Extracts from the SauerReport

The new Zhangpu tanning zone is intended to replace Kemu Tanning Centre, which was originally out of town, but in recent years been swallowed up by large real estate developments.
The Fujian tanners are currently very confused and discouraged and have been forced to undertake contract wet-blueing in Guangdong Province. They are not in a buying mood!
Argentine slaughter continues at an exaggeratedly high rate (13-14 million/year) in relation to the rapidly decreasing cattle population (down from 54-55 million to 48-49 million). This is due to the rampant liquidation of female stock because of the milk industry crisis, the drought and the constant government intervention in meat prices and export restrictions.
When the female liquidation comes to an end it is possible that slaughter will diminish abruptly to 10-11 million/year which is hardly enough to feed the 40 million carnivorous Argentine population that continues to consume 70 kg of bovine meat per capita per year (including babies up to 90-year olds!).
In Brazil, the four biggest meatpackers JBS, Bertin, Marfrig and Minerva have agreed not to buy cattle from protected areas in the Amazon, as Greenpeace has demanded. The measure should result in a national ban on buying from the Amazon and be valid for all.
There is more news becoming available about the JBS/Bertin association and the Marfrig expansion. The merger is so big that one should not be sure that all figures published up till now are 100% correct. But the deal is done!
Together with the acquisition of Pilgrims Pride in the USA and BMZ, the JBS/Bertin group is now said to be:
• The biggest meat producer in the world but also the biggest in individual countries such as Brazil, Argentina, Australia, Italy and one of the leaders in the United States
• World leader in the production of hides and skins
The global annual amount invoiced will be around US$30 billion with a daily global processing capacity:
Bovine 90,000; pigs 48,000; poultry 7 million; other small animals 19,000; and, most important for us, 1.6 million sq ft of leather!
This leather figure is very low! It works out an average of only 17.7 sq ft per hide counting the 90,000/plus bovine slaughtered every day and not counting any leather from the 48,000 pigs! The average footage per hide should be at least double, 34 feet, and even that is low!
Or is the explanation to be found in the word capacity of more than 90,000 bovine per day and the real slaughter far less? Or is a part of the 90,000 raw hides going to be sold raw and not turned into leather by the group?
But on how many animals then are the 1.6 million feet of leather based? Many questions remain and maybe we should indeed be careful with this shower of figures.
Ownership of the group is reported as 40:60 Bertin/JBS. It is also said the Batista (JBS) and Bertin families will control 60% and the rest will controlled by others including the Brazilian National Bank for Development. How this fits with the first statement that ownership is 40:60 Bertin /JBS (or together 100%), I do not understand.
If you are 100% owner there is nothing left for others to control! So do they own 60% or 100%? Or does Bertin hold 40% of 60% of the group and JBS 60% of 60% of the group? Or more simple, does Bertin own 24% and JBS 36% of the group?
Being the biggest producer of hides in the world is one thing, but whether those hides are at the same time the types/qualities in demand is another story. Brazilian hides are not on top of the list of the most wanted today! Hence, owning hundreds of thousands of them may not always be the best position to be in, in a given market situation.
The number two in Brazil, Marfrig have leased eleven abattoirs which are owned by Mercosul and Margen. It brings Marfrig’s Brazilian capacity to 22,000/day and their global capacity to 30,000 (Marfrig are said to have bought Seara, beef division of Cargill in the USA). We have already written about the purchase of a majority in Zenda leather in Uruguay, previously named Branaa.
The global situation of the biggest meat packers looks like this:
1 JBS, Brazil – kill (global) 90,000/day
2 Cargill, USA – kill 39,000/day
3 Marfrig, Brazil – kill 30,000/day
4 Tyson, USA – kill 29,000/day
The total is 188,000 per day which must mean almost as many hides produced! Four companies producing so many hides must have some strong influence on the global hide market. But how much nobody knows.
What a story. Will the leather world ever look the same again? Maybe, but not in South America.
In Sudan, the Ministry of Investment has finally located an area of about one million square meters for the tanneries in West Omdurman. It has taken a very long time of discussions between tanners and the government before getting the final approval. Still the project will not be ready soon since a start still has to be made with all the necessary infrastructure like water, electricity, a water treatment plant, roads and all else that is needed. But at least a decision is taken.
The Palestine/Israel market does not change much. There are ten tanneries for bovine hides which can produce 5,000 pieces per month and the rest (7,000-10,000 hides) are exported to Thailand. Most of the hand flayed hides are sold domestically and the rest is exported to Thailand. Machine flayed hides are all exported to Thailand.
Around 85% of the sheepskins are exported to Turkey but at this time the prices one can obtain are so low that export may be stopped, being not worth it.

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