Rise in Chinese import of coir raw materials hits traditional exports

Written by Rajesh Ravi | Kochi | Updated: May 31 2011, 02:09am hrs
COIR trade with China is slowly but steadily transforming the industry dynamics, with the export of non-traditional items like coir raw materials and tufted mats increasing at the expense of traditional products like mats and rugs.

Small and medium enterprises which essentially depend on the traditional handloom sector is facing a decline with the export demand shifting to machine tufted mats and other products. The trade is also slowly shifting from its traditional base of Kerala to the neigh-bouring states of Tamil Nadu and Karnataka.

With South Asian neighbours relentlessly lifting good volumes of coir raw materials from India, the slump in exports to traditional markets of US and European countries has been somewhat compensated off late.

India's coir exports for financial year 2010-11 stood at R807 crore, compared to R804 crore of exports during 2009-10, coir board sources said.

While the traditional products like mats, carpets and rugs have not shown much increase, non-traditional items like tufted mats and coir pith have recorded huge growth. During 2009-10, coir exports touched 2,94,508.05 tonne valued at R 804 crore, registering a growth of 47.31% in terms of volume and 25.64 % in value terms over the financial year 2008-09.

In a span of two year, nine units have been set up in Kerala as independent or joint venture units to produce runner mats using coir and rubber, a coir board official said. These manufacturing units have a share of almost a third of the total coir exports from the nation.

The disturbing factor is that the exports of raw materials like fibre, pith and rope are continuously on the increase creating problems for the domestic industry. Huge quantities of coconut husk available in the Malabar Region, which accounted for 60% of the states coconut production, was presently being procured by Tamil Nadu which exported substantial quantities of fibre and coir pith, particularly to China, resulting in cost escalation, sources said.

The industry is facing shortage of raw material and skilled labour and the incremental cost increase on inputs is eroding the competitiveness of Indian products, coir board sources said. Coir industry in Kerala needs around two lakh tonne of coir fibre annually as against production of 50,000 tonne within the state. The R2,000 crore industry, which employs more than five lakh workers, is set for a crisis with volumes shrinking in major exports markets like US and Europe. US buyers have been the major supporters of Indian coir products and problems in that country have meant fewer exports. Default on payment by some buyers and the fluctuations in major currencies have added to the problem, a major exporter told FE.

New markets are not responding enough to balance the loss from the US and European market, Coir Shippers Council sources said. It was the fancy of the US buyers who changed their carpets and rugs frequently that kept us going. Other markets are conservative in their approach and volumes may be hard to come, he added.

Internally, the coir sector is faced with 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. There are more than 250 coir and coir products exporters and nearly 10,000 small-scale coir manufacturers registered with the coir board engaged in the production of alleppey coir.