Local leather exporters are facing turbulent times because of a fall in both exports and prices of their products in the international markets that might threaten the growth of the local tannery industry, said industry people.

"The fall in both exports and prices is a direct effect of the decline in leather consumption in international markets,” said Tipu Sultan, president of Bangladesh Finished Leather and Leather Goods Exporters Association.

The price of leather was S 4.95 per square feet in fiscal 2006-07, which declined to $4.70 last fiscal year, translating to a 5 percent rate of decline, according to Bangladesh Bank (BB) data.

Industry people predict the global economic crisis will further take a toll on this industry and reduce consumption, and eventually prices.

“The price of finished leather and leather products may drop up to 40 percent in the current fiscal year,” Tipu Sultan said.

He said the industry is going to face serious problems this year as export of finished leather has already marked a 20 percent decline in the first quarter of the current fiscal year.

He also said the fall in the prices of leather products in the international markets will result in a 25percent decline in exports by the end of the fiscal year. This will directly concern the 195 tanneries in the country.

Bangladesh has plenty of rawhide, as every year thousands of cattle are slaughtered to celebrate the Muslim religious festival Eid-ul-Azha. On an average, 18-20 lakh pieces of

cowhide and 35-40 lakh pieces of goatskin are collected during the festival alone.

Leather is one of the most important export items of the country, as it attracts impressive foreign currency. Some of the most common leather items are shoes, bags and purses.

Leather is also one of oldest export items from this region, starting from the British colonial period. The tannery industry is a years old industry that sprang up in Narayanganj, and later shifted to Hazaribagh, the northwestern part of Dhaka, in 1990, said industry people.

Currently, the overall market size of the leather industry is

around Tk 3,500 crore a year, with export figures standing at $284 million in 2007-08, said the industry people.

Sultan said the consumption of leather and prices in the international market declined by 30 percent last year, followed by a decline of international production by 6 percent.

SAMM Nuruddin, managing director of Kid Leather, one of the major exporters, said the government needs to immediately take necessary measures to overcome this crisis to save the industry, such as preserving the local leather and leather goods properly for the coming years.

He said another problem of

this industry is the rising cost of processing the finished leather, which makes Bangladesh's leather more expensive than China, India or Morocco.

"The essential chemicals, such as sodium chloride and sulfuric acid that are needed for conversion of animal hides to leather, have to be imported and are very expensive," he said, suggesting that the government reduce import duties and VAT on these chemicals."

Tipu Sultan advised local industry men to emphasise producing diversified products, such as shoes and bags, to minimise the threat of future collapse.