Tapping the coconut coir fibre industrys vast potential

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Tapping the coconut coir fibre industrys vast potential Powered By Docstoc
					4                                                                                                                       OPINION                                                                  The Nation Economist Sunday February 1, 2009




    Export competitiveness and high inflation
        We are now witnessing a                                                                                                                                                   Root cause- inflation                             the money supply was regu-
      decline in our export earn-                                                                                                                                                    We have to go to the root                      lated through the Currency
      ings due to the global fall in                                                                                                                                              cause which is the high infla-                    Board system which lacked
      demand. It has affected both                                                                                                                                                tion relative to our competi-                                               .
                                                                                                                                                                                                                                    the power to print money The
      commodity exports as well                                                                                                                                                   tors and our markets. So we                       money supply varied with
      as manufactured goods. We                                                                                                                                                   must bring down inflation.                        the foreign exchange Reserve
      depend on a narrow range                                                                                                                                                    Inflation no doubt is coming                      position- with net inflows
      of exports- primary com-                                                                                                                                                    down due to the fall in world                     expanding and net outflows
      modities like tea, rubber,                                                                                                                                                  prices of practically every                       shrinking the money supply    .
      coconut, and minor export                                                                                                                                                   product. If our consumers                         So there were no inflation or
      crops like cinnamon as well               It will have to close shop or              of inflation. As for our ex-                ports, particularly primary                                                                  current account deficits in
                                                curtail wages and retrench                 port markets, these countries               commodity exports. Has the                 have not had the full benefit
      as garment exports, and a                                                                                                                                                   of such declines in world                         the balance of payments. But
      variety of similar manu-                  workers. These are hard                    have had very low inflation                 situation changed now?                                                                       all that changed with the es-
                                                economic realities, and the                well below 5%. How then will                  The Central Bank has                     prices, it is because of our
      factured goods like ceramic                                                                                                                                                 internal taxes like tariffs,                      tablishment of the Central
     products. The Central Bank                 sooner the workers realise                 our exports manage to com-                  pegged the Rupee to a fixed                                                                  Bank with the power to print
                                                this the better. The entrepre-             pete with those of compet-                  value in terms of the US dol-              cesses and levies. In the pres-
     has advised exporters to im-                                                                                                                                                 ent global crisis, each coun-                     money by subscribing to Trea-
     prove productivity rather                  neurs’ ability to change work-             ing countries? The answer is                lar, and it has intervened in                                                                sury securities and expand-
                                                ing methods and practices to               simple. It is through depre-                the foreign exchange market                try seems to be jockeying for
     than depend on a deprecia-                                                                                                                                                   comparative cost advantage,                       ing Reserve Money to enable
     tion of the currency. But can              improve productivity are of-               ciation of the rupee to com-                to preserve this value, when-                                                                the commercial banks also to
                                                ten stymied by trade union                 pensate for the differential                ever there was upward or                   and resorting to competitive
     productivity be improved?                                                                                                                                                    depreciation of their curren-                     take up such securities, thus
        The worker productivity                 protests. So this business of              inflation rates.                            downward pressure. But in                                                                    expanding the money supply
                                                improving worker productiv-                  In the early 1950s, the In-               the process the Central Bank               cies. India and Kenya depre-
     of our tea plantations is half                                                                                                                                               ciated their currencies by                        several fold, which is called
     that of Kenya, and much less               ity is mere wishful thinking.              dian Rupee, the Pakistan                    has lost a significant portion                                                               the ‘money multiplier’.
