The illegal trade in python skin generates $1+ billion annually, according to a 2012 report by the International Trade Center. Given that python skin has become one of the most pronounced sartorial trends of recent years, this number can only be expected to have increased. If the status quo continues, continued demand will support an unethical and unsustainable supply chain, mired in ambiguity and complexity.
Consumer demand is driving a supply chain whereby for every legally obtained animal skin, another will be illegally poached, as estimated by the Convention on International Trade of Endangered Species (CITES), the primary regulatory body in the python skin industry. South-East Asia alone imports more than 500,000 skins legally into Europe each year.
In this post, we will explore the the unique challenges in the python skins supply chain and how a blockchain-based asset tracking solution can address them.
What’s wrong with Python Skin Trade?
The trade in python skin is problematic for more than its frequent illegality. It is mired in an opaque supply chain that often allows for cruelty and unethical practices, drawing mounting consumer, supplier, and regulatory concern.
Why is this happening?
The industry market size has grown from ~$100 million in 2005 to $1 billion in 2015 with no signs of letting up.
Unfortunately, reptilian welfare is rarely at the forefront of people’s minds and there are few legal protections for them in place, apart from CITES. In the US, for example, reptiles are excluded from the Animal Welfare Act. This extends into the systems overseeing the trade of python skin, all of which allow for far more manipulation, fraud, and python abuse than should exist.
Regardless of scale, the depravity behind even one illegal python skin should be indication enough of the need to address the issue. For example, snakes are often nailed to trees and skins taken while they are still alive. Their slow metabolisms mean they often experience hours or days of agony before death.
From there, the skins are sent to fashion factories where they are made into boots, belts, handbags, and more.
These items then enter the often lengthy fashion supply chain and are eventually sold in stores to consumers, primarily in Italy, France, Switzerland, and, Germany.
Between all of these points there are also transport services, increasing the number of interested parties. Additionally, around 70% of python skin exports are re-exported via the Republic of Singapore, where they are often stockpiled.
The python skin supply chain’s inherent complexity and its global nature make it very difficult to create traceability around the origins and movements of any given skin.
Most pythons for skin trade are sourced in the Republic of Indonesia and Malaysia, with recent participation from the Socialist Republic of Vietnam and the Lao People’s Democratic Republic.
Traders often incorrectly denote a skins’ geographic origin, taking advantage of Malaysia’s porous borders and its closeness in natural habitat to Indonesia, it’s possible for traders to claim snakes were sourced from Malaysia when in fact they are from elsewhere – prompting discrepancies between reported and actual harvests of Python brongersmai from Malaysia.
The complexity of the supply chain and lack of digitization or automation around it also obstructs any sort of precise timeframe from developing.
Practices such as stockpiling render it near impossible to know when any given supply chain movement is taking place.
While stockpiling is a legal and common practice, most traders in Singapore do not declare their stocks, disabling oversight for authorities and enabling illegally sourced skins to be mixed in and re-exported with the legally exported skins.
Beyond the mixing of illegal and legal skins, stockpilers can also declare whole skins as half skins allowing them to add illegal skins into the pile without changing the count.
Whether stockpiled or not, mis-declaration is common practice in the python skin trade and often skins are concealed within shipments of legally exported commodities.
Often traders falsely label the source of skins as either “captive-bred,” “pre-convention” or “seized” when in fact, they have been illegally poached from the wild.
Additionally, the inherent difficulties of distinguishing between python species can drive the false categorization of species. All of these obscurities add to create a vulnerable system, ripe for exploitation.
A Known Industry Issue
The situation has been so pressing as to motivate Kering, the parent company of brands such as Gucci, Saint Laurent, and Alexander McQueen to establish their own python farm, creating their own autonomous supply chain rather than sourcing through independent hunters and supply chains.
“Today, there is no way to be fully sure where the skin comes from”
The establishment of a directly-owned farm is not only a testament to the level of difficultly in traceability, but also a strategic statement in support of corporate responsibility.
The New Financial Value of Sustainability
While there is undeniable financial value in the illegal trade of python skin, increasing regulation and consumer awareness is already “wearing” on the industry.
