Instability in raw hide mkt: who's to blame?
Thursday, 25 November 2010
Shahiduzzaman Khan
Simmering row between the traders and the tanners continues with the latter agreeing to pay Tk 5.0-10 more for buying rawhides against the price, fixed earlier by both sides. The tanners had earlier refused to buy rawhides from the traders beyond such fixed prices and decided to follow a go-slow policy to cool down the overheated hide market.
The rate of rawhide prices was raised ahead of Eid-ul-Azha this year by Tk 15 per square foot. Then again the seasonal traders moved into the scene and began to purchase rawhides at a rate which was Tk 15 to Tk 20 more than the fixed price from the Eid day. For what reason they bought these hides at a higher price remains a puzzle. It is very strange to see the seasonal traders and 'farias' (middlemen) roaming through the city and buying rawhides at exorbitant prices. What prompted them to do this when they knew for sure that the supply of rawhide would be abundant in the market? Market watchers believe that there was a motive behind this activity. They think some quarters were trying to create an artificial crisis in the local market by diverting rawhides to the bordering districts for smuggling to the neighbouring countries.
But it is a point that the government had acted quickly by bringing the both sides to sit across a negotiating table. The tanners have agreed to pay an extra Tk 5.0 to 10 for buying rawhides over the set price, from the traders. But even this agreement could not satisfy a section of traders who want more for their goods that are purchased. They say a hike of only Tk 10 will fail to pull them from incurring substantial losses.
On this point, the tanners say they will suffer a big loss if they pay the traders as per their demand. The price was set in line with the rate fixed by the global buyers before the Eid festival, they contended. Global buyers are unlikely to increase the rate at this stage. The same is the case with other parts of leather industry, such as manufacturers and exporters of shoes and other products who are not ready to pay the traders more than the agreed rates.
Reports say some wholesale traders have alleged that a syndicate of the tanners is to blame for the instable situation in the market. They say that before the Eid-ul Azha festival they used to buy rawhide at higher prices - in the range between Tk 80 and Tk 90 per square foot -- because there was an acute scarcity of rawhides at that time. And that was the reason why better quality rawhides were sold at higher prices. As such, if the tanners could pay a higher price before Eid, why not this time? To this point, the tanners say, if the market is flooded with raw hides, the price will come down automatically. Why should they pay more?
Market watchers point their fingers to an unusual development over the rawhide trade in Chittagong. According to reports, a group of 'unknown' traders bought huge quantity of rawhides from seasonal traders at a very high rate -- beyond the price fixed by the tanners and the hide merchants. Such 'unknown' traders could not be found. Seasonal traders in Chittagong alleged that those 'unknown' purchasers of rawhides were cross-border smugglers, who intentionally caused distortion in the market. However, there is no report whether this group of traders became active in the capital city and caused instability in the hides and skin market.
Smuggling of rawhides to the neighbouring countries is a regular phenomenon in Bangladesh. A group of unscrupulous traders tend to smuggle rawhides to the neighbouring countries in order to reap maximum gains. Obviously, they are trying to destabilise the market to find better ways to smuggle the goods. However, such an anarchy is created over the rawhide trade almost every year. Of course, this year it is being witnessed in a different mode which was unexpected. In fact, there is a racket of local influential persons who control the seasonal trade in the rawhide market and is responsible for destabilising it.
Sensing a serious problem, the government has rightly intervened into the situation and helped reach an amicable settlement between the fighting forces. Hides of sacrificial animals account for nearly half of the country's annual supply, making the Tk 30 billion plus leather and finished leather goods export industries. The industry is heavily dependent on Eid-ul Azha stocks. Although the raw hike prices this year were higher than those in the past years, the global price of finished leather is also much higher than before. In Bangladesh, hide prices marked sharp rise this season from those in the previous Eid-ul Azha seasons due to a buying binge to make up for a perceived shortfall in stocks caused by the recent anthrax outbreak.
Market observers believe that delayed procurement would make hides and skin merchants nervous and depress the market. As such, tanners should expedite the process of buying rawhides from the traders, instead of following a 'go-slow' policy. The government, on its part, must take necessary steps to stop smuggling of the rawhides by strengthening its vigil in the bordering districts. Good sense should prevail among all the stakeholders -- tanners, skin merchants and finished leather manufacturers. The nation cannot afford to see half a billion dollar hide market slip away and controlled by any extraneous forces. szkhan@dhaka.net
Simmering row between the traders and the tanners continues with the latter agreeing to pay Tk 5.0-10 more for buying rawhides against the price, fixed earlier by both sides. The tanners had earlier refused to buy rawhides from the traders beyond such fixed prices and decided to follow a go-slow policy to cool down the overheated hide market.
