Global market expands, Bangladesh lags behind

Photo shows a line of leather products at shop.Prohtom Alo file photo

The global market of leather and leather products has been expanding every year, but Bangladesh could not use its potential to expand exports in spite of having a huge domestic supply of rawhide. The export volume has been more or less in the same spot over the past seven years. On the one hand, low prices are contributing to the decaying of sacrificial animal hide every year; on the other hand, leather worth 16 billion taka is being imported to manufacture export-oriented leather products. The leather industry in Bangladesh is not developing because of pollution caused by the Hemayet leather industry estate.

Experts and people involved in the sector said it has been 21 years since the implementation of a planned tannery industry estate on a 200-acre of land in Hemayetpur of Savar, outskirts of capital Dhaka. A total of 154 tanneries were allocated land in the industry park and 142 of them are currently in operation. However, the common effluent treatment plant (CETP) is yet to go into full operation. Work on dumping yards for throwing hard wastes ha not started either, resulting in growing pollution now in the Dhaleshwari river after the Buriganga river.

The potential leather industry sector is paying the price of the failure to make the leather industry estate environment-friendly. The price of rawhide fell drastically due to no rise in exports, traders claimed saying companies require LWG certification, but tanners cannot apply for the certification as pollution in the industrial park continues. As a result, traders are forced to export leather to the Chinese traders at half price.

Leather Working Group (LWG) is a not-for-profit membership organization, working to create meaningful change across the global leather supply chain. LWG community works together in a pre-competitive way to make responsible leather production and sourcing a reality, the group said on its website.

The government, however, wants to increase export in this sector despite the dire situation of the leather industrial park. As part of this initiative, the National Board of Revenue (NBR) decreased tax at sources on the export of leather and leather products from 1 per cent to 0.50 per cent in March this year. The industries ministry moved to form a separate authority for proper management and development of the leather industry.

Asked, the research director at the non-government research agency Centre for Policy Dialogue (CPD), Khondaker Golam Moazzem told Prothom Alo that the challenge to environmental standards is having a negative impact on the export of rawhide and leather goods in the country. Currently, it is not possible to obtain LWG certification with the existing CETP, and that is very unfortunate, which is why the CTEP system must be restructured.

State of leather and leather goods export

Market research and consultancy firms say the global market of leather products has been expanding except for the coronavirus pandemic period. According to K-based Technavio and US-based CMI Consulting, the global market size of leather goods including shoes, sandals and bags has grown by 30 per cent to 242.70 billion US dollars in 2024 from 217.49 billion US dollars in 2016. The market size is predicted to rise to 552.90 billion dollars in 2033.

Exports of Bangladesh did not rise as much as the global market grew. According to data from the Export Promotion Bureau (EPB), earnings from exports of leather and leather-processed goods were at 1.23 billion US dollars in the 2016-27 fiscal and 1 billion dollars of the earnings were from the export of leather-processed goods. Exports, however, dropped in the following three years and rose slightly in the next two years before dropping again in the 2022-23 fiscal. Earnings from exports of leather and leather-processed goods were at 1.23 billion US dollars in the last fiscal and 830 million US dollars in the first 11 months of the current fiscal.

Bangladesh shares a small portion of the global market while other countries are moving ahead. In 2023, Vietnam exported leather and leather-processed goods worth 24 billion US dollars and India exported products worth 5.28 billion US dollars that means Vietnam’s export of leather and leather goods is 19 times higher than Bangladesh and India's export is four times higher than Bangladesh's.

Less LWG-certified tanneries

Several global brands and footwear manufacturers including Nike, Adidas and Timberland formed the Leather Working Group (LWG) in 2005. It envisions a leather industry dedicated to sustainable and responsible business and works to achieve this through full supply chain transparency, minimal environmental impact, deforestation and conversion-free (DCF) supply chains. Currently, more than 1,000 brands and suppliers are members of the LWG.

According to data available on its website, 1,285 factories have obtained LWG certification so far with Italy dominating the list with 254 factories, followed by India (251), and China (206). Besides, Pakistan has 45 factories with LWG certifications.

To date, seven factories have received LWG certification in Bangladesh. They are ABC Leather Limited, Apex Footwear Limited, Austan Limited, Riff Leather Limited, SAF Industries Limited, Simona Tanning Inc. (Bangladesh) and Superex Leather Limited. Three of those factories manufactured finished leathers from rawhide.

It has been learned that the LWG stopped auditing factories in the tannery industrial estate in Hemayetpur as the estate failed to comply with the stop of pollution. LWG, however, runs audits once a factory installs its ETP, and Simona Tanning received the certification in this process.

Low price of rawhide

The price of cattle rawhide increased by 5-100 taka in this year's Eidul-Azha than the last year's price. Yet, rawhide was sold for 275-300 taka lower than the government fixed price with rawhide from large and medium-size cattle being sold for a maximum of 800-900 taka in the Posta area of Old Dhaka on Eid day. Prices dropped further outside Dhaka. Wholesalers are also reluctant to purchase goat hides with many people even discarding it.

Leaders of the Bangladesh Tanners Association said on 19 June that about 500,000 rawhide mostly goats decayed this year and about 9 million rawhide were processed with salt.

In 2013, the price of cattle rawhide was 85-90 taka per square foot during Eid-ul-Azha. Since then, rawhide prices continued to drop with prices falling drastically in 2019 when rawhide were thrown away roadside or buried underground, damaging rawhide worth about 2.42 billion taka.

On the one hand, rawhide sees low prices; on the other hand, the import of leather has been on the rise. Leathers worth about 9 billion taka were imported in 2018. According to the NBR, companies exporting leather goods imported 11,718 tonnes of various types of leather worth 16.46 billion taka in 2023.

Ways to develop tannery estate

The government relocated the tannery industry from Narayanganj to Dhaka’s Hazaribag after acquiring land through a gazette issued on 3 October 1953. However, waste disposal systems were never set up there, and about 25,000 cubic meters of waste was disposed of in the Buriganga river per day in addition to throwing hard waste roadside and into ditches.

The tannery industrial estate project in Hemayetpur, Savar was taken in 2003 at an estimated cost of 1.76 billion taka in a bid to prevent pollution. The project cost was later revised to 10.79 billion taka with added spending on various sectors including CETP. A work order was issued in 2012 to build the CETP, but tanneries were relocated to Hemayetpur from Hazaribag days before the Eid-ul-Azha in 2017 without operating the CETP in full swing.

The CETP in Hemayetpur has a capacity of disposing of 25,000 cubic metres of liquid waste per day, but when tanneries process rawhides in full swing they produce more waste than CETP's capacity. Besides, chloride and biological oxygen demand (BOD) in l refined liquid has not been brought down to a certain limit yet.

Tanners said CETP and hard waste management are still incomplete in the ternary industrial park. The initiative was taken to ration the leather processing to control the additional pressure after Eid-ul-Azha like the last year. It reduces pollution but does not stop.

BTA general secretary Shakawat Ullah told Prothom Alo, “At first, we must move ahead with a goal to achieve 20 LGW certifications for the rapid improvement of the situation. Once that is done other things will follow gradually, but for this, initiative is necessary to make the CETP fully operational.”

This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna