Tanners decide to go slow as 'seasonal' traders ask higher prices for raw hides

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THE SYMPHONY OF BRITISH MUSIC : Fireworks explode over the stadium during the closing ceremony of the 2012 London Olympic Games on August 12. — AFP

Tanners are taking a 'go slow policy' in purchasing raw hides as 'seasonal' traders charge much higher than the price fixed by the authorities for the occasion of Eid-ul-Azha.
Such traders, who have embarked upon a quick business on raw hides and skin of the animals slaughtered during the Eid, were waiting in a long queue on Friday in front of tanneries with their collection.
The tannery owners on Friday alleged that the seasonal traders collected raw hides at the rates much higher than set prices of Tk 55-60 for cows for Dhaka Tk 45-50 for outside of Dhaka for more profit.
"We're moving slowly to procure rawhides to end the manipulation of the traders who charges Tk 20-30 extra for per square foot," Shaheen Ahmed, Chairman of Bangladesh Tanners Association, said, adding that they have been observing the situation and will meet tomorrow (Saturday) on the issue.
"We may offer Tk 5-10 extra for per square foot. Their (traders) demand is very high, and it even makes import cheaper," Mr Shaheen said.
He said the traders earned more than Tk 10 billion by manipulating the market last year.
"We'll not accept the illogical price. We'll definitely purchase raw hide at prices fixed by authorities. The seasonal traders will incur losses because of the high purchase prices, but it will not upset the market," said Haron Chowdhury, Adviser of Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLFEA).
The tanners' slow go policy has caused frustration among the small seasonal traders who fear substantial losses for failing to sell most of their purchased hides even after three days of Eid-ul-Azha prayer.
Traders said the raw hides were being purchased and sold at rates between Taka 1,500 and Taka 2,800 per piece (at Taka 75 to 90 per square foot) depending on their sizes even before the Eid festival.
Suddenly, the tanners in Dhaka fixed the per square foot purchasing rate of cow hide at Taka 55 and 60 just before the Eid that reset per piece cow hide prices between Taka 1,200 and Tk 1,600.
A seasonal buyer said he purchased 70 pieces cow hides at average rates of Tk 2,000 per piece and expressed fear of incurring losses as the prices dropped by Tk 500 to Tk 700 per piece.
Local tanners procured more than 2.9 million pieces of cow hides and 4.5 million pieces of goat skin during the Eid-ul-Azha in 2009. During the Eid-ul-Azha tanners get around 50 per cent raw hides of total annual collection.
Around 170 tanners of the country exported semi-finished and finished leather worth $226 million in fiscal 2009-10 while shoe manufacturers shipped footwear worth $ 204.09 million.
However, the situation in Chittagong favoured the seasonal traders who made profit on an average Tk 300 by selling a piece cow hide this year.
They bought a piece of hide at the arte between Tk 1200 and Tk 1500 and sold at Tk 1600 to Tk 1700.
"We have earned good profit this year from trade of raw hide and skin and earned profit of Tk. 300 on a average for selling a piece," Mohammad Shafi, a butcher turned seasonal trader at Bahaddarhat told the FE Friday.
Abul Bashar, another seasonal trader at Agrabad area told the FE: "I've earned Tk 18000 by selling 50 pieces of cow hide. I've bought a piece at Tk 1200 to Tk 1500 on average."
The wholesalers, who supplies to the tanneries, also expressed their hope to make good profit this year after a slump in the past year.
The wholesalers preserve raw hide and skin for a certain period by mixing salt. Aturar Depot, near Muradpur, is the hub of raw hide and skin in Chittagong.
Md. Muslim Uddin, President of Chittagong Raw Hide and Skin Wholesalers Association, told the FE: "we expect good price this year as the values of leather has increased sharply in the international market after economic recession."
Wholesalers claimed that they had bought each square foot hide on an average at Tk 80 although the tanners, earlier on Saturday, fixed the prices of raw hide and skins Tk 50 outside of Dhaka city.
Mr. Muslim also claimed that hides collected on Eid season were of finer quality.
Currently, international prices of crust leather are between US$ 1.5 and $1.8 per square foot. It was below $1.0 during the recession period. The processing cost of per square foot ranges from Tk 25 to Tk 35 depending on the quality of leather.
However, the tanners in the port city said they are not happy following the rise in the prices of hides and skin during the Eid period.
Tanners said they may face losses due to the price rise, which is almost double the rate fixed earlier.
Mokhlesur Rahman, executive director of Reep leather at Kalurghat area, told the FE, "We may incur losses as the wholesalers have bought raw hides and skin at much higher prices".
Chittagong city has only two tanneries with combined capacity to process 1.6 million square feet leather per year.
According the association, wholesalers collect more than 0.3 million pieces of cattle hide on Eid season. They also mobilise 70,000 pieces of goat skin during this period. Apart from this, many traders also collect raw hide and skin this period and they mainly sell to the tanneries located in Dhaka.
More than 200 active raw hide and skin wholesalers in the port city are engaged in collection round the year.