A PROFILE OF THE SOUTH AFRICAN HIDES, SKINS AND LEATHER MARKET VALUE CHAIN 216 Directorate Marketing Tel: 12 319 8455 Private Bag X 15 Fax: 12 319 8131 Arcadia E-mail:MogalaM@daff.gov.za 7 www.daff.gov.za
Table of Contents 1. DESCRIPTION OF THE INDUSTRY. 3 2. PRODUCTION, PRICES AND CHANGES IN EMPLOYMENT IN HIDES, SKINS AND LEATHER INDUSTRY 4 2.1 Production bovine (cattle) hides 4 2.2 Prices of skins, hides and leather (214) 4 3. EXPORTS VOLUMES 5 3.1 Share Analysis 29 4. IMPORTS VOLUMES OF RAW HIDES & SKINS 34 4. IMPORT VOLUMES OF LEATHER (FURTHER PREPARED) 38 5. SKINS, HIDES AND LEATHER VALUE CHAIN 43 6. BLACK ECONOMIC EMPOWERMENT 45 7. MARKET ACCESS 45 7.1. Export tariffs of hides and skins during 214 45 7.2 Non tariff barriers (NTB) 45 7.2.1 European Union 46 7.2.2. Japan 47 7.2.3 China 47 7.2.4 United States of America 48 7.3 Import tariffs of raw skins, hides and leather 48 8. MARKET INTELLIGENCE 5 9. GOVERNMENT SUPPORT 73 1. APPENDIX A: GOODS AND FOOTWEAR LEATHER 74 11. APPENDIX B: AUTOMOTIVE LEATHER 74 13. APPENDIX C: SOUTH AFRICAN TANNARIES 75 14. APPENDIX D: INDUSTRY ASSOCIATIONS 76 15. ACKNOWLEDGEMENTS 78 2
1. DESCRIPTION OF THE INDUSTRY. Hides, skins and leather are by-products of farming stock and wild animals bred primarily for meat consumption. Thus, hides and skins are mainly recovered from slaughterhouses and farms. Because the leather industry depends on the recovery of hides and skins of the farming stock and wild animals, availability of raw material directly depends on the size of the animal population, the take-off ratio and the weight/size of the hide/skin recovered. The quality of South African hides has been positively influenced by the rise in the number of feedlots operating in the meat industry, with animals thus spending less time in the open veldt. These hides are rated to be superior to other sub-saharan African and most Asian hides, but inferior to most hides from Australia, Argentina, the US and Europe. Their relatively small size compared with the last two origins (3.5 to 4m 2 ) and the use of non-hump breeds that produce large panels renders them just marginally suited for upholstery and automotive leather. Over 65% of South African hides are regarded as suitable for automotive leather. In South Africa skins and hides are given the following status types when they leave the abattoir: a. Gold status. This is the skin or hide that had been sourced from an approved registered abattoir where ante and post mortem examinations are routinely performed. These skins and hides must not originate from OIE recognized foot and mouth disease controlled areas of the Limpopo, Mpumalanga, KwaZulu Natal or the Kruger National Park b. Silver status. This is the skin or hide that had been sourced from an approved registered abattoir anywhere in South Africa where ante and post mortem examinations are routinely performed. c. Bronze status. This is the skin or hide that had been sourced from an unapproved or unregistered abattoir without veterinary health certificate and/or original status has been compromised and/or exposed to contagion. Skins and hides are derived mainly from livestock and to a lesser extent from wild animals and reptiles. The following are the main categories of skins or hides according to species. Bovine (cattle) hide. Bovine hides dominate the supply of leather in South Africa. They are mainly by-product of meat production supplied by feedlots. Sheep skin. It is produced with or without wool mainly for export market. Pig skin. South Africa does not have significant supply of pig skin as this tends to be part of the meat. Goat and kid skin leather. The supply of goat and kid skins is low as the majority of goats are slaughtered outside the abattoirs. Ostrich skins.
Unlike bovine, ostrich is bred primarily for its skin; and ostrich meat becomes a by-product. Ostrich leather is unique with its feather quill pattern. This gives it extra strength and durability which is 7 times stronger than bovine (cattle) hide. Ostrich leather is used to produce handbags, wallets, shoes, clothing etc. Skins of wild animals. Many wild animals including elephants and buffalo are main sources of leather. Skin of reptiles. Crocodiles and snakes are bred for their skins. 2. PRODUCTION, PRICES AND CHANGES IN EMPLOYMENT IN HIDES, SKINS AND LEATHER INDUSTRY Hides and skins are inputs to the leather industry. The bulk of hides and skins are recovered from abattoirs. South Africa slaughters over 2 million cattle and over 4 million sheep every year. The availability of these products depends on the size of the slaughter facility and the species involved. Ostrich skins are mainly produced in Western Cape. Prices of hides are higher in South Africa than in other countries. This is because of the increase in demand of local hides caused by the Motor Industry Development Program (MIDP) which was introduced in 1995 and it was scheduled to come to an end in 212. The key component of the MIDP with regards to automotive upholstery is that it contained an import-export complementation scheme that gave credits to component manufacturers and assemblers for any exported goods. These credits, which are transferable, could then be used by assemblers to offset the duty on parts or vehicles that they wanted to import. Export of stitched leather seat covers responded positively to this incentive and increased the demand for local hides and skins. 2.1 Production bovine (cattle) hides Hides are by-products of the livestock (cattle) industry. The availability of hides and skins depends on the number of cattle slaughtered. Both in beef and dairy businesses, hides and skins are recovered and taken to firms for further processing. Interestingly Eastern Cape is the biggest producer of livestock but the bulk of the hides come from Mpumalanga, Gauteng, Free State and Kwazulu Natal as they have big abattoirs. 2.2 Prices of skins, hides and leather (215) Table 1 below indicates different types of skins, hides and leather and unit prices of different products as indicated in the first column and second column. The prices indicates the 214 and 215 marketing season but are subject to change due to the fluctuations in terms of the rand, demand and supply forces. Table 1: Prices of skins, hides and leather (215 marketing season) Type of Skins, Hides & Leather Prices per skin Merino dry sheep skin Short wool skin Sheared wool skin Cattle dry skin Ostrich skins Goat dry skin Goat skin after tanning Impala (grade 1) Bless Bok / Springbok (grade 1) R15. R2. /skin R1. R15./skin R25. - 3./skin R7. - R8.5 per kilogram R1-R15 / kilogram R15. R2./skin R4. / skin R15. R2./skin R15. R2./skin Sources: Skin, Hides & Leather Council, Klein Karoo International Ltd, IMPEC (Integrated Meat Processors of the Eastern Cape) 4
Export quantity(tons) 3. EXPORT VOLUMES OF RAW HIDES AND SKINS The raw skins, hides and leather industry are also an important earner of foreign exchange through the export of raw leather and tanned leather. The industry exports mainly to Europe (Italy, Turkey and Germany) and to Asia (Japan, Republic of Korea, Hong Kong and China. Leather articles are classified as a luxury goods and thus by definition it follows that consumers demand for leather products is related to their disposable income. This implies that the absolute demand for leather products is greater, but also, the market for leather products is broader based in developed compared to developing countries. The developing nations mainly produce under license from developed countries retailers/ buyers in accordance to their specifications. Figure 1 below shows some trends in raw hides and skins exports to the world over a ten year period. Figure 1 below indicates export volumes of raw hides and skins from South Africa to various regions of the world between 26 and 215. 3 25 2 15 1 5 Africa 11 4 21 15 65 71 Americas 1 1 2 1 1 Asia 1 528 553 1932 2651 312 96 1297 1846 171 Europe 373 873 59 253 545 214 239 353 384 491 Oceania 74 Figure 1: Export volumes of raw hides and skins to the world The graph further indicates that during the period under scrutiny, the major export market for raw hides and skins from South Africa to the world was Asia, followed by Europe. Africa and Americas experienced very low levels of exports of raw hides and skins from South Africa to low levels of between 1 and 65 tons per annum. The graph also indicates that on average, South Africa exported 1 59 tons to the world over the past decade. The graph further indicates that export volumes of raw hides and skins from South Africa to Asia started to increase substantially in 29 until a peak was attained in 21 at an export quantity of approximately 2 651 tons. The figure also indicates that export volumes of raw hides and skins from South Africa to Europe started to increase substantially in 27 and at the same time attained a peak at an export quantity of approximately 873 tons. It is evident that export volumes of raw hides and skins from South Africa to Asia experienced a dramatic decline between 26 and 28 to lower levels of approximately 1 tons in 26. The graph further indicates that there was a 7.3% increase in export volumes of raw hides and skins from South Africa to Asia in 215 as compared to 214 marketing season. Figure 2 below depicts export volumes of raw hides and skins from South Africa to Africa between 26 and 215. 5
Export quantity (tons) Export quantity (tons) Figure 2: Export volumes of raw hides and skins to Africa 7 6 5 4 3 2 1 SADC (excluding SACU) 11 4 2 6 SACU (Excluding RSA) 1 15 65 65 The graph further depicts that most of raw hides and skins exports from South Africa to Africa went to the SACU region excluding RSA over the past decade. The graph also depicts that export volumes of raw hides and skins from South Africa to SACU region excluding RSA started to increase substantially in 214 to 215 and at the same time attained a peak at an export quantity of about 65 tons. It is further evident that between 26 and 211, there were no exports of raw hides and skins from South Africa to SACU region excluding RSA, while there were no export volumes of raw hides and skins from South Africa to SADC between 26 and 27 and again between 21 and 211 of the period under examination. Export volumes of raw hides and skins from South Africa to SADC were not more than 2 tons per annum. The graph further depicts that there was no growth (.%) in export volumes of raw hides and skins from South Africa to SACU region excluding RSA in 215 as compared to 214 marketing season. Figure 3 below illustrates export volumes of raw hides and skins from South Africa to the Americas between 26 and 215. Figure 3: Export volumes of raw hides and skins to Americas 12 1 8 6 4 2 NAFTA 1 1 2 1 1 The figure further illustrates that most of raw hides and skins exports from South Africa to Americas went to NAFTA, followed by very intermittent volumes from South America over the past ten years. The figure also 6
Export quantity (tons) illustrates that export volumes of raw hides and skins from South Africa to NAFTA started to increase substantially in 21 and at the same time attained a peak at an export volume of about 1 tons. It is also evident that in 211 and 215, exports of raw hides and skins to NAFTA declined dramatically to levels of about 1 ton per annum. Between 26 and 28 and again in 21 and 212, there were no export volumes of raw hides and skins from South Africa to NAFTA. The figure further illustrates that South America experienced very low or minimal export volumes of raw hides and skins from South Africa during the period under examination of not more than 1 ton per annum. The figure also illustrates that there was no growth (.%) in export volumes of raw hides and skins from South Africa to NAFTA in 215 as compared to 214 marketing season. Figure 4 below shows export volumes of raw hides and skins from South Africa to Asia between 26 and 215. 3 25 2 15 1 5 Eastern Asia 87 125 185 833 237 123 815 154 1585 1452 South-central Asia 11 33 51 177 18 128 83 122 124 73 South-eastern Asia 2 292 317 919 2396 1 19 159 Western Asia 78 4 61 8 2 28 26 Figure 4: Export volumes of raw hides and skins to Asia The figure further shows that the major export market for raw hides and skins from South Africa to Asia was Eastern Asia, followed by South-eastern Asia over the past decade. South-central Asia and Western Asia had very low / intermittent exports of raw hides and skins from South Africa between 26 and 215. The figure also shows that export volumes of raw hides and skins from South Africa to Eastern Asia were from a high base during the second half of the ten year period (211-215) attaining a peak in 214 at approximately 1 585 tons. The figure further shows that export volumes of raw hides and skins from South Africa to Southeastern Asia attained a peak in 21 at an export quantity of about 2 396 tons. The figure further shows that there was 8.39% decrease in export volumes of raw hides and skins from South Africa to Eastern Asia in 215 as compared to 214 marketing season. Figure 5 below depicts export volumes of raw hides and skins from South Africa to Eastern Asia between 26 and 215. 7
Export quantity (tons) Export quantity (tons) Figure 5: Export volumes of raw hide and skins to Eastern Asia 14 12 1 8 6 4 2 China 84 125 61 519 21 16 193 951 1234 Hong Kong Special Administrative Region of China 14 313 13 123 78 861 634 14 The figure further depicts that most of raw hides and skins exports from South Africa to Eastern Asia went to Hong Kong Region of China, followed by very low or minimal levels of exports of raw hides and skins from South Africa to China over the past decade. The figure also depicts that exports of raw hides and skins from South Africa to Hong Kong Region of China were from a high base during the second half of the ten year period (211-215) attaining a peak in 213 at approximately 861 tons. The figure further depicts that exports of raw hides and skins from South Africa to China were from a high base during the second half of the ten year period (211-215) attaining a peak in 215 at approximately 1 234 tons. The figure also depicts that there was an increase of 29.7% in export volumes of raw hides and skins from South Africa to Hong Kong Region of China in 215 as compared to 214 marketing season. The figure further depicts that there was a 29.7% increase in export volumes of raw hides and skins from South Africa to China in 215 as compared to 214 marketing season. Figure 6 below indicates export volumes of raw hides and skins from South Africa to Europe between 26 and 215. Figure 6: Export volumes of raw hides and skins to Europe 1 9 8 7 6 5 4 3 2 1 European Union 373 873 59 253 545 214 239 353 384 491 8
