Higher Value Addition Through Hides and Skins the FAO Diversiﬁcation Booklets Are Not Intended to Be Technical ‘How to Do It’ Guidelines

FAO Diversiﬁcation booklet 8 H i

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o n Diversiﬁcation booklet number 8

ue Higher val addition through hides and skins

Ian Leach and R. Trevor Wilson

Rural Infrastructure and Agro-Industries Division Food and Agriculture Organization of the United Nations Rome 2009 The views expressed in this publication are those of the author(s) and do not necessarily reﬂect the views of the Food and Agriculture Organization of the United Nations.

The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of speciﬁc companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned.

All rights reserved. Reproduction and dissemination of material in this information product for educational or other non-commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of material in this information product for resale or other commercial purposes is prohibited without written permission of the copyright holders. Applications for such permission should be addressed to: Chief Electronic Publishing Policy and Support Branch Communication Division FAO Viale delle Terme di Caracalla, 00153 Rome, Italy or by e-mail to: [email protected]

Contribution of hides and skins to rural livelihoods 1 Introduction 1 Purpose of booklet 1

Market potential of hides and skins 3 Production 3 Leather products 3 Trade 4 Location of business 5 Table of contents Table Livelihood opportunity 7 Advantages as a livelihood activity 7 Opportunities foregone 10

The livelihood activity 13 Producing quality hides and skins 13 Preservation 13 Common fallacies concerning hides and skins 16

Markets and marketing 19 Markets 19 Market intelligence 21 Marketing procedures 22

Financing 25 Operating expenses 25 Possible sources of ﬁnance 27

Selected further reading 29 Sources of further information and support 31

small-scale farmers todiversifyintonewincome-generating activities? What actionsmightpolicy-makerstake tocreateenablingenvironmentsfor programme managersingovernment andnon-governmentalorganizations. TheFAO Diversification bookletsarealsotargeted topolicy-makers and ‘success factors’? benefits? What are farmer requirementsandconstraints? What arecritical these mightenablesmall-scalefarmers totakeaction. What arethepotential service providerstoconsidernewincome-generatingopportunitiesandhow countries. Itishopedthatenoughinformationgiventohelpthesesupport poor small-scalefarmersandlocalcommunitiesinlow-middle-income that provideadvisory, businessandtechnicalsupportservicestoresource- Themaintarget audienceforthesebookletsarepeopleandorganizations skins. local marketsareinfluencedbyinternationalmarketdemandforhidesand markets willbeconsidered.Thisisbecausesmallenterprisedevelopmentand dependent onanexportmarket.However, inthisparticularbooklet,export for meetingdemandonagrowing,oralreadystrong,localmarketandare not complexity. The productsorservicesgenerated bytheenterprisesaresuitable farmers intermsofresourcerequirements,additionalcosts,exposuretoriskand profiled intheFAO Diversificationbookletsaresuitableforsmallholder into smallfarmstoincreaseincomesandenhancelivelihoods. The enterprises Eachbookletfocusesonafarmornon-farm enterprisethatcanbeintegrated community leveltoincreasetheincomesofsmall-scalefarmers. provide decisionsupportinformationaboutopportunitiesatfarmandlocal The purposeoftheFAO Diversificationbookletsistoraiseawarenessand Preface v

Higher value addition through hides and skins The FAO Diversification booklets are not intended to be technical ‘how to do it’ guidelines. Readers will need to seek more information or technical support, so as to provide farmer advisory and support activities relating to the introduction of new income-generating activities. To assist in this respect, each booklet identifies additional sources of information, technical support and website addresses. A CD has been prepared with a full series of FAO Diversification booklets, relevant FAO technical guides, together with complementary guides on market research, financing, business planning, etc. Copies of the CD are available on request from FAO. FAO Diversification booklets can also be downloaded from the FAO Internet site. If you find this booklet of value, we would like to hear from you. Tell your colleagues and friends about it. FAO would welcome suggestions about possible changes for enhancing our next edition or regarding relevant topics for other booklets. By sharing your views and ideas with us we can provide better services to you.

vi design andlayoutofthebooklets desktoppublishing. managed thepost-productionphaseofseries.FabioRicciundertook the of thebooklets.MartinHilmiprovidedbothtechnicalandeditorialinputs technical supportandguidance,bothduringthedevelopmentfinalization of theseries.ClareBishop-Sambrook,principaleditorseries,provided patience, commitment,andcontributionstotheproductionpost-production are alsoduetoJosefKienzle, Agro-Industries Officer, AGS, FAO, forhis support inthedevelopmentofFAO Diversificationbookletseries. Thanks Industries Division(AGS),FAO, forhisvision,encouragementandconstant Gratitude isowedtoDoyleBaker, Chief,RuralInfrastructureand Agro- Acknowledgements fortheseries booklet. comments andClareBishop-Sambrookforprovidingtechnicalinputstothe Development Officer, AGS, FAO, forreviewingthebookletandproviding various draftsofthisbooklet. Thanks alsogoto HeikoBamman,Enterprise Agro-industries Division(AGS),FAO, forprovidingdetailedreviewstothe Gratitude isowedtoE.Seidler, SeniorOfficer, RuralInfrastructureand Acknowledgements vii

