Seaweed industry appeals for gov’t financing

CEBU CITY — Seaweed traders and farmers are seeking government financing to boost production, in the face of the twin threats of raw seaweed shortage and competition from Indonesia’s fledgling carrageenan industry. Members of the Seaweed Industry Association of the Philippines (SIAP) warned that a commodity price war could erupt as processors and traders scramble for supplies when Indonesia, which supplies a third of Philippine processors’ requirements, bans the export of raw seaweeds in 2012 to stimulate its seaweed processing industry. "We should really anticipate the effect of that [Indonesian ban]. In SIAP, we’re looking at how we can help each other. If processors are operating viably, all other players will also benefit," said Ismael Abubakar, Jr., SIAP chairman and former speaker of the ARMM Regional Legislative Assembly. The Philippines, once the world’s largest suppliers of raw eucheuma cottonii seaweed, has become a net seaweed importer and a major supplier of carrageenan, a seaweed derivative used as ingredient in processed meat, pet food, dairy and pharmaceutical products. Exports of value-added carrageenan have surged, topping 140,000 tons as of May this year. But raw seaweed production has plummeted to about 60,000 tons this year from a high of approximately 150,000 tons during the Philippine seaweed industry’s so-called golden years (1977-1990). "Our seaweed production has not been able to keep up [with the demand]. We should be producing more seaweeds to be able to produce more carrageenan," said Benson U. Dakay, SIAP president and Shemberg Marketing Corp. chief executive officer. About four tons of dried seaweed is needed to produce a ton of carrageenan. Southern Philippines, once considered the seaweed granary of the world, has been replaced by Makassar, Indonesia, although large seaweed farms are still found in Zamboanga, Basilan, Jolo and Tawi-tawi. Carrageenan producers, led by Shemberg, have been sourcing since 2006 part of their raw seaweed requirements from Indonesia, whose seaweed industry took off in 1982 ironically with a kilo of seaweed seedlings from the Philippines, Dakay said. Indonesia now produces about 110,000 tons of raw seaweeds, almost double that of the Philippines’, and, following the path taken by the Philippines, wants to produce more value-added carrageenan. Area-wise, the Philippines, which has only 7,100 islands, already loses to Indonesia, which has about 17,000 islands. Having farmed only less than half of its islands, Indonesia has the potential to outperform the Philippine seaweed industry. SIAP has blamed the declining Philippine seaweed output on the lack of credit facilities for the farmers, shortage of high-yielding seaweed seedling banks, lack of post-harvest and farm-to-market facilities, and global warming. Dakay said he and other processors used to advance the funds to cover production costs of the farmers under their group’s Adoptan-Island program, which allowed the processors to privately develop seaweed farms to complement government efforts to boost supply. "We don’t have the funds anymore. The government, not the private sector, should now advance the money [to farmers]. It’s time for the government to come in," Dakay said. "In Indonesia, the farmers have all the support, financial and technical, from the government. Our government should do the same," he added. Seaweed processors have had to deal with raw material shortage since 2004, when Chinese traders invaded the Philippine market and started sourcing their seaweed requirements from Mindanao. Demand outstripped supply, despite a government program launched in 2003 that aimed to increase annual production by 31 percent through the expansion of existing seaweed farms in 36 provinces and development of new ones in 14 other provinces. Dakay and other SIAP members, however, were disappointed by the results as production has consistently gone down — to 90,000 tons in 2006 and further to 60,000 tons this year. Farmgate prices of the raw Eucheuma cottonii seaweed, on the other hand, have increased to P65-P70 per kilo this year from P45 in 2004 and about P30 in 2002. "What was signed [in 2003] was just an agreement among government agencies to enhance and prioritize seaweed production. But there was no substantial increase in production after the signing," said Hadji Adam S. Omar, director of SIAP and chairman of the Western Mindanao Seaweed Industry Development Foundation, Inc. Omar said nurseries and demonstration farms were established, but were not sustained due to lack of funds and unfavorable weather conditions. He cited a 1,000 hectare deep-sea seaweed farm off the coast of Zamboanga that was destroyed by strong waves in 2001. The farm, which was put up by a group of farmers, has not been rehabilitated since then. "They [farmers] don’t have the funds to rehabilitate the farm. Besides, deep-sea farming is considered high-risk and the banks required them to secure crop insurance," Omar added. Deep-sea seaweed farming is also expensive, requiring an investment of about P300,000 for a one-hectare farm, Omar added. — Marites S. Villamor, BusinessWorld