Export quantity (tons) The figure further indicates that during the period under observation, most of raw hides and skins exports from South Africa to Europe went mainly to the European Union with no competition from other European regions. The figure also indicates that export volumes of raw hides and skins from South Africa to the European Union started to increase substantially in 27 and at the same time attained a peak at an export quantity of 873 tons. During the ten year period under review, export volumes of raw hides and skins from South Africa to the European Union experienced a dramatic decline to lower levels of about 59 tons in 28. Although exports of raw hides and skins from South Africa to the European Union were declining, there was a notable increase in 21 of about 545 tons. The figure also indicates that there was 27.8% increase in export volumes of raw hides and skins from South Africa to the European Union in 215 as compared to 214 marketing season. Graph 7 below depicts export volumes of raw hides and skins from South Africa to the European Union over a ten year period. Figure 7: Export volumes of raw hides and skins to Europen Union 9 8 7 6 5 4 3 2 1 Germany 1 United Kingdom 98 Greece 1 177 169 186 28 292 344 Italy 275 818 59 243 368 46 52 72 81 15 Netherlands The graph further depicts that the major export destinations for raw hides and skins from South Africa to the European Union was mainly Italy, followed by Greece and United Kingdom over the past ten years. It is clear and evident in the graph that between 25 and 26, exports of raw hides and skins from South Africa to Italy experienced an increase of about 275 tons until a peak was attained in 27 at approximately 818 tons. The graph also depicts that between 28 and 215, exports of raw hides and skins from South Africa to Italy dropped to below 369 tons per annum. The graph further depicts that there was a slight increase of about 29.6% in export volumes of raw hides and skins from South Africa to Italy in 215 as compared to 214 marketing season. Figure 8 below clearly shows export volumes of raw hides and skins from South Africa to Oceania between 26 and 215. 9
Export value (Rands) Export quantity (tons) Figure 8: Export volumes of raw hides and skins to Oceania 8 7 6 5 4 3 2 1 Australia and New Zealand 74 The figure further shows that most of raw hides and skins exports from South Africa to Oceania went mainly to Australia and New Zealand with no competition from other Oceania regions. The figure also shows that export volumes of raw hides and skins from South Africa to Australia and New Zealand were from a high base during the second half of the ten year period (211-215) attaining a peak in 213 at approximately.2 tons. The figure further shows that between 26 and 214, there were no export volumes of raw hides and skins from South Africa to Australia and New Zealand. The figure shows that the export volumes of raw hides and skins started in 215 and at the same time attained a peak of approximately 74 tons. The figure also shows that there was 1% increase in export volumes of raw hides and skins from South Africa to Australia and New Zealand in 215 as compared to 26 marketing season. Figure 9 below clearly illustrates export values of raw hides and skins by Provinces of South Africa to the world between 26 and 215. Figure 9: Value of raw hides and skins exports by Provinces 4 35 3 25 2 15 1 5 Western Cape 39363 13837173 957838 248129 1425637 28748297 35739715 5684785 8413656 128756218 Eastern Cape 58544463 7693571 6541913 618918 15715941 11675286 18153789 3452879 33127316 35798968 Northern Cape 424 Free State 262249 1972578 2291132 25136 123773 55923999 16688343 KwaZulu-Natal 753986 214594 6896482 14729843 2222531 2956223 5159365 15465912 8177954 62413787 North West 11235612 827483 25162833 413581 4322499 518521 13683891 26652168 18357514 12822251 Gauteng 1121254 1118648 245184 15682563 11268975 685694 6261167 6469996 5995268 34283486 Mpumalanga 1888 1242 225263 3975 Limpopo 969149 3413346 27597 4724831 174122 164 1
Export value (Rands) The figure further illustrates that over the past decade, most of raw hides and skins exports in value from South Africa to the world were from the Eastern Cape Province, followed by KwaZulu-Natal, Western Cape and North West Provinces. The figure also illustrates that export values of raw hides and skins from the Eastern Cape Province to the world started to increase in 212 at about R181 million until a peak was attained in 215 at an export value of R357 million. The figure further illustrates that export values of raw hides and skins from KwaZulu-Natal Province to the world attained a peak also in 213 at an export value of R15 million, while Western Cape Province attained a peak in 215 at an export value of approximately R128 million. Export values of raw hides and skins from North West Province to the world attained a peak also in 21 at an export value of R43.2 million. All the other remaining provinces had very low or minimal levels of exports of raw hides and skins from South Africa to the world of not more than R58 million per annum during the same period under scrutiny. The figure also illustrates that there was an increase of 8% in exports value of raw hides and skins from Eastern Cape Province to the world in 215 as compared to 214 marketing season. Figure 1 below indicates export values of raw hides and skins from Eastern Cape Province to the world between 26 and 215. Figure 1: Value raw hides and skins exports by Eastern Cape Province 4 35 3 25 2 15 1 5 Cacadu 766417 7375 41787 33798 161 Nelson Mandela Bay 575561 76896196 6536126 61732849 1223629 1996242 17849958 33631378 3242273 35394925 Buffalo City 227985 158231 3142553 6789666 346851 897871 6882313 4443 The graph further indicates that most of raw hides and skins exports in value from Eastern Cape Province to the world were mainly from Nelson Mandela Metropolitan Municipality during the period under examination, with very intermittent exports from Cacadu District and Buffalo City Metropolitan Municipalities. It is also evident that during the period under observation, exports of raw hides and skins from the Nelson Mandela Metropolitan municipality to the world were from a high base during the second half of the ten year period (211-215) attaining a peak in 215 at approximately R353 million. The graph also indicates that between 25 and 212, export values of raw hides and skins from the Nelson Mandela Metropolitan Municipality to the world experienced a down-turn and were not more than R178 million per annum. The graph further indicates that there was a decline of 9.2% in exports value of raw hides and skins from Nelson Mandela Metropolitan Municipality to the world in 215 as compared to 214 marketing season. Figure 11 below clearly depicts export values of raw hides and skins from North West Province to the world between 26 and 215. 11
Export value (Rands) Export value(rands) 45 4 35 3 25 2 15 1 5 216 Bojanala 11235612 827483 251629 23174471 1951271 12913711 26652168 18357514 12822251 38116446 Dr Ruth Segomotsi Mompati Figure 11: Value of raw hides and skins exporta by North West Province 824 1786133 23712838 518521 7718 The graph further depicts that during the period under examination, Bojanala District Municipality was the main exporter of raw hides and skins in value from North West Province to the world, followed by Dr. Ruth Segomotsi Mompati District Municipality. The graph also depicts that export values of raw hides and skins from Bojanala District Municipality to the world were generally high throughout the period under scrutiny attaining a peak in 215 at an export value of approximately R38.1 million. The graph further depicts that export values of raw hides and skins from Dr. Ruth Segomotsi Mompati District Municipality to the world started to increase in 29 at about 17.8 tons until a peak was attained in 21 at an export value of about R23.7 million. The graph also depicts that in 211, there were no export values for raw hides and skins from Bojanala District Municipality to the world, while between 26 and 27 and again between 213 and 215, there were no exports of raw hides and skins from Dr. Ruth Segomotsi Mompati District Municipality to the world. The graph further depicts that there was an increase of 197% in exports of raw hides and skins from Bojanala District Municipality to the world in 215 as compared to 214 marketing season. Figure 12 clearly reflects export values of raw hides and skins from Gauteng Province to the world between 26 and 215. Figure 12: Value of raw hides and skins exports by Gauteng Province 3 25 2 15 1 5 Sedibeng 432421 688826 1161686 West Rand 15536 52814 999 65743 2127 51458 54997 52353 Ekurhuleni 37685 42659 233851 39296 477496 525237 91897 43634 364378 1933478 City of Johannesburg 517198 6339549 1765386 14527279 943558 1141187 654472 539368 568988 752189 City of Tshwane 489653 462 6358 16492 439143 6334 978297 59549 24828919 12
Export Value (Rands) The figure further reflects that during the period under observation, most of raw hides and skins exports in value from Gauteng Province to the world were mainly from the City of Johannesburg Metropolitan Municipality, followed by Ekurhuleni and City of Tshwane Metropolitan municipalities. The figure also reflects that over the past decade, export values of raw hides and skins from the City of Johannesburg Metropolitan municipality to the world attained a peak in 28 at an export value of approximately R17.7 million, while export values of raw hides and skins from Ekurhuleni Metropolitan municipality attained a peak in R4.2 million and the City of Tshwane Metropolitan municipality to the world attained a peak in 215 at export values of about R24 million. The figure further reflects that export values of raw hides and skins from other districts (Sedibeng and West Rand) to the world were very low and not more than R1.2 million per annum. The figure also reflects that there was an increase of 5% in exports of raw hides and skins from the City of Johannesburg Metropolitan Municipality to the world in 215 as compared to 214 marketing season. Figure 13 clearly indicates export values of raw hides and skins from Western Cape Province to the world between 26 and 215. 14 12 1 8 6 4 2 Figure 13: Value of raw hides and skins exports by Western Cape Province City of Cape Town 2775988 1255146 95785 2171381 9418623 2861968 35716613 5412629 84127276 1286562 West Coast 922277 1459735 26374 51 Cape Winelands 74 1995 3986 48375 17322 55336 2532 5427 878 4575 Eden 225298 2111297 989692 22353 257 218129 59443 The graph further indicates that during the period under examination, the main exporter of raw hides and skins in value from Western Cape Province to the world was the City of Cape Town Metropolitan Municipality, followed by very low or minimal levels of exports from the West Coast, Cape Winelands and Eden District municipalities. It is evident in the graph that during the period under observation, exports of raw hides and skins from the City of Cape Town Metro municipality to the world started to increase substantially in 211 with a consistent increase in 212 and 213 until a peak was attained in 215 at an export value of approximately R128 million. The graph also indicates that between 26 and 214, exports of raw hides and skins from Eden, West Coast and Cape Winelands District municipalities were from a low base throughout the ten year period under review and not more than R 1.5 million per annum. The graph further indicates that there was an increase of 52% in export value of raw hides and skins from the City of Cape Town Metropolitan Municipality to the world in 215 as compared to 214 marketing season. Figure 14 clearly shows export values of raw hides and skins from the Northern Cape Province to the world between 26 and 215. 13
Export Value (Rands) Export value (Rands) Figure 14: Value of raw hides and skins exports by Northern Cape Province 5 45 4 35 3 25 2 15 1 5 Frances Baard 432 The graph further shows that during the period under examination, most of raw hides and skins exports in value from Northern Cape Province to the world were mainly from Frances Baard District Municipality, with no competition from other district municipalities. The graph also shows that exports of raw hides and skins from Frances Baard District Municipality to the world started to increase substantially in 213 and at the same time attained a peak at an export value of approximately R4 24. The graph further shows that between 26 and 212, and again in 214, there were no exports of raw hides and skins from Frances Baard District to the world. The graph also shows that there was 1% decline in exports of raw hides and skins from Frances Baard District Municipality to the world in 215 as compared to 213 marketing season. Figure 15 illustrates export values of raw hides and skins from Mpumalanga Province to the world between 26 and 215. Figure 15: Value of raw hides and skins by Mpumalanga Province 25 2 15 1 5 Gert Sibande 223333 Ehlanzeni 1888 1242 4693 3975 The figure further illustrates that over the past decade, most of raw hides and skins exports in value from Mpumalanga province to the world were mainly from Gert Sibande District Municipality, followed by low or intermittent exports from Ehlanzeni District Municipalities. The figure also illustrates that exports of raw hides and skins from Gert Sibande District Municipality to the world started to increase substantially in 29 and at the same time attained a peak at an export value of approximately R2.2 million. The figure further illustrates 14
