Nevertheless, precautionary stamping out procedures were enforced by the South African Government Authorities on South African ostrich farmers, resulting in the killing of thousands of healthy ostriches.

Along with such debatable enforcement, very strict bio-security measures for South African ostrich farms have been imposed. These, among others, restrict the free movement of live ostriches between farms, and hence the trading of ostriches among South African ostrich farmers.

On top of these negative production and supply factors, the export of ostrich meat to European Countries had also been banned, resulting in a dramatic drop in the annual income to ostrich farmers and thus production of ostriches for slaughter, (and obviously skins) from around 400,000 during 2007-08 to a 20 year low of 150,000 in 2013.

Luxury demand holds firm

What has coincided with the drop in the supply of ostrich skins is the introduction of exotic ostrich leather as a luxury item by luxury brands such as Louis Vuitton, Gucci, Prada, Hermes and others, into their present and forthcoming collections, lending further stimulus to the present high skin price and bullish market phase.

This has resulted in the square foot price for Grade #1 ostrich leather increasing from a recent US$20 to US$42 per square foot to European manufactures. This has left the Japanese, US, Mexican, Korean and other handbag, footwear and small leather goods manufacturers no choice but to contend with a much smaller availability of Grade #1 and Grade #2 ostrich leather. They have been obliged to supplement the shortfall by purchasing and manufacturing with Grade #3 and Grade #4 leathers.

The present short supply situation is expected to last for at least two to four years until the stamped out breeding birds have been replaced by the newly selected young breeders after having reached maturity.

The question now on many manufacturers’ minds is – how high can ostrich leather prices climb ?

Considering the fact that US manufacturers have already paid US$42 per square foot for Grade #1 (US$700 per skin) before the downturn in price in early 2014, it can be expected that ostrich leather prices have not yet reached the ceiling. Add to this that exotic leather such as crocodile still sells at more than double the price of ostrich there is still room on the upside for ostrich leather.

 

Recent events

The keen interest for ostrich leather during both the recent Bologna and Paris leather fairs supports the forecast of higher prices to come and a similar reaction can be expected during the 2014 APLF leather fair in Hong Kong.

As founder of the vertically integrated Saag Jonker Group of Companies, Saag Jonker has accumulated 50 years experience in all divisions of the Global Ostrich Industry.

Article edited by Richard Smith, UBM Asia (APLF Ltd)