2009

VALUE CHAIN
ANALYSIS OF THE
SEAWEED
INDUSTRY IN
SAMAR

A study commissioned
by ICCO

Prepared by:

STRATEGIC DEVELOPMENT COOPERATION, ASIA (SDCAsia)

TABLE OF CONTENTS
Title Page
Number
Executive Summary 4
Section 1 Samars Position in the Seaweed Industry 11
A Share in the Philippine Seaweeds Production 11
B Share in Major Segments 11
Section 2 Characteristics of the Seaweeds Value Chain Samar 12
A Products 12
B Seaweeds Production Trend 13
C Value Chain Players 15
D End market Analysis 21
E Firm Level Upgrading 25
F Inter firm Cooperation 27
G Support Market 29
H Enabling environment 32
Section 3 Gender 34
Section 4 Constraints and Opportunities 36
Section 5 Upgrading Strategies / Interventions 41

2
ACRONYM
ARB Agrarian Reform Beneficiaries

BDS Business Development Services

BFAR Bureau of fisheries and Aquatic resources

BUDLIS - Barangay United Development of Livelihood Initiatives of Sawang

CASAFIPCO Carapdapan Small Farmers & Fishermen Producers Cooperative

CERD - Center for Empowerment and Resource Development, Inc.

DAR Department of Agrarian Reform

DOST Department of Science and Technology

DTI Department of Trade and Industry

GAqP Good Aquaculture Practices

GMP Good Manufacturing Practices

ICCO Inter church Organization for Development

LGU Local Government Unit

NGO Non Government Organization

PO Peoples Organization

RAGS Red Algal Galactans

SEAFDEC-AQD South East Asian fisheries Development Center Aquaculture

Department

SIAP - Seaweed Industry Association of the Philippines

SFAC - Seaweed Farmers Association of Capul

SPPI Sentro ha Pagpauswag ha Panginabuhi

SRC Semi Refined Carrageenan

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 EXECUTIVE SUMMARY

Production

Seaweeds account for 70% of Philippine aquaculture production. From 2001 2008,
production increased by 10 12% annually, but declined in 2009 due to unfavorable weather
conditions. Region VIII (Eastern Visayas) produces 21,000 MT of fresh seaweeds each year,
mainly the Kappaphycus alvarezzi or the cottonii variety, contributing 1% of Philippine
production. Leyte is the top producer in the region, contributing 80% (17,000 MT fresh),
followed by Eastern Samar with 15% (3,300 MT fresh). Northern and Western Samar combines
for 0.35% (74 MT fresh) of regional production.

Industry

Seaweed production in the Samar provinces was at its peak between 1997 and 2000. But
because of the destruction caused by successive typhoons which wiped out the seaweed farms,
and prevalent infestation of ice ice disease, a lot of seaweed farmers stopped planting
seaweeds. Vigan ARB Cooperative is a major producer of seaweeds in Eastern Samar, but is still
constrained by their very low production. In Northern and Western Samar, only a handful of
farmers continue to plant seaweeds, but maintaining only 1 to a few monolines per household.

Focus is now on the establishment of seaweed nurseries, which is being initiated by the Bureau
of Fisheries and Aquatic Resources (BFAR) and some NGOs and LGUs. BFARs roll-over
program however, is still on its initial implementation in Leyte. In Northern Samar, ICCO
partner Sentro ha Pagpauswag ha Panginabuhi (SPPI), in collaboration with Seaweed Farmers
Association of Capul (SFAC), have set up pilot seaweed nurseries. The various seaweed
stakeholders of Samar are described below:

As of October 2009, there are around 90 seaweed farmers (63 male; 27 female) in the 3 Samar
provinces; 90% are in Eastern Samar, mostly concentrated in Guiuan and in Gen. Mc Arthur.

Traders have ceased to operate in Northern and Western Samar because of the low volume of
seaweed production in those provinces. All the seaweeds produced in Eastern Samar, are
consolidated by 2 local traders and are sold to the TBK processing plant in Tacloban, or thru its
buying station in Guiuan.

For seaweed processing, TBK manufacturing high-quality food grade carrageenan since 1999,
requires 100 MT of dried seaweeds per month. Samar Island provides less than 1% of this
monthly requirement. While it corners local seaweed production in Leyte, TBK still has to
source dried seaweeds from Palawan, Zamboanga and Indonesia to fill in this supply gap.
A local cooperative CASAFIPCO from Salcedo, Eastern Samar, also engages in microprocessing
of seaweed pickles.

Market

FMC and Shemberg used to source seaweeds in Eastern Samar. Buyers from Matnog, Sorsogon
also used to buy seaweeds from Northern and Western Samar. But because of declining
production, only Tacloban based TBK remains as the sole buyer of Samar seaweeds.

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The demand for carageenan, which is extracted from cotonii, is seen to constantly grow because
of its growing preference over animal based substitutes. New applications for this product are
also continually being developed. While the export market for seaweed products was severely
affected by the global financial crisis in 2009, recent export data indicates that the market has
begun to recover.

The global deficit for cotonii is now estimated to be 43,800 MT (dried weight). Even the
Philippines have become a net importer of dried seaweeds with an estimated annual supply gap
of 2,885 MT of dried cotonii. Some of the carageenan manufacturing plants in the Philippines
have resorted to importing seaweeds from Indonesia.

In October 2009, farm gate prices of dried seaweeds ranged from P 30 38/kg. Traders sell to
the TBK buying station at P 44 46/kg, or P 50/kg when delivered to the plant in Tacloban.

The basic quality requirements of buyers: the seaweeds should be properly dried (38%
moisture content), clean and the variety must have high carageenan yield.

Firm Level Upgrading

Primary and support activities in Samar Island spans from seaweed farm development to the
marketing of fresh and dried seaweeds within the locality and to Cebu/Manila-based exporters
and processors.
The following statements summarize the assessment of these primary and support activities of
the seaweed farmers.

On site selection, it was revealed that previously farmed areas may no longer be suitable for
seaweed farming because of changes in the weather, salinity and other environmental
conditions. BFAR has identified new potential seaweed areas which are less exposed to harsh
weather conditions. An updated seaweed culture calendar has to be established to mitigate
risks against typhoons.

On the general farming system, production capacity can be maximized by strictly following
production standards. Each monoline must be planted with a total of 70 100 kg of seedlings.
Bottom monoline is another seaweed farming system which can be more appropriate for areas
with more turbulent waves.

For seedlings procurement, it would be possible to preserve seedlings in sheltered inland

seaweed nurseries, to replace the farms ravaged by visiting typhoons.
During harvesting, productivity can still be increased by ensuring that the harvested seaweeds
are already mature, which is 2 3 months after planting. The target is to attain the ideal dry
weight ratio of 1 kg dried: 7 kg fresh seaweeds.

If the Samar Seaweed Industry wants to be competitive with other major cotonii farming areas,
the issues described should be addressed. This would result to an improvement in farm
performance, from the current average ROI of 52%, to the industry standard of 563% for
multiple long lines.

Inter Firm Cooperation

The Samar Value Chain operates with little vertical integration and horizontal collaboration.
The low production volume and intermitted operations do not provide sufficient incentives to

5
invest on collaborative relationships between buyers and suppliers. While TBK maintains a
buying presence in Eastern Samar, it does not provide cash advances or any other value added
services to its suppliers. Transactions between the stakeholders are on a cash and carry basis.
Outside of the ARBs engaged in seaweed production or process, seaweed farming and
marketing is generally pursued individually.

Support Markets

The government is providing support services thru BFAR and its respective LGUs. Both offices
have provided financial support to seaweed farmers. Aside from its mandate of conducting R &
D and maintaining a seaweed gene bank, BFAR provides technical trainings while the LGU
conducts organization development and enterprise management trainings.

NGOs like SPPI, Center for Empowerment and Resource Development, Inc. (CERD) and Trowel
Foundation have supported seaweed growers thru organizational development, technical
support, market research and development.

The academe has also conducted various researches on seaweeds and trainings on seaweed
pickle processing.

POs like the Seaweed Farmers Association of Capul (SFAC), Barangay United Development of
Livelihood Initiatives of Sawang (BUDLIS) and Vigan Agrarian Reform Beneficiaries Multi
Purpose Cooperative (Vigan ARB MPC), have also been providing support services, ranging from
technical trainings to microfinancing, extended to their respective members.

The Seaweed Industry Association of the Philippines (SIAP), which represents many of the
carrageenan Philippines processors, is a potential provider for the Samar seaweed industry.
SIAP has been particularly active in establishing demonstrations farms, finding new cultivation
areas, and pushing for trade agreements at the international level.

Generally, government and NGOs are the main providers of Business Development Services
(BDS) in Samar, often providing it for free or thru heavily subsidized schemes. And
because of resource constraints, the depth and breadth of these services tend to be limited.

The following recommendations may help drive upgrading initiatives: private sector
providers must be developed, an efficient technology and information resource sharing
system must be designed, low cost credit must be provided and post harvest
infrastructure upgraded.

Enabling Environment

The Seaweed Development Framework of the national government covers a) Regulation: Strict
implementation of Quarantine Policies in the entrance of seaweed seedling from other
provinces into our province; b) Law Enforcement: inventory of seaweed growers and
production areas, proper implementation of taxes and licensing; and c) proper zoning and
assessment of potential areas for expansion.

Fisheries Administrative Order 146 further stipulates the rules and regulations governing the
gathering and farming of seaweeds.

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Gender

Interviews and stakeholder workshops conducted last October 2009 indicated that there are 90
growers and of which 30% are female all members of Vigan ARB Cooperative. The dominance
of male seaweed farmers may be attributed to the fact that women, especially the older ones,
may find themselves at a disadvantage, because of a lack of swimming or boat skills.

Aside from seaweed pickle processing, female employment in seaweed farming in Samar is
usually concentrated in labor intensive activities that require dexterity (e.g., tying of
propagules). And these activities have to be done in between maintaining vegetable gardens,
helping in the copra marketing/petty trading.

For women to be gainfully involved in seaweed farming in Samar, alternative technology has to
be introduced that would make it easier for them to maintain their farms without sacrificing
farm productivity.

Constraints and Opportunities

Constraints

Seaweed farming employs simple and low-cost technology. It is within the coastal households
capability and women can handle the work. However, the momentum of seaweed farming in
Samar has been derailed by the occurrence of disease and typhoons.

At present, Samar has a very weak competitive position in the Philippine seaweed industry. The
volume of production in Samar is not attractive enough for stakeholders to invest on the area.
This is a result of the following interrelated factors:

a) Lack of site suitability assessment/poor site selection process.

Technical expertise in selection of environmentally productive farm sites is the most important
first activity which will determine the all year round production of farms. Checking year
round water movement, salinity, water temperature, and depth, and validating it by test
planting selected varieties will determine suitability of the area for seaweed production.
b) Lack of access to disease resistant and high yielding varieties

The importance of having seed stocks of the right strain available during the different planting
or growing periods is a crucial factor in seaweed farming. To date, the growers and NGOs
working with seaweed nurseries rely on BFAR to provide the seedlings, but the supply to date is
limited.

c) Limited technical know-how

Seaweed farmers lack or possess very little knowledge in the more technical and developmental
aspects of seaweed farming. Their risk aversion is manifested in their passive attitude towards
investing in technology, research and development.
d) Lack of entrepreneurial drive

Majority of seaweed farmers lack the necessary skills and knowledge to manage their income
generating activities as businesses.

e) Insufficient post-harvest facilities

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The lack of adequate post-harvest facilities significantly affects the productivity and quality of
seaweeds from Samar Island. It also affects dry to weight ratio, now averaging 10%, which is
lower than the standard ratio of 15%.

f) Lack of providers of relevant services/lack of access to providers/Weak effective demand

for services

There is a lack of stand-alone and value chain based providers to help Samar seaweed industry
players improve their skills in production, post production processes and business
management. The absence of credit facilities for seaweed producing households also prevents
them from achieving their full production potential.

g) Weak inter-firm cooperation

Horizontal relationships are generally weak, seaweed production and marketing is generally
pursued individually. Public private partnerships can be forged among LGUs, NGOs and other
stakeholders, to be more effective in delivering support services and creating an enabling
environment for the industry.

h) The need for improved governance/more conducive enabling environment

LGUs and BFAR try do a little of everything ranging from policy and regulations to service
delivery resulting to thinly spread out interventions. Policymakers need to improve their
capacity to design better plans, instruments and criteria for efficient, cost-effective, high impact
support programs and infrastructure for the seaweed industry under different socioeconomic
circumstances and under budgetary and administrative constraints.

