The Competitive Context of the Sri Lanka Coir Industry

Trial site owner and geotextile weaver Mr. Ajith Shantha with 50meter roles of 2M width geo textiles	Tsunami affected family in Ambalangoda using the machine donated by TCP/USAID and CCI to restore livelihood

USAID/TCP distribution of 500 coir yarn spinning wheels.	Common Fund for Commodities (CFC) Mr. Sietse Van der Werff visiting the model mill site in Dunkannawa

Global Market Context

Although Sri Lanka has traditionally been the lead exporter of coir fiber and pith, India holds the dominant position in terms of revenue generated by the industry, given the higher value-added component of its coir exports. Comparison of the value of coir products exported from India and Sri Lanka show that lower-value commodities- fiber and coir pith- account for over half of Sri Lanka’s coir exports, while more than 95% of India’s export revenues are from value-added coir based products, including yarns.

In view of the relatively small size of its domestic market, the production of raw fiber and related goods in Sri Lanka are almost exclusively driven by external demand (in contrast to India which has a large domestic market). Global coir production since the early 1990’s has grown by approximately 6% per annum, fuelled primarily by increased domestic consumption of woven coir mats in India. Coir exports on the whole did suffer during the 1970’s and1980’s due to competition from synthetic substitutes but have recovered since and experienced moderate growth.

Two market trends that have supported Sri Lanka’s coir industry in recent years have been the emergence of China as a principal buyer of Sri Lankan coir fiber for use in its rapidly expanding domestic mattress market and the resurging demand from German automotive manufacturers for twisted fiber for use in high-end car seats. The Sri Lanka coir industry has also recently seized several competitiveness enhancing opportunities such as moving into coir-based erosion control products (geotextiles) and high-end twine used in horticulture in North America and Japan. Since the early 1990’s, coir pith from Sri Lanka also experienced rapid growth as a peat substitute in horticulture.

Despite the above, the industry continues to be threatened by synthetics, stagnating world coir prices and the poor and declining profitability of small mills, which form the basis of the coir industry in Sri Lanka. Future industry success therefore lies in improved product quality and consistency, as well as the expansion of existing markets and development of commercialized new applications for coir that involve in-country value addition.

Industry Constraints

A key obstacle facing Sri Lanka’s coir industry is the absence of an effective quality control system, particularly between fiber mills and buyers. Coir Mills continue to use old and labor-intensive fiber extraction technologies and cleaning methods. Variability in husk quality, weather, and operating conditions, as well as poor plant layout contribute to poor quality— high dust content, short fibers, husk residues, and moisture in the fiber. Moreover, millers have little or no financial incentive to improve equipment and plant layout, or improve operations to achieve consistent quality. Several elements of the industry strategy pursued by the coir industry to enhance competitiveness therefore targets the need for “quality management” on all levels.

Workforce

The Sri Lankan coir provides at least part-time employment to an estimated 40,000 persons. At the beginning of the value chain are approximately 300 fibers millers (with usually less than 10 employees) and an estimated 500 suppliers of coir pith, or dust. Their output is either purchased for direct export or undergoes manufacturing for twine, mats and brushes, rubberized coir mattresses and pots, geotextiles and pith products. Products which are technically more demanding or better suited for mass production, such as high-end twine, brushes, rubberized coir and erosion control blankets are predominantly produced in larger facilities, employing more than 20 persons.

Coir Industry Statistics

Contribution of the major industry segments to total coir exports in 2003 and industry projections for the year 2007.

The Coir Council International

The Coir Council International (CCI), successor to the Sri Lanka Coir Cluster, is the industry apex body established to promote growth and development of the Sri Lanka coir industry. CCI is the outcome of the Coir Cluster’s industry strategy and Task Force Road Map and was developed by industry stakeholders under the auspices of the U.S. Agency for International Development (USAID) sponsored program, The Competitiveness Initiative (TC).

The CCI was Incorporated under Section 21 of the Companies Act No. 17 of 1982, on 19th November 2003 with representation from all stakeholders in the value chain. CCI’s 21-member board comprises of growers, millers, manufacturers and exporters represented through their respective associations; as well as representatives from the academia and related government sector institutions.

The Ceylon Coir Fibre Exporters Association, Sri Lanka Coir and Allied Products Manufacturers Association, Miller’s Associations (Seemasahitha (Janatha) Eksath Kohu Nishpadakainge Apanayana Sanwardana Samagama and Kohukarmantha Himiyange Sahayogatha Samithiya) and Coconut Grower’s Association of Sri Lanka represent respective industry stakeholders. The public sector and academia are represented through the Coconut Development Authority (CDA), Coconut Research Institute (CRI), Ministry of Industries, the Industrial Technology Institute (ITI) and the University of Moratuwa.

Role / Objectives

The mission of the Council is to support the Sri Lankan coir industry improve competitiveness and achieve viability through innovation, coordinated research, enhanced market intelligence, workforce development and effective representation.

The primary objectives of the Council are:

	To ensure the ability of all Sri Lanka coir industry segments to compete effectively and profitably in the coir fibre and manufactured product markets at home and abroad;
	To engage in and promote scientific research in the coir and coir related products industry;
	To upgrade the technological and skill content of industry;
	To conduct training and development programs at industry level;
	To serve as the central forum for consensus building among growers, millers, manufacturers and exporters of coir and coir products;
	To be the unifying force in working with the government to ensure that the interests of the coir industry are considered;
	To support public sector policymaking through recommendations generated by the CCI’s four program committees –Research & Development, Market Development, Government Affairs Administration and Finance, Workforce Development & Training.

Key Strategic Initiatives

Contact Information

Offices:
Coir Council International
C/o National Agribusiness Council
503, Sri Jayawardenapura Mawatha
Etul Kotte.
Telephone: 94-11-4716364
E mail: coircouncil_int@yahoo.com

Contact:
Ms. Nelun Herath
Program Assistant
Coir Council International
C/o National Agribusiness Council
Website: http://www.coir.lk