Raw hide prices likely to jump this Eid season

Bangladesh’s tannery owners – just a year ago – protested vehemently against the move to raise raw hide prices citing poor export performance and huge losses in the industry, but thanks to a nearly 32 per cent boost in export earnings this FY, they are ready to pay even more.

The Export Promotion Bureau (EPB) data shows that the country earned $1.12 billion by exporting leather and leather goods in the first 11 months of FY22, a significant increase from $846 million recorded during the same period of last FY.

This sector is well on its way to recovery, indicated by the fact that it earned $1.2 billion in FY19. Leather and leather product earnings had dropped to $797 million in FY20 due to a crisis triggered by the relocation of tanneries from Hazaribagh to Savar, and the Covid-19 pandemic.

A large number of raw hides also remained unsold during the Eid-ul-Azha seasons of 2019 and 2020. Because of a shortage of buyers, many who performed ritual sacrifice of animals – also known as Qurbani – had to bury or dump the raw hides.

Speaking to The Business Post, tannery owners and raw hide merchandisers said due to the good performance of the industry and a greater demand, per square foot raw hide price could go up by Tk 5 – Tk 10 compared to last year.

The raw hide prices would continue to rise at a steady pace every year if the global economy remains somewhat stable. Last year, the commerce ministry fixed the price of per square foot salted raw hide of cow between Tk 40 – Tk 45 in Dhaka, and Tk 33 – Tk 37 in outside the capital.

This ministry is set to hold a meeting with stakeholders today to set a new price for raw hide.

Bangladesh Hide & Skin Merchants Association’s Vice-Chairman Manjur Hassan said, “We got good prices for salted raw hides from tannery owners, and they have already cleared 75 per cent payment.

“Thanks to the significant increase in demand, we will be able to pay good prices in the upcoming Eid-ul-Azha season.”

Bangladesh Tanners Association’s (BTA) General Secretary Md Shakawat Ullah said, “The raw hide prices will definitely go up as our export growth has been excellent this year. The new prices will be finalised by the commerce ministry after their meeting with the stakeholders.”

He further said, “After completion of the CETP, many brands started purchasing from Bangladesh, which in turn helped boost Bangladesh’s leather and leather goods exports. But completion of the solid waste management in Savar is crucial for achieving our goals.

“We however do not know exactly when the system will be completed.”

Meanwhile, raw hide traders and merchandisers have expressed their concerns about the ongoing volatility of the domestic salt market. They have already sent a letter to the commerce minister, urging them to take adequate action for ensuring a smooth supply of the preservative.

The letter mentions that the industry will require 10,000 tonnes of salt during this Eid-ul-Azha season. Industry insiders say per sack (75 kg) of salt was available at Tk 700 – Tk 800 last year, but now the prices have reached Tk 1,100 – Tk 1,150.

Savar Tannery Palli development goes on

In 2003, the Bangladesh government took the initiative to shift the tannery factories out of the capital city following protests from environmentalists, who have been expressing concerns over the dumping of high levels of toxic chemicals into the river and soil near residential areas.

The government allocated 199 acres of land in Savar, around 16 km from Hazaribagh, to establish a modern leather industry under the Bangladesh Small and Cottage Industries Corporation (BSCIC).

On April 8, 2017, the BSCIC cut-off all utilities and facilities in Hazaribagh tannery to force them to move to Savar following a High Court rule ordering relocation at any cost. The move came amid allegations by tannery owners that Savar was not ready for production at that period.

Five years have already passed since then, but the relocation process of tanneries is yet to see any further development, and solid waste is still being dumped out in the open, industry insiders said.

Hazaribagh had a total of 222 tanneries, but 68 among them are yet to get plot allocations in the Savar Tannery Palli. So far, 134 factories are operating in Savar, and some of them have installed effluent treatment plants (ETP) with their own funds.

Industry insiders say if the demand and price of salted raw hide would have been significantly more if the BSCIC had managed to hand over plots to the 68 tannery owners and developed a solid waste management system in time.