Production and trade CARRAGEENAN SEAWEED PRODUCTION AND VALUE CHAIN

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1. INTRODUCTION

This chapter is an assessment of the social and economic dimensions of seaweed aquaculture in Indonesia. It focuses on the development of sustainable seaweed farmer livelihoods in the context of regional and global value chains. The analysis was carried out in conformity with the frameworks of Scoones 1998 and Scoones et al. 2007. These frameworks were placed in a value chain context according to the model of Gereffi, Humphrey and Sturgeon 2005. Data were analysed from farmer surveys conducted by Seaplant.net in the period May 2007 – January 2008 and again in September 2009. In addition, several value chain players were informally interviewed. From 1985 to 2009, Indonesian seaweed farm development was driven by farmers and local traderscollectors in a reflexive, “bottom-up” manner. A market need was made known to prospective seaweed farmers by value chain stakeholders on the demand side; farmers were exposed to the simple technology that was involved in growing seaweeds and, with facilitation from a variety of organizations, seaweed farmers were able to build their businesses within the context of village norms, mores and structures. Seaweed farming became integrated into the social fabric of farmer villages to the point where it now appears to be a traditional economic activity even though it did not begin until the mid-1980s or later. Since 1985, seaweed farming has been generally expanding in Indonesia; by 2008, it provided an average annual income of the order of USD5 000 to an estimated 20 000 farm families working on a part-time basis. The most diligent farmers have been able to make from two to three times that amount by working full time or by employing the “leader model” approach to farming. Such earnings are well above the poverty level. Interviewed farmers generally asserted that seaweed farming was by far their most lucrative economic activity. Seaweed farming has also been complementary and compatible with other village economic activities such as fishing and farming land crops. Ready cash from seaweed farming has also had a noticeable multiplier effect. Shops, support services for seaweed farming and village infrastructure have all benefited visibly from seaweed cash flowing through local village economies.

2. CARRAGEENAN SEAWEED PRODUCTION AND VALUE CHAIN

Indonesia is located in the Coral Triangle region of Southeast Asia, north of Australia and south of East Asia TNC, 2004. The country has a tropical marine climate. Seashores are typified by fairly uniform air and sea temperatures averaging in the range of 25–30 °C. There is high humidity and moderate to heavy rainfall. There are no typhoons but seismic activity can produce tsunamis and earth tremors. Most cultivated seaweeds from Indonesia are of the red algal galactan seaweeds RAGS genera Kappaphycus commonly known by its commercial name cottonii, Eucheuma commonly known as spinosum and Gracilaria. Those genera are sources of the hydrocolloids known respectively as kappa carrageenan, iota carrageenan and agar.

