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Leather tanning industry in Pakistan.

Leather Tanning Industry in Pakistan

The tanning industry occupies an important place in Pakistan's economy. At the time of independence, there was no tanning worth the name in Pakistan except Bata. Few tanneries at Lahore and Multan were producing only vegetable sole leather. The entire production of hides and skins were being exported in a raw form. Thereafter the local tanning industry making at first semi-finished leather made rapid progress due to favourable raw material situation, cheap labour and the existence of growing demand and foreign market, and is now reckoned among the country's main industries. The present tanning industry consists of about 436 tanning units with an estimated installed capacity at around 47.58 million square metre of chrome leather and 28.18 million kgs. of vegetable tanned leather.

Table : TABLE-I Tanneries in Pakistan
- Punjab 301
- Sindh 117
- N.W.F.P. 15
- Balochistan 1
- Azad Kashmir 2
 Total:- 436

The availability of indigenous raw material to this industry depends upon the livestock population. Livestock population has increased at an annual average rate of 5.37 per cent during 1981-89. Availability of hides and skins with the break-up of slaughtered and fallen animals are 6.53 million hides and 36.23 million skins available for the tanning industry. Of these 46.6 per cent came from goat, 36 per cent from sheep, 10 per cent from buffalo and 66 per cent from cow. Of the 436 tanneries 50 are fully mechanised converts these hides and skins into leather.

Raw Material Availability

Hides and skins are by-products of meat industry and the increase in their number is entirely on the status of the livestock sector. Livestock contributes over 7.5 per cent to GDP. The share of livestock products i.e. leather and leather products in total exports is estimated at about 10 per cent. The present livestock population is closely integrated with the crop production. The livestock population has increased at an annual compound rate of 2.4 per cent during 1960-76. In contrast, the agricultural production during this period recorded a growth rate of about 2.86 per cent per annum. Average growth rate per annum of the livestock sector from 1980-81 to 1988-89 worked out to 5.37 per cent.

However, an examination of growth rates of various types of livestock shows that during 10 years period 1976-86 buffalo recorded the highest increase of 4.8 per cent followed by goat which increased by 3.7 per cent. However, buffalo which contributes the 74 per cent of milk grew only by 4.8 per cent annually. The figures given by types are shown in table-II below:-

Table : TABLE-II Livestock Population in Pakistan
 (Million Heads)
 Rate of
 Growth %
 1976 1986 (1976-86)
Buffaloes 10.6 15.7 4.8
Cattle 14.8 17.5 1.8
Sheep 18.9 23.2 2.2
Goat 21.7 29.9 3.7

Horse etc. 3.3 4.3 3.3
Total:- 69.3 90.6 3.0

Source: Agriculture Statistics of Pakistan, 1988-89.

At present (1989-90) Pakistan is blessed with over 99.64 million heads which form 3 per cent of the global estimate. The estimated live-stock population of the country is in Table-III.

Table : TABLE-III Livestock Population of the Country 1990-91
Cattle 17.78
Buffalo 15.03
Sheep 30.16
Goat 36.67
Total: 99.64

Source: Pakistan Leather rade Journal 1991.

The distribution of livestock and production in different provinces can be seen in Table-IV.

Table : TABLE-IV Povince-wise Distribution of Livestock and Population in Pakistan (%) (1986)
 Balo- Northern
Province Punjab Sindh NWFP chistan Areas
Cattle 55 19 20 5 1
Buffaloes 75 17 8 0 0
Sheep 42 10 19 27 2
Goats 36 20 21 20 3
Others 48 17 15 13 7
Poultry 43 20 30 6 1
1) Livestock Units 60 18 15 5 2
2) Human Population 57 22 13 5 3

Source: Final Report on Livestock situation in Pakistan, Dr. Moeder Hans Peter, Livestock Consultant, ADBP.

Accurate and regular statistics are not available in respect of hides and skins. The exact figures are only available in respect of slaughtering of animals in the recognised slaughter houses located in cities and towns. The picture has to be reconstructed from the sketchy data available. The production of hides and skins according to Livestock Division is in Table-VI.

Table : TABLE-VI Estimated Hides & Skins Production in Pakistan
 (Million Nos)
 Hides Skins
Year Cattle Buffalow Sheep Goat
1980-81 2.00 2.96 11.63 15.32
1981-82 2.02 3.03 12.00 15.86
1982-83 2.05 3.10 12.38 16.43
1983-84 2.07 3.18 12.77 17.01
1984-85 2.10 3.25 13.17 17.62
1985-86 2.12 3.33 13.58 18.25
1986-87 2.15 3.41 14.01 18.90
1987-88 2.17 3.49 14.45 19.57
1988-89 2.18 3.50 14.50 20.00

* Estimates Source: Agriculture Statistics of Pakistan - 1989. Installed Capacity

The leather tanning industry can be divided into two major categories. Firstly, there are units which process raw hides and skins only upto semi-finished or wet-blue stage. This type of tanneries are numerous and consist of a few wooden drums and pits. Because of the low investment cost, ready export market for wet-blue leather and minimum technical know-how required, these tanneries have a low break-even point and can be established fairly easily. Consequently too many such units have been set up with the result that not all of them can obtain the required quantities of hides and skins.

The second group consists of those mechanised and semi-mechanised tanneries which have integrated facilities for processing raw hides and skins into fully finished leather. The number of such tanneries is limited and their output is sold mainly in the local market. Lately, interest in production and exporting finished leather is growing as a result of fiscal measures taken by Government and changes in market structure.

