Market Research on Value-Added Seaweed Products

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MARKET RESEARCH on Value added Seaweed Products

Southeast Sulawesi

MAY 2009

This Market Research was conducted forBINA BAHARI Seaweed Cooperative

Kendari, Southeast Sulawesi byCIPSED Project

Jakarta, Indonesia

Consultant: Jack Mukerjea [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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Canada Indonesia Private Sector Enterprise Development [CIPSED] Project & BINA BAHARI

1Market Research on Value-added Seaweed Products SULTRA - 2009


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Market Research on Value-added Seaweed Products SULTRA - 2009 3

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY..4

2. SCOPE and METHODOLOGY of RESEARCH5

3. INTRODUCTION.7

4. COMMERCIAL SEAWEEDS An Overview...7

5. MARKET OVERVIEW.11

6. CARRAGEENAN PROCESSING.19

7. IMPLICATIONS FOR BINA BAHARI...21


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1. EXECUTIVE SUMMARY:

The objective of this Market Research report is to provide Bina Bahari Seaweed

Cooperative with the background information on seaweed, its principal derivative,carrageenan, and the market potential for its constituents of farmer members.With carrageenan impacting daily lives of all humans and some pets worldwide,the weed in seaweed is a misnomer. Its versatility ranges from food additives topersonal care products to pharmaceuticals. A growth market in most ofdeveloping economies, seaweed and its derivatives account for plus US$ 6billion of trade a year.

With decline in cottonii seaweed production in the Philippines and addition ofhectares of coastal areas for seaweed cultivation in Indonesia, the latter hasemerged as the world leader in cottonii production. The province of South East

Sulawesi, with its long coastline, much less polluted water, and a population usedto coastal living for generations is the seaweed hinterland for many of exportersand processors in Makassar and Surabaya. No value-addition of seaweed hashitherto been done in the province.

In its raw state, cottonii is not an edible seaweed. It ought to be processed forvalue-addition. There are clear opportunities and priorities for Bina Bahari inseaweed-to-hydrocolloid value chain as it and its farmer members strive to beself-sufficient, create net new jobs locally, and improve the livelihood of coastalcommunities they inhabit:

Address the vagaries of an essentially internationally traded commodity byestablishing direct access to markets local, regional and international bypassing layers of intermediaries.

Improve quality of seaweed higher gel content harvested.

Minimize downtime and increase production through availability of qualityseedlings from cooperatives own nursery.

Gradually establish a production unit for Alkali Treated Chip a pre-cursor toprocessing of Semi Refined Carrageenan.


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2. SCOPE and METHODOLOGY of RESEARCH:

Canada Indonesia Private Sector Enterprise Development (CIPSED) Projectaims, through Technical Assistance (TA), to increase seaweed production in its

SULTRA Seaweed Cluster of five villages. In support of this aim and to enhancethe growth of sustainable SMEs through local value-addition, this MarketResearch report has been prepared so that Bina Bahari Seaweed Cooperativecan effectively establish Market and Supply Chain Linkages and establish aprocessing unit for seaweeds collected from its farmer members.

The five villages in SULTRA Seaweed Cluster are: Tanjung Tiram, Tambeanga,Saponda, Mekar and Labuan Beropa. Members of Bina Bahari SeaweedCooperative are drawn from these five villages. All farmer members are involvedin cultivation and harvesting of only Eucheuma Cottonii or, cottonii as simplyreferred to by the supply chain.

In conducting this market research, largely secondary data were collated andconsolidated from a variety of sources including business network and desktopresearch i.e. the Internet. Primary data sources were limited to those available inKendari only. No processor in Surabaya, Makassar or Jakarta area was visitedfor this market research. Bau Bau, reputedly a much larger seaweed collectionand shipment centre in SULTRA than Kendari was not visited either. Thefollowing Kendari sources were visited in November 2008 and March 2009 in thecompany of Bina Bahari:

TRADERS of raw, sun-dried cottonii:

