New Prices Are Sheepskin Deep
08/08/05

SKIN prices can have a major influence on the overall market price for lambs and ewes and the English Beef and Lamb Executive (EBLEX) is reflecting this in the latest addition to its website.

Prices for lambskins and fellmonger* skins, quoted as a spread, are already being posted and will be updated fortnightly.

The significant impact changes in these prices can have was illustrated by the collapse of the Russian economy in the late 1990s which meant imports of finished leather clothing from Turkey, made from UK sheepskins, crashed.

This in turn meant English skin prices, which had been as high as £11, fell to zero which had an instant and dramatic effect on finished UK sheep prices.

EBLEX Industry Development Manager Phil Hadley said: "Sheepskins are global commodities and are traded accordingly but the market can be extremely volatile.

"The price for sheepskins can represent a significant proportion of the farm gate price, so it is in their interest for producers to be aware of what the sheepskin market is doing.

"Although it has to an extent been hidden, the skin value has been a major factor in lamb price variations over the last 20 years. This is why we feel it is important farmers have this information at their fingertips."

The prices are available on www.eblex.org.uk

*Fellmongered skins are those where the wool has been removed and the leather is used for lightweight clothing

Background on the Sheepskin market

Although hidden in the cost of abattoir production, the skin value has been a main factor in lamb price variations over the last 20 years.

Leather and leather products, including sheepskins, are global commodities and are traded accordingly. The leather sector takes what is a by-product of the food industry and turns it into a potentially highly value item. The manufacture of hides/skins into leather begins almost immediately after slaughter with preservation by refrigeration, drying or more commonly, salting.

Sheepskins are generally traded is three forms: * Salted, where the salt acts as a preservation method for up to six months * Dried, notably African skins are traded in this condition * Pickled, where the wool has been removed, generally for the textile sector, and the skin has been preserved chemically

The demand for leather has no direct link with slaughter or meat consumption and results in nations of importers or exporters of hides/skins.

The typical outlets for sheepskins are either as wool-on or 'double-face' skins, which are used for rug and garment requirements, or as fellmongered skins where the wool has been removed and the leather is used for lightweight clothing. Fellmongering, for wool and leather markets, traditionally provides the fall back price for sheep and lambskins.

Turkey has traditionally been the main market for UK sheepskins. The Chinese woolskin sector has recently seen phenomenal growth. However, this new demand has been based on the finer wool using larger lambskins from Australia. Attempts to use UK stock have largely failed to date. The oriental demand is for dressing selection with the wool on for traditional products giving warmth and function but has been driven strongly by the fashion trend for UGG boots over the last 2 years.

The UK lost much of its sheepskin infrastructure in the 1980's. Tanneries closed first, followed by most of the fellmongeries after the 1998 price crash. It took time for Hide Markets and Abattoirs to source new markets for the by-product into the leather trade and, eventually, back to dressing skins as Turkey regained some strength with Russia.

Today, with the absence of a UK fellmongering and tanning base, skin price fluctuations are far more exposed to the vagaries of the export demand than they once were.

Sheepskin market prices

2004 In May 2004, with the return of demand from Turkish sheepskin tanners for Russian coat buyers, prices were firm, peaking in June at over £6 for selected lambskins. By September there were signs of weakening in the market for any dressing skins. The end of the 2004 season saw a significant fall in the value of skins for the dressing trade and fellmongering remained depressed.

2005 The early 2005 season was characterised by weak trading, with no serious interest from Turkish Sheepskin tanners and just the basic value of wool and leather for fellmongering (Spain, Turkey, China).

The market continues to be depressed due to the poor demand for finished leather and garments and there is still no sign of this strengthening.

The current selling (As at 3/8/05) price of double face lambskins into Turkey is between £2.00 and £2.30. Fellmonger skins are selling between £1.70 and £2.00 but only in small numbers. The small price differential between double face and fellmonger skins illustrates the strange state of the market.