Impact Assessment Study on “Seedstock Improvement of Kappaphycus, Eucheuma and Gracilaria” in Calatagan, Batangas

Montes, Nimfa D.1*, Panabang, Maritess B.1, Zapata, Normito R.1, Carambas, Nora D.2, Buenafe, Marinelle A.1 and Narvaez, Teresita A.3

1 Department of Agribusiness Management and Entrepreneurship, College of Economics and Management, U. P. Los Baños; 2 Department of Agricultural Economics, College of Economics and Management, U.P. Los Baños 3 College of Agriculture, Western Mindanao State University; * Corresponding author: Contact No.: (049) 536-2846, Email: [email protected]

I. INTRODUCTION

The Philippines as the leading world supplier of Eucheuma/Kappaphycus (raw dried seaweeds/RDS) contributed a substantial share of 88% of the total world supply (Hayashi, 2013). The country’s production volume increased from 785,795 metric tons (MT) valued at Php 2.96 billion in 2001 to 1,751,070.64 MT valued at Php 9.77 billion in 2012, attaining an annual average growth rate (AAGR) of 10.24% and 19.19%, respectively. Seaweed harvest area increased from 16,422 hectares to 41,881 hectares in 2001- 2010, indicating AAGR of 15.55% (Bureau of Agricultural Statistics (BAS), 2012). Tawi-Tawi obtained the highest average yield of 68.86 MT per hectare in 2010.

The Philippines is the largest manufacturer of semi-refined carrageenan (Philippine Natural Grade (PNG)) and the third leading supplier of carrageenan in the world, next to China and Indonesia. The most valuable commercial use of seaweeds is as raw material bases for extraction of phycocolloids (seaweed gels) such as agar, alginate and carrageenan which could be applied to various food and non-food products and liquids. Philippine carrageenan was initially used as a gelling agent for canned pet foods but consumer demand shifted toward human food uses and industrial uses. Carrageenan is now being used for dairy products, bakery products, processed meats, confectionary, cosmetic and personal care products, paints, and pharmaceutical products among others.

The country’s total exports of seaweeds (raw, PNG, and refined seaweeds) increased from 40,231,03 MT valued at US$ 71,163,843 in 2001 to 46,108.73 MT valued at US$ 210,774,977 in 2011, exhibiting an AAGR of 1.3% and 17.83%, respectively (BAS, 2001- 2011). However, despite the strong demand, the Philippines has been suffering from raw dried seaweeds shortage supply in the last few years. As evidence, seaweed import increased from 3,704.61 MT worth US$ 5,535,719 in 2001 to 12,740.74 MT valued at US$ 30,091,461 in 2012, showing AAGR 20.32% and 36.96%, respectively in a span of 12 years (BAS, 2001-2012).

China remains to be a strong competitor, in terms of buying, producing and processing seaweeds. Whereas, Indonesia is continuously expanding seaweed production to 10 million tons by 2015, making it number one producing country, replacing the Philippines (Embassy of Indonesia, 2010). Cognizant of the threat in the country’s capacity to export seaweeds, the government adopted an action programme aimed at helping the small and medium scale enterprises acquire the necessary technological capabilities for production, cost reduction, output quality improvement and sustainable environment-responsiveness (Pagdilao, 2004).

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With the great economic contribution of the seaweed industry in the Philippines, the government through the Philippine Council for Aquatic and Marine Research and Development (PCAMRD-, now Marine Research Division of the Philippine Council for Agriculture, Aquatic, Forestry and Natural Resource Research and Development, MRD PCAARRD-DOST) had undertaken two major research and development (R&D) projects on seaweed production technologies. UP Marine Science Institute (UP MSI) through the GAINEX Program implemented on April 1997-July 2001 a project entitled “Seedstock Improvement of Kappaphycus, Eucheuma and Gracilaria” to address the problems of low productivity of the seaweed farming caused by poor cropping management of the cultivars and the deterioration of the environment (Terminal Report, 2001). The project aimed to improve the productivity of presently used seedstocks of seaweeds through the introduction of highly productive strains of Kappaphycus alvarezii, Eucheuma denticulatum and Gracilaria species. Specifically, the objectives were (1) to arrest the deteriorating quality of seaweeds that resulted in continuous vegetative propagation by improving the quality of seedstocks or cultivars from a reproductive process; and (2) to assist a large number of small scale seaweeds farmers/growers in acquiring the necessary technological capabilities for production, cost reduction, output quality improvement and sustainable environment responsiveness.

This project was complemented by another project entitled, “Biotechnology of Kappaphycus and Gracilaria II” which applied the technique of protoplast fusion using cells from seaweed strains with desirable traits to produce a new strain of seedstock that has all the best qualities (Terminal Report, 2005). It aimed to improve the genetic make-up of economically important seaweeds in the Philippines.

II. OBJECTIVES

Currently, PCAARRD-DOST provided fund support and project supervision for the conduct of an impact assessment of the previously joint UNDP-GAINEX and PCAMRD-funded seedstock and biotechnology projects related to seaweed production. This is now called the “Impact Assessment of Seedstock Improvement of Kappaphycus, Eucheuma, and Gracilaria”, February 2013 to February 2014. The general objective of this study is to assess the impacts and benefits of these projects. It aims to determine, describe and analyze the impact pathway of the projects.

The impact assessment will provide the national government and PCAARRD as a funding agency and decision maker, national research and development (R&D) / science and technology (S&T) system and other international funding agencies, research managers and policy makers with significant information and documented evidences of the impacts of its R&D programs/projects, in terms of productivity, welfare gains and economic benefits as well as the contribution of various entities involved in the R&D projects. Moreover, the impact assessment will provide more complete understanding of what has been achieved from the R&D investments to help the Council direct its courses of future work.

III. METHODOLOGY

Primary data were collected through key informant interviews (KIIs), farmers’ survey and farmers’ focus group discussions (FGDs). KIIs were carried out with personnel who were involved in the implementation of the UNDP-GAINEX Project, key staff from concerned government agencies such as BFAR and Calatagan LGU-MAO, nursery operators (2) and traders (4). Thirty-five (35) randomly-selected seaweed farmers from three (3) seaweed producing barangays in Calatagan, Batangas participated in the farmers’ survey. Farmers from Poblacion Dos were classified as adoptors, while farmers from Poblacion Uno and Balitoc were spill-overs. A focus group discussion consisting of six (6) seaweed farmers were also carried out in Balitoc. Another follow-up survey of nine (9) seaweed farmers among those earlier surveyed was carried out in August, 2013 to reassess farming practices before and after introduction of the technology. Hence, there was a total of 41 farmers: 35 under the survey and six under FGDs.

