Traders in trouble with high rawhide prices as tanners cool

Traders are now in trouble as tanners are recluctant to purchase rawhides and skins of sacrificial animals at high prices, insiders have said.
Although hide and skin traders at Posta managed to collect rawhides, most of the tanners could not procure their share from the market mainly due to high prices. They blamed the seasonal traders, who embarked on a quick money-making business during the Eid-ul-Azha for the high prices.
The tanners are now dilly-dallying in purchasing rawhides apparently to put pressure on the small and seasonal traders to release their stocks at lower prices.
Members of the Bangladesh Hide and Skin Merchants Association (BHSMA), who also collected rawhides at higher prices, are also in trouble due to the stubborn attitude of the tanners.
Tanners are refusing to buy raw materials at higher prices claiming that the demand for Bangladeshi leather declined in the international market.
"We cannot purchase the raw materials at high rates to incur losses as many of the big buyers are not interested to import leather from Bangladesh because of environmental issues," said M Abu Taher, chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters' Association (BFLLGFEA).
If not bought at home, businesses fear the rawhides might be smuggled into neighbouring India, where prices are higher. This might cast a negative impact on the country's overall leather industry, still at a nascent stage. Rawhide is now selling at around $1.20 per sft in India.
Leaders of the BHSMA, however, expressed their hope that the stalemate would be resolved within a couple of days and tanners would begin to buy raw hides
and skins. But many of them expressed their inability to release the stocks at low rates as they had to buy at higher prices.
"They have to buy the raw materials from members of the BHSMA as we are the mainstream suppliers", said BHSMA president Ali Hossain adding that it might take some more days to end the row.
Unlike the previous year when the government had set the prices, this time three trade bodies - the Bangladesh Tanners' Association (BTA), Bangladesh Hide and Skin Merchants Association and Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLGFEA) -- fixed the purchase rates to avoid losses.
They set the price of salted cowhides at Tk 70-75 per square feet in Dhaka and at Tk 60-65 outside the capital. Price of salted goat skin was fixed at Tk 30-35 per square feet.
Despite fixing of rates, rawhides and skins of sacrificial animals were traded at higher prices in different city markets and its adjoining areas. Many of the traders had to collect rawhides at Tk 100-120 per square feet against their fixed rate of Tk 70-75.
Many of the traders at Posta and tanners at Hazaribagh said that they failed to procure their expected quantity of rawhide from the market due to the high prices.
Traders are still waiting to get due prices but the tanners is not willing to pay more than the set rates. Terming it a bad situation, BFLLGFEA chairman Taher said many western buyers, even from European Union countries, already informed them that they might not import leather from Bangladesh due to environmental issues.
"Under the circumstances, tanners have no scope to buy the raw materials at higher prices," Mr Taher added.  "Seasonal and small traders have created an adverse situation through buying rawhides at high prices and they will have to incur loss,' said the chairman.
Many of the traders have just expressed the opposite views.
According to industry insiders, every year the tanners set low prices of rawhides citing low prices in the international market but prices of finished leather were increasing gradually. The prices set by the tanners were not effective as most of the traders had bought hides at higher prices.  
"There is a huge demand for Bangladeshi leather in the global market due to its quality. The tannery owners want us to accept their prices to make higher profits," said a trader, preferring not to be named.
According to him, it is a strategy of the tanners to compel the small traders to release their rawhides at low prices as many of them do not have the capacity to preserve those.  
Usually, traders at Posta collect rawhides and skins of sacrificial animals from across the country through middlemen and supply those to tanneries throughout the year. Middlemen purchase the rawhides and send those to warehouses at Posta.
There are 250 warehouses at Posta, which can accommodate 300,000 pieces of rawhides. The warehouses at Aminbazar in Savar have room for another 100,000 rawhides.
But during the last few years, some seasonal traders, blessed by political leaders, got involved in the business during the Eid-ul-Azha and very often controlled the market.
This year, small traders and middlemen started purchasing rawhides from different areas including Dhaka city and its outskirts. They bought the hides at higher prices. Some of them allegedly stored the rawhides with a view to selling directly to the tanners, which put the whole supply chain in disarray, traders and tanners said.  
Industry insiders said a significant portion of rawhides might be smuggled into India unless the impasse is resolved immediately because of high demand of Bangladesh hides and higher prices in India.
Every year, a significant portion of rawhides is smuggled to the neighbouring country evading security surveillance depriving the country of foreign currencies.
According to them, every year Indian businessmen appoint hundreds of seasonal traders in border areas and give them a large sum of money in advance to collect rawhides before the Eid from the border areas.
The government, however, imposed a ban on transportation of rawhides to border areas for 30 days from the day of Eid-ul-Azha to check smuggling. The law enforcers have been put on high alert.
The Home Ministry has asked the law enforcement agencies, especially Border Guard Bangladesh (BGB), to remain on high alert in border areas to stop smuggling of the raw materials of the country's leather industry.
More than 6.5 million cattle were sacrificed during the Eid-ul-Azha last year, according to data of the Department of Livestock. Nearly 50 per cent of the country's annual demand for hides and skins is met from animals sacrificed during the Eid, 10 per cent during Eid-ul-Fitr and two per cent during Shab-e-Barat.
At present, a total of 194 tanners buy rawhides during the Eid. About 220 million sft of rawhides are collected in the country every year, half of which is stocked during Eid-ul-Azha.
Rawhides worth about Tk 40 billion are traded on the Eid day alone, according to industry operators.
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