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“According to Hidenet, a leather markets research firm, a hide from a branded cow went for as little as $4 the week of July 15, down from as much as $81 just fi

“According to Hidenet, a leather markets research firm, a hide from a branded cow went for as little as $4 the week of July 15, down from as much as $81 just five years ago.” Wait, what? Consumer trends have shifted so radically in 5 years that even with a white hot economy leather prices have dropped by 20x?

mikeash 7y ago
I assume cows are mostly raised and slaughtered for their meat, with leather as just a sort of bonus. That would mean that the supply is extremely inelastic: farmers won’t raise and slaughter noticeably fewer cows just because leather prices drop a lot, or more cows just because they jump a lot. That would imply that a small swing in demand could result in large changes in price.
luxuryballs 7y ago
I wonder how much of this is because of the increase in cheaper faux leather, maybe even also combined with inflation, you may be paying the same numerical amount for poly leather as you did for genuine leather 20 years ago. Also I guess if a company can cut costs by using the improved poly leather and the consumer doesn’t notice or care then that’s the move.
- kevin_thibedeau 7y ago
  More like cheap Chinese bonded leather which permeates most sub-$100 leather goods. I make a pass on buying most leather products because it's so hard to find decent quality without an overinflated price. I don't even dare buying it online unless its a niche where substandard materials are unlikely.
  - mrnobody_67 7y ago
    Feels like the leather industry needs to launch an education campaign to distinguish the real thing from the cheap China knock offs... big marketing/branding opportunity for the sector. Most consumers, myself included, have no clue about grading leather, etc.
- big_chungus 7y ago
  Leather still is a durable and useful material, if properly cared for. Assuming its production as a by-product of the slaughterhouse, it could be considered more sustainable than plastic (it can biodegrade).
acdha 7y ago
The economy is hardly white-hot, especially for people below the top decile or so – the median American worker made 5% LESS in 2018 than in 1979 (https://fas.org/sgp/crs/misc/R45090.pdf https://fas.org/sgp/crs/misc/R45090.pdf) – so I’d be surprised if this wasn’t basic economics: for a long time, leather was a premium good and cost more, so companies focused on using less of it and the large fraction of consumers who favor low prices rewarded them for it. It’s easy to hit a threshold where cutting the remaining usage entirely is a good marketing move since it removes a type of material from your system and attracts buyers who avoid animal products. Prices may be low but they’d have to stay lower than the equivalent synthetics for a long time to get manufacturers to invest in redesigning and changing their supply chains.
- sokoloff 7y ago
  It appears to me that the report you cite says that the overall median real wage rose by 6.1% over that time period. (Table 1, page 4, first row; related text on page 5). What figure in the report are you using to determine a 5% decrease over that time period?
  - jdsully 7y ago
    It almost certainly comes from this paragraph: > In 1979, wages at the 10th percentile ranged from $10.03 for black and Hispanic women to $14.42 for white men, whereas in 2018 wages in the 10th percentile ranged from $9.72 for Hispanic women to $13.70 for white men. This adds up to -4.99% for white men in the 10th percentile. Above the 10th percentile everyone has done better.
    - deleted 7y ago
      [deleted]
    - DuskStar 7y ago
      So the GGP mistook 'bottom decile' as 'top decile', then?
  - acdha 7y ago
tomrod 7y ago
A couple of points to keep in mind: - After processing, leather doesn't rot. Thus it is a durable good, and stockpiles can build up - Texas and other parts of the nation had massive droughts a few years back. This resulted in herd culling, which could have increased the supply of available hides at the time.
brandmeyer 7y ago
Beef and hide are coupled goods. One cow produces about X kg of beef and Y m^2 of hide. If demand for beef is extra high, then it will depress the price of hide because the ratio in supply is roughly fixed between them. There are other examples in modern society. Chlorine and caustic soda are produced in strictly fixed ratios from NaCl salt and electricity. Extra demand for one will depress the price of the other. The effect is quite sharp in this example, since both products are expensive to store. Similarly, the hydraulic fracking industry has somewhat depressed the market price of natural gas in the US. The miners are really hunting for high-value liquid hydrocarbons. The gaseous hydrocarbons are quite low-margin by comparison, but come along for the ride in the shale being exploited right now. The effect is more modest in this example since new home construction, new electricity production, and industrial process heat can all be biased towards natural gas. But its still there. If electric and other high-efficiency propulsion technologies takes off enough to impact gasoline consumption, then a side effect in the US will be an increase in natural gas prices. The source of the increase is twofold: Decreased production of liquid hydrocarbons will decrease supply of gaseous hydrocarbons, and increased demand for electricity will raise demand for gaseous hydrocarbons.
- squirrelicus 7y ago
  I can't help but get the sense that your economic materials analysis is based on a video game crafting economy. If the profitability of leather is low enough, then people will trash the raw hide but butcher and sell the beef. There's a lot of labor and logistics and materials that goes into producing the beef you cook or leather goods you buy beyond (cow) -> (meat,leather) -> (food,clothes). Remember, nobody knows how to make a pencil.
  - praptak 7y ago
    How does this contradict the point that GP made? GP did not imply that you get a free piece of leather with each cow slaughtered, just a hide. Btw, even game economy models this part - in Dwarf Fortress a slaughtered animal produces skin, which will decompose if not tanned or converted to parchment.
  - 7y ago
mc32 7y ago
It’s the intersection of high global demand for beef with its consequential byproduct of hides and the depressed appetite for leather goods in mature economies influenced by the long campaign against fur which coupled with vegetarianism and veganism have resulted in change in consumer behavior over time.
pmorici 7y ago
Tesla and a lot of other car makers are switching to so called "vegan leather" in their cars. Which is a fashionable way of saying synthetic leather. In Tesla's case it is for everything except the steering wheel which they still use real leather for. It seems to be an admission that the real thing is still more durable under some circumstances.
sp332 7y ago
This is explained near the beginning of the article. Just five years ago... leather outpriced itself, forcing shoe and clothing designers to cut the material from their products. Combine that with the rise of athleisure and the growing popularity of “vegan clothing,” and one can see why demand hasn’t come back.
vilhelm_s 7y ago
It also says > Just five years ago, prices soared after a drought shrank the U.S. herd to a six-decade low. so the $81 high mark is probably more to do with the weather than the consumer trend.
rasz 7y ago
>a hide from a branded cow went for as little as $4 the week of July 15 That price point doesnt seem right. Can anyone point me where you can actually buy a cowhide for $4? or even $40? Quick search gives me ~$50 for calf hides. Even Chinese fake leather cowhide rugs start at ~$50.

