Increased prices and shortage of leathers are reported

The problem of leather production in Argentina, with respect to exports, supply, local tanning and manufacturing industry is long-standing.

Currently, the claim arises from the manufacturing sectors -footwear and leather goods- which, according to what they expressed, "the availability of finished leather is insufficient and there have been price increases that reached 50% since the beginning of the year."

The previous link in the chain to manufacturers are tanneries, who claim that they do not have sufficient volume of leather for tanning since most of it is exported as raw raw material -salted/wetblue-, by meat processing plants and collectors.

The current critical period has its origins in mid-2020, where, due to the pandemic, international demand for leather fell due to the sharp decline in manufactures production. This situation caused a serious problem for the meat processing plants due to the accumulation of perishable raw material, in addition to its price falling to 0. In view of the claims, and to facilitate leather exports, the government ordered an extraordinary measure for 2 months, which was to lower to 0 the tariff of the shipments abroad of salted leathers. This measure was extended for some time, and from January 2021 the tariff was definitively at 4.5%, much lower than the historical one, which was 15%.

Once the international manufacturing industry began to reactivate, the demand for leather grew and Argentine exporters increased their sales. According to tannery sources, last January, 80% of the total slaughter was exported, which in the 12 months of 2020 was more than 14 million animals. Although there is a decline in the consumption of beef in the domestic market, the increase in Argentine meat exports is expected to keep slaughter rates stable and therefore the availability of hides.

Given the growing demand for leathers from abroad, with the current tariff conditions, international prices are the benchmarks, which are difficult to pay for the local industry in the recovery stage. In consequence, the footwear and leather goods industry is facing a very complicated situation, where the shortage of leather is deepening and its prices are permanently increasing.

Although officially at the level of chambers of the sector -footwear and leather goods- there are still no presentations in this regard, it is estimated that the entities will shortly request the national government an immediate intervention to analyze and seek solutions to this problem, which considers the interests of the parties and allow the equitable regularization of the activity of all members of the leather and manufactures value chain.

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