CLUSTER DEVELOPMENT PROGRAMME, INDIA

DIAGNOSTIC STUDY

SME

THE COIR CLUSTER

KOLLAM, KERALA

BY

MANIKANDAN PILLAI T.C., COIR BOARD

DEVELOPED UNDER

THE CLUSTER DEVELOPMENT AGENT TRAINING

PROGRAMME OF UNIDO CDP, NEW DELHI

&

THE ENTREPRENEURSHIP DEVELOPMENT INSTITUTE

OF INDIA (EDII), AHEMEDABAD

YEAR 2001

The views expressed in the Diagnostic Studies are those of the

authors and should not be attributed to UNIDO or to the

institutions they may represent.

KOLLAM COIR CLUSTER

CONTENTS

NO. TOPIC PAGE

1.

INTRODUCTION

1.1 About The Coir Industry 1.2 Historical Perspective 1.3 Status of Coconut Production 1.4 Location of Coir Industry 1.5 Socio-Economic Perspective 1.6 About the Kollam Cluster

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2.

ENVIRONMENTAL PERSPECTIVE

2.1 A Natural Fibre 2.2 Retting-A Cause Of Pollution

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3.

ANALYSIS OF THE PRODUCTION PROCESS

3.1 Making of Coir Fibre 3.2 Availability and Consumption of Husk and Fibre 3.3 Scope for Value Addition 3.4 Marketing

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4.

CORE CLUSTER PLAYERS

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KOLLAM COIR CLUSTER

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ANALYSIS OF BUSINESS OPERATIONS

5.1 Inefficient Industrial Associations 5.2 Cost Reduction Necessary For Increasing Exports 5.3 Low Productivity 5.4 Seasonal Nature Of Employment 5.5 Managing Processing Wastes 5.6 Mistrust Among Coir Co-Operative Societies 5.7 Low Wage Rate In Other States 5.8 Threat Due To Land-Use Regulation 5.9 Scarcity Of Raw Material 5.10 Labour 5.11 Product Pricing 5.12 Export Market 5.13 Limited Role Of Financial Institutions 5.14 Lack Of Associated Behavior 5.15 Lack Of Professional Quality Management

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6.

ANALYSIS OF BUSINESS OPERATIONS

6.1 Coir Project Office Of The State Government 6.2 Central Coir Research Institute, Alleppey 6.3 Central Institute Of Coir Technology, Banglore 6.4 National Coir Training And Design Centre, Alleppey 6.5 Regional Coir Training And Development Centres At

Thanjavur, Arisikere, Rajamundry And Bhubaneswer 6.6 Coirfed 6.7 Small Scale Coir Producers Associations 6.8 State Coir Corporations Of Kerala And Karnataka

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KOLLAM COIR CLUSTER

7.

SWOT ANALYSIS OF THE CLUSTER • Strengths • Weakness • Opportunities • Threats

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8.

RECOMMENDATIONS

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9.

PROPOSED ACTION PLAN FOR THE CLUSTER

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10.

ANNEXURES

22

KOLLAM COIR CLUSTER

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1. INTRODUCTION 1.1 ABOUT THE COIR INDUSTRY The Small Scale Industries have been assigned an important role in India’s development plans. Their development is one of the key strategies adopted by the Government, as they are a chief source of employment and income generation. The Coir Industry alone provides employment to about 5 lacs of people especially women, and earns foreign exchange to the tune of Rs. 300 crores per annum. It is a highly labour intensive industry but the productivity levels in the industry are so low that the average earning of the workers, are insufficient to maintain even a subsistence standard of living. A rise in cost factors in the recent years has impacted the cost of production considerably, without any corresponding increase in productivity. On the demand side, Coir Products appear to be facing tremendous global competition from other hard-fibres. Also, price fluctuations seem to have become a perennial feature of the coir-markets. Marketing therefore has become a major problem in recent years and the future prospects of the industry depend on the expansion of domestic as well as the foreign markets. However, the industry in the developing economies is charactrised by insufficient marketing, which has added to its already mounting problems. Firstly, the manufacturers of the original and the major product sector of the coir-household have a very low direct access to the markets. The Traders and Exporters control the entire marketing business due to their higher financial strength and procure goods only on job-work basis. The actual producers find it beyond their own means to hold the products for a long time before marketing it directly. Due to a limited access to market, the traditional yarn and other product manufacturers are always engaged in price-wars and are even found to compromise on quality aspects in order to make their products cheaper. Secondly, the anti-pollution awareness has increased and the enforcements from the Government are a threat to the industry, especially due to the polluting nature of the Retting process. Another major concern is the amount of drudgery involved in the processes of retting and Fibre Extraction. Due to the insufficient technological upgradation, the manufacturers are unable to make these processes less labour intensive and environment friendly. As the interests of each sector in the Coir industry are different, therefore it does not seem feasible to organize them under the same umbrella. The smaller women groups with active intermediaries will have to be identified in order to initiate small yet productive activities. The untapped raw material potential in this cluster can be productively utilized with an active intervention from these groups. The two major NGOs in this cluster with wide network can contribute quite a lot in this respect. 1.2 HISTORICAL PERSPECTIVE Coir Industry in India has a very long history. Even the 11th Century A.D. Arab writers have mentioned about Coir and referred to the use of this material for ship’s cables, fenders, rigging etc. During the Thirteenth century, there was an evidence of coir yarn being used for ship-building in the Persian Gulf.

