Indonesia threatens RP seaweed dominance

Zamboanga City – The golden weed from this country’s shores might see less glitter in the global marketplace, if our neighbor Indonesia continues working doubly hard to snatch its own niche as the world’s top producer and supplier of raw dried seaweed and high quality semi refined and refined carrageenan. This was the conclusion reached at the recent 6h Mindanao Seaweed Congress.

The steady production growth of Eucheuma cottonii seaweed in Indonesia has put the Philippines’ seaweed industry under threat. Figures presented by Farley Baricuatro of the FMC BioPolymer Indo-Pacific Sourcing Center showed RP market share for seaweed has been dwindling by about five percent annually in favor of Indonesia, Vietnam and Cambodia. From only 31,000 metric tons in 2001, Indonesia produced 55,000 MT of Eucheuma cottonii seaweed (with 38-42 percent moisture content) last year. It boasts of a 21 percent production growth rate since 2001.

With a coastline stretching almost three times that of the Philippines, and with farmers enjoying government concessions and private sector financial support, Indonesia is the next preferred global supplier of Kappaphycus spp. otherwise known as Eucheuma cottonii by trade, the seaweed from which carrageenan is extracted. Carrageenan is a hydrocolloid widely used in various industrial and pharmaceutical applications. It is used as an ingredient in ice cream, toothpaste, pet food, medicine capsules, suture threads, and may even be effective against fighting human immunodeficiency virus (HIV) and dengue virus.

The Philippines, which has been the leading supplier of seaweed for years, has been experiencing sluggish production for the past three years. Data from the Seaweed Industry Association of the Philippines (SIAP) revealed production growth rate in the country averaged only 2.6 percent since 2001. Last year, export earnings from seaweed products amounted $144 million, only 0.3 percent higher than $143.59 million registered in 2003. Thus from supplying around 80 percent of the world’s demand for carrageenan, the Philippines last year was only able to capture just 68 percent of the global market.

The sector is currently saddled with many problems, among them high costs of production, transport, hauling, shipping and marketing services brought about by the continuing oil price increases, according to Alfredo O. Isidro, seaweed and aquaculture development advisor to the USAID-funded Growth with Equity in Mindanao (GEM) program.

"With the increasing costs, growers have to do value-adding in their raw dried seaweeds to offset transport and shipping costs," Isidro suggests. He said pre-processing activities such as production of alkali-treated seaweed chips, clean anhydrous weed (CAW), and other forms of semi-processed seaweed using indigenous fuel may be initiated at the village level.

Seaweeds sourced from Indonesia, although of lower quality, are cheaper by up to $150 per metric ton compared to those produced in the Philippines. Isidro said this has driven China, one of the world’s biggest processors of semi refined and refined carageenan, to source their raw materials from Indonesia instead of the Philippines.

While Philippine produced seaweed for export is relatively expensive, the buying price for raw dried seaweed is cheap. The low buying price of P27 per kilo has discouraged farmers from increasing production or expanding farms. Exporters and processors claim that because of high costs of hauling, transporting and shipping the seaweed, they are forced to buy raw dried seaweed at lower prices. Seaweed exporter John Cabanes at the Congress said some of the Zamboanga-based exporters have decided to cease operations due to financial problems.

With this development, Isidro predicts a stronger cooperation will exist among all the stakeholders. "Growers need to consolidate and engage in operating as a group to command better prices. Or seaweed traders, exporters, and processors have to come up with a set of plans that may include provision of financial support, technical and marketing assistance to promote the industry," Isidro proposed.

The seaweed industry may actually bring forth peace and development in Mindanao, according to Vice President Noli de Castro, who graced the opening ceremony of the Congress. But for the sector to survive tough competition in the global market, industry players which include the government, private sector, non government organizations must converge to bring positive developments not only for their own interests but for the "good of the country," according to de Castro.

Agriculture Secretary Domingo Panganiban issued the same call, as he urged the private sector and NGO representatives to assist in further addressing supply chain, production and export problems. He lauded the GEM program for assisting former Moro National Liberation Front (MNLF) fighters to venture into seaweed and high value finfish production.

Hadji Adam Omar, chairman of the Western Mindanao Seaweed Industry Development Foundation Inc. (WMSIDFI), said various efforts have been initiated to improve the sector, among them intensified production and culture of high quality raw materials, strengthening of traders and farmers groups, and trainings on the strict observance of quality standards.

"With the assistance of our partners such as GEM, SIAP, the local and National Government units as well as those from the academe, we were able to conduct various seaweed fora which focused on the needs, challenges and potentials of the industry, and how the LGUs can better help in developing the industry," Omar said. Trainings on seaweed productivity, licensing, and quality management were likewise conducted in several seaweed-producing barangays in Zamboanga City and Zamboanga del Sur.

WMSIDFI, with technical and financial assistance from the Department of Science and Technology (DOST) also established a seedling bank to address lack of good planting materials. Omar acknowledged that despite these efforts, "a lot of work is still needed" to further develop the sector.

Seaweed exports in 2004 contributed about 21 percent of the country’s total fisheries export value, based on the Bureau of Agricultural Statistics (BAS). Of the total 128,159 MT of seaweed shipped out of the country, 31,898 MT were raw dried seaweed valued at $17.95 million, while 24,340 MT were semi-refined carrageenan, valued at $93.96 million. A total of 3,717 MT of refined carrageenan, on the other hand, brought in $32 million for the country. The world demand for carrageenan is expected to grow at 10 percent annually. – (GEM Program)