Part I: General News

WORLD MEAT/HIDE PRODUCTION
An interesting but alarming new report by the FAO of the United Nations and the OECD says that world meat production will only increase by 1.6% per year in the next decade (2013-2022).
In the past decade the increase was 2.3% per year.

Knowing that the meat industry manages to continuously produce more meat with less animals, this could mean that the 1.6% increase does not demand a bigger number of animals and thus that we should not count on more hides globally till the year 2022. And since the demand for leather products will no doubt continue to increase and increase far more than 1.6% per year also, one imagine ........... A doomsday story! But keep this in mind: we shall never have more hides than we have animals.

Increases announced for South America are: Brazil + 10.6%, Argentina + 21%, Uruguay + 30%, Paraguay + 46%. If such seemingly huge increases still result in a global increase of only 1.6% one can imagine how much production must drop in a number of other countries (as we already knew and reported in previous reports).

Production will also increase mostly in developing countries but these countries generally produce medium or lower quality hides.

IMPORTS OF LOW QUALITY NON LEATHER FOOTWEAR
Like a good number of other countries before them the Turkish footwear industry through its national association has approached the government to take protectionist measures against cheap imports of low quality non leather footwear from Asia.
This synthetic footwear is sold for 5 Dollars and less! In 2012 imports amounted to 863 million USD while national footwear exports were worth 552 million USD.
KENYA
The market in Kenya is steady. There is good demand from India for cow hides but the unfavourable exchange rate makes buyers reluctant to import. Many importers sell locally in the Indian market.

The Chinese hide importers are no longer prepared to accept incorrect descriptions (raw hides) on the bills of lading since they are closely watched by the customs authorities.
There have alsways been ways to get the raw hides out and into China but it is more and more difficult and risky. Traders wonder, however,  where the hides are then because not all are being wetblued and getting offers is difficult as well.

The goat skin market is strong with demand coming from China. The sheep skin market seems to be slowly reviving as well.

MALAWI
After bids from China which were refused nothing happened. The slaughterhouses stick to their prices and have no need to sell now as they are still short of material. Traders think they will keep the prices where they are now until ACLE in Shanghai in September.

SUDAN
Sudans drysalted hide prices are found too high to interest tanners abroad when compared to other African origins. The value as food for human consumption in Nigeria may have to do with that.

Counterfeit articles
Last Tuesday (June 25, 2013) the French customs destroyed 1 million counterfeit articles in several places in the country. It was reported the counterfeit business keeps growing and did an estimated 6 billion EUR damage to the economy.

In 1994 200,000 items were intercepted but in 2011 this had gone up to 8.3 million.

Seventy percent of counterfeit articles are made in Asia. One third was ordered through the Internet.

Source: http://www.thesauerreport.com/subscribers.php

Part II: Some Indicative Prices of Leather and Leather Products

 Source: Compiled from Sauer Report and other sources
Abbreviations
a/b/c; Private quality indication by supplier; 'a' is not necessarily 1st grade, etc
Av: Average
c: cash payment
cif: Cost, Insurance & Freight
fob: Free On Board
off: Offered
ori: Price payable to supplier in country of origin of the goods
pce : Piece
sqft: Square Feet
t: Price Payable to Traders outside the country of origin of the goods

Part I: General News

The 7th Regional Leather Sector Core Team Meeting Held

The 7th Regional core Team Meeting organized by COMESA-Leather and Leather Products Institute (COMESA/LLPI) and financed by the COMESA Regional Integration Support (EU) was held in the Sudan from 25-26 June, 2013 at Grand Villa Hotel, Khartoum.
The main objectives of the Core Team Meeting were:

• To design practical strategic guidelines for improving the leather value chain in the COMESA Region,
• To strengthen the collaboration between COMESA-Leather and Leather Products Institute and COMESA member States and
• To develop a strategy for fund raising

The Meeting was officially opened by H. E. Mr. Osman Omar Al-Sheriff, Minster of Trade of the Republic of the Sudan and attended by Core Team members drawn from public and private sectors from 6 member countries (Eritrea, Ethiopia, Kenya, Sudan, Uganda and Zimbabwe). COMESA Secretariat, COMESA/LLPI and various stakeholders from the host country, the Sudan.
The 7th Core Team Meeting selected Ms. Nalima Rupanic, Managing Director of Adelphi Leather Shop of Kenya as Chairperson of the Core Team for the next two years.
The Core Team Meeting thoroughly discussed on various pertinent issues that encompass:

•  Importance of Designing strategic Guidance for improving the Regional Leather Value Chains in the COMESA Region;
• Strengthening of collaboration between COMESA/LLPI and Member States;
• Fundraising Mechanisms Development

At the end of the second day, the meeting adopted the minutes/report of the 7th Core Team Meeting, and fixed the date and venue of the 8th Core Team Meeting.

