The Economics of Kappaphycus Seaweed Cultivation in Developing Countries: A Comparative Analysis of Farming Systems

Abstract

The farming of the red seaweed Kappaphycus alvarezii and related species as raw material for the hydrocolloid carrageenan rapidly spread from the Philippines in the late 1960s to Indonesia, Tanzania, and other tropical countries around the world. Although numerous studies have documented positive socioeconomic impacts for seaweed farming, factors such as diseases and distance to export markets have led to an uneven development of the industry. Using standard budgeting techniques, this study adapted production and market data from a FAO-led global review of seaweed farming to develop comparative enterprise budgets for eight farming systems in six countries (Indonesia, the Philippines, Tanzania, India, Solomon Islands, and Mexico). Although the basic technology package is the same across countries, the study revealed large differences in the economic performance of systems due to wide variations in farm prices and the scale of operations. Although seaweed farming is a suitable activity for small-scale producers, a minimum of 2,000m of cultures lines are still necessary to ensure adequate economic returns. Greater farming plots may be needed if farm prices are well below the average farm prices paid in Indonesia and the Philippines. Policy recommendations are made to improve the economic potential of underperforming systems.