Published in The New Nation on Monday 13 July 2020
Pandemic fallOut
Volatility in rawhide markets feared
Businesses apprehended another unprecedented price disorder in the procurement of rawhides of the sacrificial animals during the upcoming Eid-ul-Azha due to ongoing corona pandemic, fund crisis, lack of policy, fall in the demand for leather products in the global markets and syndication by tanners.
Over 30 percent rawhides were damaged due to drastic fall in price in the last year. Many people who sacrificed their animals and small traders dumped their unsold rawhide.
Commerce Ministry sources said the government will fix the prices of the sacrificial rawhides during the Eid this week by holding a meeting with the stakeholders.
The stakeholders, however, meet the Industries Minister at the ministry on Sunday to know about the overall situation of the sector and the government’s policy regarding it.
Tanners said that most of the orders have been cancelled since the beginning of the Corona pandemic in China in December last year as the country is the main export destination of lather and lather-made goods and over 100 containers of consignment of the products were upheld in the ports.
Besides, the rescheduling loan facility paying by 2 per cent down payment is not sufficient for the sector. Rather, the sector needs interest free loans to rebound. Otherwise, the desired outcome will not be achieved from the sector, they said.
According to Bangladesh Bank Data, the classified loans have stood at Tk 3845 crore in the sector since 2017. The state-owned and some commercial banks disbursed some Tk 4273 crore and around 90 per cent of the loans have become classified during the time.
Following this, many tanners have become unable to purchase rawhide and skins this year due to lack of sufficient fund as the banks will disburse loans for their elected clients, insiders said.
Shakhawat Ullah, General Secretary of Bangladesh Tannery Association (BTA), told The New Nation, “The lether sector is now passing through a massive vulnerable situation at the moment as most of the export orders either cancelled or upheld due to the ongoing Corona pandemic.”
“Many of us are now suffering from fund crisis to procure rawhides and skins in the upcoming Eid-ul-Azha. So, the government should take initiative to avoid unwanted situation this,” he added. Bangladesh Hide and Skin Merchants Association (BHSMA) President Md Delwar Hossain said tannery owners receive loan facilities from the banks every year but they are unwilling to purchase rawhides and skins timely.
Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD) said, “The government is required to make evidence-based policy decisions for the rawhide industry to avoid unwanted situation.”
“The government should address the problems and formulate a policy for equitable solutions as soon as possible,” he added.
Leather industry is a promising sector in terms of national growth, employment, foreign exchange earnings and value addition. About half of the year-round supply of raw materials used in the leather industry comes from animal skins sacrificed every year during the holy Eid al-Azha festival.
But due to various reasons existing loans have not been repaid by tannery owners and some loans are being classified as unfavourable. As a result, it is not possible to maintain normal credit or investment flow in this sector in many cases.
The price of rawhide fell sharply in the last year. The cowhide was sold as low as Tk100-200 per piece in the wholesale market, resulting in huge losses to small and seasonal traders who had bought per piece cowrawhide at Tk 400-500 per piece. The goat-hides were also sold as low as Tk10, frustrating the small traders.