ECONOMIC RETURNS FROM SEAWEED (Eucheuma cottonii

ECONOMIC RETURNS FROM
SEAWEED (Eucheuma cottonii)
FAMILY FARMING IN TUN
SAKARAN MARINE PARK,
SEMPORNA, SABAH.
James M. Alin, School of Business and
Economics, Universiti Malaysia Sabah,
maejames@ums.edu.my,ajames2000@hotmail.co
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MIMA Seminar on Developing the Seaweed
Aquaculture Sector, 27 October 2009, Kuala
Lumpur
Tun Sakaran Marine Park,
Semporna Sabah
Is located at the entrance of Darvel Bay off
east coast Sabah, includes eight islands
and associated reefs and covers an area of
app.350 sq km.
Management goal is to protect and
conserve the natural features,habitats
and species of the Semporna Islands
Park whilst providing for ecologically
sustainable use of the area and its
resources.
Seaweed family farming is not
as extractive as?
est.150 households living inside TSMP
actively involved in seaweed (euhema
cottonii) farming.
Sabah Parks identified seaweed farming as
the alternative livelihood because;
(i) it is not as extractive as artisanal fishing
(other mari/aqua culture activities such as
pearl culture, giant clam and cage fish
rearing)
Zoning system
With the implementation of zoning system
(some zones are off limit for fishing),
islanders will have their livelihood reduced
or removed all together unless there is an
alternative.
Successful seaweed farming will give
stronger incentive for them to allocate their
efforts on it, by time will reduce
dependency on fishing and eventually will
ease the pressure on the wild stocks.
This research is to determine
the optimal size of seaweed family farming
to be viable as the alternative livelihood for
the islanders living inside TSMP.
Whether the allowable 5-acres (2-5ha)
recommended by L&S Department economically
efficient?
Trade off between efficiency and fairness of the
Temporary Occupation (TOL) system.
The limitations of TOL as an instrument for
payment for environmental services.
Cultivating Methods
(3) Floating/raft method (sara rakit)
and (4) sara Labad-labad
(2) Off Bottom (sara niosolan) and (1)
Long-line Method
4 to 6 rounds per year (1 r=2 months)
1 round = 4 - 5 days planting
preparation + 45 days to grow+2 days
for harvesting + 3 days drying (if no
rain )
Off- bottom (pancang)
fixed bottom method
Wooden (mangrove) stakes (15 c diameter
and 1.5 m long) are driven into the sea
bottom.
6mm thick PE rope (line) firmly stretched
between stakes +suspended 20-30cm
below water surface at low tide (or from
sea bottom at high tide)
Attached to line are 30 pieces of raffia
strings and tied with seed ( 150 grams
each)
Off-bottom method ?
Simple (cheap) to construct+ easy to
manage +lines can be prepared on punt
/shore =farm accessible at low tide
Difficult to locate a good area/high
probability of losing crop during rough
weather /more raing/belais (grazer
fish=kumai/raing batu/buntal/tombad and
Peteg) or worst sea turtles (bokkok) around
crops / drying rack required
Long-line (rawai) Method
Seaweed is hung to a rope (main
rope must be thicker =10-15 mm
diameter) which is suspended by
floaters.
Rope is tied to floaters (or bamboo)
set at 4-5 m interval and anchored
(weight) at each end.
The pieces of raffia holding seaweed
can be tied to main rope in two ways.
Long-line method
Can set long-line almost anywhere and it
can be moved to another area (can be
stolen?) / seaweed seems to grow faster?
Lines easy to prepare offshore from punt
(onshore=difficult to stretch it (heavy) and
easily tangles/ loose some bibit agal-agal.
Ropes expensive/ planting and harvesting
cannot be easily done on shore/ long-line
can be damaged by motor driven boats.
Accounting type rate of return
Temporary Occupation License (TOL
payable to Land and Survey Dep.=
RM170 per annum
processing fee during application
RM50 + coastal rental RM120
= permit for 5-14 acres (2-5 ha)
A. Initial Investment/cash
outflows/fixed c = 1 acre
1. PE (nylon) ropes-6mm X 10 bundles
X200m=RM300 (Life=2 years)
2. Ropes for weight X 3 bundles
=RM77 (2 years)
3. Big Pet bottles as Floats = RM95 (380X RM
0.25) (2 years)
4. Weight (iron rod 4’X3cm) X14XRM2 =RM28 (2
years)
5. Stakes bulian (mangrove= cheaper?) =RM500 (
5 years)
A. Initial investment
6. Wooden boat (RM500) +engine Yamaha
15hp (RM4,800)
7. Seed stock = 900-1,200 tangkai of
Eucheuma cottonii/
tambalang/e.kappaphycus alvarezii) 1,540
kg X RM1 =RM1,540 or RM1,232 (RM0.80
per/kg)
8. Raffia 3 bundles X RM4 =RM12
or PE 1mmXRM36=RM72
Total cash outflows (FC)=RM2,624
B. Operating costs (variable c)
7. Laborers =2 adult members of familychild labor) X RM10 X 7days X4w
=RM560 (inc. tools/nails etc)
8. TOL = RM170 (23% of OC/4% of TC)
9. Diesel = liter?/2 months =RM900
10. Depreciation (derived from initial
investment) = ?