Secondary data and industry statistics were gathered from the Bureau of Agricultural Statistics (BAS) and Bureau of Fisheries and Aquatic Resources (BFAR). Other researches and journals were also sourced from FAO, SEAFDEC, WORLDFISH, PCAARRD Aquaculture Unit and UP-MSI and other institutions actively engaged in education/training and R&D in seaweed production technologies. 2

The analytical approach included the following: (1) identification and mapping of inputs to benefits; (2) examination of adoption characteristics; and (3) estimation of impact through Benefit Cost Analysis.

Following the ACIAR guidelines, project inputs were mapped with the benefits using the results frame. The frame consists of sequential identification and assessment of inputs, outputs, outcomes, impacts and benefits and the issues to consider in each step in the process. The mapping was done in such a way that the results were clearly identified and causal links were made explicit, intended as well as unintended results were included, preconditions and/or additional investments required to realize results were identified, absolute results were measured and comparisons were made between these and the baseline.

The impact assessment study on improved seaweed farming technologies used specific tools of analysis such as production function (e.g. relating technical efficiency to the R&D intervention) and farm business analysis (known also as cost and return analysis) at the micro/farm enterprise level. The method used at the meso/community level was highly descriptive whereas surplus estimation will be required at the sectoral/industry level.

Economic surplus approach was used to examine the welfare impact of the project. The change in economic surplus was used as the measure of social benefits generated by the research intervention.

The benefit-cost analysis was employed in quantifying inputs and impact valued in monetary term, analyzing the streams of cost and benefit and bringing them into their present values through discounting. Among others, the impact of the project can be represented in terms of changes in certain summary measures or indicators (e.g. BCR, NPV, IRR, etc.) that can be attributed to the project.

IV. DISCUSSION OF RESULTS AND FINDINGS

A. PROJECT INPUT

1. DOST-UNDP GAINEX Project

The “Seedstock Improvement of Kappaphycus, Eucheuma and Gracilaria” (PHI/96/017/A/01/99) Project was under the UNDP-GAINEX Programme. The GAINEX Programme was the National Action Programme for Technology Development and Transfer for export-oriented industries of the Government of the Philippines in 1995. The project was initially planned to run from March 1997 to December 2009 with a total budget of $350,000. The project was extended a further 1 ½ years to July 2001 with actual total expenditure of $339,140. The funds were used for purchases of laboratory equipment, seedstocks and operating expenses for the gene and seedling banks. The project was coordinated by UP MSI with PCAMRD (now MRD PCAARRD-DOST) as the implementing agency and DOST as the executing agency. Gene banks were established at UP MSI and at MCPI Farm while mother and satellite seedling banks were set up in Calatagan, Batangas; Bohol; Leyte; Zamboanga and Tawi-tawi.

The main objective of the project is to address the deteriorating quality of seaweeds produced by vegetative propagation through the joint efforts of the seaweed farmers, researchers/government and the SIAP.

2. PCAMRD-UP MSI Biotechnology Project

The “Biotechnology of Gracilaria and Kappaphycus” Project was a follow-up project to complement the DOST-UNDP GAINEX Project. The biotechnology project was meant to address the need to pursue studies that would be more directly related to genetic improvement of strains of K. alvarezii and species of Gracilaria. This research was funded by PCAMRD and implemented by UP MSI. The project ran from August 15, 2003 to December 31, 2005. Total project expenditure on its first year of implementation totaled to Php 2,097,192.80 and Php1,004,000.00 on its second year or a total budget of Php 3,101,192.80. The funds were used for the establishment and operating expenses of a Biosafety Level 2 3

laboratory and maintenance of the germplasm collection at the UP MSI Seaweed Laboratory Culture Facility.

The medium- to long-term goal of the project, as stated in the project terminal report, was to develop strains of Kappaphycus and Gracilaria that will be superior in performance (i.e., higher yielding and faster growing) compared to native strains. The project’s immediate objectives, as stated in the original proposal, were the following: (1) develop an efficient technique for laboratory scale production of carrageenases and agarases (enzymes that degrade carrageenan or agar, respectively); (2) develop and optimize techniques for preparation of protoplasts from Garacilaria and Kappaphycus and for fusion of the protoplasts to produce viable hybrids; (3) develop genetic transformation techniques for species of Gracilaria; and (4) continue the operation of the laboratory culture facility (“gene bank”) established at UPMSI by the Seedstock Improvement Project.

3. The Seaweed Development Program of BFAR

The Department of Agriculture (DA) through BFAR has created the Seaweeds Development Program (SDP) to respond to the high world market demand for seaweeds and address the problems and constraints besetting the local seaweed industry in mid-1990s. The program, which was initially conceptualized as a 5-year undertaking (1996-2000), was envisioned to implement a well-coordinated industry with responsive seaweed projects and activities both at the national and regional levels (Ferrer, 2002). With the success of SDP’s initial implementation during the mid-90s to 2000s, BFAR has revitalized and institutionalized SDP making it the national program for seaweeds to date. SDP gets an annual budget allocation of around 20-40 million pesos from 1996 to 2012. This budget allocation was substantially increased to 265 million this 2013 or about 600% increase (Velayo, 2013). The funds cover the following: a) expenses for capability-building activities (training/extension); b) purchase of solar dryers; c) establishment of seaweed nurseries; d) establishment of test plots; e) establishment of techno- demo farm; and f) provision of farm inputs.

In general, the constraints and gaps in the seaweed industry include pollution in production areas; inadequate supply of dried seaweeds for processing leading to processor’s losses; diseases affecting seaweeds especially the “ice-ice” disease, and the instability of peace and order situation in production areas. Regionally, there are still other different constraints and gaps that the seaweed-producing regions encounter. In CALABARZON, other major problems include the epiphytism disease, rampant cyanide fishing near seaweeds farming areas, and the natural calamities.

There are four major interventions and strategies that BFAR are implementing under the SDP: 1) establishment of seaweed nurseries; 2) promotion of seaweed health management; 3) provision of post harvest facilities (seaweed dryers); and 4) establishment of a pilot semi-processing plant. The BFAR Regional Offices focuses on establishment of seaweed test plots and nurseries, input assistance including seaweed seedling dispersals and provision of planting paraphernalia, and conduct of hands-on trainings on seaweed culture and processing. BFAR also supports the seaweeds farmers in marketing of dried seaweeds and other processed products. Farmers are linked to markets which are identified by the agency together with the LGU. Seaweed processors are invited to trade fairs and exhibits to showcase their products and establish networks with potential markets.

The BFAR Regional Offices tie up with the Local Government Units (LGUs) in the implementation of these interventions and strategies. In CALABARZON, most of the seaweed nurseries established and beneficiaries identified are located in the provinces of Quezon and Batangas. In Batangas, existing seaweed farming areas are located in the municipality of Calatagan. The activities of BFAR 4A under the SDP are described as follows: 1) establishment of seaweed test plots and seaweed nurseries; 2) input assistance, which include dispersal of seaweed seedlings and farm implements; and 3) hands-on training on seaweeds culture and postharvest.

