Volatile seaweed prices imperil 500 thousand jobs

CEBU, Philippines -

“Volatile seaweed prices in our country scare carrageenan buyers,” said Seaweed Industry Association of the Philippines (SIAP) president Benson U. Dakay yesterday.

According to Dakay the Philippine seaweed prices had been very volatile for the past three years now scaring away the carrageenan buyers and users worldwide.

“For decades, the Philippines had been the biggest seaweed producer in the world but it has been overtaken lately by Indonesia due to its decreasing seaweed production,” Dakay said.

In 2005, the Philippine raw dried seaweed (RDS) production (carrageenan-based) was the highest at 110,000 metric tons (MT) while Indonesia produced only 74,000 metric tons.

However, in 2009 the trend reversed with Philippine RDS production at 70,000 MT while Indonesia was 90,000 MT despite the EI Niño that hit Indonesia in the months of September to November.

The continuing high demand of RDS in China and the low seaweed production are the major contributing factors of the erratic carrageenan prices worldwide since 2008.

Average seaweed price in 2008 was US$2500/MT and US$ 1600/MT in 2009.

At the start of 2010, seaweed price was at the level of US$ 1200/MT, but again it had shown a steady climb and is now reaching the US$1600/MT level.

With the onset of the EI Niño phenomenon in the Philippines and the continuous rains in Indonesia, it is a possibility that seaweed prices will be a roller coaster.

“Such volatility and erratic pricing had put the carrageenan on threats of being substituted by other food hydrocolloid ingredients such as modified starch, gelatin; alginates, agar, pectin, xanthan gum and others which had shown stability and lower prices.

Dakay said that Carrageenan buyers and users worldwide are now clamoring for a steady and stable price (RDS at the level of US$1400 - US$1500/MT), otherwise the total substitution of such food ingredient will materialize sooner than anyone in the industry expects.

“The industry may start to see ‘sunset’ of the once touted sunrise dollar-earning industry,” he added.

This scenario could only be averted if all the industry players such as seaweed farmers, traders and the manufacturers will have one direction in addressing the problem.

Carrageenan, a food hydrocolloid and ingredient extracted from the red algae seaweed, is a multi-billion dollar business and is considered a major dollar-earning product of the Philippines. It is exported all over the world with the biggest markets in Europe, the America and had a substantial market growth in the Asian region for food, cosmetics, neutra / pharmaceutical, petfood and various non-food applications.