How Bangladesh squanders its leather potential – hide by hide, Eid by Eid

Highlights:

• Leather and leather goods exports stagnated at around $1.1 billion over the past decade
• Cowhides sold far below government-fixed prices
• Industry stakeholders blame rising processing costs, limited export markets and supply-chain distortions
• Experts have called for year-round exports of salted and wet-blue leather

Rawhide prices plummeted again during this year's Eid-ul-Adha, leaving traders and seasonal collectors facing heavy losses as the country's long-running leather sector crisis resurfaced with renewed intensity.

Many traders who purchased hides in anticipation of profits were unable to find buyers and were forced to dispose of unsold hides by the roadside or bury them, underscoring the persistent dysfunction in a sector that industry stakeholders say has remained trapped in crisis for nearly a decade.

Infographic: TBS

The core problem remains unchanged: Bangladesh has failed to establish a fully functioning Central Effluent Treatment Plant (CETP) at the Savar Tannery Industrial Estate, preventing the sector from meeting international environmental compliance standards and limiting access to major export markets.

Export potential remains untapped

Commerce and Industries Minister Khandaker Abdul Muktadir, during a visit to the Savar Tannery Industrial Estate on 16 May, said Bangladesh could earn as much as $12 billion annually from exports of leather and leather goods derived from domestically produced rawhides.

According to the minister, the country currently utilises only 0.26% of its leather potential. He said production and exports could increase by between 12 and 14 times if longstanding constraints were addressed.

Export Promotion Bureau data show that exports of leather and leather goods stood at $1.13 billion in the fiscal 2014-15 and reached $1.14 billion in FY25, reflecting virtually no growth over a decade. During the same period, Bangladesh's garment exports increased from approximately $25 billion to $40 billion.

The leather export trajectory is not stagnant; it is in freefall. Bangladesh exported $226 million worth of leather in FY10, a figure that climbed steadily to $400 million five years later. Since then, it has collapsed. By FY18, leather exports had fallen to $183 million. They declined further to $128 million in FY25. In the first nine months of the current fiscal year, leather exports stood at just $97 million.

Md Nasir Khan, vice-president of the Footwear, Leather Goods and Accessories Exporters Association, told TBS that exporters are unable to purchase Bangladeshi leather because international buyers effectively refuse to source products made from local hides.

"Global buyers do not purchase Bangladeshi leather because of compliance concerns," he said.

In the early 1990s, Vietnam's leather exports were comparable to Bangladesh's. By 2025, Vietnam became the world's second-largest footwear exporter at $29 billion – roughly 25 times Bangladesh's leather export earnings.

"The divergence is not accidental. Vietnam built the infrastructure and attracted investment. And, Bangladesh built a tannery estate without a sewage plant," said Nasir.

"We have destroyed our national asset – rawhides," he said. "It had the potential to earn many billions."

Prices fall far below official rates

The government fixed the price of salted cowhide in Dhaka at Tk62 to Tk67 per square foot for this year, Tk2 higher than last year.

Based on estimates provided by tannery owners and traders, a medium-sized cowhide typically yields 18 to 20 square feet of leather, while larger hides produce around 24 to 26 square feet. At the highest official rate of Tk67 per square foot, a medium-sized salted hide should therefore sell for between Tk1,200 and Tk1,350, while larger hides should command between Tk1,600 and Tk1,700.

In practice, however, market prices were substantially lower.

In Dhaka, most hides sold for between Tk300 and Tk700, depending on size and quality. Traders at Posta, one of the country's principal hide trading centres, reported purchasing hides for no more than Tk600 to Tk700.

Seasonal traders, orphanages and madrasas alleged that tannery operators and depot owners largely ignored government-set prices.

Depot owners acknowledged purchasing hides below official rates but attributed the situation to rising preservation, transport and labour costs.

Syed Rubel Hossain, chief engineer at AK Leather, said processing costs had increased sharply because of higher prices for imported chemicals.

"The prices of chemicals used in leather processing have risen by 20% to 30% after the outbreak of the Iran war, but finished leather prices have not increased correspondingly," he said. "Foreign buyers are unwilling to pay more, so we cannot afford to buy hides at government-set prices."

Rubel also noted that Bangladesh's leather market has become heavily dependent on Chinese buyers because European purchasers prioritise environmental compliance and are not sourcing from Bangladesh.

