US Perspective—17.02.09
Calf measures
Throughout 2008, the number of calves US cattle farmers sent to slaughter kept going up, week by week. In ordinary times, we might have hoped that this would lead to greater availability of calf hides to tanners, and of calf leather to footwear companies and other finished product manufacturers—at lower prices. The times, however, are far from ordinary.
Ask any of the experts and they will urge you to take slaughter statistics, even official ones, with enough salt to pickle a buffalo hide. “If you knew how they actually calculate the figures, you’d be sceptical too,” one seasoned observer told us last year.
In focusing here on the slaughter statistics for calves in 2008 from the US Department of Agriculture, it is not our intention to question the expertise and experience of those in the know. In terms of raw figures, the calf slaughter rates emanating from the department could well be inaccurate. What seems undeniable, however, is the upward trend in cattle farmers sending calves to slaughter.
As early as January 2008, some hide traders in the US had begun to see a big increase. Feed was expensive, cash was tight, and farmers wanted to rear fewer calves. There was talk at the time of delivery trucks arriving at abattoirs and farmers asking to have calves taken off their hands for not even a token fee; they just wanted to be rid of them. Alerted to this, we kept an extra vigilant eye on the numbers after that.
Calf slaughter continues to rise
If the figures do defy belief, it’s perhaps only because they kept increasing. In World Leather Business Week, we offer a comparison between the most recent levels of slaughter and the level for the same week the year before. By mid-March 2008, the comparisons for calves were showing big increases. By the end of that month, the increases were double-digit, a situation that continued without ceasing until the end of the year.
From the summer onward, percentage increases in the thirties and forties had become common, building up to the astonishing figure of 90.5% for the week ending November 22, 2008. The number of calves that went to slaughter that week (20,960 animals) was almost double the figure for the same week in 2007.
Here are the monthly averages for these comparisons between the calf slaughter rates for 2008 and 2007.
January: -4.6%
February: -1.8%
March: 4.4%
April: 27.4%
May: 27.4%
June: 24.0%
July: 34.1%
August: 34.7%
September: 39.6%
October: 47.2%
November: 60.3%
December: 22.15%
The overall average for 2008, compared to the year before, is, therefore, 26.2%.
So, to make the point again, the figures may be debatable, but the trend seems undeniable. Now it’s a question of teasing out the story from this.
Well, one of the first things to say is that we can be confident few of the hides from these calves will be processed in the US; France and Italy are the traditional countries for tanning the skins of calves, which have what tanners call “special characteristics”, and in countries where the tanning industry is still developing, such as India, the best in the business are making their name by specialising in calf.
Younger animals, in general, will have fewer marks on their skin, giving the leather a natural look. Buyers of this leather will often expect it to have fewer finishing products applied to it, so tanners will be able to afford fewer mistakes. Unless they treat it carefully and skilfully, with perhaps manual finishing and perfect dyeing, it will end up looking like ordinary bovine leather, thereby losing its attraction.
Where have they gone?
More calves going to slaughter ought to mean more calf hides becoming available to these tanneries, and a fall in hide prices. However, our information is that prices have not come down, either for tanners or for their customers, at least not by much, and that user companies, such as high-end footwear manufacturers, still complain of finding top-grade calf leather hard to come by. Specifically, in a recent conversation with World Leather, Chennai-based Presidency Kid Leather, a specialist in high-quality calf leather, said it was unaware of any market changes.
If this is true—and, admittedly, what we have from the world of finished products is mostly anecdotal evidence—what can have happened to the hides of the thousands of extra calves that have come onto the market in the last 12 months? Where have they all gone?
There seems to be evidence of trading companies and packer firms keeping hides in storage while they wait for prices to pick up. There has been talk for weeks in our Market Intelligence reports that the price-difference between top-quality hides and lower grade material has been narrowing. In other words, tanners with the will, the cash and the order-books, have been able to take advantage of the market situation to upgrade their offering. But this does not seem to have applied so far to calves.
There is a concern that attempting to store the calf hides, often using an inadequate amount of salt and too little care, can lead to a deterioration in the quality of the hides when, eventually, they do make it to the tannery. This seems like a tremendous waste of a good opportunity.