Opportunities

a) Most viable market for Samar is TBK. Dried seaweeds from Samar comprise less than 1% of
TBKs raw material supply. TBK is open and willing to source more of its raw material
requirements within the region rather than importing from Indonesia.

b) There are available technologies within the Philippines that can be adapted/transferred to
Samar farmers to help them improve profitability of their seaweeds farm
- Improve wet to dry ratio
- Reduce losses due to diseases
- Promote economies of scale
- Utmost consideration on site suitability/ appropriate technology

c) BFAR has identified areas suitable for seaweed farming deep sea technology currently
being piloted.

Upgrading Strategies/Interventions

Samar needs to establish its presence in the cottonii market and take advantage of the various
market opportunities, by first establishing a viable seaweed production base through the
following strategies:

8
1. Build up of local capacity to conduct a scientific site suitability assessment to mitigate risks
of failure, reduce cost of transactions, support year-round production, and to gain buyers
confidence on Samars capacity and capability to deliver cottonii of significant volume and of
consistent quality.

This strategy has 2 components: a) assessment and selection of potential areas suitable to
the farming of cottonii; and b) compilation and assessment of the actual practices in
seaweed culture/farming in Samar and benchmarking system development to facilitate
promotion of best practices

2. Facilitate the establishment and/or strengthening of seaweed nurseries with a primary

focus on cottonii to ensure industrys responsiveness to changing market demand and
requirements

This will involve the building up and/or strengthening of capacity of farmer groups and
cooperatives as well as NGOs to operate and manage a seaweed nursery, which can be
anchored on the inherent dexterity of women making them active participants in nursery
enterprise ventures. They can also provide embedded technical assistance to their clients
particularly start-up seaweed farms.

3. Facilitate the development of critical mass of cottonii/seaweed farms to attract buyers to

source from Samar

There are 3 components to this strategy aimed at reviving the interest of coastal households
to re invest in seaweed farming: a) identification, selection, and development of at least
two model farms (preferably one female-owned and one male-owned) in each of the
seaweed farming municipalities to demonstrate viability of seaweed production; b)
awareness campaign on benefits of seaweed production and its market opportunities
through multi-media campaign and other communication tools; and c) field visits and
benchmarking to promote interest, validation of business concept, and accelerate learning

4. Development of a community-based business development services (BDS) system

Seaweed farmers in Samar require continuous access to BDS for upgrading. Building
community based providers will facilitate the development of the farmers self sustaining
capability towards obtaining BDS. This will consist of the following directions: a)
Development of a range of intermediary organizations and individuals that can provide
services to enterprises in transactional, business-like relationship and without the need for
long-term subsidy; b) Increase effective demand for business development services by
enhancing enterprises understanding and valuation of the benefits of services; and c)
Facilitate the development and delivery of a wide variety of services for a broad range and
significant proportion of farmers/enterprises in the Samar seaweed industry and that are
profitable to both the clients and the providers.

5. Set-up of community-based post-harvest facilities

This will involve assistance in the set-up of common service facilities: solar dryers, moisture
analyzers and baling machines, strategically located in key seaweed producing

9
 municipalities operated by farmers associations, traders for their suppliers or processors
for their supply chain.

6. Promotion of horizontal collaboration

This will involve support to collective action strengthening for the multiple purposes of: a)
group production and marketing; b) fostering learning and innovation and access to support
markets; c) building an effective base for advocacy and info dissemination; and d)
promoting better social security functions.

7. Pilot value chain formation/Vertical linkages

As soon as the production volume in seaweed areas improve, it may be possible to initiate
small pilot activities with TBK to assess the potential of larger-scale and longer-term
collaboration.

8. Strengthening public-private partnerships for seaweed industry development

This will involve technical assistance to: a) restructure and strengthen capability of seaweed
industry council to advocate for market-based and enterprise friendly policies and
improvement of infrastructure; b) promote public-private partnerships in delivery of
services to the seaweed industry; and c) promote a culture of information sharing and chain
wide learning and innovation

Technical assistance will also be provided to LGUs to help them align their priorities with
the other stakeholders vis-a-vis market environment as well as facilitate reorientation
towards market-based decision-making and priority-setting.

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 SECTION 1:
SAMARS POSITION IN THE PHILIPPINE SEAWEED INDUSTRY

A. SHARE I PHILIPPI E SEAWEED PRODUCTIO

Of the Philippines total aquaculture production,

seaweeds account for 70%. Seaweeds production in
the Philippines grew by an average of 12%
annually in 2001-2007. In 2008, production was
estimated at 1,666,566 MT (fresh weight) or a
10.7% increase over 2007 harvest. According to
Mr. Benjamin Dakay, President of the Seaweeds
Industry of the Philippines (SIAP), local seaweed
production during the first half of 2009 declined
due to unfavourable weather, high temperature in
seaweed producing areas, and the occurrence of
typhoon.

Eastern Visayas seaweed production comprises

about 1% of total Philippine production. Regional
seaweed production in 2008 increased to 20,959.92
from 18,896.13 in 2007 or a 10.9% increase over
2007 harvests. Field interviews indicate that
production in Samar Island has significantly
declined during the past years due to unfavourable
weather condition and increase of seawater
temperature at various points of the year. Eastern
Samar is the 2nd seaweed producing province in the
region accounting for about 15% of the production. Northern and Western Samar contribute to less
than 1% of the regions seaweed production at 0.34% and 0.01% respectively. The largest seaweed
producing area in Eastern Visayas is Leyte, accounting for 80% of the regional production.

B. SHARE I MAJOR MARKET SEGME TS

During the past years, companies such as Shemberg Corporation and FMC Marine Colloids had
buying stations in Eastern Samar. With declining seaweeds production in Eastern Samar, the only
buying station operating in the area is that of TBK Corporation, a Tacloban-based seaweeds
processor.

Other markets being served by the few existing seaweed growers in Samar are the Bureau of Fisheries
and Aquatic Resources (BFAR) and non-government organizations involve in seaweed planting
material dispersal projects.

In the past years, Samar Island used to be an active player in the Matnog seaweed trading activities.
Seaweeds traded in Matnog (Bicol) were sold to processors in Manila and Cebu.

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 SECTION 2:
CHARACTERISTICS OF THE SEAWEEDS VALUE CHAIN IN SAMAR

A. PRODUCTS

They are classified into four main

groups: the red algae
(Rhodophycae), brown algae
(Phaeophycae), green algae
(Chlorophycae), and the blue green
algae (Cyanophycae). Among these
varieties, Eucheuma or red seaweeds
are the most economically important
variety in the Philippines accounting
for 98% of the total Philippine
production. Eucheuma is the source
of carrageenan, one of the worlds
foremost food and industrial additive
today. Carrageenan is a hydrocolloid
used as a thickening, gelling, and
stabilizing agent in a variety of
industries but usually in food and
pharmaceutical products. The popularity of the Eucheuma has increased because of declining amounts
and quantities and increasing prices of other sources of carrageenan (e.g. Chondrus, Gigartina etc.),
which are mostly only available from wild crops.

There are three carrageenan types which are of commercial interest because of the various
applications of the hydrocolloid in food and other industrial uses. These are called the iota, kappa, and
lambda carrageenan. The Philippines produces mainly the kappa carrageenan which uses the
Eucheuma cottonii and the iota carrageenan which uses the Eucheuma spinosum. The kappa
carrageenan has a wider range of applications than the iota carrageenan. As such, dried E. cottonii
fetches four times the per unit price obtained for E. spinosum because of its wide range of uses.

Majority of the seaweed farmers in Samar Island grow Kappaphycus Alvarezzi or the cottonii. In
response to the high incidence of ice-ice/epiphytes disease, BFAR introduced the Kappaphycus
Striatum or the sacol variety. As per BFAR, the variety is more resistant to epiphytes but, to date,
there are only a few farmers planting sacol as they are not sure of its acceptability in the market. One
grower delivered sample to TBK buying station in Guiuan but the in-charge did not accept. Samples
were sent to TBK to test market acceptability but,
to date, no feedback has been received yet.

There are women groups, cooperatives,

associations and individuals in Samar Provinces
engaged in the processing of seaweed for pickles.
Volume of seaweed utilized for pickles is very
minimal. The pickles are sold just within the
locality and during town fiestas. Only small
quantity goes out to markets outside the region.
The pickles makes use of fresh seaweeds which
they sell at P40 per 300-gram bottle or P150 for a
1,000-grain bottle.

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B. SEAWEED PRODUCTIO TRE D

As per field interviews and as described during the validation workshop, seaweed production in
Samar was at its peak from 1997 to 2000. Seaweed farming then was considered by many
coastal households as a lucrative source of income. Women were heavily involved during
planting and household members took turns in the daily maintenance of the farms. During those
years, residents recounted that the weather was less harsh and there were less incidence of
typhoons compared to the recent years. The Samar seaweeds industry started to encounter
problems when ice-ice disease, epiphytes, and predators increasingly attacked the farms.
Compounding the problems of seaweed farms was the frequent occurrence of typhoons which
almost always washed out their farms. With the series of calamities and failed harvests, farmers
significantly reduced the size of their farms or stopped completely from seaweeds farming.
Based on the visits conducted in the three provinces of Samar Island, only Eastern Samar is able
to consistently produce seaweed despite the series of calamities that wiped out almost all of the
seaweed farms in the island. However, current production volume from Eastern Samar is still
very low compared to the 1997-2000 harvests.

Replanting
HISTORICAL TIMELINE: Rehab Epiphytes
SMALL GROUP SESSION nurseries Ice ice
Validation Workshop Seedlings Chromite (leaching)
November 2009 Disease infestation Distribution Weather (typhoons)
Harsh weather conditions (BFAR) Seedlings resistant to
Lack of financial 2003 diseases
Decrease in production 2003 - 2006
2001 - 2002
Farmers increase income 2009
2000 Conditions became
Seedlings to Guiuan seaweeds friendly
Women o Seedlings
Production to Matnog Men same as roles of women
o weather
Tying
Capul 1997 - 1998 Planting Constraints: No local
Cleaning/monitoring ordinance (P/kg) or rules
and regulations supporting
Benefits
source of income; Problems or protecting the farmers
able to buy appliances and send
children to school Ice ice disease
1990
Low price
Start of Challenge
occurrence of diseases
Seaweeds Deterioration quality of seedstocks/low resistance to diseases
Reasons: as an alternative source of income Poor market place; TBK monopolizes the local market and therefore
controls or manipulates the price
Simple and low cost technology Lack of LGU support in terms of regulations/protections
To divert/minimize illegal fishing activities Weather condition

Trader Mark Magalona, 25 years old, used to work for TBK. He resigned and started his own
seaweed farming and trading business, selling to TBK. He was successful. He also encountered
problems in 2001. His farm, which consisted of 200 lines, was wiped out. Unlike other farmers,
he replanted, and wanted to prove that seaweeds can still be successful like in 1999. But now,
he confirms that he can only consolidate up to 1 MT dried seaweeds per month. Bigger
problems such as frequent occurrence of typhoons faced the Samar seaweed industry in 2005
and 2006, and more and more farmers quit seaweed farming.