Higher value addition through hides and skins

Contribution of hides and skins to rural livelihoods

Introduction provide many service jobs in countries Hides and skins are an end product of where livestock are produced. animal production. As an end product To take advantage of this in a – although more correctly they are a successful way, farmers, merchants, by-product – they are an important and butchers, entrepreneurs, and traders valuable resource. In the developing working in rural communities need world they are almost never exploited to take full advantage of their local to anything like their full potential. knowledge, including sources and Hides and skins are often thought of supplies of hides and skins. Each of as intrinsically unclean and end up these groups needs to be aware of its being discarded or wasted because of own special skills and those of others ignorance or misinformation. Others in the supply chain so that each is are processed improperly which able to add to the production process. greatly reduces their potential value. Too often butchers, for example, see Hides and skins are a renewable hides and skins merchants simply resource of national and international as unnecessary middlemen. Greater signiﬁcance. They provide scope understanding and appreciation of for exploitation on a sustainable other people’s contribution to the long-term basis. More particularly, business of hide and skin production production and marketing of hides – for example under the auspices and skins provide opportunities of trade associations – could help to support and sustain livelihoods to resolve contentious issues and especially in rural areas. In order to promote economic cooperation. Higher value addition through hides and skins operate successful ventures, however, there must be a suitable business Purpose of booklet structure and the hides and skins By highlighting the most important must be treated as commercial assets. issues in increasing the best use As a resource, hides and skins are of hides and skins, it is hoped that the raw materials for various types development personnel and potential of businesses – such as collecting, entrepreneurs will recognize the processing and distributing – which opportunities that are available for

1 increasing the quantity and quality and offer some solutions. Most of of hides and skins that enter the these examples derive from project production chain. This would not work of FAO in various parts of the only result in improved livelihoods world. More detailed information for producers but also assist in about the production and utilization expanding employment and income of hides and skins is available from opportunities in general. other publications listed at the end The booklet focuses on important of this booklet. Additional sources aspects of this business. The case of information, such as trade studies demonstrate some of the associations, research organizations, constraints that have affected useage commercial publications and websites of hides and skins in some countries are also listed.

2 Market potential of hides and skins

Production goat skins in 2010. This increasing In the short term until 2010, global trend is likely to be governed by a production of hides and skins is growth in slaughter and the per caput expected to continue growing at a consumption of meat, as well as by slow rate. Slow or negative growth in increased efﬁciency in the collection, production in developed countries is ﬂaying and preservation of hides and expected to be compensated by faster skins, especially in Africa. growth in developing countries, where livestock raising is likely to expand Leather products in order to satisfy an increasing More than 50 percent of bovine hides domestic demand for meat. Among and approximately 40 percent of the developed countries, production sheep and goat skins are processed of bovine hides and sheep and goat into footware, with the remainder skins in North America is expected being used for the production of to contract. In Europe and the former garments, furniture and travel goods. Soviet Union area, the negative trend It is projected for the medium term experienced during the past decade that shoes will continue to provide the is likely to reverse, mainly because major demand for leather although of improvements in income that are other products are also expected to projected to take place in Eastern increase their share, especially in European countries and the Russian developed countries. Federation and the subsequent While the consumption of leather increase in the demand for meat and products is mainly determined by the Higher value addition through hides and skins slaughter. level of prices, income and consumer Production of bovine hides and demand preferences for other product sheep and goat skins in developing attributes, the production of hides and countries is projected to increase skins depends on factors related to the and is expected to be equivalent meat market that are exogenous to the to 56 percent of global production hides and skins and leather markets. for bovine hides and 71 percent of These differences in economic global production for sheep and incentives at both ends of the leather

3 supply chain are often responsible for Trade wide price variations as the market Among the developing regions, the adjusts to equilibrium. Far East is expected to continue In the medium term, it is likely being the most important net that income growth will stimulate importer of bovine hides, with demand for footware and other imports projected to grow by 1.24 leather products, and as the supply of percent per annum to approximately hides and skins will record restrained 1.0 million tonnes by 2010. It is growth rates, prices will strengthen likely that, given the tanning and to bring consumption in line with footware manufacturing capacity production. in China, most of the imports in the Consumption of leather products, Far East will be in the form of raw in the developing countries, expressed hides for processing and re-export. in raw equivalent, is expected to Exports of bovine hides from Africa increase by an average of 1.1 percent are likely to grow at a fast rate and per annum for bovine hides and by 1.8 provide an important source of export percent per annum for sheep and goat earnings for countries such as Kenya, skins. These rates reflect a slowdown in Ethiopia, Somalia and Zimbabwe, consumption in developing countries while exports of sheep and goat skins in comparison to the previous decade are likely to be reduced as a result of which was characterized by a strong growing domestic demand. upward trend in the Far East; China, Latin America is expected to especially found improvements in continue being the most important net income in conjunction with increased exporter of bovine skins and leather tanning capacity and obtained gains products, accounting for 10 percent in efficiency in the manufacturing of of global consumption by 2010. footware, thus stimulating local and Developed regions are expected to export demand for leather goods, remain, as a group, net exporters of but all in all consumption is likely to hides and skins. Exports of bovine increase moderately in the Near East. hides from North America are likely Consumption of hides and to grow at a fast rate, while those from skins in Africa is expected to countries in the former Soviet Union increase by 1.54 and 4.67 percent are expected to contract because of per annum respectively, mainly strong domestic demand. Oceania because of improvements in income. will remain the dominant exporter This signifies increasing market of sheep and goat skins, while net opportunities. imports of both bovine hides and

4 Globalconcentration ofthetanning Korea, ChinaandIndia. producers beingItaly, theRepublicof ten countrieswiththefourdominant of finishedleathercomesfromonly are muchlesswidespread. Two thirds the manufactureofleatherproducts the productionoffinishedleatherand throughout theworld,butlocationsfor pre-tanning processingarepractised Production ofhidesandskins Locationofbusiness address theseissues. stakeholders realizetheneedto training services.Fortunately, many poor management;andinefficient levels oftechnologicaldevelopment; low labourproductivity; the componentsofsupplychain; communication flowsthataffect all weak powersupplyandpoor deteriorating roadinfrastructure; quality ofhidesandskins;poor include, butarenotlimitedto:poor their fullpotential.Suchproblems for developingcountriestorealize sector needtobeaddressedinorder of problemsthathaveplaguedthe to increaseappreciably, anumber from developingcountriesisprojected Althoughhidesandskinsoutput growth. respectively, exhibitingslowratesof to 47000tonnesand59 are projectedtolevel-off by2010 sheep andgoatskinsintoEurope inadequate

of environmental pollution. Many thereby becomea significant source Effluents discharged fromtanneries involves theuseofseveralchemicals. enormous amountsofwaterand nature, leatherprocessingrequires environmental regulations.Byitsvery fronts concerningcompliancewith increasing pressurefromdifferent been andcontinuestobeunder The leatherindustryhas major producers. Indonesia andItalyhavebecomethe manufacturing, butnowBrazil,China, the pre-eminentcountriesforshoe the RepublicofKoreawereonce of thelowlabourcosts. Taiwan and been concentratedin Asia because finishing, shoemanufacturinghas intensive industry. Likeleather Shoemanufacturingisalabour- extent, Thailand andIndonesia. China, Taiwan, India,and,toalesser lower. The countriesinvolvedare Eastern Asia, where labourcostsare process forfinishedleathergoodsto a trendtomovethemanufacturing per year. Recently, therehasbeen estimated turnoverofUS$10billion 1960s andisnowanindustrywith has increasedconsistentlysincethe components. Globaltradeinleather finished leather, leathergoodsand hides andskins,semi-processed international tradeinalltypesofraw 1980s and1990s,ledtoanincreasein industry, particularlyduringthe 5

Higher value addition through hides and skins in the industry continue to search compliance are making it difﬁcult for ways to address the problems of for processors to remain competitive. pollution in the tanning industry. A In some cases, this has led to closures, number of environmentally friendly while in others, tanneries have chosen processes have been developed and to relocate their businesses to places implemented across the world, but where environmental regulations are mostly in developed countries. By less stringent. In the medium to long virtue of their scale of operation, many term, compliance with environmental tanneries in the developing world still requirements could continue to lead lack the capital required to invest in the to a shift in tanneries from developed currently available environmentally to developing countries where friendly processing methods. The regulations are less stringent and increasing costs of environmental labour costs are lower.

6 Livelihood opportunity

Advantages as a livelihood by one of a variety of religious activity or ritual slaughtering techniques. Producing hides from large animals However, many hides and skins and skins from small animals does not remain uncollected, and income and entail a huge investment and although employment opportunities that might operational costs may be high, be associated with their use are lost solutions can be found to keep them (see Case Study 1). to manageable levels. No hide is too big and no skin too small to provide a source of income and employment in rural areas. Hence it is an activity that many rural dwellers could take up. Most countries have resources from livestock that can provide hides and skins for making leather, garments, shoes, handbags and other leather goods. Hides and skins are most commonly a by-product of meat, milk or wool production. They become available when an animal is eventually slaughtered and ﬂayed. In developed countries, hides and skins are produced during the course of Higher value addition through hides and skins slaughter in purpose-built premises (abattoirs) while in developing countries they often emanate from FIGURE 1 Bush or informal slaughter is backyard slaughtering or informal the source of many hides and skins slaughter (see Figure 1). These latter (Photo by I. Leach) sources are rarely exploited to their full potential. Very few animals are kept speciﬁcally Hides and skins are also produced for their hides and skins. Exceptions

7 CASE STUDY 1 Cultural and religious signiﬁcance of livestock in Pakistan

In many societies the slaughter of animals is commonly used to provide food for special festivities, often religious celebrations such as the Muslim Eid-ul-Azha. In Pakistan during the Eid-ul-Azha, which is referred to locally as Qurbani, the slaughter of animals may exceed ten times the normal daily rate. Normal, or halal, slaughtering procedures require animals for human consumption to be fit and healthy, but those used during Qurbani must be of particularly high quality because of their religious symbolism and significance. This festival could thus produce a large number of high quality hides and skins, but the animals are commonly slaughtered on private premises by people with little practical experience. The slaughtering process is often wasteful and unsanitary, and many hides and skins produced during Qurbani are lost or spoiled. During such an important religious festival it would often be difficult to encourage people to worry about issues such as avoiding waste and keeping the environment clean and tidy, but in Pakistan public service broadcasts have been used to increase businessmen’s knowledge of the commercial opportunities which arise in these situations.

FIGURE 2 Animal selected for ceremonial slaughter during ‘Qurbani’ in Pakistan (Photo by I. Leach)

include fur-bearing breeds of fox and from a relatively small number of mink and Karakul sheep for their domesticated livestock species, which pelts (see Case Study 2). The vast include: cattle, sheep, goats, pigs and majority of hides and skins come buffalo.

8 CASE STUDY 2 High value pelts from Karakul sheep in Namibia

The Karakul industry, which has existed for over 100 years in Namibia, is one of the enterprises that have enabled economic and social development in large parts of the country and rural communities. Although the industry is relatively small, it contributes to the livelihood of communities, especially in the arid areas of the country where resources are limited; moreover, the industry has the potential to grow, as a result of increased demand for the particular pelts.

Karakul productivity is expressed by the number of pelts per ewe per unit time and is therefore affected by low reproductive and high mortality rates. Lambs used for pelt production are slaughtered the ﬁrst day after birth, otherwise the characteristic curls and patterns disappear. Slaughtering and skinning are done by knife and by hand. Tissue and fat are removed with a knife, and the blood and dirt are washed out with cold water. The wet pelt is spread on a frame covered with jute and dried in the air.

