Intended to improve the monitoring of bales and minimise the opportunity for errors for lost or misplaced bales, electronic indentification of bales has proven a difficult and expensive tool to incorporate into the industry.

Even as AWEX, the latest wool company to take up the challenge to develop an electronic system, advocate the importance of having an electronic tracking system, financial constraints caused by retraction of the volume of Australian wool appear the ultimate determining factor to put the research "on hold".

In a farm to mill trial AWEX had been experimenting with the use of an electronic transponder embedded beneath the label but had repeatedly hit problems at the store level when the electronic transponder had been damaged by forklift movement and the coring process.

A week after AWEX confirmed it had abandoned its e-bale research, AWEX chief executive Mark Grave said the research had "been put on hold" because the industry was not in a viable position to support it.

"The project was reincarnated in many ways 15 years when there was 1000 million kilograms of wool. Now there is a third of that and as the size of the industry changes, so does its needs," he said.

Mr Grave said the most recent change to wool packs was a simplified label that did not have the bar-code that was introduced a decade ago, repositioned on the bale flap.

Australian Wool Industries Secretariat consultant Peter Morgan said it was "unfortunate" situation that the e-bale research had been put hold.

While reluctant to comment directly on the decision, he said an electrnic identification system would benefit the wool industry.

"There is no doubt in my mind that a cost effective electronic identification system would offer a lot of potential along the wool pipeline."