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Vigan ARB Cooperative is more resilient in terms of
resolving seaweed production issues. The
cooperative provides loans for planting materials
and other supplies (ropes) to their grower members
and this encouraged them to continue producing
seaweeds. However, out of the PhP 300,000 loan
they received before, only PhP 19,000 has been paid
because all the farms of their members were
washed out. Main problem now is the very low
production, compounded by the unavailability of
seaweed seedlings and erratic weather conditions
(unpredictable weather)

In Northern and Western Samar, there are only a

handful of coastal households still engaged in
seaweed farming. Focus now is on the re-
establishment of seaweed nurseries since in order
to expand or increase volume of production and
number of growers, availability of good volume and
quality of planting materials is very crucial. Seaweed
growers in the island experience difficulty in
sourcing out planting materials and multiplying newly planted seaweeds due to unpredictable
weather conditions. The presence of rabbit fishes feeding on the seaweeds and occurrence of
ice-ice disease also pose challenges for seaweed farmers, although many of them said that these
can be addressed.

The Bureau of Fisheries and Aquaculture Resources (BFAR) is leading the rehabilitation of
farms and establishment of seaweed nurseries in collaboration with NGOs. In Capul, for
instance, the revitalization of the seaweed industry is being spearheaded by SPPI but, to date,
the organization is still in the process of piloting systems to better protect the nurseries.
Attempts were also made by NGOs like Center for Empowerment and Resource Development,
Inc. (CERD) and Trowel Foundation to re-start the seaweed farming in the municipalities of
Biri and Lavesares. In coordination with BFAR, CERD was able to assist six (6) individual
households to start seaweed growing by providing them the needed inputs especially seaweed
planting materials. In 2007 Trowel in coordination with BFAR also conducted dispersal of
seaweed planting materials to seaweed growers in Lavesares. However, seaweeds in this
municipality were wiped out during typhoons and seaweed growers stopped.

For Western Samar, LGU has conducted an assessment to identify potential seaweed production
areas. Most of identified potential seaweed production areas by the Provincial Fishery Office
are island barangays and municipalities.

The priority for Samar to revive its seaweed industry is to be able to identify seaweed farming
technology and system best suited for an island frequently visited by typhoons in order to
significantly increase its production volume. Current quantities of seaweed being produced in
the area are too small to be sufficiently attractive for lead firms to invest in upgrading and in
putting up the marketing infrastructure.

Seaweed Production in Region 8 (in Metric Tons: Fresh)

Province 2006 2007* 2008*
Leyte 14,442.53 15,309.62 16,981.70
Eastern Samar 2,811.00 2,979.76 3,305.21

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Seaweed Production in Region 8 (in Metric Tons: Fresh)
Province 2006 2007* 2008*
Southern Leyte 509.88 540.49 599.52
Northern Samar 60.00 63.60 70.55
Western Samar 2.50 2.65 2.94
Biliran - -
Total 17,825.91 18,896.13 20,959.92
* 2007 and 2008 data was based on the provincial seaweed distribution in 2006.

C. VALUE CHAI PLAYERS

There are primarily two supply chains in the Samar seaweed industry, namely: a) supply chain for
seaweeds for export and/or carrageenan production; and b) the seaweed pickle processing. During the
time that seaweed production was at its peak, Northern and Western Samar sold their dried seaweeds
to buying station in Matnog-Bicol region directly or through local traders. There were also some
deliveries made directly to Cebu based processors or consolidators. To date, the only seaweed
processor/exporter that continue to source from Samar is TBK Manufacturing which is based in
Tacloban.

For the carrageenan supply chain, Samar Island is a raw material supplier with the seaweeds sold in
fresh and dried formats. The flow of the seaweeds from farmers to the seaweed processors pass
through the buying station and/or municipality level consolidators. To date, only TBK continues to
source from Samar. TBK Manufacturing has buying station in Guiaan. There are two consolidators
who sell to TBK: one is located in Vigan, McArthur operated by a cooperative that sells its produce
to TBK buying station in Guiuan and another in Borongan owned by a local trader who directly
deliver to TBK Manufacturing Plant in Tacloban. Interview with the Marketing Manager of TBK
Manufacturing, indicated that although the company has a buying station based in Guiuan - Eastern
Samar, the volume sourced from all over the island contribution less than 1% of their seaweed
requirement and is thus not significant to their operations. Interview with the TBK Buying station in-
charge in Guiuan similarly pointed out that in many instances monthly volume of dried seaweeds
from Eastern Samar is less than 1 ton per month. To cover costs of delivery to the TBK plant in
Tacloban, the volume for delivery should at least be 1 MT of dried seaweeds.

Pickled seaweeds are sold just within the locality. The pickles are produced by part-time household-
based micro processors and one cooperative in Eastern Samar. The seaweeds are sourced directly
from seaweed growers. This chain provides an alternative channel for growers with very small
volume of seaweed harvests. According to the cooperative, pickle making does not affect the volume
of dried seaweed that they supply to TBK because they utilize only what they were unable to sell.

The following are the key chain operators in the seaweed value chain in Samar:

a) Seaweed Nursery Operators

BFAR established a seaweed culture laboratory that would produce disease-free planting materials to
farmers through a roll-over scheme. The facility serves as bank of seaweed genes coming from
different parts of the country. In this system, farmers are given250 kilograms ready-to-plant seaweeds
and some paraphernalia for growing. After gaining the maximum weight, beneficiaries are obliged to
return the 250 kilograms for distribution to other fisher folks. Estimated investment required is
P50,000 per half hectare that will be run by five fishermen, or P10,000 for every participant. BFAR is
targeting five coastal municipalities for each province of the region. To date, implementation of the

15
roll-over program is focused in Leyte. Initial identification of suitable seaweed farming sites have
been conducted in Samar Island.

In Northern Samar, NGOs are taking the lead in the set-up of nurseries and/or dispersal of seedlings
in an attempt to revive seaweed farming in these areas after these have been destroyed in 2008 due to
typhoons. Pilot nurseries in Capul have been set-up by Sentro ha Pagpauswag ha Panginabuhi (SPPI)
in partnership with Seaweed Farmers Association of Capul (SFAC). The seedlings were sourced
from BFAR. Nursery operations, however, have been hampered by weather disturbances, fish
grazing, and ice-ice diseases. Of the 500 kilograms seedlings planted in 2009, 160 kilograms were
washed out. To address these constraints, the nurseries are now set-up in deeper parts of the sea.

There are also a few farmers who sell seedlings to NGOs involve in seaweed seedling dissemination
projects.

b) Seaweed Farmers

It is difficult to estimate the number of

seaweed farmers because of the part-time
nature of their activity. It is rare for
instance for individuals or groups to be
engaged for more than half of their time
in the cultivation of seaweeds. Seaweed
farming is oftentimes one of the many
income generating activities of the
grower. Other sources of income include
copra, fishing, village stores, and other
land-based farming activities.

Growers go in and out of farming

depending on market and weather
conditions. On the average, each grower
owns a total of 5 8 floating monolines.
In the past, growers used to have 150-200 monolines. The size of the farm is limited by initial capital
available to the farmer while capability to expand farm is constrained by lack of revolving fund for
expansion purposes. Likewise, majority of the households are risk adverse after repeated incidences of
crop failure. Based on accounts of residents, seaweed farming used to provide them with good income
and enabled them to build their own house but during the recent years they had more crop failures
than successful harvests.

Most labor on seaweed farms is provided by family members with little outside hired labor except for
the tying of seaweed propagules to the growing lines which is usually done by women at a daily rate
of PhP 150. Labor costs are not accounted for by the farmer especially if these involve unpaid labor
from household members and for himself/herself. In many instances, the farmer sidelines as a wage
earner or engage in other land based farming activities while waiting for the harvest so as to be able to
sustain daily needs of household.

SSPI has initiated the formation of the association of seaweed farmers in Capul. To date, there are
only 3 members who are directly involve in seaweed farming. The others are still waiting for seedling
materials. In Vigan Eastern Samar, there is one cooperative (Vigan ARB MPC) which is composed
of 47 seaweed growers. 16 of the cooperative members are female. The cooperative is also engaged
in trading. Another cooperative is the Carapdapan Small Farmers & Fishermen Producers Cooperative
(CASAFIPCO) which is engaged in seaweed farming and pickle processing.

16
 Growers as of Current umber of
June 2009 Growers REMARKS
PROVI CE MU ICIPALITIES (BFAR Data) (as of Oct 2009)
Male Female Male Female
Capul Island 0 0 3 0 SPPI nursery managers
Biri 0 0 6 0 CERD Beneficiaries
Lavesares 0 0 0 0 Previous Trowel Area
chosen sites for nursery
San Vicente 0 0 0 0 establishment (SPPI)*
orthern chosen sites for nursery
Samar San Antonio 0 0 0 0 establishment (SPPI)*
Identified potential
Daram 0 0 0 0 seaweed farm site
Planned by PLGU as
Agutay 0 0 0 0 seaweed nursery area
No existing seaweed
Catbalogan 0 0 0 0 grower
Identified potential
Sumaraga 0 0 0 0 seaweed farm site
Tried planting through
Calbayog 0 0 0 0 DIOCESE
potential seaweed farm
Western Samar Talarura 0 0 0 0 location
Guiuan 40 4 15 0 BFAR Data
Mercedes 2 0 0 0 BFAR Data
Quinapondan 2 0 0 0 BFAR Data
Giporlos 1 0 0 0 BFAR Data
Salcedo 0 1 5 0 BFAR Data
Giporlos 0 0 1 0 BFAR Data
Eastern Samar Brgy Vigan ARB MPC
+ Minagkong Island
Gen. Mc Arthur 47 23 26 27 Growers
Hernani 2 0 0 0 BFAR Data
Borongan 5 1 7 0 Brgy Ngulos
San Policarpio 11 0 0 0 BFAR Data
Canavid 1 0 0 0 BFAR Data
TOTAL 111 29 63 27
GRA D TOTAL 140 90
Source: KII, SPPI, BFAR
*SPPI plans to establish 5 seaweed nurseries in their chosen sites but are not yet existing as of the moment.

!otes
- Data provided by BFAR shows that Eastern Samar has 140 farmers as of June 2009, 111 are male and 29 are
female.
- Based on interviews conducted, there are 84 existing growers and of which 16 are female.
- In Northern Samar, all of the farmers are nursery managers and are restarting production. There are no
existing growers at the time of study.
- In Eastern Samar, the growers also supply for the minimal demand for seaweed seedlings, aside from the
starting roll-over scheme of BFAR.

17
c) Traders

It is only in Eastern Samar where seaweed trading is still operational. There are two traders in the
area and a TBK buying station. Both the two traders sell to TBK. Activities of these traders are
focused in collection of dried seaweeds from growers in Borongan, McArthur, and Guiuan. The
cooperative provides advances for inputs which are deducted directly from the payments for their
delivery. The other trader does not provide any advances and pay upon delivery.

Traders have ceased operations in Northern and Western Samar. The absence of traders in these areas
has also deterred households from going back to seaweed farming or in expanding their existing
production. Current production volume could not cover cost of delivery to buyers. As per interview
with former seaweed traders in the area, they were forced to stop buying seaweeds as the volume they
get is very low making it unprofitable for them to continue. Residents of these areas indicated that in
the past, there were traders who regularly collected their seaweed produce which were then traded in
Matnog or sold to TBK and Cebu/Manila based processors.

d) Processors

The only seaweed processor that currently buys from Samar Island is TBK. Since 1999, TBK has
been processing seaweeds and manufacture high-quality food grade carrageenan as a finished product.
The company has a monthly production capacity of 150 MT of semi-refined carrageenan. TBK
Manufacturing sources out its supply of dried seaweeds from Palawan and Zamboanga and Indonesia
during wet season. The company pointed out that they are ready and very willing to get whatever
volume of dried seaweeds Samar can produce. The company requires a total of 100 metric tons of
dried seaweeds per month.