Prices of pelts are related to: Colour Pelt size Grey pelts are better priced than black Pelt size depends on litter size and ones. Prices for check red pelts are the nutrition and age of the ewe. Pelts very low owing to low demand and smaller than a standard fetch much inferior quality. lower prices.

Hair length and curl size Hair quality and pattern Hair length and curl size affect price. Hair quality is determined by lustre and ‘Good’ is short hair or small curls texture while pattern has a considerable and ‘bad’ is overgrown hair and curls. inﬂuence on the attractiveness of a pelt. Overgrowing is more common Hair quality and pattern therefore in years of good nutrition. have high economic value.

Curl type The breeder distinguishes among the Shallow types in Galliac (almost without curls), Watersilk, Shallow and Shallow developed, and among the Curl types in developed

Shallow and Pipe curl but there are many intermediate types. The Shallow types Higher value addition through hides and skins were bred from the Curl types in the 1920s. Only four classes are recognized on the market, these being Shallow, Developed, Ribbed and Curl. Better prices are achieved for shallower types.

Swakara pelts, which are the main product of the Karakul sheep, are sold at international fur auctions. Swakara fur garments, styled by the most prominent and famous designers, are displayed in fashion boutiques around the world.

Source: 2007. The Namibia Economist. (http://www.economist.com.na/)

9 Opportunities foregone Determining the extent of losses from hides and skins that are not collected for processing or are processed improperly is difﬁcult to estimate. Many hides and skins are discarded soon after slaughtering, but the major losses occur among materials which have been damaged before, during or after collection. Most hides and skins are affected by pre-slaughter defects accumulated during the life of the animal (see Case Study 3). Some are damaged during slaughter while relatively few are spoilt during preservation. FIGURE 3 Outdoor drying in Uganda (Photo: © FAO/17516/R. Faidutti)

CASE STUDY 3 Damaged livestock skins: external parasites in Ethiopia

In Ethiopia in the early 1990s almost all the country’s sheepskins and most of its goatskins were increasingly affected by pre-slaughter defects of unknown origin. The problem varied from minor imperfections in the surface grain of ﬁnished leather made from affected skins to more severe pits and blisters. None of these defects were apparent on the raw material, so skins went through expensive processing before the damage became obvious. Since these types of skins were often used to make such products as high quality sporting gloves, anything less than a perfect, blemish-free skin was a serious problem.

Field trials eventually confirmed that the sheep skins were affected by cockle, an irritation caused by the sheep ked (Melophagus ovinus) and the sheep louse (Bovicola ovis). Goats were affected by sarcoptic mange caused by mites (Sarcoptes scabiei). Both problems were easily treated with pesticides such as Diazinon or Amitraz, but the sheep also responded well to simple shearing. Since the damage caused by these external parasites was not permanent, skins from treated animals soon showed no evidence of the original defect. Among the goats in particular, mortality was reduced significantly and there was significant weight gain among the treated animals. In practice, these findings were of immense value to the industry.

10 The potential for reducing losses associated with uncollected and spoiled hides and skins is affected by general economic factors and by the balance of supply and demand (see Case Study 4). The overall supply of hides and skins is ﬁxed because livestock numbers and slaughter rates are relatively stable. The demand for leather products – and hence for hides and skins – can, however, ﬂuctuate quite rapidly.

FIGURE 4 External parasites (keds) on Ethiopian hair sheep (Photo by I. Leach)

CASE STUDY 4 Fast-growing rabbits producing poor-quality skins in India

Certain types of skins have always provided special problems during the tanning process. This applies especially to the skins of very young and immature animals. Such skins are particularly susceptible to damage by high temperatures and intensive agitation.

In Northern India in the early 1980s, rabbit production became popular as a convenient source of inexpensive meat. Rabbit skins were ideal for leather

manufacture in the local handicrafts industry. Intensive commercial production of Higher value addition through hides and skins rabbit meat, however, normally uses concentrated feeds to achieve rapid growth and weight gain. This produces large animals ready to slaughter at a relatively young age, but it also makes their skins immature and weak, and liable to damage during tanning. Because of this, the skins from this production system were of little value. A simple solution is to use low energy, non-concentrate diets. These feeds are relatively cheap, so the extra time required to reach slaughter weight is not signiﬁcant and the skins of the older animals are much less susceptible to damage during tanning and are therefore more valuable.

The livelihood activity

Producing quality hides inward. They should in particular be and skins free of deep cuts on either side and For production of the best hides and have no holes in the external surface. skins only healthy animals should Hides and skins should be, wherever be slaughtered and they should be possible, well protected against processed by operators properly contamination by blood, dung or trained in slaughtering and dressing other extraneous matter and kept cool techniques. To avoid unnecessary to restrict the growth of any micro- stress and to reduce the risk of organisms that can damage them. stress-related defects in the meat, animals should be treated humanely. Preservation Approved slaughtering and dressing Most hides and skins must be techniques should be adhered to. preserved to protect them during Correct post-slaughter treatment of storage and transport until they are hides and skins by small producers converted into leather. Preservation is essential if quality is to be assured. should ideally begin immediately Correct ﬂaying, drying and treatment after slaughter and should never be of skins is necessary if slaughter is ‘in delayed overnight. the bush’. The most common methods of If appropriate precautions are preservation are drying, salting, adopted during slaughtering, the brining or the use of other chemicals hides and skins produced should be (see Table 1). Refrigeration, freezing free of processing or peri-slaughter and mechanical drying methods can Higher value addition through hides and skins defects. They should be even along be used, but they are expensive and the backbone and more or less tend to be reserved for more valuable rectangular without being folded skins in particular situations.

TABLE 1 Common methods of preservation of hides and skins

Sun drying: in direct sunlight and usually on the ground. Frame drying: in a large frame. Shade drying: in a roofed shelter and usually in a frame Drying and is the recommended way. Suspension drying: in a large frame, over a pole or even on a porous wall.

