Hides and Seek

Ketema Maru, 38, makes a living selling cheap imported clothes at his small store in the Kera market, located in Woreda 6 of the Lafto Kifle Ketema District. But, come holidays, he closes his shop and goes door-to-door slaughtering sheep and goats for people who require his service.

This Easter was no different: he slaughtered nine sheep, earning 70-80 Br on average or the skin plus an additional 20 Br. He sold the skins for 55 Br to collectors at the sheep market along Pushkin Street in Kirkos District. A collector around the Flamingo area of Africa Avenue, Ahmed Delia, was buying the skins for 60Br on Tuesday afternoon April 22, 2014, to sell them directly to tanneries.

Those collectors sell the skins and hides they buy directly to factories or larger collectors, such as Idris Hussein, at the Arat Menta area of Merkato, in the Addis Ketema District.

The holiday market was good for Idris, 30, even though he had bought more cattle hides than skin compared to last year. He thinks the reason is that people are favouring kircha (people slaughtering cattle by pooling their money), instead of buying sheep.

In the two days after the holiday, he bought 6,700 skins and 4,000 hides, which he collected at his 1,000sqm collection centre. He also receives hides and skin from regional traders from all over the country during normal times and gets supply from the Modjo Abattior, which prepares meat for the export market.

He bought the skins for 60 Br this time, down from 85 Br a year ago. He sells them, mainly to the Ethiopia, Awash and China Africa tanneries, for 65 Br he sold salted hides for 160 Br a feresula (17kgs).

“The main problem in the sector is the credit purchase and lag of payment by the tanneries,” said Hussein, explainings the challenges that he is facing.

Seventy to 80pc of the hide and skin in the country comes from holiday slaughters, according to the Ethiopian Leather Industry Development Institute (ELIDI).

The livestock population of Ethiopia is believed to be the biggest in Africa, with a little more than 100 million, according to a sample survey conducted by the Central Statistics Agency (CSA) in 2011. However, the extent to which the available resource is exploited depends on the off-take rate, which measures the number of livestock sold and slaughtered annually. This stood at a much lower to the neighbouring countries.

There are 31 factories in the country, with a total demand for 43 million pieces of skin and 2.5 million hides a year- if working at full capacity. The supply, however, is only 17 million pieces of skin and 1.3 million hides, the Institute says.

“If we look at the hide market, 2.5 million pieces are supplied to the market, but 1.2 million go to the traditional domestic tanneries for the preparation of souvenirs, bed linen or household items,” Tesfaye Birhanu, Plan amp Information Director at the Institute, told Fortune.

This Easter has seen the Addis Abeba Abattoirs Enterprise slaughtering 2,500 sheep and 300 goat, as well as 1,935 cattle. The numbers show an improvement from the previous year, when it slaughtered 1,711 cattle and 1,530 sheep. The Enterprise faces a challenge in maintaining the quality of the hides and skins, says Ataklti Gebremichael, public relations head.

The Enterprise mainly supplies its hides and skins to tanneries, like Sheba, and private traders that supply to factories. The Enterprise sold the hide of cattle during the holiday for a price of 6.2 Br a kilo before tax, while it sold the first grade skin for 65 Br per piece and the second grade for 25 Br. The company also sold the first grade goat skins for 42 Br and the second grade for 16 Br.

The Enterprise has received 174,000sqm of land around Hanna Mariam, in the Nifas Silk Lafto district, where it will relocate. This will take place with a 50 million euro fund that it expects to receive from the French government. The new facility could help the Enterprise to improve the quality of the skins and hides it produces, Ataklti says.

The sector has continued for years to deliver below government expectations. The government’s plan for the previous five-year economic plan, which ended in 200910, was a revenue of 500 million dollars from exports the achievement was only 205 million dollars. The Growth amp Transformation Plan (GTP) targets a 500 million dollar revenue by its final year, 201415. Its revenue in the last fiscal year was 125 million dollars. The sector is among eight – including sugar, cement, metal, textile and garment industries – that the government has emphasised for the period.

The supply gap has been addressed through imports, which, by 2013, had reached 1.5 billion Br, according to the CSA.

The Ethiopia Tannery S.C is one of those tanneries that are procuring the inputs they need from the domestic market, as well as through importation. Located in Modjo, around Lake Koka, in the Oromia region, the 40-year-old factory now works at 80pc of its capacity, which is 12,000 sheep or goat skins a day and 1,200 cattle hides a day, according to Dagnachew Demelash, finance director of the tannery.

“Our company has been importing hides and skins for the past four years,” Dagnachew told Fortune. “Four years ago, during a shortage, our company has imported five containers of sheep skin from Yemen. And two years ago, we have imported four containers of cattle skin from Malawi.”

This year, the Company is testing the waters, but has not yet began that much level of importation.

“We are testing the results of the sheep skins that we imported from Somaliland,” said the finance manger.

Tesfaye agrees with this.

“The shortage is mainly in sheep skin,” he told Fortune.

Ethiopia is expected to import 10.5 million skins in this fiscal year, according to the ELIDI. Yet there is reluctance from the side of the factories to import because of logistical problems and other costs, according to the institute.

The Ethiopia Tannery has bought sheep skins for 65 Br, while it paid 160 Br for a feresula of cattle hide during this holiday. The Company, with its 810 permanent and temporary workers, plans to continue importation this year and in the future. And the improvement in the logistics handling of the multi modal system is encouraging for the importation of perishable products like hides and skins, unlike in the past where there was much wastage because of a time lag at the port and through the channel, according to Dagnachew.

The domestic supply is cheaper and sometimes can be of better quality, but to avoid the shortage in the market, tanneries should really see the importation of hide and skin as a strategic alternative. This is especially true for imports from immediate neighbours like Sudan, Yemen and Somaliland, the institute aises.

Source : Addis Fortune

Leave a Reply