Ep. 51: Australian Wool Exchange adopts new technologies Ankit Podcast

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Ep. 51: Australian Wool Exchange adopts new technologies

In this episode of The WTiN Podcast, we talk to Mark Grave, CEO at the Australian Wool Exchange (AWEX).

Jessica Owen
Hello. My name is Jessica Owen, and I am the Deputy digital editor at WTiN, and this is the WTiN podcast, the fourth industrial revolution is underway, and the world of textile and apparel is just one industry that is benefiting from new and innovative technologies. With this in mind, for this series, I'll be talking to companies across the textile apparel landscape about their new technologies, the benefits of digitalization, and the advice that they'd give to others who are trying to implement such solutions. This week, I am joined by Mark Grave, who is the CEO at the Australian wool exchange. Mark talks about Australia's Strong and proud will industry and how it's taking advantage of new technologies that are helping to improve transparency, bolster integrity and encourage diversity within the sector.

Well, hello mark, and welcome to the WTiN podcast. How are you doing today?

Mark Grave
Hi Jess and thank you for the opportunity of speaking with you today, I'm well, and now we're heading into summer, and I know you're heading into winter, things are warming up for us, which actually is a good thing.

Jessica Owen
Yes, I'm very jealous. I'm sat here at the moment, and the light is just about peeking through, so I'm very jealous of your hot summers. I would love to be there right now.

Mark Grave
You're welcome at any time. Yes,

Jessica Owen
I do need to get over there. That's one of the things on my bucket list as soon as soon as lockdown lifts and we can get moving again. So today, then we're going to be talking about the Australian wool exchange and some of the ways it has been becoming more digital in recent years. So I mean, first of all, could you just tell me a bit about the organization and a bit about your role within it as well? Please?

Mark Grave
Yeah, sure. The Australian wool exchange was established in 1993 and back at that time, there was a lot of disruption within the agricultural industry, but more so with wool, and that was to do with support reserve price schemes that were coming to an end, and the need for the industry to reorganize itself so that it could maintain a level of service and regulation control in the new environment, in a self regulated environment, that's where the Australian wool exchange came was established, and the reason why it was established was to try and address the facilitation, administration and service roles that were being serviced by other organizations at the time. So that was in 93 and I suppose the intent then was to have a lean organization that was able to and flexible enough to move and address any issues that were being raised, whether it was on a market front, quality control, quality assurance front, or an information front, right?

Jessica Owen
Okay, so you support the wool growers and people like that, then, is that right?

Mark Grave
Yeah, we do. We sorry, I didn't say my role as CEO with the Australian will exchange. And I've been with the with a weeks, as we're known, for 26 of the 27 years. So I've been here a long time, and I've probably seen too much look at our role is principally behind the scenes. So we do a lot of work with the people who go on farm and class wool. Our wool classes we've got, and we currently have 16,000 of them around the country, and these are trained at trained and registered professional classes who provide a service to the grower on farm, but also provide confidence to the industry and to the exporters, buyers of wool, because they provide or they class prepare the wool to a standard that's been developed by industry. So they're an important part of and cog of the wheel. The other services we provide more related to the trading of wool. So all of the 90% 92 or 3% of all wool in Australia is traded through an auction trading system. And that's a almost the traditional open cry trading system. And awex is a facilitator of the auction system, but also we provide the market information the independent market services that come out of the trading. So our role, and there's a lot more to it than just those two things, but our role is essentially around. Providing independent services that provide, hopefully provide the confidence and integrity to the trading systems of wool,

Jessica Owen
right? Okay, so do you mind just giving me a bit more background actually, about the wool industry and how it operates, actually, because I'm sure some people listening to this isn't too aware of what goes on. So I mean, essentially you have wool growers, and they have their flock of sheep, and then they shear them, and then, how does that all work? And go down the line,

