General view of raw materials20 November 2006
Botswana Kenya's Eastern and Southern Leather Industries Association (ESLA) chief executive Dr Samuel Kiruthu has urged Botswana to take advantage of the abundance of hides and skins and commercialise their leather industry. Kiruthu, based in Nairobi, believes that Botswana should establish its own tanneries to produce good quality products for domestic use rather than exporting raw materials. 'Understand that the cost, knowledge and skills are important tools for sustainability', Kiruthu said. He recommended that Botswana diversify and stop depending on minerals for its development, adding that the establishment of a leather industry would be a step in the right direction. He said it was disheartening to see Botswana importing a lot of leather when most of the raw materials are produced in the country. A three-year project on the commercialisation of hides and skins, partly funded by Common Fund for Committees (CFC) was begun in 2003 with the aim of improving collection and quality in small-holder farming systems. According to Mosielele, of the Ministry of Agriculture, commercialising the leather industry would also help fight poverty and reduce unemployment. He appealed to participants to form strong associations and lobby government for better skin and hides prices. Project co-ordinator Lesitamang Paya said since the project's inception, the collection of hides and skins had increased and the quality of these products improved from 78% to 90% for first and second grades. He added that six demonstration centres had been constructed at Seronga, Satau, Kachikau, Kavimba, Parakarungu and Mabele including eleven slaughterhouses at Mokubilo, Mookane, Mahalapye, Gumare, Mosojane, Charleshill, Hukuntsi, Nata, Rakops and Shakawe. Burundi Burundi is regularly exporting raw hides and skins, partly filling the gap left open by the Rwandan export ban. Unido is trying to help the local abattoirs by promoting the production of machine flayed hides in order to improve the overall hide quality. The government pursues the road for value addition but the local tannery is not operative. It makes the odd finished hide and skin for the local market but there is no industrial operation. The tannery has looked for foreign cooperation but is too immature to actually get production off the ground. Kenya There is huge potential and opportunities for the leather industry in Kenya. However, to exploit the available resources, the industry needs the support of the people who have the authority to change current practice. First of all, politicians should listen to the industry and be convinced that the correct exploitation of hides and skins (from rearing to finished product) in Kenya will bring added value (and therefore more taxes) and employment in the same way as happens with the coffee, tea, and flower plantations. Once government and associations are convinced, the industry needs to act at all levels and, as everybody knows, in the tanning sector everything starts with good quality breeding, protecting the animal during its life, avoiding as much as possible any mechanical aggression and then with regulated and controlled slaughter conditions, which would considerably enhance the meat quality, Kenya can also produce good hides and skins. It is important to realise that meat quality and hide quality are closely linked. Kenya needs to focus on the preservation process for hides and skins and the adoption of standard procedures. Many hides and skins are definitely lost after slaughter and unfit for leather production due to bad preservation, especially up-country, in spite of all kinds of aid programmes. All this can only be done through the creation of organised slaughterhouses with respect for standards. This would improve the organisation of the collection of hides and skins and give an efficient control. Africa, and in particular Kenya, suffers enormously from a total lack of standards, organisation and planning. Theoretically, the tanning industry in Kenya would have good prospects if only it could resolve the problem of the tolerated illegal exports of raw hides and skins. A major row erupted in July over tax evasion by a cartel of fourteen leading exporters which was revealed by a team of investigators from the Kenya Anti-Corruption Commission and the Kenya Revenue Authority. This tax-scam is likely to be followed by others unless a serious effort is made at the top political level. Only then will it be possible to resurrect the leather industry to full capacity. There is an urgent need to develop a local leather manufacturing industry that can take up those quantities of produced leathers that do not correspond to international standards at internationally competitive prices. It is difficult for a tannery to survive if to export 1 sq ft of finished leather at a competitive price, it needs to produce 4 sq ft. What about the other 3 sq ft? To whom can they be sold and at what price? One of the biggest problems in the whole of East Africa is that there are no local clients who might consume, on an industrial level, leathers that are not exportable. Efforts have been made, with great expenditure of money, by Unido for instance, but the results are disappointing. The market is there, as East Africa imports large quantities of used leather shoes and garments. There is no, or almost no, leather culture on an industrial level. This lack of industrial credibility is underlined by the fact that