Kerala’s coir industry has witnessed growth in exports since 2015-16 with exports reaching ₹1,731.66 lakh in 2021-22. This industry holds importance as a source of employment and foreign exchange earnings. It provides livelihood opportunities for 3,75,000 individuals, with an impressive 80 percent being women. While Alappuzha was the largest contributor to the production of coir, there were other high quality varieties like Anjengo coir that ruled the market. However, the traditional coir industry is in decline, with hardly any coir societies and factories in the Anjuthengu Kaniyapuram stretch.

For generations, families in Anjengo (Anjuthengu) and Kaniyapuram have relied on the coir industry for their sustenance. Women have played roles in aspects such as husk retting and hand spinning,  while private merchants have facilitated exports. Anjengo A and  Anjengo M are a couple of varieties of coir yarn produced in this stretch.

One unique characteristic of the coir produced in Anjengo-Kaniyapuram lies in its production process. The retted coir fiber, also called white fiber, is extracted from green natural coconut husks after retting in flowing or circulating water for a minimum of three months. This leads to the separation of the layer called the exocarp from the middle layer known as the mesocarp. This particular approach creates coir that has a longer lifespan, maintains its colour without fading, and meets the standards required for export. Once the crown jewel, Anjengo coir is now facing dire challenges.

Price Hike and Substitution

The deterioration of the Anjengo coir sector is closely related to the increase in coir prices. The cost of labour has increased, despite the historically low cost of the basic materials used to produce coir. This increase in wages in the coir industry is mainly driven by the variable dearness allowance, which makes up 99.24% of wages while only 0.70% of wages is fixed. Small-scale industry wages are adjusted every few years based on the prevailing dearness allowance. However, when small-scale wages go up, labour unions pressurise organised sector factories to follow suit, which is seen as an arbitrary practice. It then becomes increasingly difficult for exporters to maintain their competitiveness in the market as a result of this constant shift in labour costs. This was attested by Abdul (name changed), a former prominent coir merchant residing in Kaniyapuram, who expressed that the rising labour costs have significantly complicated coir production. 

As a result, many exporters started looking at less expensive options like jute and sisal, shifting their investments away from traditional coir products. Given the labour-intensive nature of coir production, these replacements provided cost savings that coir products could no longer match. Above all, the emergence of polythene coir as a rival greatly influenced the decline of the traditional coir sector. 

Competition from neighbouring states

Tamil Nadu, a state that outperforms Kerala in a number of crucial areas, is a significant competitor for Kerala’s coir market. The coir production environment in Tamil Nadu has seen a substantial change as a result of the introduction of machinery, particularly in fiber extraction and spinning. However, in Kerala, local unions in the coir industry and other interested parties bitterly resisted this modernization. These unions frequently oppose changing piece rates in response to productivity gains, which prevents mechanisation from having the ability to increase productivity. 

The current average wage in Kerala’s coir factories, calculated on a cost-to-company basis, is about Rs 810 per day. In contrast, Tamil Nadu, a neighbouring state, pays only Rs 368.21 (again, on a cost-to-company basis) for the same service. In addition, compared to Kerala-produced coir yarn, Tamil Nadu-produced coir yarn is not only more affordable but also of higher quality. It is becoming more difficult for Kerala’s coir business to sustain itself in its current shape over the long run due to this significant disparity in wages and the overall cost difference. Most importantly, uninterrupted production due to fewer labour-related disruptions and reduced input prices made regions like Tamil Nadu more advantageous for the industry’s profitable and sustainable growth, deteriorating local coir varieties like Anjengo coir.

Anti-competitive policies of Coirfed

Coirfed, short for the Kerala State Co-operative Coir Marketing Federation Limited, plays a significant role in the coir industry in the  state of Kerala. It is a cooperative federation that was established to promote and support the coir industry. The key roles and functions of coir fed include industry development, market support, quality assurance, research and development, credit and financial services, and cooperative development.

Coir societies in the area are dealing with problems that have gotten worse as a result of what they believe to be Coirfed’s anti-competitive actions. An important consideration is the requirement for fair pricing that accounts for both administrative and production costs. As coirfed procures the manufactured coir from the cooperatives they set pricing unilaterally without proper consultation with the respective cooperatives. There are also delays in payments which puts pressure on the financial resources of cooperatives. The methods that Coirfed uses to assess the quality of its coir, which rely on subjectivity and random sampling without moisture testing, are also debatable. Many coir societies adopt this procedure despite their objections in order to avoid conflicts and delays. A competitive and open environment for coir societies in the industry depends on addressing these concerns.

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(This article was featured on Times of India)

The author is a youth leadership fellow at CPPR

Views expressed by the author are personal and need not reflect or represent the views of the Centre for Public Policy Research.