Friday, August 23, 2019

Decision to allow rawhide export delights merchants, disappoints leather entrepreneurs

  • Staff Correspondent, bdnews24.com
    Published: 2019-08-14 04:54:27 BdST

The government has decided to lift the bar on rawhide export for the first time but many things remain unclear such as how the move will affect domestic industries or benefit general people and seasonal traders.

The prices people get for cattle slaughtered on Eid-ul-Azha are “not reasonable” and the latest government decision aims to ensure that they get the fair price, Commerce Minister Tipu Munshi says.

Wholesalers and merchants have welcomed the decision with the hope that they will not have to depend only on the tanners to sell rawhide.

The decision will threaten the leather, leather products, and footwear industry as rawhide export will make the raw material less available in the domestic markets, fear those involved with the trade.

Half the cattle slaughtered in Bangladesh throughout the year are sacrificed during Eid. Muslims have slaughtered around 125 million cattle this Eid, according to a government estimate.

Wholesalers buy the rawhide and skin of sacrificial animals from seasonal traders and sell these to tanners.

The government set the price of rawhide this year after a meeting with representatives from the traders and tanners.

Seasonal traders allege they have not been getting fair prices during Eid.

The government left the minimum prices unchanged this year. The price of cowhide was set at Tk 45 to 50 per square foot in Dhaka and at Tk 35-40 in the rest of the county. The price of goat hide was set at Tk 18-20 and Tk 13-15 for 'Baqra' goat hides across Bangladesh.

Seasonal rawhide traders and tanners blamed a ‘syndicate’ as price of cow rawhide began to drop on the evening of Eid, on Monday.

The opposition BNP has alleged a ruling Awami League leader is behind the syndicate, without naming anyone. 

The merchants have alleged the tanners for the steep rawhide price fall, alleging dues from past years forced them to offer low prices or stop buying. 

The seasonal traders in Dinajpur, the rawhide trade hub of the north, and Chattogram abandoned thousands of rawhides after being offered meagre prices or a failure to find any seller.

In this situation, the commerce ministry on Tuesday afternoon announced the government will allow rawhide export.

‘SHOULD HAVE BEEN ANNOUNCED EARLIER’

Bangladesh Hide and Skin Merchants’ Association General Secretary Tipu Sultan told bdnews24.com: “We welcome the government decision. It will benefit us.”

He claimed the tanners owe them Tk 3 billion in unpaid bills and over a dozen cases were started over the issue in past three years.

“This is why we cannot invest. This is why hide price is so low this time. It will drop further if the situation lingers,” he said.

The merchant leader could not say how much the wholesalers and merchants will be benefitted by the new government decision.

But he saw one positive: “Rawhides rotted on the streets as fair price was not ensured previously. Now the merchants will export these without waiting for the tanners.”

Chattogram Rawhide Merchant Cooperative Association President Abdul Kader said the tanners of Dhaka were yet to pay around Tk 500 million for rawhides sold previously.

He thinks the government should have moved earlier to prevent the situation.

“The situation would not have been so bad if the government had announced the decision to allow rawhide export earlier and moved for discussion with the tanners for payment of the dues before Eid,” he said.

Bangladesh Tanners’ Association President Shaheen Ahmed denied the allegations of dues, asking: “How have they been able to continue trade if we haven’t paid them?”

He admitted there have been “some” dues as 30 to 40 percent tanneries were yet to start production after shifting to Savar from Hazaribagh in 2017.

“But that cannot be a reason to cut rawhide price,” he added.

Shaheen brought a counter allegation that the rawhide merchants formed a syndicate to manipulate the market and deceive the seasonal traders.

“They will seek the government-fixed prices when they sell to us,” the tanner said. 

He declined to say how much the government decision will affect the tannery industry, but expressed doubt over its implementation.

“An unstable situation is ongoing over hide. And it’s not so easy to export rawhide. It has never been exported,” he said.

‘LEATHER INDUSTRY WILL BE DESTROYED’

Bangladesh Finished Leather and Leather Goods Exporters Association Senior Vice-President Diljahan Bhuiyan believes the leather industry will go bust once rawhide export begins following the government decision as the industry is dependent on the domestic markets for its main raw material – rawhide.

“We’ve built an industry by spending tens of billions of taka, but we can operate for maximum three to four months with rawhide from the domestic markets and keep the factories closed for the rest of the year. This industry will be totally destroyed if the government permits rawhide export,” he said.

Leather goods and footwear entrepreneurs cannot buy hides as they have already been suffering from a lack of funds, he said.

“We would have bought hides at least at low prices if we formed any syndicate, but we are not buying hides because we don’t have any money,” Bhuiyan said.

The 220 tanneries of Bangladesh process around 2.5 billion square feet hide and skin annually while 93 large and listed footwear producing firms make more than 378 million pairs.

MONOPOLY

Commerce Minister Munshi hinted at reviewing the decision when his attention was drawn to the fears of the leather industry entrepreneurs.

“Let’s see what happens. We will slow down (rawhide) export if we see negative impact on the local industry,” he told bdnews24.com.

Defending the government decision, he said: “It’s not that we are very much eager to export. Our goal is to ensure fair price for the people.”

He, however, had no answer when asked how fair prices will be ensured after rawhides have already been changed hands at least twice to the merchants.

Asked whether it was realistic to plan the launch of rawhide export at such a short notice, he said: “It’s not possible within a very short period, but it will be possible to export rawhides if these are preserved with salt.”

The minister also said he had earlier warned the merchants that the government will open the market if any “monopoly” is found.

“And we’ve done exactly that,” he said.