                                                On the other hand it is impos-             Rupee, and the Ceylon Rupee                 of our Foreign Reserves, and               about 20% and in Russia our
     than that of South India.                                                                                                                                                    tea buyer there is struggling                       So budget deficits increased
     Nor can the management                     sible to reduce wages or even              had the same parity value in                most independent analysts                                                                    both in magnitude and as a
                                                resist the wage demands of                 relation to the US dollar. But              in the private sector think                to expand
     introduce changes because                                                                                                                                                      What is the primary cause                       ratio of the GDP. The Fiscal
     of the strong trade unions.                the workers, for they are jus-             what is the situation today?                that the Foreign Reserves                                                                    Management (Responsibili-
                                                tified by the increase in the              One US dollar costs Indian                  are inadequate to service im-              for our higher relative infla-
     The over-protective Labour                                                                                                                                                   tion over other countries? It                     ty) Act which was introduced
     Laws are biased too much                   cost of living.                            Rupees 40 and Pakistan Ru-                  ports, and settle foreign debt                                                               some years ago limited the
                                                                                           pees 60. But the dollar costs               obligations falling due for re-            was not so always. Between
     in favour of the workers.                  Depreciation of the rupee                                                                                                         1950 and 1960- a period of ten                    budget deficits to 5% of the
     They are based on the false                                                           Rs 114 in terms of the Sri                  payment.                                                                                     GDP and the outstanding
                                                  Nobody stoops to ask the                 Lankan Rupee. How come?                       The past depreciations                   years, the price level change
     Marxist concept that the                                                                                                                                                     was only 5%. The SLFP gov-                        National Debt to 85% of the
                                                question why the cost of liv-              Because the Central Bank                    have not helped to preserve
     capitalists are exploiting the                                                                                                                                               ernments introduced deficit                       GDP. But this law has been
                                                ing and prices keep on rising,             has continuously devalued                   export competitiveness on a
     workers, and that the role of                                                                                                                                                finance. Prior to that the gov-                   flouted every year and it is
                                                and why they are so much                   or depreciated the rupee                    permanent basis. This is be-
     trade unions is to check such                                                                                                                                                ernment ran budget deficits,                      unlikely to be ever followed.
                                                higher than in countries                   particularly when the coun-                 cause the inflation has con-
     exploitation. But now it is                                                                                                                                                  but only to the extent of the                     So the public will have to
                                                which compete with our ex-                 try sought IMF assistance to                tinued unabated and eroded
     recognised that in the long                                                                                                                                                  foreign aid utilised and no                       live with higher and higher
                                                ports in global markets. India             cope with a shortage in For-                once again the competitive-
     run, the interests of the capi-                                                                                                                                              more. But deficit finance, in-                    inflation and more and more
                                                has had single digit inflation             eign Reserves. But doesn’t                  ness of the exports requiring
     talists and the workers, con-                                                                                                                                                volved funding the budget                         depreciation of the Rupee,
                                                for the last several decades.              depreciation itself raise pric-             another bout of deprecia-
     verge.                                                                                                                                                                       deficits with printed money                       until the people realise that
                                                Even our other competing                   es? Yes indeed, but then this               tion. So depreciation is not
       If the firm becomes uncom-                                                                                                                                                 or borrowing from the Central                     populist programmes should
                                                countries like Thailand, Ma-               was the way to preserve the                 the answer. What then is the
     petitive and loses money, it                                                                                                                                                 Bank and the banking system.                      not be funded through money
                                                laysia, Vietnam and China                  competitiveness of our ex-                  answer?
     cannot carry on indefinitely.                                                                                                                                                During the colonial period,                       printing.
                                                have had much lower rates




