Brazil leather price slumps, challenging $1.25 billion export industry

By Ana Mano

SAO PAULO, Sept 19 (Reuters) - Brazilian leather prices have fallen sharply over the last decade or so, threatening jobs and weakening the national industry against global competitors, according to data compiled by Durli Leathers, one of the largest domestic producers.

Skin valued at $59 in 2014 is now worth about $5, Durli data shared only with Reuters showed. That represents about 0.5% of the cattle head's price, from 14% in 2014.

The U.S. and Brazil, the world's top beef producers, respectively slaughter an estimated 30 million and 40 million cows a year, Durli CFO Christiano Frizzo said in an interview on Friday.

Brazil is eminently an exporter, he said, shipping about 80% of its unprocessed leather output. Last year, Brazilian exports totaled $1.25 billion, according to data compiled by CICB, a national leather group.

Strong lobbying from the petrochemical industry, which sells fossil fuel-based products labeled as leather that take 10 times as many years to decompose, has contributed to the fall in prices, Frizzo said.

Other factors depressing prices include a global oversupply, an overall drop in international sales and the fact Brazil's cattle are raised in vast open pastures, making animals more exposed to disease, he noted.

But the increasing use of innovative cattle tracking devices such as ear tags will help matters, Frizzo said.

"There are a lot of people against these new developments - the ear tags, the traceability (of herds)," said Frizzo. "They think it's just cost, but in fact this could reverse leather's devaluation trend in recent years."

The quality of Brazil's leather has also been an issue, as Brazil's cattle fire marking, or hot branding, blemishes the product.

"Each mark can take up to 5% of the animal's skin," said Sebastiao Silva, head of a tanners' lobby in the state of Mato Grosso. Because Brazil's cattle tend to have more than one owner through their lifecycle, multiple marks further depreciate the skin, he said.