Other seaweed processors that used to buy from Samar Island are FMC Marine Colloid, Shemberg
Corporation, and Lexco (Manila). Shemberg can accommodate daily delivery of 100 MT of dried
seaweeds.

e) Pickle Processors

Pickle processing in Eastern Samar was

started by CASAFIPCO. The processing
is done by the women members of the
cooperative. A year after it was
introduced, the co-ops achara had been
chosen as a commodity for the One
Town, One Product (OTOP) Philippines
for the municipality of Salcedo. This
development has boosted the coops
production of seaweed achara.
Eventually, they call the product as
kuratsa, a popular folkdance in Samar
and Leyte. Now, this seaweed achara is
proudly labeled Kuratsa Seaweed
Pickle which comes in a handy bottle
whose label design was conceptualized
by the Department of Trade and Industry (DTI). The cooperative is being assisted by the Department
of Agrarian Reform (DAR), Department of Science and Technology (DOST), and Plan Philippines.

18
VALUE CHAIN MAP
CONSUMPTION Households, Households,
Food Service Food Service

RETAILING
Supermarkets Supermarkets

MANUFACTURERS USA EUROPE

Food & Non Food Products Food & Non Food Products

PROCESSING (semi refined carageenan) TBK Mfg. Tacloban

Guian Buying Station

1 MT/mo (dried)
Local Traders @P 44 - 46/kg
TRADING
(Guiuan 1, McArthur 1, Borongan 1)
Each 500 1,000 kg/month (dried) @ P44/kg

PRODUCTION Seaweed Farmers

(Guiuan 15, McArthur 49, Borongan 7, Salcedo 5)
Eastern Samar: 1 MT/month (dried)

INPUT SUPPLIERS Seaweed Nurseries

AgriVet Suppliers (Ropes)

VALUE CHAIN ACTORS
CONSUMPTION Households, Households,
Food Service Food Service

RETAILING
Supermarkets Supermarkets

MANUFACTURERS USA EUROPE

Food & Non Food Products Food & Non Food Products
BFAD
LTO
LGUs International Cert.
Business Bodies
PROCESSING TBK Mfg. Tacloban
BFAD Permits and

Export Guian Buying Station

(1 MT/month) (dried)
@P 44 - 46/kg
TRADING Local Trader FACILITATORS
(Guiuan 1, McArthur 1, Borongan 1)
BFAR, SPPI,
Each 500 1,000 kg/month (dried) @ P44/kg
SIAP, SFAC

PRODUCTION BFAR,SPPI, Seaweed Farmers SPPI, Vigan BFAR

Vigan (Guiuan 15, McArthur 49, Borongan 7, Salcedo 5)
LGU Eastern Samar: 1 MT/month (dried) Microfinance Nursery
Establishment and
BFA Training on Seedling Dispersal
INPUT SUPPLIERS R Seaweed Seaweed Nurseries
Production

AgriVet Suppliers (Ropes)

Legend: CAPACITY SUPPORTERS FACILITATORS INFLUENCERS

BUILDERS
20
D. E D MARKET A ALYSIS

The seaweed or hydrocolloid industry experienced a lull during the first half of the year due to the
global economic slowdown. During the recent months, export orders have begun to pick up. Cottonii
has a wide range of uses in various industry sectors. The popularity of E. cottonii has also increased
because of declining amounts and quantities and increasing prices of other sources of carrageenan
(e.g. Chondrus, gigartina etc.), which are mostly only available from wild crops. The future market for
cottonii is tied to the future prospects for the carrageenan that is extracted from it. Growth of demand
for seaweeds will come from extending current uses of carrageenan-based products in meat, poultry
and dairy products to areas such as India and other Asian countries, and Central and South America.
Other potential markets for refined carrageenan are in oral care strips and capsules for the
pharmaceutical industry. The use of gelatin for capsules is losing favor due to the incidence of mad
cow disease and its human variant, Creutzfeldt-Jakob disease. Hard capsules use the carrageenan from
E. cottonii, soft capsules from E. spinosum. Carrageenan is found to be cost effective as 1 kg of
carrageenan (US$16) produces as many capsules as 4 kg of gelatin (US$24). Another carrageenan
product, Carraguard, for prevention of AIDS virus transmission may soon be commercialized.

The steady increase in the use of carrageenan implies continuing rise in demand for cottonii. At 70%
utilization of nominal capacity of worldwide producers of carrageenan, supply deficit of Eucheuma
seaweeds is estimated at 43,800 MT (dried weight).

Worldwide Producers of Carrageenan By Country

Estimated ominal Capacity MT/Year (2007)
Country SRC Food RC (A/P & SRC on- Total % of Total
Grade KCL/P) Food Grade
(E-407a) (E -407 ) (Petfood)
Philippines 16,300 5,100 13,100 34,500 41%
Indonesia 7,500 1,000 8,500 17,000 20%
China 1,000 8,000 0 9,000 11%
South America 1,400 3,100 0 4,500 5%
United States 0 4,500 0 4,500 5%
France 0 3,500 0 3,500 4%
Spain 200 3,100 0 3,300 4%
Denmark 0 3,000 0 3,000 4%
South Korea 0 2,000 0 2,000 2%
Japan 0 1,700 0 1,700 2%
Malaysia 0 0 1,700 1,700 2%
Total Capacity 26,400 35,000 23,300 84,700 100%
Total Seaweed 105,600 175,000 69,900 350,500
Requirement
Assumption: 70% 79,920 122,500 48,930 245,350
Utilization
World Eucheuma 201,550
Seaweed Production
Surplus/Deficit (43,800)
Source: Mr. Dakay Presentation/SIAP in Seaweed Forum in Indonesia last Oct 2008
The high demandshort supply seaweed situation in the Philippines is forecasted to persist. Based on
the 2007 cottonii seaweed production and the nominal capacity of Philippine carrageenan producers,
cottonii supply seaweed deficit is at 43,850 MT (dried weight).

Estimated ominal Capacity (MT/Year) of Philippine Producers of Carrageenan

Company Location SRC Food Refined SRC on- Total
Grade Alcohol food Grade ominal
and KCL Capacity
Shemberg Marketing Corp. Mandaue 3,600 1,200 - 4,800
City, Cebu (KCL)
Polysaccharide Corp. Zamboanga 1,800 1,800 3,600
(Shemberg sub.) City
Shemberg Biotech Corp. Carmen, - 1,200 - 1,200
Cebu (ALC)
Marcel Carrageenan Corp. Zamboanga 1,900 - 3,600 5,500
City
FMC ( Philippines ) Mandaue 1,000 - 3,000 4,000
City, Cebu
CP-Kelco ( Philippines ) Sibonga, 1,000 1,500 - 2,500
Cebu (KCL)
Cargill Laguna - 1,200 - 1,200
(KCL)
Kerry Food Ingredients Inc. Mandaue 1,200 - - 1,200
City, Cebu
RICO Philippines Cavite 1,000 - 500 1,500
TBK Manufacturing Corp. Tacloban, 1,000 - 800 1,800
Leyte
PCI Worldwide Cavite 1,000 800 1,800
Zamboanga Carrageenan Zamboanga, 800 - 1,000 1,800
Corp. ( LM ) City
Miyoka Corp. Laguna 1,000 - 800 1,800
Martsons Food Corporation Davao 1,000 - 800 1,800
Assumption: 100 % Capacity Utilization
100% Capacity Utilization 16,300 5,100 13,100 34,500
Seaweed Requirement 65,200 25,500 45,850 136,550
2007 Cottonii Production 92,700
Deficit (43,850)
Assumption: 70% Capacity Utilization
70% Capacity Utilization 11,410 3,570 9,170 24,150
Seaweed Requirement 45,640 17,850 32,095 95,585
Deficit (2,885)
Source: Mr. Dakay Presentation/SIAP in Seaweed Forum in Indonesia last Oct 2008

From 2000-2007 the general trend for export volume (raw, dried seaweed basis) of red algal galactan
seaweeds (RAGS) from Indonesia and Philippines showed a production increase from about 110,000
tons/year to about 190,000 tons/year. Over the 8 year period this was an annual average increase of
about 10,000 tons/year. Indonesia advanced strongly with annual total seaweed volume rising from
less than 40 K MT/yr to over 100 K MT/yr from 2000-2007. Indonesia became overwhelmingly the

22
major supplier of raw dried seaweed to
global markets. Philippine seaweed
production appeared to decline from
about 90 K MT/yr to less than 80 K
MT/yr from 2000-2007. By 2007, the
Philippines appeared to be a net seaweed
importer.

About 50% of the world's tropical

seaweeds were harvested in Indonesia,
which exported around 290,000 metric
tons of dried seaweeds in 2007, boosted
by much bigger farm areas and cheaper
production costs. Indonesia's output of
raw seaweeds in 2008 was 600,000
metric tons and is expected to go up to a
million metric tons in 2012, according to
Jakarta Post.

Some of Philippines big carrageenan

plants have been importing dried
seaweeds direct from Indonesia since the
seaweed output from the Philippines
suffered a steady decline in the last few
years due to rising energy costs, harsh
weather conditions, transport and
shipping costs, etc. "We're forced to buy
some of our supply of dried seaweeds
from Indonesia because of lower prices
and bigger supply capacity -- that's the
only way for us to survive in this
industry," said Benson Dakay, president
of Shemberg Marketing, the country's
biggest carrageenan plant. Indonesia,
however, is planning to stop the exports
of its dried seaweeds to the Philippines
and other countries, as the Moslem
country is now making moves to develop
their own seaweed processing industry
and produce their own carrageenan for
world exports, according to Jakarta Post.

Increase in E. cottonii production from Samar Island can be absorbed by processors and exporters,
majority of which are located in Cebu. Shemberg, for instance, requires about 100 MT of seaweeds
daily. A major constraint, however, is the transportation cost as there are no direct shipping lines from
Samar to Cebu (has to pass through Tacloban or via Matnog in Sorsogon). Many of the processors
have resorted to importing raw seaweeds from Indonesia to meet their supply requirements. The most
viable option for Samar Island in the short-term is to increase its market share in the TBK seaweed
supply requirement. TBK currently sources its dried seaweeds from Zamboanga and Palawan. During
wet seasons, 30-40% of raw materials needed are imported from Indonesia. The company is now in
the process of expanding its plant capacity. TBK has also signified willingness to give priority to
dried seaweeds produced within the region provided that they meet the required standards. For all
processors, willingness to set-up a buying station is based on the production volume of the area. To
date, the Samar seaweed industry is not an attractive proposition for processors since production
volume is very low and does not offer economies of scale.

23
 Farm Gate Traders Price TBK B/S- TBK Tacloban
Guiuan
orthern As per field interviews, no ongoing buying (50 90 kilos of P50 per kilo
Samar of dried seaweeds dried seaweed
There are few transactions involving selling delivered) (with minimum
of fresh seaweeds for planting materials. P44/kilo volume per
Price per kilo of fresh seaweed planting delivery 3 tons)
materials is P14.00 per kilo (100 kilos up of
Western No ongoing buying No ongoing buying dried seaweed
Samar of dried seaweeds of dried seaweeds delivered)
Easter Samar 30 35 38 40 P46/kilo

For Shemberg, buying price during 2nd second semester 2009 ranged from PhP 35 to 55 per kilogram.
Last month price was at PhP 40 per kilo. Prospective suppliers have to submit samples for laboratory
analysis and pass the accreditation requirements before they can be taken in as suppliers to the
company. Shemberg can accommodate up to 100 MT of dried seaweeds delivery per day.

There are limitations though as to the price that the Philippine processors and exporters can absorb
given the increasing competition in the world market particularly Indonesia. As per interviews, the
PhP 80-90 per kilogram prices for dried cottonii is perceived to be beyond what the market can bear.
Ideal price is at PhP 40/kg. Likewise, in some of its applications, carrageenan competes with other
hydrocolloids, so its cost must also be competitive with them. If the price of seaweed pushes up the
cost of carrageenan way too high, carrageenan may lose its market share and both processors and
farmers will suffer. In 2008, when price of seaweeds reached PhP 120 per kilo, some of the
carrageenan buyers opted to switch to cheaper substitutes. Carrageenan is a commodity that is little
known to the general public despite the fact that it is increasingly found in our food. People do not
commonly know it is in their food and if it is noticed on the ingredient list, there is no indication that
it is derived from seaweed. It is an invisible yet essential component of the increasingly global agro-
food industry. Although, it is in high demand, companies cannot raise the price in the same way as
other visible commodities. Colloids that have similar properties can be substituted for many
processes, therefore companies must take a delicate balance between technical properties and costs.
Unlike, other highly visible commodities like shrimp, consumer demand does not have a strong
influence on the market prices or, for that matter, on the continuation of peoples livelihoods who
grow seaweed. The next best colloid may come along tomorrow and be substituted for carrageenan
with little awareness by the end consumer. Despite this, the market price has risen slowly over the
years and global demand for carrageenan has been steadily rising.

The unprecedented rapid rise of cottonii prices in the late 2007 and extending to summer 2008 was
attributed to a supply failure caused by global warming, diseases and other phenomena. Seaweed
trade experts, however, contend that the crisis was caused by a sudden rise in cottonii demand
mainly from China and value chain failures caused by defective commercial linkages between
farmers and processors.

Over the past 20 years there had been several cycles of boom and bust in the international price for
cottonii and this has always affected the farm-gate price. Typically, a shortage occurs for some reason
(such as a fall in the number of farmers, an unusual rise in water temperature or other adverse weather
changes, destruction by epiphytes, a surge in buying by speculators) and this shortage pushes up the
farm-gate price. These high prices consequently attract farmers to plant seaweed. Their increased
production eventually leads to an oversupply and results to a fall in prices, farmers become
discouraged and return to their previous activities, the supply falls and eventually another shortage
occurs. A stable farm-gate price is essential for stability in the industry, for both farmers and
carrageenan producers.

24
E. FIRM LEVEL UPGRADI G

Primary and support activities in Samar Island spans from seaweed farm development to the
marketing of fresh and dried seaweeds within the locality and to Cebu/Manila-based exporters and
processors. The carrageenan processors/seaweeds exporters are the final buyers in the seaweed
marketing chain. Failure to meet their quality requirements will result in lower prices for the seaweed;
consistent low quality and volume force them to move to other sources. Their basic quality
requirements are dry, clean and high-carrageenan-yield seaweed. Likewise, for seaweed exporters/
carrageenan processors to take an interest in sourcing from the area, production volume must be high
enough to cover cost of transaction and promote economies of scale. The primary challenge at present
for the Samar seaweed industry is to increase production to a consistent level and quality.

From the own account of respondents, seaweed farming in Samar was at its peak from 1997 to 2001.
Seaweed production slowed down starting in 2007 due to unfavorable weather, farms washed out by
typhoons, and high incidence of pests and diseases. Successive crop failures discouraged farmers and
many have decided to stop seaweed farming. Most of the initiatives being undertaken to date by
BFAR and NGOs are aimed at revitalizing the industry through site suitability assessment, seedling
dispersal programs, and establishment of nurseries.

Farmers generally acquired know-how on seaweed farming from looking and talking with their peers,
training from BFAR , LGU, and NGO. Traders, to some extent, provide some advise particularly in
terms of standards required by their buyers.

Below is a description and assessment of primary and support activities of farmers.

Site Selection. The highly seasonal production of farms is indicative of poor site selection process. In
many cases, selection is via instinct and experience and not on assessment of interrelationship of light,
water motion, water quality and temperature. Farmers generally choose those areas accessible to
them, previously farmed by them or their relatives. Experiences during the recent years show that
previous areas which showed good seaweed farming results in terms of volume of production are now
infested with ice-ice and epiphytes. Likewise, during the recent years, seaweed producing areas were
frequently hit by strong typhoons. Ice-ice refers to the white segments that appear between branches
usually in the basal parts of the thalli. According to seaweed experts, it is a phenomenon caused by
low salinity, temperature and light intensity. When this condition occurs, the plant is under stress and
exudes an organic substance that is muscilaginous in nature. The presence of opportunistic bacteria in
the water column aggravates the whitening of the branches. In cases of severe infestation, total
harvesting of the stock and the use of a new set of seedlings or change of farm site/method is the most
practical solution to prevent further losses.

Epiphytes infestations could also be minimized if seaweed farmers would turn to "deep sea farming",
or to areas at least 10-15 kilometers away from the shore. Epiphytes will be disrupted from attaching
to seaweed at such distance. But deep-sea farming requires sturdier materials that are expensive and
hard to procure. BFAR launched the Deep Sea Seaweed Park in Hinunangan, Southern Leyte (pilot
area) last September 22, 2008. The project aims to increase seaweed production using improved
technology for seaweed culture.
BFAR has identified potential seaweed areas per province. With many of the farmers already hesitant
to go into seaweed farming due to successive crop failures, a demonstration farm would help in
overcoming risk aversion as well as facilitate test-planting in the area.

Farm Construction/Farming System. Common practice in seaweed growing in Samar is the long
monocline measuring to about 100 meters per line. Seaweed farmers determine their area of
production not in terms of hectare but by lines. There are no set standards being followed by growers.
In some cases, growers use whatever rope/nylons available not necessarily measuring 100 meters
which they utilize for seaweed growing. The number of planting materials/seedling planted per 100
meter line also varies, and farmers apparently are not aware of what is the standard weight needed as

25
practice vary from one farmer to another. BFAR, on the other hand, said that the standard weight of
seedling per 100 meter line is 100 kilos but farmers usually plant only 20 kilos per 100 meter line.

Aside from the below optimum utilization of production capacity, farmers also need guidance in the
identification of farming system to use vis--vis area characteristics and specie. Bottom monoline
farming is encouraged against the floating monoline farming to better protect the farm from crashing
waves during typhoons. Farming in shallow waters is the simplest and the cheapest to start with.
However, it is more susceptible to "ice-ice disease" and grazing by small pelagic fishes. Farming in
deep waters means increased production capacity and yield. However, a major disadvantage is the
higher start-up capital required.

Farmers generally use the cheapest rope material good for one production cycle and non-recyclable.
Abaca, raffia, or other sturdier ropes that may be good for more than 1 cropping are not used due to
high investment costs.

Aside from site suitability assessment, TBK also recommended the need for seaweed culture calendar
to mitigate risks of crop failure due to typhoon and unfavorable weather conditions. Cottonii
production is significantly influence by its strict ecological requirements. In existing areas, it may
best to limit the no. of croppings within the productive seasons of the year parallel to utilizing
intensive cropping methods

Seedlings Procurement. Farmers usually save seedlings from their harvest or procure these from their
neighbors. With many of the farms devastated by typhoons, there is a lack of seedling materials.
Farmers are now dependent on BFAR for seedling materials. NGOs such as SPPI, CERD, and
Trowel have embarked on seedling nurseries or seed dispersal programs but initiatives are still in the
infancy stage and, in some cases, also destroyed by typhoons and diseases. The NGOs also depend on
BFAR for seedling materials. There are a few farmers who sell seedling materials to BFAR and
NGOs. Inland nurseries must be developed as an alternative shelter for seaweeds during typhoon
season (which lately has been unpredictable).

Harvesting. The seaweeds are harvested 2-3 months after planting. However, some farmers harvest
earlier. One production cycle takes 45 to 60 days. Harvest per 100 meter monoline ranges from 550
600 kilos per line of fresh seaweeds in a 60 days culture period. Growers in Samar who opt for a 90
days culture period get 900 1,000 kilos of fresh seaweeds per line. Most farmers try to keep the
cycle at 45 days to have a fast turnover. The crops harvested within 45 days of culture are immature
plants and produce low amount of recoverable carrageenan during processing. The crop should be
matured by harvesting these after 60 to 90 days of culture.

Drying. Current practice in Samar is to wash seaweeds with tap water to remove dirt, rocks and other
extraneous materials. These then are laid on top of coconut palms (drying platform) and are sun-dried
for two to three days during sunny days, or may reach up to 5 days during the rainy season, to attain a
moisture content of 30%. Dry-weight ratio in Samar ranges from 1: 9 -10 or about 9% to 10%
production. As per farmers interviewed, they have difficulties in achieving standard dry-weight ratio
of 1:5 7 or 15% to 20% production.

If the Samar Seaweed Industry wants to be competitive with other major farming areas for the
production of cottonii, then the technical problems described above should be addressed. The current
average ROI of Samar seaweed farms, which is only about 52%, can further be improved to be at par
or higher than those in other areas. In Zamboanga, monocline seaweed farming has an average ROI of
700%. Studies conducted by SEAFDEC-AQD on the economics of seaweed farming using various
farming methods showed a return-on-investment (ROI) of 115% for single raft long line, 218% for
hanging long line, 563% for multiple long line and 984% for fixed off bottom method.

26
 Cost and Returns for 1x100 meters monoline of cotonii : Samar
Price per Unit Units or Kg 1st Cycle Succeeding Cycle
Materials
Seedlings 12.00 80 960.00 960.00
Rope/Nylon 350.00 1 350.00
Soft Tie 35.00 2 70.00 70.00
Sack 10.00 8 80.00
Plastic Bottles 5.00 10 50.00
Labor (Tie-Tie) 100.00 100.00
Total Cost 1,610.00 1,130.00
Gross Income 38.00 50 1,900.00 1,900.00
et Income 290.00 770.00
ROI 52%

Main factor that deter traders from operating in Samar is the low volume of seaweed production.
Production volume has to be significantly increased to obtain any price leverage, attract seaweed
processors to set-up buying stations and to invest in the development of the industry in the area, and
for traders to re-start their operations in Samar.

F. I TER-FIRM COOPERATIO

1. Vertical Relationship

Actors closest to the end market (seaweeds processors/exporters) are engaged fulltime in the industry.
As one moves upstream, progressively away from the end market and closer to the natural product
base (growers/village traders), actors become increasingly marginalized, part-time players. Given the
low entry barriers and the inherent tendency of growers and village traders to have diversified sources
of income (although generally subsistence activities), involvement in seaweed farming is on an
intermittent basis depending on perceived lucrativeness and risks.

The Samar value chain is characterized by the informal nature of its upstream base (growers/village
traders) and its better organized and more formally structured actors downstream (processors and
exporters). Overall the value chain operates with little vertical integration and horizontal
collaboration. The Samar farmers are the least integrated in the value chain owing primarily to their
low production volume and intermittent operations. Buyers generally invest in collaborative
relationships with their suppliers if they are able to offer consistent volume and quality. To date, the
volume from Samar particularly the northern and western parts are too small to warrant investments
from buyers. Likewise, Samar has yet to demonstrate its viability as a seaweed producing area to
counter the general perception that production is unstable due to frequent visits of typhoon.

Except for a small volume that are sold to public market vendors and used for pickle processing, all
of the dried seaweeds produced by Samar is sold to TBK. TBK has consistently maintained its
presence in the area despite the fact that the current volume sourced is less than 1% of its total volume
requirement. However, TBK does not provide advances and other significant value added services to
its suppliers. Transactions between farmers and market intermediaries, and between intermediaries
and TBK, are primarily conducted on a cash and carry basiswhich requires access to sufficient
working capital to remain competitive or in business. Farmers recounted that when seaweed
production in the area was at its peak, traders usually provided cash advances to secure their stocks.
At present, it is only the Vigan ARB Cooperative which provides advances to its seaweed grower
members.

27
2. Distribution of Cost and Profit

The preceding waterfall chart compares the costs, profits and margins across different players of the
seaweed industry. This analysis traces the costs and returns from seaweed farming, trading and
production of semi refined carragenan (SRC), which is the most dominant product of seaweeds from
the Samar provinces and Region 8 as a whole.