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The remarkable international correspondent of ancient times, Marco Polo, was impressed by its usage there and later on visited the land where Arabs bought their coir and recorded as to how it was made out of a fibre extracted from the coconut husk. In fact till the early decades of the last century the industrial development in Kerala was mostly centered around coconuts. Production of coir yarn and fibre quietly spread through the coastal belt of Travancore utilising the abundant and cheap labour that was available. Coir weaving industry was localised in and around Alleppey. Coir industry is one of the traditional industries of Kerala. This industry is described to be traditional, not merely in reference to its historical traditions but also in reference to their traditional technology base that continues to be handcrafted. 1.3 STATUS OF COCONUT PRODUCTION Coir is drawn from the husk of coconut and the industry therefore tends to be located in the coconut growing areas. World production of coconut is 54 billion nuts from an area of 11.6 million hectares. More than 75% of this is contributed by the four major players namely India, Indonesia, Philippines and Sri Lanka.

In the recent years, India has attained the top position amongst the coconut producing countries with a production of 13,088 million nuts overtaking Indonesia and Philippines. This is about 24.23 per cent of the world production. With an area of 1.89 million hectares and production of 13,088 million nuts, coconut contributes around Rs 5000 crores annually to the domestic GDP. Among the states in India, Kerala is the largest producer of coconuts contributing 45 per cent of India’s production.

State-wise Area, Production and Productivity Of Coconut State (Area)

(‘000ha) 1997-98

Production (Million nuts)

Productivity (Nuts/ha)

Area (‘000ha)

1996-97 Production

(Million nuts)

Productivity (Nuts/ha)

Andhra Pradesh

94.9 780 8216 90.9 686 7546

Karnataka 286.9 1493 5204 291.4 1498 5140 Kerala 1020.4 5911 5793 1005.7 5835 5802 Orissa 53.1 272 5123 53.1 272 5123 Tamil Nadu 319.8 3716 11620 327.9 3811 11621 West Bengal 24.3 306 12601 23.7 313 13211 Others 98.0 610 6225 98.0 646 6593 All India 1897.4 13088 6898 1890.8 13061 6908

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Coconuts are utilized both in its tender and mature form. Tender nut is consumed as a thirst quenching natural drink. In West Bengal more than 80% of coconut production is consumed as tender nuts, while in Karnataka, Andhra Pradesh and Tamil Nadu it accounts for 25-40% per cent. In Kerala, since coir industry, oil extraction and copra making are widespread, the consumption of tender coconut was not popular till recently. But with the promotional activities organised by various bodies to give a reasonable price to the coconut growers, the consumption of tender coconut has increased significantly.

Consumption pattern of Coconut

Kerala (%)

Others (%)

All India (%)

Raw nuts Mature nuts (Including seed nuts) Tender nuts (Desiccated coconut) Copra Oil

41.02 38.2

2.9

Neg 58.5 54.8

78.5 57.3

16.8 4.4

21.5 --

61.6 48.7

10.5 2.4

38.4 39.4

Consequent to the agitation by MPs from Kerala at New Delhi, a high level meeting was convened by the Honourable Lok Sabha Speaker, Mr G.M.C Balayogi on 5.12.2000 where it was informed that coconut from Sri Lanka were finding its way into the country through Tuticorin and Calcutta ports. At Calcutta, Coconut that was being brought in for transportation to Nepal was in reality being sold in India, which resulted in lowering of its prices. Low price for the matured coconuts boosts up the usage of tender coconuts, which comparatively fetch a reasonable price in a short period. Thereby, affecting the Coir industry as there is a fall in supply of its raw material i.e. husk of the matured nut.

The outbreak of minor pests that affect coconut in several parts of the country creates panic amongst the coconut growers as well as in the coir industry. These minor pests, to some extend affects quality of husk and fibre produced there from.

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1.4 LOCATION OF COIR INDUSTRY “Availability of plenty of coconuts from the low land and hinter land, accessibility to good roads, numerous canals and rivers, the presence of brackish lakes and lagoons replenished by fresh water schemes and above all the presence of labour force with large experience in this industry have contributed greatly to the location of the Coir Industry in the coastal areas of the State.” (Patel S J,Report of the “Coconut and coconut products in India” GOI publication) Coir industry is concentrated mainly in the coastal belt of Kerala, Tamil Nadu, Andhra Pradesh and Orissa. The 10 coastal districts account for nearly 90 per cent of the total production in the State of Kerala. Kollam district supplies 8.06 per cent of the State production of coconuts while the Alleppey district, which has top most concentration of coir industry supplies only 6.5 per cent of the total production of coconuts in the State. The production of coconuts in the three regions viz. low land (covering coastal belt), midland and highland was about 54, 38 and 8 percent respectively (Source: Department of Economic and Statistics, Government of Kerala). The Kollam district area covers the above three regions. 1.5 SOCIO-ECONOMIC PERSPECTIVE The huge importance of the Coir industry in the economic development of Kerala is evident from the fact that it is a means of livelihood for a large section of its population and forms the basis of several other Small Scale and Cottage Industries. About two third of the Coir dependent households in the state belong to the Hindu backward section and only about 7 per cent to the Hindu forward. The figure of the latter is the highest in Kollam district i.e. 21 per cent. The following table gives an insight into the Coir-workers' income and social profile:

MONTHLY INCOME (in Rupees)

PERCENTAGE OF COIR DEPENDEDNT HOUSEHOLDS

500 – 1000 40 % 1000 – 3000 50 % More than Rs 3000 4 %

OTHER SOCIAL FACTORS PERCENTAGE OF WORKERS Age : 60 & above 40-50

13% 26%

Gender Ratio: Males Females

18% 82%

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Illiteracy: Literate but below SSLC Literate SSLC or above Note: Illiteracy among both male and female coir workers seems to be comparatively higher in the northern districts of the State.

