Will rawhide collections improve this Eid after two grim years?

Typically, Eid-ul-Azha is the most productive time of the year for the leather industry as the majority of the annual yield of good quality rawhides and skins are collected during this period.

Tanneries and wholesalers eagerly look forward to the festival but their enthusiasm was tempered in the last two years. But this time, the industry is eyeing a turnaround in fortunes.

In recent years, there has been a marked decline in the rawhide collection as stocks from previous years drove down demand while a financial crisis coupled with the coronavirus pandemic has compounded matters further.

A lot of discussions have also centred on the dumping of piles of rawhides in the streets as tanners, merchants and traders were at loggerheads over the meagre prices on offer.

However, many in the sector are hoping that the 'hard times' will pass this year, with the arrears of the tanners falling while the previous year's stocks are also drying up. Adequate salt stocks and the government's initiative to ease exports of wet blue leather have further boosted hopes.

Stakeholders believe the situation will change this time as the demand for rawhides in the leather and leather product export sector has gone up and some of the problems that existed last year have been resolved.

Additionally, the government has paved the way for the export of 10 million pieces of wet blue leather over the next year, which is expected to create additional incentives for leather procurement.

To this end, the Ministry of Commerce has organised a virtual discussion on Thursday on the proper management of sacrificial animal skins.

Traders said that the price of leather may be fixed at the meeting.

Addressing the situation, Aftab Khan, president of Bangladesh Hide Merchant Association, said, “The tannery owners have already paid for the leather that was given to them during the last Eid."

"But some of the dues from previous years are still pending. Overall, the situation is supposed to be better than last time.”

Noting that the price of salt has gone up a bit recently, he said, “A bag of salt worth Tk 670 now costs Tk 700. However, if the price increases further, the business will suffer. We are all traders so we shouldn't harm each other." No one should be harmed."

But Mohiuddin Ahmed Mahin, chairman of the Bangladesh Finished Leather, Leathergoods and Footwear Exporters Association (BFLLFEA), believes otherwise.

“Even if the export earnings from leather and leather products increase, it will not play much of a role in boosting the rawhide market. This is because the prices of leather goods worldwide have fallen and are continuing to plummet."

“Now, the state is benefiting from the increase in exports of leather goods. But the profit margins of traders are much lower than before. As a result, it will have a negative impact on the rawhide market. ”

STATE OF EXPORTS

Although the pandemic has intensified in Asia this year, its severity in Europe and the Americas has somewhat abated.

As the shackles on daily life come off in those parts of the world, the demand for clothing, fashion and leather goods is also starting to return to normal.

Bangladesh bagged $797 from the export of leather and leather products in FY 2019-20 but the figure jumped to $941 million in the recently-concluded FY 2020-21, which was over 2 percent higher than the target of $920 million.

HIGH SALT STOCKS

Salt is the key preservative for the rawhides and skins of sacrificial animals. Accordingly, the market price of salt is closely linked with the pricing of rawhides.

To preserve the skins of sacrificial animals, an average of 82,000 tons of salt is required.

Asked about the current market situation, Bangladesh Salt Mill Owners Association President Nurul Kabir said: “We are not facing any crisis. Around 100,000 to 150,000 tons of salt is required during the Eid season. Our reserves are several times than that."

Noting that the price of salt has recently gone up by Tk 1 per kg, he said, “Now the price of coarse salt that is applied on the animal skin is Tk 8 per kg at the mill gate. And edible salt costs Tk 11.”

According to the Bangladesh Small and Medium Enterprises Corporation (BSIC), which monitors the overall salt production in the country, 1.6 million tonnes of unrefined salt has been produced this season. The previous season's deposit is about 350,000 tonnes. As a result, there is no salt crisis ahead of Eid-ul-Azha.

PROCUREMENT OF RAWHIDES DURING EID

Leather sector stakeholders estimate that about 7 million animals including cattle, goats and buffaloes are sacrificed in the country every year, which is more than half of the animals slaughtered throughout the year.

Of this, about 4 million are cattle, according to industry sources. However, the number of animal sacrifices dropped about 40 percent last year due to a combination of the coronavirus pandemic and seasonal floods.

According to the Department of Livestock Services, as many as 11.8 million animals are being considered worthy of sacrifice this time. Of these, cows and buffaloes account for 4.5 million while the other 7.2 million are goats and sheep.

Last year, the price of salted leather was fixed at Tk 35 to 40 per sq ft in Dhaka and Tk 28 to Tk 32 elsewhere.

Due to a lack of demand, buyers of skins and rawhides were few and far between despite the low prices last year. A lot of the rawhides and skins were left to rot in the streets as a result while some even buried the sacrificial animals.

The pandemic and its impact on processed leather exports also dealt a heavy blow to the rawhide market last year.

With that in mind, the commerce ministry approved the export of 10 million square feet of wet blue leather under special consideration earlier this year.

The ministry has also taken various initiatives, including the formation of a committee, to avoid a repeat of last year.

Four separate panels will oversee the movement of rawhides from the field level to the tannery.

These committees will work on the trade, storage, transportation and stocking of raw hides in the five days from Eid-ul-Azha.