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B. PROJECT PROCESS

The UNDP-GAINEX Project had two major components: 1) Biotechnology, which included DNA fingerprinting and characterization of carrageenan; and 2) Seedling Bank, which included the establishment and operation of own-farm seedling banks, which carried the 15 seaweed cultivars from the major seaweed-producing provinces all over the Philippines. These cultivars were identified as fast- growing and high-yielding varieties.

A culture facility (gene bank) was established in UP MSI. Collected seaweed samples (Eucheuma, Kappaphycus and Gracilaria) from the project sites were cultured through branch, micropropagules and callus at the UP MSI laboratory. The selected strains were then test planted in Calatagan, Batangas, Leyte, Tawi-tawi, Zamboanga and Bohol. The test planting were done by seaweed farmers/growers. After the test planting of the selected strains, own-farm seedling bank/nurseries or propagation sites were established in the project sites. The seedling banks served as outlet/distribution center of cultivars for planting. The farmers/growers who are members of the seaweed growers’/farmers’ organization/cooperative were given seedstocks to reproduce in their own farms

The selection and development of superior seaweed strains involved 4 phases: 1) collecting seaweed stocks from the project sites (Calatagan, Batangas; Bohol and Tawi-tawi); 2) micropropagation (laboratory-based); 3) test planting; and 4) nursery/seedling bank establishment.

The UP MSI trained the staff/operator of the seedling banks and SIAP-MCPI in applying biotechnology and other conventional and non-conventional methods in solving the problems of deteriorating quality of seaweed and in preventing diseases in cultured seaweed species. The seedling bank operator/staff, in turn, trained the farmers on how to reproduce the stocks by reproductive process so the farmers will be able to produce their own seedstocks in their own farms.

C. PROJECT OUTPUT

Major achievements of Phase I of the DOST-UNDP GAINEX project vis-à-vis the expected results were as follows: (1) establishment of gene bank in UP MIS and own-farm seedling banks in Calatagan, Leyte, Tawi-tawi and Zamboanga; (2) selection of fast-growing, high yielding varieties through comparative growth studies; (3) cropping management of the different seaweed cultivars; (4) DNA Fingerprints (Rapid Amplified Polymorphic DNA, RAPD) on 14 Kappaphycus and Eucheuma cultivars, which served as basis for genetic classification and identification contributing towards the conservation of biodiversity of Philippine Kappaphycus and Eucheuma resources and their protection from biopiracy; (5) carrageenan/gel characterization, particularly gel strength, viscosity, 3,6~anhydrogalactose content, sulfate content, gelling and melting temperatures, which provides the seaweed processors and those in R&D with a range of opportunities for different industrial applications of seaweeds; (6) protoplast fusion; (7) training of biologists/ farmers; and (8) manual entitled “Primer on Farming and Strain Selection of Kappaphycus and Eucheuma in the Philippines”. . In Phase II, the protocols for protoplast preparation were further developed and procedures for protoplast electrofusion were optimized to achieve reliability and reproducibility. Other achievements are the establishment of a Biosafety Level 2 (BL2) laboratory and continuation of the operation of the Phase I gene bank.

Seaweed seedling bank and availability of fast-growing, high-yielding and disease-resistant seaweed cultivars: The project established one seedling bank for Calatagan, Batangas. The seedling bank was located in Poblacion Dos and the operator was Mr. Edgardo Limoico. The seedling bank served as repository of 15 cultivars of Kappaphycus and Eucheuma for mass propagation and distribution to farmers. The establishment of the seedling bank facilitated the distribution and accessibility of the identified fast-growing, high-yielding and disease-resistant seaweed cultivars.

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Cropping management of the different cultivars: The project was able to document the growth performance including the seasonality of growth of the various cultivars. Knowledge of the growth performance of the different cultivars led to the identification and selection of cultivar/s best suited to the area while the knowledge of seasonality of growth provided information in drawing up cropping management schedules. The comparative growth studies in Calatagan, Batangas indicated apparent superiority of Bohol Sacol variety (Cultivar H, Kappaphycus), particularly because of its relatively faster growth and resistance to “ice-ice”. The project further recommended that different strains should be grown in separate plots for ease of cropping management as well as to segregate the strains of different gel quality.

Seaweed farming practices:

Site selection: Farmers select areas that exhibit the following characteristics: a) free from pollution caused by domestic, agriculture and industrial wastes; b) Moderate water movement or current to ensure nutrient supply; c) Sandy or rocky bottom, preferably with growing vegetation (i.e., seagrass, Caulerpa); d) site is not exposed during low tide.

Culture method: Farmers currently use three culture methods: the fixed off-bottom method, raft method and the floating long line method.

Fixed off-bottom method: This method is used in areas that are very shallow during low tide. It involves the use of stakes or “tulos” erected on seabed and arranged in rows. Seaweed farmers in Calatagan, Batangas use either bamboo or “elena” (“ipil-ipil) as stakes as these are abundant in the area. The stakes are arranged in rows at around 1-meter intervals with 10 meters distance between rows. The distance of the lines from the ground is adjusted to the depth of water during low tides so that the plants are not exposed to air and sun.

Raft method: This method is used in areas with a depth of 1 meter or more at spring low tide. It uses bamboo floaters and anchors, which may be stakes, steel bars, or sand bags (or sacks filled with rocks and sand).

Floating long-lines: This method is used in deeper water with a depth of 0.50- 1.5 meters at spring low tide. It uses floaters like styrofoam or plastic bottles and the wooden stakes or iron bars used as anchors may be replaced with sandbags (or sacks with large rocks).

Planting density/ planting distance: A 5mx20m module usually is planted with 400-500kg propagules. Each plantlet weighs about 100g, the distance between each plantlet is 8 inches (or about 20-25cm) and ½ m distance between monolines.

Cleaning and maintenance: Seaweed farmers inspect/visit their seaweed farms regularly especially during calm weather to shake/remove epiphytes and other sediments that attached to the plants, which may compete with nutrients, light and space. The seaweed farmers also remove/cut seaweeds infected with ice-ice disease and replace/re-tie plants, which were washed out.

Harvesting/ postharvest: The current dominant strain (cultivar H) in Calatagan, Batangas is harvested not less than 45 days but not longer than 90 days after re-planting. In Calatagan, one cropping cycle usually takes 3 ½ months because the farmers devote the first two months for propagating and splitting of seedstocks (until the entire seaweed farm is completely filled with seaweed plantlets).

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D. ADOPTION

1. UP MSI Seaweed Gene Bank and Seedling Banks. Seaweeds were usually collected from natural stocks or wild populations. However, these resources were being depleted by over-harvesting. With supplies sourced from naturally occurring resources unable to meet or satisfy rising demands, approaches to manage the seaweed resource is to develop seaweed farming techniques and determine which of the species grow best. Hence, seaweed cultivation techniques are standardized and made economically feasible (SEAFDEC, 2007).

