The export orders for finished leather, leather goods and footwear have drastically declined by around 60 per cent following the political standoff, frequent long spells of nationwide hartal and blockade in the last one month, making a heavy blow to the sectors. The industry insiders said the foreign buyers of Bangladeshi finished and crust leather and leather goods were refraining themselves from making new export orders in the last month as they were skeptical of timely delivery of their import orders amidst ongoing nationwide political violence.
The back-to-back long spells of countrywide blockade and hartal by the opposition have drastically broken down the entire supply chain of the three sub-sectors of leather industry---tannery, leather goods and footwear industries---and also made the entrepreneurs anxious about the achievement of export target of US$ 669.80 million,set by the government for the current fiscal year 2013-14.
According to the Export Promotion Bureau, the government has set US$ 669.80 million export target for the FY 2013-14 for leather and leather products.
Shahin Ahmed, president of Bangladesh Tanners Association (BTA), told The Independent that the ongoing political violence in the name of hartal and blockade led the tannery industry to a delicate situation.
“Buyers are not coming to Bangladesh in fear of being stuck here in the ongoing political violence,” Shahin said. Thus, the import orders for Bangladeshi finished and crust leather fell by around 60 per cent in the last month, he noted.
“Some portion of our export orders has already been shifted to India and China, the main competitors of Bangladeshi finished and crust leather in the global market,” the BTA president pointed out.
Moreover, the production of finished and crust leather have been declined significantly in recent times as the frequent long spells of blockade and hartal in the past one month made a serious barrier to the supply of raw hides.
He also expressed his grave concern over the supply crunch of raw hides, a major raw material of the leather industries.
Everyday, tanners have to collect raw hides of slaughtered animals from remote parts of the country, he said and added that the collection of raw hides was interrupted during the past month, creating supply scarcity of raw hides.
In addition, the supply of raw hides of the sacrificial animals during the last Eid-ul-Azha to the tannery has not yet been completed, he said.
Normally, it requires three months for the tanners to collect raw hides of the sacrificial animals during Eid-ul-Azha, he said.
But this year, the tanners had only one month to collect the raw hides of sacrificial animals as the blockades and hartals damaged one months of the collection time.
Thus, a huge stockpile of the collected raw hides has been created in different parts of the country, he said adding: the quickly perishable raw hides were being flawed due to the lack of proper preservation by the traders.
He also expressed his apprehension over smuggling a major portion of the raw hides of the sacrificial animals to neighbouring country India.
Thus, the future production in the lather industries will be disrupted following supply crunch of raw hides, the BTA president said.
Now, the tanners are failing to bag profit from exporting finished and crust leather as they have to make the shipment by air to keep the foreign buyers satisfied through on-time delivery, Shahin said.
Tanners are now paying Tk 25 per square feet to deliver the export orders by air while they paid Tk 2 per square feet to deliver by ship, he said.
In addition, a truck owner is now charging Tk 1,00,00 to transport the finished and crust leather from Dhaka to Chittagong port while the cost was only Tk 25,000, he said.
The price hike of transportation also cut the profit margin of the entrepreneurs of the leather sectors, he added.
Engr. M Abu Taher, chairman of Bangladesh Finished Leather, Leathergoods and Footwear Exporter’s Association (BFLLFEA), told The Independent that the ongoing frequent long spells of hartal and blockade have been taking a heavy toll to the leather sectors.
The political violence has significantly reduced the sales turnover of the Bangladeshi leather goods and footwear at home and abroad, Taher added.
Mohiuddin Ahmed Mahin, senior vice chairman of BFLLFEA and chairman of RMM International Ltd, said the most promising export market of Bangladesh, the leather goods and footwear might be shifted to other destinations like Myanmar, Vietnam and Cambodia following the ongoing political instability.
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