Hides and skin traders are worried about cash flow crisis while buying rawhides during Eid-ul-Azha, as most of them are still owed a lot of payment by tanners from the last Eid.
According to the Bangladesh Hide and Skin Merchants Association, traders are yet to get about Tk500 crore from the tanners.
This will hurt the collection of rawhides and their price will fall further below the set prices, the association says.
About 50% of annual rawhides collection is made during Eid-ul-Azha – the second largest religious festival for the Muslim community that will be held on August 22 this year.
Talking to the Dhaka Tribune, rawhide traders said they have not received the money due from last year yet. Tanners had promised to pay up before this Eid, but it still has not happened.
“This will hurt the collection of hides and we will have to offer lower prices for them,” he said.
President Bangladesh Hide and Skin Merchants Association, Hazi Md Delwar Hossain said: “Usually, tanners pay previous year's dues before Eid. There is only a day left before the banks close and the tanners have still not paid their dues.
“Some of the big tanners are partially paying their dues today (Sunday), and we are unsure when the smaller tanners will pay. We are very concerned about the payment. If they do not pay us, we won't be able to buy raw hides,” he added.
Md Shakawat Ullah, general secretary of Bangladesh Tanners Association said they were trying to manage the funds to pay hides and skin businesses, adding: “Hopefully most of the tanneries will be able to do so, but a good number of tanners will not be able to make the full payment.
“This is because the sector is in serious funding crisis as the tanners have to make huge investments for relocating to Savar from Hazaribagh,” Shakawat explained.
“On top of that, we are not getting loans from banks as they want to mortgage the lands as collateral. But the owners are unable to do that because they made net registration of lands from the government,” he added.
Meanwhile, leather exporters are facing losses due to the relocation. The tanners even claimed that they have stock of processed leather collected last year.
In the last fiscal year, Bangladesh’s export earnings from leather and leather goods suffered a drop of over 12% to $1.08 billion, which was $1.23 billion in the FY 2016-17.
Hide collection may go up
Industry insiders are expecting an increased supply of rawhides this year compared to the last. They are expecting politicians to sacrifice more animals ahead of the election to please voters.
“Since the national election will take place by the end of the year, we are hoping for more hide collection as the political leaders will slaughter more animals to woo voters,” said Delwar.
We are expecting 10 to 15 lakh more rawhides than the previous year, he added.
According to Department of Livestock, last year a total of 10.4 million animals were slaughtered, which is expected to be 11.5 million this year.
No chance of smuggling
Couple of years ago, rawhides were being smuggled to India from the boarder areas, but now it has stopped due to strong monitoring by the Boarder Guards Bangladesh (BGB), sector people said.
“In stopping the smuggle of rawhides to the India, we have asked the law enforcement agencies to strengthen monitoring in the border areas,” Commerce Minister Tofail Ahmed told the Dhaka Tribune.
“In Dhaka, we will be vigilant so that traders cannot take hides out of the city,” said Tofail.
On the other hand, the Home Ministry in a meeting asked the law enforcement agencies to remain alert and to take necessary step to stop smuggling of rawhides.
There is no scope of smuggling as the Indian traders would not be interested in buying hides as the global market is showing down trend, said Delwar.
Prices of salted raw hides of sacrificed cows have been set at Tk45-50 per square foot for Dhaka and Tk35-40 for other parts of the country. Last year, the price per square foot of salted raw hide of sacrificed cows was set at Tk50-55 for the Dhaka region and Tk40-45 for outside of Dhaka.