In the laboratory culture facility (gene bank) for Eucheuma, Kappaphycus and Gracilaria, which was established in UP MSI, stocks of the different strains are preserved using branch and tissue culture and used for biotechnology studies wherein new strains of improved seedstocks are developed. Starting stocks produced from the laboratory are distributed to the small farmer-cooperators for field testing and multiplication. Hence, seedling bank nurseries were established in areas where the seaweeds grow best (e.g., Poblacion Dos and Balitoc, Calatagan; Tawi-Tawi, Zamboanga, Leyte and Bohol). As distribution center of cultivars for planting, seedling bank nurseries ensure the availability of quality seedlings to the small farmers in all production seasons throughout the year.

The seedling bank staff and the farmer-cooperators obtained training to produce their own seedstocks, applying biotechnology and other methods of improving quality of seaweeds and preventing diseases on cultured seaweed species (e.g. ice-ice). The performance of the new varieties of seaweeds was monitored by the seedling bank staff with the assistance of UP MSI and they continue to develop new strains to prevent further degeneration of the seedstocks.

2. Seedling bank and fast-growing, disease-resistant cultivars in Calatagan, Batangas

Dr. Gavino C. Trono, a marine scientist from UP MSI, worked closely with Dr. Maxwell Doty, a known international seaweed expert and Mr. Edgar Limoico to monitor the growth of selected seaweeds in the coastal communities of Poblacion Dos, Calatagan, Batangas in the early 1970s. Mr. Limoico learned about improved seaweed farming practices from Dr. Trono, encouraging him to establish his own seaweed farm in 1985. By keen observations and sheer interactions with Mr. Limoico, close relatives and neighbors engaged in seaweed farming in the early 1990s. Poblacion Uno and Balitoc eventually became seaweed producing areas in 1995. They gradually transformed their small seaweed farms into profit generating ventures. At present, seaweed farming communities covered five (5) barangays in Calatagan, Batangas, namely: Poblacion Uno, Poblacion Dos, Balitoc, Gulod and Poblacion Cuatro (Rosella C. Lucero, Seaweed Action Officer, BFAR 4-A, May, 2013).

In 2000, Mr. Limoico served as the operator of the seedling bank established in Poblacion Dos under the UNDP-GAINEX Project. K. alvarezii (cultivar N) locally known as “tambalang” was the dominant strain in the 1990s. Farmers relied heavily on propagating seaweed by cuttings because seaweed seedlings were not readily available. Since farmers used the same cuttings for several cropping seasons, the seaweeds were more susceptible to diseases (Dr. Edna Fortes at U. P.-MSI, April 4, 2013).The local seaweed industry was practically wiped out during the occurrence of “ice-ice” disease in 2006 but the presence of the seedling bank in Calatagan, Batangas saved it from collapse. The project introduced a total of 15 seaweed varieties but only four (4) varieties survived the infestation: the Bohol Sacol green (cultivar H), and Sacol brown, which were fast growing seaweeds of high carrageenan content, Eucheuma denticulatum (commonly known as spinossum) and Caulerpa lentillifera (“lato”). The seaweed farmers gradually shifted into farming of the Sacol green and brown strains. (Edgar Limoico, seaweed nursery operator and seaweed farmer in Poblacion Dos, Calatagan, August 2013).

3. Seaweed Nurseries

UP MSI and PCAMRD considered BFAR as one of its direct project beneficiaries which successfully gained access to the DOST-UNDP GAINEX Project’s fast growing seaweed varieties and recommended farming practices (Dr. Arturo Lluisma, UP MSI April 4, 2013). As part of the intervention strategies of 7

BFAR 4-A in Calatagan, Batangas in May 2013 (the onset of the rainy season), they dispersed seaweed seedlings sourced from BFAR-established nurseries in Poblacion Uno, nearby private nurseries operated by Ms. Bibian Perado of Poblacion Uno and Mr. Edgardo Limoico of Poblacion Dos as well as distributed farm paraphernalia (Lucero, Rosella C., May 2013). BFAR propagates and uses the varieties in the locality in its seaweed seedlings dispersal activity. The amount of seaweed seedlings ranged from a minimum of 1 MT to a maximum of 10 MT in 2013. Every individual seaweed farmer obtained about 50- 100 kilograms of seedlings.

4. Adoption Characteristics. Since the Calatagan seedling bank was established in Poblacion Dos, farmers in the said barangay were mostly “adoptors” while Poblacion Uno and Balitoc farmers were mostly “spillovers” who adopted Sacol strains and improved farming practices by direct observations and interactions with other experienced seaweed farmers, except for three (3) seaweed farmers in Balitoc who underwent formal training in the technology aspect.

Based on the results of the survey, farmers were mostly males at 60% while females were 40% (Table 1). The number of male farmers could have been greater but they were outside of their homes at the time of the survey, either buying seedlings in the neighboring barangay or marketing the farm produce. The wife and elder children took their places in the survey considering that seaweed farming is a family enterprise.

Most farmers were married at 89% and seaweed farming as a means of livelihood in the area was able to sustain the needs of the family. The farmers belonging to the middle age range of 41-50 comprised nearly 29% while those older at 51-60 were about 26%. There were relatively young seaweed farmers, with about 37% belonging to either ages 21-30 or 31-40. This is an indication that seaweed farming has the capacity to attract relatively young people due to the profitability of the venture.

Also, seaweed farmers who finished elementary schooling constituted about 34% and those who were high school graduate at 31%. Nearly one-third of the total farmers obtained formal training in the technology aspect whereas two-thirds of them had no access to any training. Most farmers just relied heavily on keen observations and interactions with other well experienced farmers who were either close relatives, neighbors and/or friends in learning and adopting the seaweed farming practices. Out of the 11 farmers with formal training in seaweed farming, eight (8) farmers came from Poblacion Dos and three (3) farmers from Balitoc.

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Table 1. Socio-Economic Profile of Respondents (Calatagan, Batangas) Number Percent Share Sex Male 21 60% Female 14 40% Total 35 100% Marital Status Single 1 3% Live-in 0 0% Married 31 89% Widow 3 9% NA 0 0% Total 35 100% Age <20 0 0% 21-30 7 20% 31-40 6 17% 41-50 10 29% 51-60 9 26% 61-70 2 6% >70 1 3% Total 35 100% Highest Educational Attainment Elementary Undergraduate 5 14% Elementary Graduate 12 34% High School Undergraduate 5 14% High School Graduate 11 31% College Undergraduate 1 3% College Graduate 1 3% Total 35 100% Source: Calatagan, Batangas Seaweed Farmers’ Survey, 2013

5. Seaweed Farming. Farmers who had ten years or less in seaweed farming comprised 43% of the total seaweed farmers and those with 21-30 years at 28% (Farmers’ Seaweed Survey, May, 2013). Farmers having 11-20 years engaged in seaweed farming was about 26%. There were three (3) farmers with more than 41 year spent in seaweed farming.

