16 Oct 2019

Leather exporters struggle in oversupplied market

11:29 am on 16 October 2019

Leather exporters are grappling with record low prices for hides.

Grazing cows in green meadow of hilly countryside during sunset in new zealand

File photo. Photo: 123RF

The agricultral insights group, AgriHQ, said strong beef production in Australia, Brazil and the US had meant that the cattle hide market was significantly oversupplied.

A senior analyst at AgriHQ, Mel Croad, said this oversupply, combined with the rise of much more convincing synthetic leather substitutes and a downturn in the manufacture of luxury leather goods meant global demand was very weak.

"In addition, the closure of some Chinese tanneries due to environmental concerns has narrowed down selling options for hides," Ms Croad said.

Ms Croad said even the better quality cattle hides were selling at heavily discounted rates.

The general manager of Wallace Group Tannery, Ted Hulbert, said demand for leather, particularly for the manufacture of shoes, in its key export markets, Italy and China, had dropped significantly.

"In New Zealand it's mainly a cow [hide] issue, the other types of hide ... they've all come back in prices, some have come back over 50 percent, but it's really the cows that have dropped ... a lot of cow hides now are not worth processing," Mr Hulbert said.

Earlier this year NZ Light Leathers, New Zealand's only export supplier of high quality finished deer skins, announced it was stopping production of fine deer skins due to the tough trading conditions.

However it was still partially processing cow and deer skins for meat processors, who would then export them to tanneries overseas for finishing.