Export value (Rands) that between 26 and 215, there were no exports of raw hides and skins from Nkangala District municipality to the world. It is also evident from the figure that exports of raw hides and skins from Gert Sibande District municipality to the world attained a peak in 29 at an export value of about R46 93. The figure further illustrates that there was no growth (.%) in exports of raw hides and skins from Gert Sibande District Municipality to the world in 215 as compared to 213 marketing season. Figure 16 below depicts export values of raw hides and skins from Limpopo province to the world between 25 and 215. Figure 16: Value of raw hides and skins by Limpopo Province 5 45 4 35 3 25 2 15 1 5 Capricorn 44172 13398 Waterberg 924977 3399948 27597 4724831 174122 The figure further depicts that the major exporter of raw hides and skins from Limpopo province to the world was mainly Waterberg District Municipality, followed by very low levels of exports from Capricorn District Municipality over the past ten years. It is evident that during the period under scrutiny, exports of raw hides and skins from Waterberg District municipality to the world were from a high base during the first half of the ten year period (26-21) attaining a peak in 29 at export values of approximately R4.7 million. The figure also depicts that between 211 and 215, there were no exports of raw hides and skins from Waterberg District Municipality to the world. The figure further depicts that there was no growth (.%) in exports of raw hides and skins from Waterberg District Municipality to the world in 215 as compared to 214 marketing season. Figure 17 illustrates export values of raw hides and skins from KwaZulu-Natal province to the world between 26 and 215. 15
Export Value (Rands) Export value(rands) Figure 17: Value of raw hides and skins exports by KwaZulu Natal Province 12 1 8 6 4 2 UMgungundlovu 66185 231689 683123 9643886 2234138 295299 49787311 15465912 81747339 6245855 Uthukela 761519 51966 6435 Umzinyathi 4124 355513 Zululand 92953 576941 1626957 ethekwini 272 38172 136 2581 364215 37254 2631 12419 The graph further illustrates that most of raw hides and skins exports in value from KwaZulu-Natal province to the world were mainly from UMgungundlovu District Municipality, followed by intermittent exports from Zululand, UThukela District Municipalities and ethekwini Metropolitan Municipality. The graph also illustrates that export values of raw hides and skins from UMgungundlovu District Municipality to the world were from a high base during the second half of the ten year period (211-215) attaining a peak in 213 at an export value of approximately R15 million. The graph further illustrates that exports of raw hides and skins from Zululand District to the world attained a small peak in 29 at approximately R5. million. The graph also illustrates that there was 24.1% decline in exports of raw hides and skins from UMgungundlovu District Municipality to the world in 215 as compared to 214 marketing season. Figure 18 clearly shows export values of raw hides and skins from the Free State Province to the world between 26 and 215. Figure 18: Value of raw hides and skins exports by Free State Province 6 5 4 3 2 1 Lejweleputswa 2767539 495 Thabo Mofutsanyane 123773 3466624 1356234 Fezile Dabi 262249 1744681 2289932 25136 49689836 313269 Mangaung 227897 12 16
Export quantity (tons) The graph further shows that most of raw hides and skins exports in value from Free State Province to the world were mainly from Fezile Dabi District Municipality, followed by very low or intermittent exports from Lejweleputswa, Mangaung and Thabo Mofutsanyane District Municipalities over the past decade. The graph also shows that exports of raw hides and skins from Fezile Dabi District Municipality to the world were from a high base during the second half of the ten year period (211-215) attaining a peak in 214 at approximately R49.6 million. It is further evident in the graph that in 29, and again between 211 and 213, there were no exports of raw hides and skins from Fezile Dabi District Municipality to the world due to the shortfall from producers of livestock domestically. The graph further shows that Lejweleputswa, Mangaung and Thabo Mofutsanyane District Municipalities had very low or intermittent levels of exports of raw hides and skins of not more than R3.4 million per annum. The graph also shows that there was a substantial decline of 93.7% in exports of raw hides and skins from Fezile Dabi District Municipality to the world in 215 as compared to 214 marketing season. Figure 19 below depicts export volumes of leather (further prepared) from South Africa to various regions of the world between 26 and 215. Figure 19: Export volumes of leather (further prepared) to the world 2 18 16 14 12 1 8 6 4 2 Africa 1 13 17 14 84 75 74 47 158 Americas 22 51 15 1 1 1 6 16 33 1 Asia 47 1 2 134 44 6 52 145 Europe 5 1 1 14 31 16 54 83 9 172 Oceania 1 1 5 3 19 1 The figure further depicts that most of leather (further prepared) from South Africa to the world went mainly to Africa, followed by Americas, Europe and Asia during the past decade. The figure also depicts that export volumes of leather (further prepared) from South Africa to Africa were from a low base during the first half of the ten year period (26-21) reaching a maximum of about 17 tons in 29. The figure further depicts that during the second half of the same ten year period under scrutiny, export volumes of leather (further prepared) from South Africa to Africa were from a high base attaining a peak in 215 at approximately 158 tons. Export volumes of leather (further prepared) from South Africa to Americas attained a peak also in 213 at approximately 16 tons. The figure also depicts that export volumes of leather (further prepared) from South Africa to Europe attained a peak in 215 at approximately 172 tons, while export volumes of leather (further prepared) from South Africa to Asia attained a peak in 215 at approximately 145 tons. The figure further depicts that there was a growth of 236% in export volumes of leather (further prepared) from South Africa to Africa in 215 as compared to 214 marketing season. Figure 2 below illustrates export volumes of leather (further prepared) from South Africa to Africa between 26 and 215. 17
Export quantity (tons) Export quantity (tons) Figure 2: Export volumes of leather (further prepared) to Africa 18 16 14 12 1 8 6 4 2 SADC (excluding SACU) 1 13 17 13 79 71 66 46 158 SACU (Excluding RSA) 1 5 4 8 1 The graph further illustrates that export volumes of leather (further prepared) from South Africa to Africa went mainly to SADC excluding SACU, followed by very intermittent exports to SACU excluding RSA. The graph also illustrates that export volumes of leather (further prepared) from South Africa to SADC excluding SACU attained a peak in 215 at an export quantity of about 158 tons over the past decade. Between 26 and 21, export quantities of leather (further prepared) from South Africa to SADC excluding SACU were very low and not more than 17 tons per annum. Export volumes of leather (further prepared) from South Africa to SACU excluding RSA attained a peak in 213 at an export quantity of about 8 tons over the past decade. The graph further illustrates that there was an increase of 243% in export volumes of leather (further prepared) from South Africa to SADC excluding SACU in 215 as compared to 214 marketing season. Figure 21 below shows export volumes of leather (further prepared) from South Africa to Americas between 26 and 215. 12 1 8 6 4 2 Figure 21: Export volumes of leather (further prepared) to Americas NAFTA 2 51 15 1 1 1 6 16 33 1 The figure further shows that export volumes of leather (further prepared) from South Africa to Americas went mainly to NAFTA, followed by very low of exports to Central America over the past decade. The figure also shows that export volumes of leather (further prepared) from South Africa to NAFTA started to increase substantially in 27, and then a decline occurred between 29 and 211 to lower levels of about 1 ton per annum. The figure further shows that export volumes of leather (further prepared) from South Africa to NAFTA 18
Export quantity (tons) attained a peak in 213 at approximately 16 tons. Export volumes of leather (further prepared) from South Africa to Central America were not more than 1 ton per annum. The figure further shows that there was a decline of 96.9% in export volumes of leather (further prepared) from South Africa to NAFTA in 215 as compared to 214 marketing season. Figure 22 below indicates export volumes of leather (further prepared) from South Africa to Asia between 26 and 215. 3 25 2 15 1 5 Eastern Asia 9 1 2 134 18 46 68 South-central Asia 36 77 South-eastern Asia 9 245 56 68 1 Western Asia 1 Figure 22: Export volumes of leather (further prepared) to Asia The graph further indicates that most of leather (further prepared) exports from South Africa to Asia landed mainly in Eastern Asia, followed by export volumes of leather (further prepared) to South-eastern Asia and South-central Asia over the past decade. The figure also indicates that export volumes of leather (further prepared) from South Africa to Eastern Asia were from a very high base attaining a peak in 211 at an export quantity of about 134 tons. The graph further indicates that during the period under scrutiny, export volumes of leather (further prepared) from South Africa to South-eastern Asia attained peak in 212 at approximately 245 tons. Export volumes of leather (further prepared) from South Africa to South-central Asia attained peak in 26 at approximately 36 tons. The figure also indicates that there was 47.8% increase in export volumes of leather (further prepared) from South Africa to Eastern Asia in 215 as compared to 214 marketing season. Figure 23 below depicts export volumes of leather (further prepared) from South Africa to Eastern Asia between 26 and 215. 19
Export quantity (tons) Export quantity (tons) 16 14 12 1 8 6 4 2 China 52 Hong Kong Special Administrative Region of China Figure 23: Export volumes of leather (prepared) to Eastern Asia 4 134 18 46 16 Japan 6 1 1 The figure further depicts that Hong Kong Special Administrative Region of China commanded the greatest share of leather (further prepared) from South Africa to Eastern Asia, followed by low volumes of leather to Japan and Republic of Korea over the past ten years. The figure also depicts that export volumes of leather from South Africa to Hong Kong Special Administrative Region of China started to increase substantially in 211, and at the same time a peak was attained at approximately 134 tons. The figure further depicts that between 26 and 21, export volumes of leather (further prepared) from South Africa to Hong Kong Special Administrative Region of China experienced very low exports of not more than 4 tons per annum. The figure also depicts that there was a decline of 65.2% in export volumes of leather (further prepared) from South Africa to Hong Kong Special Administrative Region of China in 215 as compared to 214 marketing season. Figure 24 shows export volumes of leather (further prepared) from South Africa to Europe between 26 and 215. Figure 24: Export volumes of leather (further prepared) to Europe 2 18 16 14 12 1 8 6 4 2 European Union 5 1 1 14 31 16 53 83 9 172 The graph further shows that European Union commanded the greatest market share of leather (further prepared) from South Africa to Europe over the past decade. The graph also shows that exports of leather from South Africa to the European Union were from a low base during the first half of the ten year period (26-21) reaching not more than 32 tons per annum. The graph further shows that exports of leather from 2
Export quantity (tons) South Africa to European Union were from a high base during the second half of the ten year period (211-215) under review, until a peak was attained in 215 at about 172 tons. The graph also shows that there was an increase of 91.1% in export volumes of leather (further prepared) from South Africa to the European Union in 215 as compared to 214 marketing season. Figure 25 below illustrates export volumes of leather (further prepared) from South Africa to Oceania between 26 and 215. Figure 25: Export volumes of leather (further prepared) to Oceania 25 2 15 1 5 Australia and New Zealand 1 1 5 3 19 1 The graph further illustrates that export volumes of leather (further prepared) from South Africa to Oceania landed mainly in Australia and New Zealand over the past decade. The graph also illustrates that export volumes of leather (further prepared) from South Africa to Australia and New Zealand were very low during the first half of the ten year period (26-21) and not more than 1 ton per annum. During the second half of the ten year period (211-215), export volumes of leather (further prepared) from South Africa to Australia and New Zealand were from a high base attaining a peak in 212 at approximately 19 tons. The graph further illustrates that there was no growth (.%) in export volumes of leather (further prepared) from South Africa to Australia and New Zealand in 215 as compared to 214 marketing season. 21
Export Value (Rands) Figure 2 below depicts value of leather (further prepared) exports by Provinces of South Africa to the world between 26 and 215. 35 Figure 26: Value of leather (further prepared) exports by Provinces 3 25 2 15 1 5 Western Cape 4747 2434258 249241 3495269 2919441 46824 5577855 586745 5571948 13171 Eastern Cape 34336252 341397 1181951 3879353 858195 36882 4797 1267977 27863 49866 Northern Cape 12738 23 14243 27952 64945 Free State 27 282345 64433 945 92827 KwaZulu-Natal 292729 5582614 2285116 4424882 855644 192728 224166 61649 1737859 12161533 North West 2276 3144 197662 328862 11314 99834 4326 Gauteng 388814 42521158 62986757 79591996 112844758 78693571 71519226 189793714 3222864 27581952 Mpumalanga 7716 16664 136964 12489 14168 76886 64254 245918 473518 Limpopo 35464 5258 42354 29639 29253 1338 79738 7349 175792
The figure further depicts that exports of leather (further prepared) in value from South Africa to the world originated mainly from Gauteng Province, followed by Eastern Cape, Western Cape and KwaZulu-Natal over the past decade. Mpumalanga, Northern Cape, Free State, North West and Limpopo provinces had very low or intermittent exports of leather to the world of not more than R3.1 million per annum. One of the reasons why Gauteng Province was the biggest exporter of leather (further prepared) is because most processing factories are located in Johannesburg over the same period. The figure also depicts that exports of leather from Gauteng Province to the world were from a low base during the first half of the ten year period (26-21) under scrutiny reaching a maximum of R112.8 million in 21. The figure further depicts that exports of leather from Gauteng Province to the world were from a high base during the second half of the ten year period (211-215) under scrutiny attaining a peak in 214 at approximately R322 million. The figure also depicts that there was 35.7% decrease in exports of leather (further prepared) from Gauteng Province to the world in 215 as compared to 214 marketing season.
