ITC reports on Africa15 October 2001
Botswana Hides and skins are very important to the economy since Botswana relies too much on income from the mining sector and needs to look at other sectors with capacity for growth. However, the existing know-how, technologies and infrastructure are insufficient to take advantage of this potential. There are 300,000 hides produced every year in Botswana. So far, 50% of the hides and 100% of the skins are exported raw, depriving the country of employment possibilities. Only 50% of the hides are processed to wet-blue and the rest are exported as salt dried only. Botswana has five hides and skins merchants, one major tannery, two small tanneries and three artisanal tanneries. Raw hides and skins are obtained from the Botswana Meat Commission (BMC) butcheries countrywide. However, the supply of animals to BMC has dropped due to the low prices they are offering farmers. This has in turn led to the tannery operating at 50% production capacity. The collection of bovine hides is good, but over 80% of goat and sheepskins are not collected, making it a potential area for investment. In 1998, 317,356 hides were marketed, of which about half were processed by BMC and exported as semi-processed wet-blue. BMC conversions of both chemically preserved and chilled hides to wet-blue is first grade. But hides and skins from rural slabs and abattoirs are flayed, making them of poor quality and of little value. Most slaughter facilities in Botswana were built many years ago and are operating below their installed capacity. Their continued use explains many of the negative factors raised about the quality and value of hides and skins in this country. The negative factors in Botswana are: * no single authority with overall responsibility for hides and skins improvement and health related matters * no leather association to co-ordinate sectoral activities and represent the sector both domestically and internationally * no strong financial incentive to butchers and workers to raise quality standards The report recommends a fully-fledged feasibility study to establish a tannery capable of manufacturing finished leather and hides and skins improvement schemes to reduce flaying, curing and handling defects. The introduction of raw stock grading at production and tannery recipient points, as well as a corresponding price restructuring, should cause substantial increases in collection rates, a higher proportion of quality grades and decreased post-mortem defects in raw material. The Department of Animal Health and Production already has a countrywide infrastructure which runs training courses in hide and skin improvement and provides advice to producers. This could be built on and expanded. Madagascar Madagascar, the fourth largest island in the world, is located in the Indian Ocean. The country rears a large amount of livestock but raw hides and skins are not very prominent within Madagascar's economy. Their share in the total export value represented only 1% in 1999 and domestic demand is limited as well. The only industrial tannery in Madagascar is the Tannerie D'Anjeva belonging to Omnium Industrial Group of Madagascar. The capacity of OIM was 2 million ft² in 2000, while their production was only 1.28 million ft². This under-utilisation of capacity is due to a lack of raw hides. The tannery export nearly all of their total output, while only 5% of their production is sold to the domestic market. Madagascar has no industrial level tanning of sheep and goat. Around 50% of sheep and goat skins are not processed and can be considered as lost due to the bad conditions associated with artisanal slaughtering. Gathering and tanning of sheep and goat skins are dealt by artisanal bovine tanneries. Due to a European embargo on bovine meat and raw hides and skins, Europe, formerly the major customer for Madagascan raw hides and skins, has stopped importing from Madagascar. South Africa also discontinued imports of bovine raw hides from the country in 1999. Fortunately, demand from Asian countries, especially Hong Kong, has risen and this trend is expected to continue in the near future. Unfortunately, the relative shortage of fresh hides due to the decrease of slaughtering and the difficulties in collecting hides from rural areas constitutes a constraint in increasing exports. The number of bovines slaughtered fell continuously from 250,357 in 1995 to 110,513 in 1997. There was a recovery in 1998 and the number of cattle slaughtered in 1999 increased to almost three times the level of 1997. In 1999, bovine hides represented 89% in volume and 31% in value of the total exports of hides and skins (including leather) from Madagascar. Italy was the main importing country until 1996 when it stopped trading with Madagascar because of the European embargo. Since then, Hong Kong has imported the most Madagascan bovine raw hides. The report cites the