The US cattle herd is firmly in a growth phase. An increase of 3% at the beginning of 2016 has led to a corresponding increase in slaughter: as of 11 October, levels were trending 4.7% higher than the same period in 2015, and this is expected to continue (although at a slower rate) into 2017 and 2018. Good weather and crop conditions in most of the major growing regions have helped to keep forage and feed cheap and readily available, creating ideal conditions for herd expansion. Given that global hides and leather markets are primarily demand-driven, however, it is unclear what type of impact, if any, this increase in supply will have on the market.

The industry continues to closely monitor developments in China, following last year’s publication of Decree Number 159, which regulates the trade of all non-edible animal byproducts in that country. The agency responsible for implementing the regulation – AQSIQ – has given some indication that the major hide-supplying countries of Australia and the US are probably going to be next in the implementation process. AQSIQ will perform a systems audit of each country’s animal health and safety regulatory system, and, when the systems have been deemed acceptable, will work with the appropriate regulating authority in each nation to establish a registration system for facilities approved to export products to China. The US industry has been observing this procedure over the last year and half, and will be ready to jump into action as soon as is required.

Shipping news

One of the other big surprises to the industry this year also came out of China’s vast regulatory bureaucracy. Since early August, the US has been on China’s list of countries that require fumigation of all imported containers in an effort to eliminate mosquitoes and mitigate the risk of spreading of the Zika virus.

In the beginning, there was very little information, or detail, on how exporters would be able to go about fumigating and certifying their containers. The costs and uncertainty associated with the issue threatened to have a significant impact on US export business.

Luckily, the enforcement of this requirement in China has since been modified to focus only on containers originating in Florida, the only state in the US that has so far recorded Zika outbreaks. The risk to the industry still stands, however, as the virus may yet spread to other regions.

Inevitably, given its reliance on shipping and transportation, the US hides and skins industry has felt the effects of the Hanjin bankruptcy. Not only has this created a logistics nightmare, with companies not knowing when, if or where their containers will be unloaded from ships at sea, it has also created some novel regulatory issues with which the industry must now deal. Export health certificates for hides and skins, along with import licences and other related legal documents, must be amended, or reissued, in order to accommodate new destinations.

Unfortunately, this process is not always as easy as simply applying for a new certificate from the relevant government authority. Some administrations have rather strict requirements related to dates, times and other information relevant to when certificates are issued, and when the product actually left the US.

While the industry works in tandem with our government authorities on these and other issues, these challenges may remain for the foreseeable future.