The challenge of non supplying caprine and ovine hides

In approximately two decades the caprine and ovine cattle has been continuous on North and North-east Brazilian regions. When population is increasing, the non supplying of meat emphasizes, but the Import Tax aliquot (Common External Rate - TEC), which is rightly fixed in 0%, allows an economical complementation for the meat import, and the request can be answered in an appropriate level.

However, in addition to the meat, the animal can offer the hide, and in the last few years, Brazilian footwear industry, which used to work with the bovine hide only, discovers the comfort that ovine hide without wool (specially Santa Inez race) and caprine hide (exclusively created in the North-east region) can offer to their products for the domestic market. And it begins to request increasing quantities of these hides. As the Brazilian cattle has been stagnated, the non supplying has been imposed for the tannery from North and North-east Region, and it generated absence, unemployment, tax and enterprises reduction. Some of these companies have been established some decades ago, by their owner's entrepreneurship, and they gave subsistence and honor to their compatriots.

The high rate of clandestine slaughters and the risky technical assistance for the producers are aggravated by the disorder of the productive chain, with a reduced articulation between the chain's links.

This untoward disarticulation causes the low quality of the Brazilian raw material, and consequently the non remuneration to the producer, who receives for the product he offers. Obviously, as related, the exploration of these animals is not economically compensatory and this can explain the frequent qualitative and quantitative involution of the supply of hides from these animals in the last few years.

To have an idea, the capacity of production of caprine and ovine hides in North and North-east region is about 12 millions unities per year and the offer is not reaching 7 million unities per year (without considering here the low quality of Brazilian hide). Such deficit is the main causer of the reduction of Jobs in the tannery from these Brazilian regions and can only be eliminated (or reduced) by the import of raw material in competitive conditions (in this case, the imported hide has high quality and a much more high price).

And, as everyone knows, these regions are extremely lacking and they cannot accept such unnecessary rate of unemployment, when the local offer of raw material is limited and totally consumed by the tannery segment.

Some people can suggest the “import” of this raw material from Brazilian South and South-east regions, and this could be an intelligent national solution, if these regions didn't produce hides with wool only, of which destiny is the production of vestment, because their characteristics don't allow the utilization of the product for footwear production. Tannery from Brazilian North and North-east process hides for the production of footwear for the internal market (and so they cannot use drawback) and hides of animals with no wool are utilized, completely different of hides of animals from South and South-east regions.

The solution for this question is, first of all, the reduction of current non-supplying, including again these two hides (caprine and ovine) on the Exception List to the TEC, reducing the aliquot of the Import Rate to 0%. We have to remember that the expression ‘include again' is rightly used, because these hides was on the Exception List and they were removed from this list in order to include some articles from the footwear segment, which are threatened by the import of Chinese footwear. The current governmental decision of elevating the Import Tax aliquots of every article of the footwear segment to the consolidated rate of 35% will offer space enough for return of the caprine and ovine, keeping the changes on the List, partially in the productive chain, and giving justice to a segment that can generate money and job.

In this context, it is satisfying to have together with the industrialization of the region the Parliamentary Group on Footwear-Leather and Furniture Segment, composed by Federal Deputies indentified with the Brazilian population well being, defending the economical growth, the generation of jobs, of income and duty.

And we can go ahead, because it is important to organize this productive chain which has a high economic and social importance to the lacking regions. Some Systems of Agro-industrial Organization models, such as: the use of Integrated Companies or of a Model for Social and Economical Inclusion of Small Producers can be effectuated, together with the private segment and the public segment (Brazilian Agency for Industrial Development – ABDI, Agency for Export and Investment Promotion – APEXBRASIL, Brazilian SEBRAE, Segment Chamber of Caprine and Ovine Productive Chain, etc.) in a high compensatory synergy for the social evolution of the regions.

The emergency solution (Exception List to the TEC) and an articulation for the structural solution, in partnership with the public and private segments, are urgent.

It is now time to organize, definitely, the productive chain of caprine and ovine in Brazilian North and North-east regions, aiming at increasing the number of permanent jobs, offering comfort, joy, nourishment and honor to our people from North-east.

Sérgio Aloys Heeger

Director of Brespel and of the Tannery Industries Association from Brazilian North and North-east – AICNOR