How are AWI finances managed?
We run a budget the way growers do on farm – adjusting all the time for variables like price, weather, production and more. When the AWI Board makes financial decisions and allocates budgets, it considers:
- delivering a benefit to woolgrowers and the industry – increasing woolgrower profitability and global demand for wool.
- woolgrowers’ priorities – what R&D and marketing activities have been identified as priorities during consultation with woolgrowers.
- alignment with AWI’s Strategic Plan – developed by the AWI Board to reflect woolgrowers’ R&D and marketing priorities.
- pathway to commercialisation – ensuring the investment can be commercialised and thereby realise benefit for growers.
- market failure – where private investment is low/non-existent.
The AWI Board’s investment decisions are guided by the following questions:
“Will this decision benefit woolgrowers?”
“Are we helping to secure the industry’s future?”
Income and Expenditure
Consistent growth in wool prices across most microns for much of the past three years has meant AWI’s levy income has risen. During this period AWI has been building its resources and expenditure from $76.6 million in 2015/16 to a forecast of $88 million in 2017/18 to deliver R&D and marketing for woolgrowers.
This has allowed us to fund more wild dog control initiatives, train more shearers, commence a major genetic life-time productivity project, initiate a process to modernise the wool selling system, deliver more education opportunities for our young growers, and expand our marketing initiatives in our major consumption markets in China, North America and Europe.
The Board believe this level of investment is warranted, to continue to drive demand, as well as to support industry growth, sustainability and productivity. Simultaneously, AWI is focused on managing its finances and investments prudently to build resilience from this ‘once in a generation’ period.
What has the strong EMI meant for AWI’s finances?
In preparing its operating budgets, AWI draws on the best available market analytics – including production forecasts, retail and trade market reports, consumer insights and trend monitoring, along with fibre market research. But the continued growth in the EMI over the current WoolPoll period exceeded even the most optimistic reports.
It’s not possible to scale up a business overnight. With the increase in income, AWI has spent the past couple of years building its resources across the business, so that we now have the right people and infrastructure in the right places to deliver more for Australian woolgrowers. At the same time, our reserves have also grown. In 2017/18, we increased expenditure again, putting additional funding into accelerating and expanding existing programs. Funding was provided for new R&D and marketing activities in line with woolgrower priorities outlined in AWI’s Strategic Plan.
- EMI would average 1225c/kg
- Total revenue $73.4 million
- Expenditure would be $73.4 million
- Available Reserves would decline by $5 million – with AWI drawing down on funds to deliver R&D and marketing investment commitments
- Closing reserves would be $84.0 million
- EMI ranged from 1287 – 1546c/kg
- Total revenue was $88.0 million
- Expenditure was $70.8 million
- Available reserves reported a surplus of $17.2 million
- Closing reserves were $106.3 million