Steps taken, yet rawhide wasted
FROM PAGE 12
In Bangladesh, a cow or buffalo’s skin is 20 to 25 square feet and a goat’s 4 to 5 square feet.
While cowhides, which sold between Tk 100 and Tk 500 per piece, managed to find some takers, the goat skins were simply chucked away despite the prices as low as Tk 5 in some districts.
“The demand is just too low,” said Mohammad Shamim Hossain from Narsingdi district, who sold four pieces of cowhide for Tk 400.
Uddin though begs to differ.
Fewer number of rawhides were thrown away this year compared with last year, when one crore pieces of animal skins worth Tk 100 crore were disposed of across the country, he said.
The slide in prices of leather goods in international markets, compounded by the global coronavirus pandemic, are to blame for the emerging trend of throwing away rawhide, he said.
Delays in applying salt on the skins is another reason for the low prices.
Aftab Khan, chairman of the Bangladesh Hide and Skin Merchants Association, blamed the poor inflow of funds to the sector for the low demand for rawhide in the country over the last two years.
For decades, the tanners paid the full arrears to the merchants every year to buy the rawhides from the field level.
But over the last two years, the tanners are clearing only a small portion of the merchants’ dues, as a result of which the merchants were unable to channel funds to their regional depot owners and seasonal traders to buy rawhides at the field level.
“This badly impacted the rawhide business. The poor trading system of rawhides have been exposed over the last two years,” Khan said.
And the tanners’ excuse for not clearing the arrears? It is a laundry list, including the lower demand for tanned leather, the price fall in the international markets, the US-China trade war and the global coronavirus pandemic.
Of the total quantity of tanned leather produced in Bangladesh, 60 percent are shipped to China.
China is the main export destination for Bangladesh’s leather because the others are not interested in purchasing leather from the country’s non-compliant factories.
Bangladesh is yet to obtain the much-required certification from the Leather Working Group (LWG) that guarantees international standard compliances in the leather business.
The Savar Tannery Industrial Estate (STIE) was supposed to ensure the LWG certification. But despite spending several hundred crores of taka and eight years, the construction of the mandatory Central Effluent Treatment Plant (CETP) remains incomplete.
In the absence of a functional CETP, an LWG certification is out of the question.
Now, in the absence of the accreditation, the local exporters have to export leather at rates 40 percent lower than the going rates in the international markets to China.
The Chinese importers re-process the Bangladeshi leather in their factories to make those international standards.
But, over the last two years, the export of leather goods from China also declined significantly because of the US-China trade war, which, in turn, badly impacted Bangladesh’s leather trade.
Last fiscal year, leather exports fetched $98.3 million, down 40.3 percent from a year earlier, according to data from the Export Promotion Bureau. The overall export of the leather and leather goods sector stood at $797.6 million, down 21.8 percent year-on-year.
The tanners are sitting on unsold leather worth Tk 2,500 crore due to low demand from the international buyers, according to Md. Shaheen Ahmed, president of the Bangladesh Tanners Association.
Like Khan, Ahmed also blamed the fund crisis in the sector for the piles of unsold rawhide this Eid.
The tanners had demanded loans amounting to Tk 500 crore ahead of Eid-ul-Azha but the lenders gave only Tk 120 crore. And the loan amount was used to clear arrears amounting to Tk 60 crore, Ahmed said.
“There is a cash crunch in the sector,” said Ali Hossain, a rawhide trader, adding that the banks are also not lending freely to the tanners to ease the situation.
The tanners have invested Tk 7,000 crore on the STIE, which created fund crisis for them, he added.
Amid the backdrop, the special committee formed to decide on rawhide exports will meet in two or three days, the commerce secretary said.
The committee, which has representations from the business community, government higher-ups, leather goods manufacturers and exporters and experts, will take stock of the rawhide inventory in the country and then decide.
Our district correspondents contributed to the story