10% 83% 7%

1.6 ABOUT KOLLAM CLUSTER Kollam is one of the most picturesque places in Kerala with majestic promontories situated on the banks of Ashtamudi backwaters, the name of which comes from eight creeks into which it branches. This city's splendour in ancient times gave origin to a Malayalam saying “Kollam kandavanillam venda” meaning, he who has seen Kollam cares not even for his house.

Kollam is second only to Kodungallore in terms of historic antiquity of Kerala. It used to be a renowned international emporium for trade and was the capital of the powerful kingdom ‘Venad’ that came into prominence in the 9th century A.D. In the early days Persians, Greeks, Romans, Arabs and Chinese used to frequent the port. The description given by famed travelers like Marcopolo and Iban Batuta highlights the historical importance of Kollam as a commercial town. Kollam, even today is one of the major industrial and commercial centres of Kerala. It is known as the nerve center of Kerala 's Coir and Cashew industry. It has some good infrastructure to offer for the development of coir industry. The development of port at Thankassery will be an added advantage for the industrial development of the place. 2. ENVIRONMENTAL PERSPECTIVE Kerala has the highest density of population than any other state of India. Area of Kollam district alone forms 6.41 per cent of the total area of Kerala and accommodates 8.27 per cent of the total population of the state. The whole district looks like a continuous village of independent and separate households with frequent small towns. This makes the issue of Environmental Pollution of water, air and even noise, a really critical one for the area. Apart from the health aspect, it is important to keep the natural environment clean and beautiful in order to attract tourists also. The land, its fertility with evergreen vegetations and the clean waters of its rivers and lagoons are some of the most precious assets of Kollam and we should take full precautions to keep this beautiful balance of nature alive. 2.1 A NATURAL FIBRE The Golden-fibre 'Coir’ is all capable of becoming a medium for the attainment of the Millennium Goals of Cleaner and Greener Earth, Empowerment of Women and Bringing to the fore the weak and less privileged. Coir is a natural fibre and its application in whatever form or use makes the product naturally biodegradable.

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2.2 RETTING-A CAUSE OF POLLUTION A high-quality fibre is obtained from the kind of husk that is neither too tender nor too ripe. Dry husk yields brown fibre, which is hard, brittle and unsuitable for being spun into yarn. To avoid this, the husk has to first undergo the process of Retting. However, this process causes excessive water pollution. 3. ANALYSIS OF THE PRODUCTION PROCESS 3.1 MAKING OF THE COIR FIBRE 3.1.1 RETTING Retting is a process by which the pectinuous matter binding the fibre to the husk is disintegrated. There are different methods used for Retting in different regions. For example, in South Kerala, where the best quality of 'Anjengo' yarn is produced 'Retting' is mainly done in backwaters, while in the North it is usually done in pits. Another method of Retting is to do it in cement tanks. This process of Retting takes anywhere between six to ten months, depending upon the maturity of coconuts, the season and the salinity of water. Technological inventions in the field of retting The Central Coir Research Institute (CCRI), Alleppey, the R & D institute of Coir Board has developed a bacterial consortium known as ‘Coirret’. The use of Coirret can reduce the retting period to 78 hours. Coir Board has not been able to extend this technology to the industry effectively due to the poor infrastructure and field level staff. Transferring such technology is of great importance for the development of the industry and to reduce the cost of production to meet with Global markets. Natural retting facility Availability of brackish water is not the only condition necessary for retting of husk. Brackish water has to be replenished by fresh water at frequent intervals to wash away the water contaminated in the process of retting of husk. Kerala is naturally endowed with this facility also as many perennial rivers flow into its backwaters. Anjengo area has this facility in abundance. The Anjengo area extends from Mayanad over Kollam to Thiruvallom, South of Thiruvanandapuram for a length of 80 kilometers. The regular flow of fresh water of the rivers into the backwaters in this area, gives the fibre a special cleanliness and luster that cannot be obtained in other areas and thus takes the credit for the fame that Anjengo yarn has earned. The Southern part of Kollam cluster falls under this area.

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3.1.2 WASHING After retting the tough husk becomes soft and flabby. It is then taken out of the pits and is washed well to remove the dirt before peeling off the outer skin. It is then placed on a hard block of wood and beaten with a mallet. A few beats of the mallet with frequent shaking makes the fibre free of dirt and pith. 3.1.3 FIBRE EXTRACTION The beaten husk is torn on rolling cylinders with nails on the cylinder casing. The fibre thus extracted is passed through a willowing machine for softening and removal of the last trace of pith on it. The fibre extraction is done in defibreing mills with the help of machines. There are two varieties of Coir fibre namely, the White fibre and the Brown fibre. The White fibre is known to be superior to the Brown fibre and is extracted from the retted husk. For this, the raw husk is soaked (retted) in brackish water for about 6 to 10 months and then the fibre is extracted by beating the retted husk either by hand or by machine. The Brown fibre is extracted from the dry husk generally through a mechanical process. In Southern districts of Kerala, most of the fibre is of the White variety. 3.1.4 SPINNING There are two broad sectors in the coir industry: first is spinning sector, which is essentially a cottage industry spread over a wide area and the second is manufacturing, which is concentrated around certain locations only. Spinning is decentralised over a wide area along the back-waters because as this stage is reached, a good deal of waste material is eliminated and thus it becomes cheaper to transport the fibre to different places.

