Low Price, Nonpayment
Seasonal rawhide traders in deep trouble
Published : Saturday, 1 September, 2018 at 12:00 AM Count : 200
Seasonal traders are in deep trouble due to low prices of rawhide of sacrificial animals. Now they are facing another problem as tanners are not paying the traders due to, what they say, fund crisis.
Prices of rawhide of sacrificial animals crashed to a 10-year low during this Eid, dealing a heavy blow to small and seasonal traders.
Stakeholders attributed the poor prices to acute fund crisis faced by rawhide merchants and traders, as tanners didn't pay them arrears before the Eid.
They also mentioned non-operation of a number of tanneries at the newly established Savar Tannery Industrial Estate (STIE) as one of the major reasons.
As a result, rawhide traders and seasonal traders are worried about cash flow crisis and they are facing huge losses.
On the other hand, the tanners have taken loans from banks in different time, but they are yet to return.
General Secretary of Bangladesh Tanners Association (BTA) and owner of the Salma Tannery Sakhawat Ullah said, "It is true that there was some problem in paying money due to the financial crisis. But we are trying to pay their money."
He said export earnings have come down due to low global demand. Besides, there is a financial crisis due to the transfer of tannery to Savar. Sakhawat said they would solve the problems.
He said that leather imports in China and the United States, the main country of import, declined. About 40 per cent of the leather has remained unsold.
As a result, the export earnings also decreased.
He claimed, due to the transfer of tannery to Savar, there were many problems in the production process.
"The sector is in serious funding crisis as the tanners have to make huge investments for relocating to Savar from Hazaribagh," Shakawat explained.
He said, "On top of that, we are not getting loans from banks as they want to mortgage the lands as collateral. But the owners are unable to do."
Sources said, Prime Minister Sheikh Hasina had also announced leather as the 'Product of the Year' in 2017 and ensured all-out cooperation to boost this industry to reach its full potential.
According to Bangladesh Bank sources, the leather default loan amounts to Tk 8,100 crore or 90 per cent until last June.
The malpractice has been in place over the past 40 years.
However, this year the total disbursed loan is Tk 600 crore. Of which Sonali bank granted Tk 70 crore followed by Janata Bank Tk 201 crore, Rupali Bank Tk 175 crore and Agrani Bank Tk 154 crore.
Sources said the export earnings from leather suffered a huge drop of over 12 per cent in the last fiscal; with manufacturers blaming the forced relocation of the tanneries.
The leather sector, the second largest export earner after apparel products, contributed USD $1.08 billion - or just less than 3 per cent of the total national exports of $36.66 billion in fiscal 2017-18.
Export Promotion Bureau (EPB) data showed Bangladesh earned $1.23 billion from the sector in the FY 2016-17.
According to the Bangladesh Hide and Skin Merchants Association (BHSA), traders are yet to get about Tk 500 crore from the tanners.
This hurts the collection of rawhides and their prices will fall further below the set prices, the association says.
BHSA Secretary General Haji Md Tipu Sultan said a few companies started buying raw hide from us. There are more than 8 lakh rawhides at posta.
He said "Usually, tanners pay previous year's dues before Eid. The tanners did not pay their dues even after Eid."
He said the rawhide business facing depression in the last three years. On the other hand, the salt prices are high. As a result, the tannery owners did not pay the money of the previous year.
Bangladesh Tanners Association Chairman Md Shaheen Ahamed claimed that only 42 companies could get loans from banks before Eid, and of those, only a few could pay 20 percent of the arrears to merchants.
"Many of the tanneries are yet to start operation at the new site in Savar. As a result, there is no production and no business. This is why they couldn't pay the arrears to the merchants," claimed Shaheen.