Speaking at the ninth session of the FAO Sub-Group on Hides and Skins in Tanzania earlier this year, John Koppany (CIDEC Argentina and a former president of the International Council of Tanners) gave a review of the Latin American tanning industry, graphically illustrating its position in the world as second only to Asia (principally China and India) in terms of production and especially potential.

Latin America”s main producers of leather are Argentina, Brazil and Mexico. According to Koppany, Brazil has developed most rapidly, based mainly on the growth of its meat business. Beef exports have grown from $700 million in 2000 to $2,400 million in 2004 to secure Brazil’s place as the world’s number one beef exporter, as well as the number one poultry exporter and number three pork meat exporter. This trend is being replicated in the leather and shoe industries, where export growth in 2004 was 30% for leather and 20% for shoes.

Argentina has grown more slowly, but has considerable potential in terms of both hide production and in the possibilities of adding value through the hide, leather and leather product chain. John Koppany also highlights the theory that protection of the industry, which constitutes restrictions on exports of raw materials, simply reflects the restrictions placed by developed countries on imports of Latin American meat products.

Mexico is the third most important tanning country in Latin America. With 110 million inhabitants, it is the second largest Latin American economy. In addition to its own seven million hides, Mexico relies heavily on bovine hide imports to the tune of 7.5 million pieces yearly from the USA. NAFTA has changed the country’s economy dramatically and produced both challenges and opportunities with a serious impact on the local shoe industry, but a positive effect for producers of automotive leather.

Mexico is the largest importer of processed leathers in Latin America, with US$454 million, followed by Brazil with US$110 million. However, the biggest exporters of leather, including wet-blue, crust and finished leather, are Brazil and Argentina who in 2004 exported (US$1.27 billion) and (US$804 million) respectively.

Regional round

Mexico has formally requested membership of Mercosur, not only with a view to becoming a partner in the economic block, but also due to the political strength that Mercosur is currently showing on the world stage.

It is rumoured that Brazil is reluctant to accept the new member and asked Mexico to sign a treaty of free commerce, with Mercosur stating the timing for this free commerce to begin. Brazil is said to be the only member of Mercosur imposing conditions for Mexico to join.

Footwear exports from the state of Guanajuato, Mexico, grew 11% between January and May 2006. This is a total of 4.2 million pairs, compared with 3.75 million in the same period of 2005. Jose Antonio Abugaber, president of the state’s footwear association SICEG attributed this increase to the successful search for new markets. He stated that the region’s manufacturers were now exporting to Germany, Spain, Japan and Cuba in addition to the traditional markets of the USA and Canada. Abugaber added that this had contributed to the creation of 67,500 new jobs.

Brazil uncharacteristically pessimistic

According to a survey carried out by newspaper ‘Folha de São Paulo’ Brazil’s manufacturers are ‘pessimistic’ in the current climate of high stocks and low demand. This mood is predicted to cause a slump in production in the 3rd quarter of 2006. Brazil’s ministry of finance was said to be in talks with the country’s central bank to create a ‘set of foreign exchange measures’ to relieve the pressure of the dollar on the Brazilian economy.

The move comes after many long months of lobbying by organisations such as CICB and Assintecal. The weak dollar has been a problem for the sector for the last two years, making exports difficult and even making it harder to compete in the domestic market against Chinese and Vietnamese imports. The dollar exchange rate is currently hovering around R$2.2.

A commission from the Dominican Republic arrived in Brazil in July in order to promote the potential advantages to Brazilian companies of installing new shoe factories and industries in that country.

According to the executive director of this commission, labour costs in the Dominican Republic are just over half of Brazilian labour costs. In addition, the Dominican Republic has a mutual free trade agreement with the US, and shipping distances to the states are much shorter (roughly two days as compared with up to a month from Brazil).

Quarantine conditions which have existed in Brazil due to the FMD outbreak are now over and EC inspectors have made their visits. It is hoped that following their reports, the affected states will be allowed to recommence meat exports. This has contributed to low raw materials supply in the month of June.

Exports update

In the first quarter of 2006, Brazil’s exports increased 9.3% over the same period of last year. However, in the same period, imports were up 15.9%. This increase in imports is particularly acute in the footwear sector. Exports increased just 3.9% while imports rose 11.6%.

With regards to destinations, in the month of May exports of leather totalled $160 million, approximately 33% higher than May 2005. Italy (with 26% of Brazilian exports), China (19%), and Hong Kong (16%), are still the main buyers of Brazilian leather. Exports to the United States increased by 50%, from $55 million to $83 million. Indonesia and Vietnam showed phenomenal increases: Indonesia with 1,007% ($1 to $15 million) and Vietnam by 300% (from $3 to 13 million). However, 63% of exports are as wet-blue so the country’s sector is not adding as much value as it would like.

A CICB-Apex initiative is currently underway to promote the ”Brazilian leather brand’, and their goal is to increase annual leather exports from the current $1.5 billion to $2.4 billion by 2008.


The country’s tanneries are facing a shortage of hides due to the restrictions imposed on meat exports by the government which has led to low kill levels. As a result the price of raw hides on the internal market has increased by 60-70% since November 2005.

In March, the Argentine government increased the export tax on raw hides from 8% to 15%.