mikeash 7y ago

I assume cows are mostly raised and slaughtered for their meat, with leather as just a sort of bonus. That would mean that the supply is extremely inelastic: farmers won’t raise and slaughter noticeably fewer cows just because leather prices drop a lot, or more cows just because they jump a lot. That would imply that a small swing in demand could result in large changes in price.

luxuryballs 7y ago

I wonder how much of this is because of the increase in cheaper faux leather, maybe even also combined with inflation, you may be paying the same numerical amount for poly leather as you did for genuine leather 20 years ago. Also I guess if a company can cut costs by using the improved poly leather and the consumer doesn’t notice or care then that’s the move.

kevin_thibedeau 7y ago
More like cheap Chinese bonded leather which permeates most sub-$100 leather goods. I make a pass on buying most leather products because it's so hard to find decent quality without an overinflated price. I don't even dare buying it online unless its a niche where substandard materials are unlikely.
- mrnobody_67 7y ago
  Feels like the leather industry needs to launch an education campaign to distinguish the real thing from the cheap China knock offs... big marketing/branding opportunity for the sector. Most consumers, myself included, have no clue about grading leather, etc.
big_chungus 7y ago
Leather still is a durable and useful material, if properly cared for. Assuming its production as a by-product of the slaughterhouse, it could be considered more sustainable than plastic (it can biodegrade).

acdha 7y ago

The economy is hardly white-hot, especially for people below the top decile or so – the median American worker made 5% LESS in 2018 than in 1979 (https://fas.org/sgp/crs/misc/R45090.pdf https://fas.org/sgp/crs/misc/R45090.pdf) – so I’d be surprised if this wasn’t basic economics: for a long time, leather was a premium good and cost more, so companies focused on using less of it and the large fraction of consumers who favor low prices rewarded them for it. It’s easy to hit a threshold where cutting the remaining usage entirely is a good marketing move since it removes a type of material from your system and attracts buyers who avoid animal products. Prices may be low but they’d have to stay lower than the equivalent synthetics for a long time to get manufacturers to invest in redesigning and changing their supply chains.

