The dramatic drop in prices for tanned leather hides is hitting Argentina packers hard.
The downturn in orders for finished leather in Argentina, has sent the prices of hides tumbling at the meat plants of country. The price per hide has gone from $35-40 to $10-12 per hide.
This money was traditionally relied apon by the beef plants to cover the costs of production and transport, leaving change of $10-12 per head. Today's reality is that the beef plants have to pay an additional $15 to produce their beef.
Because of the weak economy, the United States is not buying leather for upholstery in the car industry.
Argentina is a leading global supplier of finished leather. As no hides are allowed to leave the country raw, they must be processed into leather within the country.
There have been 1,200 tannery workers laid off in the last two weeks with more lay offs expected.
While China still remains the main market for leather, the United States have always preferred Argentine leather for their automobile industry, making them the second largest market
The leather industry is worth well in excess of $1.2 billion a year to Argentine exports.