Pit salting: using an excess of salt and preventing any loss of moisture by retention in a pit. Salting Stack/wet salting: using an excess of salt and allowing excess moisture to drain away. Dry salting: using an excess of salt followed by drying.

Static/pit brining: by immersion in a saturated brine with little or no agitation. Brining Raceway brining: by immersion in a saturated brine with considerable agitation.

Chemicals (other than salt) provide preservation lasting Chemical days, weeks, months or years.

With the exception of sun drying, which has no real merits, most of the preservation procedures presented in Table 1 can be used successfully almost everywhere. The ﬁnal choice will depend on the availability of materials, chemicals and suitably trained staff and on the requirements of the customer. In practice, the most useful methods tend to be suspension drying on a frame in the shade (see Figure 5) and stack salting. FIGURE 5 Suspension drying of large cattle hides (Photo by I. Leach)

14 FIGURE 6 Transport of dried hides from source to central collection in Ethiopia (Photo by I. Leach)

Preservation is most effective should be ﬂat, smooth and protected when it is carried out quickly and against insect damage during long thoroughly. Cattle hides, for example, term storage. Salted and brined hides should be dried to a moisture content and skins may be rolled, stacked of less than 15 percent within three or bagged to facilitate storage and days. Sheep and goat skins should transport. be dried to a moisture content of less Preserved hides and skins may than 15 percent within one day. If be stored for up to a year while drying takes longer bacterial damage awaiting further processing. During is likely to occur. Similarly, hides and this time preserved hides and skins Higher value addition through hides and skins skins preserved by salting or brining may be collected and transported should be saturated with salt – sodium from remoter parts of a country (see chloride – within one day. Properly Figure 6) and undergo grading, preserved hides and skins should be sorting and accumulation into free of post-slaughter defects related large lots pending storage, sale and to preservation processes, such as delivery. Storage usually involves bacterial decay, contamination and costs such as rent, depreciation and adulteration. Dried hides and skins interest charges.

15 Common fallacies concerning hides and skins

The section below addresses some of the common misunderstandings about the production and presevation of hides and skins:

Preservation is an essential part of Hides with deep cuts and holes are not the tanning process. suitable for leather manufacture.

No Not necessarily Leather can be made by using Many hides are deliberately cut into unpreserved hides and skins, but if two halves, or sides, in the tannery, hides and skins have to be stored and so if defects such as cuts and holes transported for long periods they must are close to the backbone they will be protected by preservation. disappear when the hide is cut.

Sun drying is the least expensive Heavy bull hide is better and more method of preserving hides and valuable than small calfskin. skins. Usually not No Most leathers made from heavy hides It is the most expensive. Because only must have their thickness reduced a small piece of ground and a few in order to be suitable for many ﬁxing pegs are needed, sun drying purposes. As layers are cut away from might seem to be inexpensive but the underneath the hide, what remains quality of the dried hides and skins becomes progressively weaker. provided by this technique is often poor. Wet-salted hides and skins are better raw material than dried material. Drying salted hides is an essential part of the preservation process. No The few recorded tannery evaluations No comparing similar hides and skins Salted hides are dried to reduce the preserved in different ways show that weight-based costs of transport. dried hides and skins can be as good as wet-salted ones.

16 growth. biologically unsuitable forbacterial by makingthewater inthehide a disinfectant.Saltpreserveshides is unchangedbysaltandnot contain 45percentmoisture;thepH Well-preserved saltedhidesmaystill (pH) andactingasadisinfectant. removing water Salt preserveshidesandskinsby cured hidesandskins. tolerant bacteriathatcandamagesalt- and therearemanycolourlesssalt- their activitytendstobeveryslow attack salt-curedhidesandskins,but bacteria areredincolourandcan It istruethatmanyhalophytic damage onsaltedhidesandskins. ‘Red heat’ isasignofbacterial to handle. problem withefﬂuentsthatisdifﬁcult washing saltedhidesproducesa is oftencorrupted.Rehydrationand scarce andexpensivesothemethod In manypartsoftheworldsaltis preservation. Salting isthebestmethodof , changingtheacidity No No No

US$1.86/kg. or skinsisbetterthanapriceof A priceofUS$3.00/kgforhides defects. they containfewerpre-slaughter materials if,assometimeshappens, provide betterleatherthanGradeI So GradeIV materialscansometimes see andonlyemerge duringtanning. and skinsaresmalldifﬁcultto and visible.Mostdefectsonhides and holesintherawmaterialarelarge But onlyifallthedefectssuchascuts material. the same. same originalfreshweightwouldbe the totalpriceforahideorskinof US$1.86/kg isforwet-saltedmaterial, material, forexample,andthe If thepriceisUS$3.00/kgfordried better qualityleatherthanGradeIV Grade Ihidesandskinsmake Not necessarily Yes 17

Higher value addition through hides and skins

Markets and marketing

Markets The traditional image of a market is a Although there are similar markets collection of stalls where buyers and for hides and skins, most tend to be sellers exchange goods or services, out of public sight and the way they usually for cash. In rural areas they operate varies according to location are usually places where food is sold. and purpose (see Figure 7). The main Prices – usually based on recent market place for hides and skins trends or market demand – may be usually exists, however, near the displayed or conveyed verbally and source of the raw material, which is may be subject to negotiation. often the slaughterhouse. Higher value addition through hides and skins

FIGURE 7 Hides and skins market in a rural area in Ethiopia (Photo by I. Leach)

