Ugg! Lambskin row breaks out over boots brand

A row is escalating in Tasmania over the supply of sheepskins used to make ugg boots for the US market.

The globe's largest meat processing company, JBS Swift, is expected to front an Australian Senate hearing to answers questions about alleged abuse of market power.

It follows a complaint made to the Australian Competition and Consumer Commission in February about the Brazilian-owned company.

The Tasmanian hide and skin processor, Cuthbertson Brothers, has alleged that production had been halved because the business could no longer tender for skins from the Longford abattoir, which Swift bought last year.

Company manager, Wayne Jones, said by locking the firm out of the Longford facility, Swift was using its market power to force Cuthbertson Brothers out of business, which was clearly in breach of the Trade Practices Act.

"The majority of sheep and lamb skins we produce go to the US as high quality uggs which are then sold as a premium Tasmanian product," Jones said.

"Unless something is done to stop Swift abusing its market power, Tasmanian uggboots will be lost, as well as a valuable export market"

Jones said Cuthbertson Brothers were once 80% of the market. Since December, the company had only been able to get a "dribble" of sheep and lamb skins from Swift.

Becher Townsend, who represents small independent retailers in Tasmania, told Inside Retailing Cuthbertson Brothers had slipped from having 80% of the market to between 10% and 20%.

"It's savage for them. They're copping it in the neck," he said.

"It's a family company, over 150 years old, the same family that owns Blundstone boots.

"The long and the short of it is the lamb skins are sent to the largest tannery in the world, Hinnan Proposer in China, and used to make high end consumer goods and in particular ugg boots. From what I can gather the vast majority, but not all, of branded ugg boots (Billabong, EMU, UGG , etc) sold in Australia would have come from this organisation.

"The top 10% of the lambskins processed annually go to make the ugg boot and the top 10% just happens to come from Cuthberton's in Tasmania.

"That's because of the high quality and clean-ness of the skins. Interstate, lambskins end up with grass seeds through them. Down in Tasmania, they don't" Townsend said.

"As a result of what's happening, the ugg boot is suffering as a result," he said.

"It's ironic, but if I walk down the road to Sheepskins & Opal World (in Hobart), I'd buy a pair of ugg boots which are probably made from Tasmanian lambskin, sent to China, value-added and sent back here to be sold to tourists, particularly from south-east Asia".

Townsend said Swift had closed an abattoir on King Island last week for six to eight weeks in order to "review services".

"So they are also jeopardising the King Island brand - all the food and dairy products - and that one is deeply distressing to watch."