Australian Wool Innovation (AWI), the not-for-profit company funded by woolgrower levies and responsible for research and development, is preparing to commercialise part of its highly criticised online market platform WoolQ.
- AWI has spent $6.3 million and more than five years developing WoolQ
- Woolgrower and broker groups are concerned the company will not be able to recoup its investment costs
- An independent review of performance has recommended WoolQ be assessed
Woolgrowers have criticised the buying and selling platform as a waste of industry levy funds.
AWI Chair Jock Laurie said the market component of the platform, which had cost $6.3 million and took more than five years to develop, was heading toward commercialisation.
“All of the development of WoolQ, the market component of WoolQ has basically been completed, Mr Laurie said.
“I think we’re in a position now where we’ll look at commercialising that and that component of it will get into the commercial arena and see how it tracks from there,” he said.
“In the end it will be whether growers actually want to use it, whether brokers want to use it and whether buyers want to use it that’ll be the big telling point.
This week the New England-based woolgrower told a webinar audience that AWI was preparing a prospectus and the company’s board would work on the plan over the next few months.
He said the traceability component of WoolQ was still being developed.
Woolgrower and broker groups react
The president of the National Council of Wool Selling Brokers, Rowan Woods, welcomed the announcement and said he has long held concerns about the cost of WoolQ’s development.
“It’s levy payers that are paying for this development and they would want to see a return on that investment and that … has not materialised to any degree,” Mr Woods said.
Mr Woods said there were already sufficient commercial electronic platforms for the buying and selling of wool.
“These systems succeed or fail on volume and throughput and even existing systems are struggling with that,” Mr Woods said.
However, Mr Wood, a Jemalong-based wool broker, said the company should retain and continue developing the platform’s wool traceability component.
“AWI really is in the box seat to be heavily involved in the development of and possibly provide an Australian industry and quality assurance program designed here and relevant to our growers,” he said.
Australian Wool Growers Association director Rob Ingram agrees that the market component of WoolQ should be sold off.
Mr Ingram said he was surprised by the announcement but was concerned AWI would not be able to recoup the costs already invested.
“Our networks are saying to us we don’t think that there is a substantial commercial value in the platform,” Mr Ingram said.
Criticism of costs and low uptake
An independent report published in August recommended AWI undertake an internal review of WoolQ.
The report noted the woolgrower registrations on the platform were below the target of 1,700 and the target of 2 per cent of all Australian wool traded had not been met.
The company has since reported there are 3,470 registered users, 1,866 of which are woolgrowers.
In its operating plan released in June, AWI planned to invest $600,500 into the platform and set a target to increase the number of woolgrower users by 250 during this financial year.
During a Senate Estimates hearing in March, the company faced fierce scrutiny about the $6.3 million already spent on the project
Chief operating officer John Roberts told the hearing WoolQ had yet to charge users and derive a revenue stream due to the low volumes of wool on offer.
Sellers using WoolQ are now charged a $5 fee for every bale sold through the site.
The federal government contributes to AWI’s funding of research and development activities, capped at half a per cent of the wool industry’s gross domestic product.
WoolPoll, the triennial vote where woolgrowers decide the levy rate paid to fund the marketing, research and development work undertaken by Australian Wool Innovation, is currently underway.
Posted , updated