Nasir Khan said a medium-sized cowhide sold for Tk2,000 to Tk2,500 two decades ago, whereas similar hides now fetch less than Tk500. Based on international market conditions, he argued that prices should have reached Tk7,000 to Tk8,000 by now.

"Only Chinese buyers are purchasing, and they are paying Tk30 to Tk40 per square foot, which is almost half the government-set price," Nasir said.

Dispute over market structure

Stakeholders remain divided over who bears responsibility for the depressed market.

Rubel argued that depot traders purchase hides cheaply and later resell them to tanneries for Tk1,200 to Tk1,300 after preservation. According to him, preservation costs amount to only Tk150 to Tk200 per hide.

Md Tipu Sultan, general secretary of the Bangladesh Hide and Skin Merchants Association, disputed that assessment, saying preservation costs can reach Tk300 to Tk400 per hide.

"A hide purchased for Tk400 effectively costs Tk800 by the time it reaches a tannery," he said.

He also pointed to quality problems, arguing that many seasonal traders enter the market without properly assessing hide quality and often attempt to sell damaged products.

Bangladesh Tanners Association Senior Vice-President Md Sakhaowat Ullah, meanwhile, accused depot operators of creating artificial distortions.

"Depot owners sell hides to us at Tk1,000 to Tk1,200 and do not complain throughout the year. Their complaints only emerge during Eid," he said.

Sakhaowat also noted that restrictions on exports of raw and wet-blue leather have limited market outlets and reduced the sector's capacity to absorb the large volume of hides generated during Eid-ul-Adha.

Industry insiders stressed that hides must be salted within seven to eight hours of slaughter; otherwise, their quality deteriorates irreversibly. The commerce minister echoed the same message after visiting the Savar Tannery Industrial Estate the day after Eid.

"Businesses buy preserved hides, not rotting ones. I urge everyone to salt and preserve hides within the required timeframe. Salted hides have value. Unsalted hides have no life, no longevity – who will take them?"

Crisis linked to Savar relocation

Industry leaders trace the origins of the current crisis to the relocation of tanneries from Hazaribagh to the Savar Tannery Industrial Estate.

The government compelled tannery owners to move after cutting gas and electricity supplies to Hazaribagh facilities in April 2017. However, industry representatives argue that the relocation took place before the Savar estate was fully prepared for operation.

The CETP, intended to ensure compliance with international environmental standards, has yet to function effectively, preventing Bangladesh from regaining access to major global markets.

As a result, many tannery operators reportedly faced financial distress and loan defaults, while environmental concerns shifted from the Buriganga River to the Dhaleshwari River.

Calls for market liberalisation

Khondaker Golam Moazzem, research Director at the Centre for Policy Dialogue, said the domestic market lacks the capacity to absorb the volume of hides generated annually during Eid-ul-Adha.

He urged the government to permit year-round exports of salted and wet-blue leather, arguing that broader market access would attract investment, increase competition and improve hide collection practices.

"If the market remains open throughout the year, new entrepreneurs will invest, competition will increase and quality management will improve," he told TBS.

Moazzem added that major leather-importing countries including China, Brazil, South Korea and India could become significant markets for Bangladeshi salted and wet-blue leather.

He also criticised the government's handling of the sector, saying current collection and preservation systems have repeatedly failed to address structural weaknesses.

Evidence of market disorder at Savar

A field visit to the Savar Tannery Industrial Estate revealed widespread irregularities in hide collection and transportation.

Despite government restrictions prohibiting the movement of hides from outside Dhaka into the capital for seven days after Eid, officials and traders acknowledged that large quantities entered Savar almost immediately.

Data from the Bangladesh Small and Cottage Industries Corporation show that 4,91,949 sacrificial animal hides entered the industrial estate between noon on Eid day and 11am the following day, compared with 3,54,752 during the same period last year.

By 6pm on 30 May, total arrivals had reached 5,27,875 hides, compared with 3,79,877 during the first three days of last year's Eid period.

Industry observers said the sharp increase suggests that a substantial volume of hides entered the estate without proper preservation.

Several traders also complained that they were compelled to accept low prices after unloading hides because they lacked the labour and transport capacity to remove them from trading depots.

Depot owners attributed market difficulties to cash shortages, a lack of government-backed financing and delayed payments within the supply chain.