following problems as the main causes of lack of hides collected: * Poor state of roads connecting the collecting areas to major cities * Under-equipment of rural slaughtering and city slaughterhouses resulting in great loss of hides To develop the production of hides and skins, the report recommends that Madagascar should find a way to increase its exports of meat in order to slaughter more cattle. To this end, the Malagasy government, through the Ministry of Livestock, is conducting a programme to meet the requirements of the European market in order to remove the European embargo. Malawi The raw hides and skins and leather industry in Malawi has a very good potential for export; however it is under-utilised. There is a high off-take rate of animals with slaughter amounting to 80,000 cattle per annum. Despite this, there has been very little production of hides and skins and, ultimately, leathers in Malawi. The major problem is that livestock farmers lack access to information about the hides market. In addition, although there is a boom in private abattoirs, the Malawi government has made no effort to enhance and organise the slaughter of animals and this has led to the theft of animals and the dilapidation of veterinary services. The domestic demand for hides and skins is very limited as there is only one tanner in the country, namely Liwonde Tannery Limited. As a result, consumption of hides and skins is only about 12% of total production; the remaining hides leave the country in their raw state. Liwonde are currently working at less than 50% capacity due to the lack of good quality hides and skins. Generally, Malawian hides are small, but this is compensated for by their good thickness. Statistics indicate that the volume of exports for hides and skins has been increasing over the years from 372,000kg in 1997 to 582,800kg in 1999, representing a 57% increase. Hong Kong has emerged as a major destination for Malawian hides, in addition to Italy and Greece. In the SADC region, Tanzania is the largest importer of hides, while South Africa is a negligible market. The domestic demand for hides cannot absorb all the supply, due to limited tanning. Most of the end-users of leather in Malawi are importing finished leather rather than buying locally. Domestically, prices of hides are felt to be higher than those in South Africa and Zimbabwe. The export unit prices for wet-blue hides on the other hand have been declining from US$1.22 per kg in 1994 to US$0.5 per kg in 1999. The report recommends the expansion of tanning activities in Malawi because there is a good supply of raw hides. Mauritius An island of 1,865 km², Mauritius has a limited variety of locally available raw skins which, even in terms of quantity, are not sufficient to meet the needs of the local leather industry. In addition, animal husbandry, particularly cattle and goat rearing, is becoming less and less popular as emphasis is being placed on the manufacturing and service sectors. Local production of raw hides and skins is restricted by the number of livestock. A monthly average of 1,200 cattle and 2,000 goats and sheep are killed at the country's only slaughterhouse, owned by the government. Out of these, some 1,000 cows and 1,800 goats and sheep are imported every month as live animals. Despite this availability, goat and sheepskins are often not used due to higher local demand for bovine leather. The skins are, therefore, often destroyed unless used for linings or mixed with bovine leather. Skins are sold to the only two tanneries operating in the country, Mustun Leather Tanning and Luxor Tannery Ltd. Both are family-owned operations which have been in existence for about 50 years. Given the level of pollution, the government is not promoting the setting up of additional tanneries in the country. Usable skins from the local slaughterhouse are distributed evenly and together they produce roughly 70,000 ft² of leather every month. Demand for tanned leather is almost five times higher than local availability, which explains why exports are negligible. Yet the two tanneries are only working at about 50% capacity on average. The tanneries have not been marketing their services abroad and only work with regular customers. However, it has been reported that the slaughter is sometimes careless. As the animals have been reared principally for their meat, the skins may not be of the best quality. Local tanneries also prefer to buy crust or wet-blue leather rather than raw skins as it is better preserved and processing creates less pollution. It is also more cost-beneficial to focus on the latter tanning stages. The export of raw hides and skins from Mauritius is negligible compared with the country's total trade. In 1999, exports of raw hides and skin were a mere US$26,800 and for tanned leather it was only US$2,650, which together represent less than 0.01% of the country's total exports. Most