Coconut Industries Development and the Importance of Technical Innovation
Peter Steele
Agro-Industries and Post-Harvest Management Service
Summary
Coconut industries provide work for many thousands of rural people in the southern states of India. Encouraged by the success of firm international and domestic markets for food and fibres, the areas given over to coconut have expanded considerably in recent times, and productivity has increased. This has not generally been the case with the post-production sector, and processing technologies, plant and the range of products available remain traditional, generally small-scale and fragmented. This limits the potential for market exploitation.
This paper examines some of the potential that exists for exploiting coir fibres development in India; it links agro-industries development to the employment and well-being of rural people and emphasizes the importance of maintaining technical excellence with industrial processing so that the quality of the product will meet market expectations. The importance of a competent industrial research and development (R&D) service in support of producers is exemplified by the CFC/Coir Board/FAO project. Some recommendations are made for the work under way, so that a measure of continuity is available to the domestic industry. Herein, the private sector has a firm role.
Introduction
Coconut industries in India are of significant value to the economy of the southern states, where the bulk of the trees are grown. In recent years, state governments have encouraged the expansion of the crop; more land has been given over to coconuts and higher productivity has resulted. During the ten-year period since 1984, the area under coconut has grown by 40 per cent, from 1.16 to 1.6 million hectares. Production has grown by more than 112 per cent, from 5,800 million nuts to more than 12,300 million nuts during the same period. Of more significant importance, however, is an increase in productivity of more than 50 per cent - to yields of more than 7,500 nuts per hectare. Earnings from coconut products - coir fibre included - was of the order of US$ 1,210 million in 1994 (1).
Simple ratios for the production of useable fibre per unit are not always applicable, but it is useful to have some idea of potential yield, viz. 12,300 million nuts equates to 15 Mt nuts (at 820 nuts/t). If approximately one third of the mass of the nut comprises fibre and one third of this is useable fibre, then this equates to 1.6 Mt of fibre currently available each year (2).
Yield provides an indication of potential and, importantly, the levels of investment that are required for industrial planning, for processing capacity, for the information required for market exploitation and, in the case of the "Coir Processing Technologies" project - which is the focus of the seminar - some indication of resource allocation for the R&D facilities that should be available to the Coir Board at the Central Coir Research Institute (CCRI) and other R&D centres - in support of domestic industry.
Production during the period 1993/4 showed that 239,000 t of coir fibres entered into the domestic and export markets (3), or 15 per cent of that available. The potential processing capacity of domestic industry remains unknown.
Agro-Industries
Of the range of industrial sectors that is found in most developing countries, the processing of agricultural crops and materials normally accounts for the largest share of industrial output - the sector provides income and employment to mainly rural and peri-urban people, and is a considerable stabilizing influence on the well-being of local communities. Rural industries enable people to work close to home, enjoy the hours and conditions of work that are generally better than the equivalent in agricultural production, and to gain a sense of achievement from the acquisition of new skills, new information and a sense of participation in community development. The same is not always the case with the search for industrial work in neighbouring cities.
The agro-industrialist also gains; from access to raw materials at point of production, reduced transport costs, better relationships between management and workers, and the skills and intellect of an educated workforce that also has a vested interest in making the factory a success in the community. Profitability is essential for security of both worker and factory owner, and herein may be a need for enterprise support from joint private and public sector groups. Ultimately, it is the entrepreneur who takes the major financial risk with industrial investment, but the ramifications also affect the rural community with access to the security of employment provided by the enterprise.
The models involved are variable, with considerable linkages existing between the dual economies of, for example, a "traditional" agricultural sector and a parallel "modern" industrial sector. The definitions of these models are beyond the immediate interest of the technical seminar, but characteristics of land scarcity and labour abundance (in agriculture), the enclave nature of an industrial enterprise in a rural setting and, importantly, the distinct division that exists between rate of profit for the two sectors, make presumptions that suppose that, whilst labour and products can flow freely between the two sectors, capital does not. There are important implications herein for pricing and pricing support, and the establishment of industrial wage levels (4).
Government can provide an appropriate environment in which to encourage agro-industrial development, to enable it to establish and to function profitably. The establishment of laws, policies and regulations that are consistent with the promotion of processing, transport, markets, financial support and similar, are essential for the well-being of the private sector. Contract law provides security for those involved with commercial transactions (5).
Coconut Industries
Many of the constraints (and advantages) of small-scale agro-industries development are characterized by coconut industries in India. Fragmentation, family enterprises, limited innovation, support and information, and a way of life that has changed little, notwithstanding the industrial development of the country. However, these same coconut industries - when fully integrated - are capable of providing food, beverages, fibre, oil, timber, charcoal, chemicals and other products, and are responsible for the livelihood and well-being of an estimated five million farm families in the country. Coconuts are unique for their contribution to food production (in addition to the edible oils production), for example, for fully 60 per cent of the total production of nuts in India are consumed as mature nuts (6).