New Leather Strategy for Zimbabwe

Zimbabwe has launched a new strategy for its leather industry with the aim of boosting the whole leather value chain in the country. COMESA, the Common Market for Eastern and Southern Africa, has given its backing to the plan, called the Zimbabwe Leather Value Chain Strategy.

Sindiso Ngwenya, Comesa secretary-general, said at a launch event for the initiative in Bulawayo in mid-June that the Comesa region was losing millions of dollars in potential revenue by exporting raw material that could be made into leather.
“The overall market potential of Comesa leather can grow from an estimated value of raw material of $378 million a year to an estimated value of $875 million for fully finished leathers, which represents a value addition of roughly $500 million or about 150% of the value of raw materials,” he said. “And if all the raw hides and skins are transformed into finished goods like footwear, garments and other leather goods, the industry would balloon to $2.5 billion from the present value of $450 million.”

He said the COMESA region was important to Africa and the world in terms of the size of livestock herds and production of hides and skins.
Source: http://www.leatherbiz.com/fullitem2.aspx?id=130087 

A Chinese Tannery Overcomes Initial Obstacles to Find Success in Ethiopia

Workers in China-Africa Overseas Leather Products SC process raw materials in the factory at Sululta, north of Ethiopia's capital, Addis Ababa. Li Lianxing / China Daily

He Mingliang leather tannery, in central China's Henan province, is a typical success story: Expansion to Africa, a new factory in Ethiopia, sales of leather goods across the globe and a staff of more than 500.

But as with any success story, struggles play an early and defining role. For He's tannery, which had been buying semi-processed leather from Ethiopia since 1985, soaring costs in China during the early 2000s hampered business.
He set his sights on Ethiopia to invest in manufacturing factories, but still had no expansion funds and no basic knowledge of how business was run on the continent.

He says he was scared of possible illnesses in Africa and even regional conflicts.
But He did his homework, making several trips to the country to research how commerce is conducted and to find funding sources. Then came a meeting in Beijing in 2004 with then Ethiopian ambassador Addisalem Balema. Balema encouraged He and took a great interest in the venture plans. With Balema's help, He got in touch with the China-Africa Development Fund in Beijing three years later.

"CADF turned out to be very interested and decided to support us," he says.
The tannery's subsidiary in Ethiopia, the China-Africa Overseas Leather Products SC, is now quickly becoming a model for the leather industry in the country.

Li Jun, project manager of the CADF in Ethiopia, says it decided to support He's project in Ethiopia for several reasons.
"This is fundamentally a mutually beneficial project that could expand Chinese tanneries to Africa. But more importantly, it could lift the entire industry in Ethiopia and benefit farmers at the most basic level," Li says. "It is also a good opportunity to create jobs, which is the priority for Africa's future sustainable development."

Li also says the reason the CADF chose China-Africa Overseas Leather Products is because the Henan-based parent company has been an industry leader in China for more than half a century and CADF believed its technologies and skills could offer a great opportunity to Ethiopia.

The factories were completed in November 2010 in the town of Sululta, to the north of the capital Addis Ababa.
Operations during the first year were rocky, Li says. Many unexpected events brought disruption and at times daunted his investors in Ethiopia.

