16 October 2017

Wal Merriman
Chairman
Australian Wool Innovation Ltd
GPO Box 4177
SYDNEY NSW 2001

Via email - Wal.Merriman@wool.com

Dear Wal

Thank you for your letter of 5 September 2017.

At the outset, I want to re-state the commitment of my board and MLAs staff to fulfilling MLAs mission
to deliver research, development and marketing initiatives that contribute to the profitability,
sustainability and global competitiveness of our levy-paying producers.

Key to this is the achievement of MLAs strategic imperatives, against which MLAs performance is
regularly and objectively measured:
Maintaining and improving market access
Growing demand
Increasing productivity across the supply chain
Supporting industry integrity and sustainability.

It is against this backdrop that MLA makes its investment decisions. Given the common issues between
the sheepmeat and wool sectors, its also a reason why MLA has a commitment to collaborating with
AWI in the progression of research and development to advance the industry.

On this basis, I will now address points made in your letter regarding specific areas of investment.

Footrot
It is a matter of fact that AWI terminated its funding of footrot research in 2008 mid-way through a
project to investigate the suitability of 89 expressed antigens from the footrot bacteria for use in
vaccines. The work was stopped after 63 of the 89 antigens had been tested and, five years later, MLA
was requested by the Sheepmeat Council of Australia (SCA) and Wool Producers Association (WPA) to
fund the investigation of the remaining 26. It now seems likely that several of these antigens will be
useful in future vaccines.

The vaccines being trialled by University of Sydney are not multi-valent, but mono-valent that is, using
only one antigen at a time. The multivalent vaccine Footvax was withdrawn from sale in Australia by
Coopers years ago. Further, the discovery of the 10 fimbrial antigens or serogroups of the footrot
bacteria that are used in current vaccines was made by John Egerton and Peter Claxton in the 1970s and
1980s, not by more recent R&D funded by AWI.

The only vaccines currently available in Australia are on permit and are bespoke monovalent or single
antigen vaccines made on order by Tredlia Biovet.

Meat & Livestock Australia Limited ABN 39 081 678 364 Level 1, 40 Mount Street, North Sydney NSW 2060
Postal address: PO Box 1961, North Sydney NSW 2059 Ph +61 2 9463 9333 Fax +61 2 9463 9393 www.mla.com.au
OJD
It is true that there is only one commercial vaccine (Gudair) on the market, but its utility is debatable. It
suffers from the fact that it is highly irritant to tissue and a threat to human operator health and safety
without the proper equipment being used. It also utilises antiquated adjuvant technology, which needs
to be modernised. This characterisation of the usefulness and limitations of Gudair was funded by
MLA.

Mulesing
All of MLA Managing Director Richard Nortons comments regarding mulesing have been made within
our companys responsibilities to the prime lamb industry and what consumers, domestically and
globally, are telling MLA and the industry regarding their expectations of sustainable food production.

This is consistent with a key plank of the Sheep Industry Strategic Plan (SISP) 2020, which is to monitor
and respond to community perceptions and concerns about practices in the sheep industry. MLA is
working with SCA to deliver this objective and undertakes continuous research on consumer and
community attitudes and trends which allows industry to conduct regular risk assessments on animal
health, welfare and other issues.

Consumer interest in animal welfare is growing across all key red meat markets, while retailers are
increasingly concerned about shopper and investor scrutiny of the products they source. This is
translating to action. For example, 6% of Australian consumers are limiting lamb consumption due
animal welfare concerns, up from just 2% in 2012. Major retailers Waitrose, Sainsburys, Tesco, Marks &
Spencer, Aldi and Lidl have developed tighter animal welfare requirements and communicate these.
Market access negotiations are now contemplating animal welfare policy and practices.

To discount or fail to communicate these global macro trends or take no action to protect the
farmgate income of prime lamb producers would represent a dereliction of MLAs mission and
strategic imperatives.

In fact, MLA is committed to continuous improvement of sheep health and wellbeing throughout the
value chain and best practice in animal husbandry on-farm to deliver on the objectives of the SISP 2020
and our responsibilities to consumers. In prime lamb production systems, prime lambs should never be
mulesed and producers are encouraged to introduce genetics and management changes to enable
prime lamb mothers not to be mulesed. It is best practice that pain relief be used for all invasive
procedures.

Despite the $34 million AWI investment you cite, no practical solution or alternative to mulesing has yet
been delivered apart from the ASBVs offered through Sheep Genetics, a service no longer supported by
AWI. While the publication of the Lucilia genome is an important achievement and AWI should be
acclaimed for concluding that effort, MLA does have concerns that other AWI-sponsored research on
mulesing remains unpublished and unavailable for peer review. Data collected by AWI is potentially
useful to MLA and red meat levy payers in continuing to address the issue and I ask that you make it
available to MLA for this purpose.

Genetic Evaluation
MLA acknowledges that AWI is making a significant investment in the Merino Lifetime Productivity
(MLP) project. It should be noted though, that this is not a new approach. MLA has been investing in
reference populations since 2007. This was initially done through the Sheep CRCs Information Nucleus
Flock (INF) project that was in operation from 2007 to 2012 running 5000 ewes across eight sites. AWI
initially co-invested in the INF through their support for the Sheep CRC until withdrawing funding after

Meat & Livestock Australia Limited ABN 39 081 678 364 Level 1, 40 Mount Street, North Sydney NSW 2060
Postal address: PO Box 1961, North Sydney NSW 2059 Ph +61 2 9463 9333 Fax +61 2 9463 9393 www.mla.com.au
the first round of the Sheep CRC. Since 2012 MLA has continued this work as the Resource Flock project.
The Resource Flock produces over 2000 lambs each year with around 30% of the animals represented
being pure Merinos. AWI separately funding the MLP project in many ways duplicates the overheads
required to maintain these flocks.

It should also be noted that a reference population itself, such as the MLP, is not a genetic evaluation.
This type of project is used to collect data that can then contribute to genetic evaluations such as those
under the MERINOSELECT program. MLA is firmly of the view that the greatest benefit is delivered to
industry by including all such research data in a single national genetic evaluation and would encourage
AWI to consider sharing the MLP data for this purpose.

In terms of genetic evaluation, in July 2016 AWI withdrew its support for the arrangements under the
Sheep Genetics Management Agreement. While I note your comments that AWI withdrew from Sheep
Genetics because it was seen as a commercial entity, this did not reflect the input AWI made in relation
to the Business Plan. Indeed the Barnett review commissioned by AWI earlier in the year found that
Sheep Genetics was not able to be completely commercialised. This view was consistent with the
position taken by MLA and communicated to AWI at the time of its withdrawal.

In closing, I want to reiterate MLAs commitment to collaborating with AWI in the progression of
research and development to advance the industry. To that end, Id urge that you favourably consider
my requests in this letter for access to AWIs data around mulesing and the MLP project and would
welcome the opportunity to discuss other opportunities for enhanced collaboration in projects of shared
interest to the sheepmeat and wool industries.

Yours sincerely

Michele Allan
Chair

Meat & Livestock Australia Limited ABN 39 081 678 364 Level 1, 40 Mount Street, North Sydney NSW 2060
Postal address: PO Box 1961, North Sydney NSW 2059 Ph +61 2 9463 9333 Fax +61 2 9463 9393 www.mla.com.au