Australian Wool Innovation Limited (AWI) and Australian Wool Services Limited (AWS) have agreed to work together to build global demand for Australian Merino wool.

Both Boards have given the go-ahead to look at options to integrate research and marketing efforts - but AWI chairman Ian McLachlan and AWS chairman Trevor Flugge stressed that any proposal to integrate the two companies would need to have the support of shareholders and be endorsed by Federal Agricultural Minister Warren Truss.

"While AWI and AWS already work closely together, it is clear the links between wool product research, development and innovation and the marketing of wool products needs to be better integrated."

"AWI has developed new products and marketing platforms and a greater global product marketing effort is required to support this work," Mr McLachlan said.

Mr Flugge said that it was clear that AWS could not generate sufficient profits or surplus to provide significant marketing of wool products whilst operating in isolation to the levy funded R&D section of the industry and therefore would not be able to meet grower expectations that a greater marketing effort should be initiated.