Bangladeshi leather industry look for Eid bonus

The leather industry, hit by the global recession, is looking to shake-off the lull with Eid-Ul-Azha this year, but will local and international markets allow a recovery? Bangladesh processes around 220 million square feet of leather every year, half of which is sourced during this time, when millions of sacrificial animals are slaughtered across the country as part of the Eid ritual. A sharp fall in international demand for animal- hide last year, in the wake of the global recession, triggered a slump for the local hide and leather industry, which they hope will pick up this year. Industry leaders expect supply of hide will surge this Eid compared to the last two years of interim government. "Many political leaders, and businessmen, could not sacrifice animals as they were passing a tough time over the past two years. Or they felt it didn't really matter during the emergency period from a 'public relations' point of view," Rezaul Karim Ansari, head of the industry's top trade body, said. "Cyclone Sidr in 2007 also caused deaths of a huge number of animals as well as creating lots of financial woes, which contributed to the lower supply of hide too," said Ansari, chairman of Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLGFEA). "And like every other industry, we are suffering due to the financial meltdown as international market price has been falling significant since last year," he added. Prices of finished leather declined 30-40 percent in the last one year in the global market, causing a huge loss to local tannery owners. Figures from the government's Export Promotion Bureau show that leather exports amounted to $45.56 million in the first quarter of the current fiscal year, crashing almost 24 percent compared to the same period last year. Footwear exports, however, fell less steeply— by just 2.95 percent in the first quarter of the current fiscal, earning $56.22 million—boding better for local leather sales. But the good news is demand for finished leather has also bounced back thanks to buyers in Hong Kong and China, say tanners. "China and Hong Kong bought a huge amount of leather over the last two months," Shahin Ahmed, president of the Bangladesh Tanners Association, told bdnews24. com. He said the fact led them to plan for procuring as much raw hide as they can store during Eid-ul- Azha this year. Meanwhile, increased demand from local footwear-makers for finished leather will also cause local tanners to buy more hides this year, says Tipu Sultan, a former chairman of BFLGFEA. Footwear and leather goods manufacturers echoed the same, saying their consumption of domestic finished leather has been rising. "We used to consume around 15 percent of domestic finished leather on average, now we use around 35 per cent," Saiful Islam, chairman of Bangladesh Leather Goods and Footwear Manufacturers Exporters Association told bdnews24. com. He added that earnings from footwear export surpassed leather exports in 2008-09 fiscal. Bangladesh exported around $170 million of finished leather in the last fiscal while shoe manufacturers bagged about $204 million, according to the Export Promotion Bureau. But, despite expectations of brisk business, the BFLGFEA has cut the maximum buying price for raw hide this Eid. Price per square feet of raw cowhide was fixed at Tk 30 in Dhaka and Tk 25 outside, dropping from Tk 30 and Tk 35 respectively last Eid-Ul- Azha. The announcement came just ahead of Eid. BFLGFEA chairman Rezaul Karim Ansari told the media that prices have been fixed low due to a fall in prices of leather and leather products on the international market. But, he told bdnews24. com, exports are expected to turn around in coming months as the shocks of recession are easing in parts of the world.