Tanners profit, traders lose
Tanners are delaying purchase of rawhide this year forcing small and seasonal traders to release their stock at lower prices.
“The tanners have taken such a stance to maximise profits,” said Tipu Sultan, general secretary of Bangladesh Hide and Skin Merchants Association.
Cowhide prices have already been set at Tk 70-Tk 75 per square foot in the capital and Tk 60-Tk 65 elsewhere in the country, a 24 percent decline from those last year.
Tanners brought down the prices claiming that the demand for Bangladeshi leather has declined in the international market.
But traders say just the opposite. "There is a huge demand for Bangladeshi leather in the global market due to its quality. The tannery owners want us to accept their prices to make higher profits,” said a trader, preferring not to be named.
Md Saiful Islam, senior vice-president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, also echoed the same: “It (delaying purchase) is a strategy of the tanners.”
If the tanners delay purchase, small traders would be compelled to sell cowhide at low rates as they do not have the capacity to preserve those, he said.
Islam, also the managing director of Picard Bangladesh, said rawhide price is lower in Bangladesh than that in India, which may fuel smuggling into the neighbouring country.
Rawhide is now selling at around $1.20 per sft in India, while the rate is nearly $1 in Bangladesh, he said.
“So I fear hides would be smuggled into India, which may create a negative impact on the overall leather industry of Bangladesh.” Moreover, the supply of rawhide is estimated to rise by 10-12 percent this year due to low prices of cattle, he said.
More than 65 lakh cattle were sacrificed during the Eid-ul-Azha last year, according to data of the Department of Livestock.
At present, a total of 194 tanners buy rawhide during the Eid. About 22 crore sft of rawhide is collected in the country every year, half of which is stocked up during Eid-ul-Azha.
Rawhide worth about Tk 4,000 crore is traded on the Eid day alone, according to industry operators.
M Abu Taher, chairman of Bangladesh Finished Leather, Leathergoods and Footwear Exporters' Association, said they have cut rawhide prices this year due to a poor demand for Bangladeshi leather in the global market.
Big international brands are not interested in importing Bangladeshi leather as it is processed without considering the environmental concerns, he said.
Moreover, the US dollar is losing its value against the local currency, he added.
Shaheen Ahmed, chairman of Bangladesh Tanners Association, had earlier told a press conference that the rawhide prices are witnessing a declining trend globally.
“The Chinese government has recently imposed duties on import of leather and leather goods from some countries including Bangladesh,” he added.
Aniruddha Roy, managing director of RMM Leather Industries, said rawhide prices set by the tannery owners are not logical. “I think Tk 85-Tk 95 per sft is a reasonable price to buy cowhide.”
In fiscal 2013-14, Bangladesh exported leather, leather goods and footwear worth $1.29 billion, according to Export Promotion Bureau.
Japan, European Union and the US are the major markets for Bangladeshi leather and leather goods.
Export earnings from leather, leather products and footwear rose 18 percent year-on-year to $232 million during July-August of the current fiscal year.
Four state-owned commercial banks -- Sonali, Janata, Agrani and Rupali -- disbursed Tk 502 crore in loans among tanners to facilitate rawhide purchase, the amount being 17 percent higher than that in the previous Eid.
Meanwhile, the government has already imposed a ban on transportation of rawhide to border areas for 30 days from the day of Eid-ul-Azha to check smuggling.
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