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Cyclone Gaja tests resilience of coco industry

Coco coir is used broadly in the horticultural industry. Being renewable and reusable, it offers growers an alternative with lower discarding costs. In addition, growing on a plant-based substrate is valued by its users, as well as the forgiving nature of the substrate: it can contain a lot of water and realise a constant supply to the plant. The global demand is on the rise. With most product for the horticultural industry coming from India and Sri Lanka, recent weather has put up challenges for the industry. How are coco suppliers dealing with this and will growers be affected by it?

Let’s start with India. The Indian coconut industry is hoping to be back on track next year. Cyclone Gaja hit the Indian coast on November 15 and 16. The damage done to the coco industry has come to light these days: many coco farms are demolished, and Pattukkottai, a major supplier of coco pith, has also been hit. The price of coconut has risen, and so has the price of coir pith. According to Mr Mahesh Kumar of the Federation of Indian Coir Exporters Associations, the pressure on the coco market is high. "As acres of coconut plantations have been wiped out in Pattukkottai and surrounding areas, the demand started turning towards another hub", he shares with the Times of India. "But due to the recent rain, drying coir in Pollachi might be difficult."

Gaja hasn't been the first bitter pill for the Indian coco industry this year. Starting last year, drought resulted in a lower yield of nuts per tree, and thus less raw material. And then there’s the rain in the current season, making it hard for the suppliers to stock up. "Sun is needed to dry the coco, but at the moment it's still raining. We're hoping the situation will improve soon, so we can start shipping larger volumes again”, Wim Roosen with Dutch Plantin says. The company works with Indian coco, and their supply is affected by the storm. Now there's rain affecting processing as well – possibly causing delays. "The last couple of months the whole business has been affected.”

Now, with the start of the new crop cycle, the demand is high. “Thanks to stocking up the raw material, we are able to send out all the orders we’ve taken. For the growbags and pots it will be in time, for the users of coco it might result in a short delay.” To make sure they can live up to the expectations, the company had to withhold clients from ordering 5 kg blocks. “Of course that’s not something you want to do, but quality and trustworthiness are most important for professional suppliers in the industry. Restocking the blocks might take up to two months. We’re expecting things to normalise after Christmas.”

Drought influences nut yielding
At Pelemix they are also aware of these challenges. The past two years they’ve seen the pressure rise on their Sri Lankan and Indian production facilities. “The nuts yielding per tree were affected by the heavy drought, combined with monsoon seasons with not enough rain. This caused a lower supply of the raw materials in most of the regions, while our worldwide demand for some of the products lines increased rapidly. The second half of this year was better in those terms: the monsoon season has lots of rain, hopefully enough to recover the plantations from the years of drought”, Eli Shalmon shares.

But then Gaja occurred. “Even though we were not affected directly, this means the general production capacities in India will be lower. For us the damage can be covered, since we have facilities geographically spread: in India, Sri Lanka, and Thailand as well. We’re holding large volumes of dry protected stock of raw material and standard finished goods besides the ordinary demand for the day by day production”, Eli explains. “However, medium and small sized producers will face supplying problems. We need to be aware that the worldwide demand is growing continuously, which affects the raw material supply needs. We are investing and developing the company accordingly and planning our steps for the long run.” He continues, “our strategy as always, is keeping the clients aware of the situation, confirm orders only based on actual abilities, be transparent with the information and keeping the quality based on the highest standards.”

Market is growing in general
Jelte Veenstra, director of coco substrates with Van der Knaap, adds that the market for coco in general is growing. “Looking at the annual numbers, the export of Indian coco is the same as it was in the last couple of years, but the demand for coco substrates is rising year by year. In general the Indian production of coco products in October and November is down because of the rain, and because of the higher demand, many local suppliers sold their product before this time already.”

At Van der Knaap, inventory management is an important part of the business. “We’re constantly on the lookout for sources and adding extra production locations, since the demand is on the rise, but we only sell what we can deliver for sure. That’s why the current circumstances did not hurt us as much as some other players: our production facilities are spread out geographically, we can dry the coco mechanically and we’ve stocked up product strategically all over the world.”