The chart shows that farmers incur the highest costs, contributing 81
81%
% of production costs for a unit
of semi refined carrageenan. The proc
processor and the trader contribute 13% and 6% of the SRC value
added cost respectively.

The 2nd data series shows that profit distribution can still be improved to enhance the financial
financ
position of seaweed growers. While traders only contributed 6% of the value added cost,cost they get a
relatively larger share of the profit at 23%. Likewise, processors get a 16% share of the profit, while
only contributing 13% of costs. On the other hhand,
and, growers only get a 60% share of the profit for
their 81% cost contribution.

Comparing margins (3rd series), the pricing schemes between growers and traders can still be
improved to ensure a more equitable distribution of income. This can be done by increasing the
buying price of seaweeds from growers. Developing the capabilities and capacities of growers to be
more efficient in seaweed production would also result in a fairer distribution of benefits.

Waterfall Chart Showing the Cumulative

Costs, Profits and Margins of Seaweed Industry
Players of Samar
Grower Trader Processor

13% 16% 14%

6%
13%
23%

81%
72%
60%

% Added Cost % Total Profit % Retail Price

28
3. Horizontal Collaboration

From the field surveys, the functioning seaweed groups are the agrarian reform beneficiaries
organized by the Department of Agrarian Reform, namely the Vigan ARB and the CASAFIPCO. The
Vigan ARB availed of a PhP 302,000 loan from Eastern Samar Development Organization last
September 9, 2008. This was re-loaned to members for seaweed production. The seaweed farms
established from loan proceeds were all washed out during the typhoon. As of September 2009, only
Php19,000 has so far been paid. Trading of seaweeds started last June 2009. Average delivery to
TBK buying station is about 500 kilos per month. The cooperative also provides training on seaweed
farming to their members as well as advances for materials. CASAFIPCO is engaged in seaweed
farming and pickle processing.

Outside of the ARBs, seaweed farming and marketing is generally pursued individually by
households. It would seem that at this point farmers generally do not see yet the benefit of working
together to revive the industry. Many are still on a wait-and-see attitude and hesitant to take risks.

G. SUPPORT MARKET

1. Providers

Public Sector

Since seaweed offers a niche in global competitiveness and is in demand, the Philippines government
has decided to pursue an expansion of the seaweed industry. The Seaweed Development Program of
the Bureau of Fisheries and Aquatic Resources (BFAR) was started in 1996 with three main focus
areas: research and development, management, and institutional development, though it was not until
the last few years that the program started to make strides. A sub program has been formed, the
!ational Integrated Seaweed and Seaweed Products Development and Promotion Program, that is
creating provincial and regional seaweed development councils with goals to increase the number of
hectares farmed per year, and the creation of new processing plants and marketing opportunities.

a. Bureau of Fisheries and Aquatic Resources

Research
Technical trainings, seminars and consultancy
Market matching
Establishment of techno demo farms
Establishment of seaweed nurseries
Financial support
Construction of postharvest facilities
Operates the seaweed gene bank
Implements roll-over scheme for seaweeds

b. Local Government Units

Organizational development
Enterprise management training
Production technology training
Financial support

The services are generally provided for free or heavily subsidized. Outreach dependent on budget.
The roll-over scheme for the seedling dispersal program is an attempt to make the system self-
sustaining. Progress, to date, however has been slow. Likewise, to increase outreach, number of

29
seedlings given to households is reduced. In many cases, the lines are too few making seaweed
farming more of a sideline activity rather than a fulltime business.

BFAR also lacks the personnel and resources to provide extensive training to farmers. In many cases,
programs are focused in Leyte.

Non-Government Organizations (NGOs)

a. Sentro ha Pagpauswag ha Panginabuhi (SPPI) Center for Local Economy Development

SPPI provides livelihood assistance to Samars rural poor. SPPIs community development
workers facilitate development planning sessions and support communities in assessing their
requirements.

SPPI has been one of the prime movers in reviving the seaweed industry of Samar. With support
from BFAR Region 8, SPPI has ongoing pilot nurseries in Capul Island. The organization is also
currently conducting mapping and site assessment in other potential sites for the seaweed
nurseries. Other related activities in support to the seaweed industry are the following:

- Training on cultural practices in seaweed farming and nursery operations including

mentoring of nursery managers
- Organizational development and technical support to Seaweed Farmers Association of
Capul (SFAC) and Barangay United Development of Livelihood Initiatives of Sawang
(BUDLIS)
- Facilitate sourcing of seedlings including transport and other logistic services
- Facilitate establishment of farmers groups
- Conducts market research on seaweeds sub-sector
- Networking with BFAR and other agencies

b. Center for Empowerment and Resource Development, Inc. (CERD)

CERD is a non-governmental development organization established to assist fisherfolks to

effectively manage the marine and coastal resources on which they depend for livelihood.

- Offers livelihood programs to poor communities

- Technical assistance on Integrated Coastal Resource Management
- Conducts Basic Coastal Management and Ecological Assessment
- Assisted seaweed farmers through input provision (planting materials) with the support of
BFAR in the Municipality of Biri, Northern Samar

c. Trowel Foundation

- Facilitated release of 1 ton of seaweed seedlings in Barangay Magsaysay, Lavezares,

Northern Samar (washed-out)
- Conducted VC study on seaweeds in Samar

The Foundation seems to be more focused on the mudcrab subsector during the recent months.

Academe (UP, ESSU, UEP)

Conducts of studies and researches on seaweed

Conducts training on dried seaweed processing / pickled seaweed

30
PEOPLES ORGANIZATION (POs)

a) Seaweed Farmers Association of Capul (SFAC) Capul Island, Northern Samar

- Orientation of policies
- Identification and selection of nursery managers/growers
- Expansion of members
- Consolidation (production)
- Oversee production and control
- Quality control
- Permit acquisition
- Facilitate coastal zoning
- Networking (NGOs, NGAs and private sectors)
- Planning for production

The organization is still at the infancy phase and would require intensive organizational
development support.

b) Barangay United Development of Livelihood Initiatives of Sawang (BUDLIS) Capul Island,

Northern Samar

- Financial services
- Seaweed processing (pickled seaweeds)

c) Vigan Agrarian Reform Beneficiaries Multi Purpose Cooperative (Vigan ARB MPC) Mc
Arthur, Eastern Samar

- Conducts training to seaweed farmers (members and non members)

- Identified/tapped trainer on seaweed production in Eastern Samar by DTI and BFAR
- Engaged in dried seaweed trading
- Supply dried seaweeds to TBK
- Provides (through credit) farming inputs such as ropes, nylon and soft tie to seaweed farmers
who are coop members

Potential Providers that can Samar Industry can link with (as soon as it has sufficient supply base)

The Seaweed Industry Association of the Philippines (SIAP), which represents many of the
carrageenan Philippines processors have both been particularly active in starting demonstrations
farms, finding new cultivation areas, and pushing for trade agreements at the international level.

Play a big role in solving non trade barriers by cooperating with international seaweed
associations like MARINALG and the International Seaweed Association. SIAP is also
active in strengthening the ASEAN CAREGEENAN INDUSTRY CLUB.
Coordinates with government agencies involved in promoting seaweed both in production and
marketing.
Reviews the importation of food, cosmetics, pharmaceuticals and other related companies of
caregeenan from Europe and USA for their products.
Communicates with buyers on their carageenan needs
Conducts regular monitoring on quality needs of the markets and disseminate it to all makers
for strict compliance.

31
2. Assessment of Support Market

Government and NGOs are the main providers of business development services to the seaweed sector.
Services are provided for free and/or socialized payment schemes tending to heavy subsidy. Outreach,
depth and breadth of services are limited, owing to resource constraints. The resource limitations of the
local government necessitated that meager budgets are allocated to all services especially agricultural
extension. It becomes more important, then, that the meager resources be put to good use so that farm
productivity and incomes can be achieved by the farmers. Some of the salient problems and opportunities
for reform in the provision of business development services are as follows:

a) There is a lack of private-sector providers in Samar specializing in the seaweeds sector. This absence
is particularly acute in the areas of production technologies aligned to Good Aquaculture Practices
(GAqP) and Good Manufacturing Practices (GMP);

b) The lack of a system of technology sourcing, archiving and sharing so that clients who are mostly less
educated could comprehend and use them for decision-making

c) The lack of information systems particularly on site suitability and market movements and trends that
can guide players to make informed decisions and lower investment risk aversion;

d) The lack of access to low-cost credit to allow small farmers to capitalize their farm enterprises;

e) The inadequacy of post harvest facilities that are readily accessible to farmers to assist them in meeting
market standards;

f) Whether services are embedded or fee-based or even free, Samar enterprises and farmers are more
receptive to services with immediate impact on sales/income. Samar enterprises and farmers are
generally very risk adverse resulting to low buy-in, and low level of adoption of new technology and
practices. This is basically because impact of services received in the past are not that tangible

H. E ABLI G E VIRO ME T

2) ational: Government Policy Support (Seaweed Development Framework, 2006 2010. BFAR)

a) Regulation: Strict implementation of Quarantine Policies in the entrance of seaweed seedling

from other provinces into our province

b) Law Enforcement

o Inventory of seaweed growers and area occupied should be undertaken in

coordination with other agencies concerned to determine areas for further production
purposes and to give government agencies time to plan and implement decisions on
what appropriate interventions be put in place to increase productivity.
o Legislation LGU must pass and approve a municipal ordinance regarding seaweed
industry in their locality

 Proper implementation of taxes

 Maximum area to be released for licensing purposes

c) Plans and Zones

o Proper zoning and designation for seaweed industry areas/zones

o Proper assessment of areas potential for expansion

32
3) ational: FAO 146

This stipulates the rules and regulations governing the gathering and farming of seaweeds.
Permits to gather, license to culture and gratuitous permits are needed for seaweed gathering;
renewable from 6 months to 1 year
Size of farm lots are restricted to not more than an aggregate of 1 hectare per farmer
Fees must be paid by seaweed gatherers and growers

33
 SECTION 3:
GENDER

High levels of occupational multiplicity often characterize households in rural coastal communities
like Samar. In Samar, it is not unusual for households to have several sources of income, especially a
mix of fishing and farming. Occupational diversity allows households to shift the mix and relative
importance of productive activities depending on the opportunities and circumstances at hand. It also
provides insurance against ecological catastrophes such as typhoons, pests and diseases, and
price/market fluctuations. The loss of entire seaweed farms as a result of tropical storms and diseases
has been a recurring problem in Samar. There are no systems for insurance or compensation
equivalent to those available in the agricultural sector.

Seaweed plots take about 3-4 hours a day to maintain. This leaves plenty of time for growers to
maintain land crops, to fish and glean marine resources, to care for children and the household as well
as other activities. At present, seaweed farming is a supplementary income by only a few households
in Samar. Based on BFAR data (June 2009), there are 140 growers and of which 21% are female.
Interviews and stakeholder workshops conducted last October 2009 indicated that there are 90
growers and of which 30% are female. Female growers are members of the Vigan ARB Cooperative.
In other areas there are no female growers reported. The phenomenon of decreasing number of
growers is common for both women and men. The dominance of male seaweed farmers may be
attributed to the fact that women, especially the older ones, may find themselves at a disadvantage,
because of a lack of swimming or boat skills. In this case, they are restricted to shallower, less
productive waters, and have to pay more often for labor help. Seaweed farms in shallow waters in
Samar are very much prone to diseases and destruction by typhoon. For women to be gainfully
involved in seaweed farming in Samar, alternative technology has to be introduced that would make it
easier for them to maintain their farms without sacrificing farm productivity. However, a site
suitability assessment involving pilot farms for a series of cropping at different times of the year has
to be made to ensure viability and minimize the risks for both male and female-headed households.
Merely increasing the involvement of women without considering specific benefits to them and
lowering the risks involved may worsen the womens present social situation and also increase their
work burden.