of the raw hides and skins exported are reptile, namely crocodiles, destined for Zimbabwe. The finished crocodile leather is then returned to Mauritius for local sale. Yet new categories of skins are being exploited in Mauritius as existing farmers are becoming more organized; for example deer which are quite plentiful on the island, and crocodiles which are imported for display purposes and farming. Namibia Despite Namibia's substantial livestock resources and its position as an exporter of meat and livestock, the country's leather industry is at an infant stage of development. Namibia does not have a regulatory mechanism for the hides and skins trade other than the veterinary requirements for exports of raw materials from the quarantine areas in the north of the country. The tanning sector processes most of the hides produced in abattoirs and a small percentage of what is produced in the communal areas. The majority of sheepskins from the established abattoirs and most of the goat skins are exported raw. Namibia has few tanneries, namely Okapuka, Nakara and Ostrich Production Namibia, all established recently. The largest is Okapuka Tannery owned by Meatco which processes mainly cattle hides supplied by Meatco's abattoirs. Okapuka produces 900-1,000 hides per day, and most of the production is exported to Italy, Japan and the US. The collection of hides and skins from the formal abattoirs by the tanneries is well established. In recent years, there has been a substantial increase in tanning capacity in Namibia up to the wet-blue stage. The capacity among the three tanneries exceeds the annual slaughter of animals in the formal abattoirs. The main cause of this excess in capacity is because of live animals continue to be exported to South Africa for slaughter in large numbers. In addition, large quantities of hides and skins are exported raw (wet or dry salted) to Europe and South Africa and most of the goat skins are wasted. Ostrich skins are important raw materials for the tanning sector. Ostrich meat is about ten times more popular now than last year, and this is good news for the leather industry. The report suggests that the Namibian government should regulate the export of raw hides and live animals. The government should also promote more centralised slaughter in the communal rural areas by encouraging the establishment of slaughter slabs to increase raw material availability to the domestic tanning industry. The report concludes that despite current constraints, Namibia will become a supplier of quality leather within a few years if not sooner. Tanzania Agriculture is the backbone of Tanzania's economy. The 2000 animal population was estimated at about 15.5 million cattle, which is dominated by the short horn zebu, 10.7 million goats and 3.7 million sheep, totalling 29 million animals. Yet the potential for hides and skins as a foreign exchange earner is yet to be fully realised. A special government committee has been given the task of finding means and ways of reviving the leather industry. Tanzania's tanneries are in Kilimanjaro, Mwanza, Morogoro, Dar-es-Salaam and Coastal regions, which are largely the centres for production of raw hides and skins. Six companies own tanneries, however for the moment only Moshi Tanneries is operating and Lake Trading Industries Ltd are about to re-start their operations. An expatriate working with the Moshi tannery indicated that with the present livestock population, Tanzania could have about 40 or more tanneries in order to realise the full potential. Indigenous raw materials are readily available from the local sources. However, raw hides and skins are found to have the following problems: * Livestock keepers brand their animals as a way of identification. The practice uses heat which affects the quality of the hide * Animals are commonly beaten during or on their way to or from the grazing grounds * Due to incompetence and lack of proper tools, hides and skins are badly damaged by flay cuts, gouge marks, warbles etc * In the absence of drying sheds and drying frames, fresh skins and hides are not laced within the four hour limit, causing hair slip, putrefaction and stains. Due to the nature of the collection exercise, it is not easy to establish the number of firms that are handling hides and skins, but it is estimated that there are about ten exporters of raw hides and skins. Exports of hides and skins of both raw and wet-blue have fallen significantly both in quantity and value. Pakistan, Hong Kong and China are the leading importers of hides and skins from Tanzania. There are no national standards for hides and skins in Tanzania. Even the Tanzania Bureau of Standards are yet to develop a national standard for hides and skins. The report recommends that the government implement a fiscal policy to discourage exports of raw forms, and at the same time stimulate the revival of local processing