Spinning of Coir yarn on Traditional Ratt

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The second stage of manufacturing with pure materials tends to be concentrated at places having; a good availability of skilled labour, source of power, proximity to markets and facilities for export. The development of Alleppey, the near district of Kollam cluster, as a manufacturing center for coir is the natural consequences of the presence of all these factors in this area. The raw material of the coir spinning industry is the coconut husk, which is bulky and has low value. The coir industry tends to gravitate to the raw material producing area because the proportion of weight of raw-material used to the weight of the final product i.e. the Material index comes out to be quite high. The low value of the product cannot meet the high cost of transportation of the raw material. The retted husk is heavier than the green husk and the cost of their transportation to distant places is not economically viable. As such, the process of transforming them to fibre tends to be located near the soaking pit/retting yard. But during the process of de-fibreing, the retted husk looses most of its weight and it becomes easier to transport it to other places through cheap water transportation. This factor as well as the easy availability of labour throughout the rural sectors of Kerala facilitates in wide dispersing of the spinning process, virtually taking the coir spinning industry to the door of the labourers. 3.2 AVAILABILITY AND CONSUMPTION OF HUSK AND FIBRE 3.2.1 Availability and Consumption of Husk The entire husk obtained from the coconuts produced cannot be used as a raw material for the Coir Industry as it might not be suitable for fibre production. The quantity of fibre content present in a nut depends not only on the size and maturity of the nuts but also on the method of de-husking. Most of the husk that is derived from the Coconuts used for domestic consumption is not suited for fibre production. Though authentic data on consumption of tender coconut are not available, the modest estimate bring the quantity of such husks to be around 24 per cent of the total production of Coconut in the State. This is likely to be more due to the promotional activities organised by various bodies to increase the consumption of tender coconuts. Interactions with Husk Dealers, Retters etc reveals that about 50 per cent of the husk produced in the lowland region and 20 per cent of that in the midland region are consumed by the Coir industry. The contribution of highland region in this aspect is negligible. Based on the above, the total quantity of husk consumed by the Coir Industry works out to be around 35 per cent of the Total Husk production of the State.

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AVAILABILITY & CONSUMPTION OF HUSK IN KOLLAM DISTRICT Source: Department of Economics and Statistics, Government of Kerala

§ Total Production of coconuts in district : 430 million nuts § Consumption of husk in the coir industry : 150.5 million § Per cent of the Husk production : 35 % § Average yield of Fibre per Husk : 81.65 gms § Total annual production of Fibre : 12,288 tons § Amount of Fibre brought from outside : 12,046 tons § Total quantity of fibre available in Kollam : 24,334 tons

3.2.2 Availability and Consumption of Fibre The Coir fibre extracted from coconut husk is the raw material used for manufacturing yarn and various other coir products. Fibre is used even for manufacturing of Rubberized Coir goods. The bulk of the Brown fibre is utilized for manufacturing upholstery items, latex based coir goods, yarn etc. A small part of the fibre produced is also sent for direct exports.

Out of the 211357 tons of fibre available in Kerala, 180729 tons or 85.5 % is consumed in the local industry itself. The percentage of Consumption of fibre in each sector is given below:

Sector Consumption as Percent of total

available fibre Co-operative Sector 17.10 Household sector 49.34 Private yarn production 15.11 Factory sector 3.95 TOTAL 85.50

3.3 SCOPE FOR VALUE ADDITION IN KOLLAM CLUSTER The following table reveals the Value addition in Coir products made by Kollam district vis-à-vis Alleppey in the year 1995-96.

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These figures reveal that the Availability of fibre (both production and arrival) in Alleppey district is 20% more than Kollam district, whereas in the dispatch of Coir Yarn from Kollam is much higher than that from Alleppey. Therefore, the latter concentrates more on sale of value added products than the Kollam producers. Thus there is am ample scope for capacity building both by improving husk consumption and by producing value added products. Value addition would also mean that more workers would be engaged for more number of days. This can be seen from the table below: 3.4 MARKETING The two types of markets viz. Domestic and Export hold equal importance in case of the Coir Industry and 'Expansion' is necessary in both the cases. The Coir Board has opened up 33 show rooms and sales depots at important cities in India. These showrooms and sales depot are also functioning as agencies for market-feedback. Considerable attentions is being given to publicity of coir products by systematic propaganda, advertisements, exhibitions and also by printing colorful catalogues, brochures etc. Please refer to Annex 1 for the Statistics relating to Sale volumes achieved by these outlets. Other marketing agencies are:

• State level Co-operative Coir Marketing Federation in Kerala, Karnataka, Tamil Nadu and Orissa • Some primary Coir Co-operatives and Coir Products Manufacturing Societies that have also setup

sales-outlets in important cities. • Besides, the Rubberized Coir Manufacturing units usually have their own arrangements for

marketing their products.

Sl_No PARTICULARS ALLEPPEY KOLLAM 1 Availability of Fibre 27,540 tons 24,334 tons 2 % of Dispatch in the form of Yarn 18.02 % 58%

3 Dispatch in the form of Coir Products 75% 6% 4 Infrastructure All available All except Skilled labour

Wide range of Coir Products

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4. CORE CLUSTER PLAYERS There is a long chain of intermediaries or players engaged in various stages of production from the raw material processing to the finished product marketing. This is shown in the chart given below:

