The rawhide collection drive for Eid-ul-Azha is again facing hurdles this year amid the coronavirus pandemic and a slump in leather exports.

The demand for leather in tanneries has declined due to the stagnation in the world market, according to merchants. In this situation, leather prices may be lower than last year, they said.

In the last season of animal sacrificing, piles of thousands of rawhides were left to rot in the streets over a dispute among tanners, merchants and traders.

The relevant ministries are meeting at different levels this time to avert a major disaster.

Tannery owners said if the seasonal traders buy leather at the prices fixed by the government, they will not have to count losses unlike the last time.
In the previous year, tanners bought cowhides at Tk 45 to 50 per square foot in Dhaka and at Tk 35-40 in the rest of the country. The price of goat hide was set between Tk 13 and 20 per square foot.

The situation took a turn for the worse when wholesalers began offering meagre prices for hides or stopped purchasing them altogether . The seasonal traders subsequently dumped their stock in the streets to rot.

Wholesalers said they ran out of money due to bills not being paid by the tanners.

OLD PROBLEMS STILL LOOM LARGE

Tannery owners were accused of not paying the merchants a total of Tk 4 billion following a dispute in the last Eid-ul-Azha. The Ministry of Commerce and the Federation of Bangladesh Chambers of Commerce and Industries subsequently took initiatives to recover the dues.

The FBCCI had advised tanneries to pay off the arrears in three steps. It also called for a memorandum of understanding between the two parties.

Sakhawat Ullah, the general secretary of Bangladesh Tanners Association, told bdnews24.com: “An MoU was supposed to be signed. But following the death of Mohammad Delwar Hossain, the president of Bangladesh Hide and Skin Merchants Association, that did not happen. But tannery owners have paid off some old dues.”

SLUMP IN EXPORTS

Due to the pandemic, crust leather exports have come to a standstill.

The situation in the leather industry has been deteriorating since the beginning of this year, said Sakhawat. Many tanneries have closed down since January.
“Most of our business is dependent on China. When the virus appeared in China earlier this year, our orders started getting cancelled. Since then, tanneries have not been able to turn things around.”

Now the clients want to buy the products at stock lot prices, he said. There are some new orders but the prices are very low.

According to the Export Promotion Bureau, $1 billion worth of leather and leather products were exported in FY 2018-19 but the figure fell down to $797 million in FY 2019-20.

“We have not sold any leather in the last six months. As a result, there will be a lower demand for leather in tanneries this time. The tanneries are still retaining 30-40 percent of last year’s leather.”

GOVERNMENT INITIATIVES

In a circular last month, the central bank gave the defaulting leather traders an opportunity to reschedule their loans by depositing two percent of the amounts. However, many traders were not happy with the move.

“The scope to reschedule had been there before. If the interest was slashed, then I would have thought something has been done,” leather trader Tipu Sultan said.

He said the Tk 6 billion allocated by the government for the sector would not help the traders much because the banks would deduct previously unpaid loans from the new ones.

The government is working towards an export target of $5 billion by 2021, Industries Minister Nurul Majid Mahmud Humayun had said last year.

However, the plan has been hit by uncertainty due to the coronavirus crisis.

https://bdnews24.com/business/2020/07/16/coronavirus-crisis-deals-leather-sector-a-hard-blow