800 workers on forced leave: Shemberg slashes production

The worsening supply shortage of seaweed in the Philippines coupled with the volatility of the peso against the dollar have taken it’s toll on the world’s largest carrageenan producer, Shemberg Marketing Corporation.

Shemberg recently shut down 75 percent of its plant production resulting to personnel forced leaves that could last to as long as 15 days, said Shemberg chief operating officer (CEO) Benson U. Dakay.

Dakay said around 800 employees of Shemberg were forced to utilize their vacation and sick leave credits due to low production capacity caused by the declining supply of seaweed in the country, including supply from Indonesia.

Currently, Shemberg only retained 300 regular workers to man the operations during the regular working hours, while the rest are made to take their time off. Dakay, however, said the “forced vacations” may only last for a month or two.

“We have no choice, other than implement forced leave system. The demand is still strong, but we can not accommodate the orders due to raw material shortage,” Dakay said.

Earlier this year, Shemberg’s Zamboanga plant also employed a semi-shutdown scheme while operating at a very low capacity.

Dakay added that even Indonesia is experiencing a declining supply of raw seaweed. Shemberg used to import raw seaweed materials from Indonesia, however stopped when shortage hit the importing countries as well.

Indonesia is a source of seaweed for some Philippine carrageenan processors. While Philippine cottonii is pegged at $1,600 per metric ton (MT) from last year’s $800 per MT, Indonesian cottonii is only at $1,400 per MT from last year’s $600.

About 30 percent of the total carrageenan requirement in the world is supplied by Shemberg Corporation, making the company the largest carrageenan supplier in the world.

Dakay hopes that the supply situation will improve in the next few months, as the price of carrageenan in the world market has doubled, and this can offset the slow production output due to demand shortage.

This year, he said the industry is projecting to export about US$200 million in value, a slight decline compared to previous years.

The series of natural calamities that hit the Philippines is one of the main causes of the seaweed supply shortage in the country.

Dakay said although this problem had been hounding the entire seaweed export industry for the past several years, this year has been the worst.

For seaweed, main reasons for reduced production are low-yielding crops and high levels of contaminants in dried seaweed, he said.

The increasing global demand of carrageenan, both refined and semi-refined, has also heightened the shortage situation for the raw material.