19 The producer’s main concern will Other market opportunities may arise be to obtain the highest possible price during the course of distribution per piece, but other factors that may of the hides and skins, or between be important include: processing and delivery to the tanner and eventually to the global market • price determination: according to (see Figure 8). piece, to weight, to grade or to The global market for hides and type of preservation; skins is increasingly important. In the • type of payment: cash or credit; past, many countries had a laissez- • timing of payment: at collection, at faire attitude to hides and skins and delivery or after a fixed or agreed allowed export in the raw state. time; Some countries then looked upon • contractual obligations: agreement them more seriously as a national to buy a certain number of hides resource of strategic importance and and skins or to buy over a certain prohibited exports in unprocessed period of time. form. Domestic processing of hides

FIGURE 8 Tanners at work treating hides in Morocco (Photo: © FAO/22387/A. Gandolﬁ)

20 consist onlyofinformation about locally, marketintelligencemay Forasmalltraderwhoworks selling. relying onopportunisticorreactive to plannedsales,ratherthansimply for followingaproactiveapproach and marketingskillsisnecessary to findbuyers.Knowledgeofmarkets effort andexpensewillbelosttrying Without marketintelligence,time, be local,nationalorinternational. hides andskinstrade,whetherit picture ofallfactorsaffecting the a comprehensiveandup-to-date skins. Itincludestheprovisionof related tolocalpricesforhidesand more thansimplycollectingdata involves intelligence Market that anentrepreneurcanhave. – isthemostimportantinformation about potentialbuyersorconsumers intelligence –includingknowledge of profit.Inmostbusinesses,market risks andincreasingthelikelihood Knowledge iscrucialinreducing or penalizedbyprofitslosses. world, takingriskscanberewarded in anyothersegmentofthebusiness In thehidesandskinstrade,justas Market intelligence and 1980s. for export,asinEthiopiathe1970s to manufacturedproductsdestined extra employment,whileaddingvalue and skinswasconsideredtoprovide any risksandbeprepared forworst- of alternatives,to remainawareof products iswise to keepinformed be asecureandreliableoutletfor trader whohaswhatappearsto dynamic. Evenahidesandskins encompass hidesandskinsare Economiesandmarketsthat skins. for leatherandhencehides to predictchangesinthedemand that allowsproducersandtraders spend less. This isaclearindicator shoes, butwhenitdeterioratesthey is good,peopletendtospendmoreon hides andskins. When theeconomy international trendsinthedemandfor influences specificnationaland global, regionalornational–strongly the generalstateofeconomy– interpreted accordingly. Forexample, together withotherinformationand in thefuture.Itneedstobeexamined necessarily indicatewhatwillhappen Historicaldatadoesnot,however, magazines andvariousInternetsites. number ofsources,includingtrade hides andskinsareavailablefroma in prices.Historicaldataonpricesfor idea ofbothcurrentandfuturetrends information. They musthavesome is theneedforconsiderablymore and operateinmanymarketsthere that havelarge stockpilesofmaterials the caseoflarge tradingoperations situation ofcompetitors.However, in buying andsellingpricesthe 21

Higher value addition through hides and skins case scenarios. This is the essence type there are basic differences which of good marketing. Although one may be compounded by preservation established outlet for hides and skins processes. To take two extreme may disappear it does not necessarily examples, a wet-salted and heavily- mean that all options have been lost. woolled sheepskin is not the same as Identifying or anticipating trends a shade-dried goatskin. A shade-dried in prices and accommodating the goatskin from West Africa is not associated proﬁt or loss is all part of the same as a shade-dried goatskin the trader’s job. from Eastern or Southern Africa. Sales are an important part of the Some products, such as Ethiopian marketing process, but a great deal of hair-sheep skins, Scandinavian cattle other work is needed prior to selling if hides and Nigerian goat skins, have a business is to continue and prosper. If established reputations in certain parts market research has been undertaken of the leather industry. In marketing correctly and information has been terminology they have achieved the gathered about potential customers, status of a market brand. their locations and their requirements, selling should be relatively simple Promotion and straightforward. If hides and skins of a particular type or from a particular location Marketing procedures are considered especially attractive Marketing procedures that apply to there is good reason to promote them business functions can be classiﬁed on this basis. Promotions of this according to the four Ps – product, type usually require subjecting the promotion, place and price. The nature product to a grading system.Although of these component activities will grading systems have limitations vary according to the entrepreneur they provide essential information and according to the place occupied that can facilitate the marketing by an enterprise in the production and of hides and skins. They must be supply chain. credible, however, and be supported by documentation. It is important to Product note in this respect that most buyers Buyers collecting directly from of hides and skins value consistency slaughterhouses are often restricted more than anything else. to buying whatever types of materials Most tanners do not expect their happen to be available – cattle hides, raw materials to be perfect,but they sheep skins or goat skins. For each do expect them to be consistent with

22 in manycountries,sellingwasdone was operatedasaparastatalenterprise and distributionofhidesskins Previously, whenthecollection small numberofexporters. number ofproducerstoarelatively a progressivedecreasefromvast buyers ateachstage. This resultsin effect withasmallernumberof that theretendstobeafunnelling nature ofthesupplychainmeans and pricearecloselylinked. The In thecaseofhidesandskins,place Place andprice processing isthereforeessential. from theverystartofproductionand previous supplies. Accurate labelling involved. of sometheﬁnancialfactors above, togetherwithanappreciation marketing informationreferredto each partyhasaccesstothesortof of allparties,itisimportantthat be completedtothesatisfaction to negotiation.Fornegotiations unrestricted andpricesaresubject hides andskinsisnowentirely most countries,buyingandselling With theliberalizationoftradein on internationallysetprices. or throughprivateagreementsbased ultimately havebeensoldatauction that weredestinedforexportwould set prices.Manyofthehidesandskins through clearlydeﬁnedchannelsat 23

