When Jamie Zitnick examines a typical cattle hide, he quickly spots flaws left by insect bites, urine stains and brands.
In the volatile hide market, prices can fluctuate wildly from month to month depending on quality, supply and demand. The annual North American hide market is worth about $3.2 billion a year.
“The world market in cattle hides is very much interrelated,” said Zitnick, who runs Texpac Hide and Skin in Fort Worth, Texas.
His company buys hides from all over North America. He described the demands of the hide market during the recent International Livestock Identification Association convention in Calgary.
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Leather is used in the fashion, furniture and upholstery businesses.
The European Union produces 23 million high quality hides for high-end furniture and garments. New Zealand is a small producer, but its quality is on par with European leather.
Australia produces about 11 million hides, which are similar in quality to North American products.
Brazil produces about 36 million hides a year and is the primary supplier of hides to the Italian low-end upholstery market. Brazilian hides have improved in the last five years because producers introduced Continental cattle to the native population.
However, the hides generally have poor grain quality due to numerous defects caused by biting insects and scratches.
Argentina produces 14 million hides a year mostly for shoes and upholstery. They are better than Brazilian hides, but lower quality than hides from North American feedlot cattle.
India is a large producer, offering as many as 50 million hides a year. However, these are mostly from fallen cattle rather than the slaughter trade. The hides are small, carrying many defects and scratches.
Hide defects downgrade leather quality. Scars and stains often show up only when dyed.
Serious problems include holes caused by brands, grubs, mange and ringworm, urine and manure stains, and tears that occur when the hide is removed at the packing house.
Tanning problems may also arise and devalue finished products.
Branding is not as serious as insect holes, or manure and urine damage. Bacteria works into the hide where wastes were splashed and create a rougher grain. Manure stains can ruin as much as 15 sq. feet of leather.
Insect damage is most obvious in the neck area. Often that piece is full of little holes and has to be discarded. Insects cause more damage than brands.
Zitnick said producers should consider placement of brands. Side brands cause more waste than those on the hind quarters or neck area where insect damage is already present.
“Branding is not the biggest value eater-upper,” he said.
The most valuable hides become full-grain leather. This grade carries the original grain and contains intact hair follicles.
Corrected grain leather accounts for 60 to 70 percent of the world market. The tanner buffs off the grain to correct damage and prepares the hide to take special dyes or pigments. Pigmentation can often hide defects.
Leather is priced by the sq. foot. A full-grain, drum-dyed leather fetches between $3.75 and $4 US per sq. foot while heavily corrected pigmented material is as low as $1.40.
A 1,200 pound steer generates a 45 to 47 sq. foot hide.
“On a 45 sq. foot hide, a tanner could see his gross sales per hide vary between $63 and $180 apiece,” Zitnick said.
The shoe industry is the largest leather user, taking 65 percent of the world’s leather production. Shoemakers can often cut around the flaws because each shoe needs only about one sq. foot of material.
The upholstery business is divided into three sectors: auto, low-end and high-quality furniture makers.
The auto industry wants full-grain, pigmented leather that is strong and abrasion resistant.
Furniture and auto upholsterers must be able to cut large, square pieces out of the hide, which must be flawless. An expensive three-seat couch requires up to 300 sq. feet of leather that costs up to $4 per sq. foot.
“No one will spend $6,000 for a nice leather couch if it has scratches in it or it has a big brand in it or insect bites,” Zitnick said.
The Italians have perfected the low-end furniture market. They have developed techniques to highly buff leather to remove the grain. It is coated with pigment and embossed to produce couches that retail between $800 and $1,200 US.