The cultivated area in Calatagan, Batangas was a minimum farm area of 500 square meter per farmer and a maximum of 10,000 square meters per farmer (Farmers’ Seaweed Survey, May, 2013). The average farm area was 3,029 square meter per farmer. As the head of the family clan, some farmers managed his own farm and those of his immediate family members and close relatives owing to his knowledge, skills and experiences in seaweed farming. This was the reason seen why some farmers cultivated a farm size greater than what was allowed under the Municipal Fishery Code. In 1996, the local government unit of Calatagan, Batangas passed the Municipal Fishery Code which proclaimed that an individual can only obtain a permit to farm seaweeds for an area of only 2,000 square meters.

The farm produced a minimum of 36 kilograms dried and a maximum of 4,075 kilograms dried per cropping season (Farmers’ Seaweed Survey, May, 2013). Average production volume per cropping season was 2,055.5 kilograms dried form. Since production output was in dried form, farmers’ number of years in seaweed drying must be looked into. Farmers who had 6-10 years in seaweed drying comprised almost 28% of the total farmers (Farmers’ Seaweed Survey, May, 2013). This was followed by farmers 9

with just 1-5 years at 26%, indicating that many farmers have limited experiences in seaweed drying. In effect, farmers with less than 10 years in drying comprised 45% of the total farmers whereas those farmers with about 16-20 years constituted 17%. Longer experiences in seaweed drying helped farmers perform the right drying techniques as traders and processors shared information on quality of seaweeds with the farmers. However, this still called for training in both harvesting and post-harvesting techniques, particularly drying in order to meet or satisfy the quality requirements of the buyers (e.g. traders and processors).

6. Adoption Rate. Calatagan, Batangas contributed a great bulk to the seaweed production volume of the whole Batangas Province while the province itself had a share of 3.26% of the CALABARZON seaweed production volume (BAS, 2010). This share had declined further to 1.21% due to the effects of “ice-ice” disease, fish (“danggit”) grazing, epiphytes and polluted water released from nearby fishfarms. In contrast, the Quezon Province exhibited a share of 96.74% of total seaweed production in the CALABARZON and it even grew bigger to 98.78% in 2012.

At the start of the DOST-UNDP GAINEX Project, the said project had only 20 beneficiaries in Poblacion Dos but it had grown to almost 100 seaweed farmers in 2006 using the Bohol Sacol (brown and green varieties) and the modified seaweed farming technology (Edgardo Limoico, May, 2013). They also planted “lato”, the seaweed variety used as fresh salad. The recommended planting calendar was not followed since all adopted seaweed varieties were planted all throughout the year depending on the availability of seedlings. At present, seaweed farmers in the area propagate seedstocks during the months of May, June, July, August, October and November; while they usually harvest during the months of September to February. The Calatagan seaweed farmers do not propagate during the months of March to May due to high incidence of ice-ice disease during these months, though the current dominant strain (Cultivar H, Kappaphycus/ Bohol) was found suited for all year round planting and propagation. Indeed, they are mostly considered as “partial” adoptors since they failed to adopt the whole technology package.

Upon distribution of the seaweed stocks and farm paraphernalia by BFAR, seaweed farmers planted seaweed stocks for a month and then harvested and replanted for another month to produce more quality seedlings for the use of the farm. Actual production of seaweed in Poblacion Dos takes up to 45 days growing stage, followed by three-day harvesting and 5-7 day drying. The entire cropping season takes a total of 115 days, bringing the total number of cropping to about three times per year. If the seedlings were readily available, cropping seasons can be further stretched to 5 cropping seasons annually. Most of the seaweed farmers reported three (3) cropping seasons at 69%. Farmers who reported producing seaweed four times annually comprised roughly 9% whereas farmers who reported two (2) cropping seasons per year accounted for 20%. Hence, the seaweed farmers had not really realized the full production potentials of the farm due to lack of capital. They were heavily dependent on free seedlings and farm paraphernalia provided by BFAR Region 4-A.

7. Adoption Pathways. The adoption pathways were varied: a) 3-4 day formal trainings jointly conducted by BFAR 4-A, local government unit (LGU) and farmers’ cooperatives or associations; b) visit to MCPI facilities in Bohol as part of their training on the technology aspect; c) “peer influence” through keen observations and interactions with Mr. Limoico, nursery operators and other experienced seaweed farmers and farmers’ association members; d) visit of the international seaweed expert Mr. Doty in the mid-1980s who conducted seminars on seaweed farming; e) field visits of BFAR 4-A agricultural extension workers; seaweed specialists from the Municipal of Calatagan, Batangas; and seaweed barangay coordinator cooperating with BFAR 4-A among others. Based on the seaweed farmers’ survey, most farmers sourced the technology through peer influence (43%); a combination of training/extension and peer influence (11%); and training/extension (9%).

The farmers who were members of a local seaweed farmers’ associations accounted for only 37%. Most farmers failed to become active members of any local seaweed farmers’ associations due to unmet expectations that BFAR can supply the cooperatives with free seedlings and farm paraphernalia as a major benefit they will derive from such membership. Also, these associations tend to take inactive status

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when there was no supply of free seedlings available for distribution to the farmers. Such occurence was observed in Poblacion Uno and Balitoc, Calatagan, Batangas.

Most of the farmers did not attend any training on the technical aspects of seaweed farming at 69%. Farmers who attended one training comprised 28% and only one farmer attended two (2) trainings. Also, BFAR reproduced, packaged and distributed copies of fisheries and seaweed information, education and communication (IEC) materials to create awareness. To promote the Bureau’s programs and projects; they installed billboards while radio and informed the public of the latest development/issues besetting fisheries. However, the farmers did not have access to these learning resources.

8. Factors Contributing to Adoption. Key factors contributing to the adoption of the seaweed technology were high demand for the seaweed, increased quality and price of the seaweed and strong BFAR 4-A, LGU support and private sector (e.g. free seedlings and farm paraphernalia, and technical support). Kappaphycus and Eucheuma with high carrageenan content commands a better price in the market than the traditional varieties used in the area. This resulted to enhanced profitability of the seaweed farming as a business venture. Moreover, the availability of varieties which can be harvested and sold as fresh one month after planting (e.g., Sacol green and Caulerpa) in fresh form served as cash crop for most seaweed farmers.