A. Haji HARUNACV. Sinar Laut0816 254 936

B. Kendari Sourcing Office of:PT Amarta Sari Lestari, SURABAYAPT Amarta Carageenan Indonesia, SURABAYA 0815 2404 8849 (Leonardo)0815 2482 3580 (Adi)Surabaya: 031-7491633 / 749 1634 (Pak Agus Permana)

C. Haji BAIDEUD. Harapan Bone0812 428 7169; 0401-321 732

D. Haji HASANUD. Sumber Makmur0811 408 2980401-325 463


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SHIPPING LINES transporting raw, sun-dried cottonii:

There are only TWO container lines SRIL and MERATUS operating into andout of Kendari. Both of them ship to Surabaya as well as Makassar. SPIL,operating into and out of Bau Bau, is the only other choice of SULTRA shippersusing containers.

A. SRIL Container LinePT Samudra Raya Indo Lines Ms. Deksa Matondang0852 4176 28760401 326 880

B. MERATUS Container LineMIF Forwarding & LogisticsPak Adriansyah081 1405 3450401 321 520

Kendari-based Health Certifi cate issuing office for raw, sun-driedseaweed shipments:

Stasiun Karantina Ikan Kelas 1Jl. Wolter Monginsidi 82APak Amdali (Head)Pak Amsal Sallolo

Provincial government information sources:

A. Dept. of Industry & TradeB. Dept. of Fishery & Oceans

CAVEAT:

There are substantially conflicting data pertaining to country outputs of seaweed,exports, imports, processing of carrageenan, production capacities, and pricepoints, sometimes within the same source. Principal desktop research sourceshave been: Seaweed Industry Association of the Philippines (SIAP), FAO,SEAPlant Net and World Association of Seaweed Processors(www.marinalg.org ). As such, median data have been included in this Researchreport.
http://www.marinalg.org/http://www.marinalg.org/


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3. INTRODUCTION:

Kendari folks love to shop at Rabam. They go through the shelves picking uptooth paste, shampoo, cough syrups, cheese, ice cream, beer, jams, jellies,

protein drinks, processed meats, or contraceptives. None of them aremanufactured in SULTRA. But each of them has one key ingredient whosesource is nearer home - the coastal areas of the province.

The ubiquitous ingredient that helps all these personal care, food andpharmaceutical products maintain their consistency and freshness iscarrageenan, a by-product of the Kappaphycus and Eucheuma seaweedcultivated in great abundance along the coast of Banda Sea. Carrageenan, ahydrocolloid, is used as a fat replacer, thickener, emulsifier, stabilizer, calorie-controlling dietary substance, and gelling agent in the food, pharmaceutical, andcosmetic industries. In the food industry, carrageenan is the third most widely

used hydrocolloid after starches and gelatin.

The weed in seaweed is surely no wild, unwanted growth or a pest. Forcenturies, edible varieties of raw seaweeds have been an integral part of culturaldiets of East Asian countries of Japan, Korea and China as salads and soups. Inearly 1800s, seamen in the town of Carragheen (hence the derived name,Carrageenan) in Ireland started using Irish Moss as a food, for gelling of milk andas a cure for respiratory ailments. The use of Irish or Carragheen Moss spreadfrom Ireland to New England, USA via the Irish immigrants fleeing famines in the19 th century. The main commercial sources of carrageenan used to be the sub-tidal Irish Moss beds in the cold-water Maritime Provinces of Canada. Today

however Indonesia and the Philippines dominate the estimated US$6 billion plusglobal seaweed related market.

4. COMMERCIAL SEAWEEDS An Overview:

This overview takes a pertinent look at Carrageenan and role of cottoniiseaweed in its production, as only cottonii is now being planted and harvested bythe farmer members of Bina Bahari Seaweed Cooperative.

4.1 Carrageenan from Seaweeds:

Until the early 1970s, Chondrus crispus, commonly known as Irish Moss,was the main source of carrageenan and Canada provided about 70% ofthe world production. By 1992, with the successful cultivation ofKappaphycus alvarezii (Eucheuma cottonii or simply cottonii to the trade)and Eucheuma denticulatum (Eucheuma spinosum or simply spinosumto the trade) in tropical waters of South East Asia, East Africa and thePacific islands, the demand for Irish Moss had fallen to about 3% of thetotal requirement of carrageenan processors. Cottonii and Spinosum


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today enjoy a whopping 89% of market share for carrageenan-producing seaweed .