RAW HUSK

VILLAGE DEALER LARGE SCALE DEALER CO-OPERATIVES

RETTING

SMALL RETTERS CAPITAL RETTERS

HUSK COOPERATIVES OR UNION

SPINNING FIBRE & YARN

VILLAGE MIDDLE-MEN

LOCAL MER-CHANTS

BAZAR DEALERS

COMMI-SSION AGENTS

FACTORY REPRESE-NTATIVES

COOPER-ATIVES

DOMESTIC MARKET

COIR PRODUCTS

EXPORT MARKET

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5. ANALYSIS OF BUSINESS OPERATIONS 5.1 INEFFICIENT INDUSTRIAL ASSOCIATIONS Since the Coir-producing units are not strongly linked with each other through any associations therefore lobbying for the common issue facing the industry becomes quite weak. The Small Scale Coir Producers' Association established in different locations, are neither able to co-ordinate their efforts nor build-up confidence amongst their members. The types of services provide by these associations has not had any impact on the industry so far. Their activities are limited to settlement of small disputes between individual units. They do not consider co-ordination in the field of procurement of raw material or marketing etc. The need of the hour is to encourage people to adopt a group-approach and together improve their knowledge of the new means of production and marketing and also upgrade themselves about the latest technological developments in coir industry. 5.2 COST REDUCTION NECESSARY FOR INCREASING EXPORTS There has been a persistent upward movement in the costs and prices of Coir Yarn in the recent years. World over, the markets have turned into a Buyers-market where price and quality are of prime importance. The industry has to seek ways and means to cut down their costs. These include; reduction in unit cost of production through improved material management, fuller utilization of capacity, modernisation and expansion of industry. In order to take advantage of modern techniques of production and economies of large scale, the raw material should be purchased in bulk as the latter forms a major part of manufacturing expense. 5.3 LOW PRODUCTIVITY The industrial sector of Kerala as a whole is marked by very low levels of productivity, mainly due to the predominance of unorganised Small Scale units and generally low levels of technology employed, even in the factory setups. Since the traditional type of industries lack dynamism, one of the main tasks of Coir sector is to modernise its production activities. 5.4 SEASONAL NATURE OF EMPLOYMENT A majority of the Coir-workers engaged in spinning work in household units itself. The spinning activities are conducted in open yards and prolonged adverse weather conditions affect the production. During monsoons, the extraction of fibre and spinning of yarn in the open yard is possible only for temporary durations.

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The employment rate of the Coir Spinners is directly linked to the rate of demand in the product sector. Especially in the case of products that are manufactured against specific export orders, there is a high rate of fluctuation observed and workers do not get assured employment throughout the year. The creation of regular employment can be made possible through the following measures:

• Modernisation of technology in Spinning and Product sector. • Finding new user areas for Coir such as Coir-geo-textile, Pith composting, Polymer Composite

Board etc. • Capturing the untapped export as well as domestic potential in the markets.

5.5 MANAGING PROCESSING WASTES Coir Pith is a waste material and huge accumulation of the pith causes environmental problems. The extraction of 1 Kg of Coir fibre generates more than 2 Kg of Coir Pith. Since Coir Pith contains about 25% Lignin, it does not decompose easily. With a view to finding solution for the problematic waste material, Central Coir Research Institute (CCRI) has developed a technology to convert the Coir Pith into an organic manure within 30 days, by applying a fungus known as “Pith-plus”. This is being produced on commercial basis at the pilot scale laboratory at CCRI. Popularisation of this innovation is being done by the Extension Task Force of CCRI. This should be strengthened in Kollam cluster where retting and fibre extraction is being done at the coastal areas. 5.6 MISTRUST AMONG COIR CO-OPERATIVE SOCIETIES These co-operatives were formed with a view to put the Coir Industry on a sound track and to protect the workers and entrepreneurs from exploitation by the middlemen. A scheme for the development of Coir Industry on a co-operative basis was launched in the year 1950 and its objective was mainly to solve the problems of the Small Producers and to ensure regularity of work and standard wages to the workers. But the reality is that the Board of Directors of these societies seem to have different interests. They lack trust amongst themselves and consider their position as a political plot to build up their political future. As a result, there exist variations in the nature and methods of operations among the primary Coir Co-operatives in Kerala. While a few of them purchase green husk and arrange the retting and spinning operations through their members, the others begin their operations by purchasing retted husk itself, which of course is not economical due to high transportation expense. Also some of the societies deal only in fibre. According to Mr. K.M. Rajan, Assistant registrar of Coir Co-operative Societies, Coir Project Office, Kollam, there are 92 working Coir Vyavsaya Co-operative Societies in Kollam and all of these are working with Government support and thus avoiding trade-losses. He emphasized the need for formation of a horizontal network for making the procurement of raw materials economically viable and going in for marketing diversification.

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According to Mr. Nelson, President, Kollam Coir Merchants Association and a yarn producer, such networks would be very helpful and should definitely be introduced in both the Private Sector as well as in the Household sector of the yarn producers. Such a network will facilitate the following joint businesses:

1. Joint management of raw material acquisition 2. Joint penetration into the new market 3. Availing the service of specialized technicians and consultants for product diversification by cost

sharing basis. 4. Establishment of Common Facility Centers (CFC) for product finishing, Godowns (Warehouses)

etc. and Common Effluent Treatment Plant (CETP) that require huge investments. 5.7 LOW WAGE RATE IN OTHER STATES The wage rates in Tamil Nadu, Karnataka and Andhra Pradesh are lower when compared to Kerala. This tends the workers to produce more of Brown Fibre Coir based products, which ultimately affect the market of Coir from Kerala. Because of the low labour cost and cost of production the traders in Kerala cannot compete with them, as told by the Sri Appukuttan Pillai and Rahamatullah, President, Kollam Coir Traders’ Association during an interview. 5.8 THREAT DUE TO LAND-USE REGULATION There are no industrial licenses required for processing of raw husk into finished products but like any other industry, the Coir Industry too shall be subjected to land use regulations. The Central or State Environmental Laws or regulations will have to be strictly followed in the case of disposal of waste or ret liquor. This regulation has gained a higher importance in the light of the recent judgment passed by The Supreme Court of India in the case of Delhi based polluting industries. It is worth mentioning here that the Travancore Titanium Products at Trivandrum had to face closure for some days due to the intervention of Coastal Uplift Association in the matter of effluent disposal. Moreover the Supreme Court has categorised drinking water as a fundamental right (Press released dated 09/12/2000). In the light of the above there is a threat to Coir industry since Coir retting is done in open place, which pollutes ground water. 5.9 SCARCITY OF RAW MATERIAL Severe scarcity of raw materials and the escalation in their costs is a uniform feature of all traditional industries. Only around 50-60% of the husk is being industrially utilised. It has even been observed that a large number of equipments especially the traditional 'Ratts' are kept idle for long due to this shortage of raw materials. Specialisation in the fibre production alone can solve the present day raw material shortage in the industry.

