Cattle hides for the past few years have been waging a battle with synthetic materials that have increasingly been used in everything from footwear to car seats. New evidence suggests that synthetics have significantly impacted world-wide demand for leather. But the hides and leather industry, at least in the U.S., is fighting back.
The reason is obvious. Cattle hides for many years in the U.S. added as much as $60 to the value of a fed steer or heifer and accounted for two-thirds of the value of all byproducts. But hide prices and the value began eroding in 2018 and have not recovered. Now the COVID-19 pandemic has delayed any improvement in hide prices and the global leather market.
Last year saw a highly depressed hide market. Nearly 16 percent of all U.S. cattle hides produced went to landfills because there was no market for them. Global demand for hides and leather began to improve marginally at the start of this year. But the onset of the pandemic heavily impacted demand as tanneries from China to Italy closed down. This forced hide prices to go lower again and meant an even larger percentage of hides have gone into landfills than before the pandemic began. But tanneries, especially in China, appear to be operating more normally now and hide traders are cautiously optimistic that hide prices and global demand will start to improve again.
About 5.5 million cattle hides failed to reach the leather value chain in 2019, says the Leather and Hide Council of America (LHCA). These hides have almost all gone into landfills, as there is no other practical way to dispose of them. A few more hides percentagewise have gone into landfills since the onset of the pandemic, says LHCA President Stephen Sothmann.
Hide demand and prices saw the slightest bit of growth prior to COVID-19, says Sothmann. But they then weakened again. Native unbranded hides in late August were fetching only $29-30 versus a high of $120 five years ago. Branded cow hides have no market so all are going into landfills. USDA at the end of September reported a butt-branded steer hide brought $30.
China has been the major market this year for U.S. hides, says Sothmann. Its tanneries and those in Italy are now up and running again. So the industry is finally seeing a very small price increase. Hopes are that prices will increase enough for hides to get back to breakeven levels in a couple of months, he says. Leather usage by automakers accounts for 20 percent of global hide usage and has been the bright star for the leather industry. But 50-60 percent of all leather goes into footwear and has been hard hit by the use of synthetic materials, he says.
The leather industry previously tried to compete with synthetic materials by making leather look just like synthetics, says Sothmann. The industry is now focusing on promoting the natural attributes of leather versus synthetic and is attempting to re-educate consumers about leather’s unique qualities, he says. The industry was also feeling pretty good pre-pandemic that leather was becoming fashionable again among top clothing designers. The industry hopes this trend will grow, he says.
Meanwhile, following reports of hides and skins going to waste in Bangladesh after the recent Eid al-Adha festival, AJ Hollander’s chief operating officer, Ben Ganz, said in a post on social media that the same problem persists in the U.S. AJ Hollander is based in New York and has processing plants in Nebraska, Texas, Tennessee and Wisconsin where it fleshes and cures hides and skins. It has a capacity to process 10,500 hides per day. It was no longer economically viable for AJ Hollander to collect and process certain hides owing to their low value in the leather market, wrote Ganz. These hides are being dumped in landfills by packers instead.
The availability of cheaper, petrochemical-derived synthetic alternatives was one of the factors pushing the demand for and value of leather lower, wrote Ganz. U.S. landfills are filling up and oil companies are profiting. Clothing, furniture and auto manufacturers are happy too because they can use a cheaper oil-based product while claiming to be environmentally conscious.
It is time for consumers to make it clear to finished product brands that they will not stand for these lies any more, he wrote. Consumers who want to protect the environment should instead buy products made from leather produced in environmentally sustainable tanneries, Ganz wrote in his social media post. — Steve Kay