Total operation cost=RM730
Previous estimates Sabah Parks
(prep. By MCS ) /DOF Manual
1 acre revenue =RM699 per month /RM8394 per
annum /if price for dried seaweed RM2.
TC=2,365 ( FC=RM999 + Operation Cost /variable
C=RM1,366)
R1 planted 1,540kg = + 443
R2 seaweed grow ? Replant +harvest = RM2,800
(1400 dried X RM2)
2,800- 1,366 (R-VC) = +1,434
R3 (1434) +R4(443) +R5(1434) +R6 (1434) =
Total net revenue + 8,394
C. Cash inflows
R1 (Day 14 + 45) seed stock
planted 1540 kg after 45 -55 days, will
grow 15,400 kg (wet) to harvest.
R2 farmer select fast growing (faster
> 10 %) strains 1,540 kg wet for
replanting.
1,540 kg to dry and after 3-4 days to
reduce moisture content (required by
buyers) 35%
C. Cash inflows (1 acre)
Well dried seaweed is covered with plenty
of salt crystals (prevent spoilage of
carragenan) and have rubber-like texture
when you squeeze it and no water should
drip from it.
Weight of seaweed decreased by
approx.10 times after drying, R1 harvest
wet 15,400 kg become 1540kg dried
D. Break even point?
Round 1 = - RM1,814
1540 kg dried seaweed market price is RM1
RM1540 (TR) - 3,354 (TC)
Round 2 = RM 810 (Break event point)
RM1,540 (Revenue) –RM730(Variable Cost)
1 acre = RM 2,236 (monthly RM186.6)
R1 minus R2+R3+R4+R5+R6
2 acres = RM4,472 (+ seedlings) monthly
372.6
3 acres=RM6,708 (monthly RM559
>Hardcore poverty income RM503)
Break even point?
Round 1 = - RM274
1540 kg dried seaweed market price is RM2
RM3080 (TR) - 3,354 (TC)
Round 2 = RM 2,350 (Break event point)
RM3,080 (TR) – RM730(Variable Cost)
1 acre = RM11,750 (monthly RM979.1)
R1 minus R2+R3+R4+R5+R6
2 acres = RM23,500(+ seedlings) monthly
RM1,958.3
3 acres=RM35,250(monthly RM2,937.5)
Optimal size = >2.5 acres
Break even? If price fluctuates
Domestic price= intermediary buy from
farmer at wholesale price of RM2.40 (Jan
2008) and RM4 (Jan-Feb 2009)
Local refineries pay intermediary RM4.60
per/kg (Dec 2008) RM6 per/kg (Jan 2008)
Market price highest RM6.30 ( Feb 2008)
/RM1.70-2.00 (2007) and lowest RM0.50
Break even? If price fluctuates
Tacara import 70% of its raw materials
(dried seaweed) from Indonesia (reliable
SS in term of quantity and quality) and
buys 5,000 kg from Semporna farmers.
Semi refineries DD 500 tan dried =100 tan
kappa and Iota carragenan
Most local SS goes to Omnigel and other
independent intermediaries (include from
Philippines)
Break even? If price fluctuates
Seaweed price (trends) now on “boom” and
sooner will go bust and farmers will be badly hit.
Semporna seaweed is going through a “bubble
about to burst” phrase of production.
Examples of busted markets where farmers lives
in marine parks are many =South Pacific
(Samoa/Tonga/Kiribati /Fiji etc) mid90s/Philippines market (1997 onwards).
Sulawesi farmers (inc. Bunaken Marine Park) went
out of business when price collapsed within a
month (Sept price USD1.80 fall to USD 0.50 in Oct
2008).
Bubble going to burst?
Over 2 years Semporna seaweed
production is experiencing a mad rush of
entrepreneurs- e.g Tekun (pyramid ?)
schemes (scamming gullible farmers)/
entry of commercial
Komtar Epic Biofresh Seaweed Project J.V
with Nusantara Bangga Sdn.Bhd set up 3
months ago at Sebangkat with 2,800 lines
+100 workers (1,000 lines planted and
remaining are abandoned lines)
Bubble going to burst?
Seaweed has low barrier of entry (low
initial capital) = mad rush of traders will bid
up the (wholesale) price to extraordinary
levels.
Poor farmers will harvest immature
seaweed (30 days) + “impured” (tietie/sand)
will lose out to imported dried seaweed
(best= harvested 50 days/ impurities 5%)
Wholesale price fall =intermediary and
semi-refinery (pay RM0.20 per kg for
cleaning impurities)
Recommendations
TSMP has 1,700 ha (total suitable for
seaweed in Semporna
=15,788ha/Sabah=24,400) at Sebangkat
reefs with 200 ha (Bodgaya island) +100
ha (BoheyDulang/Public use zone)
In 2007 Semporna has 178.9 ha (447.4
acres) cultivated with seaweed +439
farmers (registered) producing 80,577 kg
Recommendations
Two of zone B cultivation areas is
within TSMP +48 farmers /27 ha (67
acres).
Sibangkat 14 farmers =21.9 acres (1
farmer=1.57 acre) + Selakan 34
=44.7 acres (1 farmer= 1.32 acre)