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U.S. Exporters Dominate Markets for Cattle Hides and Skins
By Jose Rivera
The next time you shop for a
new car, as you browse through the showroom, remember that the
leather upholstery you’re admiring is a product of American
agriculture.
Automotive upholstery products make an important contribution to a booming U.S. leather goods industry that extends around the world. Today, over 50 percent of U.S. hides sold domestically are used as automobile leather upholstery and interiors, while another 45 percent is destined for American footwear.
Not every hide produced here stays here. Far from it; the United States is a force to be reckoned with in the world cattle hide market. Exports represent almost half of total whole cattle hide production.
Surprisingly, production and exports are not necessarily in phase with one another. Last year serves as a case in point.
In 1998, the United States maintained its position as the world’s largest producer and exporter of hides and skins. It produced about 987,000 tons of bovine hides, virtually unchanged from 1997, representing about one-quarter of the world cattle hide production.
But due to both the Asian economic crisis and increased domestic demand, U.S. exports were down by 1 million cattle hides last year. In 1998, the United States exported 18 million whole cattle hides valued at $871 million, compared to 1997, when the United States exported 19 million whole cattle hides valued at more than $1.1 billion.
Last year, the value of calf and kip skin exports also declined from $94 million in 1997 to $78 million in 1998. Total U.S. bovine hide exports account for about one-third of world exports.
When Asia Took a Tanning
One of the largest markets
for U.S. bovine hide exports is Korea, where hides and skins are
among the top 10 imports from the United States. In fact, the
tanning industry is so important that leather products account
for almost 10 percent of Korea’s total exports.
But the Asian crisis affected U.S. hide exports to Korea throughout 1998, slashing demand by 35 percent in volume and 45 percent in value. A reduction of this magnitude in the Korean market couldn’t help but have serious consequences for U.S. exporters of hides and skins.
Determined not to be defeated, U.S. exporters looked for new opportunities to ship their products overseas. Resilient hide exporters capitalized on low U.S. prices by building sales to markets other than those Asian countries facing economic difficulties. As a result, U.S. exporters benefitted from the competitive prices of U.S. hides last year by picking up orders in markets such as Mexico, China, Italy and Spain, increasing sales of U.S. hide exports by 42 percent. Market opportunities also expanded in Latin America where U.S. hides are appreciated for their quality and durability.
Wet Blue Hides Increase Overseas
Despite the reduction in U.S. hide exports last year, the demand for American wet blue hides, which are used mostly in higher quality shoes and handbags, remained strong overseas. U.S. blue hides are popular in the international market, because they have undergone additional processing with chrome solutions, which reduce pollutants during the final tanning process.
In 1998, although the total export quantity of wet blue hides dipped slightly, a marginal increase in price boosted total export value slightly to $225 million. U.S. exports to China, Italy and Taiwan increased 110 percent to over 2.4 million pieces.
Where are hides and skins going next? First the domestic picture: Looking back at the first two months of 1999, total U.S. bovine slaughter dropped more than 2 percent. However, looking to the future, 1999 should bring better returns to the U.S. hide industry. Production is projected to drop by about 1 percent, but domestic consumption is projected to increase 3 percent, thus strengthening prices.
On the export side, although hide imports by Korea might not fully recover in 1999, they will profit from a $50 million GSM-102 allocation for hides and skins during fiscal year 1999–all of which has been fully subscribed.
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The author is an agricultural economist for the Dairy,
Livestock, and Poultry Division of FAS. Tel.: (202)
720-1349. E-mail: riveraja@fas.usda.gov
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