Low prices of hides and skins: The consequences

Dhaka,  Monday,   2016-09-19
Published : 19 Sep 2016, 19:45:56

Low prices of hides and skins: The consequences

Low prices of raw hides and skins of sacrificial animals encouraged the smugglers to despatch the item out of the country in larger quantities this year than previous ones as the overall situation favoured smuggling, writes Syed Jamaluddin

Low prices of hides and skins and high prices of salt resulted in a market crash for hides and skins this year. Price for hides and skins of sacrificial animals was the lowest in last eight to 10 years. In addition, those who bought hides and skins are not being able to process those due to soaring salt prices. They are now looking to the tannery owners. The skin traders in Chittagong, who collected four hundred thousand pieces of raw hides,  are also depending on the tannery owners in Dhaka as there is no tannery in Chittagong. Most of the tanners buy hides and skins on credit. The aratdars did not receive their outstanding dues of last year from the tanners. They are uncertain about receiving full payment even if they sell their products this year. Aratdars are buying the hides and skins from seasonal traders at the rate of Tk.25/30 per sft.

Traders in Sylhet could not buy sufficient hides and skins due to non- payment of arrears. They received 60 per cent of last year's arrear of Tk.20 millions. Again number of animals sacrificed this year was much less due to reduced remittance receipts. Seasonal traders bought skins at high price but later sold them at half the purchase price. In Jessore, local traders bought raw hides at a high rate and then sold them at a cheaper rate to traders who had to purchase salt at the rate of Tk.1,600 per sack. In Bogra, hides and skins were sold at lower prices. Manipulative traders fixed the price below the market price. As a result seasonal traders became the worst sufferers and they are counting huge financial losses. At Rajshahi, agents of traders bought the products at a price lower than the price fixed by the authorities and seasonal traders incurred loss at a rate of Tk.500/600 per unit of skin. In Dinajpur, market price of skins is much higher than the price fixed by the government. But local traders have not received full payment from the tanners as a result of which they are short of capital to buy more products. They are also not happy about the price fixed by the authorities and as such are reluctant to buy the hides and skins at that price.

Due to higher salt price and non-payment of arrears by the tannery owners, the skin traders of Moulvibazar are unable to process the raw hides and have thrown three thousand pieces of goat skin down the river with each piece costing about Tk.100/120. Traders have informed that there will be no local collection unless price of salt comes down and influence of tannery owners is controlled. Another trader is known to have thrown 1,000 pieces of skin in the river due to scarcity of salt. The traders demand that the government must exercise its authority over the tanners and control the price of salt otherwise the industry will be in peril.

It is a pity that the imported salt did not arrive before the cattle were due to be sacrificed and it is learnt that import of another one hundred thousand tons of salt is under process. The aratdars at Posta purchased hides and skins at a cheaper price because of the salt crisis. The collapse in skin trade this year is an inevitable result of high price of salt. A packet of 1 kg of salt is close to Tk.50. Commerce ministry officials say that the price of salt will come down as soon as the imported salt arrives.

Low prices of raw hides and skins of sacrificial animals encouraged the smugglers to despatch the item out of the country in larger quantities this year than previous ones as the overall situation favoured smuggling. Tanners fear shortage of hides and skins for the industry this year. Fixing of lower prices of skins and skyrocketing price of salt have put the industry under stress. Seasonal traders are in dire straits and the situation is forcing them to smuggle the products out of the country. On the other hand, orphanages and charity organisations are being deprived of a large amount of money that usually comes from the prices of skins of sacrificial animals.

Hide prices have been quite low in the country for last 8/10 years. Although more than 10 million sacrificial animals were sacrificed, not enough hides and skins were seen in the market. Many traders are hiding skins due to lower price and traders with big capital, who have the capacity to store cowhides for at least a month, are set to make good profit while small seasonal traders are going to incur huge losses. Last year only goat and sheep skins were smuggled. But the situation is different this year when both cow and goat skins are being smuggled from the evening of Eid-ul-Azha.

Every year Indian hide traders fix the price of hides at a rate higher than that in Bangladesh. As a result, the local traders, middlemen and retailers prefer to smuggle the hides rather than selling those to local traders at lower prices.

The writer is an economist and columnist.


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