Seaweed industry forex volatility dampens recovery hopes

CEBU, Philippines - True to its projection early in 2010, the seaweed exports in the Philippines were able to seize the recovering consumption market in the United States, and almost hit the 2008 level of export volume.

However, the supposedly recovering demand for processed seaweed products or carrageenan could have brought “relief” to the seaweed exporting companies, if it were not for the unpredictability of the foreign exchange movement, which made the year 2010 a “roller coaster” ride for carrageenan exporters.

Seaweed Industry Association of the Philippines (SIAP) president Benson U. Dakay said that despite the improving demand from the US market, about five seaweed processing plants have continued to temporarily shut down their plants this year, because of currency problem coupled with the threats from Indonesian players who are slowly eating up on the world market.

This year, the seaweed industry is projected to close the year with a total export value of US$200 million, close to the US$250 million recorded in 2008. Dakay said this year’s figure could have done more, if the Philippine government were serious enough to help the industry, in terms of tampering the wild movement of foreign exchange.

In 2009, the seaweed sector experienced one of the worse years in recent times, with US$180 million total exports recorded. Dakay said while the Philippines was able to take advantage of the US market recovery in the last two quarters of 2010, the foreign exchange movement brought about the sluggard growth.

The carrageenan export which is largely dependent on the US market is now riding the consumption recovery, however, it needs full support from the government especially in stabilizing the currency, helping the farmers, and other measures, Dakay said.

Although the market has improved, Dakay said “everybody lost money” because of the wild foreign exchange in the Philippines, and the selling price is too low, because of stiff competition from other countries like China, and Indonesia.

The seaweed industry in the Philippines, which primarily provides the food-grade specie of seaweed grown the Philippine shores, is providing livelihood to over 100 thousand families across the country.

According to Dakay, this year, some of the family members of the farmers have started to look for other jobs, like going abroad, to sustain the family’s daily income, while seaweed farming has become less lucrative.

Besides, Dakay said because of the government’s lack of support to farmers, production capacity from Philippine seaweed farms have decreased from producing 150 thousand tons of raw seaweed a year, to 80 thousand tons today.

Because of this, most seaweed processors, and exporters are importing their raw seaweed requirement from Indonesia, because of good quality of their produced.

Calamities, and the different effects of global warming are two of the new factors that weakened the Philippine’s edge in the production raw seaweed.

This is supposedly the time that the government should make efforts in providing the farmers with proper technology to sustain the production. “Unfortunately, the government has different priorities now.”

Carrageenan is a hydrocolloid extracted from red seaweeds that is used as an ingredient in food, dairy, air freshener, oral care, pharmaceutical products, personal care products, biotechnology research and other industrial consumer product applications.

The product is used in a variety of commercial applications such as gelling, thickening and stabilizing agents, especially in food products such as chocolate milk, cottage cheese, frozen desserts, yogurt, pet foods and sauces. About 70 percent of the world demand for the product is for food purposes.       

As “nobody eats/drink as much chocolate, milk, chocolate-milk, ham, as Americans,” the US remains as the single largest carrageenan market in the world.

About 70 percent of the total carrageenan exports from the Philippines go to the United States.

According to Dakay, although the demand is there, the unresolved shortage of supply from the seaweed farms and the declining quality of the produced coupled with the unstable foreign exchange are just few of the challenges that exporters have to face in the coming years. (FREEMAN)