Higher value addition through hides and skins

Financing

In presenting the case for generating or can be improvised easily. income by producing and trading Entrepreneurs need enough capital in hides and skins this booklet to cover the relatively high operating examines the importance of technical costs associated with this business; operations, marketing and financing. the main items of expenditure are These three activities are the core of listed in Table 2, on the following almost any business enterprise. Of the page. Chemicals for treatment three, finance is undoubtedly the most include salt, bactericides, fungicides important and arguably the cause of and insecticides, plus pesticides for most problems and failures. controlling rodents. Hides – especially Gaining access to financial fresh hides – and skins are bulky and services that adequately meet the can be heavy. Transporting them over needs of the business is often the most long distances involves a great deal important precondition to establishing in terms of the cost for vehicle fuel, and managing a successful hides maintenance, etc. Processing the raw and skins enterprise. Knowing that materials also necessitates the use hides and skins are available, how to of storage facilities and treatment process them and how to sell them chemicals. might appear to be all that is needed With the exception of a few very to start this type of business. It will small operators anyone involved in not, however, be sufficient to ensure the hides and skins trade will need to the successful operation of such a invest some capital in order to operate business. the business. If they do not have funds Higher value addition through hides and skins they must acquire them from other Operating expenses sources. In this case it is imperative Unlike many other businesses, the to carry out a cash-flow analysis to hides and skins business requires identify possible credit needs prior low investment costs. The capital to engaging in any business activity. costs associated with equipment are Once this is done then the best ways generally low because of the fact that of financing the enterprise need to be most of the items involved are cheap determined.

25 TABLE 2 Description of expenditures for a small-scale hides and skins business

Hides and skins Storage expenses Purchase costs, interest charges on Rent, depreciation of owned buildings, money borrowed to buy hides and deterioration of materials during skins, interest income lost by spending prolonged storage, protection against money on hides and skins. pests such as rodents, etc.

Equipment Transport

Fleshing/trimming knives, Vehicle, fuel and labour costs ﬂeshing/grading tables, washing to transport hides and skins from tubs, drying frames and shed, strings, the slaughterhouse to merchant’s pallets, baling press for dried hides, premises to market or the next link scales, etc. in the supply chain.

Chemicals Market intelligence Salt, bactericides, fungicides, Up-to-date information on prices, pesticides, and insecticides trends, current buyers, etc. (for rodents).

Labour Contingencies Personnel for the collection, Decrease in the value of hides and transportation, ﬂeshing, preservation, skins during the course of storage weighing, labelling, grading (after the original purchase and storing of hides and skins, and before any subsequent sale). as well as on-site security.

Financing for businesses is either time to repay. Conversely, the money long-term, involving more than one needed to buy and store hides and year, or short-term, involving less skins pending resale can be repaid than one year. If a business needs after a short time. to purchase a building in which to The distinction between long-term process and store hides and skins and short-term financing is significant or a vehicle to transport goods, a for a number of reasons. In general, substantial sum of money will be much more work is required to acquire needed. Any loan used to buy these long-term financing from a bank, assets is therefore likely to take a long but the rate of interest will be lower

26 joining arotatingsavingsandcredit borrowing fromfamilyandfriends, from theuseofpersonalresources, financing mechanisms,ranging choose amonginformalandformal a businessinhidesandskinscan An entrepreneurseekingtoestablish Possiblesourcesoffinance the loanifenterprisefails. secure repaymentofatleastsome as wellguaranteeingcollateralto owner’s commitmenttotheenterprise It providessomeguaranteeofthe This iscalledtheowner’s equity. portion ofthefundingthemselves. owner ofthebusinesstoprovidesome financial institutionsrequirethe required torunabusiness,most term andshort-termfinancingis Irrespectiveofhowmuchlong- basis belowacertainminimumlevel. lend sumsofmoneyonalong-term some banksmaynotbepreparedto business unnecessarily. Moreover, a long-termbasismayburdenthe that borrowingtoomuchmoneyon inexpensive, itshouldbeunderstood long-term financingisrelatively than forshort-termfinancing. While costs. a hidesandskinsenterprise. reassurance abouttheviabilityof the providerwillrequiresome an entrepreneur, itislikelythat outside financingprovidedto Irrespectiveofthesource considered byconventionalbanks. business enterprisesthatwouldnotbe small loanstoentrepreneursfinance system. Microfinancelendersprovide have withtheconventionalbanking of theproblemsthatsmallbusinesses innovation, designedtoremedysome Microfinanceisafairlyrecent under ruraldevelopmentinitiatives. businesses throughgrantprogrammes can accessfinancingforsmall-scale developing countries,entrepreneurs going toacommercialbank.Insome a localmicrofinanceorganization, or group, accessingfinancialservicesat expected sales,andincomes arrangements, cashflowprojections, and tactics,detailsoffinancial operations, marketingstrategy especially thescaleandscopeof activities oftheproposedenterprise, business plandescribingallthe usually requirespreparationofa This 27

Higher value addition through hides and skins

countries, byJ.A.Clotty, Rome. FAO FAO. livestock FAO. 2001.Manualforthehumanehandling,transportandslaughterof FAO. FAO. FAO/GTZ Agricultural FinanceRevisited(AFR)No.6,Rome. FAO. analysis ofrecent developmentsandfuture outlook FAO. Rome. FAO. developing countries and leatherfootwear, 1972–1990 FAO R.G.H. Elliott FAO. FAO. . 1985c.Manualfortheslaughteringofsmall ruminants indeveloping . 1985b.Slaughterhouse cleaning andsanitation 1992b.Constructionandoperationofmedium-sizedabattoirsin 1999. Enhancingfarmer’s ﬁnancialmanagementskills 1993. Commodityreview andoutlook 1995. Hidesandskinsforthetanningindustry 1992a. World statisticalcompendiumforrawhidesandskins,leather 1985a. Hidesandskinsimprovement indevelopingcountries 1986. Theworldhides,skinsandleatherproducts economy:global 1988. Standard designforsmall-scalemodularslaughterhouses. , byP.G. Chambers& T.Grandin, Rome. , Rome. Selected further reading , byF. Veall, Rome. , Rome. , Rome. , Rome. , byI.B.Leach,Rome. , by T. Skaarup, Rome. , byJ.Heney, , by 29

Higher value addition through hides and skins FAO. 1983. Manual for animal health auxiliary personnel, Rome.

