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vision of the future development of carrageenan seaweed farming and the formulation of more concrete and evident-based policy recommendations. Some of the gaps are
highlighted as follows.
6.1 Carrageenan market
The demand for carrageenan seaweeds is derived from the carrageenan market. The demand for carrageenan is expected to continue growing because of increasing demand
for processed food, driven primarily by population and economic growth in developing countries. Scientific and technological advances could also tend to broaden the uses of
carrageenan as food additives and other ingredients. However, quantitatively, what will the global demand for carrageenan be in the future?
Much information on the global carrageenan market has been provided by the literature including McHugh 2003, Panlibuton, Porse and Nadela 2007, Neish
2008a, and Bixler and Porse 2011. Although data from different sources may not be completely consistent, there are some general ideas about how much carrageenan
has been produced by what countries and how much carrageenan has been used in which products. However, in order to estimate the future demand for carrageenan, it
would be necessary to have more detailed information on how much of what kind of carrageenan products is used by what countries in which products. Such information
has not been readily available.
Another related issue is the carrageenans own-price elasticity of demand i.e. the sensitivity of carrageenan demand to a change in its price. A common perception is
that the food industry, with generally thin profit margins, tends to be very sensitive to an increase in the price of carrageenan McHugh, 2006; Bixler and Porse, 2011.
However, there is not much information to quantify how sensitive it is.
As carrageenan may only account for a small portion of the cost of an end product, a change in its price may cause a relatively small change in the total cost and, hence, have a
limited impact on its demand, especially when carrageenan is an irreplaceable ingredient. Indeed, as carrageenan may not only improve the texture of a pre-cooked meat product
but also increase its yield Bixler and Porse, 2011, the real cost of carrageenan under this situation would be the difference between its price and that of the product.
Further study should be conducted to provide more and improved information on the status and trends of the carrageenan market, including the geographic
distribution of carrageenan production and production capacity, the market segments of carrageenan products i.e. the use of carrageenan in meat, dairy, water gel and other
products, and the geographic distribution of carrageenan demand across countries and products. On the basis of such information, analyses should be conducted to provide
more reliable estimates of carrageenan demand and, hence, the derived demand for carrageenan seaweeds in the future. The estimation would shed light on the potential
of carrageenan seaweed farming in the future, which is important information for both policy decision-making and sector management.
6.2 Carrageenan processing industry and carrageenan seaweed market
Carrageenan seaweed processing used to be dominated by a few large companies from developed countries. Now, carrageenan processors have become more numerous
and geographically diverse. Based on the information provided in Neish 2013, an example of value addition in SRC processing in Indonesia is presented in Section 2.4
Table 5. However, the situations in other countries e.g. China and the Philippines remain less clear; as do the situations of value addition in RC processing.
The carrageenan seaweed crisis in 2008 was allegedly caused by a large increase in the demand from carrageenan processors in China. What were the driving forces
behind the demand hike? What will its trend be in the future? Will there be a trend of consolidation in the carrageenan processing industry in China? Will carrageenan
processors from China attempt to gain more control over the sources of their raw materials through vertical integration or business alliance?
Seaweed farming countries have always been eager to extend their seaweed value chains to processing. Given time, profit-seeking entrepreneurs would make this
happen, as long as seaweed processing provided profitable business opportunities. However, from a policy perspective, some issues need to be clarified in order to
develop appropriate industrial policies and create an enabling environment. Despite the availability of raw materials, does a seaweed farming country necessarily have
comparative advantage in carrageenan processing; what about other factors such as infrastructure, markets and human capital? What would be the minimum size
for a carrageenan processing industry to be economically viable? What about the environmental impacts of carrageenan seaweed processing e.g. nutrient-loaded
effluent? What could be done to facilitate the industry to adopt multistream processing i.e. extracting not only carrageenan but also other nutrients [Figure 3 in
Neish, 2013]? Last but not least, what could be done to increase seaweed farming countries’ competitive advantage in carrageenan processing?
In Indonesia, there has been a proposal to restrict the export of raw seaweeds in order to support the development of the local processing industry.
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Compared with other supporting policies e.g. subsidizing the processing industry, this may incur
a smaller financial burden for government to implement. However, an export quota system would distort the market and, hence, should be implemented with caution. For
example, limited and uncertain seaweed supply from Indonesia under the quota system may force overseas processors to source raw materials from elsewhere, which would
essentially impair the competitiveness of seaweed farmers in the home country. While the quota system may benefit the local processing industry with more abundant and
cheaper raw material supply in the short term, the artificial competitive advantage may not be sustainable in the long run.
Based on the existing literature e.g. McHugh, 2003; Panlibuton, Porse and Nadela, 2007; Neish, 2008a; Bixler and Porse, 2011, further study should be conducted to
provide broader, deeper and more systematic information on the economic, social and environmental performance of the carrageenan seaweed processing industry.
Considering the special situation of China i.e. a large carrageenan processing industry depending mostly on imported raw seaweeds, further study should be conducted
to understand the status and trends of its carrageenan processing industry and their implications for the global carrageenan seaweed market.
6.3 Carrageenan seaweed production
