Seaweed producers project zero growth in three years

CEBU, Philippines – Seaweed producing countries, of which the Philippines is one, now project a zero growth rate in the next three years due to the lingering effects of the global economic crisis made worst by the substitution of carrageenan with other hydrocolloids.

Seaweed Industry Association of the Philippines (SIAP) president Benson U. Dakay, made this projection in his speech held in Indonesia recently during the Seaweed Business Forum.

Dakay, the president of the world's largest carrageenan supplier, Shemberg Marketing Corporation (SMC), called other Asian producing countries to unite and start collaborative efforts to fight the odds of the seaweed industry.

"Let us unite our efforts, make our moves and do it fast to keep this industry going," Dakay told Indonesian seaweed producers and other international participants of the seaweed business forum.

According to Dakay, the top seaweed producing countries in Asia, Philippines, Malaysia, Vietnam, and Indonesia, may be facing a rough road ahead, although there are still opportunities along the way.

In 2009, total demand of carrageenan in the world market was 55,000 metric tons, but it is expected to drop this year to 50,000 metric tons due to the crisis.

Carrageenan users slowly shifted to SRC food grade and RC Gel pressed products.

On the other hand, Dakay said new applications for carrageenan-based products have given hope for the industry to post growth despite the threats.

"On animal-free soft gel capsules, biodegradable digestible films and microbicides for AIDS-prevention adds hope to the future of the carrageenan industry," Dakay said.

Dakay said seaweed producers and seaweed exporters from Asian countries have to brace themselves from facing zero or negative growth of carrageenan industry due to unstable seaweed and carrageeenan prices, over capacity in carrageenan production.

"There is a number of major weaknesses and threats contributing to a gloomy future of the industry. So much could be done by the industry players to convert what are controllable into strengths." Dakay said.

Carrageenan-based hydrocolloids are only covering 18 percent or US$315 million or the US$1.75 billion food hydrocolloids market in the world. Competing it are Starch, Gelatin, Pectin, Xanthan, GumArabic, and others which are substitute to carrageenan.

On the other hand, Dakay emphasized that carrageenan suppliers have to further emphasized its strength, being a natural, organic, plant-based food ingredient. This proposition is expected to bring about turn-around of the declining carrageenan-based hydrocolloids demand.

On the other hand, Dakay also underscored the uncontrollable threats of the industry, that will weakened players to stay a float, these are the unstable prices of carrageenan since 2008 up to present, which scared away some buyers, and the raw materials are very depended on nature, which is mostly affected when typhoons, floods, El Niño and La Niña are experienced.

Significantly, he said duties and tariffs for carrageenan are still barriers in most countries.

"Three of the biggest threats are beyond our control. These are global financial crisis, natural calamities affecting seaweed supply and diseases of the seaweeds affecting quality," Dakay said.

Other threats however, such as the substitution or replacement by other good hydrocolloids, food safety issues, and international regulations can be worked out by stakeholders of the industry, if a more pro-active and joint-effort among seaweed producing countries shall be implemented, he concluded. (THE FREEMAN)