Australian Wool Innovation (AWI), the non-profit company funded by levies on wool producers and responsible for research and development, is preparing to commercialize part of its much-criticized online market platform WoolQ.
- AWI spent $ 6.3 million and over five years to develop WoolQ
- Wool producers and brokerage groups fear the company may not be able to recoup its investment costs
- An independent performance review recommended that WoolQ be evaluated
Wool producers criticized the buying and selling platform as a waste of funds raised by the industry.
AWI President Jock Laurie said the platform’s market component, which cost $ 6.3 million and took more than five years to develop, was headed for commercialization.
“The entire development of WoolQ, the market component of WoolQ, is virtually complete,” said Laurie.
“I think we’re in a position now where we’re going to look at marketing this and this component will enter the commercial arena and see how it translates from there,” he said.
“At the end of the day, it will be if producers really want to use it, if brokers want to use it and if buyers want to use it, that will be the main argument.
This week, the New England-based wool producer told a webinar hearing that AWI is preparing a prospectus and that the company’s board of directors will work on the plan over the next few months.
He said the traceability component of WoolQ is still under development.
Groups of wool producers and brokers react
National Council of Wool Brokers Rowan Woods welcomed the announcement and said he has long been concerned about the cost of developing WoolQ.
“It is the taxpayers who are paying for this development and they would like to see a return on this investment and it … has not materialized to any degree,” Mr. Woods said.
Mr Woods said there are already enough electronic trading platforms for buying and selling wool.
“These systems succeed or fail in terms of volume and throughput and even legacy systems struggle with that,” Mr. Woods said.
However, Mr Woods, a Jemalong-based wool broker, said the company should retain and continue to develop the wool traceability component of the platform.
“AWI is really on the verge of being heavily involved in development and eventually providing an Australian industry and a quality assurance program designed here and relevant to our growers,” he said.
Australian Wool Growers Association director Rob Ingram agrees that WoolQ’s market component should be sold.
Mr Ingram said he was surprised by the announcement, but worried AWI might not be able to recoup costs already invested.
“Our networks tell us that we don’t believe there is substantial business value in the platform,” Mr. Ingram said.
Critical cost and low adoption
An independent report published in August recommended that AWI undertake an internal review of WoolQ.
The report noted that the records of wool producers on the platform were below the target of 1,700 and that the target of 2% of all Australian wool traded had not been met.
The company has since reported that there are 3,470 registered users, of which 1,866 are wool producers.
In its operating plan published in June, AWI planned to invest $ 600,500 in the platform and set a target to increase the number of users producing wool by 250 during this fiscal year.
During a Senate estimate hearing in March, the company came under scrutiny for the $ 6.3 million already spent on the project.
COO John Roberts told the hearing that WoolQ has yet to bill users and generate a revenue stream due to the low volumes of wool on offer.
Sellers using WoolQ are now required to pay a fee of $ 5 for each ball sold on the site.
The federal government contributes to AWI’s funding for research and development activities, capped at half a percent of the wool industry’s gross domestic product.
WoolPoll, the triennial vote where wool producers decide the rate of levy paid to fund marketing, research and development work undertaken by Australian Wool Innovation, is currently underway.