Due to compliance issues, many buyers have stopped buying leather from Bangladesh and 50 percent of hide bought last year is still unused.
Moreover, the banks didn’t sanction enough loans for the merchants to purchase rawhide. Hence businesses haven’t yet decided whether rawhide will be purchased this year at all.
According to the Export Promotion Bureau (EPB), the export target for leather goods in the 2017-18 fiscal was $1.38 billion which remained unfulfilled. That fiscal year Bangladesh collected over $ 1.08 billion from export of leather goods, 21.38 percent less than the actual target.
The traders have also attributed to the crisis to the fact that the tannery owners are yet to receive the proper to their designated plots in Savar after being shifted from the capital's Hazaribagh. This has made it harder for them to draw loans from bank and led to the impending crisis.
They said that for various reasons demand for leather has fallen in UK, Europe and China.
“The leather sector honestly isn’t in a good state right now. Orders for all leather goods have gone down,” said Bangladesh Tanners Association Chairman Md Shaheen Ahamed.
He added that demand in China and UK, Bangladesh’s biggest market for leather goods have fallen.
According to him the Tk 4.7 billion loan sanctioned for the purchase of rawhide was nowhere near enough.
Responding to queries on the matter, Shameem said that half of the rawhide that they purchased last year hasn’t yet been used.
“Hence this year, the demand for raw hide is less and so are orders. Plus buyers are not happy with the compliance policy,” he said.
He attributes the slump to the effluent treatment plant (ETP) at Savar tannery industrial area not being fully effective.
“I heard that some machines have been procured to make it operational. If that’s the case, it can be made partially operational at the end of this year.”
Meanwhile, Senior Secretary to the commerce ministry Mofizul Islam said that they have adopted multiple initiatives to increase leather export.
He added that there is a big scope for export in Germany and Australia and does not see leather good export prospects as bleak.
“All preparations have been taken for the purchase of raw hides of sacrificial animals,” he said and added that the government is holding meetings with the traders to aid them in any way.
He said that the government will also monitor whether the rawhide is being preserved in keeping with the standards.
Industries Minister Nurul Majid Mahmud Humayun said that that the tannery industry area at Savar has seen much development including better roads.
According to leather industry insiders, Bangladesh processes around 220 million square foot of leather every year, half of which is sourced during the Eid-ul-Azha, when millions of animals are slaughtered as part of the Muslim festival’s ritual.