Kerala Coir industry crisis: Exporters cancel 1,000 tonnes of orders over rising costs

ALAPPUZHA: The coir export sector in Kerala is facing a severe crisis driven by skyrocketing raw material prices and substantial pending dues from the government. Over the past two months, the prices of coir and coconut fibre sourced from Tamil Nadu have surged drastically under the pretext of a shortage, forcing local exporters to withdraw from international contracts.

In the last month alone, export firms have pulled out of foreign orders exceeding 1,000 tonnes of coir products. As international orders are secured four to five months in advance based on the prevailing raw material rates at that time, exporters are bound by fixed prices that cannot be adjusted to accommodate subsequent cost escalations. Consequently, many units have decided against accepting fresh international orders.

Coir products constitute approximately 50 percent of India's total coir-related exports, with major markets located in the United States, Australia, and various African nations. The ongoing raw material crisis has also severely impacted the production of coir geotextiles. Industry stakeholders warn that without immediate government intervention to curb price hikes, the export sector could face a complete shutdown, mirroring the stagnation currently witnessed in the domestic coir spinning sector.

The financial strain on the industry is reflected in the sharp increase in raw material costs since May. The price of coir has nearly doubled from Rs 40–42 per kilogram in May to the current rate of Rs 72–76 per kilogram. Similarly, the price of coconut fibre has climbed from Rs 24–27 per kilogram to Rs 44 per kilogram during the same period.

Adding to the sector's woes, government entities including the Kerala State Coir Corporation, Coirfed, and Foam Mattings India Limited are collectively owed Rs 74.5 crore for coir geotextiles supplied to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). These geotextiles were procured for the protection and conservation of ponds, roads, riverbanks, and canals. The Coir Corporation alone accounts for the largest share of the arrears, amounting to Rs 61 crore. Funding for raw materials under MGNREGS is shared between the Central Government, which contributes 75 percent, and the State Government, which covers the remaining 25 percent, both of which are currently lagging in clearance.

Highlighting potential solutions to navigate the ongoing distress, local entrepreneur Unni stated that the industry must procure fiber and coir well in advance by anticipating market fluctuations. He noted that boosting domestic production and securing immediate financial assistance from the government remain the primary ways forward to revive the struggling sector.