Lower prices of hides, skin a boon for smuggling

Seasonal raw hide traders this year suffered losses as they bought skins of sacrificial animals at prices higher than the rates set by merchants and tanners ahead of Eid-ul Azha. When the seasonal traders approached the merchants and tanners for buying their raw hides, they refused to buy the skins at higher prices than the fixed rate citing low international demand and present stockpiles. It was a common practice in previous years that merchants offered higher prices to raw hide dealers. The seasonal traders did not adhere to declared prices.
A section of seasonal traders allege syndication among the hide and skin merchants for their losses. Merchants say that it is the wholesalers who buy raw hide from seasonal traders and middlemen and then cure those with salt. So, there is no scope of syndication by merchants.
Seasonal traders are in trouble in Chittagong after buying hides and skins at imaginary prices. They had a target of buying 5,00,000 pieces of hides. They could procure only 3,50,000 pieces. But they did not go by prices fixed by the government. In Chittagong, the prices were fixed at Tk 40 to Tk 45 per square feet but traders bought skins from Tk 50 to Tk 80 per sft. They are not selling their products to aratdars at fixed prices. They are waiting for better prices. The target of procurement could not be achieved as the supply of cow was much less and the prices were high. Traders made advance investment for processing of hides. Their investment is at risk as procurement of leather was not up to the mark.
For fear of smuggling, hides and skins from countryside were diverted to Dhaka. Because of this, the seasonal traders could not apply salt to the skins in time. As a result, most of these hides were spoiled. The seasonal traders aim to make money by selling these skins to the aratdars (stockists). They purchased hides and skins in outlying areas at a high price but they did not get good price while selling. Normally, salt is to be applied within 4/5 hours. Because of transport gridlock, the traders could not collect the hides and skins in central places like Aminbazar, Posta and Hazaribagh. The traders could not sell their stuff even within 28 hours and could not use salt.
The hides and skins from villages were deliberately diverted to Dhaka with the help of law-enforcing agencies. The trucks laden with cargo were waiting outside arats. The aratdars  and tannery owners did not take the initiative to buy and unload the goods. The aratdars did not agree to keep the stuff. Hides from Dhaka were not allowed to go outside Dhaka. Huge quantity of raw hides was spoiled before processing. Many  traders went back to their original places for processing of raw hides with salt. Thousands of pieces of valuable raw leather were spoiled in the trucks. It is estimated that leather worth Tk5 billion would be damaged this year due to negligence and indifference.
Innumerable trucks laden with raw hides moved towards Dhaka. The tannery owners and aratdars were buying time to buy the hides and skins. The government-fixed prices were low and as such there is a possibility of smuggling in the border. Prices are reportedly higher in India. Syndicates purchased hides and skins in the villages. It is reported that tannery owners in Dhaka reduced the prices through syndication. Even then it was not possible to buy the hides as per price fixed by them.
Bogra traders were buying hides at a high price because of supply constraint. They were processing hides at home.    None could buy hides at prices fixed by the government. If the tanners do not buy hides at a high price, there is a chance of these hides being smuggled into India. If the price is not increased, traders will not release these in the market. They will find alternative market beyond the border.
Price of hides and skins were fixed 30 per cent lower in Bangladesh in consideration of low prices of finished leather goods in the international market. Those who bought hides and skins at high price this time will have to incur loss. Tannery owners are happy because of low price. Those who bought hides at Tk 2,000 per piece in the noon time of Eid day, sold it in the night at Tk 1,500. Against the total demand of skins in the country, 48 per cent is collected during Eid-ul Azha.
Businessmen from northern districts have used salt in respect of 3,00,000 cow hides and 4,00,000 goat skins and have been waiting for tanners to purchase their stock. Tanners have not started buying hides. It is alleged that a syndicate is controlling the market. Tannery owners are not coming from Dhaka to purchase hides and skins in North Bengal. The BGB has strengthened vigilance to stop smuggling of hides and skins.
Price fixed by the government for buying  hides and skins did not work. Businessmen are faced with losses at the field level. Tanneries have stopped purchase of leather in order to put pressure to reduce the price. The businessmen are going back with their hides and skins. Because of the collapse of prices in Dhaka, rawhides are not coming to the capital from outlying areas. There is instability in the leather market. Some have sought the government intervention as economic laws of demand and supply did not work in hides and skin market which acted on a directive from above.
The writer is an economist and columnist.
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