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5.10 LABOUR Of the three major elements of cost viz. raw material, labour and overheads, the labour cost is incurred at different stages of the production process. In the spinning of yarn, the labour employed is practically unskilled but in the manufacturing sector both skilled and unskilled labour is used. The coir industry is highly labour intensive and the total number of people engaged in the industry is approximately around 5 lacs. Subcontracting The large manufacturing units do not consider it prudent to expand productive capacity beyond a certain level, as export markets are generally unpredictable particularly with the growing competition from artificial products. This paved way for subcontracting of labour as this way they could accept and execute orders even in excess of their own capacities without getting worried about permanent overheads. As a result a number of small units were also started at household level. Trends in wages The coir industry has been one of the most sweated industries in India and it continues to be so inspite of repeated efforts of the Government to fix minimum wages. The Spinning sector of the industry is by and large a Cottage type, where wages are abnormally low. But in the Manufacturing sector is mostly organised and has a comparatively higher wage-rate. There would be a high degree of correlation between changes in the coir product prices and the wage rate but interestingly the wages have remained at a somewhat static subsistence level, and product prices have been mostly influenced by the change in price of husk or yarn. 5.11 PRODUCT PRICING Besides Labour and raw material, the other major overheads, in the Coir manufacturing industry are items like rent of premises, interest on capital, establishment charges and indirect materials like electricity, gunny bags, lubrication oils etc. In order to ensure a remunerative return to the Coir Producers and Manufacturers in the fluctuating market, the minimum purchase price of the products meant for export should be fixed. This should be done keeping in mind the global market scenario. 5.12 EXPORT MARKET The most negative development in the Coir industry has been the sharp decline in exports even when the developed countries were preferring to source their supplies from the developing nations. The only reason attributed to this decline is the inferior commodity nature of Coir. Diversification of products to Geo-textile, Coir Polymer Composite Board etc. can certainly boost the export levels, but we'll have to plan to systematically in order to exploit the vast potential of these markets.

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According to Shri. Appukuttan Pillai, a coir trader in Kollam, Coir Products have received a beating from 'Synthetics' in the recent period, due to the latter's cheapness, durability and all weather utility. Climatic conditions, high cost of Coir Products and cheap substitutes are certain factors hindering the growth of domestic market in a big way. Even then, the eco-friendly nature of coir and coir products has induced some demand. 5.13 LIMITED ROLE OF FINANCIAL INSTITUTIONS The banks and financial institutions have assumed a very limited role in Coir Industry. This is because most of the Coir producing units have not been registered by the District Industries Centers, which is a pre requisite that is usually felt necessary by the lending institutions before extending finance. Also the failure of the Financial Institutions in the past is keeping them away from assuming any further risks. Need for Working Capital by the Cooperatives All the Coir Cooperative societies interviewed during the course of this diagnostic study are in need for Working Capital (WC) for continuing production. It has been observed that although the sanctioning authorities were monitoring the WC loan or grants being given to the Coir Cooperative Societies at the initial stages but later they were simply left on their own, which led to the misuse of resources. Direct Marketing beyond the means of SMEs & House-hold sectors Due to a lack of financial resources, most of the entrepreneurs refuse to undertake marketing themselves, as they cannot afford to invest capital for holding stocks. Secondly, they are not financially sound to invest in retail outlets or to provide credit to customers. With a little help from the financial institutions and banks such obstacle can be removed.

5.14 LACK OF ASSOCIATED BEHAVIOR An individual unit especially in the House Hold Sector cannot afford to buy large stock of raw material alone, but if they unite and cooperate, while retaining their own business, they can definitely make use of economies of large scale and thereby enhance their earnings. The spirit of “Working together” is to be cultivated but this is not realised by a vast majority of the producers. Co-operatives can do much to help forward the industry, if only a true group spirit is created and fostered. “Mutual distrust” is a great drawback to the overall progress and must be eliminated. Besides, Banks also find it easier to monitor a group loan rather than monitoring small-scale individual loans. Thus the associated behavior of the entrepreneurs can do them good in this respect also as then the former can extent mutual credit guarantee for availing loans.

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5.15 LACK OF PROFESSIONAL QUALITY MANAGEMENT While interacting with Shri. Remanan, the President of Paravoor Coir Mats and Matting Cooperative Society, it was found that the main reason behind the shut down of his unit was the lack of professional management. Firstly, he said that the project for this unit was framed without specific reference to the source of working capital. He also told that products worth Rs.2.75 lacs were rejected because of not satisfying quality norms. According to him 'quality' was ignored right from the stage of procurement of raw materials to the manufacturing of the finished product. Moreover, workers were paid salary instead of productivity-linked wages. Due to such precedence nobody would like to put in huge money in any venture related to Coir Products Manufacturing. Moreover, the investment in machineries will be high and Bank and financial institutions are reluctant to lend to such projects.

