The Economics of Kappaphycus Seaweed Cultivation in Developing Countries: A Comparative Analysis of Farming Systems

Abstract

The farming of the red seaweed Kappaphycus alvarezii and related species as raw material for the hydrocolloid carrageenan rapidly spread from the Philippines in the late 1960s to Indonesia, Tanzania, and other tropical countries around the world. Although numerous studies have documented positive socioeconomic impacts for seaweed farming, factors such as diseases and distance to export markets have led to an uneven development of the industry. Using standard budgeting techniques, this study adapted production and market data from a FAO-led global review of seaweed farming to develop comparative enterprise budgets for eight farming systems in six countries (Indonesia, the Philippines, Tanzania, India, Solomon Islands, and Mexico). Although the basic technology package is the same across countries, the study revealed large differences in the economic performance of systems due to wide variations in farm prices and the scale of operations. Although seaweed farming is a suitable activity for small-scale producers, a minimum of 2,000 m of cultures lines are still necessary to ensure adequate economic returns. Greater farming plots may be needed if farm prices are well below the average farm prices paid in Indonesia and the Philippines. Policy recommendations are made to improve the economic potential of underperforming systems.

Keywords:

• Kappaphycus alvarezii
• production economics
• seaweed

ACKNOWLEDGMENTS

Acknowledgments are due to all seaweed farmers who contributed data for this study. All errors, omissions and views remain the sole responsibility of the authors.

Notes

Seaweeds can be classified into three broad groups based on pigmentation: brown, red and green. Botanists refer to these broad groups as Phaeophyceae, Rhodophyceae and Chlorophyceae, respectively. Red and green seaweeds are usually smaller than brown seaweeds, ranging from a few cm to about a meter in length (McHugh, 2003).

Nori (Porphyra spp.) is another red seaweed with significant aquaculture production in East Asian countries but it is mainly used for direct human consumption.

The international carrageenan industry is dominated by five or six multinational conglomerates, mainly based in the U.S. and Europe. China has also emerged in recent years as a major purchased of raw seaweed (McHugh, 2003; Tinne et al., 2006).

Unlike terrestrial plants, seaweeds do not propagate via seeds; they reproduce instead through a complex mechanism involving zoospores. The production of zoospores is not possible under laboratory conditions; tissue culture and micropropagation methods are thus the best alternatives for seedling production in labs. Although much research has been conducted in this area, lab production of seedlings is still not cost efficient from the point of view of farmers, most of whom rely on repeated vegetative propagation of harvested seaweed. Nevertheless, vegetative propagation does not augment genetic variability which may contribute to the decrease in growth rates and carrageenan yield and the increased susceptibility to diseases observed in some locations (Hurtado & Cheney, 2003). Current research is aimed at optimizing culture conditions for the massive production of high-quality lab seedlings (Yong et al., 2014). If these efforts are successful, the industry could eventually turn away from repeated vegetative propagation and experience overall increases in productivity.

Ice-ice is caused when changes in salinity, ocean temperature, and light intensity inflict stress on seaweeds, making them produce a moist organic substance that attracts bacteria in the water and induces the characteristic whitening and hardening of the seaweed’s tissues (McHugh, 2003).

Purchasing Power Parity (PPP) is a technique used to determine the relative value of different currencies. The PPP concept allows one to estimate what the exchange rate between two currencies would have to be in order for the exchange to be at par with the purchasing power of the two countries’ currencies. This is the appropriate methodology to use when comparing living standards across countries and over time (Cheung, 2009).

In fact, the USD $1.25 IPL is computed as the average of the national poverty lines of the poorest 15 countries for which data are available (Chen & Ravallion, 2008).

The following were the sources consulted for the NPLs of Indonesia, Philippines, Tanzania, India, Solomon Islands, and Mexico, in respective order: Iriana et al. (2012); Philippine Statistics Authority (2014); Policy Forum (2012); Government of India (2013), SINSO/UNDP (2008), and CONEVAL (2013). The NPLs for the Solomon Islands (2008) and Mexico correspond to rural areas.

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