Export Value (Rands) Figure 27 indicates value of leather (further prepared) exports by Western Cape Province between 26 and 215. 6 Figure 27: Value of leather (further prepared) by Western Cape Province 5 4 3 2 1 City of Cape Town 1546139 96426 452834 3297 24843 2863473 143322 741333 1214621 2871322 Cape Winelands 2399842 975735 974546 3238 2335523 1584316 441713 493784 4357327 2851564 Eden 111747 49898 16466 145531 37975 234251 11743 128328 438185
Export value (Rands) The figure further indicates that exports of leather (further prepared) in value from Western Cape Province to the world were mainly from Cape Winelands District Municipality, followed by very low volumes of leather from the City of Cape Town Metropolitan Municipality and Eden District Municipality over the past ten years under observation. The figure also indicates that exports of leather (further prepared) from Cape Winelands District Municipality to the world were from a low base during the first half of the ten year period (26-21) under scrutiny attaining a peak in 29 at approximately R3. million. The figure further indicates that exports of leather (further prepared) from Cape Winelands District Municipality to the world were from a high base during the second half of the ten year period (211-215) under scrutiny attaining a peak in 213 at approximately R4.9 million. Furthermore, exports of leather (further prepared) from City of Cape Town Metropolitan Municipality to the world attained a peak in 215 at approximately R2.8 million. The figure further indicates that there was a decline of 34.5% in exports of leather (further prepared) from the Cape Winelands District Municipality to the world in 215 as compared to 214 marketing season. Figure 28 below shows export values of leather (further prepared) from Eastern Cape Province to the world between 26 and 215. Figure 28: Value of leather (further prepared) exports by Eastern Cape Province 4 35 3 25 2 15 1 5 Cacadu 359276 4724 4797 347 4951 727 Chris Hani 13 8635 Nelson Mandela Bay 34326951 33744694 1181951 3879353 858195 32158 126763 189912 37571 Buffalo City 932 18494 The graph further shows that Nelson Mandela Metropolitan Municipality commanded the greatest market share of leather (further prepared) exports in value from the Eastern Cape province, followed by Cacadu and Chris Hani District municipalities and very low or intermittent exports from Buffalo City Metropolitan Municipality to the world over the past decade. It is also evident in the graph that exports of leather (further prepared) from Nelson Mandela Metropolitan Municipality to the world were from a high base during the first half of the ten year period (26-21) under review attaining a peak in 26 and 27 at approximately R3.4 and R3.3 million respectively. During the second half of the same ten year period (211-215), exports of leather (further prepared) from Nelson Mandela Metropolitan Municipality to the world were from a low base reaching a maximum of R1.2 million in 213. It is further evident in the graph that exports of leather (further prepared) from Cacadu District Municipality to the world attained a peak in 27 at approximately R359 276. Exports of leather (further prepared) from Chris Hani District and Buffalo City Metropolitan Municipalities were low and not more than R13 and R9 32 per annum respectively. The graph also shows that there was an increase of 97.8% in exports of leather (further prepared) from Nelson Mandela Metropolitan Municipality to the world in 215 as compared to 214 marketing season. Figure 29 below illustrates export values of leather (further prepared) from KwaZulu-Natal Province to the world between 26 and 215.
Export value (Rands) Export value in Rands Figure : Value of leather (further prepared) exports by KwaZulu-Natal Province 18 16 14 12 1 8 6 4 2 UMgungundlovu 77429 19435 6451923 15768 456723 822847 18331 464681 1724 4245 Uthukela 153254 5473145 15429927 396376 ethekwini 1165185 4256 196484 294134 759561 483392 3781 14479 177515 1167383 The figure further illustrates that UThukela District municipality commanded the greatest market share of exports of leather (further prepared) from KwaZulu-Natal province to the world, followed by ethekwini Metropolitan Municipality and UMgungundlovu District municipality. The figure also illustrates that exports of leather (further prepared) from UThukela District municipality to the world started to increase substantially in 27 until a peak was attained in 29 at approximately R3.9 million, while exports of leather (further prepared) from ethekwini Metropolitan municipality to the world attained a peak in 215 at approximately R12.5 million. It is further evident in the figure that exports of leather (further prepared) from UMgungundlovu District municipality to the world attained a peak in 28 at approximately R6.4 million. The figure further illustrates that there was no growth (.%) in exports of leather (further prepared) from UThukela District Municipality to the world in 215 as compared to 214 marketing season. Figure 3 below depicts export values of leather (further prepared) from North West Province to the world between 26 and 215. Bojanala 197662 31787 11314 99834 Dr Ruth Segomotsi Mompati 2276 Dr Kenneth Kaunda 3144 1992 4326 Figure 3: Value of leather (further prepared) by North West Province 35 3 25 2 15 1 5 The graph further depicts that exports of leather (further prepared) from North West Province to the world were mainly from Bojanala District Municipality, followed by Dr. Ruth Segomotsi Mompati District municipality and very low or intermittent levels of leather exports from Dr. Kenneth Kaunda District Municipality over the past decade. The graph also depicts that exports of leather (further prepared) from Bojanala District municipality to 26
Export Value (Rands) the world were from a high base during the second half of the ten year period (211-215) under review, attaining a peak in 212 at an export value of R3. million. Exports of leather (further prepared) from Dr. Ruth Segomotsi Mompati District municipality to the world attained a peak in 28 an export value of R2.2 million. The graph also depicts that there was a 1% decline in exports of leather (further prepared) from Bojanala District Municipality to the world in 215 as compared to 214 marketing season. Figure 3 indicates export values of leather (further prepared) by Gauteng Province to the world between 26 and 215. Figure 3: Value of leather (further prepared) exports by Gauteng Province 25 2 15 1 5 Sedibeng 1383 2751 495 1992 352 59464 52 West Rand 22654 37496 19979 5332 18425 497964 353117 2658 7731821 Ekurhuleni 15189759 1153285 42941958 7586172 7537412 2652755 13183159 83849668 22656414 9447367 City of Johannesburg 12874932 28631941 257161 1826671 2256511 2656422 24911787 26253914 389477 368387 City of Tshwane 181678 2619449 174633 184579 14898321 31515969 32926316 79333963 92526741 1169325 The figure further indicates that leather exported by Gauteng Province to the world originated mainly from Ekurhuleni Metropolitan Municipality, followed by the City of Tshwane Metropolitan and City of Johannesburg Metropolitan Municipalities over the past ten years under observation. The figure also indicates that exports of leather (further prepared) from Ekurhuleni Metropolitan Municipality to the world were from a high base during the second half of the ten year period (211-215) under review, attaining a peak in 214 at an export value of approximately R227 million. The figure further indicates that exports of leather (further prepared) from the City of Tshwane Metropolitan Municipality to the world attained a peak also in 215 at an export value of approximately R12 million. Exports of leather (further prepared) from the City of Johannesburg Metropolitan Municipality to the world attained a peak in 27 at an export value of R28.6 million. The figure also indicates that there was a decline of 1.3% in exports of leather (further prepared) from Ekurhuleni Metropolitan Municipality to the world in 215 as compared to 214 marketing season. Figure 32 shows export values of leather (further prepared) from Limpopo Province to the world between 26 and 215. 27
Export value(rands) Export value (Rands) 14 12 1 8 6 4 2 Vhembe 3875 1948 1478 116 498 2124 19761 Capricorn 35464 2721 2259 1161 1156 9282 1864 532 4948 Waterberg 2615 45 1881 39894 4849 126312 Figure 32: Value of leather (further prepared) exports by Limpopo Province The figure further shows that exports of leather (further prepared) from Limpopo Province to the world were mainly from Vhembe District Municipality, followed by Waterberg and Capricorn District Municipalities during the period under examination. The figure also shows that exports of leather (further prepared) from Vhembe District Municipality to the world started to increase substantially in 28 and at the same time attained a peak at approximately R38 75. The figure further shows that exports of leather (further prepared) from Waterberg District Municipality to the world attained a peak in 214 at approximately R48 49, while exports of leather (further prepared) from Capricorn District Municipality to the world attained a peak in 215 at approximately R49 48. The figure also shows that there was 1% decline in exports of leather (further prepared) from Vhembe District Municipality to the world in 215 as compared to 214 marketing season. Figure 33 below illustrates export values of leather (further prepared) from Mpumalanga Province to the world between 26 and 215. 5 45 4 35 3 25 2 15 1 5 Nkangala 23 Ehlanzeni 7716 16664 113964 12489 14168 76886 64254 245918 473518 Figure 33: Value of leather (further prepared) exports by Mpumalanga Province The figure further illustrates that exports of leather (further prepared) from Mpumalanga Province to the world were mainly from Ehlanzeni District Municipality, followed by very intermittent levels of leather exports from Nkangala District Municipality over the past decade. The figure also illustrates that exports of leather (further prepared) from Ehlanzeni District Municipality to the world were from a low base during the first half of the ten 28
year period (26-21) under review, reaching a maximum of R166 64 in 28. Exports of leather (further prepared) from Ehlanzeni District Municipality to the world were from a high base during the second half of the ten year period (211-215) attaining a peak in 215 at approximately R473 518. The figure further illustrates that exports of leather (further prepared) from Nkangala District Municipality to the world attained a peak in 29 at approximately R23. The figure also illustrates that there was 92.5% increase in exports of leather (further prepared) from Ehlanzeni District Municipality to the world in 215 as compared to 214 marketing season. 3.1 Share Analysis Table 2 below depicts that in South Africa, Eastern Cape Province commanded the greatest market share of raw hides and skins exports between 26 and 215. Table 2: Share Analysis of provincial raw hides and skins exports to the total RSA raw hides and skins exports (%) Years: Provinces Western Cape 4.14 1.1 7.39 1.74 5.29 15.3 13.2 9.46 14.5 4.3 Eastern Cape 61.7 56.2 5.5 43.3 54.3 63.3 63.8 64.6 57.1.2 Free State 2.74 1.44 1.77. 1.4...23 9.84. KwaZulu-Natal 7.94 15.7 5.32 1.3 11.7 15.4 17.5 19.8 14.2 5.3 North West 11.8 6. 19.4 28.7 22.5 2.36 4.87 4.99 3.16. Gauteng 1.7 8.5 15.5 11. 4.4 3.67.59 1.1 1.3 89.9 Mpumalanga.2..1 1.58.61.....2 Limpopo 1.2 2.49.16 3.31.9.....1 Total 1 1 1 1 1 1 1 1 1 1 Table 3 below shows that in Western Cape, the greatest market share of raw hides and skins exports came from the City of Cape Town Metropolitan Municipality over the past ten years. Table 3: Share of district raw hides and skins exports to the total Western Cape provincial raw hides and skins exports (%) Years Districts City of Cape Town 76.4 88.9 99.3 87.6 99.7 99.6 99.9 99.72 99.98 99.99 Metro Cape Winelands.18.8.67 1.95.27.19.1..1. Eden District..46....8.5.28.1.1 Total 1 1 1 1 1 1 1 1 1 1 Table 4 below indicates that in Eastern Cape Province, the greatest market share of raw hides and skins exports came from Nelson Mandela Metropolitan municipality over the past ten years. Table 4: Share of district raw hides and skins exports to the total Eastern Cape provincial raw hides and skins exports (%) Years Districts 29
Years Cacadu District 3.52.1.6......4. Buffalo City 2.71....... 2.8 98.9 Nelson Mandela 96.1 99.99 99.9 98.6 96.9 94.1 98.3 21.65 97.87 1.1 Total 1 1 1 1 1. 1 1 1 1 Table 5 below illustrates that in Free State Province, the greatest market share of raw hides and skins exports was mainly from Fezile Dabi District Municipality during the period under review. Table 5: Share of district raw hides and skins exports to the total Free State provincial raw hides and skins exports (%) 27 26 28 29 21 211 212 213 214 215 Years Districts Lejweleputsw a..... 97.99.. 4.85 Thabo....... 1 6.8 Mofutsanyan e Fezile Dabi....... 69.83 89.6 Mangaung District......46. 2.76.. Total 1 1 1.. 1. 1 1 1 Table 6 below shows that in KwaZulu-Natal Province, the greatest market share of raw hides and skins exports was mainly from UMgungundlovu District Municipality during the period under scrutiny. Table 6: Share of district raw hides and skins exports to the total KwaZulu-Natal provincial raw hides and skins exports (%) Years Districts UMgungundl 1 ovu 87.7 94.7 99.1 65.5 91.2 1 1 1 1 Uthukela. 3.55.75.6..... District ethekwini Metro. 1.78.19. 1.61.... Total 1 1 1 1 1 1 1 1 1 1 Table 7 below depicts that in North West Province, the greatest market share of raw hides and skins exports was mainly from Bojanala District Municipality during the period under review..3 8.9 18.8 3