The rate of rawhide prices was raised ahead of Eid-ul-Azha this year by Tk 15 per square foot. Then again the seasonal traders moved into the scene and began to purchase rawhides at a rate which was Tk 15 to Tk 20 more than the fixed price from the Eid day. For what reason they bought these hides at a higher price remains a puzzle. It is very strange to see the seasonal traders and 'farias' (middlemen) roaming through the city and buying rawhides at exorbitant prices. What prompted them to do this when they knew for sure that the supply of rawhide would be abundant in the market? Market watchers believe that there was a motive behind this activity. They think some quarters were trying to create an artificial crisis in the local market by diverting rawhides to the bordering districts for smuggling to the neighbouring countries.
But it is a point that the government had acted quickly by bringing the both sides to sit across a negotiating table. The tanners have agreed to pay an extra Tk 5.0 to 10 for buying rawhides over the set price, from the traders. But even this agreement could not satisfy a section of traders who want more for their goods that are purchased. They say a hike of only Tk 10 will fail to pull them from incurring substantial losses.
On this point, the tanners say they will suffer a big loss if they pay the traders as per their demand. The price was set in line with the rate fixed by the global buyers before the Eid festival, they contended. Global buyers are unlikely to increase the rate at this stage. The same is the case with other parts of leather industry, such as manufacturers and exporters of shoes and other products who are not ready to pay the traders more than the agreed rates.
Reports say some wholesale traders have alleged that a syndicate of the tanners is to blame for the instable situation in the market. They say that before the Eid-ul Azha festival they used to buy rawhide at higher prices - in the range between Tk 80 and Tk 90 per square foot -- because there was an acute scarcity of rawhides at that time. And that was the reason why better quality rawhides were sold at higher prices. As such, if the tanners could pay a higher price before Eid, why not this time? To this point, the tanners say, if the market is flooded with raw hides, the price will come down automatically. Why should they pay more?
Market watchers point their fingers to an unusual development over the rawhide trade in Chittagong. According to reports, a group of 'unknown' traders bought huge quantity of rawhides from seasonal traders at a very high rate -- beyond the price fixed by the tanners and the hide merchants. Such 'unknown' traders could not be found. Seasonal traders in Chittagong alleged that those 'unknown' purchasers of rawhides were cross-border smugglers, who intentionally caused distortion in the market. However, there is no report whether this group of traders became active in the capital city and caused instability in the hides and skin market.
Smuggling of rawhides to the neighbouring countries is a regular phenomenon in Bangladesh. A group of unscrupulous traders tend to smuggle rawhides to the neighbouring countries in order to reap maximum gains. Obviously, they are trying to destabilise the market to find better ways to smuggle the goods. However, such an anarchy is created over the rawhide trade almost every year. Of course, this year it is being witnessed in a different mode which was unexpected. In fact, there is a racket of local influential persons who control the seasonal trade in the rawhide market and is responsible for destabilising it.
Sensing a serious problem, the government has rightly intervened into the situation and helped reach an amicable settlement between the fighting forces. Hides of sacrificial animals account for nearly half of the country's annual supply, making the Tk 30 billion plus leather and finished leather goods export industries. The industry is heavily dependent on Eid-ul Azha stocks. Although the raw hike prices this year were higher than those in the past years, the global price of finished leather is also much higher than before. In Bangladesh, hide prices marked sharp rise this season from those in the previous Eid-ul Azha seasons due to a buying binge to make up for a perceived shortfall in stocks caused by the recent anthrax outbreak.
Market observers believe that delayed procurement would make hides and skin merchants nervous and depress the market. As such, tanners should expedite the process of buying rawhides from the traders, instead of following a 'go-slow' policy. The government, on its part, must take necessary steps to stop smuggling of the rawhides by strengthening its vigil in the bordering districts. Good sense should prevail among all the stakeholders -- tanners, skin merchants and finished leather manufacturers. The nation cannot afford to see half a billion dollar hide market slip away and controlled by any extraneous forces. szkhan@dhaka.net