4.2 Types of Carrageenan:

Principal carrageenan types are: Iota, Kappa and Lambda. They differ intheir chemical structure and properties, leading to difference in their uses.While Iota carrageenan is mainly extracted from Spinosum seaweed,Lambda is mainly derived from Irish Moss and Gigartina (mostly grown inChile). Cottonii and to a much lesser extent, Irish Moss and Gigartina areused in extraction of Kappa carrageenan.

4.3 Global Carrageenan Market and applications:

Global carrageenan production is about 50,000 metric tons a year (source: Panlibuton, Hans Porse and E. Nadela, 2007). It is estimated thatover the past five years, annual compounded growth has been in excessof 10%. The chart below captures current world carrageenan applications:

30%

25%

20%

15%

5% 5%

Dairy Pet Food Water gels Meat Water viscosity Other

The markets for carrageenan are relatively mature and saturated inWestern countries, but are expected to grow in developing markets due toincreasing ability to afford meat and dairy products in their diets. Withgrowing affluence of middle-class consumers, pet food, toothpaste andsoft sweet markets for carrageenan are also growth areas in the Asianmarkets.

8Market Research on Value-added Seaweed Products SULTRA - 2009


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4.4 Commercial Species of Seaweed grown in Indonesia:

Carrageenan bearing red seaweed

- Eucheuma Cottonii ( Kappaphycus alvarezii )- Eucheuma Spinosum

Agar-agar bearing red seaweed

- Gracilaria

4.5 Principal value-added products of harvested cottonii:

Raw, dried, cleaned, machine compressed and baled seaweed. Alkali Treated Chips. Semi-Refined Carrageenan Pet Food Semi-Refined Carrageenan Food Grade Refined Carrageenan

4.6 Principal applications of extracted Carrageenan:

Eucheuma Cottonii Kappa

Dairy Products Meat and Poultry Water gels Other Processed Human Foods

Pet Foods Pharmaceutical Personal Care Products

Eucheuma Spinosum Iota

Toothpaste Misc. Dairy Products Pharmaceutical

4.7 Production of carrageenan bearing red seaweed:

2008 was the watershed year for raw, dried seaweed exports fromIndonesia, with estimated 120,000 tons leaving the country largely forChina and the Philippines. Indonesia thus trumped hitherto world numberone, the Philippines. According to SIAP, total dry production of cottonii andspinosium seaweed in the Philippines in 2008 dropped to 90,000 tons.


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5. MARKET OVERVIEW:

5.1 Market characterist ics

A. World production of Cottonii seaweed, the variety that is now beingpredominantly (up to 96% of total in US dollar term) cultivated in SULTRAin particular and Indonesia at large and hence the focus of this Research,was estimated at 240,000 dry tons in 2008.

B. The international market for seaweed is characterized by a large numberof raw material producers supplying through layers of intermediaries e.g.village traders, municipal traders and exporters relatively fewprocessors. Most of these processors are located in the Philippines,Denmark, USA, France, Spain, Chile, South Korea, and China.

C. The cottonii crisis of late 2007 through summer of 2008 when seaweedprices tripled, if repeated, can trigger carrageenan producers seeking outalternative raw materials such as vegetable gums, with similar propertiesto seaweed gels. Anecdotally, when mad cow disease broke out in a fewdeveloped countries, carrageenan processors were forced to find analternative source of raw material to animal bone marrow. Seaweed wasthe beneficiary then.

D. As with most commodities, market for seaweed is very sensitive tochanges in supply and demand. As prices rise, farmers take advantage ofseaweeds relatively short production cycle planting-to-harvesting cyclegenerally within 50 days and increase production. Resultant over-production leads to price corrections.

E. Nature also plays a significant part affecting global patterns of supply anddemand. Global warming e.g. short and long-term sea surfacetemperature changes, cyclones, storms, as well as fish grazing can alllead to lower production of seaweed.

