How COVID-19 and the China-US trade war have impacted the leather trade

How COVID-19 and the China-US trade war have impacted the leather trade
Photo credit: Getty

By Eric Frykberg of RNZ

The COVID-19 pandemic and the China-US trade war have both played a big part in the troubles affecting the leather industry.

Hundreds of thousands of dead animals are at risk of being left uncollected on farms because of a collapse in the price of leather to levels last seen in the 1970s.

The crisis has left companies that collect dead animals from farms for their hides scrambling to avoid severe economic losses by making farmers pay to have the corpses taken away.

Derek Ramsay handles international trade and specialty products for the Alliance Group, a farming co-operative exporting lamb, beef, venison and other products.

He said leather prices were declining anyway, but the situation was made worse by US President Donald Trump's tariffs and COVID-19 on the Indian sub-continent.

When Trump imposed tariffs on leather, many of China's tanneries closed and businesses relocated to India and Pakistan.

"The economics of making leather didn't work any more," said Ramsay.

"But COVID has been quite aggressive in India and Pakistan. The tanneries have been closed for three to four months now, even out to the end of August. That essentially means all the orders we have to ship are on hold. So the question remains, will the tanneries reopen."

Many fashion houses are also moving away from leather, finding alternative products.

Ramsay said despite these problems, his company had been able to sell calf and some cow hides, partly because of economies of scale and alternative sources of income unavailable to smaller firms collecting casualty cows.

But even his company has seen the economics of sheep skins and many cow hides collapse.

"Alliance has been proactive in expanding its sustainable waste management systems for skins, like composting.

"Ultimately, animal skins are an abundant source of collagen. So it is possible the skin use transitions to collagen over the coming years."

Collagen is widely used in medicine and cosmetics.