Situational analysis of Semi-Finished Products from the Sheba Leather Industry
By Hadush Berhe Asgedom, Assistant Professor, Tsegay Tesfay Mezgebe, Lecturer, Ethiopian Institute of Technology-Mekelle, Mekelle University; and Asayehgn Desta, Sarlo Distinguished Professor of sustainable economic development, Dominican University of California, USA
Ethiopian News, Tigrai Online, January 30, 2016
The quality of semi-finished products has implications for production costs and sales prices. Poor quality materials are expensive to process and result in a high percentage of low grade products including rejects. Leather is an important industry involving a large number of institutions, associations, government and non-governmental institutions, and private entities in Ethiopia. However, leather defects are imperfections occurring on the surface or within the structure of the raw material ultimately resulting in an unsightly appearance and weakness of the resulting product leading to rejection and down-grading.
The objective of this study is to investigate the existing situation of the northern Ethiopia leather industry in Tigray through value chain analysis to determine the major causes of rejection and degrading of semi-finished products at company level, mapping the main value chain actors and stakeholders, identifying the type and magnitude of defects, and grading of pickled skins and wet blue pelt. Raw material inputs for the Sheba leather industry are collected from collection centers found in several parts of the nation. The flow of materials comes from different sources to collection centers and then to the Sheba leather industry.
The methodologies used are from primary and secondary data sources. Value chain mapping techniques and the GIS tool are employed for identifying the locations of the collection centers and mapping the different actors and stakeholders of the company. Analysis of data gathered from the company is made using Microsoft excel.
In the data analysis process, the study has distinguished a number of actors and stakeholders within the value chain of the Sheba leather industry. Compairing the supply of raw skins to companies from different parts of the nation, the Tigray region supplies the highest proportion of raw sheep and goat skins accounting for a percentage share of 38 % and 60% respectively. The region is also the one where most materials supplied are of low grades and high rejection rates. Due to this, on average, grade-V, above 35% for goat skins and sheep skins are the dominant supplies rather than grades I-III, 15% for goat skins and 20% for sheep skins, which are the most important inputs, but are not sufficiently supplied. The highest proportion of rejected raw sheep and goat skins is also from the Tigray region, 6% and 3%, respectively. The proportion of rejected raw hides and skins supplied to the Sheba leather industry during the previous nine months from collection centers reveals that the proportion of rejected raw hides and skins is higher, 39%, 46% and 33% for sheep skins, goat skins and cattle hides respectively.
The results of the grade selection for raw sheep and goat skins supplied from different sources of the country to the company reveal that the highest proportion of rejections are from Tigray, 6% and 3%, respectively, higher than the supplies from Addis Ababa and Amhara. The study also indicates that the proportion of raw sheep and goat skins collected from Tigray have the highest proportion of grades IV, V, and VI and the proportion of grades I-III is lower than Amhara and Addis Ababa. Thus, it is indicated that there is poorer inspection and quality control service at the source than at the company, resulting in higher rejection rates from increased supplies of lower grade raw hides and skins sent to the company.
The major constraints to achieving the desired success of the leather and leather sub sector industry in northern Ethiopia are identified as the absence of backward and forward linkages, lack of sufficient R&D facilities and inadequate marketing knowledge of skins and hides based on quality grading. However, the acknowledged strengths and opportunities come from leather as a renewable natural resource with a worldwide reputation for quality grain leather, the availability of a large, low-wage work force, and a favorable business environment with governmental and non-governmental attention. Such strengths along with the available opportunities for the sector give a strong signal that the sector has all the basic elements for a sustained rate of growth. If the major constraints of the company are properly addressed and concerned authorities give attention to get rid of barriers in the way of its progress, the sector could bring remarkable results for economic growth and a reduction of poverty in the country.
The study concludes that traditional husbandry, slaughtering, the preservation and processing systems of raw hides and skins, and infrastructure, contribute to the rejection and degrading of semi-finished products in the Sheba leather industry. Proper collection systems, training and veterinary services for the awareness of the community and forward and backward communication linkages are recommended to minimize the situation.