By: Ryan Stuart

“ Animal byproducts contribute and significantly impact the bottom line of the U.S. meat industry.”[i] Byproducts consist of “edible offal, inedible offal, hides, skins, blood, fats, and tallow” and constitute about “44 percent of the live cattle weight.”[ii] Historically, hides have been the most valuable of the byproducts averaging “58% of the total [byproduct] value” and between “6-8% of the total [cattle] value.”[iii] Ranchers and meat processing facilities have been significantly impacted with recent trends valuing the hide at around 1% of the total cattle value.[iv]

The price of hides has been steadily decreasing over the last several years, and what once was an economically viable export has decreased to the lowest value on record.[v] While hide values do not factor into a rancher’s decision to produce more or less cattle, it does directly impact the meat processing facilities and what they are willing to pay the rancher for those same cattle.[vi] In recent times the low hide value has created a situation where many processing plants cannot cover their cost to export hides leaving few options.[vii] In some cases the price and demand is low that companies are not willing to take hides at all, forcing processing plants to discard them as waste.[viii]

“The U.S. exports as much as 80% of its cattle hides to China, which is ….the largest importer of hides in the world.”[ix] These hides are sent to China to be processed from raw cowhide into leather.[x] American companies gather hides from meatpacking plants throughout the country to be cured and shipped to China.[xi] The Chinese tanneries are operating primarily in rural areas because the chemical process currently used can be hazardous to employees.[xii]

Factors Contributing to the Current Market Trend

The consumption of beef in America has been increasing to near-record highs, but more consumers now are switching from traditional leather to synthetic alternatives.[xiii] A drought in 2014 forced ranchers to reduce their herd to the “smallest size in six decades.”[xiv] The reduction in herd sizes caused the price of beef hides to increase and manufacturers were looking to use less leather in their goods.[xv] The switch to synthetic alternatives attracted a variety of manufacturers that use leather in their products.[xvi]

The recent tariff war between the U.S. and China has resulted in additional tariffs on U.S. beef product exports.[xvii] This time, cattle hides made the list of specific U.S. agricultural exports to have additional tariffs that range between 5 and 25 percent.[xviii] China’s tariffs are expected to have minimal impact on the hide market due to the current value already being low and declining.[xix]

There have been many changes in the China leather production industry.[xx] Many factories have cited higher wages and the ability to hire and maintain a steady workforce as contributing to lower imports.[xxi] Chinese regulators have increased inspection of the production facilities to monitor the environmental impact which has resulted in many facilities having “to suspend, shrink, or otherwise modify their production” process.[xxii] The policy and regulations in China have a significant impact on current hide values because of their role as the primary importer of U.S. hides.[xxiii]

The Future of the Hide and Leather Industry

The volume of processed cattle “would remain the same even if people stopped buying leather.”[xxiv] With every animal processed there is a hide that can either be utilized or discarded in landfills.[xxv] Due to the help of the U.S. leather industry, 85% of all cattle hides produced are recycled.[xxvi] Consumers can help recycle and keep hides out of the landfill by purchasing authentic leather products.[xxvii]

The environmental impact of not having the leather industry and hides being discarded into landfills would be significant.[xxviii] If all cattle produced in America were discarded in landfills instead of produced into leather, every landfill in the U.S. would be full in four years.[xxix] In 2020, there were 4.8 million hides that were “either destroyed or discarded into landfills.”[xxx] If those 4.8 million hides were recycled into leather and not discarded they could have produced the leather for “86.4 million pairs of shoes, 96 million footballs, or 1.6 million sofas.”[xxxi]

The record low value in animal hides has hurt the profitability of the meat and cattle industry.[xxxii] While consumers have been purchasing more synthetic leather alternatives for a variety of economic and personal reasons, the impact on the leather industry has been prominent.[xxxiii] The leather industry is contributing to the cattle hide industry by generating some value and preventing the disposal into the landfills.[xxxiv] Hopefully soon there will be other ways to utilize the animal hide, but for now we need leather goods.