F. Unlike other agricultural commodities e.g. copra, cocoa, tea, coffee, etc.,seaweed prices are not quoted in any global exchange. Seaweed ismarketed, in most cases, through direct bilateral contracts.

G. Although lately use of Euro is emerging in a few selected contracts, USDcontinues to be the currency of international seaweed trade. Recentvolatility in USD value / exchange has had been affecting the market in nosmall measure.

H. The market dominance of six multinational corporations based in the USAand EU have been and are being challenged during the past five years byhome-grown processors in the Philippines, China, Chile, Malaysia,Indonesia, and South Korea.


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5.2 Traders and / or Exporters

Makassar -based leading exporters/traders of cottonii seaweed are:

COMPANY CONTACT COORDINATESPT Rapid NiagaInternational

Ms. Noor Rahmah Amier (Amma)

Tel: 0411-514 312/0815 2510799Fax: 0411-513 567

CV SumberRejeki

Ms. MarcelinaTaher (Noni)

Tel: 0411-872 575/0812 4184718Fax: 0411-853 262

CV. CahayaCemerlang

Alfred Tjandra Tel: 0411- 315 358Fax: 0411-318 227

CV. IndomarinNiaga

Andy Tanaja Tel: 0411-506 7946/0811 335932

PT Batara LautCelebes

Safari Azis Husein Tel: 0411-423 088Fax: 0411-423 967

PT Citra Mandala Ali Thalib Tel: 0411-494 613Fax: 0411-310 823

PT Kali MasSeaweed Co.

Lie Tjep Njan Tel: 0411-316 272Fax: 0411-310 730

PT SumbergunaMakassarmusa

Hutama Rusli Tel: 0411-321 770

UD Setia Utama Haji Sakka Tel: 0411-451 866/455 629Fax: 0411-455 629

5.3 Processors

PROCESSORS of carrageenan can be distinctly categorized into:

Manufacturers of Refined Carrageenan (RC) Processors of Chips and Powder (flour) (SRC) Carrageenan blenders (who may at times buy raw cottonii or chips for

co-operative processing with refining companies)


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The table below gives principal processors (sources: various) ofcarrageenan worldwide, category-wise:

RC :

COUNTRY COMPANY REFINERY WEBSITES / NOTESUSA FMC

BiopolymerRockland,Maine

www.fmcbiopolymer

Denmark CP Kelco ApS

Danisco

Denmarkand Cebu(Philippines)

www.cpkelco.com*** also 40% shareholder inGenu Philippines

www.danisco.comGermany Degussa

TexturantSystems

Baupte,France andManila,Philippines

www.texturantsystems.com

Philippines ShembergMarketingCorpn.

Cebu www.shemberg.com.ph*** Total of eightcarrageenan refineries.

Benson U. Dakay, [email protected]

Ireland QuestInternational

Cork www.questintl.com

Indonesia PT GumindoPerkasaIndustri

Jakarta www.indogum.com

Spain CREAMSA

HISPANAGAR

Vigo

Burgos

www.creamsa.com www.hispanagar.net

SouthKorea

MSC Co Ltd

KoreanCarragheenCo Ltd

Kyeongam

Seoul

www.msckorea.com

Taiwan Rico IndustrialGroup

A J/V with Marcel TradingCorp of the Philippines

Chile Gelymar Co. Santiago www.gelymar.com
http://www.fmcbioploymer/http://www.cpkelco.com/http://www.danisco.com/http://www.texturantsystems.com/http://www.shemberg.com.ph/mailto:[email protected]:[email protected]://www.questintl.com/http://www.indogum.com/http://www.creamsa.com/http://www.hispanagar.net/http://www.msckorea.com/http://www.gelymar.com/http://www.gelymar.com/http://www.msckorea.com/http://www.hispanagar.net/http://www.creamsa.com/http://www.indogum.com/http://www.questintl.com/mailto:[email protected]:[email protected]://www.shemberg.com.ph/http://www.texturantsystems.com/http://www.danisco.com/http://www.cpkelco.com/http://www.fmcbioploymer/


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SRC :

COUNTRY COMPANY COORDINATESPhilippines Shemberg Marketing

Corp

FMC Marine Colloids

Genu Philippines Inc.

