German Perspective – 25.09.18
25/09/2018
There are plenty of private talks and meetings during which the subject is discussed, but there is no sign of a common strategy for the industry. The differences between the different sectors are still too big, as are the disparities between what the small and the large tanners think. It is a big problem that the small tanners still do not have a real voice in the choir, while only the big industrial operators have the time and the money to deal with the problem.
The exception is the large luxury groups, which continue to grow, emphasise the importance of leather and invest in production capacity. They haven’t displayed, at least in public, any intention to reduce leather consumption in their luxury product lines. It might be wise to learn from the success stories and to check if the point of no return has already been reached for others.
In general, one has to accept that all the warnings that a larger industrial production of leather which brings it closer to its competitors rather than distinguishing it from them have been ignored. It was a toxic cocktail of productivity gains and technical specs, shaken with general competition, that has made volume leather more similar to plastic. Why buy the original when the copy is almost the same in appearance, is cheaper, requires far less human labour to be manufactured, is more flexible, and is not subject to the same levels of public criticism?
To surrender to requests from the shoe, upholstery and automotive industries to make leather a plastic lookalike material has ended with the consequences many have been warning of for a long time. In reality, this has been a problem for 20 years, but it was hidden by the massive growth in private consumption and the better margins leather products were able to achieve in the markets.
We forgot to stress what leather actually is – a valuable, sustainable material with many superior qualities, and which is made from a waste product. It has long been explained that new consumers do not know and do not care about this, but the leather industry put their faith in retailers and manufacturers, believing that they would care. They care about their products and their business, and about how more and quicker profit can be made. As soon as there is a better option they are gone, and this represents a threat for the sectors that are currently thriving.
What we have now is rising oil prices and growing concern about petroleum-based materials (plastics). This is the economic argument. From the ethical standpoint, leather has a much longer life cycle and the consumer has to decide if he prefers to use it. These are pretty strong arguments, but we shouldn’t believe that the manufacturers are our partners. They will choose what makes the most money and presents the fewest problems; nobody can blame them for doing this.
We are able to include this lengthy statement as business was quiet again last week. There were bits and pieces, but mostly from the small niche producers. Others chose to wait for meetings at Lineapelle in Milan (September 25-27). Hides are still being sold and shipped, but they are unevenly spread across the market grades and it is simply not enough to clear all production.
Prices were steady for the preferred items and there was a non-existent situation for those materials for which the market has no use at the moment. We have until mid-October to hope for the seasonal uptick in demand. If that does not happen, it will be a challenging winter half for hide suppliers.
The kill: The kill continues to gradually rise. The weather was brilliant until the end of last week, but it now seems to have changed. More rain and still a month where grass is growing might encourage farmers to continue to hold cattle back in order for them to gain more weight in the fields. When temperatures really drop and the days get shorter, the kill should rise, even with beef demand not brilliant.
What we expect: We cannot foresee any change in the trend and we tend to believe that females will continue to trade in narrow ranges. Males in our region need a correction to get back into line. The Lineapelle show in Milan will tell us what is next. We might have to adjust prices eventually, but the natural qualities of the material we are handling means we don’t have to become the next market victim, as long as the beef industry understands.
| Type | Weight range | Avg. green weight | Salted weight | Avg. weight salted | Price per kg green weight | Trend |
| Ox/heifers | 15/24,5 kg | 22,0/23,5 kg | 13/22 kg | 20/21 kg | € 2,10 |
Stable |
| 25/29,5 kg | 27,5/28,5 kg | 22/27 kg | 25/26 kg | € 1,10 | Stable |
|
|
Dairy cows |
15/24,5 kg |
22,5/23,5 kg |
13/22 kg |
20/21 kg |
€ 0,90 |
Weak |
|
25/29,5 kg |
27,5/28,5 kg |
22/27 kg |
25/26 kg |
€ 0,70 |
Stabilizing | |
|
30/+ kg |
33,5/35,5 kg |
27/+ kg |
29/31 kg |
€ 0,60 |
Stabilizing | |
| Bulls | 25/29,5 kg | 27,5/28,5 kg | 22/ 27 kg | 25/26 kg | € 1,60 |
Weak |
| 30/39,5 kg | 36,0/37,0 kg | 24/34 kg | 31/33 kg | € 1.60 |
Stable |
|
| 40/+ kg | 45,0/48,0 kg | 34/+ kg | 38/40 kg | € 1.50 |
Stable |
|
| Thirds | 15/+ kg | 25,0/27,5 kg | 13/+ kg | 24/26 kg | € 0,60 |
Weak |
| Thirds bulls | 30/+ kg | 38,0/40,0 kg | 24/+ kg | 33/36 kg | € 0,80 |
Steady |
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