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Dhaka Tribune

Why are salt prices soaring amid bumper production?

This unusual hike in salt prices is likely to increase cost of rawhide processing by Tk30-35

Update : 25 Jun 2023, 03:34 PM

Even after record production of salt in the country, salt prices have been soaring ahead of Eid-ul-Azha. 

Dhaka Tribune has found that in the last 7 to 10 days, the price of salt per 74 kg sack has increased by about Tk150. 

It is a Tk350 per sack increase over last year.

Industry insiders are concerned about the abrupt increase, which comes right before Eid, when it is most needed. 

According to them, the cost of processing each rawhide will rise by at least Tk30-35 this year as a result of this exceptional increase in the price of salt.

Bangladesh Tanners Association (BTA) General Secretary Sakhawat Ullah told Dhaka Tribune that: “This time we have set a target of collecting about 10 million pieces of rawhide from sacrificial animals, like cows, goats and buffaloes, after Eid. 

“But this time, we are very worried because the price of salt has suddenly increased in an abnormal manner. As a result of this, not only will the cost of leather preservation increase, but will also have an effect at the local level. How they will be able to match this increased price is also a matter of concern.

Apart from this, he also thinks that none of the wage, salt transportation or production costs justify this radical increase in the price of salt compared to last year.

As a result of this year's high salt prices, he was asked how much it would cost to preserve each piece of leather. He said: "We can preserve 9-10 skins per bag (74kg) of salt. If we have to pay Tk300-350 more than the previous year, the cost of rawhide will rise by Tk30-35 due to the increase in salt prices.”

According to the Bangladesh Small and Cottage Industry Corporation (BSCIC) , the recently concluded season witnessed an impressive output of 2.23 million tonnes, surpassing the previous year's figures by 489,000 tonnes, or 22% year on year (YoY).

Data analysis also reveals that salt production was 1.8 million tonnes in FY22 and 1.8 million tonnes in FY21.

However, despite an all-time high in salt production, the price of salt in the country has not witnessed a decline. Surprisingly it has been on a rising trend for the last one and half weeks.

This year at the field level salt was priced between Tk350 to Tk400 per maund. But with the end of the season, it has now risen to Tk500 to Tk530. 

In Chittagong's Majhir Haat, the country's main wholesale salt haat, salt price was Tk1150-Tk1210.

However, mill owners have attributed the surge in salt prices to multiple factors, including escalating fuel prices, frequent power outages, and higher labour wages. 

Despite an increase in salt production, demand cannot be met adequately due to ongoing load shedding, resulting in insufficient crushing as per requirements. 

The mill owners have projected an increase in the price of salt this year compared to the previous year due to the heightened production costs caused by soaring fuel prices.

In response to these concerns, Nurul Kabir, President of the Bangladesh Salt Mill Owners Association, countered the notion that only higher production would ensure manageable prices. 

He stressed that the cost of salt refinement has risen due to inflationary pressures. 

Consequently, the price of salt has escalated this year compared to the previous year. Furthermore, the recent severe load shedding has led to a significant reduction in crushing activities at the mills. Unless these crises are resolved, Kabir believes that the expected decrease in salt prices will not materialize.

According to the Association of Rawhide Traders, 10 to 12 kg of salt is needed to process each larger rawhide, seven to eight kg of medium skin and five to six kg of salt for small.According to salt mill owners, usually 1 to 1.25 lakh tons of salt are required for Eid-ul-Azha's sacrificial animals. 

This time demand for salt for the Eid sacrifice is almost the same.

However, according to Bangladesh Small and Cottage Industries Corporation (Bscic), demand for salt in the leather industry alone is 3.41 lakh tonnes this fiscal year. 

In comparison, demand may exceed 4.45 lakh tonnes in the next fiscal year.

The demand spikes further during Eid-ul-Azha, prompting traders to express concerns about the future stability of the salt market.

Khorshed Alam, adviser of Chittagong Rawhide Dealers Association, noted that the collection and storage of leather from each cow or buffalo requires approximately 8 to 10 kg of salt. 

This process incurs costs of Tk250 to Tk300 per hide, encompassing transportation, labour wages, and salt expenses. Given the elevated costs associated with storing these leathers, coupled with the purchase price of leather, leather traders anticipate potential losses this year. 

As a result, there are concerns among businessmen about a looming crisis in the leather collection process during Eid al-Azha this season.

Mohammad Muslim Uddin, President of Chittagong Rawhide Dealers Association, expressed his apprehension over the rising price of salt. 

He emphasized the indispensability of salt for preserving leather and underscored the fact that any increase in salt prices will directly impact the cost of leather. 

However, Uddin also pointed out that the government-fixed price remains unchanged, and tanneries are unwilling to pay more. Hence, it becomes crucial to mitigate the price of salt to alleviate these concerns.

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