Wednesday, November 07, 2007 Seaweed industry at risk
THE country is in danger of losing its dollar earnings from seaweed exports to Indonesian counterparts, an industry organization warned.
A report from the Seaweed Industry Association of the Philippines (Siap) said the country’s seaweed industry is “threatened” of losing its position as the biggest producer of Eucheuma—red algae seaweed—as well as the largest manufacturer of carrageenan in the world.
Among the Philippines’ competitors in terms of seaweed production, Indonesia is considered the biggest threat. Indonesia’s seaweed production increased 21 percent to 78,000 metric tons last year from 64,600 metric tons in 2004.
The Philippines’ seaweed production, however, decreased by as much as eight percent in the same period. The country’s seaweed production went down to 95,000 metric tons in 2006 from 102,820 metric tons in 2004.
Overtake
“In the next two years, it is projected that Indonesia will overtake the Philippines in seaweed production if the private sector and the government will not consolidate their efforts and resources to prevent the declining trend,” said SIAP president Benson Dakay.
Apart from the effects of a strong peso and stiff competition, Dakay said the seaweed processing industry is affected by environmental factors, such as global warming, that caused a decline in the supply of raw materials.
These, in effect, has pushed exporters and manufacturers to raise seaweed prices, making the industry less competitive compared to other Asian exporters.
Dakay, who is also chief executive officer of Cebu-based Shemberg Corp., earlier decided to raise prices of processed seaweeds by 15 percent. He said the increase was only to offset the company’s losses.
In addition to low supply of raw materials, Dakay said the industry has to face the approved minimum wage increase and the government’s re-imposition of the one-percent agricultural tax.
Peso factor
He said the appreciation of the local currency against the greenback is the “biggest factor that pushed the seaweed industry against the wall.”
The peso closed at 43.885 against the US dollar last Monday.
Dakay said economists have predicted that the peso will go up further to reach 41 against the greenback before the year ends, a scenario feared by exporters in general.
The Indonesian rupiah, on the other hand, has barely moved against the dollar, averaging at .000109 against the greenback yesterday compared to .000106 two months ago.
To cushion the seaweed industry from further downfall, Dakay said exporters and manufacturers are considering several options. These options are: slowing down exports, increasing selling prices, reducing labor cost through retrenchment, and asking for government intervention (which includes fixed foreign exchange rate and subsidies on export-oriented companies).
He said the worst scenario would be for companies to close shop.
“Profits are shrinking and some manufacturers have (already) decided to close shop due to extensive losses incurred,” Dakay said.
Earlier, he said five seaweed processors—Dahon Dagat Inc., King Agro-Marine Products, Geltech Hayco Inc., Philippine Carrageenan and Natum Corp.— have shut down.
He said internal and external problems hounding the seaweed processing industry in the country have led to the displacement of 10,000 to 20,000 factory workers of small and medium enterprises. (MMM)