sokoloff 7y ago
It appears to me that the report you cite says that the overall median real wage rose by 6.1% over that time period. (Table 1, page 4, first row; related text on page 5). What figure in the report are you using to determine a 5% decrease over that time period?
- jdsully 7y ago
  It almost certainly comes from this paragraph: > In 1979, wages at the 10th percentile ranged from $10.03 for black and Hispanic women to $14.42 for white men, whereas in 2018 wages in the 10th percentile ranged from $9.72 for Hispanic women to $13.70 for white men. This adds up to -4.99% for white men in the 10th percentile. Above the 10th percentile everyone has done better.
  - deleted 7y ago
    [deleted]
  - DuskStar 7y ago
    So the GGP mistook 'bottom decile' as 'top decile', then?
- acdha 7y ago

tomrod 7y ago

A couple of points to keep in mind: - After processing, leather doesn't rot. Thus it is a durable good, and stockpiles can build up - Texas and other parts of the nation had massive droughts a few years back. This resulted in herd culling, which could have increased the supply of available hides at the time.

brandmeyer 7y ago

Beef and hide are coupled goods. One cow produces about X kg of beef and Y m^2 of hide. If demand for beef is extra high, then it will depress the price of hide because the ratio in supply is roughly fixed between them. There are other examples in modern society. Chlorine and caustic soda are produced in strictly fixed ratios from NaCl salt and electricity. Extra demand for one will depress the price of the other. The effect is quite sharp in this example, since both products are expensive to store. Similarly, the hydraulic fracking industry has somewhat depressed the market price of natural gas in the US. The miners are really hunting for high-value liquid hydrocarbons. The gaseous hydrocarbons are quite low-margin by comparison, but come along for the ride in the shale being exploited right now. The effect is more modest in this example since new home construction, new electricity production, and industrial process heat can all be biased towards natural gas. But its still there. If electric and other high-efficiency propulsion technologies takes off enough to impact gasoline consumption, then a side effect in the US will be an increase in natural gas prices. The source of the increase is twofold: Decreased production of liquid hydrocarbons will decrease supply of gaseous hydrocarbons, and increased demand for electricity will raise demand for gaseous hydrocarbons.

squirrelicus 7y ago
I can't help but get the sense that your economic materials analysis is based on a video game crafting economy. If the profitability of leather is low enough, then people will trash the raw hide but butcher and sell the beef. There's a lot of labor and logistics and materials that goes into producing the beef you cook or leather goods you buy beyond (cow) -> (meat,leather) -> (food,clothes). Remember, nobody knows how to make a pencil.
- praptak 7y ago
  How does this contradict the point that GP made? GP did not imply that you get a free piece of leather with each cow slaughtered, just a hide. Btw, even game economy models this part - in Dwarf Fortress a slaughtered animal produces skin, which will decompose if not tanned or converted to parchment.
- 7y ago

mc32 7y ago

It’s the intersection of high global demand for beef with its consequential byproduct of hides and the depressed appetite for leather goods in mature economies influenced by the long campaign against fur which coupled with vegetarianism and veganism have resulted in change in consumer behavior over time.

pmorici 7y ago

Tesla and a lot of other car makers are switching to so called "vegan leather" in their cars. Which is a fashionable way of saying synthetic leather. In Tesla's case it is for everything except the steering wheel which they still use real leather for. It seems to be an admission that the real thing is still more durable under some circumstances.

sp332 7y ago

This is explained near the beginning of the article. Just five years ago... leather outpriced itself, forcing shoe and clothing designers to cut the material from their products. Combine that with the rise of athleisure and the growing popularity of “vegan clothing,” and one can see why demand hasn’t come back.

vilhelm_s 7y ago

It also says > Just five years ago, prices soared after a drought shrank the U.S. herd to a six-decade low. so the $81 high mark is probably more to do with the weather than the consumer trend.

rasz 7y ago

>a hide from a branded cow went for as little as $4 the week of July 15 That price point doesnt seem right. Can anyone point me where you can actually buy a cowhide for $4? or even $40? Quick search gives me ~$50 for calf hides. Even Chinese fake leather cowhide rugs start at ~$50.