Economy, Business And Markets

Unfinished Leather Exports Inflict Huge Losses

 Unfinished Leather Exports Inflict Huge Losses Unfinished Leather Exports Inflict Huge Losses

The 100-year-old leather industry in Iran is facing a multitude of challenges ranging from out-dated machinery to high tariffs on import of new machinery and raw material, lack of investments, and the abundance of smuggled products in the market, Persian daily Ta’adol reported.

“Iranian leather companies are unable to compete with their rival markets in neighboring countries, such as Pakistan and Turkey, due to high tariffs imposed by Iranian custom authorities on import of necessary raw material and machinery”, said the president of Iran Tanners Association, Ali Hassanzadeh.

Iran produces a large quantity of sheep hide due to abundance of livestock in the country. But, the problems in the past four decades have forced the leather companies to export the unprocessed raw hides, according to Mohammad Lahooti, the deputy head of the Iran Export Confederation.

“As much as 85 percent of Iran’s leather is exported in the form of raw hide and wet-blue (processed raw hide before turning into finished leather),” Lahooti informed.

The expert criticized wrong policies in Iran that do not allow manufacturers to import complete production lines for processing leathers with the aim of “protecting the low-quality domestic products.”

“If the leather industry enjoyed similar government support as the textile industry, we would be able to generate hundreds of millions of dollars through exporting finished leather products instead of exporting raw leather in the form of hide or wet-blue”, Lahooti added.

The revenues generated from the export of raw hide and wet-blue currently stand at $200 million per annum or less, depending on fluctuations in the export tariffs. Experts believe the revenues could increase drastically if the wet-blues were processed to manufacture finished leather products.

Considering the high quality of Iranian hides, the ultimate winners are the importers of Iranian hides who use the raw material to produce highly desired leather goods while Iran suffers from the environmental pollutions caused by hide production.