expected to use the portal, this doesn’t mean a reduction of 15pc through the auction system – especially if the auction floor provides the best returns.
Given the sensitivity of the auction system to supply, if some growers did divert wool away from the auction floor, this could help maintain some buoyancy in auction prices.
However, while higher auction prices have conveniently generated the levy funds needed to bankroll this project, while prices remain at current levels or better, there also might not be any great urgency for growers to jump aboard the portal.
Regardless, when the cost of the project is slightly more than one per cent of the $300 million it currently costs to sell the national clip – and the national clip is relatively small right now – if it doesn’t work, then the experiment will have been a comparatively small cost in the overall scheme of things.
It might also position wool for an incoming digital generation.
