Time to rebuild growers’ trust

Australia's peak wool body AGM focuses on transformation


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AWI chair Colette Garnsey said as a company AWI know they must do more to earn and retain the trust of woolgrowers.

AWI chair Colette Garnsey said as a company AWI know they must do more to earn and retain the trust of woolgrowers.

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Incoming AWI chair says she wants a company that is transparent and accountable.

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Incoming Australian Wool Innovation chairwoman Colette Garnsey says AWI needs to "lift its game" as it fights to emerge from a troubling period for the peak wool body. 

Rebuilding trust was front and centre for Ms Garnsey in her address to stakeholders at AWI’s annual general meeting in Sydney today. 

The meeting was set to be a pressure cooker after a testing year for the nation’s peak wool body, following an intense independent review of performance ordered by Department of Agriculture Minister David Littleproud and the recent resignation of long-standing chairman Walter Merriman.

But stakeholder input was undoubtedly subdued. 

Ms Garnsey’s comments to the 100 stakeholders that attended were concise and to the point, leaving a clear signal that AWI are confident they are heading into a new era. 

“We must do more to earn and retain the trust and confidence of our shareholders,” Ms Garnsey said. 

Ms Garnsey admitted AWI needs to do more around transparency and consultation.

Not to just woolgrowers and shareholders, but also the government, farmers’ groups, the media, their supporters and those who hold a more critical view of their performance. 

“They all have a stake in the future of the company, they all want the very best for the wool industry,” she said. 

“Consultation is pointless without transparency, I want an AWI that is open and accountable.” 

Notably absent in question time, but addressed early in the meeting, Ms Garnsey updated shareholders on the 82 recommendations in the review, saying 75 of those they accept entirely and are in the process of implementing, with 33 per cent already completed. 

But in a contravention of the recommendation of a 10 year cap on director terms, Ms Garnsey declared Mr Merriman was prepared to stand for the board again, pending the outcome of an extraordinary meeting in March next year. 

A board skills matrix has been introduced, which will help ensure the company has the right mix of skills and experience on our board. 

Of the remaining recommendations, Ms Garnsey said two are the subject of continued negotiations with the Department of Agriculture and the remaining five will be put to shareholders at a general meeting in mid-March 2019 after a period of wide consultation.

“It is only appropriate that as it is your company, it is your constitution that you decide if there are going to be changes to the constitution,” she said.

She said the review found no fault with the existing governance and the financial performance of the company. 

Ms Garnsey took the recent WoolPoll levy vote and delivery of results to assure growers they will run lean with every dollar spent wisely and every dollar accounted for.

“The final impact will be determined in the first half of next year as we consult with you on our budget 2019-2020 and our priorities for our next triennial strategic planning period,” Ms Garnsey said. 

“We have operated with smaller budgets in the past, and our reserves, which have been prudently built up over the years, give us the ability to ride out the peaks and the troughs of the industry.” 

Although there were no votes at today’s AGM, the chair assured stakeholders that at all future shareholder meetings they will be revealing the number of open proxies and how the chair intends to use them. 

RESERVE FIGURES WILL DROP 

AWI chief executive officer Stuart McCullough pointed to the record highs hit by wool prices in the recent months, with the average EMI since the last AGM sitting at 1895 cents per kilogram, a lift of 25.5 per cent over the prior 12 month period. 

He reported their budget for 2018-2019 was set at 340 million kilograms for shorn production and 1650 cents per kilogram. 

But with volumes coming down forcefully, it has been altered to 305 million kilograms and 1750c/kg.

“That does mean a drop in revenue, but we have the ability to draw down on our reserves,” Mr McCullough said.  

He said the board has agreed to alter the budget and reduce the drawn down for this fiscal year from $15.4 million to $5.4 million.

He said the board will now look over the budgeting of the company over the next four to five months and in May next year they will make the decision on draw down from reserves. 

“The reserves that have been built over time are healthy and obvious, they are there for good reason, to take the peaks and troughs out of the revenue that comes in.

But with the draw down modelled over the next three years, they will be looking at reserve figures dropping to $90 million.

Mr McCullough reported investment in research and development, and extension by AWI in its Sheep Production and Woolgrower Services portfolios, increased by 27pc last year, delivering a range of outputs to help woolgrowers improve their on-farm productivity and profitability.

This included ongoing investment in Lifetime Ewe Management training, which resulted in more than 4300 growers undertaking the hands-on course.

“In the off-farm R and D area, we have added to the growing number of research findings supporting the health and wellbeing benefits of wool products,” Mr McCullough said. 

“And we are working with leading brands such as adidas and Max Mara in new product developments.”

Mr McCullough echoed the comments of AWI’s chairman, reaffirming the company’s commitment to consultation with growers and to continuing to be being transparent, lean and efficient in their operations and work hard to put the interests of woolgrowers first. 

SOME MAIN POINTS 

  • The average EMI since the last AGM is at 1895 cents per kilogram, a lift of 25.5pc over the prior 12 month period
  • Decreased volumes has seen the budget altered to 305 million kilograms shorn production at 1750c/kg
  • Reserves will drop to $90 million in the next three years 
  • Of the 82 recommendations in this year’s independent ROP 75 have been accepted entirely and are in the process of implementing, two are subject of continued negotiations with the Department and the remaining five will be put to shareholders at a general meeting in mid-March 2019 after a period of consultation
  • Director and former chairman, Walter Merriman, will again stand for board election at an extraordinary meeting in March 2019 
  • This year’s original budget AWI had an expenditure of $113 million, that is expected to be reduced
  • 190 staff are employed at AWI, with 13 offices around the world, that is not expected to grow 
  • The tenure of staff has remained the same in the last 12 months and turnover has dropped 
  • The number of open proxies and how the chair intends to use them will be will be revealed at all future shareholder meetings 
  • Investment in research and development increased by 27pc last year
  • Dr Meredith Sheil was named as the newly appointed deputy chairman of AWI

The story Time to rebuild growers’ trust first appeared on Farm Online.

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