80
In sum, the above cash flow analysis indicates that seaweed farming in Indonesia is a highly profitable business.
9
Provided farmers can obtain enough funding to start the business, they can recover their initial investments in the second year in all the six cases
discussed above even in the situation of relatively low seaweed prices. In Cases 1 and 4, they would be able to recover the initial investments in the first year. In the situation
of medium and high prices, farmers would be able to recover their initial investments in the first year under all the six cases.
Financial resources Sources of finance for 72 farmers interviewed for the present study are shown in
Table 13. Use of own funds is the primary means of financing for these farmers. Government is another important funding source – about 40 percent of farmers had
received grants or soft-money loans from government agencies such as the Department of Oceans and Fisheries DKP. One-quarter of the interviewed farmers also obtained
funding from friends and relatives. Credit unions or cooperatives provided funding to 19 percent of the interviewed farmers, while only 1 percent of the farmers received
bank loans despite the fact that many farmers have bank accounts and electronic banking is readily available.
Some microfinance was made available to farmers by non-governmental organizations NGOs such as CARE in NTT and by the Indonesian government
institution Permodalan Nasional Madani PNM, which provides finance to micro, small and medium enterprises MSMEs. Important financial support also comes in the
form of grants and soft loans from the Indonesian government through DKP. Much of that assistance supports biomass purchases; it may also consist of donations of cultivar
biomass.
One of the major obstacles for farmers seeking finance is their lack of collateral. Seaweed farm assets and seaweed crops are not viewed as satisfactory collateral by
lending institutions; in addition, few farmers own real estate that can be used as collateral.
Crop insurance for seaweed is hardly available in Indonesia. However, in some cases, farmers have provided new biomass to other farmers that have lost their crops due to
flooding. The Seaplant.net initiative of IFC-PENSA has mediated in such situations.
3.2 Social performance
Livelihoods Average annual production of cottonii in farms surveyed in this study was 6.3 tonnes.
If this number is taken as an average for all seaweed farms in Indonesia, then there are almost 20 000 farm units contributing seaweed for exports. Generally, each farm unit
provided annual income to a family at an average level of about USD5 500 gross and
9
Cash flows do not exactly reflect profitability from an accounting perspective. However, for Indonesian seaweed farming, profitability was most appropriately viewed in cash flow terms because capital
investments are relatively low; and floating structures as the main capital investment tend to have relatively short life span. Hurtado et al. 2001 examined the economics of seaweed farming in the
Philippines and evaluated farm profitability in terms of return on investment. TABLE 13
Finance sources for 72 farmers interviewed during the present study
Self Friends or
relatives Coop or
credit union Collector or
trader Government
Bank
Number 72
18 14
6 29
1 Percentage
100 25
19 8
40 1
USD4 500 net, for an average monthly net income of USD375. These are substantial income earnings for part-time work by a rural farm family, equivalent to the wages of
a university-educated person working in a mid-level position in a government office. Not only was average annual income of interviewed farmers USD5 000, but the income
was stable. In the best cultivation regions, crop production can take place year round. Harvesting and cash sales occur virtually every day.
The income from seaweed is accessible to marginalized segments of society. Many seaweed farming activities require light labour that can be undertaken near the farmers’
residences. This creates income opportunities for both women with care-giving responsibilities, and old people. Seaweed farming and related value-adding activities
are inherently suitable for MSMEs.
For those households that chose to rise above the average and made seaweed farming their dominant occupation, a monthly farm income of USD1 000 or higher
could be achieved at average prices. High prices prevalent in 2008–09 resulted in substantial windfalls for many farmers but led to market uncertainty. For farmers
that expanded into a “leader” model of operation, annual net incomes of the order of USD15 000–20 000 were achievable for operations about five times larger than the
average nuclear farms. Such farms also tended to serve as nurseries to provide biomass for planting to other farmers.
It is difficult to quantify the degree to which seaweed farming has affected the socio-economic conditions of coastal communities because baseline studies pre-dating
seaweed farming were unavailable at the time of writing. Anecdotal accounts by farmers indicate that seaweed culture was a major addition to their income. The presence of
new houses, new motorcycles and other material possessions gave tangible indications of this added income. Other livelihood options available to these communities have
tended to remain static or have declined during the time when seaweed farming developed. For example, nearshore fishing from small boats declined to the point
of being viewed as a subsistence activity with reduced potential for generating cash income Maarif and Jompa, 2007.
