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Leather market needs to be opened up to prevent price crunch

Leather market needs to be opened up to prevent price crunch
Dr. Khandaker Golam Moazzem, Research Director, Center for Policy Dialogue (CPD). File Photo

The price of sacrificial animal skins has been declining for several years. People in the leather sector are being affected. In this reality, Dr. Khandaker Golam Moazzem, the research director of CPD, has spoken about the leather market this year.

Question: Who is responsible for the catastrophe in the price of sacrificial animal skin?

Dr. Khandaker Golam Moazzem: Raw leather is procured based on the demand and stock of leather in the country and the possibility of increasing demand in the coming days. The price of raw hides has been declining year after year due to not giving a clear idea to the buyers and sellers about these issues before the sacrifice. Of course, the lack of transparency and accountability of tannery owners as the main users of leather is also responsible for this. Tannery owners cannot avoid liability for this. That responsibility also falls on the storekeepers. Because, they are also important partners in the supply chain.

It is possible to prevent skin decay at a cost of 100 rupees
File Photo

Q: Where was the deficit at the initiative of the Ministry of Commerce?

Dr. Moazzem: It is very important to know the statistics of how many square feet of leather is required in the factories of the country throughout the year, how much leather will fit in it at the time of sacrifice and how much leather is in stock. However, the Ministry of Commerce is not finding out. The ministry took some initiative to fix the price of leather before Eid. They have also formed three committees this year. Basically, more efforts have been made to ensure that the sacrificial skin is not discarded. However, it has already been proven that it is not possible to improve the situation just by monitoring.

Meanwhile, there is a kind of ambiguity in the pricing of leather. In this case, the Ministry of Commerce should fix the price of salted leather as well as non-salted leather, so that the seasonal traders also have a clear idea about the market. There are also various types of skin problems such as square feet. Seasonal traders come up with an account, which the storekeepers do not want to accept again. The result is naturally a price catastrophe. In this case also a clear scientific method needs to be determined.

Lots of raw leather transactions are left. This is also causing a lot of problems. Last time, the storekeepers complained against the tannery owners, they did not pay the previous money. On the other hand, the tannery owners said that the bank was not giving them loans. Therefore, it is necessary to bring transparency in buying and selling at this stage. The way in which international quality business is transacted through the required documents and banking channels needs to be ensured here. The Ministry of Commerce can give instructions to Bangladesh Bank for this.

File Photo

Q: What else needs to be done to prevent a leather price crash?

Dr. Moazzem: Unfortunately, in our country, the number of domestic buyers is high and there is no pressure from buyers regarding the compliance of a limited number of foreign buyers. The raw leather market is completely domestic. In many cases, a system inferior to the raw materials of other indigenous industries has developed here. It is very difficult to take it to international meaning.

Our leather processing is not up to international standards as well as the market size is very small due to limited number of tannery and product manufacturing companies and foreign buyers. The whole market has been turned inland by stopping the export to the neighboring countries on the allegation of smuggling.

At present, warehousing, tannery owners, shoe and leather manufacturing companies are all abusing this facility. As a result, the leather market needs to be opened up.

The government has allowed five companies to export wet blue this year. They will be able to export one crore square feet of leather. This initiative is positive. This has had a positive effect on the price of raw hides. As the demand inside the country is not very high, it is necessary to continue exporting wet blue leather in the coming years.

Source: Online/SZK

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