Table 7: Share of district raw hides and skins exports to the total North West provincial raw hides and skins exports (%) Years Districts Bojanala 1 1 99.99 56.5 45.4 7.1 94.4 1 1 1 District Dr. Mompati.. 1....... Total 1 1 1 1 1 1 1 1 1 1 Table 8 illustrates that in Gauteng Province, the greatest market share of raw hides and skins exports was mainly from the City of Johannesburg Metropolitan Municipality during the period under review. Table 8: Share of district raw hides and skins exports to the total Gauteng provincial raw hides and skins exports (%) Years 26 27 28 29 21 211 212 213 214 215 Districts Sedibeng. 41.6 11.1 4.39.4..13.. District. West Rand 48.1.1.26.6.95 2.54 22.9 15.62.87 District. Ekurhuleni.37.42.59 2.48 5.53 72.7 27.6.81 5.98 Metro 5.6 City of 51.1 57.5 88.1 92.7 93.3 24.6 49.3 8.9 84.67 Joburg 21.9 City of.36.41..4.13.1.12. 8.47 Tshwane 72.4 Total 1 1 1 1 1 1 1 1 1 1 Table 9 below shows that in Mpumalanga Province, the greatest market share of raw hides and skins exports was mainly from Ehlanzeni District municipality during the ten year period. Table 9: Share of district raw hides and skins exports to the total Mpumalanga provincial raw hides and skins exports (%) Years Districts Gert Sibande... 97.9 1..... Nkangala. District 1.. 2.9..... Ehlanzeni. District.. 1.... 1. Total 1. 1 1... 1.. Table below 1 reflects that in Limpopo Province, the greatest market share of raw hides and skins exports came from Waterberg District Municipality during the period under examination. 31
Table 1: Share of district raw hides and skins exports to the total Limpopo provincial raw hides and skins exports (%) Years 26 27 28 29 21 211 212 213 214 215 Districts Capricorn. District 4.56.39....... Waterberg. District 95.4 99.6 1 1 1.... Total 1 1 1 1 1..... Table 11 below shows that in South Africa, Gauteng Province commanded the largest market share of leather (further prepared) exports from South Africa between 26 and 215 under observation. Table 11: Share Analysis of provincial leather (further prepared) exports to the total RSA leather exports (%) Years Provinces Western Cape 5.5 2.87 2.49 3.82 3.11 6.66 1.3 3.5 1.59 4.3 Eastern Cape 43.3 4.2 1.2 4.24.83.6.4.75.6.2 Kwazulu-Natal 2.46 6.59 22. 4.83 8.17 2.76.44.37 3.15 5.3 North West.. 2.27.. 2.9 5.39.1.3. Gauteng 49.1 5.2 62.8 86.9 87.7 86.6 83.7 95.24 95.4 89.9 Mpumalanga..9.17.15.12.14.15.4.7.2 Limpopo..4.4.4.3.51.3.5.2.1 Total 1 1 1 1 1 1 1 1 1 1 Table 12 below depicts that in Western Cape Province, the greatest market share of leather (further prepared) exports originated mainly from the City of Cape Town Metropolitan over the past ten years. Table 12: Share of district leather (further prepared) exports to the total Western Cape provincial leather exports (%) Years Districts City of Cape Town Metro 96.8 77.7 53.8 89.8 85.2 93.7 97.5 97.58 19.38 28.6 Cape Winelands District.32 1.85 3.52 4.16 12. 1.67.58.29 8.62 28.4 Eden District Municipality 2.89 2.5 42.7 4.16 12. 4.67 1.92 2.13. 42.9 Total. 1 1 1 1 1 1 1 1 1 In Eastern Cape Province, the greatest market share of the export came from Cacadu District Municipality during the ten year period under examination (see Table 13 below). 32
Table 13: Share of district leather (further prepared) exports to the total Eastern Cape provincial leather exports (%) Years Districts Cacadu. 97.9 94.2 99.2 99.4 98.5 1 96.33 2.38 1.7 Nelson Mandela 91.2 Metro 99.97 2.11 5.83.82. 1.51. 3.67 91.36 Chris Hani........ 6.25 2.1 Total 1 1 1 1 1 1. 1 1 1 In KwaZulu Natal Province, the greatest market share of leather exports came from ethekwini Metropolitan Municipality during the period under review (see Table 14 below). Table 14: Share of district leather (further prepared) exports to the total KwaZulu-Natal provincial leather exports (%) Years Districts umgungundlovu 7.85.35 29.2 3.41 5.35 63. 77.1 74.92.2 3.5 UThukela 7.85 98. 7.5 89.6. 31.9 1.6.1.. ethekwini Metro 53.4 1.62.26 6.65 94.6 5.8 12.3 25.6 99.98 96.5 Total 1 1 1 1 1 1 1 1 1 1 In North West Province, Bojanala District Municipality commanded the greatest market share of leather exports (further prepared) during the period under scrutiny (see Table 15 below). Table 15: Share of district leather (further prepared) exports to the total North West provincial leather exports (%) Years Districts Bojanala..... 1 99.6 1 1. Dr. Ruth Segomotsi.. 1...... Mompati. Dr Kenneth Kaunda.... 1..36.. 1. Total.. 1. 1 1 1 1 1 1 In Gauteng Province, Table 16 shows that the City of Johannesburg Metropolitan Municipality commanded the greatest market share of leather exports (further prepared) during the past ten years. Table 16: Share of district leather exports to the total Gauteng provincial leather exports (%) Years Districts Sedibeng District 32.5 25.9 68.3 95.3 82.7 32.7 7.76..2. West Rand District 1.32 1.22 3.54 1.31 15.1 51.2 69.2 15.61.1 3.7 Ekurhuleni Metro 6.47.5.21.6.61 11.3 21.1.81 7.26 45.5 City of 33.3 67.4 3.27 2.3 1.28 4.6 1.15 8.9 1.1 1.8 33
Years Districts Johannesburg City of Tshwane Metro 26.4 5.42 24.7 1.4.31.26.78. 28.7 49. Total 1 1 1 1 1 1 1 1 1 1 Table 17 below shows that in Mpumalanga Province, the greatest market share of leather (further prepared) exports originated mainly from Nkangala District Municipality between 26 and 215. Table 17: Share of district leather (further prepared) exports to the total Mpumalanga provincial leather exports (%) Years Districts Nkangala District. 99.7 1 1 99.8 1 1 98.75.. Ehlanzeni District..34...2.. 1.25 1 1 Total. 1 1 1 1 1 1 1 1 1 Table 18 below depicts that in Limpopo province, the greatest market share of leather (further prepared) exports originated mainly from Vhembe District Municipality over the past ten years. Table 18: Share of district leather (further prepared) exports to the total Limpopo provincial leather exports (%) Years Districts Mopani District....... 5.3.. Vhembe District.. 93.3 46. 47.1.29 3. 26.64 26.9. Capricorn District. 1 6.67 47.8 37.6. 7. 23.33 7.2 28.1 Waterberg District... 6.17 15.3 96.8.. 65.9 71.9 Total. 1 1 1 1 1 1 1 1 1 4. IMPORT VOLUMES OF RAW HIDES & SKINS The demand for hides by the automotive sector out-strips the number of cattle slaughtered locally and 6-7% of the hides produced are suitable for use in automotive upholstery. Yet this is inadequate for automotive needs, which is why the shortfall of high quality wet-blues has to be imported (Ballard, 21). South Africa imports hides and skins from all over the world, in particular Brazil, India and Argentina are processed into value added products. Figure 34 below depicts import volumes of raw hides and skins from various regions into South Africa between 26 and 215. 34
Import quantity(tons) Import quantity (tons) 1 9 8 7 6 5 4 3 2 1 Africa 4 112 68 14 199 3473 394 7256 8827 7361 Americas 2 2 2 2 2 Europe 91 22 1 53 Figure 34: Import volumes of raw hides and skins from the world The figure further depicts that import volumes of raw hides and skins from the world into South Africa were mainly from Africa, followed by Europe and very minimal or low levels of raw hides and skins imports from Americas over the past decade. The figure also depicts that imports of raw hides and skins from Africa into South Africa were from a low base during the first half of the ten year period (26-21) of not more than 1 99 tons per annum. Imports of raw hides and skins from Africa into South Africa were from a high base during the second half of the ten year period (211-215) attaining a peak in 214 at approximately 8 827 tons. It is further evident in the figure that import volumes of raw hides and skins from Europe into South Africa attained a peak in 28 at an import quantity of about 22 tons. The figure also depicts that in 26, and again between 21 and 212, there were no import volumes of raw hides and skins from Europe into South Africa. The figure further depicts that there was a decline of 16.6% in import volumes of raw hides and skins from Africa into South Africa during 215 as compared to 214 marketing season. Figure 3 below indicates import volumes of raw hides and skins from Africa into South Africa between 26 and 215. Eastern Africa Rest 18 SADC (excluding SACU) 4 112 68 14 1135 2274 1572 3245 3372 185 SACU (Excluding RSA) 774 1198 2332 411 5436 6276 Figure 35: Import volumes of raw hides and skins from Africa 7 6 5 4 3 2 1 The graph further indicates that imports of raw hides and skins from Africa into South Africa were mainly from SACU excluding RSA, followed by SADC excluding SACU and very intermittent import volumes from Eastern 35
Import quantity (tons) Africa over the past decade. The graph also indicates that imports of raw hides and skins from SACU excluding RSA into South Africa started to increase substantially during the second half of the ten year period (211-215) attaining a peak in 215 at an import quantity of approximately 6 276 tons. It is also evident in the graph that import volumes of raw hides and skins from SADC into South Africa attained a peak also in 214 at approximately 3 372 tons. The graph further depicts that between 26 and 29, there were no imports of raw hides and skins from SACU into South Africa during the period under review. The graph also indicates that there was an increase of 15.4% in import volumes of raw hides and skins from SACU excluding RSA into South Africa during 215 as compared to 214 marketing season. Figure 36 below illustrates import volumes of raw hides and skins from SACU region into South Africa between 26 and 215. 3 25 2 15 1 5 Mozambique 18 64 21 4 25 78 Zambia 46 468 1478 568 Zimbabwe 14 1114 227 1526 2777 1869 438 Figure 36: Import volumes of raw hides and skins from SADC The figure further illustrates that imports of raw hides and skins from SADC into South Africa originated mainly from Zimbabwe, followed by Zambia and very low volumes from Mozambique into South Africa over the past decade. The figure also depicts that imports of raw hides and skins from Zimbabwe into South Africa were from a high base during the second half of the ten year period (211-215) attaining a peak in 211 and 213 at about 2 27 and 2 777 tons respectively. Between 25 and 28, imports volumes of raw hides and skins from Zimbabwe into South Africa were low and ranged between and 1 114 tons per annum. The figure further illustrates that import volumes of raw hides and skins from Zambia attained a peak in 21 at about 1 478 tons during the period under review. The figure also illustrates that there was 76.5% decline in import volumes of raw hides and skins from Zimbabwe into South Africa during 215 as compared to 214 marketing season. Figure 37 below shows import volumes of raw hides and skins from the Americas into South Africa between 26 and 215. 36
Import quantity (tons) Import quantity (tons) Figure 37: Import volumes of raw hides and skins from Americas 3 3 2 2 1 1 South America 2 2 2 2 2 NAFTA The graph further shows that imports of raw hides and skins from Americas into South Africa were mainly from South America over the past ten years. The graph also shows that imports of raw hides and skins from South America into South Africa were from a high base during the first half of the ten year period (26-21) attaining a peak in 26 at approximately 2.4 tons. There were no import volumes of raw hides and skins from NAFTA into South Africa between 26 and 215 under review. The graph further shows that in 27 and again between 212 and 215, there were no imports of raw hides and skins from South America into South Africa. The graph also shows that there was no growth (.%) in import volumes of raw hides and skins from South America into South Africa during 215 as compared to 214 marketing season. Figure 38 below indicates import volumes of raw hides and skins from Europe into South Africa between 26 and 215. Figure 38: Import volumes of raw hides and skins from Europe 25 2 15 1 5 European Union 91 22 1 53 The figure further indicates that European Union was the main supplier of raw hides and skins from Europe into South Africa during the period under review with no competition from other European regions. It is also evident in the figure that imports of raw hides and skins from the European Union into South Africa were from a high base during the first half of the ten year period (26-21) attaining a peak in 28 at approximately 22 tons. During the second half of the ten year period (211-215), imports of raw hides and skins from the 37