However, the productivity of the seaweed in Calatagan, Batangas declined in the last three years (2010- 2012) due to reasons earlier presented. Sitio Layon, Balitoc farmers claimed harvesting a minimum yield of less than 20 kilos for the last three (3) years, 2010-2012. Balitoc and Poblacion Uno are nearest to the location of the fishfarms than Poblacion Dos. Some farmers would like to undertake deep-sea culture to help minimize the effects of “ice-ice” disease but they cope with financial constraints. Instead, they planted less quantities of seaweed and thus, avoided “overcrowding”, a condition which was leading to the spread of the disease. Also, Indonesia had already overtaken the Philippines as main producer of seaweeds in 2008 and the price of seaweeds from Indonesia, Malaysia and East Africa was about 20% cheaper than local prices of seaweed. Hence, local price of seaweeds declined as an offshoot of keen competition.

Constraints to adoption of the technology were lack of capital; inability to tap the full potentials of seaweed farming because of lack of economies of scale; low prices of seaweed due to keen competition and coping with environmental related problems/issues among others.

E. PROJECT OUTCOMES

1. High carrageenan content seaweeds and shorter production cycle. Through BFAR Region 4-A in coordination with the LGUs, fast growing cultivars of seaweed through strain selection and improved farming practices were being adopted in Calatagan, Batangas. The original seaweed of Calatagan, Batangas prior to the implementation of the project in 1997 was the Batangas strain of Kappaphycus alvarezii (N) with local names of either “kalabaw” or “tambalang” depending on the location of the farm.

With increasing global industrial demand, the Philippines can increase production of seaweeds by developing new strains of cultivable seaweeds and modifying culture practices. When Batangas strain succumbed to “ice-ice” disease in 2000s, Bohol Sacol strain (brown and green varieties), a fast growing seaweed variety with high carrageenan content was introduced by PCAMRD-MSI in Calatagan, Batangas. Bohol Sacol strain enhanced overall productivity and improved quality of seaweeds. In terms of growth rate, the Bohol Sacol strain grew faster than the “tambalang” strain. The native seaweed strain is ready for harvest after three (3) months or 90 days while the Bohol Sacol (green variety) is ready for harvest as short as 45 days and the Bohol Sacol (brown variety) after 60 days. Initially, farmers obtained a higher price for the seaweeds due to the high carrageenan content. For example, the “tambalang” variety was priced at a low rate of Php 5.00-8.00 per kilo dried form. In contrast, Bohol Sacol obtained a better price of Php 26.00 per kilo. Hence, the seaweed venture has become a sustainable alternate livelihood and a good source of supplemental income for small seaweed farmers.

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Currently, farmers grew Eucheuma cottonii which was the same variety produced by farmers of Indonesia. Indonesia expanded seaweed farming operations and increased supply of the seaweed in the global market. Indonesia has overtaken the Philippines in the world’s seaweeds market. Their success is attributed to full support from their government, a well-organized industry, presence of many country- based processors and cultural values formation. The entry of big volume of cheaper seaweeds from Indonesia recently depressed market price of dried seaweeds in the country.

In terms of diversifying into other seaweed varieties, the introduction of other varieties such as Gracilaria with assured market benefits for the seaweeds farmers. Gracilaria is a genus of red algae notable for its economic importance as an agarophyte, as well as its use as a food for humans and various species of shellfish. Gracilaria is used as a food in Japanese, Hawaiian and Filipino cuisine (e.g. gulaman).

2. Postharvest Practices. Good postharvest practices included cleaning of seaweed after harvest. Unwanted seaweeds, plastic straws, debris and other foreign materials were carefully removed. Particularly, impurities such as stones, sand, raffia, fish, shells, barnacles and crabs were not acceptable as these could easily damage processing equipment due to its abrasive properties (BAFPS). Clean seaweeds were much desired by overseas buyers and processors. Good quality fetches good prices in the market.

After cleaning, seaweeds are dried immediately. Under local conditions, seaweeds were dried under the sun (the cheapest method) for about 2-4 days (Seaweed Farmers’ Survey, 2013). In Calatagan, Batangas seaweeds were hang on top of a standing recycled bamboo rafts during the peak season to avoid contact with sand, dirt and other unwanted materials. However, during the lean season, they harvested only small amounts of seaweeds which they dried under the sun using black net placed at the ground (more susceptible to contacts with unwanted materials).

The moisture content is kept at 38% for longer shelf life and higher price. The actual conversion ratio of Kappaphycus from fresh to dried form was 10:1 since farmers harvested early and produced fresh and young seaweeds with lower carrageenan content. BFAR Region 4-A, however, indicated a conversion ratio of 7:1 using mature seaweeds with high carrageenan content. Using fresh young seaweeds, farmers failed to realize favorable price for their farm produce. Processors usually conducted laboratory tests to determine amount of carrageenan and subsequently, penalized the farmers for lower carrageenan content by adjusting the price downwards. However, they just paid on-going market price for seaweed varieties with higher carrageenan content (Dakay, Jr., Benson, Chief Procurement Officer, SHEMBERG Corporation, Cebu, 2013).

Using national parameters or standards, the Philippine National Standard (PNS) for RDS was prepared as part of the project of the Bureau of Agriculture and Fisheries Products Standards (BAFPS) with the Bureau of Agricultural Research (BAR) entitled “Quality Standardization on Selected Fishery Products” (Table 2).

Seaweeds were packed in empty rice sacks at P10.00 per sack or B-Meg sacks at P12.00 per sack (usually, 50-70 kilos per bag) which were kept dry and free from unwanted materials and organisms (Seaweed Farmers’ Survey, 2013). The seaweeds were also packed in sacks with fresh banana leaves underneath and on top of the sacks for cooling effects. For example, 20-25 kilos of “lato” per bag was packed in this manner. The packed seaweeds were stored in a safe, cool and dry place to avoid spoilage before transporting.

In transacting with traders, the farmers claimed that some traders used subjective judgment in assessing the quality of seaweed (Edgar Limoico, 2013). For example, the farmers were required to dry the seaweeds up to the desired 38° moisture content. However, based on traders’ assessment of quality, they either returned the seaweeds to the seaweed farmers for further drying or else, they seek reduction of two kilos (minimum) up to five kilos (maximum) from its weight before they agreed on final prices of seaweed. On the other hand, seaweed farmers had no means or resources to verify the results/outcomes of such quality evaluation. 12

Table 2. Specifications for raw dried seaweeds Criteria Kappaphycus spp. Eucheuma spp. Moisture content (MC), (% max) 40 35 Clean anhydrous seaweed (CAS), (% min) 47 52 Impurities, (% max) 3 3 Sand and salt, (% max) 10 10 Color Definitely not black Definitely not black Source: Philippine National Standards and Bureau of Agriculture and Fisheries Products Standards (BAFPS) 85:2010

Sometimes, seaweeds were properly dried on top of the sacks but still found wet at the bottom. Processors and traders required seaweed farmers to cut the sacks into half vertically in front of them to help detect the malpractice (Flora Limoico, a seaweed trader from Calatagan, Batangas, 2013). There were also some impurities such as sand and rocks that traders needed to remove. Consequently, trader reduces 2-5% from the weight as this situation necessitated hiring of additional labor to perform quality control. A trader hired a minimum of five (5) individuals at P300 per day to help clean the seaweeds of impurities.