India has an estimated 15 per cent of the share of the land under cultivation of the major growing countries (in total 11 million hectares), and produces an estimated 23 per cent of world production of nuts (in total 49 billion nuts) (7).
Coir Fibres Industries
Regional
India and Sri Lanka continue to dominate brown fibre production in the region and, by definition, in global terms. Production in SE Asia, coastal Africa and Pacific rim countries is insignificant by comparison to South Asia. Coconut production in Malaysia, Philippines and Thailand - countries which are rapidly industrializing at the expense of a traditional agricultural sector - has remained stable during recent years. At production levels of the order of 9,000 t per annum, only Thailand is featured in published information (8). Fully 100 per cent of the Thai crop is exported.
Global
Production of brown fibre has continued to expand and reached 216,000 t in 1996, of which 70 per cent was from India and 27 per cent from Sri Lanka. Comparisons of domestic production show India expanding of the order of 10,000 t per annum during the past seven years, and production in Sri Lanka declining by 2-3,000 t per annum during the same period. Production of white fibre (for yarn) in India has remained stable at 127, 000 t during the first half of the 1990s (8).
Notwithstanding domestic production, Sri Lanka continues to dominate export markets for brown fibre, with deliveries of the order of 50,000 t per year during recent years. There is a slow decline in exports in line with production trends. India, by comparison, continues to consume the bulk of domestic production, with exports minimal and of the order of 1,000 t or less per annum.
Markets are firm, and continue to grow slowly of the order of four per cent annually - matching the trend of the past 15 years. Thus production of the order of 300,000 t can be expected by 2010, most of which will continue to be absorbed into the domestic Indian market, with exports continuing to fall slowly. Similarly, exports of brown fibre from Sri Lanka, following similar trends, are expected to be of the order of 30-35,000 t by the same date.
India
The organized coir processing industry in India was established in the mid-19th century as part of the colonial heritage of the country. It was originally dominated by large-scale manufacturers until the time of independence. The disposal of plant and the repatriation of the business sector at the time resulted in a shift of production to small- and cottage-scale. An estimated 500,000 workers and their families are currently dependent upon coir processing, and more than 5,000 manufacturers of coir products are known. Coir processing is second only to agricultural production as a source of employment in Kerala State. Kerala dominates the white fibre industry in India with 80 per cent of production; Karnataka (4 per cent), Tamil Nadu (12 per cent) and Andhra Pradesh (2 per cent) make up the remainder of production (3). In 1994, export earnings from coir fibres and fibre products were of the order of US$ 73 million (1).
Markets Exploitation
Notwithstanding the advantages of products made from coir fibres, international buyers who have traditionally purchased from India have become more quality and more price conscious, thus markets have become more difficult. Quality has also become an issue for domestic markets. As a natural material, coir, potentially, has a good image - it has excellent brushing and wearing characteristics, and it is relatively cheap. However, quality of manufacture can be mixed; the control of quality from the many hundreds of small-scale spinners and weavers is difficult to monitor and control. The range of products and designs available is strictly limited by tradition and, moreover, the range of dyes normally used does not hold fast to the fibres and sometimes fades badly. New product opportunities are frequently well-known (non-woven materials, agro-textiles and similar), but lack of development capital, lack of R&D and testing facilities, and commercial competition, frequently preclude the sharing of industrial information. New markets have to be conceived, developed and exploited for industries to survive.
Coir fibres have an image problem that has not been addressed by the trade. Coir may be environmentally "friendly" from a consumer point of view, but the same may not be the case at point of manufacture where, for example, the environmental issues of waste disposal (used chemical dyes, coir pith, etc.), pollution of water resources from retting, and the exploitation of low-paid workers, could become sensitive issues (9).
Future Options
Many of the constraints with market exploitation are well-known to those involved with industrial planning, and were summarized in a thesis prepared by a previous Secretary to the Coir Board as part of an MBA Degree in 1992/3 (10). Following a survey of the Indian coir fibre industry at that time and, in particular, the performance of the export sector, a number of recommendations were made of which the most important were:
the establishment of a firm marketing plan (new markets, existing markets, appropriate pricing policies, etc.); and the use of external consultants and expertise with which to make this study and formulate action;
the further exploitation of markets for white fibres, and the competition and/or the synergy that may be encouraged between markets that exist for both white and brown fibres;
the need to educate consumers on the benefits of natural fibres (mechanical properties, brushing qualities, resilience, etc.);
the need for improved R&D innovation and effort - for manufacturing, design and sales - to introduce more competition, to improve colour fastening, softening, to establish standards and similar;
better market delivery performance - to overcome port handling, shipping and similar constraints; and
the need for increased promotional spending (that is, to provide support for the importer), more particularly for new markets.