The tanning industry started from scratch in 1974 and has made rapid strides. The present tanning industry consists of about 436 tanning units, 50 of which are large units. The industry is heavily concentrated in Karachi and Lahore due to availability of skilled/semi-skilled labour, technicians and well developed markets for hides and skins. The industry is third in importance from the point of view of foreign exchange earning and being highly labour intensive. The principal towns are Karachi, Hyderabad, Multan, Sahiwal, Lahore, Kasur, Sheikhupura, Gujranwala, Sialkot, Gujrat and Peshawar. Leather capacity is estimated at in Table-VII.

Table : TABLE-VII Capacity Utilisation
 Chrome Vegetable
 Tanned Tanned
 (Mln. Sq. Meters) (Mln. Kgs.)
Installed Capacity 47.58 28.18
Production 40.32 22.00
Capacity Utilisation 84.74% 78.06%

Source: Pakistan Leather Journal 1991


Accurate and regular statistics are not available in regard to actual production. Production is either estimated on the basis of the leather being consumed by the footwear. Sports goods and Leather products manufacturing industries. The following figures have been obtained from Pakistan Leather Trade Journal.

Table : TABLE-VIII Production of Leather in Pakistan
 (Mln. Sq. Mtr) (Million Kg.)
 Chrome Vegetable
 Tanned Tanned
Year Leather Leather
1978-79 16.11 38.56
1982-83 19.33 33.66
1983-84 19.33 33.66
1987-88 (*) 26.00 45.00
1989-90 40.32 22.00

(*) Experts Working Group Projection. Source: Pakistan Leather Journal.

It will be seen that production of chrome tanned leather has shown a rise of about 150 per cent in the last ten years but production of vegetable tanned leather substantially declined from 38.56 million square meters in 1978-79 to 22.0 million square meters in 1989-90. The decline was due to the fact that the practice of chrome tannage in Pakistan has replaced vegetable tannage by more than 70 per cent in commercial production of leather. Whatever, vegetable tannage is affected is in rural towns or for production of speciality leather. the leather obtained from chrome tanning is more pliable. Some unique feature of chrome tanned leather are the high content of original hides proteins and mineral matters and the low content matters and the low content of water soluble materials in contrast with vegetable tanned leather which has high water solubles.

Yet another reason for shortfall in vegetable tanning was the increasing use of rubber, PVC etc., in lace of sole leather and more Buff-skins being Chrome tanned instead of being converted into sole. There is no denying the fact that the credit for the achievements is shared by the entrepreneurs who worked industriously and the government who acted wisely, towards liberalising import duty structure and other incentive measures.

Export of Leather

Hides and Skins

In the past, export of hides and skins was a sizeable source of foreign exchange earnings for the country. However, with the growth and development of the local leather industry, these exports have declined substantially. In order to ensure the availability of raw hides and skins to the local industry at reasonable prices, the Government restricted their exports by levying export duties and later banned their exports with the exception of lamb skins of grade I-III.

In leather, goat was the largest item to be exported (36.2% of total leather exports) followed by buffalo hides (19.5%). Except wetblue leather of cow and cowcalf the export of other wetblue leather is subject to export duty. It is estimated that 35 percent of the exported leather was wetblue and 65 per cent finished.

However, to encourage the export of finished leather and leather products the Government has taken many positive steps and offered various incentives. Various rates of duty drawback are available for export of leather and leather goods, e.g. 20 per cent for leather gloves, leather garments, leather shoe, uppers, saddlery travelling requisites. Import of machinery for tanning industry is allowed. Moreover, there is zero rate of custom duty on such machineries. Concessionary credit at 7 per cent is allowed for an extended monetary period.

Table : TABLE-V Livestock Population

(Unit: Million No.)
Species 1985-86 1986-87 1987-88 1988-89 1989-90
Buffaloes 13.4 13.7 14.0 14.3 14.6
Cattle 16.7 16.9 17.1 17.3 17.5
Goat 30.8 31.9 33.0 34.1 35.2
Sheep 25.8 26.6 27.5 28.3 29.2
Camel 0.93 2.94 3.02 3.10 3.18
Donkey 2.86 2.94 3.02 3.10 3.18
Horse 0.45 0.45 0.45 0.45 0.45
Mule 0.07 0.07 0.07 0.07 0.07

Hides and Skins
Hides 5.45 5.15 5.66 6.07 6.53
Skins 31.83 32.91 34.02 35.12 36.23

Source: Federal Bureau of Statistics. Production of Hides & Skins

Table : TABLE - IX Export of Leather Hides and Skins
 Hides & Skins Leather
Year (000 Kg.) (Rs. in Mil.) Sq. Metre (Rs. in Mil.)
1980-81 - 23.0 8.8 892.0
1981-82 - 7.0 11.0 1,152.0
1982-83 - 2.5 10.7 1,195.0
1983-84 - - 16.9 1,972.0
1984-85 - - 15.6 2,325.1
1985-86 - - 17.5 2,900.0
1986-87 - - 19.8 4,078.9
1987-88 - - 19.9 5,023.2
1988-89 - - 16.4 4,699.3
1989-90 - - 20.5 6,002.4

Source: Federal Bureau of Statistics.
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Title Annotation:Pakistan; Industry
Publication:Economic Review
Date:Jun 1, 1991
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