In the past, traders were rather lax with quality control measures at the farm level that they were the ones penalized by the seaweed processors as weight deduction was actually experienced by the trader themselves depending on level of quality of the seaweeds. Currently, the traders encouraged the farmers to observe proper quality control techniques at the farm level, prior to bringing these goods to the traders. If the farmers observed the right quality, they would attain the desired level of profitability.

3. Farmers’ Acquired Knowledge and Skills in Improved Seaweed Farming. BFAR Region 4-A promoted and utilized improved seaweed varieties and the recommended seaweed farming methods in Calatagan, Batangas through its Seaweed Development Program (SDP). The seaweed production technologies were derived through sharing of valuable information and data from various sources such as UP MSI, PCAMRD, SEAFDEC and other industry stakeholders (e.g. SIAP, NGOs, LGUs, SUCs with marine divisions among others) during their active participation in annual national seaweed symposium.

The seaweed farmers in Calatagan, Batangas adopted the fixed off-bottom (for shallow water), floating raft and hanging long-line (for deep water) or a combination thereof (Table 3). Most farmers adopted both fixed off-bottom and floating raft at 74%; those who adopted all three cultivation method: fixed off-bottom, floating raft method and hanging long-line were about 11%; and those who adopted only fixed off-bottom were just 9%. The combination of fixed off-bottom and hanging long-lines garnered only 6%.

Farming in shallow waters is the simplest and the cheapest method to start with but it is more susceptible to "ice-ice disease" and grazing by small pelagic fishes. Increased production capacity and yield by farming in deep waters also bring about higher value of the seaweed species produced. One of the disadvantages is the higher start-up capital required.

Many farming areas had modified the culture methods to maximize the utilization of the area and to adapt to the farming environment (e.g. “modified” fixed bottom line, bamboo raft method and others). The changes are as follows: a) use of cheap and readily available soft plastic straws (to replace polyethylene rope) as main long line; use of empty plastic bottles (to replace plastic orange floats & styrofoams) as floaters; use of bamboo and ipil-ipil as wooden stakes; these materials are not found attractive to robbers; b) shorter lines of 10 meters for fixed bottom, instead of the 100 meters being utilized by Tawi-Tawi since the latter has expansive shallow and deep water suitable for seaweed farming; c) spacings between seaweeds and between lines depend on the growth characteristics of the seaweed ---the larger the seaweed, the wider is the spacing, ranging from 20 cm (“isang dangkal”) to 40 cm (“dalawang dangkal”); and d) they did not observe the recommended cropping schedule by PCAMRD-MSI but instead they produced Bohol Sacol in commercial quantities and Kappaphycus alvarezii (Batangas strain), Eucheuma denticulatum (known also as spinossum), and Caulerpa lentiferra (“lato”) in limited

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quantities. Most seaweeds were produced throughout the year, except during the summer months when hot temperature caused the prevalence of “ice-ice” disease.

A seaweed farmer described fixed bottom practices as having 20 lines, with 50 seedlings per line. Also, three lines are used as experimental or test plots. He also describes the raft/floating (“balsa”) method as: “The balsa dimension is 15 meters by 4 meters, with 12-14 lines and 37-40 seedlings per line. Farmers purchased 35 bundles (“bungkos”) of seedlings, with 20 seedlings per bundle, a total of available 700 seedlings for planting per cropping season. The spacing between plants is adjusted depending on the variety of seaweed used.” (Rolly Consul, a seaweed farmer and caretaker of Balitoc nursery operator, Mr. Pedrosa, May, 2013).

In selecting the site, water must be free from pollution to ensure the success of its operations (Rosella C. Lucero, April, 2013). In Calatagan, Batangas, releases of water wastes from nearby fish farms caused pollution of water and destroyed seaweeds (“nalulusaw”). As a consequence, the seaweed farmers reduced their production output in the shallow water in order to minimize further losses. Some produced seaweeds away from the shoreline using the raft method where water is less subject to pollution (Edgar Limoico,May, 2013).

Table 3. Cultivation Method, Calatagan, Batangas Number Percentage

Fixed off-bottom 3 9 Fixed off-bottom and Floating raft 26 74 Fixed off-bottom and Hanging long-line 2 6 Fixed off-bottom, Floating raft and Hanging long-line 4 11 Hanging long-line 0 0 Total 35 100 Source: Seaweed Farmers’ Survey, May, 2013.

To help control “ice-ice” disease, farmers undertake the following measures: a) submerge the lines under water so as not to expose the seaweeds to direct sunlight; b) cut the infested portion of the seaweed and dispose these properly; c) establish experimental lines (3-4) to test water quality in the area and to observe growth response of seaweed before actual planting; d) avoid “overcrowding” as such practice occur in July, the start of the peak season---this caused “ice-ice” disease to multiply rapidly; e) procure healthy seaweed seedlings from neighboring barangay; f) transfer surviving seaweeds from infestation to areas with moderate waves and windy, wild vegetation and rocks/stones under the sea; g) engage in deep sea culture for those who can afford making investments among others.

Improved seaweed farming practices included the proper selection of protected habitats (e.g. free from pollution, of suitable hydrographic environments. The use of plastic bottles is a method that have been used to keep seaweed called Euchema and Kappaphychus alvarezii afloat and protected from predatory fish, sea urchins and other pests and parasites. Also, transplanting of the germlings must be handled with care and harvesting carried out in such a way as to maintain peak productivity. In effect, a seaweed farmer must have adequate knowledge of the plant's biology and reproduction as a fundamental prerequisite to successful seaweed cultivation.

4. Government Policy and Private Sector Supports the Growth of the Local Industry. Seaweed farming is being developed as an alternative livelihood to fishing, main economic activity of the area. In the past, they overexploited the fishing resources and as a dire consequence, they experienced low harvest of fishes and were more than willing enough to diversify into seaweed farming for more lucrative economic opportunities. As a socially and economically acceptable policy, it uplifts the socio-economic status of small-scale fishermen. Simultaneously, this measure would help remedy the depletion and destruction of marine resources over the long run.

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The development of seaweed farming increased socio-economic status of fishermen, reduced fishing pressures on the natural environment and improved resource status. From mere collecting of seaweed stocks from the wild and causing depletion of natural resources, they successfully established seaweed nurseries and sold the bulk of the seaweed seedlings to the seaweed farmers at low prices and kept some portion of the harvest for their own use. Through the concerted efforts of BFAR Region 4-A, the improved seaweed varieties and farming practices were utilized in Calatagan, Batangas and then were being spread to other nearby provinces and municipalities (e.g. seaweed farming areas/sites within Batangas and Quezon province) through BFAR’s SDP.

