Zimbabwe

Current leather sector problems start, as usual, with raw material supply. Most tanneries complain of a shortage of hides, especially the better grades and say they are unable to meet orders for finished leather from both local and export customers. Accordingly, the ministry concerned has invoked a long established agreement that hide suppliers must give local tanneries first refusal on 50% of their available hides. But this is not likely to improve matters. Firstly, there are two EPZ wet-blue plants in existence and, according to existing regulations, they are legally bound to export a minimum of 80% of output. Normally reliable sources say in fact 100% of output is exported and that the raw hides concerned originate largely from hide suppliers with close governmental connections! Besides this, most tannery managements are obliged to export a proportion of their output as wet-blue in order to earn foreign exchange for essential imports. Little or no foreign exchange is available from local banks at the official rate of Z$55 to the US dollar. The alternatives are to either buy foreign exchange at exorbitant parallel market rates, export part of output as wet-blue rather than finished leather, or go out of business. The preferred choice is obvious, even though domestic shortages of finished leather result. Wet-blue is more readily marketable than finished leather. Temporary alleviation of raw material shortages did result from the tendency of farmers facing takeover to reduce cattle holdings. But the effect was more than offset by foot and mouth in some districts, which resulted in the EU suspending beef imports from Zimbabwe last August and the consequent slaughter reduction. Hide supply remains tight, especially for top grades and this condition is likely to continue, particularly in view of a confirmed report that the Department of Veterinary Services has run out of vaccines to control the spread of foot and mouth. Lifting of any international suspensions on beef imports from Zimbabwe is, therefore, unlikely, and this negates hope of any increases in slaughter.