Mark Grave
in Australia today, we have somewhere between 30 and 35,000 farmers, wool growers, who, in some way, shape or form, produce wool that has to be sold. So they they have sheep. I think we latest report is around about 67 to 70 million sheep in Australia. And because Australia is a very large country, we have everything from very dry and arid pastoral zones to the more intensive wetter areas where there are smaller farms with fewer sheep or a lot of sheep on a small, small farm, and very big pastoral zones that can be measured in square kilometers or square miles, rather than in how many acres or hectares, and they have a have a lot of sheep, but on a huge number of acres. So there's the very two extremes and anywhere in between. So our work is has to be adaptable to all standards. Are actually meant to be translatable to all situations. And a lot of our work, obviously, is, is how we communicate with the farmer, how we communicate with those that work on farm and with the trade and beyond, because they're the ones that buy the wool, that process the wall, back when we started, back in the 90s, the predominant buyers of the time were Japanese. So there was four main exporters and buyers of Australian war to be processed over in Japan today, it's predominantly Chinese who will be the main and something like 75 to 80 odd percent of Australian will will go to China in one way, shape or form. And how the industry has changed. Europe was one of the big wool processing and even UK, if you go back far enough, but Europe was a big processor of wool today, it's more limited, but usually limited to the Italian type of fabrics, and certainly through Italy, Czechoslovakia, there still remains some processing mills in those countries. So over and above, wool has to be aggregated. We've got 35,000 wool growers in Australia, and they they want to sell their wool, and we sell them today through three main selling centers in Australia, one in Sydney, one in Melbourne, which is the largest, and one in West Australia in Fremantle. Over Over time, the industry has become more logistically efficient shipping routes are important to any export country in Australia is predominantly an export country, and for us, the wool market is important. It's around about a 3 billion Australian dollar industry, and it relies on shipping routes, shipping ports, obviously, for export and exchange. And as I said, the main destination today is, is China.

Jessica Owen
That's so interesting. I think, I think it's funny how you've got somewhere like 60 million sheep. I think that's as many sheep as we have people in the UK. So that's an interesting fact. Okay, so I understand then that a Wex, as I think you shorten it to, has undergone a sort of digital transformation in recent years. Is that right? Yeah,

Mark Grave
that's true. The wool industry has always been innovative in how it communicates, and particularly, particularly electronically. It has a long history, from the 70s onwards, of electronic communication of information. But more recently, digital transformations are more prominent because the technology has changed so much. And the best thing about technology is it's more intuitive than it was, it's easy, more easily accessed than it ever was, and certainly cheaper than it ever has been. And that transformation continues. So

Jessica Owen
how did you go about this transformation? I mean, where did you think you needed to start?

Mark Grave
Well, I think when we first. Started back in the early 90s. There were many areas to choose, and we're a small company, so we had to be fairly strategic in where we felt there was the best opportunity to achieve something through a digital platform. Now, as I said, electronic information is something that's been available in the industry for a long time, but as we've developed, so have the companies, those that so have wool growers who've who've adopted their own technology for their own business purposes on farm. So initially, it started off with the way that wool was traded and how that wool information could be accessed on farm or overseas or and and even in real time, so that they there's been a long tradition of wool growers wanting to see their wool being sold. So even today, streaming services so that you can actually be there within the sale room, especially in COVID, times when when we have restricted movement. So digital transformation is part of that. But increasingly, and these are real buzzwords that come around in the industry also, oh so often, but they actually mean something when people talk about transparency and traceability and integrity, digital platforms actually have a real place in that transformation to achieve those ideals of having a transparent, traceable system with absolute integrity. So that's how we or why we're doing it, and how we're doing it is that we're very conscious of the new and evolving technologies. It's very difficult to choose one. It's like backing a horse and hoping it's the right one. So you actually do you your due diligence to see what actually is out there, what works, what's actually had some issues, and how would you be able to adapt that to our environment, which is quite unique. It's different from any city environment, but adapting it to a agricultural on farm, but relate that to professional businesses here in Australia, but also overseas.

Jessica Owen
And so one of these new developments that you've come up with then is a tool called wool clip. Do you mind just telling me about this? I mean, what is it exactly?