Project GCP/RAS/149/CFC "Coir Processing Technologies"
A project to examine some of the technical constraints with industrial development was proposed by the Intergovernmental Group on Hard Fibres during the early 1980s, and came to fruition with a regional proposal in 1993, to examine specific industrial technologies that were perceived to be ready for change. A strategy was proposed to examine drying, softening, bleaching, dyeing and printing, shared between India and Sri Lanka, undertaken by respective National Counterpart Organizations (NCOs), and funded in part by the Common Fund for Commodities (CFC). A project budget of US$ 966,000 was proposed, of which US$ 416,000 (43 per cent) was provided by the Fund, and counterpart funding of US$ 299,000 (31 per cent) from the Coir Board in India and US$ 252,000 (26 per cent) from the Coconut Development Authority in Sri Lanka representing the NCOs. Apart from drying activities, all field work has been/is being undertaken in India at the Central Coir Research Institute at Alleppey, Kerala State.
The project officially began field work in mid-1995 and has, thus far, been reasonably successful with what it has set out to do. An Evaluation Mission from the CFC, fielded in early 1997, was critical of project design, implementation and some aspects of management and performance, but generally complimentary of the progress made, for example, by the NCOs with implementation of their respective field activities at that time. Notwithstanding progress with these activities, a period of project extension was recommended for the latter part of 1997 - thus extending the project for a duration of 30 months. The technical seminar, at which this paper is being presented, is one of a number of promotional activities recommended by the CFC Evaluation Mission, to highlight the work undertaken and to encourage partnership arrangements with private industry.
Field activities remain incomplete, and consideration is being given by project management to a further period of extension, to enable consultants to be fielded, training to be undertaken and end-of-project reporting to be finalized.
New Project Initiatives
The CFC/Governments of the India and Sri Lanka project have stimulated interest in coir processing technologies, and several "follow-on" initiatives have been proposed by those involved with project execution. The promotional document prepared in early 1996 by the Coir Board for development of the CCRI contains numerous sectors for which R&D work is required, viz. extraction of fibres, development of spinning ratt, processing technologies, product diversification, loom improvement, standards, rubberized coir, weaving, geotextiles and similar (11).
An outline of a proposal dated September 1997 describes a Dutch Government-financed initiative of the value of US$ 500,000, shared in a ratio of 4:1 Dutch Government and the Dutch and Indian private sector. The work will centre on commercially-promising coir processing technologies, much of which will be undertaken with the CCRI. This proposal has, thus far, not received funding support.
The Coir Board has provided the outlines of two initiatives in 1997, viz. "Development of Spinning Machinery for Coir Fibres" and "Biological Applications in Coir Processing for Pollution Abatement". Both proposals have a duration of three years and both have arisen from current work programmes with the CFC project. The projects will focus upon technical sectors concerned with, respectively, (a) spinning machine technologies, automated mechanisms and blending of natural and synthetic fibres, and (b) biobleaching, biosoftening, pollution control, and the use of coir waste. Funding required is of the order of US$ 500,000 for each proposal.
A third proposal received from the Coir Board in 1996 concerned "Bio-Conversion of Coir Wastes into Enriching Medium", and has a two-year period with an investment of US$ 175,000. The project focuses on developing uses for coir pith for agricultural and horticultural use. The work will be undertaken by the CCRI.
There is a considerable inertia with continuity from one project to another, and many resources can be lost during a period of changeover - always assuming that the follow-on initiative is eventually funded by a friendly donor. There is much to be gained from partnership arrangements between private industry and the public sector (as represented by the Coir Board/CCRI) with initiatives of this kind, with funding and support which may enable R&D activities to be continued, with guidance and management from those responsible for commercial manufacturing and sales.
Donor funding is, increasingly, under severe competition from many requests, representing many poorly-supported industrial sectors. Ultimately, there can be no certainty that donor funding will be available, notwithstanding the goodwill developed and an extensive network of contacts that has evolved during the period of an existing project. The only firm source of funding is that which may be immediately available from within the domestic industry. For this to become available to shared use within a public institution, the industrial partners must be convinced that they have access to decision-making, that the R&D work be relevant to their needs and that the R&D workers are seen to be well-motivated and cost-effective. This, then, is the challenge facing the Coir Board with the existing project coming to an end.
Concluding Statement
Coconut industries in the country have changed out of all recognition during the past 50 years, and trees are grown and products are processed in regions of the country that would not have been considered practical earlier. Processing technologies have not kept pace with the increased production available, and with the enhanced agronomy and crop improvement practices that have been adopted. The gap between the producer and the processor remains wide, but production continues to expand.
There are many coconut products that are under-exploited in the market, of which coir fibre (and coir pith) is no exception. Coir is different from the other products, however, in that it is the only significant by-product export earner. There are international markets to be further exploited, in competition with other producers, for the sale of high quality materials and goods that meet the purchasers’ requirements. Only then can security of employment and income for the many thousands of industrial workers be certain.
Bibliography
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