Leather Industry Falters, Quality Declines, Factories Shutter (original) (raw)
Leather Industry Falters, Quality Declines, Factories Shutter
Daniel Megersa, a butcher in Addis Abeba’s northern Asko area, has watched his in-home slaughtering business decline sharply in recent years. Once overwhelmed by customer calls during holidays like Genna (Christmas), Daniel now faces dwindling demand.
This past Genna, only four customers requested sheep slaughtering, and just two needed oxen services. “Five or six years ago, more than 10 people would call me to slaughter sheep, and over five for oxen. I used to struggle to prioritise my clients,” he recalls. He earns 500 to 600 Br per sheep or goat.
The fall in demand has also affected Daniel’s ability to profit from byproducts, such as hides and skins, which once made up over 50pc of his income. Today, these byproducts contribute only 10pc to his earnings. Customers often dismiss them as “trash,” letting Daniel to collect and transport them himself, sometimes walking over three kilometres to the nearest collection site.
This, coupled with low returns, has made hide collection unprofitable. “It takes time and effort to skin the animals, but the payment does not match the work,” he says. “Sometimes, I just want to finish quickly and go home to my family because the effort is not worth it.”
Despite leading Africa in livestock population, with 70.3 million cattle, 95.4 million sheep and goats, and 8.1 million camels, Ethiopia struggles to turn this potential into economic gains.
Cherinet Assefa, who recently bought a sheep for Genna, said, “I paid 16,400 Br for the sheep, but the hide is worth only 40 or 50 Br. It’s easier to let the butcher take it because its harm as trash is greater than its value as income.”
Samuel Abera, a hide collector, echoes this sentiment, citing frequent losses. “We make little profit, and sometimes we lose money transporting hides. Wholesalers often reject them due to small, unseen holes,” he said.
He buys sheep skins for 50 to 60 Br and sells them to larger traders and collectors for 80 to 100 Br. Samuel said, "the sector is declining every year, and it is difficult to rely on this as full-time work."
Tariku Weldetsadik, a hide and skin collector business, is burdened with high operating costs. The company, a large-scale collector, buys skins from people like Samuel and sells them to tanneries. Employing about 50 permanent workers, rising to 100 during holidays, the company is struggling with increasing operational costs, particularly high rent cost and salt, which is essential for preserving hides. Mamush Weldetsadik, the general manager, says that salt supply has become inconsistent, further complicating their work.
Mamush stated that while the value of skins has increased by 42pc this year, from 70 Br to 100 Br, the volume of hides collected is lower than last year due to the declining quality and dwindling demand from tanneries.
The company uses its own vehicles to collect hides from smaller neighbourhood collectors and is contracted to collect hides from sources like the Burayu Abattoir outside Addis Abeba. However, the company faces challenges due to the central bank’s cash withdrawal limits, as it operates on a cash-based system.
The Addis Abeba Abattoirs Enterprise processes a large number of hides annually, producing over 300,000 ox hides and 50,000 sheep and goat skins, according to Atakilti Gebremichael, its communications head. The daily output varies, with lower production during fasting periods. The Enterprise sells its raw hides and skins to a contracted buyer.
Tarekegn Jida, head of research and development at the Leather Industry Development Institute (LIDI), told Fortune that the quality of hides and skins has been sharply declining over the past decade. “Ten years ago, about 50pc of collections were high-quality [grades one to three]. This year, that figure has dropped to just 10pc,” he said.
He stated that the number of factories in the leather sector has also been reduced. Several factors have contributed to this decline, including a shortage of foreign currency needed to import over 90pc of the chemicals and accessories required for leather processing. Other issues include a lack of shipping containers at ports, instability and conflict in many parts of the country, and the global downturn in the leather industry during the Covid-19 pandemic. These factors, combined with the declining quality of raw materials, have crippled many tanneries.
The government is trying to address the problems in the leather sector by improving quality through awareness programmes aired in the media, according to Tarekegn. “We are hopeful for better quality leather this year,” he said.
He states that prices are incrementally increasing, with sheep skins in Addis Abeba selling for 130 Br to 140 Br, goat skins for 25 Br to 35 Br, and ox hides for 10 Br per kilogram.
Prices vary across regions. For instance, in Sheger City, sheep skins sell for 60 Br to 80 Br, goat skins for 30 Br to 50 Br, and ox hides for 80 Br to 100 Br per piece.
Tanneries and manufacturers continue to face losses from hidden defects in hides that only become apparent during processing. “Defects are revealed after the removal of hair, causing losses to tanneries after they have already purchased the hides,” said Tarekegn.
Biruk Hailu, deputy manager at Bahir Dar Tannery Plc, stated that the company sources raw materials from Debre Markos and Gonder cities in the northern Amhara Regional State. He disclosed a decline in both production and exports this year. Only 10pc to 15pc of their products meet export standards, with the rest sold locally.
The declining quality of hides stems from several issues, including animal diseases and bites before slaughter, and poor practices post-slaughter, such as knife damage, inadequate preservation, and insufficient salting due to high salt costs. Poor transportation methods further degrade the quality.
Biruk says international demand for Ethiopian leather has dropped. However, he believes improved hide quality could strengthen the company’s position in global markets, as Ethiopian leather still holds competitive advantages.
He cited production delays as a key obstacle. Processing cycles can take 20 to 25 days, and road closures can extend the transportation of hides from two or three days to two weeks.
The factory, which employs over 250 workers and has a daily processing capacity of 700 ox hides, 2,000 goat skins, and 2,000 sheep skins, is currently operating at only 40pc of its capacity.
Abaynesh Beyene, CEO of AB Leather Products, says her company is considering shifting from leather to textile production due to persistent hurdles. "For the past three months, most of our customers have turned to other countries," she said.
Abaynesh says that inconsistent production has cut their output by half. "The quantity and quality of leather are decreasing year by year, while tanned leather prices keep rising."
Abraham Tesfaye, designer and owner of Abraham Tesfaye Leather Products, echoed these troubles. He says there is a severe shortage of raw materials and accessories for products like bags and jackets. "We cannot get the colours we need to compete in the market," he said.
The leather industry comprises 188 companies, with 25 tanneries, 36 shoe factories, and several smaller manufacturers. Seven factories are involved in chemical imports and consulting.
Dagnachew Abebe, secretary general of the Ethiopian Leather Industry Association (ELIA), confirmed that poor-quality raw hides are a major issue, caused by diseases, thorn and bite damage, careless slaughtering, and low supply. These issues leave tanneries operating below capacity and unable to produce diverse, high-quality leather products.
Addis Ketema, head of leather and leather products at the Ministry of Industry (MoI), said there has been "no notable change in quantities or prices between last year and this year."
He states that the government is working on awareness campaigns to improve the quality of rawhide and skin. The campaign focuses on educating the public on proper livestock management, pre-slaughter care, preservation, and transportation. A pilot programme will soon launch in Addis Abeba and Sheger cities.
"Tanneries are in ICU [intensive care unit]," said Industry expert Solomon Getu, describing the leather sector as being in a critical state. While foreign currency availability has improved since August 2024, tanneries face severe problems. Solomon called for urgent government support, including financial aid and tax breaks, to help tanneries recover from post-COVID-19 setbacks.
He says that many rawhide problems are man-made and can be addressed through better awareness. Solomon urged the return of initiatives like radio programmes that previously educated the public about skins and hides.
PUBLISHED ON Jan 12,2025 [ VOL 25 , NO 1289]
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