It has been a mixed year for the coir sector with exports declining in the traditional markets, while new entrants like China and Korea were buying more coir raw materials.
Sale of rugs, carpets and mats declined in the traditional markets of the US and Europe while exports to new markets like Latin America didn?t show any appreciable increase.
With China and Korea continuously consuming enormous volumes of curled coir and fibre from India , the domestic manufacturing sector has been facing a shortage of raw materials. However, sustained export of raw materials has also helped in sustaining the export performance of the nation.
The drawback of the Indian coir exports industry is its over-dependence on the US and European buyers.
According to estimates of the Coir board, the US are the single largest market for Indian coir products, accounting for more than 37% of the total export.
European countries together account for more than 41% of the total exports, while the remaining 22% was shared by a number of countries.
Even though the domestic market has a bigger revenue share, the market is less evolved, traditional and brings lesser per-unit realisation.
?New markets are nor responding enough to balance the loss from the US and European market,? KC Eapen, secretary of the Coir Shippers Council told FE.
?Other markets are conservative in their approach and volumes may be hard to come,? he added.
The Rs 2,000-crore traditional coir industry, which employs more than five lakh workers, is set for a crisis with volumes shrinking in major exports markets like the US and Europe.
?It was the fancy of the US buyers who changed their carpets and rugs frequently that kept us going,? he added.
Decreasing credit lines in major markets, default of payment and fluctuations of the rupee against the dollar have severely impacted the export sector.
The only silverlining in the otherwise depressed sector has been the increase in exports of curled coir and fibre to China and Korea.
Figures provided by the state-run Coir Board for the period April- August 2009-10 reveals that export of curled coir has gone up by 143% in volume and 287% in value. Coir fibre exports have grown by 240% in volume and 226 % in value during the same period.
Coir fibre exports to China in May increased by 700% in volume and 520% in value. During the month of April, exports to China showed an increase of 600% in volume and 378% in value.
The increasing trend in the export of coir fibre to China may result in serious problems for the indigenous industry. It has already pushed up prices of coir fibre to abnormal levels.
China and Korea mainly imports lesser quality fibre from India and this has adverse impact on the availability of quality coir fibre in Indian markets.
Internally, the coir sector faces rising input costs for labour, coir fibre, transport, land and electricity. The structure of the sector, where bulk of the value addition is done by small intermediaries, also stands against it.
The supply chain adds to the cost and the vocal trade unions make negotiations impossible.