Import quantity (tons) European Union into South Africa were from a low base attaining a maximum of approximately 53 tons in 213. The figure further indicates that in 26 and again between 21 and 212, there were no import volumes of raw hides and skins from the European Union into South Africa. The figure also indicates that there was no growth (.%) in import volumes of raw hides and skins from European Union into South Africa during 215 as compared to 214 marketing season. Figure 38 below shows import volumes of raw hides and skins from Oceania into South Africa between 26 and 215. Figure 39: Import volumes of raw hides and skins from Oceania.9.8.7.6.5.4.3.2.1 Australia and New Zealand.68.8 The graph further shows that most import volumes of raw hides and skins from Oceania into South Africa originated mainly from Australia and New Zealand during the period under observation. The graph also shows that imports of raw hides and skins from Australia and New Zealand into South Africa started to increase substantially in 27 until a peak was attained in 29 at approximately.8 tons. The graph also shows that in 26 and again between 21 and 215, there were no import volumes of raw hides and skins from Australia and New Zealand into South Africa. The graph further shows that there was no growth (.%) in imports of raw hides and skins from Australia and New Zealand into South Africa in 215 as compared to 214 marketing season. 4. IMPORT VOLUMES OF LEATHER (FURTHER PREPARED) INTO SOUTH AFRICA Figure 4 below depicts import volumes of leather (further prepared) from various regions of the world into South Africa between 26 and 215. 38
Import quantity (tons) Import quantity (tons) 6 5 4 3 2 1 Africa 8 12 6 38 388 27 4 5 Americas 16 46 4 6 486 55 26 5 8 3 Asia 167 13 66 45 16 52 49 71 4 37 Europe 41 42 7 14 24 45 4 6 1 2 Figure 4: Import volumes of leather (further prepared) from the world The graph further depicts that the major import market of leather (further prepared) from the world into South Africa was Americas during, followed by Asia and very intermittent imports from Europe Africa over the past decade. The graph also depicts that import volumes of leather (further prepared) from Americas into South Africa were from a low base during the first half of the ten year period (26-21) reaching a maximum of approximately 486 tons in 21. Imports of leather (further prepared) from Asia into South Africa started to increase substantially in 26 and at the same time attained a peak at an import quantity of about 167 tons. From 26 to 215, import volumes of leather (further prepared) from Americas into South Africa consistently declined until low levels of about 3 tons were reached in 215. The graph further depicts that import volumes of leather (further prepared) from Americas into South Africa substantially declined by 96.3% in 215 as compared to 214 marketing season. Figure 41 illustrates import quantities of leather (further prepared) from the Americas into South Africa between 26 and 215. Figure 41: Import volumes of leather (further prepared) from America 6 5 4 3 2 1 South America 16 45 4 6 486 55 26 47 8 3 NAFTA 1 3 The figure further illustrates that import volumes of leather (further prepared) from the Americas into South Africa came mainly from South America followed by low import volumes from NAFTA during the period under observation. The figure also illustrates that imports of raw hides and skins from South America into South 39
Import quantity (tons) Africa were from a low base during the first half of the ten year period (26-21) attaining a maximum of approximately 486 IN 21 tons. During the second half of the ten year period (211-215), imports of leather (further prepared) from South America into South Africa were from a high base attaining a peak in 214 at approximately 8 tons. The figure further illustrates that import volumes of leather (further prepared) from South America into South Africa substantially declined by 96.3% in 215 as compared to 214 marketing season. Figure 42 shows import quantities of leather (further prepared) from Asia into South Africa between 26 and 215. Figure 42: Import volumes of leather (further prepared) from Asia 18 16 14 12 1 8 6 4 2 Eastern Asia 1 1 2 1 5 3 South-central Asia 159 119 64 45 11 47 49 41 4 37 South-eastern Asia 6 4 1 Western Asia 1 1 The graph further shows that imports of leather (further prepared) from Asia into South Africa came mainly from South-central Asia, followed by very low volumes of leather (further prepared) from other Asian regions during the period under observation. The graph also shows that imports of leather (further prepared) from South-central Asia into South Africa were from a high base during the first half of the ten year period (26-215) attaining a peak in 26 at approximately 159 tons. Imports of leather (further prepared) from Southcentral Asia into South Africa were from a low base during the second half of the ten year period (211-215) and not more than 49 tons per annum. The graph further shows that imports of leather (further prepared) from Eastern Asia into South Africa attained a peak in 213 at approximately 3 tons. The graph also shows that import volumes of leather (further prepared) from South-central Asia into South Africa slightly declined by 7.5% in 215 as compared to 214 marketing season. Figure 43 below depicts import volumes of leather (further prepared) from Europe into South Africa between 26 and 215. 4
Import quantity (tons) Import quantity (tons) Figure 43: Import volumes of leather (further prepared) from Europe 5 45 4 35 3 25 2 15 1 5 European Union 41 42 7 14 24 45 4 6 1 2 The figure further depicts that major import supplying market for leather (further prepared) from Europe into South Africa was mainly European Union during the period under observation. The figure also depicts that imports of leather (further prepared) from European Union into South Africa were from a high base during the first half of the ten year period (26-21) attaining a peak in 27 at approximately 42 tons. During the second half of the ten year period (211-215), imports of leather (further prepared) from European Union into South Africa attaining a peak in 211 at approximately 45 tons. The figure further depicts that in 28, 213, 214 and 215, imports of leather (further prepared) from European Union into South Africa ranged between 1 and 7 tons per annum. The figure also depicts that import volumes of leather (further prepared) from European Union into South Africa slightly increased by 1% in 215 as compared to 214 marketing season. Figure 44 below shows import volumes of leather (further prepared) from Africa into South Africa between 26 and 215. 4 35 3 25 2 15 1 5 Northern Africa 1 1 1 1 SADC (excluding SACU) 1 2 4 SACU (Excluding RSA) 1 38 22 1 Figure 44: Import volumes of leather (further prepared) from Africa The graph further shows that major import supplying market for leather (further prepared) from Africa into South Africa was mainly SACU excluding RSA, followed by very intermittent volumes from SADC and Northern Africa over the past ten years under observation. The graph also shows that imports of leather (further prepared) from SACU excluding RSA into South Africa started to increase substantially in 211 and at the same time attained a peak at approximately 38 tons. The graph further shows that from 26 to 21 and again in 213, there were no imports of leather (further prepared) from SACU excluding RSA into South Africa. 41
Imports of leather (further prepared) from Northern Africa and SADC excluding SACU into South Africa ranged between 1 and 4 tons per annum. The graph also shows that import volumes of leather (further prepared) from SACU excluding RSA into South Africa decreased by 1% in 215 as compared to 214 marketing season. 42
5. SKINS, HIDES AND LEATHER VALUE CHAIN Figure 45: Skins, Hides and Leather value chain 1. Skins and Hides Supply Farmers, Feedlots and Abattoirs (Exports of hides and skins) 2. Semi Processed 3. Finished Leather Wet Blues and Wet White (Appendix A) (Appendix C) Footweat and General Goods Manufacturers. (Appendix A) Automotive Leather (Exports of splits, splits for domestic use) 4. Finished Product Footwear and General Goods Leather (Appendix A) Cut and Stitch Auto Upholstery (Exports of car assembler s esp. Germany & Japan) 5. Market Domestic Footwear and General Goods Market (Minor exports) Small Domestic Market Source: Richard Ballard (UKZN) 43
Figure 48 shows that the value chain is divided into five stages: Skin & hide supply, Semi processed leather, Finished leather, Finished products; and The market. The various operations are linked by a series of arrows showing imports, exports and transfers down the value chain in South Africa. Stage 1 in the diagram is skins and hides supply. This stage involves the recovery of hides and skins from farming stock bred primarily for meat consumption. Thus, hides and skins are mainly recovered from slaughterhouses and farms. Because the leather industry depends on the recovery of hides and skins of the farming stock, availability of raw material directly depends on the size of the animal population, the take-off ratio and the weight/size of the hide/skin recovered. The bulk of the skins and hides go onto the next stage of processing and a small percent do get exported. Many of the feedlots / abattoirs have structural links with hide traders and primary tanneries. Exports consist of hand flayed dry salted and sun dried produced in rural areas outside of official abattoirs. Exporters argue that the reason to be exported is that they are low grade hides and have little use here at home. Some abattoirs export good quality hides rather than channelling them into domestic processing. Stage 2 is the production of semi processed skins and hides. Majority of the skins and hides are locally sourced and minority is imported. At this stage the skins and hides undergo the first stage of tanning which preserves the skins and hides as a semi processed leather. This stage is also called the wet blue because of the wet and a pale blue colour which comes from the chromium salt used to tan the skin or hide. Some tanneries use tannins from sources such as wattle trees to preserve the leather. This process is named vegetable tanning and the stage labelled wet white. It is interesting to note that several wet blue, and wet white processors are owned by local feedlots/abattoirs. From this stage the skin or hide can travel in one of the three directions: footwear and general goods tanning automotive tanning and exports. The better quality wet-blues are sold to automotive-tanners and the lower quality ones to tanneries that manufacture other leather products. Stage 3 is the finished leather. At this stage of the leather chain the collected raw hides are converted into what consumers recognise as leather. The semi processed leather that stay in the country either travel to automotive re-tanning or footwear / general goods re-tanning. Automotive re-tanners get access to the bulk of skins / hides (mainly high quality); automotive upholstery only uses part of the skin/hide. The part that they use is the outer layer of the skin / hide (called grain). The inner layer of the skin / hide (called the flesh or second split) is made available to footwear re-tanners or get exported. Stage 4 is the finished product. In this stage there are factories involved in cut and stitching operations that manufacture leather seat covers for the automotive industry; and footwear and general leather products including fashion items like belts, leather clothing, wallets, handbags, filo-faxes, luggage, furniture gun accessories, sport goods, footwear and industrial protective clothing. Stage 5 is the market. The automotive industry is export focused mainly to luxury car manufacturing assemblers in Germany and Japan. This is due to Motor Industry Development Programme (MIDP) of the Department of Trade and Industry. The MIDP contains an import-export complementation scheme that gives credits to car component manufacturers for any exported goods. These credits are used to offset duty on car components that are imported. Export of stitched leather seat covers responded positively to this incentive and increased the demand for local hides and skins. 44
