1990-1999: A Decade of Instability and Uncertainty

1990

The Australian government announces in May that it will reduce the minimum reserve price for wool from 870 cents to 700 cents, thus reducing wool growers' income by $1.4 billion in the next season. The move follows weeks of controversy in which the Australian Wool Corporation opposes a reduction in the reserve price yet has been forced to purchase 90 per cent of wool at auction.

The Australian Wool Corporation introduces national marketing quotas, backed up by an interim Flock Reduction Scheme to relieve the accute oversupply of wool. Growers are subsidised for costs associated with destroying some of their sheep.

1991

Facing a possible $4 billion debt by the Australian Wool Corporation, the Australian government announces the abandonment of the 17 year old reserve price for wool.

The government says it will establish new wool selling arrangements after June 30, 1991, following consideration of the report of a Committee of Review into the Wool Industry (Terms of Reference).

The price of wool falls overnight from 700 cent/kg clean to 430 cents/kg.

Sir William Vines is appointed to head the Committee of Review into the Wool Industry. The recommmendations of the inquiry include:

• The dismemberment of the Australian Wool Corporation, 4 new organisations created:
  • The Australian Wool Promotion Corporation
    The new body will be responsible for approving and monitoring IWS strategies and budgets (IWS will become responsible for current Wool Corporation technical and promotional activities within Australia). Funding: 3.5%
  • Auswool
    Responsiibilities include current Wool Corporation raw wool services functions including sales, market reporting, statistics, and quality control, plus activities performed by the Australian Wool Surveillance Authority. Funding: 0.2%
  • The Australian Wool Realisation Commission
    Responsibilities include stockpile disposal and service and discharge of debts (including sale of wool stores). Funding: 7.95%
  • The Wool Research and Development Corporation
    Responsible for research and development. Funding: 0.35%
• The total wool levy is to be set at 12% for the first two years with the government to make up any deficit, which will later be recouped from from stockpile sale profits and asset sales including wool stores.
• All references to the formation of any Reserve Price Scheme are to be exorcised from the Act.
• The stockpile is to remain frozen until the end of 1991, except for possible sales to the USSR. Subsequently, until the end of June 1993, stocks are only to be released when their market indicator level exceeds five sevenths of their former reserve price, i.i. when the average market indicator is at or above 500 cents/kg (clean). Disposal policy fro 1993/94 and beyond is to be determined six months before the start of that season.
• The number of selling centres is to be reduced and sale by separation, sale by description, and electronic trading are to be given priority.
• Sale by description is to become a "major objective" of Auswool.
• The feasibility of establishing an incorporated body to plan, arrange and administer the system of selling wool is to continue to be investigated.
• IWS is to review its services to the industry with a view to introducing a cost-recovery system.
• IWS is to be encouraged to provide price and other market information to clients on a fee-for service basis.
• Each of the new organisations created to replace the Wool Corporation will have its own board of eight directors. The chairperson in each case will be appointed by the Minister, and of the remaining directors, at least two will comprise wool growers, and three will have relevant expertise and/or experience.

The Australian Government legislates to implement, in part, the recommendations of the Committee of Review into the Wool Industry. The Wool Marketing Act 1987 is amended (Wool Marketing Amendment Act 1990), creating the Australian Wool Corporation, the Australian Wool Realisation Commission, and the Wool Research & Development Corporation as separate organisations.

IWTO-7, “Sub-sampling Staples from Grab Samples”, and IWTO-30, “Determination of Staple Length and Staple Strength”, are adopted by IWTO as full Test Methods.

1992

Mr L J Yeo AO retires as Chairman of the Board and is replaced by Mr A G McGregor AO.

1993

In April the Minister for Primary Industry establishes the Wool Industry Review Committee (Ross Garnaut, Stephen Bennett and Rodney Price) with broad terms of reference, to make recommendations by July.

On 31st July The Wool Industry Review (Garnaut) Committee presents its recommendations.

