Budget assumptions

To predict the potential income for AWI, the Board considers a number of factors based on current, historical and forward predictions. This is done in consultation with industry, expert advisors and business intelligence sources. AWI seeks to be balanced and responsible in these forward predictions. Considering these forecasts are for budgets commencing in July 2022, the modelling for the 5 levy rate options are based on the following key inputs.

EMI – is based on the ABARES March 2021 Agricultural Commodities report with an EMI of 1350c, 1480c and 1550c for the 3 years.

Production  – production uses a more conservative estimate than the ABARES March report with a gradual increase in production to 320mkg by 2024/25.

Government Contribution  – ABARES March 2021 report was used to estimate the 3 year rolling average Gross Value of Production (GVP) used to calculate the contribution.

Reserves – The anticipated reductions in reserves for each levy rate are estimated based on the income projections above and balancing the expenditure required to meet the program investments with the need to maintain the prudent required reserves in accordance with policy.

 

LEVY RATE OPTIONS

SHEEP PRODUCTION 
0.0-1.0%

Should the income from the levy be reduced dramatically AWI will continue to fund the current R&D contractual obligations that have been undertaken throughout the current strategic period. Any future project investment will need to undergo a review process to prioritise the greatest outcomes for the industry. 

The industry will see reduced investment in wool harvesting technologies, shearer and woolhandler training and sheep handling robotics. AWI will also pull back on practical sheep skills and tertiary education initiatives, such as the Nuffield Scholarships, Breeding Leadership, Science & Innovation Awards and School Wether Competitions.

1.5%

If the income from the levy will be unchanged AWI will continue investment in current R&D projects.

2.0-2.5%

Should the levy rate increase AWI will place greater emphasis on reproduction and the eco credentials of woolgrowing by mitigating and adapting to climate change. AWI will additionally invest in next generation initiatives such as the National Merino Challenge & young farmer study tours. Lifetime Ewe Management will be strengthened with opportunities for ongoing learning for LTEM groups and graduates.

 

CONSULTATION
0.0-1.0%

Should the income for the levy be reduced dramatically, AWI will invest predominately in market intelligence for licensees and supply chain partners on a subscription basis, reducing investment in grower engagement, extension networks and sponsorships/events.

1.5%

Should a matching income levy rate occur, AWI will continue to invest across all programs of market intelligence resourcing, continue to engage via existing extension networks, and grower events such as the National Sheep & Wool Show, Sheepvention and Woolorama.

2.0-2.5%

Should the levy rate increase, AWI will invest in broader international profiling and insights within major traditional and emerging markets, with the aim to create diversified supply chains and markets for Australian wool. 

AWI will also extend support for wool industry initiatives that leverage support and engagement targeting young growers and woolgrower focused events. This includes initiatives such as the National Merino Challenge and Young Grower Study Tours and Young Farming Champions.

 

PROCESSING INNOVATION AND EDUCATION EXTENSION
0.0-1.0%

If the levy income is heavily reduced, AWI will focus its investment on engaging with partners within the supply chain for Woolmark Licensing. However, AWI will not continue student design competitions, primary and secondary school education, trade partner exposure within the supply chain, trade shows and digital platform content. Emerging markets in the Eastern and Western Hemispheres will also be heavily compromised.

1.5%

If the income from the levy will remain the same, AWI will continue investing in AWI/TWC digital Education Extension platforms for students and trade throughout the supply chain. AWI will also increase licensing programs by re-engaging with potential brands within the supply chain and collaborate with industry partners for process & product innovation opportunities.

2.0-2.5%

If the levy is increased, AWI will invest in expanding all activities in the Eastern and Western Hemispheres through extension of education and product & process innovation. Greater investment on digital platform content through The Wool Lab will support trade engagement and education throughout the supply chain.

 

MARKETING 
0.0-1.0%

In the event that the levy be reduced dramatically, AWI will invest predominately in fibre advocacy of Merino wool from a trade and consumer position. There will also be a reduced investment in the International Woolmark Prize (IWP) and AWI will no longer continue the Woolmark Performance Challenge program.

1.5%

If the income levy will be unchanged, AWI will provide limited investment in the current Woolmark Performance Challenge and IWP programs, as well as reduced media investment on consumer fibre advocacy of Merino wool. AWI will continue to undergo a review process of Marketing projects to ensure that they yield a positive outcome for the industry.

2.0-2.5%

Should an increased income levy rate occur, AWI will focus investment on greater marketing reach to the Western Hemisphere and East Asia Markets. This will be done through campaigns by promoting eco credentials and performance benefits to consumers and trade. New performance programs in the Western Hemisphere will be created through brand partners and campaign content. 

 AWI will also extend the media investment and messaging reach of our eco credentials campaign globally and engage with more high-profile ambassadors to promote the benefits of Merino wool globally.

 

TRACEABILITY
0.0-1.0%

Should the income for the levy be reduced dramatically, AWI will invest predominately in attracting increased grower and brand traffic to the WoolQ platform and promote a two-way understanding of both stories of provenance and consumer/brand priorities and requirements. 

There will be minimal investment in traceability initiatives, both digital and science based. Investment in wool’s eco credentials as well as proving its effect on wellness and performance will also be impacted. Investment in wellness and performance benefits for skin health, sleep quality and breathability measurement will cease.

1.5%

If the income levy will be unchanged, AWI will continue to work on key initiatives including participation in the EU Product Environmental Footprint (PEF) development, Life Cycle Analysis (LCA) and wool’s GHG status and its role in circular economies. 

Investment increase will occur through profiling various quality assurance schemes on WoolQ and AWI will look to build blockchain and science-based traceability into the Woolmark licensing value proposition for global partners. However, carbon footprint studies on wool processor benchmarking and development of integrated on-farm methane reduction strategies will not proceed.

2.0-2.5%

Should an increased levy rate occur AWI will increase investment across all programs of traceability and eco wool credentials overall through the supply chain to ensure that clear messaging is provided. This will allow wool to be best positioned and meet the shifting requirements of overseas customers.