Interview with Mark Grave

Mark Grave
CEO
Australian Wool Exchange (AWEX)

Seismic fluctuations in any market does not create stability or growth

Mark Grave, CEO of AWEX shares his thoughts on the Australian wool industry, its market, and its role in the Australian stock exchange with Fibre2Fashion correspondent Ilin Mathew. Synopsis: AWEX is a public company limited and was established in February 1994 to facilitate the commercial interests of wool sellers and buyers in the country. Its members comprise of wool brokers, exporters, private treaty merchants, processor, wool producers, and associates. It is established with the main objective of fair, efficient, and informed trading of Australian wool. Mark Grave is one of the most knowledgeable professionals in AWEX. His role in bringing the organization forward has remained commendable since the time he joined. Excerpts:

Can we start our conversation with various types of Australian wool fibre which has captured the attention of global apparel and fashion industry? Can you elaborate on the reasons for it?

The natural properties of wool, particularly in high end fashion has been known and marketed for a long time. Australia's reputation for producing quality apparel wool is renowned around the world. Today's apparel fibre production is considered to be wool of less than 25 micron with the majority of wool in Australia sub 20 micron. The investment by woolgrowers in the genetics of merino sheep which produce fibre for this market has been significant in establishing this reputation. Australia has also invested heavily in the education and skills of the wool harvesting team which adds to the professionalism of the Australian wool industry. Australia has also well defined marketing strategies to support Australian woolgrowers through Australian Wool Innovation.

How does the quality of Australian wool differ from the rest?

Australia has a rich heritage in agriculture and the sheep and wool industries have played a significant part of this. Australia's diverse environments has also facilitated the depth and range of wool available to the diversity of markets around the world. Size is also important. Australia is the largest producer of apparel wool and wool growers have been prepared to support their industry and invest heavily in its future. Australia has always led the world with its genetics, the investments in R&D to enhance sheep and wool production as well as farming and education. Australia realized early on that quality was the key - quality of production, quality in the type a sheep and wool to be produced and very importantly quality in the way that wool is prepared. These areas have been important in establishing Australia's enviable reputation for wool quality.

How closely do you work with wool growers and how does that increase the quality of Australian wool?

AWEX's role is primarily aimed at the farm gate, working with woolclassers (who prepare the wool), wool growers and selling agents. Our emphasis is on education and communication through the supply chain to improve quality. We want to bring the woolclasser and the wool processor together so that they understand that the farm is the first step in wool processing. If the preparation and wool quality is right as it leaves the farm this will deliver a more productive and efficient delivery for the wool processor. It is important that wool growers also understand this. Wool growers and woolclassers can't influence fashion trends and retail spending but they can listen to their customers and work with their customers (wool processors) and develop this relationship for mutual benefit. There is no doubt that Australian wool growers are savvy businessmen and women. Their farms are businesses and they need the best information available to make educated business decisions. If wool processors recognise the benefit of having a product that meets their requirements and the confidence that comes with knowing that it will perform to their needs then wool growers should be rewarded for this. Australian wool prepared by trained and registered woolclassers should be the preferred supplier of wool to any wool processor.

Can you tell us about the limitations of Australian wool industry and how can they be rectified?

Australia's dry climate can be unpredictable and plays an important part in all agricultural pursuits. I am confident that the wool industry in Australia has many opportunities but it needs to be supported by the market. Wool growers will continue to invest in industries that they believe offer opportunity. Australian wool growers have demonstrated over the years that they can make effective decisions to change their enterprises, changing the type of wool they grow from strong to fine for example.

Do you feel that the supply of natural wool is less and it is unable to meet the market demand? Can you elaborate on it?

Australia's wool production has remained relatively static for the past 3 years or so. The size and profile of the Australian wool clip has changed considerably over the past 20 years demonstrating the Australian wool growers ability to change, to recognize market signals and adopt new business strategies. This are attributes of a healthy and professional industry and this will continue.

Wool is a seasonal commodity, so the demand goes very low in summers. How does this affect the Australian wool industry? What is the alternative for industries to this seasonal demand?

Is it? I would dispute this by saying that wool should and can be worn all year round and that there is market opportunity in this. From a supply point of view Australian wool production is less seasonal today as wool growers have developed strategies for their wool enterprise to fit into their whole of farm approach to business. Any changes in fashion trends or demand will inevitably be seen as market signals and these are closely monitored by wool growers and service industries.

Let me ask you this, why has the country's wool industry reduced its dependence on Chinese buyers and processors?

It hasn't. Approximately 70% of Australia's wool exports are destined for China. China is an important wool processing hub for wool and Australia's relationship with China is strong. It is equally important to recognize that other countries including India, European and many other countries play a key role in developing competition for Australian wool.

Finally, how do you see the prospects of the country's wool industry in next five years?

Australia's wool production has remained relatively static over the past couple of years and this is likely to remain for the next 3-5years. The key element to the future of wool production will be the state of the market. Wool growers need the market to remain at least at these levels. There are also some parts of the market which have underperformed for many years and the prices in these markets need to improve to provide wool growers with the incentive to continue producing this type of wool. Seismic fluctuations in any market does not create stability or growth, it creates uncertainty. Australian wool growers make their business decisions looking 5 years ahead and beyond because wool supply is not on tap and whilst it can be stopped, it cannot simply be turned on at will. The wool industry needs stable markets with steady growth.

Published on: 17/02/2014

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.