What do we do with an industry we practically invented a few decades ago, where we are now falling behind a close neighbor and our own production levels are falling fast? From a high of 103,000 metric tons in 2004, we produced only 84,000 tons of raw dried seaweed (RDS) in 2010, Antonio Yuri Yap, secretary general of the Seaweed Industry Association of the Philippines (SIAP) told me last week. It had been even lower at 70,500 tons in 2009, according to SIAP data.
Still, we continue to have the largest processing capacity worldwide (nearly half of global production) for carrageenan, the versatile product derived from seaweeds, in high demand due to its multiple uses. It is widely used as thickener, stabilizer and gelling agent in the food, pharmaceutical and other industries. But with the declining domestic production of RDS, our carrageenan processors are now importing the raw material from neighboring Indonesia, which surpassed our own RDS production with 108,000 tons last year against our 84,000. Indonesia’s seaweed production began exceeding ours a few years ago, around the same time their average income also overtook ours (making us now the poorest among the five original members of the Association of Southeast Asian Nations).
Both the Philippines and Indonesia produce the red seaweed warm water species Kappaphycus (Cottonii) and Eucheuma (Spinosum), with Cottonii making up over 90 percent of Philippine production, and the bulk of world demand. There are also cold water species (Chondrus crispus and Gigartina) that grow wild along the coasts of the North Atlantic and Pacific. In the 1980s, development of the Philippine carrageenan industry was focused mainly on its use as gelling agent for canned pet foods. But consumer demand shifted toward dried pet food products, forcing the industry to refocus toward human food uses, which entailed a long process of convincing the European and US governments to approve it as a human food ingredient. Now, only 10 percent of the total carrageenan output in the Philippines goes to pet food uses.
Seaweed is particularly significant to us as it is grown mostly in Mindanao, with nearly two-thirds coming from the Autonomous Region in Muslim Mindanao (ARMM), particularly Sulu and Tawi-Tawi. An important source of livelihood in those island provinces with among the worst poverty in the country, it can be a key instrument for poverty reduction and for securing peace and development in Mindanao. This would require further expanding the industry and making its benefits more widespread. On the contrary, however, it is moving in the opposite direction of attrition and decline.
Why this decline? The industry’s historical transformation to its current state is an interesting study on how a specific value chain can evolve over time at the expense of the industry’s most basic building blocks, the seaweed farmers. A recent value chain assessment on seaweed and carrageenan observed that the linkages between farmers and major processors had grown more distant through time. In the 1970s, the three major companies then operating were integrated firms that directly engaged in field-based research and development, extension support for farmers, and development of new production. In the 1980s, two large local processing companies (Shemberg and Marcel) emerged as demand for pet grade carrageenan grew. They developed extensive supply networks in the major production areas, providing a range of support services that included financing for farmers. As the industry moved into human food uses in the 1990s, further growth in the industry spawned more layers in the value chain, and direct support from large buyers to suppliers consequently diminished.
Yap further recounts the story thus: Shemberg and other processors “got burned” and retreated from financing the farmers, who increasingly defied their commitments and sold their yield to emerging local traders offering better prices (initially at least). The processors thus failed to recover their farmer advances, leading them to cease lending. The traders took over the financing of farmers, until they got similarly burned as farmers sold their harvest to new emerging “fly by night” traders, who also added a new trading layer to the value chain with some minor additional processing. Meanwhile, processors were in no mood to cut through the new layers that had emerged, partly out of fear of reprisal, and partly out of greater convenience in dealing with fewer suppliers (i.e., wholesale traders). The end result has been a general decline in available financing for seaweed farmers, even as more layers of trading and semi-processing had the effect of squeezing farm gate prices. Meanwhile, declining productivity is attributed to climate change and lack of quality planting materials. With financing drying up and returns to seaweed farming shrinking, many farmers have turned to fishing.
Can we reverse the decline, and retake the lead from Indonesia? We can, but we must address the two most basic challenges now facing the seaweed industry: financing and productivity. Creative approaches are needed in financing, as the usual credit programs based on interest-bearing loans, prohibited under Islamic principles, cannot be applied to the mostly Muslim seaweed farmers. Raising productivity requires higher budgets and deliberate efforts in research and extension on seaweeds, with the Bureau of Fisheries and Aquatic Resources taking the lead. In the end, to sustain our seaweed industry is to sustain livelihoods and family welfare in many parts of Muslim Mindanao, and ultimately, peace and development therein.
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