The footwear and general goods sector is domestically focused and their continued inward focus lent themselves to extensive penetration of cheap imports from China. 6. BLACK ECONOMIC EMPOWERMENT 6.1. In August, 27 automotive upholstery sewing company Allied Trim Components (Pty Ltd) sold a 5% share in its business to a black-owned company, Isibizo Investments (Pty) Ltd. This is considered to be the first BEE deal of its kind in the automotive industry. The BEE deal was quickly followed by a joint venture with Mario Levi SPA to form a separate automotive upholstery sewing company, Mia Automotive (Pty) Ltd, in Uitenhage near Port Elizabeth. 7. MARKET ACCESS 7.1. Export tariffs of hides and skins during 215 Table 19: Export tariffs of raw hides and skins of bovine originating from RSA during 215 No. Country Trade regime description Applied tariffs Total ad valorem equivalent tariff (estimated) 1 Angola MFN duties (Applied) 2.% 2.% 2 Mozambique MFN duties (Applied) 2.5% 2.5% Preferential tariff for RSA.%.% 3 Mauritius MFN duties (Applied).%.% 4 Zimbabwe MFN duties (Applied) 5.% 5.% Preferential tariff for.%.% (SADC) countries including South Africa 6 Canada MFN duties (Applied).%.% 7 Hong Kong MFN duties (Applied).%.% 8 China MFN duties (Applied) 8.% 8.% Source: Market Access Map As can be seen in Table 19 that in 215, exports of skins, hides from South Africa received preferential treatment because of the free trade agreements between South Africa and SADC. Skins, hides and leather get free entry into many lucrative markets in some of Asian countries such as Hong Kong and SADC except in China. Zimbabwe and China have high tariffs that range between 5% and 8.% to protect their domestic production. Skins, hides and leather from South Africa enjoy duty free access to the EU s market under African, Caribbean and Pacific Countries Trade Agreement (ACP); to the US market under the African Growth and Opportunity Act (AGOA) and receive preferential access in Turkey under Generalized System of Preferences (GSP). 7.2 Non tariff barriers (NTB) Non-tariff barriers take the form of strict sanitary and phyto-sanitary measures or adherence to stringent, certification measures such as 1SO 9 certification. These measures span a product s lifecycle: the raw material a product is made from, the manner the product is fabricated, the management of production process, labelling standards and packaging requirements. 45
Developed countries argue that NTBs are applied to products to ensure that imported products satisfy environmental, consumer health, consumer safely and social concerns. NTB can either be statutory obligations or determined by the market. Market related NTBs are not compulsory but are growing in importance as consumers become more discerning about the impact their purchases have on society and the environment. Non tariff barriers potential to hinder exporters ability to sell their products into foreign markets is greater than tariff barriers. Non tariff barriers increase a producer s costs throughout the supply chain due to the complexity of the processes that s/he must adhere to and the bureaucratic cost of ensuring that procedures are documented. In summary the following countries, which are the world s largest importers of skin, hides and leather place the following Non tariffs barriers. 7.2.1 European Union The exporter must satisfy the following standards in order for his/her product to be accepted in the EU. Table 2: European Union Directives No Directive Description 1 Directive (22/61/EC) Limits the use of dangerous substances and preparations (azocolourants) in textile and leather products. It should be noted that Germany and The Netherlands have stricter regulation pertaining to the usage of azo dyes Pentachlorophenol (PCP), chromium and disperse dyes. 2 Directive (94/27/EEC ) Restricts nickel and nickel compounds for metal products in direct contact with the skin. 3 Regulation (338/97 EC Streamlines the implementation of CITES in the EU. CITES contains provisions to protect endangered species through controlling international trade in these species. 4 Directive (85/374/EEC) Assigns liability to a manufacturer, or his representative in the EU, for compensation to person and property caused by a product that turns out to be not as safe as expected. 5 Social Market Requirements 6 Environmental Market Requirements 7 Quality Market Requirements Certification schemes have been developed for social management systems. Examples of such schemes are SA8 which includes basic labour standards based on international ILO Conventions. Although countries have developed their own standards it would be simpler for an exporter to satisfy two general standards: BS 775 and ISO 141. These standards are based on the ISO 9 series and stipulate the requirements for an environmental management system. Environmental issues pertaining to the production of leather occur in cleaning, tanning, finishing and waste treatment processes. The most important quality management systems are those under the ISO 9:2 series. The SG label or Schadstoffgeprüfft label stands for tested for dangerous substances. 8 Directive 94/62/EC Establishes common objectives for member countries regarding the recovery and the recycling of packaging. Also the maximum concentrations of lead, cadmium, mercury, and chromium allowed in packaging are set at 25 ppm and 1 ppm, respectively. Given these regulations, exporters should package goods in re-usable and recyclable materials. 9 Directive 24/12/EC Lies down requirements for wooden packaging material that is imported in its function of packaging material or dunnage with the import of goods, must be 46
No Directive Description Source: TIPS treated and marked according to the international ISPM 15 standard. 7.2.2. Japan Export of skins, hides and leather in Japan are regulated under the following laws: a. The Domestic Animal Infectious Disease Act. This law confirms that importation of the product is not prohibited and that proper inspection certificate is attached, carries out the inspection of the product to be imported and issues an import quarantine certificate if the quarantine officer agrees that there is no possibility of spreading any causative agent of infectious disease affecting domestic animals. However finished processed skin products are not subject to animal quarantine. b. Washington Convention. Under this convention, animals are classified from Appendix I III. Animals in Appendix I, no commercial trade is allowed including parts (bones, skins, etc.). Animals is Appendix II and III, commercial trade of parts is possible; but certificate of origin is required and an Advance Confirmation of METI (Ministry of Economy, Trade and Industry). c. Wildlife Protection and Hunting Law. This law requires that the export of certain skins and hides of wild animals should be accompanied by certificate issued by the country of origin showing that these animals are properly captured. 7.2.3 China The Chinese Government issues Public Information Notices to inform of actual or impending policy changes and categories of goods. Many of these notices are issued in Chinese and are not translated into English. The preferred route to enter Chinese market is generally to find a Chinese partner, who knows the market and understands local requirements and expectations. South African exporters are encouraged to discuss relevant Chinese national standards with importers prior to shipment to ensure that their interpretation of the regulation is accurate. Some of the regulations are listed below: a. Law of the Peoples Republic of China on the Entry and Exit Animal and Plant Quarantine Animals and plants, their products and other quarantine objects, containers and packaging materials used for carrying animals and plants, their products or other quarantine objects, as well as means of transport from animal or plant epidemic areas shall, on entry or exit, be subject to quarantine inspection in accordance with this Law. Quarantine of import and export plants, plant products, import and export animals and import animal products shall be undertaken by the Animal and Plant Quarantine Service. Quarantine of export animal products shall be undertaken by the commodity inspection authorities. b. General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) 24 Announcement 111. It eliminated importers requirements to apply for a Quarantine Import Permit (QIP) for specified animal and plant commodities before contracts are signed and products are imported into China. The animal and plant products, however, are still subject to quarantine examination upon arrival in China. The report contains an 47
UNOFFICIAL translation of the announcement along with the list of designated commodities no longer requiring a QIP. c. AQSIQ 22 Decree No. 4, the Provisions for the Administration of Risk Analysis on Entry of Animals and Animal Products, was adopted on October 18, 22 and approved on December 31, 22 for implementation from February 1, 23. d. AQSIQ 22 Announcement Number 34, The Administrative Rules on Agencies Applying for Import and Export Inspection and Quarantine, was published on the AQSIQ website on November 6, 22 for enforcement from January 1, 23. The "Rules" were published in Issue 17 of the China Foreign Trade and Economic Cooperation Gazette on March 18, 23, also. The Announcement provides guidelines and requirements for agencies/business enterprises that use agents for importing and exporting commodities. e. Regulation on Animal Origin Feed Products - CH393 This Announcement regulates the importation of animal and animal products from BSE affected countries. 7.2.4 United States of America If the product is derived from exotic wildlife or endangered species, it must comply with Fish and Wildlife (FWS) and Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) license, permit, country of origin, import documentation and record keeping requirements. If the product is derived from domestic animals, it must comply with USDA Animal and Plant Health Inspection Service (APHIS) import, quarantine and permit and certification requirements. A veterinary certificate issued by a salaried veterinarian of the country of origin stating that the animal products is free from applicable animal diseases must accompany each consignment. The specific information required varies depending on the species. 7.3 Import tariffs of raw skins, hides and leather Table 21: Import tariffs of raw hides and skins originating from various countries of the world during 215 No. Country Trade regime description Applied tariffs Total ad valorem equivalent tariff (estimated) 1 Malawi MFN duties (Applied) 1.% 1.% Preferential tariff for SADC.%.% countries 2 Zambia MFN duties (Applied) 1.% 1.% Preferential tariff for SADC.%.% countries 3 Zimbabwe MFN duties (Applied 1.% 1.% Preferential tariff for SADC.%.% countries 4 Brazil MFN duties (Applied) 1.% 1.% 5 Germany MFN duties (Applied) 1.% 1.% Preferential tariff for SADC.%.% countries 6 Mauritius MFN duties (Applied) 1.% 1.% Preferential tariff for SADC countries.%.% 48
No. Country Trade regime description Applied tariffs Total ad valorem equivalent tariff (estimated) 7 MFN duties (Applied) 1.% 1.% Preferential tariff for SADC.%.% Mozambique countries 8 MFN duties (Applied) 1.% 1.% USA 9 India MFN duties (Applied) 1.% 1.% 1 Pakistan MFN duties (Applied) 1.% 1.% Source: Market Access Map Table 21 above indicates that world countries/ markets importing hides and skins into South Africa are charged between 1% and 1% respectively during 215. Those countries with trade agreements with South Africa export their product free of charge during 215 at.%, (Most Favoured Nations). The table further indicates that South Africa has a preferential trading agreement (PTAs) with SADC countries and that means SADC countries export hides and skins to South Africa free of charge during 2154. 7.3.1 Non tariff barriers South Africa formulated non tariff barriers for the purpose of preventing infectious or parasitic diseases of animals and other harmful from spreading into or out of the country, protecting the production of agriculture, animal husbandry and fishery as well as human health, and promoting the development of foreign economic relations and trade. The following is a summary of some of the requirements: All facilities (abattoirs, tannery, intermediate stores and export stores) must be approved annually and a notice prominently displayed at all entrances and exits stating Approved Animal Health Export Store. All premises should be properly fenced to prevent access of any livestock and must have secure lockable gates at all entrances and be locked when not manned to prevent access of unauthorized persons. Original Health Attestation certificate signed by a salaried veterinarian in the country of origin indicating that all the necessary inspections, certification and record keeping required to ensure the validity and traceability of these hides/skins and are sourced from the approved abattoir, and animals were not slaughtered to eliminate any epizootic disease must accompany the consignment. Original Veterinary Import permit must accompany the consignment. The hides/skins in the consignment should at all the time, be transported, handled and stored in such a manner so as to ensure that they are not exposed to hides / skins of a lower disease status. Hygiene status of premises and equipments must be maintained at all times. A complete register must be kept for all hides/skins that enter and leave the tannery. There must be one-way flow of production so that raw materials should not contaminate processed products. This includes between raw and salted material and material that is freshly salted and salted in excess of 14 days. Hides/skins must not leave the tannery for any further processes. The hides and skins should undergo all precautions to avoid recontamination with pathogenic agents and should not be in contact with any animal products or live animals presenting a risk of spreading a serious transmissible disease. Any other documentation specified, e.g. Rabies Vaccination Certificate, etc. If the product is derived from exotic wildlife or endangered species, the consignment must be accompanied by CITES permit from Conservation Authority in the country of origin. 49
