The state-run rubber producer has not been able to sell the item for the last one year and is now sitting on a stockpile of around 5,000 tonnes of rubber worth more than Tk 125 crore.
Local consumers, who used to buy rubber from the state enterprise — Bangladesh Forest Industries Development Corporation (BFIDC), have been importing the product due to the Corporation’s reluctance to sell at auction price.
“We have not been buying rubber from the BFIDC for the past six months as it doesn’t accept the bid prices,” said NC Saha, senior general manger of Gazi Group, one of the largest consumers of rubber.
Saha said they have no option but to import rubber or buy it from private producers to meet the demand.
Gazi Group that makes tyres consumes more than 2,000 tonnes of rubber a year.
BFIDC sells rubber through auctions, but for the last one year it has not been releasing the product at the auction price.
For example, bidders offered Tk 251 for a kilogram of rubber in an auction on January 13, but the Corporation set the price at Tk 265 defying the bid price, according to BFIDC data.
In another auction on May 12, bidders quoted Tk 245 per kg, but the Corporation finally set the price at Tk 260. Bidders also have to pay around 24 percent value added tax and other taxes in addition to the bid price.
Now the price has gone down to below Tk 200, yet there is no buyer. The highest bidding price was Tk 181 per kg yesterday, according to BFIDC.
Local consumers said, for the past one year the state-run firm has been setting prices in such a way that forced them to go for imports.
Bangladesh has imported rubber worth more than Tk 300 crore since May this year, mainly from Thailand, Sri Lanka and Vietnam, according to customs data.
“Import cost is lower now and the quality is also better than that of the locally produced rubber,” said Lutful Bari, director (operations) of Meghna Innova Rubber Company that makes tyre and bicycle for exports.
Bari said rubber was selling at $2,500 a tonne ($2.4/kg) in the international market yesterday, but the government-produced rubber cost more than $2,600 ($2.6/kg).
Rubber plantation is relatively new in Bangladesh. The government has been encouraging plantation in the hilly areas since 1980. Some 45,000 acres of land have so far been allotted to the BFIDC and 32,500 acres to private producers.
The government plantation accounts for nearly 65 percent of the total domestic production at 10,000 tonnes a year. The rest is produced by the private players.
Companies, including Gazi Tyre, Hossain Tyre, Rupsha Sandal, Meghna Innova Rubber, Siraj Cycle, Apex Group and many small-scale shoemakers, are the major consumers of the locally-produced rubber.
Local consumption is likely to rise further as some of these companies have started to manufacture automobile tyre in recent months.
On the other hand, private producers are doing good business as the big consumers are not buying from the government enterprise.
“We have no stock, but the price has gone down in recent months,” said Motahar Billah Chowdhury, a private rubber producer.
He said they are now selling rubber at Tk 170 a kg, down from Tk 250-Tk 260 in December last year.
“We cannot sell rubber due to the failure of our top management. They (some top officials) are working here on deputation and lack knowledge on the issue,” said a mid-level official of the state-owned enterprise.
Prashanto Bhushan Barua, chairman of the BFIDC, also admitted the huge rise in stocks in recent months but declined to comment on other issues.