Farming and leather in a changing world
Farming, particularly animal husbandry, and leather have a long history and connection with one another. Though no farmer works with his or her animals with the purpose of producing skins and hides, they are the source of virtually all leather we use. In that sense, leather manufacturers are dependent on farmers, who in turn partly derive income from hides too. A bovine hide used to represent a value of around 10% of the animal, which is a significant part of once income. The market is changing though and this hurts farmers most. To understand why, we have to look at the historical relation between the two industries.
Respect the whole animal
Since the Neolithic age and the early days of animal domestication, man and cattle have lived side-by-side. From the start, this has seen an optimization of conditions, selective breeding and specialization. With little to waste and out of respect, using the whole animal has always been a given. In our current times, this thought is one felt strongly again. We take from nature, so when we do we shouldn’t be wasteful or greedy, and using what we can is a sign of respect.
The agricultural and industrial revolution have in the last two centuries accelerated developments and changed the way we farm and herd livestock. As subsistence farming shifted to intensive animal farming, the role of the animal in farmer’s lives also changed. Where previously, the whole animal would be used to sustain, clothe and provide resources for the family, the industrial era demanded more specialized production due to increased urbanization and a larger population.
Farming and leather
Leather production has historically always been a part of animal farming. Only in major cities a specialist industry could be found in ancient times (the leather quarter would be the smelly part of town due to the use of urine and excrement in treatment of the hide). In the last two centuries though leather production has become a separate industry with a much higher efficiency thanks to the use of chemistry. Farmers are no longer directly involved with leather production as the animal hide is merely a small part of the animals’ value, which is acquired through the slaughterhouses.
Fun fact: the former ‘smelly part’ of London town near the Thames river, where leather was made, is today one of the prime locations for businesses and property in the city.
Yet farmers still rely on the income that is derived from the whole animal, which means that market shifts in the food and by-product supply chains (including leather) affect their bottom line. The scale of most animal farms has vastly increased to meet growing market demand. Through the years, competitive technologies, prices, and government involvement has lowered profit margins at the start of the supply chain, while demand keeps growing. Meat consumption has in fact significantly grown over the last century (by up to 40% compared to the 1960s). The agricultural sector is rarely the one really reaping the benefits from this growth and a more competitive market has a detrimental effect on parts of the industry.
Under pressure from supply chain shifts
There are many factors that affect today’s farmers. Their profession has turned into one that is full of uncertainty and risk. No surprise that few young people start the profession. In Europe, according to Eurostat (2019), one third of farmers managing family farms (90% of the 10 million farms in Europe are considered family farms) is over 65 years of age. A major share of the European farms are now in Eastern Europe, many of them no longer run by families, but contracted workers.
What are the challenges that have created this precarious situation?
- Fierce competition – Meat prices have been kept low by subsidizing and exporting from cheaper countries. This means someone is paying the price and it’s usually farmers, who can’t compete with cheaper production countries, where environmental and animal welfare standards are lower and thus less costly.
- Risk – The market is extremely volatile and outbreaks of animal diseases have an extremely high impact on specialized farms.
- Environmental standards – Farmers face rigorous standards that demand high investments. Though there is subsidizing, these put enormous pressure on farmers.
- Dependency on by-product* values – Though specialization has ensured farmers to be dependent on a primary product, part of their income is based on the by-products (10% is a common estimation). Yet drop in demand for by-products affects the animal value in the long run.
All these things affect the entire supply chain, but hit the farmers hardest (Hocquette et al, 2018). The costs of innovation often land on the farms, while the loss in revenue is hard to compensate. There is yet more on the horizon.
With the COVID-19 pandemic hitting all industries hard, the value of the animal hide has dropped to an unprecedented low at about 1% of the value (hardly the value of a co-product). This graph, shared by the United States Hide, Skin & Leather Association (Sothmann, 2020), clearly shows the massive shift, which hits farmers hard and causes problems in the supply chain.
Source graph: Daily Livestock Report
Replacing natural products
According to an EU-report, these challenges are far from over as demand in dairy, beef and veal are expected to drop further in the next decade (2017). People are eager to use products that are not animal based. Dairy alternatives are taking significant market share, while meat consumption is growing. Where farmers would in the past receive value from the whole animal, this is rapidly being reduced to merely the meat (which is only about 50-60% of the animal). This means every product that is replaced by alternatives creates a cut in income in an already challenging business.
Another challenge is the rise of cellular farming, which creates agricultural products from cellular structures in controlled environments. What most people don’t realize these cells to create cellular cultures are, in fact, sourced from animals. Already, artificially grown products like eggs, dairy, gelatin and meat are available to consumers. Lab-grown materials that emulate the qualities of leather and silk are already in advanced stages, yet have not achieved the standards to enter the market. This form of production side steps the traditional process of animal rearing, further reducing the by-product value from animals. Ironically, this happens through a process that can hardly be called natural and removes us even further from where we started.
The future of animal farming
Traditional animal farming, regardless of its intention, is facing challenging days. As income drops and regulations intensify, mega stables become the only viable form of animal rearing as business. That would be a bleak future for animal husbandry, but there are positive signals too. Feeding innovations can enhance profits and animal welfare, reports FAO (2013). Animal farming also has a large role in regenerating the soil (Sadowski, 2019), contributing to a positive environmental shift and reduction of the . Yet, traditional animal farming is at a crossroads and it takes a wider discussion on the nature of what we consume and in which way, to determine its future. Recent findings show that answers to a more sustainable industry may not be found in laboratories, but on the farmers’ fields.
*Co-products & By-products
There is often confusion about the meaning of by-product and co-product. A by-product occurs as a side effect of production, where a co-product is purposely produced. A clear example is dairy and meat, which are co-products. The question if leather is a co-product or by-product depends on an interpretation of the definitions. Opponents see leather as a co-product. Once upon a time, hides definitely made up a healthy portion of the income. Today, however, the value of hides is marginal lower and in some parts of the world not particularly profitable. Though the answer to the question of leather depends on location, point of view and from where in the supply chain you look at it, the profit is marginal and would not constitute a co-product in most cases.
- Eurostat, (2019) Agriculture statistics – family farming in Europe. Retrieved from: https://ec.europa.eu/eurostat/statistics-explained/index.php/Agriculture_statistics_-_family_farming_in_the_EU [Accessed on 23 April 2020]
- European Commission (2017) EU Agricultural Outlook For the Agricultural Markets and Income 2017-2030. Retrieved from: https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/agricultural-outlook-2017-30_en.pdf[Accessed on 23 April 2020]
- FAO. (2013) Enhancing animal welfare and farmer income through strategic animal feeding − Some case studies. Retrieved from: http://www.fao.org/3/i3164e/i3164e00.pdf [Accessed on 23 April 2020]
- Hocquette, J, Ellies-Oury, M., Lherm, M., Pineau, C. Deblitz, C, Farmer, L., (2018) Current situation and future prospect for beef production in Europe – A review. Asian Australasian Journal of Animal Sciences. Retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6039334/ [Accessed on 23 April 2020]
- Sadowski, S. (7 June 2019) How regenerative land and livestock management practices can sequester carbon. GreenBiz Retrieved from: https://www.greenbiz.com/article/how-regenerative-land-and-livestock-management-practices-can-sequester-carbon [Accessed on 23 April 2020]
- Sothmann, S. (5 May 2020) U.S. Cattle Hide Value Declines Significantly in Wake of COVID-19. United States Hide, Skin & Leather Association. Retrieved from: https://www.ushsla.org/press/US_Cattle_Hide_Value_Declines_Significantly_in_Wake_of_COVID19 [Accessed on 8 May 2020]