6. SUPPORT INSTITUTIONS 6.1 COIR PROJECT OFFICE OF THE STATE GOVERNMENT The Coir Project Office of the State Government is under the administrative control of Cooperative Societies that are engaged in Coir related activities in the district. The societies coming under the field of this office are divided into different circles and each circle has a Coir Inspector who looks after the societies under his jurisdiction. In Kollam district there are eight such Coir Circles. An overview of the status of the societies in the district is presented below based on the details available in the performance report 1998-99 prepared by the Coir Project Officer. 1. No. of coir societies under control - 127 2. No. of societies reporting no production - 38 3. No. of societies reporting production - 89 4. No. of coir yarn societies - 88 5. No. of Mats & Matting Societies - 1 6.2 CENTRAL COIR RESEARCH INSTITUTE, ALLEPPEY The Central Coir Research Institute (CCRI) Kalavoor is one of the major research centres of the Coir Board that implement research programmes on problems relating to extraction and further processing of White fibre. 6.3 CENTRAL INSTITUTE OF COIR TECHNOLOGY, BANGLORE The Central Institute of Coir Technology, (CACTI) Bangalore, is another research centre of the Coir Board that implements research programmes on problems relating to extraction and further processing of Brown fibre.

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6.4 NATIONAL COIR TRAINING AND DESIGN CENTRE, ALLEPPEY The National Coir Training and Design Centre established in 1965 offers various training programmes. This centre also provides necessary assistance to the motorised Ratt Spinning units for improving their quality and productivity of yarn. 6.5 REGIONAL COIR TRAINING AND DEVELOPMENT CENTRES AT THANJAVUR, ARISIKERE, RAJAMUNDRY AND BHUBANESWER These four regional Coir Training and Development Centers, Demonstration-cum-extension Centres and Demonstration-cum-production Centres play a pivotal role in skill development amongst the workers in the coir industry. 6.6 COIRFED COIRFED is an apex body under the control of State Government. The Coir Cooperative Societies sell their products only to this institution. The only complaint from this institution is that their purchase price is very low and sometimes does not even cover the production costs.

6.7 SMALL SCALE COIR PRODUCERS ASSOCIATIONS In most of the Coir producing areas of the Kollam cluster, the Small Scale Coir Producers Associations have been formed. Their area of operation is limited to a certain geographical area, mostly a village and they are mainly engaged in settling labour disputes only. They do not give any attention to issues like increasing productivity or to reducing the cost of production.

6.8 STATE COIR CORPORATIONS OF KERALA AND KARNATAKA The Coir Corporations of Kerala and Karnataka undertake a major role in the marketing of Coir and Coir products for all sectors of the industry.

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7. SWOT ANALYSIS

BIBLIOGRAPHY

STRENGTHS

• Not many international competitors since it is a labour intensive industry • Easy availability of labour • Natural facilities for retting • Presence of supporting institutions at Government level • Less investment in machinery during the initial stages of production • Access to ports • Eco friendly products • Young and educated new generation

WEAKNESSES

• Processes generate pollution esp. Retting • Intervention of courts likely in Environment related matters • Low levels of modernisation and upgradation of technology • More problematic waste • Associations are weak • Middlemen or agents are powerful and they dictate terms • Poor marketing skills • Lack of financial resources forcing the households to become job workers • Lack of education and short-sightedness of the present generation

OPPORTUNITIES

• Growing international and domestic market • Untapped raw material potential • Product diversification • Potential for higher value-addition

THREATS

• Competition from synthetic fibre. • Stiff competition from other Coir producers like Sri Lanka. • Fall in the production of coconut due to pest.

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8. RECOMMENDATIONS § Since 95% of the work force in the spinning sector and 80% of the total work force are women,

constitute “Women Coir Swasraya Sangh” consisting not more than 20 members. § Get a survey conducted to understand the presence of NGOs and voluntary organisations to initiate

leadership in the Coir Swasraya Sangh.

§ Boost up the raw material availability in the cluster so that there is less dependence on other states or distant areas because of which a high transportation cost is incurred. For this purpose, a network of different CSS under the NGOs or voluntary organizations needs to be formed and husk collection activities especially at midland area of the cluster should be organised.

§ Training programmes in marketing to be organised for young and enthusiastic Coir entrepreneurs to

enable them to market their own products and build new linkages.

§ The Government agencies that are providing support should be involved in arranging visits to various fairs for the product manufacturers. This shall be especially beneficial to new units who have not been exposed to these types of fairs earlier.

§ To deal with the issue of high cost of raw material procured:

o Setting up raw material supply facility o Explore the raw material potential with in the cluster. o Formation of raw material consortiums so that the entrepreneurs can purchase raw material

at a reasonable price.

§ Encourage setting up of a marketing consortium in the form of NGOs with to achieve economies of scale in terms of marketing and raw material sourcing.

§ Initiate measures to reduce the labour intensity of the industry. 9. PROPOSED ACTION PLAN FOR THE COIR CLUSTER AT KOLLAM A draft action plan for improving productivity of the Kollam Cluster is produced below: Note: Most of the activities can be done simultaneously. It is proposed to achieve the above goals with out any intervention to the ongoing activities in the cluster.

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ITEM

DESCRIPTION RESPONSIBILITY BUDGET

1 1.1Qr Identify the NGOs, Voluntary Organisations (VOs) and other women organization in the cluster

CDA with the help of Coir Board, Survey reports and other related institutions

2 Organise meetings with the functionaries of the above organisations

CDA with the help of Coir Board

3 1.2Qr Formation of 6 groups named "Coir Swasraya Sangh" with not more than 20 members with active intervention of NGOs, VOs etc.

