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Hide and Skin prices took an unexpected up turn during the Christmas holiday season. The increase in slaughtering during major Ethiopian religious holidays usually means prices decline while supply goes up. However, similar to last Easter, prices rose around 25 percent last month.
“Fundamentally, the price of raw hides and skins are expected go down or remain steady around this time of the year but during the past two major Christian holidays prices have risen,” experts at Leather Industry Development Institute (LIDI), told Capital.
Yet after January 7 (Christmas day), raw hide prices went up to 80 birr from 65 birr while skins went up as well.
The Ethiopian Leather Industries Association (ELIA) officials explained that the recent price hike is due to a rise in new tannery production and the growth of the leather industry. Abdissa Adugna, secretary general of ELIA, told Capital that his association did not have information on the current price increase.
“It is difficult to know if rising prices are artificial or not, because the disparity of demand and supply created by the competition between tanneries is the major reason that companies are buying skins and hides at a higher cost,” he explained.
“So a price cap like the previous time will not work and now we can see that those actions did not really stop rising prices,” the secretary general said.
“We need to start importing semi processed leather quickly to help the tanneries,” Abddisa suggested.
His association is working with LIDI and the Ministry of Industry to begin importing raw leather from other African countries.
“We suggested that the Ethiopian Leather Development Share Company, formed by members of ELIA, could help import the leather because it helps supply it for other industries,” he said. Currently, the three year old share company is supplying chemicals for industry and it has plans to begin importing materials to make shoes. According to the ELIA secretary, the share company believes they will receive additional financing from the government.
The first five months of the fiscal year (from July to November) have already brought 62 million dollars from leather exports. Last month, the country banned crust exports their largest leather product export.
The institute laboratory, accredited from a South African body is now working with leather companies to improve their quality.
Berhanu Nigus, head of quality testing and certification service at the Leather Industry Development Institute (LIDI), told Capital, his office is working with leather businesses to improve the value of their product.
“Industries are meeting their requirement after the feedback we gave them about technical issues so as to enable them meet international standards, and people have been impressed so far,” Berhanu added.
Previously, investment in finished leather products was sparse but now more companies are showing interest especially now that crust exports have been banned.
The Ethiopian government plans to earn 500 million birr in the 2014/15 budget year from the leather sector. To achieve the plan the government has been working on different strategies including the export ban, while encouraging new and big leather industries get involved along with other leather goods producers such as Hujuan, the third biggest footwear producers in the world, that have entered the country. . According to experts most of the new companies that arrived after the Prime Minister’s visit are expected to begin production around the turn of the fiscal year.