All the recent focus of industry development, Control of IP, and sovereign manufacturing, has been on High tech.
Should we, or perhaps why don’t we, look to areas where we have dropped the ball in the past, but still have the opportunity to shape world markets, built capability, and diversify our economy.
Should we be looking at some of the obvious, but perhaps boring stuff that can make a significant difference, and where we already have a huge head start.
This race towards the newest shiny thing is fun, generates a lot of press releases, is exciting, attracts attention, as well as capital and competition, but is it the whole game?
In years gone past, Australia supplied a huge percentage of the world’s wool.
We grew it, and processed it through the many stages to the production of yarn, and exported the highly value added product to the world.
No more.
We have been supplanted as the number 1 producer by, you guessed it, China. We proudly, for now, occupy second place in the production stakes. China also is the biggest importer of Australian greasy wool, which they then process and gain the huge value add that the processing stages contribute.
I do not have all the numbers, but the current mean fibre diameter of the Australian clip is 20.8 microns, (AWPFC numbers) which is significantly less that the average of other major producers. At the extreme, production of wool at 13-15 microns is very small, requiring very considerable skill, animal husbandry, and investment in genetics. However, that investment is returned with huge price premiums paid by high end fashion manufacturers. That fine wool sells at auction for up to and sometimes more than $150/kilo, 15 times the average.
Australia’s share of world fine wool production is upward of 80%.
Why is it beyond our capability to capitalise on such a premium position, based as it is on 150 years of experience, a continuing production advantage in the preferred raw product, and many millions of dollars on R&D?
Australian Wool Innovation has been pissing around for the 30 years I have been watching, and from time to time dipping a toe into the water. They have wasted growers money and matched funding from the public purse, while failing to build a sustainable industry value chain that builds Australia’s competitive position. Making excuses, and generally having a fine old time has been the outcome of their efforts.
Having just read the latest strategic plan I can find, that sorry situation is not going to change.
As part of the National Reconstruction Fund, should we revisit old friends like wool that despite the best efforts of the last 40 years, we have failed to kill off? Surely that level of resilience requires some examination and consideration for rebuilding the supply chains that delivered many of the foundations of the prosperity we still enjoy. Such an effort would tick 5 of the 8 priority areas nominated in the reconstruction fund legislation.
13 years ago in a post I asked ‘Where next for wool‘. The question needs to be asked again, and this time we should be expecting some sensible answers.
The header graph is the average price of greasy wool over time. You can see the impact of the wool industry pricing model that ended in tears in July 1995, leaving a huge inventory of unsold wool that screwed the market for a decade. As with all averages, the graph hides the huge opportunity that has been facing us for years, which we continue to ignore.
