Leather value chain; a cocktail of business opportunities

by Sunday News Online | Sunday, Oct 1, 2017 | 503 views

Leather

Mhlupheki Dube

I ATTENDED a meeting in Lupane for a beef and leather value chain development project.

The project covers the whole of Matabeleland North and seeks to improve various sectors of the beef and leather value chain.

Two things that came out of that meeting really struck me and these are the opportunities which are not being exploited within the leather value chain and therefore the value that is being lost in this sector.

The second issue is the intricate policy constraints that are stifling the beef and leather value chain and much more the former.

These are the issues that I wish to explore this week.

Farmers will be reminded that thousands of cattle are slaughtered every year by the abattoirs and the hides collected as part of the contentious fifth quarter which is not paid for.

The hides would then be processed and exported and the benefit accrues to someone else who is not the owner of the animal whose hide was taken for free. The Government increased tax of the hides and the export part became immediately unviable.

However, despite the politics of non-payment for the hides by the abattoirs what was very clear from the discussions made during the meeting was that there is great business potential for value chain players to process the hides and produce leather products for the local market. It is without dispute that leather products still attract premium prices even against an influx of cheap quality imports.

There is still a hungry niche market for high quality leather products in the country and this can only be satisfied when people take up the space of being leather product producers.

You have to visit a tourist area to appreciate the market for the leather products, people are selling leather shoes, belts, jackets, hats and everything and these do not come cheap.

Also if one visits places where livestock farmers, not owners meet, such as auction sales as well as the bull sale, one gets to appreciate the value of leather products.

In fact it is by massive production that we can be able to make these products available and affordable to most people. I therefore pray that livestock producers and other community members can consider playing a critical part in the leather value chain which is dormant. We should see an increase in processors of hides into leather and also an increase in producers of leather products.

The market is hungry for that, ask parents who have endured the pain of buying fake leather school shoes which only peel off in less than a week! It is a no-brainer that an increase in utilisation of leather will see an increase in demand of hides and maybe we can begin to avoid throwing away these when we slaughter animals at home or around the slaughter poles that are dotted around the country.

With regards to policy environment as it relates to the beef and leather value chain, the cost of compliance in this country is prohibitive, largely due to double taxing and splitting of hairs when it comes to taxes. It is my contention that the Government’s move of privatisation (I hope this is the correct term) of some entities such as parastatals has resulted in this negative outcome. Every state enterprise is let loose on people, farmers in this case and is charging one levy, tax or another to generate income.

They are armed with Acts and statutes and are hunting viciously from the same narrow bush of farmers and the result is inevitably over taxing of the farmer or business players within the livestock value chain.

You are an abattoir operator and immediately the Environmental Management Authority wants your piece, so does the council, Department of Veterinary Service, various ministries and the list is almost endless.

We all know that in the final analysis the farmer is the one who bears this cost. Animals are bought at the most depressed prices so as to maximise on profit and absorb the taxes and levies. I am however, reliably informed that policy meetings are being crafted to look at among other things harmonising the policies as well as silencing some statutory instruments so as to improve the easey of doing business in the livestock industry.

Uyabonga umntaMaKhumalo.

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