The Financial Express

Why did Bangladesh rawhide prices crater?

| Updated: August 03, 2020 14:24:56

Evaly and Fianancial Express Evaly and Fianancial Express
Representational image — FE/Files Representational image — FE/Files

Seasonal cattle rawhide traders vanished during Eid-ul-Azha this year, still perturbed by the past bitter experience.

The coronavirus pandemic foreshadowed dismal demand for rawhides. The seasonal traders knew a crisis would unfold. And then there were the tannery owners who still owe billions of takas to the merchants, bdnews24.com reports.

Both left a combined effect on rawhide trade. Cowhide prices plummeted to levels between Tk 200 and Tk 600 apiece, lowest in decades.

The government had lowered the rate considering the effects of the pandemic, but the money received by the families that slaughtered cattle, the madrasas and mosques that receive donated rawhides, and the few seasonal traders was far lower than the fixed prices.

When the news agency correspondent asked Shafiqul Islam of Mirpur-10 in Dhaka on Sunday what he did with the rawhide of the cow he sacrificed, he appeared happy.

“You are the first one to buy the hide. I will give it to you for whatever price you offer,” Shafiqul said, assuming that the reporter was a trader.

As the correspondent made it clear that he sought information for the report, the man said: “You must’ve got the picture from what you’ve heard from me first. Prices naturally fall when there is no customer.”

He would donate the hide to a madrasa at Mirpur-1 if no-one from the madrasas in his neighbourhood came for the hide.

Disgruntled seasonal traders dumped rawhides to rot on the streets after the merchants offered very low prices citing a lack of funds due to bills left unpaid by the tannery owners during the Eid last year.

This year, many of the merchants and tanners sent their agents away to collect rawhides assuming that the seasonal traders would shun the business. The agents worked on contract for fees or slight profits.

Agents of Sadar Tannery said they bought cowhides at an average of Tk 400 apiece, but its Managing Director Masud Chowdhury said the company paid Tk 650 to Tk 700 per piece of cowhide. It recruited 200 agents in Dhaka and surrounding areas during Eid this year.

Pile of dues

There is no official account of the total dues payable by the tannery owners to the merchants.

Mohammad Delwar Hossain, the then president of the Hide and Skin Merchants Association, had said after the Eid last year that the amount would run into at least Tk 4 billion.

The government had worked to put an end to a stalemate, which had been created when the merchants declined to sell rawhides to the tanneries until the payment of the dues, but the efforts stopped after the pandemic struck Bangladesh earlier this year.

Tipu Sultan, the general secretary of Hide and Skin Merchants Association, said they would have been able to invest more and offer fair prices had the tanneries paid the dues.

He urged the government to change its plan to support the merchants by lending them money. “We want help to recover the dues. We won’t be able to get out of the loan trap if we borrow now.”

Demand plummets

Many of the tanneries still have unsold stocks of finished leather from last year’s production, which forced them to collect fewer rawhides during the Eid this year, Sadar Tannery’s Masud said.

Bangladesh’s export earnings from leather and leather goods dropped by 21.79 per cent year-on-year in the fiscal year that ended on June 30, mostly due to the effects of the coronavirus crisis that has slowed the world economy heavily.

Masud said the demand for their products has dropped in the European market by 75 per cent, while the foreign customers are offering half the asking prices.

Cowhides were sold at double the present rates even a decade ago, according to Aftab Ali, the president of the Bangladesh Hide and Skin Merchants Association.

“Do we have any option other than accepting it?” he asked, claiming that falling prices in the international market affected the local market as well.

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