These traders visit people’s homes, bargain, collect rawhide skinned from sacrificial animals and then sell it to leather wholesalers and tannery owners. Middlemen like them help collect skins from over8-9 million cattlesacrificed each year during Eid in the South Asian country with over 90% Muslim population.During this year’s Eid-ul-Adha, while the common man expressed anger over the price of rawhide, the seasonal leather traders said they had fallen between the devil and deep blue sea. They are unable to sell the procured rawhide or preserve it owing to the high maintenance cost. Meanwhile, wholesalers and tanners are unwilling to buy animal skins from small traders. They said demand in the international leather market has hit an all-time low due to the China-US trade war. The dillydallying in establishing effluent treatment plants (ETP) in theleather industrial city of Savar, at the outskirts of Dhaka, has also played a part in keeping large export order at bay, traders added. These factors have collectively resulted in a grim situation for rawhide trading in Bangladesh this year. Local media reportedthat the price of the rawhide has hit a 30-year low. In the absence of viable options, the government has decided toallowrawhide export, which was banned in the 90s due to a large chunk of it being trafficked to India. This decision has receivedmixed reactionsin the South Asian nation. Decreasing prices of rawhide “What is the point of selling rawhide at petty Tk 350 ($4.12) to a middleman? The government has fixed the price but no one seems to care,” said Hasib Mohammad Ahsan, a retired university teacher living in a middle-class neighbourhood in Dhaka. Ahsan said that 20 years ago, he sold the rawhide of his sacrificial animal at Tk 550 ($6.48) whereas he bought the cow at Tk 15,000 ($178.80). “Now I bought my cow at Tk 80,000 ($942.68) but was offered Tk 350 ($4.12) for its skin. It’s becoming a joke,” said an enraged Ahsan. “Meanwhile, I now have to pay Tk 3,500 ($41.66) for a pair of decent leather shoes whereas the price of the same was not more than Tk 550 ($6.48) 20 years ago. How do you explain that?” he asked. Also read |The Unmaking of Kanpur’s Leather Industry Rawhide price has been undergoing a downward trend over the last few years with wholesalers and tanners forming a syndicate with which they control prices. The country’s main opposition, Bangladesh Nationalist Party even allegedthat a ruling Awami League leader is behind the syndicate, without naming names. Traders say they fix the rate to avoid facing losses. Statistics of the BangladeshExport Promotion Bureau (EPB)indicate that the export of leather products has increased three-fold in the last 4-5 years – except during 2017-2018 when it witnessed a drop from the previous year. This year, before Eid, wholesalers and tanners, in association with the Ministry of Commerce in Bangladesh,had fixed the rateof rawhide at Tk 45-50 ($0.53-$0.59) per square foot in Dhaka and at Tk 35-40 ($0.41-$0.47) outside the capital. Goat rawhide price was fixed at Tk 18-20 ($0.21-$0.23) across the country, the lowest in the world. Tanners plan to collect as much rawhide as possible at a lower price during this time of the year. Seasonal traders are forced to buy rawhide at the rate pre-fixed by the government. However, when wholesalers and tanners do not buy rawhide at the scheduled time, these small businessmen are forced to spend additional money for preserving animal skin. Rashed Jitu, a seasonal rawhide trader from the capital’s Lalbagh neighbourhood, told this correspondent that he had collected over 2,000 pieces rawhide but hadn’t been able to sell even one-thirds of it due to the reluctance of wholesalers to purchase. “This has put me in trouble as now I have to preserve these with my own money,” said Jitu. Jitu, an Institute of Leather Engineering and Technology graduate – the premier institute for leather processing technology in the country – said he faced the same problem last year as well. “The US-China trade war has created a serious problem for the leather business over the last two years. During the last Eid-ul-Adha, I couldn’t sell half of my rawhide collection and was compelled to dispose of a large chunk of it.” Low export orders from China The wholesalers and tannery owners meanwhile said that despite the low prices the middlemen and seasonal businessmen offer, they have been reluctant to buy rawhide as they haven’t received new export orders over the last few months. Sakhawat Ullah, general secretary ofBangladesh Tanners Association (BTA),told this correspondent that in the last eight months, exports to China – Bangladesh’s largest leather export destination – have been close to zero. Ullah said tanners export crust leather to China since it doesn’t buy rawhide. To prepare crust leather, they need to process rawhide, which costs around Tk 60-65 ($0.71-$0.77) per square foot. In FY 2017-18, Bangladesh exported 150 million square feet of crust leather to China, comprising over 50% of the total crust leather export, said Ullah, referring BTA data. Also read | Global Economy Will Pay the Price of Escalating US-China Trade War “We sold per square feet of crust leather to China at Tk 100 ($1.20). Now, after the US-China trade war started last year, Chinese buyers are not offering us more than Tk 80 ($0.95),” Ullah said. China takes crust leather from Bangladesh and produces high-end finished leather products including footwear, clothes and bags. The US is one of China’s largest export destinations for such products. The US footwear import from China stood ata staggering $11.4 billion before the start of the trade war. Ullah said the Chinese buyers are now saying that they need to pay an extra 25% tariff for the US market, so they don’t have an option but to pay us a lower price. Shahin Ahmed, president of the BTA, told this correspondent that aside from the China-US trade war, the demand for leather-based products has been hit by the invention of leather alternatives across the world. Bangladesh’s export earnings from leather alsosuffered a dropof over 6.06% in FY 2018-19, with manufacturers blaming the forced relocation of the centre of the country’s tanning industry from Dhaka’s Hazaribagh area to Savar, an industrial town outside the capital. During FY 2017-18, when the US-China trade war began, leather export from Bangladeshsuffered even a bigger dropof 12%. Due to the relocation of tanneries from Hazaribagh area of the capital to Savar, “Around 225 tanneries are closed down,” Ahmed said. “In the leather industrial city of Savar, there are 155 factories, of which only 115 are now capable of processing leather. The rest of the factories haven’t completed their infrastructural set up yet.” The leather sector, the second-largest export earner after apparel products, contributed $1.01 billion of thetotal national exportsof $40.53 billion in FY 2018-19. According to EPB data, however, Bangladesh earned $1.23 billion from the sector in FY 2016-17. That strong performance had even prompted Prime Minister Sheikh Hasina toannounce leather as the ‘Product of the Year’ for 2017,saying the government would “boost this industry to reach its full potential”. The last fiscal, however, shows a grim picture of this promising sector. Faisal Mahmudis a journalist based in Dhaka.
Bangladesh Rawhide Traders Hit by US-China Trade War