2.1 Production and trade

National production of seaweed in Indonesia has increased dramatically. According to FAO Statistics FishStat, cultivated carrageenophyte seaweed production in Indonesia was 197 277 tonnes wet weight and worth USD21.7 million in 2000; by 2010, production had approached 3.4 million tonnes, worth USD1.1 billion. By 2010, Indonesia accounted for more than two-thirds of world tonnage and value. Seaweed farming in Indonesia first reached commercial production in Bali in the mid-1980s but the technology rapidly spread to other parts of the country; since then, Sulawesi has become the centre of seaweed production Figure 1. Major seaweed farming peoples included the Balinese, Madurese, Bajo, Bugis, Makassar, Luwuk, Banggai, Muna and Buton. Some of these peoples have lived in their ancestral homelands for centuries. Sea peoples such as the Bugis, Buton and Bajo have also migrated to establish seaweed farms in eastern regions such as Nusa Tenggara Timur NTT and Maluku. Large areas of Indonesia, especially in East Indonesia, were still available for seaweed farm development as of late 2009. The less-developed regions included the Java Sea, the Sulawesi Sea, Lesser Sundas including NTT, Banda Sea, Halmahera and Papua, but most other regions still had expansion potential as well. If all areas were developed, at least a three-fold increase in Indonesian RAGS production could probably be accomplished. Indonesia’s export of RAGS has increased significantly since 2000, thanks primarily to the increase in its cottonii and spinosum exports from about 40 000 tonnes worth USD20 million in early 2000 to 100 000 tonnes worth more than USD110 million in 2008 Figure 2. 1 Its exports of Gracilaria remained fairly constant at an annual average of about 16 000 tonnes with a value of USD8 million. About 55 percent of Indonesian exports have gone to China, where the market for RAGS products has steadily grown in the past decade Neish, 2009. The JLJ Group 1 The two species were generally not disaggregated in the trade data but their joint exports were estimated to contain about 90 percent cottonii. Sources: Seaplant.net; JaSuDa farmer network. FIGURE 1 Estimated annual production of RAGS, 2009 tonnes in dry weight Sulawesi Utara Tengah Tenggara Selatan MalukuPapua Nusa Tenggara Timur Madura Bali + Nusa Tenggara Barat Location Cottonii Spinosum Graciliria Sulawesi Selatan 20 000 1 500 40 000 Sulawesi Tenggara 35 000 1 500 Sulawesi Tengah 4 000 Sulawesi Utara 1 000 Madura 10 000 Bali + NTB 10 000 6 000 500 NTT 10 000 MalukuPapua 5 000 500 Other RI 5 000 500 4 500 Total RI 100 000 10 000 45 000 64 2006 estimated that about 95 percent of the China market consisted of meat, jelly and soft candy applications and that the market could grow at more than 10 percent per year. Based on supply, demand and prices criteria, the situation for RAGS as of late 2009 was that the markets for spinosum, Gracilaria and their extracts were steady but the markets for cottonii and kappa carrageenan made from cottonii were in an uncertain state. The high cottonii farmgate prices led to unprecedented high carrageenan prices and a reduction in the demand for kappa carrageenan. By November 2009, all processors were reporting business down by as much as 50 percent. The general consensus among processors interviewed during the present study was that a free-on-board f.o.b. price in the range of USD1 000–1 200tonne for export-grade cottonii would lead to steadily growing markets while still giving a good return to farmers. Seasonal variability between regions, within years and between years was commonly cited by farmers as a causative factor for variability in seaweed production; 2 however, comprehensive scientific studies of cause-and-effect relationships remain to be undertaken. Interviewed farmers reported that, on average, worst yields were about 23.4 percent of best yields standard deviation = 17.5. Ten successful farmers in South Sulawesi reported an average monthly harvest exceeding 1 170 kg in the best seasons, 425 kg overall, and 178 kg in the worst seasons. Exports of RAGS products from Indonesia also showed a distinct seasonality pattern in the period 2000–2008. The first quarter was usually the lowest season 19.7 percent of the annual export, followed by the second quarter 23.9 percent, the third quarter 27.5 percent and the highest in the fourth quarter 28.9 percent. Various actions were taken by seaweed farmers in response to seasonal changes. In South Sulawesi and NTT, most farmers had more than one farming site and shifted 2 Weather changes in Indonesia are driven by the West Monsoon generally from October to March and the East Monsoon generally from April to September. Seasonal variations in wind patterns and rainfall are a fact of life that has great impact on Indonesian seaweed farmers. Most farmers refer to “good” or “bad” farming conditions with reference to rainfall. In some locations, production is best during the “rainy season” and in others during the “dry season”. Some locations are good for seaweed farming all year round although there may be seasonal variations in productivity. Many locations can only support seaweed farming in a limited season of the year. Seasonality can vary even within nearby areas. In some cases e.g. Bulukumba, seasons are different even for farms located a few kilometres apart. FIGURE 2 Indonesian seaweed exports, tonnage raw dried equivalent and value, 2000–08 Source: Author’s calculation based on data from Indonesian Customs and Excise Department. 20 40 60 80 100 120 20 40 60 80 100 120 Gracilaria value Gracilaria quantity Cotoniispinosiumquantity Cotoniispinosiumvalue 2008 2007 2006 2005 2004 2003 2002 2001 2000 Million USD Thousand tonnes sites seasonally. In South Sulawesi, they also tended to change their cultivar mix by growing more spinosum in times when cottonii did not grow well. Farming effort remained constant throughout the year in Sulawesi Tenggara South Central Sulawesi but effort was concentrated more towards the best seasons in other areas. Almost all farmers reported that drying was not a major seasonal constraint although rainy weather made crop drying more difficult. However, all farmers reported that seasonal effects on growth were a major factor affecting farming effort.

2.2 Value chain