Mark Grave
Wool clip is based on a web and app that have an interface together. It's the ability to scan a bale for electronic bail ID. It's the ability to capture on farm information with greater accuracy, greater efficiency, and be able to transmit that through to the warehouse that will store the when it's being prepared and ready for sale. One of the unique characteristics I was talking about was the fact that we have many places in Australia that don't actually have Wi Fi capability. So having something that will work offline as well as online, having something that will work offline store information until you are within network coverage is very important, because the as I say, there are many parts of Australia that struggle with any Wi Fi or internet coverage, but usually at the homestead, they have the ability to do that. The absolute power of the technology is to be able to capture information. And as information is transmitted through bull clip through the pipeline, it it gathers or adds to to each step, adds more information, which makes it more valuable and valuable to those that are going to use it in further down the pipeline, be it a buyer, a broker, an agent, or the processor overseas. And I think we're only really starting to tap into what will be, I think, an exciting next 1015, years of the power of having that information at a moment's notice?

Jessica Owen
Yeah, definitely. And it's funny, actually, you mentioned that Wi Fi and signal is actually a big issue. That's something I would never have even considered. It's such a simple hurdle, really?

Mark Grave
Yeah, well, it goes more than that. Some of the technology and even this electronic capture of information, we started on this 20 years ago. I think that's what celebrities call the overnight sensation that 20 took 20 years to happen. It really is about, you know, 35,000 wool growers don't want to buy new. Equipment they don't want to have. Have to use something that's either too expensive, too cumbersome, is not intuitive, and today's technology actually allows us to do so much more with so much less. I'm not sure about the UK, but I can tell you here, nearly everybody that walks anywhere in Australia has a smartphone, and so the power of the smartphone, the usability and flexibility of the smartphone, is a particularly powerful tool on farm, and that allows you using a smartphone to capture the information, enter information that will be significant and directly about particular farmers will clip and transmit, transmit that information through. So it's not just about Wi Fi capability, but it's also about all or lack of Wi Fi capability, but using technology that doesn't require great expenditure, and is cheap to use, particularly from a non farm perspective, right?

Jessica Owen
Okay, and so this wall clip tool, then or app, I should say, um, what information is this actually collecting? Then, is it? Is it? So when the farmer shares a sheep, is it that wall that it then classes and then all that information goes into there, or what?

Mark Grave
Yeah, it's an interesting one, because I know over here in Australia, we have what we call a Livestock Identification System. It doesn't get down to the animal. It doesn't get down to the individual sheep. What you do is you can record the number of bales of wool, the type of wool, what's in in that bale of wool, the mob of sheep that it has come from, and any other relevant information that will be used as part of a normal wool classes role. They've prepared the wool. They know what goes into the bale. It will record the wool class, the stencil number, which is their license or registration number, and verified at the same time with the adaptation, hopefully over time of what we call email, where there is a unique QR code. It will also scan that and record that and transmit that so it has basic information that is known on farm, in every shed around the country. The additional item will be the QR code as it's captured or scanned, and that will be part of that traceability story, which can be used for a whole range of things.

Jessica Owen
Well, I mean, you said earlier that the reasons you're doing this is because of transparency, integrity, traceability, and this is just a really good example, really, of that, isn't it? 

Mark Grave
It is. And I suppose if I was going to add one more over it to that list, it would be biosecurity. So if, if there was an issue, a biosecurity issue or risk that needed to be traced back to a farm. You could do that using wool clip, or you could do that using the unique e bail ID of each particular wool bail if there was an incident. So it's part about mitigating risk and ensuring that we have systems in place to handle that level of risk should that arise. There's certainly any number of processor and downstream manufacturers that want to know about provenance, where the wool has come from. And equally, there are growers who'd like to know where their wool has gone. So the possibilities are endless, you know, well into the future, but putting the steps in place email, the RFID component, or QR code component, is a key part of it. But having the ability to use an app and, or web and, or web ability of recording information is, is really the I suppose it helps pull it all together. Yeah,