Marcel Trading Corp

MPCI Corporation

Biocon Philippines /Deltagen Inc.

Geltech Hayco Inc.

King Agro MarineInternational Inc.

Cebu and Zamboangawww.shemberg.com.ph Cebuwww.fmcbiopolymer.com Cebuwww.cpkelco.com Manila and Zamboangawww.marcel.com.ph CebuFAX# +63 32 348 0138

Cebuwww.questintl.com CebuFAX# +63 32 310 103

ManilaFAX# + 63 2 842 5238

Indonesia PT Gallic Arta Bahari

PT BantimurungIndah

PT Seamatec

PT Gumindo PerkasaIndustri

PT CahayaCemerlang

JakartaFAX# 021-488 1236

Makassarwww.bosowa.co.id SurabayaFAX# 031-353 4082

Jakartawww.indogum.com MakassarFAX# 0411-315 358

Malaysia Tacara Sdn Bhd

Omni-wealth Sdn Bhd

[email protected] Sabah

China Hong Kong Sheli Ltd www.sheli.com.cn
http://www.shemberg.com.ph/http://www.fmcbiopolymer.com/http://www.cpkelco.com/http://www.marcel.com.ph/http://www.questintl.com/http://www.bosowa.co.id/http://www.indogum.com/mailto:[email protected]://www.sheli.com.cn/http://www.sheli.com.cn/mailto:[email protected]://www.indogum.com/http://www.bosowa.co.id/http://www.questintl.com/http://www.marcel.com.ph/http://www.cpkelco.com/http://www.fmcbiopolymer.com/http://www.shemberg.com.ph/


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Carrageenan blenders:

A. Danisco of Denmark owns Danalg, a processor in Chile.www.danisco.com

B. Rhodia Food of France. www.rhodiafood.com C. Colloids Naturels International of France. www.cniworld.com D. P.L.Thomas Distributor of hydro-colloids in the UK.

www.plthomas.com/hydrocolloids.htm

In order for Bina Bahari to evaluate its value-addition and marketingstrategies, appended below are two tables highlighting processors inIndonesia and the Philippines, the two largest producers of raw, driedcottonii seaweed.

INDONESIA (Source: jasuda.net / IFC PENSA)

COMPANY CONTACT DETAILS INSTALLEDCAPACITYPer Annum

(Tons)

PRODUCT

1. PT AmartaCarageenanIndonesia

Kang Siu Ming - DirectorSurabaya: 031-749

1494 (tel)031- 7491501 (fax)

Pasuruan: 0343-851408 (tel)0343-851406 (fax)

1,000 ATC / SRC

2. PT Indonusa AlgaemasPrima

Tito Hari Warsito FactoryManagerJakarta: 021-641

2969 (tel)021- 6413503 (fax)

Malang: 0341-458999 (tel)0341-458553 (fax)

6,000 ATC
http://www.danisco.com/http://www.rhodiafood.com/http://www.cniworld.com/http://www.plthomas.com/hydrocolloids.htmhttp://www.plthomas.com/hydrocolloids.htmhttp://www.cniworld.com/http://www.rhodiafood.com/http://www.danisco.com/


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3. PT Seamatec/

SeatechCarrageenan

Yohannes Sukantyo -DirectorSurabaya: 031-3525

1212 (tel)031- 3534082 (fax)

Pasuruan: 0818 314268 (Cell)

500 SRC/RC

4. PT Indonesa AlgaemasPrima

Remy Jamady - DirectorJakarta: 021-641

2969 (tel)021- 6413503 (fax)

Bali: 0361-7471298 (tel)0366-91376 (fax)

3,000 ATC/SRC

5. PT CahayaCemerlang

Alfred Tjandra DirectorMakassar: 0411-

315358(tel); 0411-318227(fax)

250 ATC/SRC

6. PT GiwangCitra Laut

Setia Tedja, OwnerMakassar : 0411-

870505(fax); 0418-232 7928(factory tel)

