The government has set the price for rawhides of sacrificial animals ahead of Eid-ul-Azha and said that it will allow exports to ensure fair prices, if necessary.
Commerce Minister Tipu Munshi announced the prices in a virtual meeting on Sunday.
He said that they would allow exports if it’s found that people are not getting a fair price for the rawhides.
The price of cowhide has been set at Tk35-40 per square foot in the Dhaka region and Tk28-32 in the rest of the country this year, down by 30% from the Tk45-50 and Tk35-40 last year.
Tanners will have to buy goat hide at Tk13-15 and ‘Baqri’ goat hide at Tk10-12 this year. The prices have been lowered by 27% and 23% respectively from Tk18-20 and Tk13-15 the previous year.
“Factors like demand and international market prices, as well as the ongoing pandemic, were considered in setting the prices,” said Commerce Minister Munshi.
In an open market economy, the government does not set commodity prices, he said, before adding: “Since most of the rawhide is collected during Eid-ul-Azha, we fix it to ensure fair prices to benefit the poor.”
Tanners and hide merchants urged the government to strictly monitor the rawhide collection process and to take measures against smuggling.
“We have no problem with the prices, but this should be applicable to merchants as we have to spend at least Tk5 per square foot on salt to preserve rawhides,” said Aftab Uddin of the Bangladesh Hide & Skin Merchants Association.
They also urged the government to ban the transport of rawhides on the night of Eid-ul-Azha, which will be celebrated in Bangladesh on August 1.
‘Will allow export, if necessary’
To avoid what happened last year when traders dumped rawhides as they did not get proper prices, the government has kept the option for export of hide and wet blue.
“We will allow export, if it’s found that people are not getting fair prices,” said the commerce minister.
However, leather product manufacturers oppose the idea as it might lead to a shortage of raw materials.
“The government fixes the price [of rawhides] in line with the global market. The reality is, crushed leather accounts for only 12.25% of the export earnings by the leather industry. The remaining 87.75% comes from leather goods,” said Md Saiful Islam, president ofthe Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB).
A crunch of raw materials will lead to imports, which will affect the leather export sector adversely, according to him.
“Export of rawhides and blue wet should be allowed on a limited scale, if it’s necessary,” added Islam.
Unsold processed leather from last year
About 35% of the processed leather from rawhides collected during the last Eid-ul-Azha is still sitting in warehouses, according to Bangladesh Tanners Association (BTA).
More than half of the rawhides collected in Bangladesh are sourced during Eid-ul-Azha. According to unofficial estimates, around 10 million animals were sacrificed during Eid last year.
“Processed leather worth Tk3,200 crore from last year still remains unsold,” said BTA Chairman Shaheen Ahmed.
According to him, the tanning industry is facing a shortage of funds due to unsold products.
Merchants and tanners want fiscal support
The lack of funds this year has left tanners in trouble as they need a huge amount of cash during Eid to buy rawhide, said BTA General Secretary Md Shakawat Ullah.
“This year the industry is facing a tough time due to the Covid-19 pandemic,” he told Dhaka Tribune.
Banks usually adjust the dues of the previous year when disbursing fresh funds, said Ullah.
“We urge the Bangladesh Bank to order banks not to do that this year,” he said.
The government should provide funds to the sector from the stimulus packages announced to cushion the impact of the coronavirus pandemic, added the BTA leader.
Commerce Minister Munshi said earlier this month, that they were working with the Finance Ministry and the central bank to figure out a way to address the fund crisis.
Meanwhile, state-owned commercial banks have decided to lend Tk586 crore this year for procuring rawhide during the Eid season.
Earlier this month, the Sonali, Agrani, Janata and Rupali Banks sought 50% of their total disbursed loans as refinance capital from the government.
They proposed a 7% interest for the loans, of which borrowers would pay 4% and the remaining 3% would be covered by the government.
According to data from the Export Promotion Bureau (EPB), export of leather and leather goods fetched Bangladesh $7,986 million last year, down by nearly 22% from the previous year.