   Tapping the coconut coir fibre
     industry’s vast potential 5
By Dr.N. Yogaratnam
Chairman, Tree Crops Agro             Leading coconut growing countries in the Asia                                World exports of coir and coir products: 2002 – 2006.                                  Exports of coir products by
Consultants
                                        and Pacific region Extent and Production                                        Country	            2002	       2003	     2004	     2005	    2006                      destination from India
                                                                                                                        INDIA               49,264      70,550    78,285    80,570   84,511



T
          he coconut palm Country	 	                       Extent	 	        	         Production                        Coir yarn           11,698      12,948    11,311    9,893    9,824       Exports of coir yarn, volume and FOB value, 2002 – 2006
          (Cocos nucifera L.)        	          	          (‘000	ha)	       	         (‘000	nut	equivalent)             Coir mattings       9,020       4,786     4,260     3,081    3,479
                                                                                                                                                                                                 Destination	            2002	       2003	         2004	        2005	      2006
          is known as the ‘tree 	               	          2005	 2006	 Rank	          2005	         2006											Rank Coir mats           23,766      47,643    57,205    62,419   66,953
                                                                                                                                                                                                 A . Volume in MT        11,698      12,948        11,311       9,893      9,842
          of life’ due to it’s mul- 1.Indonesia                                                                         Coir rope           357         310       283       222      135
                                                           3,894 3,818 1              16,492,000 14,984,000 1 Rugs & carpets                1,517       1,203     1,931     1,638    414             Europe              7,426       8,951         7,940        6,020      6,367
titude of uses. In fact, each 2.Philippines                3,243 3,243 2              14,056,000 12,600,000 3 Rubberized coir                                                                        U.S.A               2,399       2,180         1,944        1,821      1,782
component of the tree is use- 3.India                                                                                                       544         499       451       480      727
                                                           1,935 1,935 3              12,832,900 12,832,900 2 Others                        2,362       3,161     2,844     2,837    2,979           Other countries     1,873       1,817         1,427        2,052      1,675
ful for human life as they could 4.Sri Lanka               395      395     4         2,785,000     2,869,000        4 INDONESIA                                                                 B . Value US$ ‘000      11,698      7,252         7,631        6,797      7,071
be used to produce a range of 5.Papua N.G.                                                                                                  191         432       2,247     3,550    3,450
                                                           260      266     5         812,500      812,500           6 MALAYSIA             2,778       18,861    407       970      4,381           Indian Rs.’000      306,131     350,997       345,914      309,290    319,471
products and by-products.            6.Thailand            344      226     6         1,204,000    1,248,000         5 PHILIPPINES          887         896       5,260     3,288    4,967
                                     7.Vietnam             132      133     7         677,400      681,000           7 SRI LANKA            60,944      50,950    62,033    54,513   72,915      Exports of coir mattings, volume and FOB value: 002 – 2006
Distribution                         8.Malaysia            130      115     8         391,000      402,000           8 Mattress fiber       33,802      23,793    38,355    23,646   39,231      A . Volume in MT        9,020       4,786         4,260        3,081      3,479
   Coconut cultivation is con- 9.Vanuatu                   96       96      9         300,000      86,004            10 Bristle fiber       3,255       3,196     3,014     3,211    4,406           Europe              2,945       3,124         2,500        1,872      2,044
centrated in seven countries; 10.Samoa                     93       93      10        180,000      180,000           9 Coir yarn            796         1,224     1,357     1,301    1,644           U.S.A               948         1,024         1,281        845        1,006
Indonesia, Philippines, India,
                                                                                                                        Twisted fiber       18,453      19,291    15,868    23,028   24,565

                                                                                                        1
Sri Lanka, Papua New Guinea, Source : Asia and Pacific Coconut Community (APCC ), and FAO                                                                                                            Other countries     5,127       638           479          364        429
                                                                                                                        Coir twine          4,638       3,440     3,439     3,327    3,069       B . Value US$ ‘000      6,277       6,331         6,317        4,283      5,177
and Vietnam, accounting for
                                                                                                                        THAILAND            18,617      30,789    44,625    34,236   34,239          Indian Rs.’000      304,696     306,422       286,350      194,916    233,880
about 80% of the world share.
                                                                                                                        Other Countries     300         450       450       400      400
A list of top ten leading co-            Methods have been devel- end-products.                                         Total               132,981     172,928 193,307 177,527      204,863     Exports of coir mats, volume and FOB value: 002 – 2006
conut cultivating countries oped to use rubberised mat-                                                                 Source : Coconut Statistical Year Book 2006, APCC.
along with their annual pro- tress fibre and produce good Exports from India by
                                                                                                                                                                                                 A . Volume in MT       23,766       47,643       57,205      62,419       66,943
duction in years 2005 and 2006 quality mattresses and cush- destination
                                                                                                                                                                                                     Europe             2,520        20,939       23,412      25,661       27,748
is given in Table 1.                                                                                                     fast emerging economy, Chi- in India and Sri

