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AUSTRALIAN Wool Innovation is set to undertake a major strategic research direction change to address rapidly rising wool harvesting costs and the largest single on-farm direct expense for wool growers – shearing.
Increased long-term expenditure on alternative shearing research and technology transfer by the wool levy-funded research, development and marketing body is expected following recent statements by AWI chairman Wal Merriman.
The AWI board is considering how to allocate a likely 25 percent increase in its annual operating budget, due to the boost to its reserves and matching government funds from increasing levy funds as a result of recent higher wool prices. AWI budgeted for $50.17 million in levy receipts in 2016-17 as part of total revenue of $73.39 million.
Only about 10pc of AWI’s annual $2.2 million harvesting investment portfolio is currently spent on alternatives to manual shearing and in-shed sheep handling, but shearing costs are rising faster than efficiency gains from in-shed shearer training.
The AWI Industry Consultative Committee March 2017 meeting summary released recently said the AWI board is investing increased income from levies into boosting the company’s current strategic direction, in particular exploring alternatives to manual shearing.
Mr Merriman also wants to use savings achieved in a recent round of staff redundancies to explore alternatives to the manual shearing of sheep.
Additional research in wool harvesting could involve combining robotic, chemical and previous platform or chain shearing technology to provide cost-saving in-shed alternatives for growers and shearers.
Sheep Central has been told there is “a greater appetite” for the AWI board to look at some of the industries bigger problems, such as the issue of shearing heavier sheep efficiently and safely. No formal project proposal on manual shearing alternatives has been put to AWI directors, but there have been discussions at board level.
Shearer training benefits lagging behind cost increases
AWI’s wool harvesting budget is currently focussed on shearer and shed hand training, but shearing costs continue to rise while increasing numbers of growers are shearing sheep twice a year or every eight months to assist cash flow, minimise flystrike and cut crutching costs.
In 2010, AWI’s Sheep Back to Mill report estimated that harvesting the wool from Australia’s 76 million sheep cost about $541 million, equivalent to 30pc of wool industry GVP or Gross Value Product. General shearing, wool handling and crutching have increased since then, with award rates for shearing and crutching rising an average 3.2pc per year for the last six years.
It is estimated that award cost rises have added $6.5 million annually to total industry shearing costs since 2010, meaning at 2016 pastoral award rates, it would now cost $39 million more – or $580 million — to shear 76 million sheep.
Based on the rate of shearing award rate increases in recent years, the annual shearing cost increase alone could, within five years, equal the total levy fund amount collected from growers annually.
In 2014, the BDA Group’s report for AWI – Benefit Cost Analysis of AWI’s Shearer and Wool Handler Training Investment – determined that AWI in-shed training has mainly benefited trainee shearers, generating an estimated average throughput gain of one sheep per day per shearer, equivalent to a 0.8pc cost saving annually, with little or no productivity gain to experienced shearers.
AWI chairman wants redundancy savings to go to shearing research
In Episode 12 of AWI’s podcast The Yarn, Mr Merriman said the redundancy of seven staff members had produced a saving of “$700,000 cash-positive in the first year and $2.3 million per year” for AWI.
“So in five years we’ve saved the company 10 million dollars.”
In the podcast, Mr Merriman agreed with corporate communications manager Marius Cuming that he had a particular purpose in mind for the proceeds from the redundancy savings.
“Potentially having another go at shearing – at the big one – trying to make shearing easier?” Mr Cuming proposed.
Mr Merriman said that “strategy” had come from the March meeting of the AWI directors.
“History shows that trying to find a replacement for manual shearing has been littered with expense and failure; however, we think it is a good time now, some 10 or 12 years after the last effort to look at all the things that are out there – robotics, laser – anything else that’s there to see if we can find something to deal with the cost of shearing,” he said.
“A global global search,” Mr Cuming added, referring to the need to involve top overseas researchers and leverage AWI funds internationally.
AWI spent more than $6 million on its mobile wool harvesting Shear Express project, before ceasing funding in 2003 after an independent evaluation and field trials confirmed the prototype unit had not met key design expectations and targets. More than 80 potential harvesting technologies were assessed by AWI, identifying promising areas for development including handpiece technology, parallel, modular, upright shearing platforms and alternative shearing technologies.