Jessica Owen
well, it's funny with this COVID 19 outbreak that we've got at the moment in the UK, we have something called the National Health Service track and trace app, where you can, you know, log in where you've been, and if you ended up with COVID, then it would alert all those people you've been around. This almost sounds like a very similar thing, you know, in a way like you can trace I'm assuming, I'm assuming maybe disease outbreaks and things like that among sheep. I mean, it could. Could it do that? For example,

Mark Grave
it not intended to do that. But it's, I suppose the concepts are very similar. You know the track and trace, which we have here as well. You know COVID, if anything, COVID has taught us the ability to do podcasts, the ability to use teleconference facilities, because it's been in. Necessity now we we're an island, and any one like the UK, when you're an island, you're always cautious of your your borders and anything coming in or leaving. But the ability is there now to and through other agricultural industries, it will increasingly become available to be able to track and trace. We won't be tracking people, although we do, we we can verify properties. We can verify classes who've prepared the wool. But it won't be going to such a granular level that every individual or every shape will be part of that tracking system, right?

Jessica Owen
And so can we just talk a bit more about this E bail tool that you mentioned? So I understand that this is based on RFID technology, I think, and I think I read as well that you actually started this back in 2007 but it's only sort of recently come into play. I mean, those facts, right? Or

Mark Grave
they're close, but not close enough. We we actually started this back in the 90s. There was a European, European wool industry group called intra wool. Now intra wool, we're looking at ways to somehow facilitate unique bail identification system, and they looked at transponders back in the day, and they looked at all sorts of technology that was available at that time. And unfortunately, it was never, never succeeded, because the technology wasn't good enough, or the process was not good enough, or it just was too expensive, and it couldn't be justified in over the last, particularly the last or six or eight years, I think it would be, we've had a reinvention of it, and we actually went out to market. We got Monash University to do a desktop study and look at the available the available technologies, and try and assess how they would work and be whether they would be suitable for the wool industry. And so what we've ended up with each wool pack, that's the container that holds the wool has a bail label on the top. The bail label contains of what we're calling an E pack. Contains an RFID on the back, which is will be used for commercial use in warehouses, shipping, transport, and the QR code I referred to earlier on, which will be used on farm. They all contain the same unique bail ID or bail number, and that's the common link between the two technologies. One can be used on farm effectively and cheaply. The other can be used by warehouse, where they store 1000s and 10s of 1000s of bales and used through systems for transport, shipping and processing overseas. So it's been it's been underway a long time. But the important thing is, and it's the same with wall clip, the way that technology has developed over the last, particularly the last probably three or four years, it's gone along in leaps and bounds, and it's affordable and it's easier to use. And you know, it's it's one of those things that you must keep reinvesting in it. You just can't build it and they will come. It's a case of building it and investing in it, because you can always improve it. And that's where we're at with E bail. So as we are today, we will have the first shipment of 2000 e packs will arrive in Australia in February, and they will be distributed to farms and farmers who want to be involved in the project. And then we will monitor that through the system so that we can actually establish the value. Because growers, and we do a deal a lot with will growers in the farming community, they want to be able to justify a cost, and they want to know the value of the cost. Because ultimately, the saying goes that they pay for everything, and they want to know that someone else in the pipeline, whether it's a warehouse or a factory of some sort, is actually pulling their weight and contributing to make the industry better. And that's what all this is about to establish the value and the benefit, not just for the grower, but also for every stage along the pipeline.

Jessica Owen
And from talking to those people, then, whether it be in the warehouse or the wool growers, aside from the cost of have they been quite happy, or have they been reluctant to sort of start using these technologies?