big chemical companies neither settle nor produce in East Africa. Objectively it has also been proven difficult for a tannery in Kenya to survive by producing only wet-blue, either for their own account and/or under contract for exporters. Of course, everything is possible but still remains to be done, and with what financing? How much money has already been invested, and for what results? Where are the well-trained African leather technicians who were meant to manage a sustainable leather production? What results have been obtained after the creation of practical and professional training centres which have eaten huge amounts of money? This view may be pessimistic, but it is the daily reality as experienced continuously and reported by a very well-known and important local operator. In his opinion, to create or resurrect the whole sector, it is not enough to get up one morning and decide that as of now it will be forbidden to export raw hides and skins, just to ease some government official's conscience or help a couple of friends. First of all Kenya needs to reinvent its leather industry by observing the local, and more importantly international, environments. In the present situation it remains unfortunately easier, less risky and more flexible to import manufactured goods made from Kenyan raw hides and skins, rather than produce them at home. The bottom line is that there is a lack of real will, incentive, motivation, training, planning and infrastructure. Under the surface, all the good ingredients are there, but they must be dug out in a realistic way, not by extravagant money devouring projects that are only self-serving. Malawi Malawi in general could be the hub of the leather industry in east central Africa. It has the population of people to warrant huge consumption of beef and goat, perfect climate and is in a central position. Unfortunately Malawi is land-locked and needs to export via foreign ports, which greatly complicates exports in terms of time and expense. Statistics show that for a population of twelve million people, there are approximately 930,000 head of cattle. This is owned by about 10% of the population which means there is heavy, localised concentration of cattle which has resulted in the rapid degradation of grazing areas. In view of this, the comparatively small quantities of animals slaughtered and the competition in the export of hides, either wet-salted or shade dried makes it relatively expensive compared with other hide exporting countries. This is mainly due to the length of time necessary to accumulate sufficient quantities for a 20ft container which is normally around 1,400 pieces of shade dried and between 900-1,200 pieces of wet-salted hides. The export market share for hides is approximately 50% abattoir quality, 30% of illegally exported hides and the balance of 20% is shared between other exporters or is lost because of the remote slaughtering areas. The main skin which is traded is goat. Sheep are not considered for export due to the low numbers that are slaughtered. There is definitely a larger and more viable population of goat in the country. The number and sizes of goats slaughtered throughout the year varies and is generally governed by the previous year's maize yields. The trend tends to be that, towards the end of the dry season (October/November), availabilities increase and reach a peak around March/April. This is due to the subsistence farmers' reduction in their maize stocks and their need to sell their goats for income. Availability drops once the farmer has started to harvest his or her next crop. Droughts and good rains both affect the skin yields. A great deal of effort and money has gone into teaching the local butchermen on how to skin and treat the skin after slaughter. This has worked to some degree but there are still numerous skins that are destroyed or illegally exported. To compete in this environment as an independent exporter of hides and skins is uneconomical: the abattoirs trade a portion of the slaughter costs for the hides; they skin the animals themselves and are assured of a good average product. They are able to wet-salt the hides and accumulate the stock until there is a sufficient quantity to export. Hide business is not their core business. The illegal export of hides and skins is probably the most damaging of all other problems that exists in this business. They do not incur the overheads that registered exporters have and also are not too fussy about the quality they purchase. In view of this they are able to offer higher prices than regular exporters. There is no quality awareness in-land in spite of expensive UN programmes. Should you try to negotiate with a rural butcherman, their response is that they do not need to bother as the money offered is the same. The government has been made aware of this problem on numerous occasions but nothing has ever been done. These are obviously not products you can take out of the country on a bicycle. You have to use vehicles and they have to cross road blocks and borders. There is a whole host of regulations that official exporters have to abide by such as buyers' and exporters' licences, exchange control formalities (CD1 Forms), veterinary certificates, certificates of origin and Malawi Revenue Authority CESS charges. Many eyes are apparently closed. Border areas The hides and skins industry in the surrounding countries is more active than Malawi except for Mozambique which is still having to