Tanners will get Tk400 crore in bank loans to procure rawhides in the upcoming Eid-ul-Azha season, the central bank has said.
The loan cap, set by the Bangladesh Bank, is Tk183 crore less than last year and will be disbursed through public and private banks.
Earlier, the Bangladesh Tanners Association (BTA) wrote to the commerce ministry seeking loan support to the tune of Tk500-600 crore and cooperation from all concerned in increasing patrols in the border areas for at least 30 days after Eid to prevent rawhide smuggling.
Serajul Islam, a spokesman for the Bangladesh Bank, told The Business Standard, "Prices of rawhides have been low for the last two years. Hide export was also disrupted due to the pandemic. Banks will provide loans considering the overall aspects vis-a-vis the traders."
Md Sakhawat Ullah, Managing Director of Salma Tannery and General Secretary of Bangladesh Tanners Association (BTA), told The Business Standard that entrepreneurs do not benefit much from the government loan.
"As some have not been able to repay previous loans, the bank adjusts the previous loans while approving the new ones," he said.
"We have asked the government not to adjust previous loans while giving new loans. Considering the post-pandemic situation, entrepreneurs will need fresh working capital to buy rawhides," he added.
Tannery owners source rawhides from different warehouses of the country and process them before selling them in local markets or abroad.
According to the Tanners Association, which has some 800 members, there are a total of 1866 large and medium warehouses across the country.
There are also many small-scale warehouses that collect rawhides from seasonal entrepreneurs during the Eid-ul-Azha season.
The storekeepers collect the skins from the seasonal traders and store them with salt, which they then sell to large tanneries.
Most of the warehouses are in Dhaka's Postagola, Natore Railway Bazar, Rajarhat in Jashore, Palashbari in Gaibandha, Taraganj in Rangpur, Naogaon, Mymensingh, Tangail, Kishoreganj, Cumilla, Chattogram, Amin Bazar and Tongi-Gazipur.
According to the letter sent to the commerce secretary, the leather industry is a potential sector in terms of foreign exchange earnings, national growth and employment. Most of the raw hides of this industry are collected on Eid-ul-Azha, with about 30% of them being lost every year due to a lack of preservation.
The letter also mentioned that there is a demand for about 81,000 tonnes of salt for the initial maintenance of rawhides alone for a total of some 1.25 crore rawhides during Eid-ul-Azha.
The tanners also called on the authorities to prevent artificial price hikes of salt during the season and ensure supply of salt across the country.
Exports increased, so did exporters' expectations
Following a rule issued by the High Court in 2017, tanneries were shifted from the capital's Hazaribagh to Savar Leather Industrial City.
The relocation and issues regarding compliance led to a decline in leather exports.
Entrepreneurs are now optimistic about a profitable season as leather exports are on the rise again since the fiscal year 2018-19, when leather worth $101.98 crore was exported.
In the first nine months of FY 2021-22, exports of leather and leather products accounted for more than one billion dollars, which is much higher than the previous year and the government's target.
At the time $111.55 crore worth of leather was exported – a 32% year-on-year increase and 18% more than the export target.