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Hides and Skins Handbook Commoditiesand Export Projections Division Economic Anelysis and Projections Department ID

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Hides and Skins Handbook Commoditiesand Export Projections Division Economic Anelysis and Projections Department ID Hides and Skins Handbook Commoditiesand Export Projections Division Economic Anelysis and Projections Department ID go S Technical Note Much of the data shown in the Tables and Figures in the Handbook are taken directly from thb recently published FAO, World StatisticalCompen- dium for Raw Hides and Skins, Leather and Leather Footwear, 1961-1979,Rome, 1980. It should be noted that the FAO's definitions and groupings of "developed"and "developing"countries differs from that used by the Bank. ePbrury 19U8 TABLE OF CONTENTS Chapter Page No. I.* Introduction.. ................. ................ I...... - 1 II. The Product.................................. II - 1 A.Chrceitc ................................ ............. II - 1 B. End-Uses and Substitutes................................. II - 1 C. Processing/Technology .......... ............ *.. ....... * II - 2 References**.* .........*..eeoee ................. II - 4 III. Hides and Skins Production..*.* ......... ........ l A. Cyclical Factors * .......... ...... III - B. Production Structure - 11orld Shares by Industrial Categories . ......... es ............. a ...... III - 2 References.......... .... o......... III - 27 IV. Hides and Skins Trade .... ............ *.* ........... ......... IV - 1 A. Exporters . ..... .................. ............. IV - 1 _ ~~~B.Imprerp o r t er......s0.......0........ IV - 6 C. International Agreements.........e.................... IV - 25 References ...... ................. ......... IV - 26 V. Hides and Skins Prices.......... ..... ........... V - 1 References ..........................0....... ..... V - 4 VI. Technical and Statistical Issues ...... ................. .VI - l Refarences .. ...... .............................. VI - 2 . February 1981 List of Tables Page III-D1 Hides and S.lns - World Production by Main Countri ; and Economic Regions.........................*. ...... III - III-B2 Production of Cattlehides and Calfskins (Including Buffe.loes) (Wet Salted Weight), 1961-65 Average and 1966/79 Annu"t.o .... III- 6 III-B3 Pr etion of Sheepskins and Lambskins (Dry Weight), 1961-65 Avt ge and 1966/79Annual.. .. .. ... .. III -11 III-B4 Production of Goatskins and'Kidskins (Dry Ueight), 1961-65 Average and 1966/79 Annual.... .......s................. III -16 IV-Al Hides and Skins - Exports (Totals and Shares) By Major Regions, 1977 .... 0........... ,oo .......... IV - 2 IV-A2 Exports of Cattlehides and Calfskins (Including Buffaloes) (WeL Salted Weight), 1961-65 Average and 1966/79 Annual... IV - 7 IV-A3 Exports of Sheepskins and Laribskins (Dry Weight), 1961-65 Average and 1966/79 Annual.. .... ......... IV - 11 IV-A4 Exports of Goatskins and Kidskins (Drv Weight), 1961-65 Average and 1966/79 Annual ...... ....... IV - 14 IV-Bl Hides and Skins - Imports (Totals and Shares) By Major Regions, 1977 ................ 4........ f IV - 17 IV-B2 Imports of Cattlehides and Calfskins (Including Buffaloes) (Wet Salted Weight), 1961-65 Average and 1966/79 Annual... IV - 18 IV-B3 Imports of Sheepskins and Lambskins (Dry Weight), 1961-65 Average and 1966/79 Annual.......... .. .. .. .. ... IV - 21 IV-Bi Imports of Goatskins and Kidskins (Dry Weight), 1961-65 AveWrnage and 1966/79 Annual....... .... ........ .. .... IV - 23 February 1981 List of Figures III-Al Cyclical Behavior of US Cattle Numbers and Slaughter Rate 1950-1979 .................. ................. III - 3 III-Bi World Production of Bovine Hides and Skins, 1961-72 ...... III - 21 III-B2 Shares in World Production of Bovine Hides and Skins, 1961-77 s III-...'.1 -22 III-B3 World Production of Sheepskins and Lambakins, 1961-77 .... III - 23 III-B4 World Shares in Production of Sheepskins and Lambskins 1961-77.... t................... III - 24 III-B5 World Production of Goatskins and Kidskins, 1961-77 ..... III - 25 III-B6 World Shares in Production of Goatskins and Lambskins, 1961-77 ..*..* ............... ................ III - 26 IV-Al Bovine Hides and Skins - Total Developing Country Production and Exports, 1961-77 ............ IV - 3 IV-A2 Sheepskins and Lamb.kins - Total Developing Country Production and Exports, 1961-77 ........................... IV - 4 IV-A3 Goatskins and Kidskins - Total Developing Co,.atry Production and Exports, 1961-77 ............ .......... ...IV - 5 V-l(a) Current and Constant Price Indices for US Heav, Steer Hides, F.O.B .................................. .. .......... V - 2 V-l(b) Current and Constant Price Indices for Australian Hides and Skins Exports, 1971-79 ................... .......... ... V 2 0 February 1981 I-1 I. INTRODUCTION Hides and skins are used in a broad range of end-products,of which the most cportant is footwear.However, the importance of garments and other personal leather goods as end-uses has recently grown considerably.Natural leather products have acquired the reputation of a high-qualityconsumer good and seem likely to retain this reputation in the face of synthetic substi- tutes. In the past two decades considerablechanges have taken place in the geographicaldistribution of productionand censumptionof leather goods. Dur- ing the 1960s there was a shift in the location of tanning and footwear indus- tries from the industrialcountries of North America and Western Europe to the less industrialized countries of Mediterranean Europe. In the 1970C fast expanding tanaing and leather manufacturingindustries have developed in the Far East and Latin America. These latter industries have catered for domestic leather goods consumption as well as, and more importantly for, the export market. As the regional distribution of tanning and leather manufacturing industrieshas changed, so have the internationalflows of raw hides and skins exports.Theimportance of Latin American countries as sources of raw hides and skins exports has diminished as their domestic processing and manufacturing has grown--mostlyunder the artificial constraints provided by taxes or bans on the esport of raw hides and skins and tariffs on imports of finished leather goods. Whereas developing countriesas a whole previously were net exporters of raw hides and skins and net importersof proces-ed leather this trade flow has now been reversed. This reversal has led to keen competition for raw materials between the newly expanding tanning industries in developing coun- tries and the established tanning industries in developed countries-- especially Japan, Italy, South Korea and Spain. This competitionwas central to the large increase in hides and skins prices in early 1979 and the subse- quent sharp fall which lasted until June 1980. Supplies of raw hides and skins nad been declining since 1977, as the cattle cycle moved into its downswing. At the same time there was strong competitionfor raw materialsfrom the expanding processing industriesin the developingcountries as well as the establishedindustries in Italy and the February 1981 I-2 Far East. The Soviet Union and Eastern Europe were also heavy buyers in this period. The market collapsedwhen the recession of 1979-80 became apparent. In the long-term it must be expected that hides and skins prices will continue to fluctuate widely, due to the highly Inelastic nature of supply. For this reason it is unwise to put heavy weight on the perioda of high prices such as experienced in 1979. As expanding demand continues to press ou this unresponsive supply, the result should be a favorable trend in real prices. However, in the medium term price competition among intermediate and end products should be severe as the iewly expanding leather goods industries compete for a share of the market in an environment of slow growth particilarlyamong the industrial countries. From the supply side there will be the price-depressingeffect of the increase in catt'.-slaughterings, which may last for the next 3-4 years--the likely period of upswing in the present cattle cycle. 0 February 1981 II-i II. THE PRODUCT A. Characteristics Hides and skins are produced as by-productsof the meat industry.Raw hides and skins are characterized )y a substantial amount of heterogeneity. Therefore, in assessing the benefits derived from a project which produces hides and skins it is imQortant to take into account the size and quality of the final product. This non-uniformityresults from the followingfactors: (a) Post slaughterdefects, e.g. poor flsying (flesh removal) techniques; (b) Branding of live cattle (a common practice for identifying ownershipof cattle); (c) Applicationof differenthide curing techniques;and (d) The utilizationof various tanning agents at the processing stage. In addition to the aforementionedfactors, the health status of the animal also affects the qiualityof the final product. Hides and skins from animals raised on low nutritional diets will be smaller and of inferior quality. Likewise the prevalence of parasites (e.g. mites, lice and ticks) result in lower quality hides. The quality of hides and skins produced by industrializedcountries tends to be of a higher quality than those produced by the developingcountries (this differentialcan be observed in the export unit values for hides from cattle, sheep/lamband goats/kids). These quality variationsmake the interpretationof data on volumes and prices of hides and skins a tenuous exercise. They also help to explain why there are no internationalstandards for grade classificationfor hides and skins or for leather. B. End Products/Substitutes End uses for hides and skins include footwear, clothing and other fashion articles and upholstery products--allproducts for which the income
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