The gender division of labour in Samar is based on men being the primary income earners, and
women taking primary responsibility for domestic and
childcare activities. As women enter the labour force,
they usually combine productive work with their
reproductive activities. Because of their ties to the
household, it is deemed 'socially acceptable' that women
can be drawn into employment at certain time of the day
but should be able to attend to their household
responsibilities for the rest of the day or year. Given
their concentration in the seasonal labour force, women
have little opportunity to upgrade or advance in their
work. It is the predominantly male members of the
households that have most access to training giving them
greater opportunity for advancement and upgrading of
their human capital. Thus women remain locked into
their role as temporary seasonal labour. Female
employment in seaweed farming in Samar is usually
concentrated in labor intensive activities that require
dexterity (e.g., tying of propagules). Women are also
involved in seaweed pickle processing, which currently is
just a supplementary income and with limited market.

34
Production is also dependent on whether there are surplus and/or rejects. Womens economic
activities are to a significant extent difficult to categorise than mens. Women tend to juggle multiple
activities (such as combining seaweed tying with pickle processing, vegetable gardens, helping in the
copra, marketing/petty trading), whereas mens work is often clearly focused on one set of inter-
related activities.

Seaweed farming and marketing is been carried out at the household level with family members often
contributing to different activities at specific times. However, in many cases, extension is organised
on the assumption that the family is an altruistic institution and there is an unrestricted flow of
information for the benefit of all concerned members. Oftentimes, it is only the males who acquire
depth of knowledge while women are given superficial know-how based on the premise that their
main responsibility is to take care of household activities. Women are much less likely to have free
time for activities not related to household, because they are the main caregivers for children and
work much longer hours daily than do men. It is essential to understand at which points in womens
and mens daily and seasonal routines they are most available for training sessions and where these
events should be located to facilitate their attendance.

35
 SECTION 4:
CONSTRAINTS AND OPPORTUNITIES

1. CO STRAI TS

The relative advantage of seaweed farming over other technologies can be attributed to its being
simple, low-cost, easy to build and deploy and effective. The technology is within coastal households
capability and not gender biased and women can handle the work. However, the momentum of
seaweed farming in Samar has always been damaged by the occurrence of disease and typhoons are
seen as the most important constraint that limits technology application in seaweed farming. Finding
ways to overcome this is a great challenge.

At present, Samar has a very weak competitive position in the Philippine seaweed industry. In an
interview conducted with Shemberg/SIAP President and MPCI last November 2009 after the
stakeholders workshop, both interviewees said that the volume Samar has been producing, including
during their peak years in 2000, is not big enough for them to invest on the area. SIAP, as indicated in
their sectoral plan (formulated Dec 2009), will continue to implement their Adopt-an-Island project
as a means of expanding the supply base for dried seaweeds. However, SIAP is not keen on Samar as
one of their project areas. The annual harvest of seaweeds in Samar represents a very small --- almost
negligible --- percentage of total production figures on a national basis. The low production volume
and the lack of infrastructure support/direct shipping routes to major locations of processors
significantly raise the cost of sourcing seaweeds from Samar. It is also evident that there is a lack of
concerted efforts among public and private stakeholders to revive and grow the seaweed industry. As
one seaweed exporter has said, typhoons passing thru Samar are the same typhoons which hit Samar,

36
Tacloban and Cebu but
seaweed farming in these
areas continues to grow and
communities never stop
searching for ways to better
cope with diseases and
disasters.

From the field survey and

stakeholder workshops, it is
apparent that the immediate
priority for Samar Island is to
increase the level of
production to a sizable and
stable quantity. This would
help Samar Island establish
its viability as a dried
seaweed supplier and attract
traders and buying stations
(of processors/exporters) to
establish operations within
the seaweed producing
areas/communities.
Thereafter it would
strengthen the bargaining
power for an island bloc in
aspects such as selling price
negotiations and upgrading
support.

The poor competitive

position of Samar seaweed
industry is a result of the
following interrelated factors:

a) Lack of site suitability

assessment/poor site
selection process.

Technical expertise in selection of environmentally productive farm sites is the most important first
activity which will determine the all year round production of farms. There are several important
criteria in selecting potentially productive sites of which water movement due to current is considered
to the most important factor. Sites with moderate wave action are considered ideal for this purpose.
This ecological factor prevents warming of seawater temperature due to it flushing and turbulence
effect on the water column. It also enhances the rate of diffusion of nutrients into the tissue of the
seaweed by maintaining high diffusion gradient between the water column and cells. Areas
characterized by poor growth of cultures during summer months when the sea is calm and the
seawater is warmer than normal will only support seasonal farming. Other factors such as salinity,
water, temperature, type of substratum, depth of the water etc. are secondary factors. The final test in
site selection is test-planting the area with the species to be farmed. In areas where no farming is
done, test planting should be done during an entire year or at least during the SW and NE monsoon
seasons. In addition, the test plant must exhibit a daily growth rate of not lower than 3%.

37
b) Lack of access to disease resistant and high yielding varieties

Crop failures mean there will be fewer seed stocks for seaweed farmers to plant. Farmers are then
unable to plant for several months. Traditionally, farmers select only the best looking seed stocks
from their present harvest for replanting. But the seed stocks may not be the best for the next season
or month. The importance of having seed stocks of the right strain available during the different
planting or growing periods is a crucial factor in seaweed farming. To date, farmers and NGOs
assisting coastal communities rely on BFAR to provide the seedlings. BFAR, however, has limited
budget for seedling distribution as well as access to good quality seedlings (also source out from
farmers within the island). Likewise, with limited budget for seedling procurement, the number of
seedlings provided to farmers is very limited and does not promote economies of scale.

c) Limited technical know-how

The farmers are very knowledgeable in the mechanical aspects of farming. However, they lack or
possess very little knowledge in the more technical and developmental aspects of seaweed farming,
especially in the biology and ecological/environmental requirements of the species being farmed.
Majority of the stakeholders in the Samar seaweed industry lacks technological capacity and
innovation, with most of them having a generally passive attitude towards investing in technology,
research and development. This can be explained to a large extent by the absence of economies of
scale to buffer investment costs and the lack of access to providers/services to facilitate upgrading.
Likewise, the players may not be willing to embark upon technology upgrading or invest in expanding
their innovation capacity because of risk aversion and other uncertainties.

Farmers in other seaweed producing areas, for example, continuously look for ways on how to protect
their farms from typhoon destruction. In Sibato Island, for example, which is also prone to typhoon,
planter on Sibato Island, describes an innovative way to deal with turbulent weather: A risk in
seaweed farming, for example, is typhoons. But people now have radios and others have TV already.
[When they hear news about a typhoon] they try this technique to save their seaweeds: they take off
the floats so that the seaweed sinks; and if the seaweed sinks the force [of the typhoon] will be
weaker, because if it is floating the force is strong. When the strong wind blows, seaweed will be
washed out. That is why they let it sink; to reduce pressure. After typhoon it is still there.

d) Lack of entrepreneurial drive

Majority of seaweed farmers lack the necessary skills and knowledge to manage their income
generating activities as businesses. Although not all are born to become entrepreneurs, acquisition of
basic business management skills and the development of an entrepreneurial mindset among the
stakeholders will improve operations and profitability of seaweed farms.

e) Insufficient post-harvest facilities

The lack of adequate post-harvest facilities significantly affects the productivity and quality of
seaweeds from Samar Island. The average dry to weight ratio in Samar is at 10% which is lower than
the standard ratio of 15%. Ground level method of drying even with the use of mat also poses risks for
sand and other contaminants to be in contact with the seaweeds. Seaweed experts recommend the
hanging method for drying seaweeds. Using this technique, seaweed samples attained the desired
dryness based on the standard dry-wet weight ratio of 1: 5-7 or 15-20% production. This method
produces high-quality dried seaweeds, at the shortest time, uses minimum space requirement, and
material cost.

The market standard of 35% moisture for dried Eucheuma is not an arbitrary number but has been
derived after considerable field research combined with detailed analytical work on the seaweeds and
their carrageenan extracts. Moisture content is important because high moisture leads to deterioration
of the seaweed during storage and transport, and a consequent loss in carrageenan content and quality.

38
Eucheumas are unstable above 35% moisture and undergo degradation during storage. At above 40%
moisture, the carrageenan in the seaweeds may not survive transportation to the factory, arriving with
functionalities too low for some applications.

Between 25% and 35% moisture, Eucheumas are relatively stable for periods in excess of 12 months,
and the thalli are ideally flexible for efficient baling. Between 15 and 25% moisture, Eucheumas are
extremely stable, but the thalli are too brittle, and resist pressure or snap baling. Eucheumas below
15% moisture remain stable, but can cause processing problems during carrageenan extraction.

Cleaning seaweeds is essential during both cultivation and post-harvest treatment. Cleaning after
harvest maintains a high quality product. During drying, care must be taken that the seaweeds are not
exposed to contamination such as sand, dust, dirt, etc., which will stick to the seaweed, and raise the
foreign material content above tolerable specifications. Drying should be done under hygienic
conditions. Likewise, all storage should be in clean, cool, dry, and well ventilated places. Processors
usually have an extensive database on Eucheuma seaweeds which can fingerprint a number of field
problems such as the following:

- Age of plants at harvest whether too young or too old; early harvesting results in low
carrageenan content and low gel strength.
- Drying efficiencies including contact with fresh water
- Storage efficiencies
- Mixing a wide range of qualities

f) Lack of providers of relevant services/lack of access to providers/Weak effective demand for

services

Current services/service delivery modalities are less responsive to diversified needs of coastal
households and lack the depth and breadth of outreach. There is a lack of stand alone and value chain
based providers to help Samar seaweed industry players particularly growers and traders to comply
with Good Aquaculture Practices (GAqP) and Good Manufacturing Practices (GMP) as well as
improve business management skills and production processes. Service delivery is heavily dependent
on external aid or government funding with natural tendency to collapse when funding dries up. This
has increased rather than reduced the dependency of coastal communities.

Gaps that hinder LGUs and NGOs from becoming effective facilitators of development are the
following: a) Lack of know-how in enterprise development and market-based mechanisms to address
constraints/opportunities; b) Lack of clarity of roles of different stakeholders including their own and
how these interface to creating conducive environment for investments; and c) Inadequate
understanding of markets

The absence of credit facility for household level seaweed farmers is one of the major constraints
which limit the full production potential of a family farm to advance to the level of a highly
productive commercial farm. The size of the farm is limited by initial capital available to the farmer
while his capability to expand his farm is constrained by lack of revolving fund for expansion
purposes.

g) Weak inter-firm cooperation

Horizontal relationships are generally weak and compounded with lack of access to information to
make informed decisions, which are necessary to promote and improve the representation of the poor
and their interests. This is further aggravated by weak capacities of community members and
organizations to participate and partner with each other. There is inadequate public-private
collaboration in the Samar seaweed industry. LGUs and NGOs need to further learn on how to
provide support and the enabling environment for private sector actors to create wealth and provide
much needed services to the poor.

39
Close partnerships with progressive lead firms can jumpstart the development process, reduce the
costs of bringing the products to the markets, and act as a catalyst for upgrading at the local level.

However, for the Samar seaweed industry to entice progressive players/lead firms and traders to enter
into strategic alliances with farmers/growers, the following pre-conditions have to be met:

- Capacity and capability to meet basic quality requirements which implies the need for some
upgrading and a good understanding of the required standards

- Consistent and reliable offer of a significant volume of seaweeds which calls for increased
and stable production base and a well-functioning horizontal collaboration

- Demonstration among farmers of their Willingness to invest --- Lead firms are more inclined
to invest when they see that the communities themselves have invested their own
money/assets. Somehow, this provides a guarantee that the communities will work towards
making the venture a success.

h) The need for improved governance/more conducive enabling environment

LGUs and BFAR try do a little of everything ranging from policy and regulations to service delivery
resulting to thinly spread out interventions. Policymakers need to improve their capacity to design
better plans, instruments and criteria for efficient, cost-effective, high impact support programs and
infrastructure for the seaweed industry under different socioeconomic circumstances and under
budgetary and administrative constraints.