[i] Daniel Marti, Rachel Johnson, Kenneth Mathews, Jr., Where’s the (Not) Meat?, U.S. Ddep’t agric. Econ. Res. Serv. (Nov. 2011), https://www.ers.usda.gov/webdocs/outlooks/37427/8801_ldpm20901.pdf [https://perma.cc/BAD2-Z4YV].

[ii] Id.

[iii] US Cattle Hide Value Declines Significantly in Wake of Covid-19, Leather Int’l (May 6, 2020), https://www.leathermag.com/news/newsus-cattle-hide-value-declines-significantly-in-wake-of-covid-19-7909593 [https://perma.cc/QAW3-GAZA].

[iv] Id.

[v] Id.

[vi] Stephen Sothmann, Hide Economics: Leather’s Status as a Byproduct, Leather and Hide Council Am. (Jan. 11, 2021), https://www.usleather.org/press/Hide-Economics-Leather-Status-as-Byproduct [https://perma.cc/MU2R-WHCR].

[vii] Lee Schulz, Byproducts Boost Beef Value, Farm Progress (Dec. 17, 2021), https://www.farmprogress.com/livestock/byproducts-boost-beef-value [https://perma.cc/DS4V-TAVJ].

[viii] Sothmann, supra note vi.

[ix] Steve Kay, U.S. Cattle Hides Take a Tariff Hit, Canadian Cattlemen (Nov. 13, 2018), https://www.canadiancattlemen.ca/prime-cuts/prime-cuts-with-steve-kay-u-s-cattle-hides-take-a-tariff-hit/ [https://perma.cc/XTU3-8MR6].

[x] How a Leather Belt Got Ensnared in Trump’s Trade War with China, Bloomberg (Sept. 27, 2018, 5:00 PM), https://www.bloomberg.com/news/articles/2018-09-27/how-a-leather-belt-got-ensnared-in-trump-s-trade-war-with-china [https://perma.cc/UG7A-Y2A2].

[xi] Id.

[xii] Id.

[xiii] Lydia Mulvany & Lindsey Rupp, Shoe Shoppers Going Vegan as Beef Boom Creates Cattle-Hide Glut, Bloomberg Quint (June 12, 2018), https://www.bloombergquint.com/business/shoe-shoppers-going-vegan-as-beef-boom-creates-cattle-hide-glut [https://perma.cc/35DU-XARS].

[xiv] Id.

[xv] Id.

[xvi] Id.

[xvii] Kay, supra note ix.

[xviii] Id.

[xix] Id.

[xx] Levin Flake, Chinese Demand for Imported Hides Beginning to Weaken, U.S. Dep’t Agric. Gain Rep. (Sept. 13, 2018), https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Chinese%20Demand%20for%20Imported%20Hides%20Beginning%20to%20Weaken%20_Guangzhou_China%20-%20Peoples%20Republic%20of_9-13-2018.pdf [https://perma.cc/Z2ZH-SME6].

[xxi] Id.

[xxii] Id.

[xxiii] Id.

[xxiv] Using Leather Does Not Mean More Cattle Are Reared, Leather and Hide Council of Am. (May 27, 2021), https://www.usleather.org/press/Using_leather_does_not_mean_more_cattle_are_reared_finds_research [https://perma.cc/9T8B-TFQ4].

[xxv] Looking to Reduce Waste? Choose Real Leather, Leather and Hide Council of Am. (May 20, 2021), https://www.usleather.org/press/Looking_to_reduce_waste_Choose_real_leather [https://perma.cc/M8QV-5L7V].

[xxvi] Using Leather Does Not Mean More Cattle Are Reared, supra note xxiv.

[xxvii] Looking to Reduce Waste? Choose Real Leather, supra note xxv.

[xxviii] Using Leather Does Not Mean More Cattle Are Reared, supra note xxiv.

[xxix] Id.

[xxx] Looking to Reduce Waste? Choose Real Leather, supra note xxv.

[xxxi] Id.

[xxxii] Marti, supra note i.

[xxxiii] Mulvany & Rupp, supra xiii.

[xxxiv] Looking to Reduce Waste? Choose Real Leather, supra note xxv.