Legislation is enacted whereby Wool International (WI) replaces the Australian Wool Realisation Commission to manage the stockpile. The Australian Wool Research and Promotion Organisation (AWRAP) is established, merging the activities of the AWRC and WRDC.

IWTO-12, “Measurement of the Mean and Distribution of Fibre Diameter Using the Sirolan-Laserscan Fibre Diameter Analyser”, is adopted by the IWTO Technical Committee, at its meeting in Istanbul.

The Standardisation Committee of IWTO suspends IWTO-12.  The reasons for this are political rather than technical, the decision made in the context of a debate about the differences between the Laserscan and an alternative technology based on image analysis (OFDA100).

The Australian Parliament also passes legislation requiring the Australian Wool Corporation to divest itself of the responsibility of administering wool marketing arrangements in the Australian Wool Industry.

Another government initiated inquiry, the Wool Processing Task Force, led by Mr Keith Lawson submits its report.  Charged with providing advice on encouraging further value adding to Australian wool within Australia the report puts forward 12 recommendations.

1994

In response to the divestment of wool marketing administration from the AWC, commercial interests representing the wool buyers and sellers in Australia establish the Australian Wool Exchange (AWEX) as a public company limited by guarantee to manage wool marketing arrangements in the Australian wool industry.

AWRAP and the IWS are merged and are governed as one organisation under the control of AWRAP.

1995

AWTA Ltd adopts a succession plan to progressively replace the most senior managers over a period of 5 years.

Following an extensive inter-laboratory round trial organised through IWTO on samples of wool tops and raw wool IWTO reinstates the suspended Test Method for Laserscan.  Amendments, relating to the sampling and measurement procedures, are included at the same time.  The Specification now requires one sub-sample to be taken from each sub-sample tested for yield and 2 test specimens taken from each of these sub-samples and 2000 snippets measured for each specimen.

AWEX begins to formulate a new Industry Description system to replace the table of types previously employed by the AWC.  The “AWEX ID” combines visual assessment and objective measurements in a much simplified typing system which attempts to address the recognised deficiencies of the previous systems.  AWEX ID is compulsory for all wool sold at auction in Australia.

1997

The Woolmark Company Pty Ltd (TWC) is established. The Company is initially a subsidiary of AWRAP but later becomes a subsidiary of Australian Wool Services Limited (AWS).

1998

Grower discontent with wool prices and wool industry structures results in a new enquiry, the Wool Taskforce led by Ian McLachlan, into the industry.

In October the Commonwealth Government announces its intention to privatise Wool International and to pass ownership and control of the wool stockpile to shareholders. Parliament legislates a freeze on stockpile sales until 30 June 1999 and appoints an Interim Advisory Board to facilitate a smooth transition from Government to private ownership

AWTA Ltd advises IWTO that in July 2000 the Company will replace IWTO-28 (Airflow) with IWTO 12 (Laserscan) as its standard service for the certification of micron.

1999

The Wool Taskforce releases its report.  Its recommendations relating to AWTA Ltd are:

• The new AWTA should become a conventional company with its shares owned by woolgrowers via Australian Wool Services
• AWTA should play a more explicit catalytic role, encouraging the adoption of new technology in testing and related areas. This may include electronic selling and the introduction of on-farm testing, first via the issuing of guidance certificates and ultimately an effective and practical on-farm certification scheme. This should facilitate the electronic sale of wool while it is still in the shed, a logical and desirable development which would enhance woolgrower selling strength and in turn enable more efficient transport at the buyer’s direction.

The AWTA Ltd Board responds to the Taskforce recommendations:

“The Task Force, in recommending that AWTA Ltd should become a "conventional Company" with shares wholly owned by Australian woolgrowers, has not focussed on the fundamental need for its independence, and how it underpins the reputation and integrity of wool testing for trading purposes.”

Wool International is privatised and Woolstock is formed.