Sri Lankan production
With many greenhouse companies not wanting to step away from coco, the demand for Sri Lankan coco is currently higher due to the Indian shortage - but also in Sri Lanka rain is affecting the industry. "Over here the supply of raw material is not an issue at the moment", Shan Halamba with Riococo shares. "But rain is. Whereas this is normally the dry season, ever since November it has rained every other day.”

"Drying the coir properly is a very important part of the process”, Shan continues. “It assures the coco coir to be safe, quality growing substrate that’s wanted by the professional greenhouse growers. Therefore all serious players in the coco industry take this activity to heart. Currently everybody is affected by the rain. It’s unusual for this time of year: normally this rain happens in July and August. Fortunately the weather is normalized now – with very little rain. That’s good, especially since the tourist season is starting as well. We expect to be back on the drying track early next year. This will not affect the orders being shipped."

Drying is the challenge
Also at Fibredust they’ve seen the weather change. “Like the other bigger players in the industry, we have a steady supply base – we’re making product all the time. The real issue is the rain nowadays: a tremendous amount has come down over the last couple of months. The drying of the coco is the challenge at the moment. Weather is improving, we’re set for this year, but we expect the weather to affect even more in the future. That’s why we’re investing in new methodologies for drying the coco. This way we can dry with and without the sun" states Satheesh Rao at fibredust. Having many sites in India and Srilanka has always kept us at great position. We have plenty of wet raw material and converting to dry position is always a challenge at certain times of the year. As always our existing customer orders will fulfilled with in reasonable time with out affecting their business needs. We are using different techniques to dry the material even during this rainy period. "Coir is here to stay and we will continue to evolve and invest to expand our production capacities to meet our customer needs"  states Andy Pidgeon at Fibredust 

Stocking up is key
Investing in dryers was done by Botanicoir two years ago. “Sri Lanka hasn’t been affected as bad as India, but it has still been incredibly wet recently and having the ability to dry continuously has been indispensable for us. We’ve stocked up the raw material and have been able to continue washing, buffering, and drying”, Kalum Balasuriya with Botanicoir recalls. “The drying stage used to be the bottle neck to cause problems with production flow, but with the mechanical dryer now we are able to continue producing, regardless of the rain. And now the weather has normalized, we can continue the drying outside as well, making us confident we can supply all growers on time.”

Like all the professional coco suppliers, Botanicoir receives many calls regarding the current shortage on the market. “Of course, we can only take so much, and we have almost filled our order book. We do not want to be taking on orders that we cannot fulfil confidently. The industry has been investing a lot over recent years and the levels of professionalism are high, substrate is a necessary product for growers. Even though we were not hit by it ourselves, it is very sad to see the effects of Gaia and we hope the situation will normalize again soon.”

Securing supplies
It’s evident that the coco suppliers are confident they can solve the current challenges – however, the rain will affect the smaller players in the industry. “The current developments and the need to invest in techniques will urge some of the smaller players to face challenges in the field since they can’t secure their supply base, something that’s a must in the current industry,” says Andy with Fibredust.


Shan with Riococo adds: “The professional players in the coco industry are investing continuously in securing supplies to growers. Therefore we are able to deal with the current situation and also looking to develop even further, whilst smaller players will be urged to leave the field since they cannot cope with the current pressure and circumstances.”

“Coco has convinced many growers, but the industry needs to professionalize further", says Jelte with Van der Knaap. "Even nowadays we get e-mails from producers who say they can deliver – something we know to be not true. These players have a negative impact on the industry in general. Also to the horticultural industry, the current situation shows the importance of stability, secured supplies and trustworthiness."

“This change causes shortage in the short run, but when the weather will improve during January, the production will keep on going as before, even with the influence of the cyclone in the Indian territory”, Eli with Pelemix agrees. “But it shows that the future is with the companies which are well organized regarding production capabilities. Collecting stocks of raw material during the drying season and spreading their facilities in different countries. The industry is facing this change now.”

Gaja will impact India for next few years. Millions of coconut trees wiped out and the supply will be affected in that surrounding region. India still has untapped areas and will be used in coming years to fill the gap. It is also vital for the customers to work with their well established coir suppliers who have the capacity to fulfill the needs even at difficult times.  "Regional diversification, newer techniques, added capacities are vital to this industry to evolve and provide solutions" says Andy Pidgeon at Fiberdust.


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