The poor trade for previously sought cattle and sheep hides is having an impact on farmgate returns, with Quality Meat Scotland estimating that cattle hides have dropped in value by 60 per cent and sheep skins by 70 per cent over five years.
As co-products of the processing sector they can produce revenue for the processing sector but there are also costs involved.
Hides and skins are classified as specified risk materials (SRMs) and as such their sale and disposal is strictly regulated.
Stuart Ashworth, QMS director of economics services, said: “Prices for skins and hides are currently particularly low both in the UK and globally due to changes in fashion and consumer spending.
“The use of leather in car and aircraft upholstery has historically been an important market, however, the use of faux leather and reduced demand for cars has hit demand hard over the past few years. Similarly, the decline in leather footwear has reduced demand for leather over several years.
“Coronavirus control measures around the world have slowed down or temporarily halted many businesses that would have used leather adding short-term pressure to the market."
Costs of addressing the environmental impact of the tanning and processing of hides and skins have also had to be met.
In some parts of the world lower quality hides are reportedly being disposed of as landfill or processors are having to pay to have them removed.
With only a small number of tanners and processors in the UK, exports are vital to the UK supply chain.
China is the dominant buyer of UK hides and skins, but other important markets include Turkey, Pakistan and Italy.
“The UK exports significant quantities of rendered inedible co-products to Europe where some is consolidated with other countries’ products and exported to Asia," said Mr Ashworth.
“Irrespective of the final version of Brexit that results at the end of December, significant disruptions are likely in the way in which these co-products are traded with Europe and the rest of the world, with an associated risk of potential loss of revenue to the red meat sector."