700 ATC/SRC

7. PTBantimurungIndah

Ir. Surahman SaadMakassar : 0411-371 152(tel); 0411-371 732 (fax)www.bosowa.co.id

1,000 ATC/SRC

8. PT GumindoPerkasaIndustri

Ms. Eva Herlina, DirectorJakarta : 021-534 7788

(tel); 021-534 7825(fax)

[email protected]

500 SRC/RC

9. PT PhoenixMas

Tjaha SetiawanFax: 031-534 8267

180 ATC/SRC
http://www.bosowa.co.id/mailto:[email protected]:[email protected]://www.bosowa.co.id/


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10. PT Gallic Artha Bahari

Jakarta :021-488 1236 (fax)

700 ATC/SRC

11. CV.KaraginanIndonesia

1,000 ATC/SRC

12. PT Centram 500 RC

13. PT.Sansiwita

500 SRC/RC

Total carrageenan processing capacityin Indonesia = 15,830 tons/Year

PHILIPPINES : (Source: SIAP)

COMPANY CONTACT LOCATION1. Cargill Texturizing Solution Expedito Dublin

Philippine RepresentativeMr. Richard RadierGeneral Manager

Cebu City

Makati City

2. Genu Products PhilippinesCorpn.

Anastacio CambongaGeneral Manager

Cebu City

3. Ingredients and GumsCorp.

Antonio Yuri YapGeneral Manager

Cebu City

4. Kerry Food Corp. Ms. Amelia AranasManaging Director

Lapu-lapu City

5. LM Zamboanga UnitedTrading

Manuel LuyGeneral Manager

Zamboanga City

6. Marcel Trading Corp. Michael TanPresident

Quezon City

7. MCPI Corporation Maximo RicohermosoPresident

Cebu

8. Polysacharide Corp. Ben AvaradoGeneral Manager

Zamboanga City

9. Shemberg Biotech Corp. Avelino ZamboExecutive Vice-President

Cebu

10. Shemberg FoodIngredients Corp.

Marcial Solante Jr.Vice-President, Operations

Lapu-lapu City

11. Shemberg MarketingCorp.

Benson DakayChief Executive Officer

Mandaue City

12. PCI Worldwide, Inc. Norman WeePresident

Mandaluyong City


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5.4 China factor

The following information is collated largely from a study done by The JLJGroup in mid 2007:

A. Processors mainly located in Hainan and Fujian. Jiangsu andShanghai are also important carrageenan processing centres.

B. From a peak of about 100 processors in 1990s, production has beenconsolidated into 50 60 processors.

C. Total domestic production is about 10,000 tons a year. 30% of the totalproduction is exported.

D. Industry growth rate of 10% p.a.E. 2007 quoted price for RC was in USD 7,700 9,000 per ton range.F. Top 5 processors account for almost 50% of the market. They are:

Shanghai Bellian Gum, Jiangshu Changhang Hydrocolloid Technology,Hainan Dazhong Ocean Industry, Quanzhou Lubao Biochemistry, andHainan Qionghai Longfeng Carrageenan.

G. 95% of carrageenan demand from within China is from threecategories:

Meat accounts for about 38% of carrageenandemand. Growing by 10% p.a.

Jelly - accounts for about 54% of carrageenandemand. 20% annual growth rate. Very popularsnack in China.

Soft Sweet - accounts for about 3% of carrageenandemand. 10-15% annual growth.

H. Other 5% of carrageenan demand is from: Dairy products, vermicelli,

etc.I. China has three categories of import tariffs e.g. General Tariff Rate,

Most Favoured Nation Tariff, and Special Preferential Treatment Tariff.The last one has the lowest import tariff and applies to imports from all

ASEAN countries, including Indonesia. Indonesian seaweed attracts7.5% import tariff.