Mark Grave
To be honest, though they would, most would have it tomorrow, if they could get it, there's a real design in. Increasing desire to actually have better traceability, better records, better information. And anybody that works with data will know that you know good data gives hopefully leads to good business decisions. So there is increasingly demand or pull through who are looking to make it a feature of the industry, but also we've got to satisfy every step from the farm all the way through to make sure that we've crossed off each particular sector and the way that they may manage or use the technology,

Jessica Owen
right? Okay, and is there? Have you also noticed over the last few years that there's been a pull from, say, designers and retailers and so on, that they want to source more transparent wool, or, you know, getting wool from people who have got a good reputation. Is that something you're also seeing then, absolutely,

Mark Grave
and this comes from all countries, be it Asian countries, or be it Western countries. It really is part of the, I suppose, the challenges that retail and manufacturing facing to make sure that they are providing the what's loosely called Sustainable Product, one that has good Providence, one that they can they can talk about the welfare of the animal, they can talk about the traceability within the system, but talk about it with confidence. You know that there's increasing interest in making sure that the pipeline fall is credible and accountable, and that's no doubt that's been a very strong push over the last couple

Jessica Owen
of years. Well, I mean, I know that the industry can't be perfect, but from my eyes, I mean, I've been reading a lot about companies, particularly knitwear companies, working with, say, merino wool, and they're all the ones driving this sustainability message with the industry. So it seems like that the wool industry is sort of, you know, really, really pushing that sustainability message. That's really interesting to see. I think, yeah, well,

Mark Grave
in in Australia, I'm sure it's the same the UK, you know, there's a, there's a strong history with agriculture, and certainly a strong history with and proud history with, with sheep and wool and sustainability for many is, you know, why am I? Why am I talking about sustainability when I've been that's been my life for the last 2040, 50 years. But what's important here is that, yes, that's true, and there's a lot of good things that are done around the world in in terms of welfare and husbandry. But what's changing is that there is greater from what we hear, there is greater interest from the consumer, and therefore they want to know that their sheep have come from happy farms. They want or the wool from the sheep from happy farms. They want to know that they have a product that's got credibility with it. And that's where farming is has a very strong hand to play. And income, you know, spending is discretionary, and therefore the younger consumer, or the new consumer, is wanting to know about where their their products have come from, the origins, the source. And so that's been relayed right through the supply chain to make sure that they can meet that inquiry and demand from their consumers.

Jessica Owen
And I, actually, I don't know if you've heard of them, there's a company called sheep Inc, that's only been going for maybe a year. They've gone so far that they Well, as the name suggests, they're including, you know, a sheep with every purchase. Now, obviously that's not true, but essentially, they are using, you know, wool from very transparent supply chains, and they're telling their consumers that, you know, this is the sheep or the farm it's come from. And I just think that's great, and it's so interesting, and it adds value as well to the product.

Mark Grave
And I suppose that's bit, bit like we were talking about wool clip or eBay. You've got to have the value proposition to make it work. And so if, if they can achieve a market, a niche in a market, or a mass market, that will deliver that company, sheep, Inc, good margin and sustainable business that translates down all the way back to the wool grower, those that are providing the raw product. So it is incredibly important and helps with the diversification of markets. Because, again, that's important. I'm not young enough to know this, but apparently the young consumer will change their mind on a whim, and so therefore you have to be flexible enough to. To meet that demand. And certainly these companies, like cheap Inc, who I don't know, but I'm assuming, that they're, they're there to match the interest and the changes of flexibility that's required to meet those changes.

Jessica Owen
And while we're just talking about younger people, a question that I wanted to ask you actually was about attracting young people into the wool industry. I mean, from my I mean, I don't know too much about the industry, but I can see that it's relatively traditional. So I mean, do you struggle to hire people in this area? And do you think maybe these new tools and digitalization is actually helping to attract more people?

