Lamb skin values plummet due to consumer sentiment

As the leather market slumps due to consumer sentiment, farmers are left to shoulder the cost of skins – now treated as waste.

Lamb and sheep skins are becoming a cost to industry rather than the profitable by-product they once were for processors as the leather market continues to flounder.

And farmers are wearing the brunt of the problem as more and more abattoirs start charging fees to either dispose of or salt skins that have little commercial resale value.

A poll of agents by The Weekly Times found that up to 50 per cent of the crossbred lamb consignments being sold direct to various processors at the moment are coming back with a skin handling/disposal fee of between $1 to $2.50 per head.

It doesn’t seem a considerable impost, but it is frustrating for producers selling decent loads of lambs, particularly at today’s lower price point stock. At the cost of $2 per skin across a consignment of 500 lambs, it works out to $1000 off the income, or the equivalent of six lambs being lost on a value of $160 each (28kg x 550c).

It is a far cry from the heady days of a decade ago when sucker skins were worth $10 to $15 each.

The leather and luxury double-faced lamb skin industries have been under pressure for a long time for a mix of reasons, from new technology producing fake or plastic leather often known as ‘pleather’ (PU leather or PVC leather) the animal rights movement and ideological stance that skin products should be avoided; and the growth of cheaper man-made materials in fashion, particularly shoes.

The graphic on this page shows the trend line for crossbred skins for the past three years. They have gone from over $5 per skin in the winter of 2022 to averaging less than $1 per head, based on figures published by Meat and Livestock Australia which regularly surveys processors on skin prices.

The latest survey came out at an average of 84 cents for crossbred lamb skins, the lowest value recorded by the survey.

Some agents said that when they haven’t been charged a disposal fee for skins in recent weeks, the return listed on accounts has been as low as 3c per pelt.

Several processors told The Weekly Times they have been trying to absorb the cost of salting skins to store them, or to put them into compost (requiring them to be cut up so they can break down) or buried in a landfill – due to the negative connotations it creates in the relationships with farmers selling stock.

It reportedly costs over $2 per pelt to salt a skin, which can then be stored temporarily. Reports suggest a backlog of skins in storage after some processors opted to go this route during the peak of Covid-19 when manufacturing in China was disrupted, as well as retail buying trends.

But pressures are mounting.

In the past month, the southern skin industry has been shaken by the uncertain future of Dynasty Australia International, which has been the leading volume buyer of skins both here and in NZ for more than a decade. Due to the retirement of key company owners, the business has reportedly been sold or transferred into a new entity, with details still emerging.

The Weekly Times was sent a copy of an email sent to major skin suppliers last month which stated: “The shareholder Susie Song of Dynasty Aus International Pty Ltd is seeking to retire in the near future and Dynasty will sell this business to a new entity and crease business trading within July.’’

Dennis King, executive officer Australian Hide Skin and Leather Exporters Association, said the impending change to a significant buying structure had added to the stresses facing skin processors in recent weeks.

Buyers and livestock agents at the Bendigo market. Picture: Zoe Phillips

“Things went into a bit of a holding pattern while this new entity was (being announced),’’ he said.

“It came at a time when all leather (skins and cattle hides) are under a lot of pressure. There is a lot of inventory around (in storage), and this is dragging down new (freshly processed) stock.’’

Cattle skin values have also dropped to extreme lows, with secondary and tick-damaged skins of no value being put into landfill, Mr King said.

While there is no silver bullet in sight for the industry, there is some interesting developments in Europe regarding a government debate to try and stop ‘fast fashion’.

This was a quote attributed to EU parliamentarian Delara Buckhurdt in the past week:

“The EU must legally oblige manufacturers and large fashion companies to operate more sustainably. People and the plant are more important than the textile industry’s profits... growing textile landfills in Ghana and Nepal, polluted water and microplastics in our oceans show what happens when we do not pursue this principle.’’

Mr King said leather, being a natural product with a long lifespan and repairable, could possibility benefit from a move to promote quality items over throw-away fashion items produced cheaply.

But this won’t help the upcoming sucker lamb season. Skin buyers said they were hopeful the market would at least have enough demand to give sucker pelts, which are a premium item for double facing, to keep them out of landfill and farmers from being charged disposal or handling fees.