Leather industry may face shortage of raw material

Pakistan's leather industry may face an acute shortage of raw material as recent floods have swept away thousands of animals, Pakistan Tanners Association (PTA) said on Wednesday. According to PTA, Pakistan's leather exports from last few years are continuously decreasing. In 2008-09 the sector faced a sharp decline of 28 percent in leather goods export, while on the other hand Indian exports of the same commodity witnessed a 26 percent increase in the first six months of 2009.
PTA Secretary General, Faheem Ahmed while talking to Business Recorder said that during fiscal year 2007-08, the country's export of leather goods stood at $1.15 billion, during 2008-09 at $943 million and during 2009-10 Pakistan's leather goods exports witnessed a further decline to $860 million. He said that the declining trend in the exports of leather products is alarming. These garments face stiff competition from Chinese and Indian products, he added.
As per Federal Bureau of Statistics report, Pakistan's second biggest export-earning segment, leather and leather goods, witnessed an 18 percent fall during July-June 2009-10, as against the same period last year. During 2009-10 the country's leather exports went down by about 7.57 percent, leather garments exports declined by 12.53 percent, exports of leather gloves fell by 37 percent and exports of other leather-based goods slumped by about 31.60 percent.
Responding to a question he said that it is too early to estimate exact loss of livestock caused by recent floods but thousands of animals have been killed. Ahmed said that the industry was solely dependent on local raw material and currently there are over 1,000 registered and unregistered leather units in Pakistan.
Giving the reasons behind declining trend in the export of leather products, he said that shortage of raw material (hides/ skins and wetblue) due to smuggling of at least 100 trucks loaded with livestock/cattle to Afghanistan and Iran. Moreover, animals are also being sent to Middle East by boats, he said.
Ahmed added that the quality raw material, wetblue (semi-processed leather), is being exported to China, India and other competitor countries that otherwise could fetch 3-4 times more value if manufactured domestically. The leather industry, including leather products, is the second largest export-earning sector after textiles, he maintained.
Currently, this sector is contributing around $800 million to $1 billion a year but has the potential to multiply volume of exports with the improvement of quality and diversification in different range of products, especially garments and footwear, officials added.
Ahmed said aggressive policies and bold steps from Pakistan were the need of the hour to regain their lost position in global market. PTA recommended that the government should avoid increasing the cost of doing business due to global recession and federal excise duty on banking, insurance and other services like custom agents services may also be withdrawn.