Prospects of the leather industry

Sarwar Md. Saifullah Khaled | Published: October 22, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

This year's raw hides' price rates during the Eid-ul Azha was fixed on October 02 at a joint meeting of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters' Association (BFLLFEA), Bangladesh Tanners Association (BTA), and Bangladesh Hides and Skin Merchants Association (BHSMA), the leading trade bodies in the country's leather sector. The tanners fixed the price of salted cowhides between Tk.50 to Tk.55 per square foot in the capital city of Dhaka and between Tk.40 to Tk.45 per square foot for the rest of the country. These are the lowest rates in five years for the skin of sacrificial animals. The prices of goat hide ranged from Tk.15 to Tk.22 per square foot, down from Tk.35 per square foot last year, i.e. 2014. Last year, the rates for cowhides stood at Tk.65 to Tk.70 per square foot in Dhaka and Tk.60 to Tk.65 per square foot in the rest of the country. The rates are also at least 30 per cent lower than that of 2014. Cowhides were sold at Tk.50 to Tk.60 per square foot in 2011.
Many feared that the fixation of raw hides' prices at lower rates may encourage smuggling of the item to the neighbouring countries. Such allegations are made almost every year. However, citing low prices in the international market, devaluation of currencies of importing countries and stockpiles of rawhides held by the tanneries, the leaders of the associations defended the low rates. The BFLLFEA also pointed out that the prices of finished leather fell by 30 per cent in the international market.
According to the Leather Goods and Footwear Manufacturers and Exporters Association (LGFMEA), 110 export-oriented factories manufacture footwear in the country. Of them, Apex, FB, Picard Bangladesh, Jenny's, Akij, RMM Bengal and Bay have their own tanneries and leather processing units. There are another 207 leather processing units in the country. They expect Bangladesh to be an attractive destination for leather sector entrepreneurs as China, the world's largest footwear manufacturer, is shifting its focus from this sector.Â Â Â Â Â
The BFLLFEA said international leather market is valued at US$260 billion and Bangladesh can take a substantial portion of this by ensuring production facilities of international standard. An environmentally sound leather sector has the potential for winning a larger share of the global leather export market and become a key driver of national development.
The BFLLFEA further said that the leather sector has the potential to develop like the readymade garment sector provided the government extends all sorts of cooperation to it. Stakeholders believe that the country's leather industry would see a better future once the tanneries are shifted from Dhaka's Hazaribagh to Savar.
According to Export Promotion Bureau (EPB) statistics, the exports of leather and leather goods exceeded US$1.0 billion for the second year in 2014-2015. Bangladesh exported leather and leather goods worth US$1.13 billion in 2014-2015, compared to US$1.29 billion in 2013-14, making it the second highest contributor to national exports after readymade garments that earned US$19 billion in 2012. The BHSMA said the country annually produced 200 million to 300 million square feet of finished leather, most of which is exported.
At present Bangladesh exports leather shoes, travel bags, wallets, belts and finished leather. Now a new possibility has opened up for the leather industries with the shift in China's focus away from the leather sector. The LGFMEA said, at least 51 foreign companies have so far expressed interest in establishing joint-venture footwear units in Bangladesh.
Bangladesh economy has now made commendable progress and is able to develop the vital leather sector by mobilising domestic sources of finance rather than relying on ADB, WB or other foreign sources of finance that may delay the process. It is better to start to be self-reliant in the nation's development expenditures than seeking external help in all cases. We have already done so in the case of Padma bridge construction.Â Â Â Â Â Â Â Â Â Â
The writer is a retired Professor of Economics, BCS General Education Cadre.
sarwarmdskhaled@gmail.com