The export market for raw leather and sheepskin has plummeted as competition from synthetics and a lack of demand has left exporters with stockpiles of almost worthless skins.

Key points: Synthetics used for clothing and shoes have been a major blow for the leather industry

Synthetics used for clothing and shoes have been a major blow for the leather industry Industry insiders say they have never seen a downturn as severe

Industry insiders say they have never seen a downturn as severe They fear low-value skins will end up being buried as they won't be able to sell them at a profit

Australia mainly exports animal skins in a preserved state to tanneries in other countries, where the final processing is carried out.

Denis King, executive officer of the Australian Hide Skin and Leather Exporters Association, said the industry was at an all-time low.

"The leather industry is in one of the worst depressions it's been in in living memory," Mr King said.

"Talking with people who have been in the industry for 40 or 50 years, they've never seen the industry in as bad a shape as it is."

Mr King said the introduction of synthetics for clothing and shoes — especially in the sneaker market — had been a major blow for the leather industry.

The high price of wool had also played a part in the downturn.

"Most of the sheep that are coming to the processing works have been shorn before they arrive and then, of course, the skins are only worth the leather value," Mr King said.

"Traditionally, before that, there would have been an inch or a bit more than that left on that would have gone into the sheepskin side of things for warm jackets."

Manufactured goods

Mr King said many low-value skins could end up being buried.

"The cost of preserving them and preparing them for shipment is far, far greater than the sale price," he said.

Tanned hides returned to Australia in the form of either uncut hides or manufactured goods, like jackets or shoes.

Tannery workers in Casino prepare cattle hides for export. ( ABC Rural: Kim Honan )

But Adelaide leather merchant Andrew Horne said it was almost impossible to tell where imported skins came from.

"It's very difficult for the tanneries overseas, where they get the raw materials from many countries, to follow that process through," Mr Horne said.

"They come in, they're all graded at once and they are all put through production.

"There's a chance, certainly, that some of the hides you buy back will be Australian, but generally it will be a mix of hides from all over the world."

Mr Horne said there was a movement in Europe towards tanneries being able to specify where leather comes from, even going as far as identifying the farm.

"It's fairly new, its fairly cost prohibitive for the tannery too, because the hides themselves have to be marked," Mr Horne said.

"But for some very top end European brands, it's becoming more important so they can use it as a selling point."

Mr Horne said the demand for tanned leather was reasonable, with an increase in cottage industries using leather, but it was difficult to source Australian leather.

"There's not much of a tanning industry left in the country unfortunately, the traditional leather that would be in an RM Williams boot or on a couch — they're just not produced here anymore."