Rawhide traders and farmers at the grassroots level are expected to receive better prices from the sale of animal skins during the upcoming Eid-ul-Azha as the business outlook for leather and leather goods for 2023 is still bright despite the lingering uncertainty at home and abroad. 

Besides, tanners have paid a major portion of the arrears built up over the last several years, which had put rawhide traders in a corner financially. With the payments, the year-long problem related to the supply of funds in the sector is being resolved.

The arrears have slipped below Tk 100 crore as many tanners have either cleared their past payments in full or to a large extent, said Aftab Khan, president of the Bangladesh Hide and Skin Merchants' Association.

"The flow of funds is better this year," he said, adding that the arrears stood at Tk 110 crore last year.

"We hope a major portion of the remaining arrears will be paid before Eid-ul-Azha," said Khan.

According to the business leader, stakeholders in the leather sector held a meeting with the commerce ministry and discussed the arrears issue.

Officials of the ministry have also asked the tanners to complete the payments before the festival so that grassroots traders can buy rawhides.

Eid-ul-Azha accounts for nearly half of the rawhide produced annually in Bangladesh. And tanneries, which are mostly located in Savar and Chattogram, rely on local suppliers for the skins of the animals sacrificed. 

Quoting data from the livestock ministry, Khan said 1.30 crore animals are ready to be sacrificed this year. They will include 85 lakh cows and 15 lakh goats, buffaloes and lambs.

The sector is expecting loans amounting to Tk 180 crore this year, according to Shaheen Ahmed, chairman of the Bangladesh Tanners' Association.

He says the old stock of tanned rawhides is almost finished since demand has been high both from domestic and international leather and leather goods manufacturers and suppliers.

In the July-May period of the current fiscal year, Bangladesh exported leather and leather goods worth $1.12 billion, registering a year-on-year growth of 0.42 per cent, data from the Export Promotion Bureau showed.

The performance of the second-largest foreign currency earner for Bangladesh after garments has remained positive despite the cost-of-living crisis in western nations.

Ahmed said the export from the leather and leather goods sector could rise thanks to the recovery of the western economies from the severe fallout of Covid-19 and easing inflation.

"This year, the prospect for the rawhide business is better."

Md Saiful Islam, a former president of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, says the leather and leather goods industry has the capacity to be a multibillion-dollar industry if the Leather Working Group (LWG) certification can be obtained because of the availability of raw materials locally.

The Group is a collaborative initiative between footwear, apparel and upholstery brands and leather manufacturers. And in the absence of accreditation, Bangladeshi suppliers have to export leather mainly to China at rates that are much lower than the going rates in the international markets.

Only a handful compliant manufacturers can use locally processed hides to produce goods for the export markets. This means finished goods exporters have to import rawhides from LWG-certified factories in other countries to ship products to developed markets.

The situation could change for the better once Bangladesh makes the central effluent treatment plant (CETP) at the Savar Tannery Industrial Estate fully operational.

Aftab Khan said the higher price of salt is a major concern for them.

The price of the ingredient has increased to Tk 1,200 per sack, which holds 74 kilogrammes of salt, from Tk 900 last year.