2. OPPORTU ITIES

d) Most viable market for Samar is TBK. Dried seaweeds from Samar comprise less than 1% of
TBKs raw material supply. TBK is open and willing to source more of its raw material
requirements within the region rather than importing from Indonesia.

e) There are available technologies within the Philippines that can be adapted/transferred to Samar
farmers to help them improve profitability of their seaweeds farm

- Improve wet to dry ratio

- Reduce losses due to diseases
- Promote economies of scale
- Utmost consideration on site suitability/ appropriate technology

f) BFAR has identified areas suitable for seaweed farming deep sea technology currently being
piloted.

40
 SECTION 5:
UPGRADING STRATEGIES/INTERVENTIONS
Without a significant volume of cottonii produced, Samar has no competitive advantage in the
seaweed market. For Samar to establish its presence in the cottonii market and take advantage of the
various market opportunities, the province has first to establish a viable seaweed production base
through the following strategies:

1. Build up of local capacity to conduct a scientific site suitability assessment to mitigate risks of
failure, reduce cost of transactions, support year-round production, and to gain buyers confidence
on Samars capacity and capability to deliver cottonii of significant volume and of consistent
quality.

The main components of this strategy are the following:

a) Assessment and Selection of Potential Areas suitable to the farming of cottonii.

Output of the assessment study will consist of delineated one-half to one hectare farm areas
ecologically evaluated as appropriate sites for cottonii/seaweed farming. The proposed
duration of the site suitability assessment is one to two years.

Conduct of the site suitability assessment would also serve as on-the-job training for local
extension officers consisting of BFAR, technical staff of NGOs involve in seaweed farming,
and selected progressive members of seaweed farmer groups. Likewise, the sites being tested
can also be set-up as demonstration farms.

b) Compilation and assessment of the actual practices in seaweed culture/farming in Samar and
benchmarking system development to facilitate promotion of best practices

This is intended to promote a better understanding of the assimilative capacity of the

environment in response to seaweed varieties and apply this knowledge in the development of
best practices in seaweed farming as well as remedial measures to guide existing growers. It
will also facilitate the development of decision tools to improve planning for cottonii/seaweed
farming.

2. Facilitate the establishment and/or strengthening of seaweed nurseries with a primary focus on
cottonii to ensure industrys responsiveness to changing market demand and requirements

This will involve the building up and/or strengthening of capacity of farmer groups and
cooperatives as well as NGOs (depending on local situation and capacity) to operate and manage
a seaweed nursery. Nursery intervention will improve the delivery of improved varieties and
seedlings from farmer-led/ community nurseries thereby contributing to improving seaweed farm
productivity and improving the livelihoods of the coastal poor. Nursery management and
operations can be anchored on the inherent dexterity of women making them active participants in
nursery enterprise ventures.

Capacity building should be directed towards increasing technical skills and knowledge of
operators and organizational development support. Focus of the organizational development
support to nurseries should be focused on: a) instilling a conscious application of business
principles in the pursuit of social impact objectives; b) improving competence to develop market
driven, socially responsive and financially viable business strategies, and c) stimulating
standardization of processes and implement simple management systems. It is also important to
assist nurseries in the development of schemes that will enable them to sell seedlings to farmers at
easy payment terms but without sacrificing their own financial viability.

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 Likewise, project support can also be provided to build capacity of nurseries to deliver embedded
technical assistance to their clients particularly start-up seaweed farms. Nurseries can potentially
set-up model farms which will also serve as learning venues where clients can visually validate
results to make informed decisions. Successful seaweed farm production by farmer-clients will
create sustainable market for seedlings. It is important though that BFAR and other NGOs
engaged in seedling dissemination to support the principles and market-based delivery schemes of
the nurseries.

3. Facilitate the development of critical mass of cottonii/seaweed farms to attract buyers to source
from Samar

This is aimed at promoting and/or reviving interest of coastal households to invest in seaweed
farming and to minimize risk aversion due to successive experiences of crop failure. It will
consist of the following components:

a) Identification, selection, and development of at least two model farms (preferably one female-
owned and one male-owned) in each of the seaweed farming municipalities to demonstrate
viability of seaweed production

Coastal households in Samar have become very risk adverse after experiencing a series of
washed out farms and harvest failures. It is not realistic to expect farmers to take up a new or
enhanced methods and processes or to diversify into something new unless they have been
thoroughly convinced that the risk factors with which they have had to struggle have been
properly assessed and locally proven (in terms of improved incomes). As such, it is
oftentimes important to demonstrate the financial viability of seaweed farming using a select
group of enterprises within their locality. The model seaweed farms will serve as a tool to
demonstrate to farmers that cottonii farming is profitable provided that appropriate production
techniques are employed and proper site selection has been taken as a primary consideration.
Identified model farms will also be assisted in further developing their business as well as
their production system to showcase the benefits of good business practices.

b) Awareness campaign on benefits of seaweed production and its market opportunities through
multi-media campaign and other communication tools

Providing existing and potential seaweed farmers and investors with technical and market
information is essential to the expansion of the industry. The awareness campaign should
include information on ideal locations, investment requirements, market opportunities, and
projected return on investments. Information can be made accessible in a variety of manner
such us via radio and television programs, seaweed calendars, information leaflets, banners
put up in strategic areas within the province, etc. Community development organizations,
politicians, and other influential people should be involved in creating technical and
marketing information campaigns.

c) Field visits and benchmarking to promote interest, validation of business concept, and
accelerate learning

Field visits and benchmarking visits are targeted for key providers (government and
community-based providers --- traders, farmers). This will provide opportunities to validate
theories and models and to learn more of their practical applications in day to day operations.
It will also reinforce participants ability to redesign seaweed production practices on the
basis of what they have learned and seen.

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4. Development of a community-based business development services (BDS) system

To satisfy the ever-changing needs of the seaweeds market, the Samar seaweed industry players
must respond by continuously improving themselves. As such, enterprises and farmers in the
Samar seaweed sector require continuous access to business development services (BDS) to
institutionalize market competitiveness for long-term survival. As such, the proposed community-
based business development services is envisioned to facilitate the development of self-sustaining
capability towards obtaining BDS. It may consist of the following complementary strategic
directions:

a) Development of a range of intermediary organizations and individuals that can provide

services to enterprises in transactional, business-like relationship and without the need for
long-term subsidy: Rather than trying to develop a single one size fits all provider", it is
advisable for a facilitator to work with a range of providers in order to be able to match
competencies and structures with particular market segments or target groups. Working with a
wide range of providers will also translate into higher outreach and having a wide variety of
services accessible to upstream players. To facilitate the development of providers that can
offer effective BDS to the Samar seaweed industry, it is proposed to:

- Build on trade structure to facilitate chain-wide learning and innovation

- Provide product development assistance to existing and potential providers

b) Increase effective demand for business development services by enhancing enterprises

understanding and valuation of the benefits of services: This focuses on three main aspects in
creating and sustaining demand for support services: acquisition, application, and benefits.
Acquisition focuses on increasing clients satisfaction and purchase of services. Increasing
acquisition means providing a service of good enough quality such that clients are likely to
want it again, or to want other services from other suppliers. Application and benefits focus
on how the farmers/enterprises are using the services. Increasing client application of services
means ensuring that the service is useful enough for enterprises/farmers to actually apply the
service in their farms/business.

Improving the understanding of players (particularly upstream) and their appreciation of BDS
may be facilitated through the following activities:

- An upfront investment in careful selection of pilot client group who will then help
sell the BDS product. Pilot demonstrations are very helpful in overcoming risk
aversion tendencies of micro enterprises/poor households.

- Publication of success stories of users of BDS to create a bandwagon effect.

Testimonial statements and referrals from satisfied customers are strong reinforcers,
especially if these customers are recognized as the more progressive farms in the
area.

- Conduct general advertising of service promotional campaigns should emphasize

the benefits of the service rather than the service itself - equate BDS with continued
cost savings and positive investment returns and profits to have greater possibility of
eventually capturing the imagination and interest of micro enterprises and farmers

- Use of demand instruments like the voucher and matching grants to encourage first
time purchase of the relatively higher priced services.

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 c) Facilitate the development and delivery of a wide variety of services for a broad range and
significant proportion of farmers/enterprises in the Samar seaweed industry and that are
profitable to both the clients and the providers.

This strategic theme involves the development and piloting of a wide range of integrated set
of services aimed at providing holistic assistance to enterprises in the seaweed sector to help
them take advantage of market opportunities and resolve constraints to growth. A product
support package addresses inter-related constraints and opportunities in a sector. In a package,
it is possible that 2 or more categories of constraints and opportunities are addressed. The
range of services proposed here represents structured and unified approaches to supply chain
transformation, which would in turn facilitate business development and operational
improvements necessary to meet requirements and facilitate the access to a specific market.
The support service package may consist of various components but with a step-by-step
delivery and implementation over a period of time.

Proposed services include the following:

- Entrepreneurial Development: Seaweed Farming as a Business
- Alignment of production practices to Good AcP and GMP from site selection to storing
and transporting of produce
- Deep sea seaweed farming
- Retail distribution of inputs (soft tie, seedlings, etc.) which may be bundled with training
services

5. Set-up of community-based post-harvest facilities

This will involve assistance in the set-up of common service facilities strategically located in key
seaweed producing municipalities with the following facilities:

- Seaweed solar dryer to improve the efficiency of the seaweed drying process
- Moisture analyzer
- Baling machine

Potential operators of the post-harvest facilities may include the following:

- Farmers associations
- Traders for their suppliers
- Processors for their supply chain

6. Promotion of horizontal collaboration

This will involve support to collective action strengthening for the multiple purposes of: a) group
production and marketing; b) fostering learning and innovation and access to support markets; c)
building an effective base for advocacy and info dissemination; and d) promoting better social
security functions Support under this component may include the following:

- Cluster formation/Organizational Development support

- Capacity/Capability building to meet basic market standards
- Database of seaweed clusters and ideal sites

7. Pilot value chain formation/Vertical linkages

As soon as the municipality and adjoining areas where TBK has its buying station improve its
production volume, it may be possible to initiate small pilot activities with TBK to assess the
potential of larger-scale and longer-term collaboration. The implementation of collaborative pilot
activities can be instrumental in attracting SIAP/ lead firms to work with Samar seaweed

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 communities from a capacity-building perspective rather than exclusively from a price offer and
compliance point of view.

8. Strengthening public-private partnerships for seaweed industry development

This will involve technical assistance to: a) restructure and strengthen capability of seaweed
industry council to advocate for market-based and enterprise friendly policies and improvement of
infrastructure; b) promote public-private partnerships in delivery of services to the seaweed
industry; and c) promote a culture of information sharing and chainwide learning and innovation

It is also proposed that technical assistance be provided to LGUs to help them align their priorities
with the other stakeholders vis-a-vis market environment as well as facilitate reorientation
towards market-based decision-making and priority-setting. Key areas for technical
assistance/advisory inputs may include:

- Participatory formulation of the seaweed industry development plan and clarification of

roles
- Assessment of how different kinds of public investments/programs affect growth of
seaweed industry to facilitate development of effective policies
- Improved dissemination of trade info and policies
- Review of policies intended to promote positive linkages
- Review of policy initiatives/incentives to promote adoption of ecology friendly practices
in fishing and seaweed production
- Capability building on business OD for rural communities

Addressing many of the aspects above will involve the active participation of the private sector
with rural communities well-represented. These would also provide the platform for promoting a
stronger and intentional public-private sector partnership.

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