Seaweed exporters explore new markets to stay afloat

Despite the challenges faced by the seaweed exporters due to the strengthening of the peso, players are trying to expand their market penetration to stay in the business.

"We are trying to explore other markets like India, China, and South America" said Benson U. Dakay, president and chief executive officer (CEO) of Shemberg Marketing Corporation. Last year, despite the supply shortage problem, and the start of peso gain to the dollar, the industry posted an increased in terms of gross sales from US$150 million in 2005, to US$165 million.

According to Dakay, industry players have to insist for continued business, although their profit is being squeezed due to higher cost of doing business.

Shemberg, for instance, which is the world's largest supplier of carrageenan, is now clenching a supply deal with an Indian company, and exporter of hard capsule materials in India.

Dakay said this Indian company has already placed a trial order with Shemberg for a 20-ton refined carrageenan as one of the primary ingredients in making hard capsule materials for the world's pharmaceutical requirements.

Carrageenan-made capsule is found to be healthier and of high quality, compared to gelatin-based capsule coating material, he said.

This deal Dakay said could improve the potential of carrageenan demand in the world market tapping the huge pharmaceutical requirements for capsule coating raw materials.

This company, which Shemberg is trying to partner with, is the biggest capsule-coating maker in India, he said.

Although there is a huge potential to supply refined carrageenan in China, Dakay said high tariff hurdles still a problem. Currently, China charges 34 percent tariff compared to 10 percent tariff in India.

Exploring new markets, amid the difficult environment for business, could help sustain the growth target for seaweed exports this year.

Dakay said the industry is targeting a 20 percent growth this year saying "If the environment will become more favorable to the export sector, the industry expects a 20 percent increase in sales this year to about US$190 million in the global market."

Dakay said the strengthening of the peso has already hurt the seaweed processors in the Philippines, and that there are talks in the industry that Multinational companies (MNCs) are considering to transfer their plants to Indonesia, or China.

"How can we continue [doing business] if the exchange rate is up to almost P48 per one dollar?" said Dakay.