Pricing hides and skins this year

Dhaka,  Tue,  26 September 2017
Published : 18 Aug 2017, 20:26:38

Pricing hides and skins this year

Syed Jamaluddin
The government is expected to fix prices of hides and skins soon like last year. The Ministry of Commerce will hold a meeting with the stakeholders. But it remains to be seen as to whether fair prices of hides and skins could be ensured this year. The tanneries are no more there in Hazaribagh. On the other hand, these are in the process of shifting to Savar. Sixty tanneries have reached the stage of production against a total of 155. That is why entrepreneurs are worried about preservation and processing of hides and skins. The project director of the Savar tannery estate, however, said about 100 factories may start working during the time of Eid-ul-Azha. The government is seemingly expediting everything in the estate but tannery owners are not responding in the same manner. Small owners are running the works on hired basis with big tanneries. It is hoped that processing and preservation will not face any problem this year.

Because of tannery shifting, about 80 per cent factories could not start operation. Traders also attribute low prices to the shifting. In the previous years, they adduced lower prices to low international prices. On the other hand, price of salt has increased. But imported salt is expected to arrive before Eid. It is against this backdrop that the entrepreneurs of the leather industry are reportedly considering to lower prices of raw hides and skins on the eve of Eid. Prices may be lowered by Tk 5-10 per square feet. However, lowering of prices of hides and skin will adversely affect beneficiaries such as orphans, and the poor. But then the prices of hides and skins of cows, buffaloes and goats have increased in the international market. Leather exports from the country are also increasing. 

Those, who sacrifice animals, sell hides and skins to provide funding to charitable institutions for  rehabilitation of the poor and the needy. They also distribute meat to the poor. The export of crust and finished leather is increasing. Side by side, there is a growing domestic market. Leather products are made locally and exported to American and European markets. Because of good quality, there is good market abroad for Bangladeshi leather goods. But unfortunately fair prices of raw hides and skins could not be ensured. The trading agencies have decided in principle to lower the prices of raw hides and skins this year.

In the international market, one square foot of A grade finished and crushed leather is selling at Tk 160/180. One square foot of leather is bought at the rate of only Tk40/50 from the local market. In any case, processing cost of one square foot of finished leather is not expected to exceed Tk 100. Such leather is sold at double the price in international market. Since these hides and skins are collected from healthy animals, they fetch good prices. The profit is swelling the coffers of the businessmen.

The Commerce Ministry is expected to instruct traders to fix the prices of hides and skins in coordination with international market. Last year, the price was fixed at Tk 50 per square foot in Dhaka. It was Tk 40 outside Dhaka. The Bangladesh Finished Leather, Leathergoods and Footwear Exporters Association, Bangladesh Tanners Association and Hides and Skin Merchants' Association of Bangladesh implemented the pricing of hides and skins. At that time, salted goat hide was collected at Tk 20 per square foot and the price of skin of a she-goat was Tk 15 per square foot. An official of the Commerce Ministry said that the ministry will watch so that price is not reduced. Price of hides and skins needs to be little higher this year considering lower prices in previous years and higher current price in international market.

Instead of fixing price arbitrarily, supply and demand of hides and skins may be allowed to determine the prices. This is the normal principle of economics. The government is likely to encourage arrival of cattle from India to Bangladesh before Eid-ul-Azha as it may try to keep the prices of sacrificial animals within the purchasing power of the people before the general election. On the other hand, because of the ongoing floods, the farmers are eager to sell their cows as soon as possible. Thus prices of cattle are likely to be lower this year because of floods. There is also flood in those regions of India wherefrom cows are brought into Bangladesh. Farmers are eager to dispose of their cattle. 

The writer is an economist and columnist

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