                                                                                                                                                                                    4
                                       ions. Loosely woven mattress              In India, coconut coir fibre, na, besides other developed Lanka.                                                    U.S.A              15,987       20,681       26,836      29,664       29,905
    Indonesia by virtue of the fibre yarn is now being con-
                                                                                                                                                                                                     Other countries    5,259        6,023        6,957       7,094        9,290
fact, it has the largest land verted to mats, and these are yarn and their products are country’s interest towards                                                 • Logistical sup-
                                                                                                                                                                                                 B . Value US$ ‘000     38,542       58,162       77,559      83,797       93,941
extent under cultivation, is being exported as Geo-textile produced primarily in the coir as an environmentally port for exports
                                                                                                                                                                                                     Indian Rs.’000     2,414,345    2,815,056    3,515,773   3,812,769    4,244,247
also the leader in production, to restore soil erosion and South Western state, where friendly product, acted as a such as sea and
closely followed by India(2), landscaping in South Asian coir has been a major industry major driving force for this air freight services, insur-                                                                                                        Source: Coir Board of India.
Philippines(3), Sri Lanka(4), countries like Korea and Ja- for many centuries. Coir has sector. As a result, export ance etc are well established
and Thailand(5).                                                              been traditionally processed of coir in raw form in 2007, and comparatively cheaper.
                                       pan.                                   in four labour-intensive steps: registered a growth of 24%
   Sri Lanka, being the 4th              Coir dust, considered as a                                                                                                • Quality and price con-      Exports of coconut fiber products by Sri Lanka, 2006 / 2007
leading producer, recorded waste material from the brown Retting of husks, extracting to 84,810 mt as compared to scious consumers and market-
a production of 2869 million fibre industry has been a seri- of the fibre, formation of yarn the previous year’s account ers the world over are turning
                                                      ,
nuts in 2006 as against 2785 ous environmental concern and weaving.                                                      of 68,200 mt. Meanwhile, the towards India and Sri Lanka                Items	          	               2006	               	              2007
million in the previous year, for decades due to disposal                                                                total earnings from coir and for a range of coir products               Fiber products Volume ( mt )    Value ( US$ ‘000 ) Volume ( mt ) Value    ( US$ ‘000 )
an increase of 3%.                                                               India is now known to be                                                                                        1.             Mattress fiber   39,231            8,425          54,264   13,736
                                       problems. Technology is now the largest exporter of coco- coir products amounted to and services which utilises                                           2.             Bristle fiber    4,406             1,721          7,683    2,853
                                       available to reduce the volume nut product in the world, with 10,118 million Sri Lanka ru- the comparative advantages                                     3.             Twisted fiber    24,656            8,016          22,863   7,968
Coir Products                          of coir dust by mechanical bri-                                                   pees in 2006.                          in these countries.
   Coconut husk is a unique quetting. These briquettes are products reaching more than                                                                             • Quality certification of                   Sub total        68,202            18,162         84,810   24,561
raw material for extraction presently exported as “Coco- forty five countries. Exports Initiatives                                                              exports is provided for export
of coir fibre. Coir fibre is ex- peat” to various countries for over the last five years are giv-                                                                                                Finished	Products	(	Fiber)
                                                                                                                           Sri Lanka has taken a num- consignments as required by
tracted from monocarp of 1” use as a soil ameliorant and en by destination in Table 5.                                   ber of initiatives to strength- the importers.
– 1 ¾” thick coconut husk. It to retain moisture mainly in Sri Lanka                                                                                               • The utilisation of fibre    1. Coir yarn                            1,664         1,025     1,737         1,036
                                                                                                                         en the coir industry in the
is lingo-cellulosic and has a horticultural activities.                                                                                                         dust for several purposes with   2. Coir twine                           3,069         2,737     3,352         3,224
                                                                                                                                    .
                                                                                                                         country Large numbers of
great demand world over due                                                      Table 6, indicates the fibre mills were provided with fi- financial returns is a fine ex-                       3. Tawashi brushes (No’s)               29,385,393 329          30,801,867    3,379
to its quality characteristics         Production                             products and finished prod- nancial and technological ample of coconut based rural                                 4. Coir brooms and brushes (No’s) 19,385,393 13,147             19,649,272    13,523
such as strength, resiliency       ,                                          ucts ( Fibre ) exported by Sri assistances for efficiency industry, that was saddled                               5. Rubberised coir pads (No’s)          356,656       1,876     270,835       2,053
                                         Production of coir fibre and                                                                                                                            6. Coir mats and rugs (No’s)            1,646,461 8,137         1,241,963     6,991
heat and dampness resistance coir products in India in years Lanka in years 2006 & 2007. improvement and value ad- with a waste disposal prob-
and microbial degradation. 2001 to 2006 are indicated in Sri Lanka, is well recognised dition. Furthermore, to im- lem, transforming the waste                                                   7. Coir matting (m)                     38,866        160       2,856         23
Basically coir fibre is broadly Tables 2 and 3.
           ,                                                                  in the global markets for coir prove the coir yarn industry, into a money spinner through                          8. Coir fiber pith (mt)                 98,619        25,042    96,965        24,969
classified into two different                                                 fibre products. Demand for the Government of Sri Lanka innovation.                                                 9. Husk chips ( mt )                    6,337         2,314     8,938         3,737
categories; bristles and mat- Exports                                         these products grew over the has distributed large number                            • Acceptance of the policy    10.Moulded coir products for horticulture (mt) 4,631 2,067      10,433        6,190
tress fibre.                                                                  past few years due to increas-                                                    of export-led growth by the      11.Coir Geo-textiles (mt)               2,071         1,700     3,574         3,014
                                         Leading exporters of coir ing concern over environ- of yarn machines along with                                                                            Total Value                                        61,679                  68,139
   The bristle fibre enjoys a                                                                                                                                   governments of India and Sri
                                       and coir products from year mentally friendly products, raw materials and supportive                                                                      Source : APCC and FAO
good demand as it is the raw
                                       2002 to 2006 are given in Table and demand driven by rapid                        services to ensure sustain- Lanka, together with attrac-
material for a range of high                                                                                                                                    tive concessions and incen-
                                       4. India and Sri Lanka have growth of emerging markets ability of the industry Among                         .
value end-products. India and
                                       been the leaders in this busi- especially China.                                  the coir products, coir twine, tives to both exports and in-                         • Available sci-                 Disputable Factors
                                                                                                                                                                                                       6
Sri Lanka is well known in
                                       ness due to their advanced                                                        geo-textiles and moulded coir vestments has resulted in the                        entific   technolo-
the world market for                                                             Conducive market climate products registered 9%, 73% blossoming of exports.                                                                                      • The present global econom-
                                           technological innovations, over the year 2007,                                                                                                                   gies meet with the
its high quality bristle                                                                                                 and 125 % export growth in                • The Boards of Investment                                                  ic turmoil may have an adverse
                                           consistency in quality and kept the coir fibre