5.5 HS (Harmonized Systems) Codes:

PRODUCT HS CODE DESCRIPTION HS CODE

Seaweed Other locust beans,seaweed and other algae,sugar beet and sugar cane,fresh, chilled, frozen ordried, whether or notground

1212 2090

Carrageenan Other mucilages andthickeners derived fromvegetable products

1302 3900 90


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6. CARRAGEENAN PROCESSING:

The stages of value-addition to raw, dried cottonii seaweed are as follows:

Raw, dried cottonii: Moisture Content of 35% to 38%; Foreign Content of 1% to3%; Maturity Farming Period of 45 days; and no mixing of salt or spinosium. IF

directly exporting cleaned, machine compressed and baled

Reduced production in the Philippines;Dramatic rise in Indonesian production;

China demand has been cooling off withindustry consolidation

Alkali Treated Chips (ATC)

Pre-cursor for SRC and RCmanufacturing

Technical Grade semi-refined carrageenan

For Pet Food; wet pet food needscarrageenan; as carrageenan pricesrise in this global downturn, demand

is shifting to dry Pet Food

FOOD Grade semi-refined carrageenan

Growth market; more cost-effectivethan RC

Gel-Press Refined Carrageenan


Gel usage on the rise; alcohol decreasing

RC Alcohol precipitated refined carrageenan


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7. IMPLICATIONS FOR BINA BAHARI:

Key market findings in this Research validate Bina Baharis Work Plan for 2009-2011, particularly as it relates to, in stages:

Establishment of a post-harvest warehousing and distribution centre, Trading in raw, dried seaweed, and Establishment of a production unit for ATC for local value-addition.

Bina Bahari can build on its key advantages :

A. Based on current membership of 113 farmers the cooperative is poisedto grow exponentially as more willing farmers are included it is assuredof at least one 20-ft container-load i.e. 14 tons of raw, sun-dried cottoniiseaweed a month, effective June09. By year II of operation, monthlyavailability of dried seaweed should exceed 30 tons.

B. As opposed to being trader-funded, Bina Bahari is self-funded by farmers.This has a direct bearing on both the cost of production and attainment ofselling prices.

C. Aggregation of farmers in a cooperative would reduce often-repeated pricewars.

D. With very little monthly overheads none now! and competitive surfaceas well sea transportation up to Kendari, Bina Bahari would have a healthygross margin in trading of raw, dried seaweed.

E. CIPSED TA in both Production and Business Management, includingMarketing.

F. Current aggressive development of a nursery for seedlings thusensuring little downtime between production cycles and minimizingseasonality issues in production of wet seaweed.

G. Bina Bahari, now located within YARI, has excellent communicationfacilities for international business, including the Internet.

H. There is a clear trend in cottonii-producing countries toward integration offarm development and value-added production. This bodes well for BinaBaharis development as outlined in the aforesaid Work Plan.

Two critical challenges that Bina Bahari would need, however, to factor inmeeting its planned results are:

A. Although the provincial government would like to call SULTRA a seaweedprovince, there is no association of seaweed producers and/or traders orpublic-private partnership of any kind. There is no known fair financingprogram, neither is there any Market Information Centre in the province.

B. There is no direct export from SULTRAs two main seaweed ports Kendari and Bau Bau. All export shipments entail shipping in domestic 20-ft containers to Surabaya; unloading and mandatory inspection by PTSucofindo (no office in SULTRA), and loading in to internationalcontainers.


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Cottonii is not an edible seaweed. Attempts have been made in the past acrossIndonesia to locally value-add through micro enterprises producing snacks suchas dodol . Complaints of stomach aches and vomiting have had been in plenty.

The preceding Research should encourage Bina Bahari to embark upon itsstated business of value-addition in stages:

Collection, warehousing, sorting,cleaning, further drying, baling andtransporting to Kendari traders.

After three to six shipments,contact and qualify suitable

Surabaya and Makassar basedExporters.

Actively supply 20-ft container loads ortruck equivalents to Exporters of raw,dried seaweed in Makassar andSurabaya. ATC/SRC processors withinthe country may also be supplied.

Direct export of raw, dried seaweed;carefully explore J/V or contractmanufacturing (ATC) opportunities with,say, Philippine based processors.

Set-up of an ATC unit in Tanjung Tiram near new Kendari Port. One of the knowntwo idle sets of production machinery &equipment may be acquired salvaged from the Dinas Koperasi.

Documents

Market Research on Value-Added Seaweed Products