FAO. 1975.Chemistry and technology of novelty leather, by K.H.P. Fuchs, Rome.

FAO. 1978. Training manual for hides and skins improvement personnel, by I. Hussein, Lusaka.

FAO. 1968. Hides and skins improvement and by-products industries, by E. Knew, Rome.

FAO. 1967. Processing and utilization of animal by-products, by I.Mann, FAO Agricultural Development Paper No 73, Rome.

FAO. 1955. Flaying and curing of hides and skins as a rural industry, by A. Aten, R.F. Innes, & E. Knew, Rome.

Laut, A.C. 1921. Fur farming for broadtail, Persian lamb, Astrakhan and Krimmer, Macmillan Co., New York.

Wilson, R.T. 1992. Goat and sheep skin and ﬁbre production in selected sub-Saharan African countries, Small Ruminant Research 8: 13-29.

30 http://www.nene.ac.uk Fax: +441604721625 T UK Northampton NN27AL Boughton GreenRoad Park Campus University CollegeofNorthampton British SchoolofLeather Technology http://www.blcleathertech.com Fax: +441604679998 T UK Northampton NN36JD Moulton Park Kings ParkRoad British Leather Confederation http://www.orgs.ttu.edu/leatherresearchinstitute Fax: +18067427298 Tel: +18067427296 USA Texas 79409-5300 Lubbock PO Box45300 Texas TechUniversity American Leather Chemists Association el: +441604735500 el: +441604679952 Sources offurther information and support 31

Higher value addition through hides and skins Common Fund for Commodities Willemshuis Stadhouderskade 55 1072 AB Amsterdam The Netherlands Tel: +31 20 5754949 Fax: +31 20 6760231 http://www.common-fund.org

Confederation of National Associations of Tanners and Dressers of the European Union Rue Belliard 3 B-1040 Brussels Belgium Tel: +32 2 5127703 Fax: +32 2 5129157 http://www.euroleather.com/

Food and Agriculture Organization of the United Nations Via delle Terme di Caracalla 00153 Rome Italy Tel: +39 06 57971 Fax: +39 06 57053152 http://www.fao.org

Leather Biz News portal to complement World Leather magazine http://wwwleatherbiz.com

32 http://www.ilo.org Fax: +41227988685 Tel: +41227996111 Switzerland CH-121 4 RoutedesMorrillons International Labour Ofﬁce [email protected] Fax: +441604679998 Tel: +441604679917 UK Northampton NW36JD Moulton Park Kings ParkRoad Leather T International Councilof Tanners http://www.ichslta.org Fax: +441896823344 Tel: +441896822233 UK Roxburghshire 9QT Melrose TD6 Douglas Road Douglas House and Leather Traders Associations International CouncilofHides,Skins 1 Geneva22 rade House rade 33

Higher value addition through hides and skins International Organization for Standardization Case Postale 56 CH-1211 Geneva 20 Switzerland Tel: +41 22 7490111 Fax: +41 22 7333430 http://www.iso.ch

International Trade Centre Palais des Nations CH-1211 Geneva 10 Switzerland Tel: +41 22 7300111 Fax: +41 22 7334439 http://www.intracen.org

International Union of Leather Technologists and Chemists Societies British School of Leather Technology Northampton NN2 7AL UK. Tel: +44 1604 735500 Fax: +44 1604 711183 http://www.iultcs.org/

34 http://www.unctad.org Fax: +41229070043 Tel: +41229071234 Switzerland Geneva 10 CH-121 Palais desNations United NationsConference on Trade andDevelopment http://www.sltc.org T UK Northampton NN14TQ 38 RoseholmeRoad Society ofLeather Technologists andChemists http://www.nrinternational.co.uk Fax: +441732220498/9 Tel: +441732878686/7 UK Kent Aylesford ME206SN Bradbourne Lane Park House Natural Resources Institute el/fax +441604635932 1 35

Higher value addition through hides and skins United Nations Environment Programme PO Box 30552 Nairobi Kenya Tel: +254 2 621234 Fax: +254 2 623927 http://www.unep.org

United Nations Industrial Development Organization Vienna International Centre PO Box 300 A-1400 Vienna Austria Tel: +43 1 26026 Fax: +43 1 2692669 http://www.unido.org

36 Notes Notes HIDES AND SKINS FROM DOMESTIC LIVESTOCK ARE POTENTIALLY VALUABLE AGRICULTURAL PRODUCTS, ESPECIALLY SUITED FOR EXPORT. Markets for ﬁnished leather products have grown, with much of the impetus coming from the fashion industry. In the rural areas of developing countries, the processing of hides and skins is often neglected or undertaken incorrectly, but can provide much needed employment and extra income – leading to improved livelihoods for rural dwellers. This booklet outlines the opportunities for generating income by producing and trading in hides and skins. It is hoped that it will provide valuable information to people and organizations providing advisory, business and technical support services to farmers and entrepreneurs attempting to exploit the commercial opportunities arising from the better utilization of hides and skins.