accumulate their national stocks because of civil war. Zambia has approximately 2.2 million head of cattle and is a few times larger than Malawi with about the same population. They have two viable tanneries which are extremely busy and adding value to the product. Mauritania Mauritania has a rather large population of sheep which are slaughtered both professionally and non-professionally. The flay quality is excellent but conservation leaves a lot to desire. The goat population is about 20% of the sheep population. Camel are slaughtered for their meat and the hides are sold. Until a short while ago, camel hides disappeared from the scene but after a workshop was held by the International Trade Centre in Geneva applying their Jitap programme, camel hides are now regularly exported. The quantity of cattle hides is rather small. Two small tanneries process some of the available goat and sheepskins but will, once the Jitap workshop produces the desired results, hopefully benefit from government incentives. One of the tanneries has recently imported chemicals from Europe and with the assistance of a European technician have achieved a good quality tannage. Rwanda The country is passing through a period of turmoil as far as the leather business is concerned. The existing tannery is not capable of processing hides and skins of an internationally acceptable quality and has greatly disappointed buyers in the last few years. Although the government has kept the general export ban of raw hides and skins in place it has licensed one exporter who has promised to set up a new tannery to export raw hides and skins. Very few hides and skins are leaving the country officially, however. Large stocks of raw materials have piled up which are unsold and losing quality. Most of the available raw hides and skins cross the borders to surrounding countries, mainly Uganda, since the local tannery pays below market prices. A second exporter, who was on the scene before the export ban was enforced, has applied for a licence to build a new tannery with European backing and should be able to revive operations in the country in 2007. Unido has invested money and equipment to improve abattoir operations aiming at a better quality of hides but, unfortunately, the programme never got off the ground due to lack of local interest. South Africa The kill remains low which has resulted in everyone fighting for the few hides which become available and prices are rock solid. Although tanners say prices are much too high, they still pay them when they need the hides. Just as clearly, they stop buying the moment they have sufficient stocks. For the moment, work in the tanneries is still hand to mouth but enjoying good interest from both automotive and furniture sectors. Source: SauerReport Tanzania One of the big players in Tanzania, East Hides Group expect their Morogoro tannery to be producing 1,500 hides and 4,000 skins/day to wet-blue this month, one year after re-opening. Over the previous six years, East Hides had already built up a network of warehouses around the country, collecting and exporting raw hides and skins. Morogoro is the group's first production facility in Africa and they also operate East Hides Tanzania Ltd with headquarters in Dar es Salaam and a branch office/warehouse in Shinyanga. The local operation collects fresh and wet-salted hides, suspension dried hides and air dried sheep and goat skins. They are also active in South Africa and their operation there is South Hides & Skins which sources wet-salted, dry-salted and wet-blue hides and splits for the group. East Hides are the exclusive worldwide agents for the hides from the Karan Beef feedlot in South Africa. Zimbabwe The country has witnessed the almost total eradication of the commercial pedigree bovine herd, which supplied 90% of hides with a 25% off take. Now around 90% of raw hides are supplied by the small-scale farmers with an off-take of about 4-5%. As a result of consumers' dwindling disposable incomes, the slaughter rate has dropped substantially. The present national cattle herd of about 5.2 million head is insufficient to sustain production should there be a substantial increase in demand. Similarly, because of financial constraints and limited knowledge of commercial ranching and good animal husbandry, the quality of cattle on offer is generally very poor with resultant low quality of beef and poor hides. There is a shortage of sheep but goats are plentiful except that they are not slaughtered in any great quantities. Pigskin is not available in this country. Substantial quantities of hides are being exported in the semi-finished state of wet-blue in order to earn desperately needed foreign exchange for purchase of imported chemicals, other raw materials, spares, equipment and fuel. Without these exports of wet-blue, tanners would have great difficulty in keeping their plants going. These raw hides are generally of very poor quality but the more sophisticated international and domestic tanneries can process them for differing uses such as industrial gloves and aprons. However, some new players who have entered the market and are compounding the problem of shortages. The country has the capacity to soak in excess of 800,000 cattle hides annually to the wet-blue stage in addition to crocodile, ostrich and other exotic hides/ skins of which approximately 350,000 hides can be taken to fully finished leather by three LAIFEZ member tanneries at full capacity utilisation.