Tanners in Brazil are choosing to hang on to their customers rather than preserve their profit margins, having absorbed the bulk of the increases seen in hide and chemical prices during 2002.

A number of factors conspired to drive up prices all round last year.  These included a slow slaughter season, the drop seen in beef consumption and the rise in local chemical prices brought about by the weakening of the Brazilian real in relation to the dollar.

According to André Mauricio dos Santos, an economist working at the Association of the Tanning Industry of Southern Brazil (AICSul), raw hide prices increased steadily throughout 2002. A kilo of raw hide that cost $0.54 in October 2001 fetched $0.70 a year later – a 29.6% increase.

On average, tanners increased their prices by 5% in 2002.  This was in spite of the 55% increase in raw hide prices projected at the beginning of the year.  In a bid to keep their costs down, some tanners opted to buy directly from slaughterhouses, instead of meat packers whose prices are higher.

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