"

4 Identify the training needs of the groups in the field of product manufacturing and arrange frequent interactive meetings

"

5 Arranging raw material for Training. Appx.2 kg yarn @ Rs.22/- per kg for one trainee for 40 days in two months Rs.44x40x120

UNIDO/UNDP Rs2,10,000

6 1.3Qr Arrange the service of weaving experts for each group for two months Rs.3000/- pm x 6 x 2

Under an ongoing scheme of the Coir Board

Rs36,000

7 Borrow the service of one quality expert for all the 6 groups during the period of training as well as production

Coir Board

8 Stipend to the trainees @ Rs.500 pm Rs.500 x 20 x 6 x2 “ Rs.1,20,000 9 1.4Qr Arranging working capital from SIDBI/SBI under Mutual

Credit Guarantee Scheme Sponsoring institution with the help of CDA

10 Establishment of raw material Consortium and CFC for taking godown/warehouse on rental basis.

“ To be worked out in consultation with the experts in this field.

11 2.1Qr Commencing commercial production of mats. Groups 12 2.1Qr Establish marketing linkages with exporters and coir traders in

Kerala as well as of other states. For this, organise training in marketing for young and enthusiastic coir entrepreneurs.

Sponsoring institutions, members of the group with the help of CDA

To be worked out

13 2.2Qr and 2.3 Qr

Market development programme a. Participate in the trade fairs etc. b. Arrange buyer seller meet. c. Consignment sale through coir board showroom d. Formation of a marketing consortium in which private entrepreneurs and cooperative societies can also join. e. Explore new avenues for marketing through NGOs of the Northern states and through internet.

Sponsoring institutions, CSS, Coir Board, CDA The Government agencies that are providing support should be involved in arranging visits to various fairs.

14 2.4Qr Formation of groups under the same pattern and extending training for manufacturers matting, rug, carpet etc.

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ANNEXURE 1

SALES FIGURES OF MARKETING OUTLETS SET UP BY THE COIR BOARD -------------------------------------------------------------------------

SL. TARGET SALES % OF ACHIEVEMENT NO. CITY FIXED FOR APR'98 APR 99 APR'98 APRIL 1999 1999-2000 TO MAR'99 TO MAR'2000 TO MAR'99 TO MAR.2000 ------------------------------------------------------------------------------- 1 AHMEDABAD 37.00 21.04 27.44 80.92 74.16 2 ALLAHABAD 27.00 16.14 18.63 134.50 69.00 3 BANGALORE 82.00 70.98 49.56 86.56 60.44 4 BHOPAL 10.00 6.55 10.60 65.50 106.00 5 BOMBAY 80.00 64.15 64.36 80.19 80.45 6 BHUBANESWAR 35.00 16.06 13.85 73.00 39.57 7 CALCUTTA 35.00 25.64 28.93 67.47 82.66 8 CHANDIGARH 40.00 28.09 30.02 65.33 75.05 9 COIMBATORE 10.00 2.34 1.56 23.40 15.60 10 DEHRADUN 43.00 17.64 16.83 103.76 39.14 11 ERNAKULAM 40.00 25.48 39.49 94.37 98.73 12 GANGTOK 10.00 6.34 6.95 63.40 69.50 13 GORAKHPUR 27.00 9.89 21.15 52.05 78.33 14 GUNTUR 35.00 23.83 30.34 79.43 86.69 15 HYDERABAD 80.00 70.79 75.45 76.95 94.31 16 INDORE 33.00 13.37 11.99 49.52 36.33 17 JAIPUR 43.00 30.03 28.75 100.10 66.86 18 JAMMU 60.00 73.02 72.90 143.18 121.50 19 KANPUR 50.00 49.68 51.70 101.39 103.40 20 LUCKNOW 47.00 27.41 35.45 109.64 75.43 21 MADRAS 58.00 44.46 51.27 96.65 88.40 22 MADURAI 39.00 14.03 17.92 93.53 45.95 DELHI 23 NEHRU PLACE 66.00 44.56 54.48 92.83 82.55 24 ASAF ALI ROAD 40.00 36.34 32.78 95.63 81.95 25 PANDAV NAGAR 30.00 16.41 20.12 49.73 67.07 26 PATNA 35.00 34.77 24.13 102.26 68.94 27 RANCHI 20.00 18.40 21.26 153.33 106.30 28 THANE 10.00 2.63 2.82 26.30 28.20

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29 TRIVANDRUM 35.00 23.36 18.15 111.24 51.86 30 TRICHUR 29.00 17.65 21.03 92.89 72.52 31 VARANASI 29.00 16.09 19.11 107.27 65.90 32 VISAKHAPATNAM 25.00 11.95 12.54 108.64 50.16 33 KOLLAM 10.00 2.45 0.00 24.50 0.00 ------------------------------------------------------------------------- TOTAL 1250.00 881.57 931.56 87.11 74.52 ---------------------------------------------------------------------------------------------------------- ANNEXURE 2

BIBLIOGRAPHY 1. Coir Industry in India by Dr.K.B.Unnithan. 2. Report of the Coconut and Coconut products in India by S.J.Patel, A Govt. of India publication. 3. The Hindu, Survey of Indian Agriculture 2000. 4. The Hindu, Survey on Indian Industries 1999. 5. Baseline survey by Tata Economic Consultancy Service, Chennai. 6. Survey of coir industry in Kerala by Kerala Statistical Institute, Pattom. 7 Report of Department of Economics & Statistics. 8. An information guide to Kerala Industria l Scenario 1992. 9. Indian Coir by FAO.