Economic returns from seaweed aquaculture compared with those of competing or complementary economic activities were not quantified in the present study; however,
almost all farmers interviewed for the present study stated that seaweed provided most of their cash income despite the fact that it only took half or even less than half of their time.
Women and children Women generally play an important role in seaweed farming. As a result, they
sometimes become the main earner in the household, even if initially they had very little income. This can potentially lead to marital tensions. However, studies on
impacts of seaweed farming indicate that such marital problems were few Neish et al., 2009. Another possible concern is the use of child labour. As in most agriculture, it is
common practice for children to participate in farming activities. One must ensure that they are not exploited in this capacity.
Communication The spread of cellular phone and Internet connectivity has virtually eliminated the
isolation of seaweed farmers from global communication. Even a decade ago, most seaweed farmers had little connection to the outside world. As of 2009, seaweed
farming generated enough revenue that most farm families had access to mobile phones. Cellular telephone connections were widespread throughout Indonesia and
were developing steadily.
Internet connectivity has followed the development of mobile telephone technology so many seaweed farmers were able to connect either through their mobile phone
or through available computers. From 2004 until 2008, the IFC-PENSA Seaplant.
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net initiative developed peer-to-peer connections among Indonesian farmers by sponsoring workshops and by installing computer terminals at several locations in east
Indonesia. Other aid agencies and NGOs supported similar efforts. Seaplant.net made KITS available globally through the English language Web site www.seaplant.net.
KITS and farmer peer-to-peer communication tools were made available through the Bahasa Indonesia Web site www.jasuda.net. JaSuDa is an acronym of Jaringan Sumber
Daya, which means “source net” in English. Both of these Web sites were continuing to serve seaweed farmers and other seaweed-based value chain stakeholders as of late
2009.
Education and training Seaweed farming has provided access to education and training to poor coastal
inhabitants. In the interviews, 44 farmers stated their level of formal education. Among that group, 1 farmer had no formal education, 24 had primary education, 9 had
intermediate education and 10 had graduated from high school. The younger farmers tended to have more formal education than the older ones.
Since 2005, scientific and technical knowledge and information has been provided to seaweed farmers through the www.seaplant.net and the www.jasuda.net Web sites.
Developed by the IFC-PENSA Seaplant.net Initiative, the Web sites have been operated by the Seaplant.net Foundation since 2008. Science and technology information and
knowledge products have been available for downloading. The Web site content was developed subsequent to a meeting sponsored by the IFC and AusAID in Bali in
May 2004. At that meeting, 138 seaweed farmers from all over Indonesia received IT training; the JaSuDa Web site has served since then to link Indonesian farmers together
in a virtual community.
The Government organizations – including the BPPT and DKP – and seaweed- oriented NGOs such as APBIRLI, ASPERLI and the Indonesian Seaweed Society
Association have also promoted community development among seaweed farmers. All of these entities joined together for the Seaweed International Business Forum
and Exhibition held in Bali in October 2007 and the Indonesia Seaweed Forum held in Makassar, South Sulawesi, in October 2008. The Makassar forum attracted seaweed
buyers from all over the world and also included special sessions for seaweed farmers.
The Seaplant.net training tools have been complemented with materials developed by other agencies, including INI RADEF, LIPI, DKP and BPPT. These materials have
been used in farmer training programmes supported by several agencies, including AusAID, CARE, the CIPSED project of the Canadian International Development
Agency CIDA, the AMARTA project of USAID, GTZ, JICA, DKP, BPPT and PNM. Support for farmer training was also provided by the private sector. The
GTZ promoted the development of research and development RD linkages in the BIMP-EAGA region and also promoted the development of coordinated quality
infrastructure systems in the region. These initiatives were mediated through the Seaplant.net Web site.
During industry gatherings and interviews for the present study, the need for ongoing technical training for farmers and peer-to-peer networking among farmers
was recognized by stakeholders at all levels of seaweed-to-hydrocolloid value chains. Several governmental organizations, NGOs and private businesses continue to seek
means for continuing education.
4. GOVERNANCE AND INSTITUTIONS
