TRAIN cuts short seaweed sector’s projected recovery

Just as seaweed farmers and industry players were about to heave a sigh of relief and looking forward to a good year ahead, the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law has burst the bubble.

Seaweed Industry of the Philippines (SIAP) president Max Ricohermoso said the TRAIN Law, among other factors, has caused the prices of raw materials to spike.

The estimated 100 percent price increase of raw materials noted in the third quarter last year, has not factored in the effect of TRAIN.

Ricohermoso feared that once the full effect of the tax reform will be felt, the industry is bound for another uphill battle.

"The effect of TRAIN in manufacturing cost is not yet felt but surely it will follow the general trend," he said.

Manufacturing power cost in 2017 was about P910/kwh. With TRAIN, this is expected to increase,8-10 percent this year.

Raw seaweed cost is also seen to increase by about 10 percent due to adjustments of rates on logistics and gas.

Since 2004, the production of the raw seaweed as well as the semirefined has been declining due to quality problem and the pricing structure.

The seaweed industry used to provide livelihood to more than 250,000 farmers, but today the figure has drastically reduced to about 100,000 and still dropping further.

Philippines corners 13 percent of the world's demand for processed seaweed or carrageenan. China holds the bigger chunk with 27 percent.

SIAP record showed that in 2014 the seaweed logged a $250 million export value. The performance saw a decline in the following year with only $200 million was recorded.