8. MARKET INTELLIGENCE Table 22: List of importing markets for raw hides and skins of bovine exported by South Africa in 215 Trade Indicators Importers Exported value 215 (USD thousand) Share in South Africa's exports (%) Exported quantity (tons) 215 Unit value (USD/unit) Exported growth in value between 211-215 (%, p.a.) Exported growth in quantity between 211-215 (%, p.a.) Exported growth in value between 214-215 (%, p.a.) Tariff (estimated) faced by South Africa (%) World 4169 1 289 193 14 1-25 China 16864 42 1575 1595 23 2-35 6.1 Italy 11981 29.8 6585 1819 2 24 55 Hong Kong, China 4623 11.5 833 555-3 -26-61 Thailand 3694 9.2 1148 3218 36 27 66 Greece 1184 2.9 43 2938 24 24 17 Pakistan 457 1.1 441 136-9 -2-49 3 Slovenia 24.6 139 1727-51 Namibia 16.4 69 2319 86 16-1 Portugal 159.4 84 1893 Korea, Republic of 152.4 87 1747 44 21-8.4 Turkey 143.4 48 2979 19 28-67 Spain 139.3 13 135-11 -25 173 Australia 129.3 15 1229 Israel 13.3 5 26 39 Viet Nam 6.1 44 1364-35 -36-94.8 Chile 27.1 6 Lebanon 16 45 356 74 Togo 11 96 115 5 Source: ITC Trade Map 5
Table 22 shows the list of importing markets for raw hides and skins of bovine exported by South Africa during 215. Table 22 further shows that during 215, South Africa exported a total of 2 89 tons of raw hides and skins of bovine to the world. The table also shows that South Africa was a net exporter of raw hides and skins of bovine to the world, as the country imported only 11 695 tons during 215. The table further shows that in world terms exports of raw hides and skins of bovine from South Africa to the world have increased by 14% in value and by 1% in quantity between 211 and 215. The major export destination for raw hides and skins of bovine originating from South Africa was mainly China, followed by Hong Kong of China and Italy. The table also shows that China alone have absorbed 42% of the total raw hides and skins of bovine exports originating from South Africa, followed by Italy at 29.8% and Hong Kong of China at 11.5%. The table further show that South Africa s raw hides and skins of bovine exports to China increased by 23% in value and increased by 2% in volume between 211 and 215. The table also shows that South Africa s raw hides and skins of bovine exports to Hong Kong decreased by 3% in value and 26% in volume between 211 and 215. The table also shows that South Africa s raw hides and skins of bovine exports to Italy also increased by 2% in value and increased by 24% in volume between 211 and 215. In terms of access to various international markets for South African raw hides and skins of bovine, countries such as China protect their raw hides and skins of bovine industries with higher tariffs of 6.1% ad valorem. 51
Figure 46: Growth in demand for raw hides and skins of bovine from South Africa in 215 Source: ITC Trade Map 52
Figure 46 above indicates growth in demand for raw hides and skins of bovine from South Africa to the world during 215. The bubble graph further indicates that China and Italy were the largest import markets of raw hides and skins of bovine from South Africa to the world during 215. However, South Africa s exports of raw hides and skins of bovine to China increased by 23%, while the China s imports from the world also increased by 8% to 2% between 211 and 215. The bubble graph further indicates that South Africa has increased its exports of raw hides and skins of bovine to Namibia between 211 and 215 by 87%, as compared to Namibia s imports from the world of about 35% during the same period under scrutiny. The bubble graph also indicates that South Africa s raw hides and skins of bovine exports to the above-mentioned country have outgrown the major countries growth in imports from the world between 211 and 215. Furthermore, South Africa has increased its raw hides and skins of bovine exports to declining markets of Netherlands and has decreased its raw hides and skins of bovine exports to declining markets of Korea Republic, China by approximately between % and 4% between 211 and 215. 53
Figure 47: Prospects for market diversification for raw hides and skins of bovine exported by South Africa (215) Source: ITC Trade Map 54
Figure 47 depicts prospects for market diversification for raw hides and skins of bovine exported by South Africa to the world during 215. The bubble graph further depicts that China and Italy were the biggest import markets for raw hides and skins of bovine from South Africa during the period under observation. The figure also depicts that if South Africa was to diversify its exports of raw hides and skins of bovine, small but attractive markets exist in Thailand, Hong Kong and Italy because these countries have increased their annual growth of partner countries imports from the world between 211 and 215 from % to 4%. The figure further depicts that other markets exist in Hong Kong during this period under review. Over the same period, China alone managed to obtain a share 42% of South Africa s raw hides and skins of bovine exports, followed by Italy at 29.8%, and Hong Kong at 11.5% during the period under examination. 55
Table 23: List of supplying markets for raw hides and skins of bovine imported by South Africa in 215 Trade Indicators Imported Share in Imported Exporters Imported value growth in South quantity Unit value 215 (USD value between Africa's (tons) (USD/unit) thousand) 211-215 imports (%) 215 (%, p.a.) Imported growth in quantity between 211-215 (%, p.a.) Imported growth in value between 214-215 (%, p.a.) Tariff (estimated) applied by South Africa (%) World 949 1 11695 774 16 17-34 Botswana 5667 62.6 5985 947 28 25-14 Area Nes 685 7.6 617 111 36 Zambia 549 6.1 724 758 156-56 Mozambique 527 5.8 456 1156 128 27 28 5 Australia 286 3.2 1575 182 4 14 5 Argentina 272 3 493 552-7 5 Uganda 245 2.7 551 445 384-18 Zimbabwe 243 2.7 163 1491-29 -41-92 5 Kenya 193 2.1 542 356 84 Swaziland 149 1.6 123 1211-24 -21-69 5 New Zealand 119 1.3 347 343 341 Namibia 45.5 51 882-52 -41-73 Italy 31.3 48 646 73-14 Lesotho 23.3 18 1278-5 -18 5 Brazil 12.1-2 -92 5 China 5 Source: ITC Trade Map 56
Table 23 above illustrates the list of supplying markets for raw hides and skins of bovine imported by South Africa during 215. The table further illustrates that South Africa is a net exporter of raw hides and skins of bovine from the world into South Africa. During 215, the country imported a total of 11 695 tons of raw hides and skins of bovine versus its exports of 2 89 tons over the same period. In world terms imports of raw hides and skins of bovine into South Africa have increased by an average of 16% in value and increased by 17% in volume terms between 211 and 215. Raw hides and skins of bovine imports originates mainly from Botswana, followed by Zambia, with Botswana commanding 62.6% share in South Africa s imports, while Zambia was at approximately 6.1% over the same period. Other small markets for raw hides and skins of bovine imports into South Africa are Uganda, Argentina and Namibia. Of importance to note is that imports of raw hides and skins of bovine originating from Swaziland have decreased by 2% in value and 2% in volume terms between 211 and 215, while those originating from Mozambique have increased in value by 128% and in quantity by 27% during the same period under review. 57
Figure 48: Competitiveness of suppliers to South Africa for raw hides and skins imports (215) Source: ITC Trade Map 58
Figure 48 above shows competitiveness of suppliers to South Africa for raw hides and skins of bovine imports during 215. The bubble graph further shows that during the period between 211 and 215, Swaziland and Brazil were the biggest markets for raw hides and skins of bovine during 215. The bubble graph also shows that Mozambique was the most competitive import market in terms of imports of raw hides and skins of bovine into South Africa in 215 with an annual growth of South Africa s imports of about 1%. Imports of raw hides and skins of bovine from Australia, Botswana and Italy into South Africa grew at an increasing rate of.% and 1% respectively which is less than the other countries exports to the rest of the world. 59
Figure 49: Prospects for diversification of suppliers for raw hides and skins imported by South Africa 215 Source: ITC Trade Map 6
Figure 49 depicts prospects for diversification of suppliers for raw hides and skins of bovine imported by South Africa in 215. The figure further depicts that Italy was the biggest supplying market for raw hides and skins imported by South Africa in 215. The bubble graph also depicts that over the same period, Botswana commanded the greatest market share in South Africa s raw hides and skins of bovine imports at approximately 62.6%, followed by Zambia at approximately 6.1%. The figure further depicts that if South Africa has to diversify its suppliers of raw hides and skins of bovine, small but attractive markets exist in Botswana and Mozambique during 215. 61
Table 24: List of importing markets for leather of other animals exported by South Africa in 215 Trade Indicators Importers Exported value 215(USD thousand) Share in South Africa's exports (%) Exported quantity (tons) 215 Unit value (USD/unit) Exported growth in value between 211-215 (%, p.a.) Exported growth in quantity between 211-215 (%, p.a.) Exported growth in value between 214-215 (%, p.a.) Tariff (estimated) faced by South Africa (%) World 13969 1 1721 8117 16 28-55 Germany 529 37.3 215 24228 87 89-9 Poland 32 22.9 86 3729 163-28 Romania 1194 8.5 44 27136-79 Lesotho 184 7.8 85 12753-19 -18-12 Zimbabwe 164 7.6 248 429-14 16-14 Hungary 773 5.5 19 4684 474-92 Korea, Republic of 35 2.5 4 875 33 7 5 Hong Kong, China 342 2.4 526 65-12 32-57 Brazil 264 1.9 15 176 86 9.6 Cambodia 193 1.4 12 1683 4 7 China 145 1 39 469 38 21-48 5.8 United States of America 31.2 2 155 19 35-6 Botswana 24.2 8 3-24 -48 Pakistan 14.1 36 389 173 367 3 Malaysia 11.1-92 Thailand 9.1 26-95 5 Austria 9.1 1 9 Source: ITC Trade Map 62
Table 24 illustrates the list of importing markets for leather of other animals exported by South Africa to the world during 215. The table further illustrates that South Africa exported a total of 1 721 tons of leather of other animals to the world as compared to 1 936 tons that South Africa imported over the same period. The comparison above clearly illustrates that South Africa is a net importer of leather of other animals from the world during the period under observation. In world terms exports of leather of other animals from South Africa to the world have increased by 16% in value and by 28% in quantity between 211 and 215. The major export destinations for leather of other animals originating from South Africa during 215 were Germany, Poland and Romania. During 215 marketing season, Germany alone experienced a market share of 37.3% of the total leather of other animal s exports originating from South Africa, followed by Poland at 22.9% and Romania at 8.5% respectively. The South African leather of other animals exports to Germany increased by 87% in value and 89% in volume between 211 and 215. In terms of access to various international markets for South African leather of other animals, countries such as China, Thailand, Cambodia and Brazil protect their leather of other animals industries with higher tariffs ranging from 5% ad valorem to 1% ad valorem. 63
Figure 5: Growth in demand for leather of other animals from South Africa in 215 Source: ITC Trade Map 64
Figure 5 indicates growth in demand for leather of other animals from South Africa to the world during 215. The bubble graph further indicates that Australia, Thailand and Hong Kong, China were the biggest import markets for leather of other animals from South Africa over the same period. However, South Africa s exports of leather of other animals to the Hong Kong, China decreased by 12% while USA s imports from the world also increased by 16% between 211 and 215. Germany was in a dynamic market for leather of other animals from South Africa, South Africa has increased its exports of leather to Germany between 211 and 215 by 87%. South Africa s leather of other animals exports to Hungary have increased and outgrown both South Africa s and the world s annual growth between 211 and 215 by 87% and 89% respectively. Furthermore, South Africa has decreased its leather of other animal s exports to a declining market of Hungary, Germany and Poland by negative.% to 1% respectively over the past five years. 65
Figure 51: Prospects for market diversification for leather of other animals exported by South Africa in 215 Source: ITC Trade Map 66