Published on Sun.Star Network Online (http://www.sunstar.com.ph)
by Debra Magallon-Estero
FIVE small players in the seaweed processing industry in Cebu have closed down, displacing 500 workers, Seaweed Industry Association of the Philippines president Benson Dakay said.
He also sees no growth in the industry this year but Shemberg Marketing Corp. (SMC), which he owns and which is the country’s biggest carrageenan plant, will continue to implement cost-saving measures to cope with the crisis.
Dakay also said the company will, as much as possible, avoid laying off its workers. Instead, SMC has implemented a three-day work week and has advised its employees to go on work rotation.
“It is better than not having (a job) at all,” he said.
SMC, at present, has 1,200 employees in four plants located in Pakna-an, Mandaue City, Carmen town, Lapu-lapu City, and another one in Zamboanga City.
Dakay said that like most businesses, SMC suffered from a decline in orders due to the global slowdown.
The orders of carrageenan have gone down to as much as 50 percent.
One of Shemberg’s big clients—a turkey ham processor based in the United States—has already applied for bankruptcy, while two other multinationals have cut down orders by 50 percent.
Because of the slowdown in the demand for carrageenan, Dakay noted that there is also an excess in the supply of seaweed. “This has also resulted to the decrease of seaweed prices from P150 per kilo to only P50,” he said.
Dakay said that in 2007, prices of carrageenan increased by 200 percent, reaching to as high as $3,000 per ton from $600 per ton in previous years.
Export revenues for 2008, however, were up close to $200 million from $170 million in 2007, even when the demand started to slow down by the last quarter of 2008.
By the end of 2009, Dakay said export revenues might go down to $150 million.
This is expected to affect not only the seaweed industry players in the country but also the 100,000 families of seaweed farmers.
However, Dakay believes the market will recover by 2011.
More critical
He admitted that the economic crisis experienced worldwide is “more critical” compared to the Asian financial crisis that hit the Asia Pacific region in the late 1990s.
Dakay said that during the Asian financial crisis, the ones badly hit were just the banks and businessmen who depended on credit lines from the banks.
“The (economic) crisis now is more severe since the consumers are also affected and the demand (for various products) has gone down,” he said.
The production of carrageenan powder is one of the Philippines’ multi-million dollar export earners.
The country reportedly produces most of the world’s demand for carrageenan, which is churned out by 16 processing plants in Cebu, Manila and Zamboanga, including new plants in Davao and Bukidnon provinces.
Carrageenan is a white, powdery substance used as a gelling and thickening agent in many processed foods, medicines, cosmetics, paints and thousands of commercial and industrial products in the world market.
The global demand for carrageenan reached about 10 million metric tons last year.
Leading the world’s biggest carrageenan importers is North America, which imports around 53 percent, combining the annual consumptions of the United States and Canada, according to the Food and Agriculture Organization (FAO).
Other big importers of carrageenan are Europe, 24 percent; Latin America, 10 percent; Australia, eight percent, and; Japan, five percent.
The European Union alone needs about 1,500 metric tons of carrageenan a month, FAO data shows. (DME)
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