"Our Chinese staff were beaten by local workers because they didn't like our management system in which several local workers are guided by one Chinese team leader," he says. "More importantly, locals were told by certain people that our factory was severely polluting (Sululta)." He says the company values the environment and that the factory was built with particular attention to environmental protection in order to set a tone for the industry in Ethiopia.
Source: http://africa.chinadaily.com.cn/weekly/2013-06/14/content_16620709.htm

The Fourth Beast to Beauty Conference

The fourth Beast to Beauty conference, jointly organised by leather training consultancy LeatherWise and World Leather magazine, with the support of Pittards, the Scottish Leather Group, the University of Northampton and the Leathersellers Company, took place in Northampton on June 13, 2013.  More than 60 delegates, representing tanning groups, major retailers, automotive and luxury brands, leather chemicals manufacturers and a wide range of fashion-focused university and college departments from different parts of the UK attended the conference.

Speakers included Kevin Sefton, one of the co-founders of Glasgow-based handmade footwear brand Govan Originals, colour trends expert Laura Perryman and Rachel Garwood and Jane Mills from the University of Northampton who talked about the role of leather in design education at the university. Mr James Lang, marketing director of the Scottish Leather Group gave a presentation on the work the group has done to reduce its carbon footprint, with the tannery waste-to-energy treatment plant at its Bridge of Weir facility one of the best examples. Reg Hankey, the chief executive of Pittards, also spoke, focusing his presentation on recent efforts in the global industry to counteract misleading anti-leather campaigns.

The conference closed with a discussion involving Gustavo González Quijano, secretary general of COTANCE, and Dr Gerhard Wolf, the head of the leather technical competence centre at chemicals manufacturer BASF. Both participants agreed that there are valid arguments for attributing 0% of the upstream carbon emissions of cows, sheep and goats to leather’s carbon footprint. They expressed hope that the global industry might soon agree on a framework for calculating the carbon footprint of leather and, from there, be able to communicate its position to brands and consumers “with one voice”.

They accepted that tanners might face opposition to 0% from finished product brands, but said this did not mean that what they called a flawed methodology of allocating a share of carbon footprint to “non-determining” by-products of the meat industry was any more valid. Nevertheless, they suggested it ought to be possible for the global leather industry to agree to a compromise on 0% to make discussions between tanners and their customers a bit easier.

Source: http://www.leatherbiz.com/fullitem2.aspx?id=130047

Global Tannery of the Year 2013 Winner Shares its Water Achievements

PrimeAsia China, the third Tannery of the Year Awards programme winner,  published an article outlining its water footprint on “China Water Risk” newsletter. China Water Risk is a non-profit initiative dedicated to highlighting water risk and fostering efficient and responsible use of China’s water resources.

In the article, PrimeAsia indicated that based on the Water Footprint Assessment Manual: 2011 it calculates its water footprint at 3.3 litres per square-foot of finished leather, but it said only 1% of the total corresponds to water consumed in its tanneries. PrimeAsia takes responsibility for 5% of a cow’s life-cycle water consumption and its water footprint ends at the door of its customers’ factories.

Breaking down the 3.3 litres of water consumed during the lifecycle of each square-foot of leather, PrimeAsia calculates that 91% is consumed during the life of the cow, 5% is consumed in the beamhouse (PrimeAsia’s two tanneries in Vietnam and in Guangdong Province in China work from wet blue), and 3% is consumed during the manufacture of the chemicals it uses in its processes.

Water-saving practices at both PrimeAsia tanneries include collecting rainwater for use in production processes, reuse of water within the production process and extensive use of recycled water throughout the facilities. The annual company-wide water reduction goal in 2013 is an absolute reduction in water usage of 11% compared to 2012.
Source: http://www.leatherbiz.com/fullitem2.aspx?id=129991

Part II: Some Indicative Prices of Leather and Leather Products

Source: Compiled from Sauer Report and other sources

Abbreviations
a/b/c; Private quality indication by supplier; 'a' is not necessarily 1st grade, etc
Av: Average
c: cash payment
cif: Cost, Insurance & Freight
fob: Free On Board
off: Offered
ori: Price payable to supplier in country of origin of the goods
pce : Piece
sqft: Square Feet
t: Price Payable to Traders outside the country of origin of the goods

