Inflation bites export of leather and leather goods

Exports of Bangladesh’s leather and leather goods fell by 0.67 per cent as demand for leather items dropped in the international market due to high inflation.

According to the Export Promotion Bureau (EPB), leather goods exports fell to $98.74 million from $99.41 million (Y-o-Y) in the first month of July 2024 FY.

The sector had set a target of $1.35 billion for leather and leather goods exports for the 2024 FY. Additionally, the exporters aimed to reach $10 billion in exports by 2030.

Syed Nasim Manzur, Managing Director of Apex Footwear Ltd, told The Daily Messenger, “As the world markets become unstable, the leather and leather goods export has suffered this year. Moreover, the largest market, the EU, is facing an inflation crisis. As a result, the export of leather and leather goods has fallen in adverse economic situations.”

He also said that the potential sector needs the policy support of the government. If the sector receives a subsidy, it might grow like the RMG (Ready-Made Garments) industry.

“We cannot ensure a water treatment plant for all the tanneries. If the government takes steps to provide financial support, the sector will boost the economy,” Belal Hossain, former president of the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), told The Daily Messenger.

In the last couple of years, 40 percent of the companies out of 155 have stopped exporting due to complaint issues, according to LFMEAB.

Moreover, there is no policy for rawhide collection. The government has yet to provide required facilities at the newly shifted Savar tannery.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), said that as the export missed the target, it will be a challenge for the sector to deal with the economic crisis.

Meanwhile, the export of leather and leather goods reached $1,245.18 million in 2022 FY, which was $941.67 million in 2021 FY, and $1,093 million in 2020.

Industry insiders think that if the export growth follows the trend, by the end of the fiscal year, it would reach $1.5 billion. Unfortunately, the industry could not reach the target due to inflation.

Bangladesh has 2 percent of the world's total livestock population. It can meet 1 percent of the leather demand in the world market.

The most promising markets for Bangladeshi leather, leather goods, and footwear products are Germany, Italy, France, the Netherlands, Spain, Russia, Brazil, Japan, China, the UK, Singapore, Poland, the US, Canada, and Taiwan, etc.

Previously, the export depended on wet blue leather. Wet blue leather is made by separating the fur from the skin and preserving it with salt. However, if raw leather can be further processed to produce finished goods, it can add up to 90% value to leather goods.