The grant, announced by Federal Minister for Agriculture, Fisheries and Forestry, Murray Watt, is to develop pathways for domestic and diversified early-stage wool processing.

Together with Industry co-investment and the recently announced strategic partnership with AusHub the total value of the project is almost $1.1million.

The grant funding allows further exploration of the findings and recommendations of the earlier Phase 1 report, "Ensuring a sustainable future for Australia's wool supply chain", which quantified the commercial feasibility and risk mitigation benefits associated with domestic and diversified early-stage processing of Australian wool.

WoolProducers Australia general manager, Adam Dawes said: "The Phase 1 report identified that early-stage domestic processing 50 per cent of the wool that we currently produce would deliver almost 600 FTE jobs to the Australian economy and reduce the annual peak impact of a Foot and Mouth Disease outbreak to the Australian wool industry by up to $1.1 billion.

"Domestic processing would also allow for pre-export value adding to Australian wool, with a potential Australian GDP increase of $1.8 billion," Dawes said.

This next phase of the project will identify pathways toward market diversification and the mitigation of trade risks associated with emergency animal disease outbreaks, and tariff and non-tariff trade barriers.

The project will road map the establishment of early-stage wool processing operations (scouring and/or carding and combing) in Australia along with four priority countries identified in the Phase 1 report; Bangladesh, India, Indonesia and Vietnam.

Dawes added that WoolProducers was grateful to receive the funding, as it enables the recommendations of the Phase 1 report to be built upon, which established the feasibility of domestic and diversified early-stage wool processing on both commercial and trade risk management grounds.

"This next phase of work will inform the "what", "where" and "how", which will deliver a clear roadmap and finalise our investigations in this area on behalf of Australian woolgrowers."

WoolProducers undertook the Phase 1 work with an industry steering committee comprised of representatives from Australian Wool Innovation (AWI), Australian Wool Exchange, Australian Wool Testing Authority, National Council of Wool Selling Brokers and Agents, Australian Council of Wool Exporters and Processors and Austrade.