Mark Grave
Gee, that's a that's a big question. Sorry, no, no, no, it's a really good question, because for many years, the industry suffered for being traditional aged. There are less people wanting to be involved in agriculture and wanting to live in cities and air conditioned offices. But I've noticed over the last probably five to seven years, a real transformation. It's no longer the 95% dominated by mail industry, particularly at our end in Australia that it used to be, there are more women who are contributing on farm as a partnership in business with their partner or their family. And we're seeing that also in the talking about wool classes, there are more professional wool classes who are women, including cheers, who are women. And which has been a really, I suppose the one of the best outcomes in in the recent 10 years is that we're starting to see more diversity in the type of people who are joining but over and above that, and we just employed somebody who started today, and if I mentioned Steph, she'd be embarrassed that I'm saying it. But there's so many capable people who are now interested in agriculture. And it's not just wool in all forms of agriculture, and I think a big part of that has been the digital transformation. It's now not the state old write it on the back of a cigarette packet. It's actually it's a professional industry that has standards and expectations, and I'm sure it's the same in the UK. But every farm, every farmer, and whatever their business is, is a is dealing with millions of dollars, you know, whether it's their land, the use of the land, the crops that they they So, the livestock that they run, and products that they produce. You know, this is, this is quite a complex business that requires good technical knowledge and the way that digital tools, whether it's webinars, whether it's wool clip that we're talking about, or even just information apps that are available, they all helped contribute to a well informed business decision. And I'm sure that the interest in that has actually sparked the interest from younger people, that it's not just sitting on the back of a tractor. There's a lot to learn and a lot that can be done, and I'm sure that that will continue.

Jessica Owen
It sounds it and it is funny, the more I learn about textiles and wool and knitwear and so on, the more interested I am. I think if I'd have gone back to university, I'd maybe, you know, trained in that area, because it is an area that is becoming much more interesting, and especially, as you say, with digital tools, not just in wall, but, say, in knit, where there's all the software side of things. I mean, it's so complex these days that I think I'd love to have had a go at it, or maybe I'm just impressionable, I don't know, but it's interesting. Definitely.

Mark Grave
I think another attribute which is more common now than it was back, you know, 30 years ago or more, is that the the linkage between the farm and the processor, the manufacturer and even to the retailer, is a lot shorter now there's more interest from the retail end to understand where the product comes from. There's always been interest from the farm the raw product end to see where their wool goes. And that's there's a lot more collaboration. And particularly, as I said about COVID times, the use of digital tools is really playing a part in that. And I think that the farm gate, as we refer to it, sees the opportunity of building relationships with those up the supply chain, which they may not have had access to in years gone past.

Jessica Owen
Interesting. Okay, well, the. Last question I wanted to ask you then today is whether you've got any other sort of technologies or developments in the pipeline, or have you maybe got a wish list, for example, of things that you want to do, but maybe the technology is not quite there yet. No, look,

Mark Grave
there's always a wish list. All I have to do is poke my head out the door and ask my staff, what would you like to do? And I'll have a dozen ideas that will come back to me that I think the important part firstly, is to if there is something that's desirable and you develop it, and usually it developments take time. You have to make sure you do it well, there's no point in creating the next web page that's going to fall apart at the first time anyone goes onto that page, because that initial experience will kill that particular innovation. So I think that the the industries, all industries, need to continually innovate, but also watch what other industries are doing, because it may not be absolutely suitable for you, but it may also provide opportunity. You know, we got Velcro from the space programs. There are, there are, and that just shows you the diversity of the why you should look broader than your own industry. Yes, there is a wish list, and certainly things like live streaming are now a part of our lives, as I indicated a little bit earlier before, but they can be improved. We don't know what the next digital platform will be, but we watch it with interest, because we'll probably want to invest in it as a company, we've always invested in it. We've had a strong history in it, and you know, from the use of iPads or or, you know, portable laptops in warehouses and for exporting of wool and assessing wool are actually an important part of what we do, but they can all improve. And I think that we will get to somewhere in the future, we'll be having more instantaneous interaction with from farm gate through to the end, supplier or manufacturer of the product that's already starting with vertically integrated companies, and I think that will continue.

Jessica Owen
Well, it sounds like it's an exciting time for the will industry. Then definitely Well Mark. I mean, unfortunately, we're coming to the end of the show now, but thank you so much for talking with me this morning or this evening as it is where you are. I mean, I've really enjoyed learning about the will industry and how you're trying to sort of make it more modern, more sustainable. It's really interesting. So thank you.

Mark Grave
It's been a pleasure, Jessica. I've enjoyed the opportunity to speak with you and be happy to do it anytime.