                                                                                                        3
                                                                                                                                                                                                            stipulated quality

                                2
fibre.
                                           comparatively        cheaper market active. The                               volume, respectively as com- established for the above                             standards in order
                                                                                                                                                                                                                                               impact on such industries due
                                                                                                                         pared to year 2006.                    purposes, offers several in-                                                   to decline in demand from the
                                                                                                                                                                centives and tax concessions     to ensure that the end-prod-
                                                                                                                                                                                                                                               developed countries, although
                                                                                                                         Favourable factors in                  on import of machinery and       ucts are competitive in global
                                                                                                                                                                                                                                               it is expected that the global re-
  India’s production of coir fiber:               India’s production of coir products, 2001/2002 India and Sri Lanka                                            related accessories, tax holi-   markets.
                                                                                                                                                                                                                                               cession is likely to re-bound by
                                                                                                                                                                days etc that are conducive        • Trained man power of
  2001/2002 – 2005/2006 in MT                     – 2005/2006 in MT.                                                                                                                                                                           end 2009 or early 2010.
                                                                                                                           •          Profitability of the for foreign investment/ col-          high caliber, in line with in-
                                                  Year	           Coir	yarn	 Coir	mattings	&	coir	mats	 Coir	rope                                                                                                                                 •Moisture reduction in wet
                                                                                                                         coir fibre based industry, like laboration in such business             ternational standards, are
 Year	        Brown	Fibre	 White	Fibre	 Total     2001 – 2002 236,900         72,575                     52,700                                                                                                                                fibre dust from 85% to 15%,
                                                                                                                         any other manufacturing in- ventures.                                   available.
 2001 – 2002 247,600        121,800     369,400   2002 – 2003 226,800         75,750                     50,000                                                                                                                                although has considerably
                                                                                                                         dustry, rests heavily on the              • Investment by the govern-     • Governmental support is
 2002 – 2003 241,700        122,000     363,700   2003 – 2004 232,500         77,900                     50,000                                                                                                                                reduced the bulkiness of the
                                                                                                                         movement of the global mar- ment in R&D activities on                   provided for value addition
 2003 – 2004 252,000        112,000     364,000   2004 – 2005 245,500         78,000                     50,000                                                                                                                                end-products, yet in terms of
                                                                                                                         ket and production costs. La- new ventures, value addition              to plantation produces which
 2004 – 2005 293,000        92,000      385,000   2005 - 2006     280,000     98,000                     57,000                                                                                                                                export potential, they are still
                                                                                                                         bour as a factor of production etc, are reasonably high.                includes coconut coir fibre
 2005 - 2006 314,000        96,000      410,000   Source : Coir Board of India.                                                                                                                                                                bulky  .
                                                                                                                         is both cheap and abundant                                              based industries.

				
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