A price slump has created a crisis of rawhide supply to country's leather industry this high season as traders are reluctant to sell the sacrificial animal skins to avert losses.
Sources in the trade circles said there had been a significant fall in the prices of rawhide and skins this time around, and many cited the low-set official rates as the damper.
Fears are rife that, amid a mismatch in this sector, much of the hides could be smuggled out. In that eventuality, the domestic leather industry may face shortage of supply of this raw material.
They said the supply of skins dropped in the city's Posta area, a key wholesale hub of animal hides in the country, as seasonal traders maintained a wait-and-see stance.
The tanners and traders also feared rise in smuggling of the animal skins following such fall in rawhide prices. They urged continuation of strict vigilance on borders.
Prices of animal hides fell by 20-30 per cent in the country during this Eid-ul-Azha fiesta. Traders attributed the slump to fund crisis, high salt prices and relocation of tanneries outside Dhaka city.
The country's tanners usually collect 65 to 70 per cent of their required hides and skins during the occasion of animal sacrifice by devout Muslims.
Visiting Posta on Tuesday the FE correspondent found low presence of hide-laden pickup vans and human-laden vehicles at the hub.
Entry of a vehicle was attracting a number of hide merchants as they were on a desperate mode to collect skins.
Md Didar Hossain, proprietor of M/S D S Enterprise at Posta, told the FE that they usually start to collect hide on the Eid evening.
"I have been able to buy 300 pieces of cowhide in last three days which should be at least 1200 pieces," he said.
A small-sized cowhide has been traded at Tk 600-Tk 800, medium one at Tk 800-Tk 1000, big-sized at Tk 1000-Tk 1500 a piece at Posta for last three days, said Mr Hossain.
The prices are 20-30 per cent lower compared to that of last year, he admitted. He said hide merchants have been passing through financial crisis as tanners didn't pay their earlier dues.
Md Ikram Uddin Mollah, a meat-seller-cum-seasonal hide trader, told the FE that he collected 50 pieces of cowhide from Rayer Bazar and Shankar in Dhanmondi area in the city on Eid-day (Saturday. "The price at Posta is now lower than my buying price," he said.
"I bought big-sized cow hide at Tk 1550 a piece and applied 2.5 kilograms of salt worth Tk 48 on it," he said. Rawhide merchants at Posta are giving only Tk 1450-Tk 1500 for same piece of skin (32-34 square feet), he said. He said many Eid-season traders, like him, are stocking skins expecting a rise in prices of the product which could help them avert counting losses.
Mr Mollah mentioned that prices of salt increased by Tk 300-Tk 400 per 74-kg sack this year, raising further losses being incurred by small traders.
President of Bangladesh Hide and Skin Merchants Association Haji Md Delowar Hossain told the FE that tanners will buy skin at Tk 50-Tk 55 per sft from them, which means a big-sized cow-skin (32sft) could be sold at Tk 1600 to Tk 1760 apiece.
He said most of the rawhide wholesalers fell into a fund crisis as their above Tk 1.5 billion hasn't been paid by the tanners in last two years.
Many of the traders are now apathetic in business after being bank defaulters, he said. Mr Hossain said the collection of skins might drop by 20-25 per cent this year compared to that of last year when 4.8 million pieces of cowhide and 7.1 million of goatskins were collected. He said fall in prices might cause surge in the smuggling of skin to neighbouring countries.
The government agencies concerned should be cautious for next two months in the bordering areas to prevent the smuggling, he said.
Chairman of Bangladesh Tanners Association (BTA) Shaheen Ahamed said they would start to buy hides from warehouses within a week at government-fixed rates.
Admitting to a fund crisis, he said many tanners could not manage adequate funds from banks.
The government, he added, should provide loan to the tanners immediately to bail out the leather sector from dull business.
Mr Ahamed said all tanners will have to go into production at the newly constructed leather estate in Savar. He said only 20 of the tanners were now running their operations while majority of the tanneries could not start for lack of gas connection and incomplete factory structures.
However, he urged the government to raise vigilance on the borders to prevent the smuggling out of rawhide to India.
The price of per-square-foot cow rawhide was fixed at Tk 50-55 in Dhaka and Tk 40-45 outside of the capital.
For he-goat hides the rate was Tk 40-45 and for she-goats Tk 15-17 across the country.
Leather and leather goods are the second-highest export-earners after readymade garments. The sector fetched US $1.23 billion last fiscal year, according to the Export Promotion Bureau.