The New Nation - Internet Edition

Staff Reporter

Rawhides supply during this year's Eid-ul-Azha has experienced a 10 to 15 per cent fall pushing up prices by 20 to 25 per cent, industry sources said.

Industry insiders said they had fixed price of per square foot (sft) of raw hides at Tk 90 this peak season against last year's Tk 80 per sft, but the price at field level ranged between Tk 110 and Tk 120.

They said such a price hike of raw hides in the local market will offer tough challenges to the country's leather industry amid a declining trend of finished leather price in the international market.

"Export of shoes will increase as a result, but the export of processed leather would decline," President of Bangladesh Leather and Leather Goods Manufacturers and Exporters Association Tipu Sultan told newsmen yesterday.

He, however, said the overall export of the sector would increase.

Tipu Sultan cautioned that there are every chance for some leather processing factories to suspend their production and become sick due to shortage of raw hides and high price.

Reports from the field level said supply of raw hides has declined by 10 to 15 per cent this year due to floods, cyclone Sidr and absence of "political qurbani".

Traders said the supply from within the capital would be around 10 per cent lower, while it would be lesser from outside Dhaka.

Moreover, the raw hide procurement environment has been much better this year in absence of musclemen, who used to impose a lower price. On the other hand, the seasonal traders were unaware about the rational price of the hides.

"Profit and loss of a factory now depends on their individual bargaining capacity. If they cannot buy raw hides at lower prices from the wholesalers, they will incur losses," said Tipu Sultan.

Leather and leather products contribute significantly as one of the major export-earning sectors of the country. In 2006-07, leather exports earned US$ 266 million, while footwear US$ 136 million and leather goods US$ 11 million.

Tipu Sultan analyzed that the availability of raw hides declined by 5 to 10 per cent this season, the peak season of sourcing, while the price of processed leather declined by 10 to 15 per cent in the international market.

As a result, he added, the leather processors would incur losses unless they could procure raw hides at lesser price.

In contrast, finished leather products like footwear enjoy duty-free access to developed markets, which is an advantage for Bangladesh over the main competitors like China, Vietnam and India.

Tipu Sultan sought immediate attention of the government to the industry to avert further closure of the tanneries. There are only 40 to 42 factories in production with a capacity to process 220 million sft leather.

As a temporary government intervention, he demanded lowering interest rate on bank loan to 5 to 7 per cent from 7 to 10 per cent only for 6 to 12 months while arranging adequate financing for import of raw hides.