BULAWAYO– A government levy introduced last year on exports of raw hides to encourage beneficiation is now hurting local abattoirs, leading to several closures, an association official has said.
Every kilogramme of raw hide for export is levied a $0,75 tax in a move that was expected to boost value addition in the leather industry as well as curtail the exportation of raw hides by local abattoirs.
But the Abattoirs Association of Zimbabwe (AAZ) chairman Rodger Tavares told The Source on Thursday that the levy has had a negative impact on the sector with some players ceasing export of raw hides – whether in wet blue form or raw state – while a few others had slowed down operations.
The development is threatening the viability of abattoirs players and the generality of the raw leather industry, he said.
“The levy of $0.75 per kg has had a huge (negative) impact. There is certainly no finance to pay the levy which exceeds the tanning cost and subsequently hides are being stacked and awaiting some resolution from Ministry of Trade and Industry,” he said.
“However, a huge amount of losses have already been incurred as this is a perishable material. The viability of abattoirs has been compromised by this situation and will raise the price of slaughter service as the hide is a part of that. This affects the whole chain from producer to butchery.”
Tavares said the income from the sales of hides was crucial to abattoirs, because of low buying power by the consumer and the decline in beef prices.
In 2011, the industry exported 5,4 kg of hides and skins worth $28,2 million while in 2012, over 5,5 million kg worth $29,2million were exported.
The figures include the export of crocodile, zebra, hippo and buffalo hides.
During the past 10 years, the leather sector has been failing to absorb all raw hides and skins that are produced leading to more hides being exported from Zimbabwe in their raw form.
In 2011 alone, a total of 5 440 tonnes of raw hide including crocodile skins worth $28 million were exported.
– The Source