Tom Hogarth

Deputy Editor

International Leather Maker

While we wait for final counts and further news from India, Pakistan and Bangladesh in the wake of this year’s Eid-ul-Azha festival, a wider picture of struggles and issues is becoming clear.

Reports so far, rather than focusing primarily on counts and breakdowns for hides and skins collected during the festival, have showcase problems across the board, some unique to Eid-ul-Azha and others that compound and highlight issues through the supply chains in these countries.

Those keeping an eye on analysis from theSauerReport will be well aware that supply chains across the world are butting up against the same problems. Finished leather orders are down and costs are up for everything from salt to electricity. As with the pandemic, many issues that were expected or hoped to die down after a few months have dragged on and the consequence is a tighter squeeze on margins and resources. Tanners and traders are in a difficult spot and, in the areas of the world where margins are already thin, casualties are piling up.

Burdens in Bangladesh

Beef consumption, festival demands and other factors may be increasing meat exports and slaughter numbers in many markets, but the fact is that there are more hides available than are needed for current finished leather orders. The Bangladesh Tanners Association (BTA) has lowered its target for hide purchases by one million pieces for this year’s Eid-ul-Azha and the causes are plain: demand for leather is down and so are exports for leather products. Exports of leather might be up on targets and year-on-year, but a lack of environmental compliance among a number of manufacturers is continuing to lock tanners out of premium markets and price points.

Unlike the Sialkot Tannery Zone in Pakistan (see ILM May/June 2024 for more), the Savar Tannery Industrial State does not appear to have the force of a determined private industry behind it and, while some leading businesses in Bangladesh have set up their own treatment solutions to meet standards and requirements, the remaining tanners are left to flounder, unable to sell at the prices they’d like. This has been passed on to traders, who now report that prices fixed by the government have been flouted because tanners say they simply can’t afford it.

Shaheen Ahmed, President of the Bangladesh Tanners Association, said: “Only a few tanners in Bangladesh are fetching a good price for processed leather, as they adhere to the environmental standards required by international buyers.”

Problems in Pakistan

Meanwhile, in Pakistan, despite the progress at Sialkot and an overall greater matching of global environmental standards for leather production, hides and skins collected from Eid-ul-Azha are expected to be down for 2024 in the overall ratio for the year (normally making up 20% of the total). Charities and religious and political organisations in the country also report that this revenue stream, which they have traditionally relied heavily on, has almost disappeared due to a drop in prices and demand for raw materials.

It’s no surprise. While tanners in Bangladesh may be immediately concerned with the environmental impact and the subsequent impact on their ability to sell leather, tanners around the world with the highest sustainability standards are still facing issues. Pakistani tanners are also currently dealing with unhelpful changes to export income taxes in the new Budget for 2024-25, marking just one more pressure for the sector on top of the myriad others.

What can be done?

With growing pressures from all angles (legislation, costs, consumers etc.), it is tempting for businesses to batten down the hatches and do their best to ride out the storm. In the current climate, this could be a mistake. Things are changing globally too quickly for the leather sector to stay idle. Sustainability legislation is increasing and the global supply chain means that, while updates such as the upcoming EUDR legislation might seem like a distant problem, they have far reaching and severe consequences. It is all too easy to fall behind. Tanners must continue to strategically invest, updating and refining their production and business to meet the requirements of customers and consumers. Whether it’s down to carbon footprint, environmental compliance, traceability or just quality, it’s simply easier to find an alternative product than a new customer.

Leather businesses are not islands, but points in a complex and varied supply chain that shares the same challenges and goals. If it’s going to survive the next decade, collaboration and innovation must be at the top of the list of priorities.