'Australian wool auction system has modernised'

15 Sep '15

3 min read

The Presidents of the National Council of Wool Selling Brokers of Australia, the Australian Council of Wool Exporters and Processors and the Inland Wool Brokers Association have said that claims attributed to the Australian Wool Innovation CEO, Stuart McCullough, in recent media reports that there has been no modernisation in the auction system in 100 years are false and misleading.

“The wool auction system of today is vastly different to that of 50 years ago when open wool bales were placed on show floors for inspection. Fifty years ago there was only manual recording of information for the exchange of ownership and auctions were conducted in three sale rooms over several hours with no electronic technology, in 13 auction locations around Australia,” they said in a press release.

This is compared with the modern-day, efficient auction system with electronic exchange of information and recording of each sale in just three locations around Australia. There are numerous examples of the industry embracing change and modernising the auction system. Many of these changes in the auction system stemmed from the introduction of Sale-by-Sample and Presale Testing in 1972.

“These innovations led to sample boxes replacing bales of wool on the show floor and to the use of objective test data to assist the purchase of wool”, the Presidents said, “This allowed exporters and processors to better predict the expected processing performance of their shipments”.

“Sale-by-Sample and Presale Testing enabled the introduction of Sale-by-Separation, which led to the steady reduction in the number of wool selling centres to the current three, and brought significant cost efficiencies”.

“It also brought efficiencies in wool processing plants with the elimination of sorting prior to processing. As well, Presale Testing provided woolgrowers with much better knowledge of their wool's commercially important characteristics, including micron, yield, length, strength and the position of break.”

The Presidents also noted that the wool industry was one of the first industries to extend the use of computers and electronic technology from the traditional finance and accounting functions to assist in improving the efficiency of the business operations within an industry.

“The industry pioneered the electronic exchange of data associated with the exchange of ownership in 1978. Advances in information technology allowed this to evolve quickly during the 1980s to the stage where high speed, cost efficient, error-free exchange of data occurs along all sectors of the wool pipeline.”

The industry has also investigated or implemented alternative methods to the use of open cry auctions, since the 1970s, ranging from sealed electronic tenders, electronic offer boards, digital imaging of samples, and electronic replication of the open cry process.

“Offer boards are in place and act as an important supplement to the auction,” the Presidents said.

“Even so, none of the technologies developed to date have demonstrated the ability to extract the same level of competition, speed and efficiency as open cry auctions.” the Presidents continued, “In excess of 250 lots are sold each hour with the open cry auction system, providing instantaneous price discovery.” (SH)

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