GLOBAL demand for leather has collapsed, substantially reducing the revenues earned by abattoirs from the sale of skins and hides.

Cattle and sheep abattoirs traditionally draw valuable income from non-edible products from the slaughter and butchering process – and in some cases, the revenue from these ‘waste’ products can be the difference between a positive and negative trading margin for these businesses.

But leather is now facing competition from alternative synthetic products, and internationally the price of cattle hide has plummeted. Speaking from Quality Meat Scotland, its director of economics, Stuart Ashworth, noted the irony that naturally-produced, entirely renewable leather was being pushed out of its strongholds in shoes and car upholstery by non-renewable, hydro-carbon based products.

“In the footwear sector, for example, alternative synthetic products and a move to more sports and leisure footwear has hit demand for more traditional leather shoes," said Mr Ashworth. "The automotive and furniture sectors have similarly been affected by alternative products for seat coverings and trim. Additionally, there has also been falling global demand for cars."

Additional challenges associated with the perception of the environmental impacts of the tanning process and global trading and tariff disputes, are also impacting on the leather sector in the same way as they are affecting primary livestock production, he said, and this challenging business environment was leading to leather industry commentators reporting that demand for leather is declining, raw material has expanded and there are huge stocks in the supply chain. So much so that, in some parts of the world, poor quality hides are having to be destroyed or sent for landfill.

“Inevitably, these challenges are influencing ex-abattoir hide prices,” said Mr Ashworth. “Australia reports cattle hide prices falling over the past twelve months by 60 to 90% and American sources suggest cattle hide prices falling 50% over the past twelve months.

“Germany report cattle hide prices falling 5% in the past month. The UK, similarly, is not immune from these falling hide prices.”

And while the challenges faced by the hide and skin industry may seem distant from the primary production of cattle and sheep, Mr Ashworth stressed that they are relevant to the returns of meat processors and therefore what they can pay primary producers for their livestock: “Declines in cattle hide prices over the past twelve months can easily equate to the equivalent of 5-7p’kg dwt,” he suggested.