Leather industry in tatters following global slowdownKARACHI: The economic slowd

own in major economies of the world is now badly affecting Pakistan s leather indu
stry. The situation is further exacerbated as the industry failed to benefit fro
m plummeting prices fetched for leather hides on Eid due to a liquidity crunch.
Low sales of finished leather products in the world over during the last few mon
ths have disturbed the business cycle of Pakistan s leather industry. Resultantly,
despite abundant availability of raw material, the industry failed to accumulat
e the required number of sacrificial animal hides this Eidul Azha, an annual Mus
lim festival, during which the industry gets most of its raw material.
This means that the market situation will remain similar over the next 12 months
as the cash-strapped industry is unable to use the previous year s stock of raw m
aterial.
The situation also resulted in a sudden fall of 40-50% in the prices of animal h
ides this year because of dampened demand and excess supply of the raw material.
The average price of cow hide dropped to Rs1,500 to Rs1,800 from as high as Rs3,
000. The situation was similar in case of goat skins where average price dropped
to Rs250 from Rs400-500.
Former Pakistan Tanners Association (PTA) chairman Gulzar Feroz said, The situati
on of leather industry in Pakistan today is similar to what we are seeing in the
international market .
There is an overall slowdown in world s leather industry due to low sales of leath
er products. For instance, the average price of an American cow skin is down by
up to 60% and a New Zealand s sheep skin is down by 70% according to some estimate
s, said Feroz.
Officials say the industry is also facing a liquidity crunch because mammoth sal
es tax refunds are stuck with the tax machinery. The industry wanted to cash the
opportunity to buy cheap hides this Eid but it was unable to do that.
According to estimates, leather industry collects over 60% of its annual raw mat
erial on Eidul Azha every year. Moreover, the quality of hides collected during
Eid is considered as top-notch.
There are about 800 tanneries in the country. According to PTA, leather industry
directly employs about 500,000 people, contributing 5% to GDP and 5.4% to the o
verall export earnings of Pakistan.