In the Global Market , Demand for Leather (Products) said to be Gloomy during the ending Week
In the US there was increasing downward pressure on cow hide prices connected to the higher kill figures. The total commercial cow kill for the first 6 months of the year is estimated to end up 3% over the same period last year (a record figure since 1996). Hides and Skins net sale were down 10 percent from the previous week.
Turkey tanners seem to have problem of cash to pay their skin purchases while Chinese tanners are doing all they can to push the prices of UK spring lambs down.
Business is also said slow and difficult in Italy. A number of contracts concluded for July arrivals are now asked to be delayed till after 10th September. But sales continue
Bangladesh’s export in leather sector, however, increased by 64% during the period July 2012-May 2013 compared to the same period a year before. Lower production costs leading to cheaper products prices might have attracted buyers, but considering the recent disasters in the textile industry in this country, many question the working conditions under which leather and leather products are made.
Court Ruling Over Hide Symbol Dispute in Italy
Italian lawyer Paolo Viscuso has published details of a court case in Milan earlier this year in which Italian tanning industry association, UNIC, was told it had no right to ask for the seizure of goods that use the well known symbol for real leather, the outline of a hide.

UNIC first filed a trademark application for the hide outline, known in Italy as the vacchetta or ‘little cow’, in 1977. According to Mr Viscuso, an anomaly grew up in Italy in which UNIC “asked for and frequently obtained” the seizure of goods that it believed were using the symbol without its authorisation.

After one such incident, French shoe brand Chaussures Eram filed a lawsuit against UNIC. Mr Viscuso has now reported that the court in Milan found in favour of Eram and against UNIC because Eram argued successfully that the hide symbol had been in widespread use in many countries before 1977.

Eram told the court that a version of the symbol was being used in France and being recognised by French consumers as long ago as 1925. A similar symbol began to be used in the US in 1961, in the UK in 1968 and in Germany in 1973.

“The most important consequence is that the judgment rectified an Italian anomaly relating to the use of the ‘vacchetta’ device,” Mr Viscuso said. “Before the decision, the contested mark was freely used by the tanning community in other countries of the European Union. In Italy, however, Unic enjoyed a unique monopoly, and frequently asked for and obtained the seizure of goods based on its trademark rights. Such a situation created significant uncertainty.”

He explained that the court decision has not yet been made final and said that decisions on the use of the hide symbol with the words ‘vero cuoio’ and ‘vera pelle’, also subject to trademarks.

Mr Viscuso told leatherbiz he did not know the reason for the delay in finalising the original decision and for reaching decisions on the follow-up questions. But he said that in the past UNIC has charged a fee to “third parties” to use the symbol.

Source: http://www.leatherbiz.com/fullitem2.aspx?id=130135

COMESA-Leather and Leather Products Institute, UNCTAD, Commonwealth Secretariat and African Export-Import Bank (Exim Bank) Co-organized Workshop Successfully Completed

The workshop on Strengthening Regional supply Chains in Leather Sector in Sub-Sahara Africa, co-organized by COMESA-LLPI, UNCTAD, COMSec and Exim Bank, took place from June 6 to 7, 2013 at Nexus Hotel in Addis Ababa, Ethiopia.

The workshop involved important sectoral stakeholders, i.e. tanners, exporters, manufacturers, investors, academicians and policy makers. A total of 35 officials and sector representatives (8 public and 19 private sector participants drawn from Burundi, Comoros, Ethiopia, Kenya, India, Madagascar, Malawi, Rwanda, Sudan, Swaziland, Uganda, Zambia and Zimbabwe, and 8 other representatives from international and regional organizations, namely: UNCTAD, COMESec, COMESA and COMESALLPI) attended the workshop.

The workshop was centered in identifying and promoting regional leather sector supply chains to assist African countries in value addition of the sector and diversification of their export. To that end, a total of 9 papers were presented and thoroughly discussed.

At the end of the workshop participates identified nine key recommendations that are for most part consistent with the Strategic Objectives of COMESA/LLPI.

After reviewing the evaluation of the participants, it was found that participants were satisfied with workshop organization, contents and delivery of the presentations, and also indicated areas that require attention for further improvement.

Kenya Leather Sector institutions pool synergies to improve productivity

At the forum held in Eastland Hotel Nairobi on 19th June 2013, participants unanimously agreed to form strategic linkages between the Kenya Leather Development Council (KLDC), Kenya Meat Commission (KMC) and Kenya Livestock Marketing Council (KLMC) to create a competitive edge for Kenyan livestock and livestock products.

Read the whole story Press Release, Kenya Leather Development Council (pdf).