In October 2019 McKinsey released a report entitled ‘Fashion’s new must-have: Sustainable sourcing at scale,’ which detailed the results of a survey of 64 executives collectively responsible for sourcing more than $100 billion of goods. All participants in this survey reported a sense of urgency around integrating sustainability, traceability, and transparency, and digitizing sourcing processes.
As such, Kering is making an environmental and financial move by opening its python skin farm. Marie-Claire Daveu said: “This is a long-term commitment to developing sustainable and responsible sourcing of Kering’s python skins.”
Kering has also made 10% of their chief executive’s annual bonus contingent on them fulfilling sustainability goals.
Kering is also a pioneer of the “environmental profit-and-loss statement”, or EP&L, a process measuring the environmental costs and benefits of a company’s operations. Kering’s goal is to decrease its total environmental impact, as recorded via EP&L, by 40% by 2025.
Today’s consumers value sustainability more than ever before, and are willing to pay a premium for it.
Nine in ten Generation Z consumers are adamant that companies have a responsibility to address environmental and social issues, a critical statistic given that Gen Z already accounts for 40% of global consumers.
A recent CGS survey found that over one-third of consumers will pay 25% more for sustainable than non-sustainable products. More importantly, according to Nielsen, “cruelty free” and “farm raised” are two of the four sustainability attributes consumers are most willing to pay more for.
A company such as Kering is in a unique position to convert this challenge into a monetizable strength.
To create credibility, foster consumer trust, and truly monetize on sustainability Kering’s efforts must be legitimate and verifiable.
The best way to do this in the python skins market is to create traceability, not only for the Kering farm but for the industry as a whole.
If all actors on a supply chain were to integrate with the STRATO platform, they would be inherently held accountable, as the system would automatically update data in real-time and with guaranteed accuracy.
It would be near impossible, for example, for stockpilers to shroud the true count of skins at-hand, as the supply chain players before them would have entered immutable data into the universal, shared system.
It would be near impossible for any party to misrepresent the journey of any given python skin.
STRATO automatically records its origins, movements, and associated agents. It also makes immutable and real-time notation of a skin’s value so as to represent any falsification on that account.
Not only would increased traceability drive a clear record of origin and sourcing, STRATO’s smart contracts feature could hold parties to certain agreed-upon terms and store and digitize relevant permits and licenses in order to prevent fraudulent copies.
For example, export permits could be stored directly on the network to strengthen the credibility of CITES certification.
Smart contracts could also be used to automatically trigger penalties if broken, and any breaches could be easily detected to create a level of deterrence.
Additionally, by clearly logging each movement of a python skin, STRATO also creates a clear record of any and all parties interacting with it. This inherently simplifies the complex supply chain at hand: by mapping it, STRATO renders it comprehensible and to an extent, easier to control.
A single source of truth, with digitized and consolidated data as provided by STRATO, would provide unparalleled and indisputable evidence of sustainability.
Given that social impact is difficult to prove and quantify, STRATO could propel a brand and its network to a unique level of achievement and credibility, monetizing sustainability so that distributors and retailers could efficiently assign premiums to verified sustainable traders.
This could benefit parties at each step of the supply chain, down to the local hunters at the bottom who could be efficiently rewarded for legality and paid premiums for sustainability.
Stable and controlled captive farming businesses (such as Kering’s) could even provide hunters with more regular employment than hunting them in the wild.
Building an Industry Network Solution with STRATO
Become an Industry Leader
Traceability Across the Globe, Time, and Authenticity
A Cooperative Network of Sustainable Parties
Automation and Digitization of Systems
Have question about the solution? Want to learn more about what STRATO can do for you?
BlockApps was the first company incubated out of ConsenSys in 2015 and has created several industry innovations including the launch of the best, easy-to-use, most powerful Blockchain as a Service (BaaS) platform on the market called STRATO.
Since launching STRATO on Microsoft Azure in 2015, BlockApps has become the first blockchain company to partner with all major cloud platforms (Azure, Amazon Web Services, Google Cloud Platform) and is a founding member of the Enterprise Ethereum Alliance (the world’s largest open standard blockchain organization). Today, we continue to expand our partner network and the enterprise-grade capabilities of STRATO.