industries. The local people need to be educated on how to avoid practices such as branding and whipping the animals. Drying the skins on the ground could be avoided by the construction of simple drying shades. The report also suggests the establishment of an R&D institute to develop new ideas, such as the possibility of small scale tanning industries that can be managed by small farmers in the districts where hides and skins are produced. Zambia Zambia's leather sector has been expanding rapidly since 1974 when the first tannery was established by the multi-national corporation Bata Tannery. Today, Zambia's leather sector comprises five tanneries (all operational). These are private except for SIDO tanning and leather which is entirely owned by the government through the Small Enterprises Development Board. The other three tanneries are Kembe Estates Limited, Malar Estates Limited and Zamleather Limited. Wet-blue production by the five tanneries is on average 1,500 hides per day, with the current total supply of hides in Zambia totalling around 140,000-160,000 per year. This is approximately an 8% off-take from the total national herd for slaughter. The leather sector of Zambia processes almost exclusively bovine hides which are mainly bought from abattoirs by the tanneries. The Zambian leather export market has been on an upward trend since 1993 but is faced with a number of constraints: * High freight costs to markets * Exports of non-value added raw hides and skins create a shortage for the tanneries * Lack of a research institute so that tanneries are able to cope with increasing demand for top quality leather The report recommends that: * Exports of non-value added raw hides and skins should be discouraged by limiting exports to value added leather products * The plan by the SIDO Tannery to set up a research centre should be implemented through the Department of Industry under the Ministry of Commerce, Trade and Industry as soon as possible * The National Council for Scientific Research should embrace activities of the tanneries so that they are assisted in research and development The report also recommends that the government come up with a policy to encourage the industry to add value to the raw hides. The aim should be to encourage farmers in the cattle industry to sell their raw hides locally to the tanneries. In addition, the tanneries exporting only up to wet-blue leather should be given incentives to make finished leather for export. In the 2001 budget, the Zambian government reduced the duty on tanning machinery and equipment to zero, and this will hopefully encourage tanneries to invest in new machinery. Zimbabwe Zimbabwe has a relatively well-developed leather industry which employs around 8,000 people. The sector is well balanced and given adequate supplies of domestic origin raw materials, there is little reason why the sector should not be extremely profitable. The majority of hides and skins used by the five tanneries in Zimbabwe originate from domesticated/commercially farmed animals and wildlife. Export earnings for hides and skins of bovine or equine animals (excluding non-tanned lamb or sheepskin) were Z$572 million (US$10.31 million), Z$841 million (US$15.15 million) and over Z$1 billion (US$18.02 million) (up to the end of October) in 1989, 1999 and 2000 respectively. Such a scenario indicates that upward growth can be sustained if the requisite support is rendered to this and other industries. Currently, the bulk of the hides, especially wet-blue, are destined to export markets, with Italy and South Africa being the biggest destinations. Some of the key hides processors export 90-95% of their total production, resulting in low supplies for the domestic market. Despite a gradual increase in export earnings, the report cites various reasons for the under-utilisation of the Zimbabwean leather industry: * Reduced slaughter and off-take * Uncontrolled exports of hides at the wet-blue stage * Hides and skins price wars The major constraints within the industry are: * Foreign exchange shortage and devaluation of the currency, both of which make obtaining needed chemicals and equipment difficult and expensive * Proliferation of small abattoirs with inadequate hide and skin treatment curing facilities. This has resulted in a lowering of quality standards and makes the production of quality leather by tanneries increasingly difficult The report recommends a policy which encourages small abattoirs and butcheries to purchase meat supplies from major abattoirs such as the Cold Storage Company rather than slaughter themselves. The policy could go further to discourage the export of semi-processed hides and skins. There is also a consensus within the sector for a mechanism to control and monitor exports of raw hides and skins. The shortage of this commodity has resulted in a number of key leather processors scaling down their operations.