Global crisis may dent prospects of coir industry

The slowdown in exports on account of a host of factors has put the coir industry on tenterhooks, especially when the sector is gearing up to meet the demand for the new season starting from June.

Exporters say that there has been a general reduction in orders by about 10-20 per cent, but the industry managed with additional export orders generated last year leading to an increase in turnovers of many coir manufacturing firms.

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“But we are keeping our fingers crossed as the current global situation is likely to hinder export orders this year,” Mahadevan Pavithran, Managing Director, Travancore Cocotufts told BusinessLine.

Varied factors

He attributed the subdued demand to a host of factors which included the Covid lockdown in many Chinese ports leading to container shortage, the Russia-Ukraine war affecting global orders, rising freight costs, the Sri Lankan crisis etc.

All these have hit coir exports in a big way, leading to a drop in demandfrom overseas buyers. The Covid situation in China has hit the availability of containers that led to a delay in shipments to the US and European markets.

The rising freight cost is also posing a problem where the rates to South American destinations zoomed to $14,000, while the rates to North American markets hovered iaround $9,000-12,000. Besides, there is a minimum of 2-3 months dealy in cargo reaching the final destination forcing buyers to postpone their orders for future shipments, he said.

Sri Lankan crisis

Besides, the slowdown in Colombo Port following the political and economic crisis in Sri Lanka has added to the woes of exporters, leading to a delay in transshipment of cargo to the final destinations. If the situation continues, he warned that the coir industry would be in trouble especially in the ensuing season beginning June.

John Chacko, President of the Federation of Indian Coir Exporters Association, said the rising freight cost has made an impact on the landed cost of products in global markets. Earlier, the freight cost was only 10-15 per cent of the product cost and now it is over 50 per cent, depending on the destination.

With the rising freight cost, buyers would be reluctant to bring new products or pass on the increased freight cost to customers etc. Hence, there could be a tendency to look for alternatives by replacing coir products. “Right now, the market is reasonably stable. But, the slowdown is likely to have its impact in the second half of the year,” he added.

Arjun Mahadevan, CEO, Travancore Cocotuft, said that the delay in getting the US visas is also posing a problem for many exporters. With the opening up of the markets, it is high time to carry out one-on-one meetings with clients for business promotion. But the authorities are citing huge backlog of applications as the reason for the delay in getting timely visas.

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