Concerns over Indian sales

India is Australia's second largest export market and Australian Council of Wool Exporters and Processors executive director Peter Morgan and president Josh Lamb say the contracts in jeopardy covered about 800 tonnes of wool.

"They arise from a combination of cancelled contracts, renegotiated prices and contracts that are in suspension, not yet cancelled, or renegotiated," the pair said in a letter to the International Wool Textile Organisation.

Mr Morgan and Mr Lamb have asked the IWTO to intervene, saying some mill owners had gone months without returning emails, have cancelled contracts and refused to open letters of credit, unless the exporter accepts a lower price.

"Exporters have been left with very dear stock that was purchased for contracts that were either dishonoured or are still subject to renegotiation," Mr Morgan and Mr Lamb said.

"Some dishonoured contracts were cancelled without notice or any other form of communication."

ACWEP warned it was a serious threat to trade between the two countries.

"(Exporters) have reported situations this year which can only be described as deplorable; and a threat to the integrity of trading outcomes.

"It is important to be aware that the deterioration in current trading relationships have set trade relations back to the extent that it will take years to recover, if at all."

Mr Lamb stressed it was not all Indian mills, as several had been "exemplary" in dealing with Australian exporters.

It's believed about nine of the 50 Australian exporters are directly affected by the position of Indian mills.

Mr Lamb said the problems started in April and May and had progressively got worse.

He said while there would be no direct effect on woolgrowers, everyone in the industry needed Indian buyers to ensure healthy competition.

United Wool director Nigel Rendell said as the largest buyer in Melbourne, his company wanted the Indian mills to reopen communication with exporters.

"Not only are they ignoring our contracts, but any communications in the past nine months," Mr Rendell said. "We will be contacting the Department of Foreign Affairs, because this idea that major companies can just walk away from the Australian wool industry is just not acceptable, and we just won't take it.

He said the coronavirus had provided challenges for exporters and manufacturers, around the world.

'But we have been able to work with them - but just to have them not communicate with us is deplorable and will not be accepted."

He said the Chinese mills had been "remarkable" in their continued support for the Australian wool industry.

"In the toughest times, we have seen in 100 years, their support has been extraordinary."

He backed the action by ACWEP.

"Why would you be growing wool here, in 2020, when a contract, on behalf of an exporter, is potentially worthless?," Mr Rendell said.

"At the end of the day, growers, exporters, brokers and anyone associated and committed to growing Australian wool needs to know that a contract is a contract."

Fox and Lillie managing director James Lillie said the IWTO"s role was limited to that of arbitration, between the parties.

"IWTO is great, but it's not the law, so you can win an arbitration cas.e but if that client, overseas, wants to say 'forget it, I don't believe it,' there is not a lot they can do," Mr Lillite said. "Other than that, you have to go to the law."

The fact India was not a part of the IWTO made it more difficult.

"Common law in India is pretty complex," Mr Lillie said.

He said the troubles with some Indian mills came on the back of the coronavirus pandemic.

"The effect of that, to be fair, has knocked around clients overseas, they have had a hard time," Mr Lillie said.

"They have had to suffer, they bought wool at high prices, and had to absorb those prices.

"We all have to be healthy, the whole industry has to be healthy, and this is an unhealthy set of circumstances."

Mr LIllie said publicising the issue was intended to act as a deterrent.

"Most clients want to act honorably, but some of them have really financial pressuresthat have caused them to cancel, others don't want to take the cost," Mr Lillie said.

ACWEP has also asked the federal government to act, on its behalf.

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