Seaweed was also an OTOP (One-Town, One Product) that was being aggressively promoted and marketed to local and foreign tourists visiting the country, particularly in Calatagan, Batangas. With the full support of the LGUs, income generated from processing of seaweeds (e.g. fresh salads served in local eateries) would help sustain seaweed farming over the long-run.

In the national level, DA-BFAR has allotted an initial budget of Php265 M in 2013 for the country’s seaweed industry in order to regain its distinctions as the world’s top seaweed and carrageenan producer (Philippine Information Agency, November, 2012). This amount is more than six times the current 2012 seaweed budget of Php 40.8 M, aiming to attain growth of at least 10%. About Php 232.7 M will be spent to provide technical training and input assistance to the seaweed farmers such as purchasing and distributing quality and disease-free seaweed plantlets or propagules to the farmers. DA-BFAR will also cooperate and collaborate with SUCs to produce tissue-culture seaweed plantlets or propagules to be distributed to the seaweed farmers. The rest of the budget will be spent for infrastructure and postharvest facilities (Php 22.3 M) and for establishment and maintenance of seaweed nurseries (Php 8.6 M). In relation to this, a long-term comprehensive industry plan or roadmap needs to be formulated by joint efforts of DA-BFAR and SIAP and reviewed and updated every six months.

DA-BFAR in partnership with seaweed farmers, SIAP and other industry stakeholders intends to expand seaweed hectarage, from the current 56,600 hectares which is merely 23% of total potential area of 255,000 hectares to help boost seaweed production and reduce huge importation from Indonesia which tends to depress local seaweed prices.

Edgar Limoico of Poblacion Dos, Bibian Perado of Poblacion Uno and Alfredo Pedrosa III, SIAP treasurer, nursery operator and trader of Balitoc in Calatagan, Batangas operated the existing seaweed nurseries in these areas. The gene bank remained with UP MSI but it housed only limited seaweed seedlings which were used primarily for laboratory experiments. The stocks were no longer intended for distribution to the public such as BFAR Region 4-A and small-scale seaweed farmers. In 2012, a new seaweed project headed by Dr. Edna Fortes had more complete assortment of different types of “healthy” seaweeds and was working on spores production, a sexual reproduction of seaweeds. The quality of the seaweed is found to be of higher quality than those reproduced by branching, asexual method. Seaweeds produced by branching performed well in 2-3 cuttings only (Dr. Edna Fortes, April 4, 2013).

Instead of rehabilitating the seedling banks in Calatagan, Batangas, BFAR opted for distribution of seaweed seedlings as production support and assistance to the seaweed farmers due to the high costs of investing on seedling banks (Rosella C. Lucero, April, 2013). In short, seedling banks were earlier established, but were not sustained due to lack of funds and unfavorable weather conditions.

Other barangays such as Poblacion Uno also established nurseries with the assistance and support of BFAR Region 4-A and the LGUs. About 75% of the nursery output was sold to BFAR Region 4-A for distribution to seaweed farmers and the remaining 25% were for their own use. Seaweed nurseries also served as technology demonstration farms where nursery operators acted as resource persons in seaweed farming within the community and nearby baranggays.

BFAR Region 4-A also provided technical and advisory services to the seaweed farmers through actual inspection of the seaweed farm and using modern communication technologies. As keenly observed, Calatagan farmers have already the needed knowledge, skills and experiences in seaweed farming 15

(Rosella C. Lucero, April, 2013). Technology trainings used to be conducted on a quarterly basis during the initial implementation of the seaweed project , then it was reduced to two trainings (biannual) up to the current undertaking of only once a year training (annual) or upon request by the LGUs and other industry stakeholders. Clearly, seaweed farmers needed updating on improved farming practices and acquiring new skills on postharvest technology and seaweed processing.

F. PROJECT IMPACTS

1. Socio-Economic Dimensions of Seaweed Farming. Unlike other forms of aquaculture, seaweed farming has minimum technological and capital requirements in establishing and managing a seaweed farm. In addition, production cycles are rather short, normally lasting less than two months. Given these unique characteristics, seaweed farming has generated substantial socio-economic benefits to marginalized coastal communities in the country. a. Profitability. In terms of profitability, the seaweed farming cost and investment is low and return on investment is high and hence, it is considered a lucrative business. The farming of the seaweed Kappaphycus does not require intensive capital and has fast turnover. Also, the family labor is gainfully employed. One quarter hectare can generate an annual income of 300,000 peso ($6,113) at an investment cost of 80,000 peso producing 1,000 kgs per cropping within a 60-day cycle (SIAP). Seaweeds from open coastal waters gave an average yield of 42.05 tons/ha.

The average share of total income of farmers from seaweed farming is a substantial share of 50% of the total annual household income in Calatagan, Batangas. Balitoc and Poblacion Uno had higher share of 67% and 61%, respectively. Poblacion Dos had the lowest average share of total income at 44%. Other sources of income come from fishing; other crop farming of coconut, rice and corn; and livestock raising for agri-related sources; and public/private employment and business for non-agri related sources.

Seaweed farmers encountered numerous challenges in seaweed farming like polluted water released from nearby fish farms; infested with “ice-ice” disease; small fishes (“danggit”) that fed on seaweed; and epiphytes among others. Hence, income from seaweed farming from the past 3 years was not reliable with annual income ranging from a minimum of Php 2,400.00 annually to a maximum of Php 330,000.00 annually. Balitoc who garnered the highest income from seaweed farming was almost triple to those of Poblacion Uno. Poblacion Dos got the lowest income from seaweed farming among the three (3) barangays under study but the highest one, in terms of generating income from other agricultural sources, with fishing as the most common alternative source of income. The seaweed farmers who resorted to fishing during lean season constituted nearly 66%. Seaweed farmers also obtained their income from public/private employment (e.g. government and micro-finance business) at 11% whereas those who have his/her own business (e.g. sari-sari-store) at 3%.

The socio-economic impacts of seaweed farming on coastal communities have been positive. The production model of the seaweed farming favors small-scale, family operations over corporate, plantation- style farms and thus, it generates substantial employment (e.g. mothers were in-charge of marketing seaweed; children helps in the maintenance of the seaweed) relative to other forms of aquaculture. In addition, seaweed farming is often undertaken in remote areas where coastal communities face a reduced number of economic alternatives. Traditionally, these communities have been dependent and reliant on coastal fisheries and are currently being adversely affected by overexploitation of these resources. More so, economic benefits from seaweed farming derived by seaweed farmers and the communities also reduce the incentives for overfishing.

Seaweed farming, together with main fishing activities, had transformed the economic fortunes of coastal communities in Calatagan, Batangas, starting with Baranggay Dos. Many of these communities routinely lived at or below poverty levels prior to engaging in aquaculture. With their incomes earned from the sale of seaweeds and other fisheries, many farmers have experienced substantial improvements in their standards of living as they are able to send their children to school, introduce improvements to their dwellings, enhance their diets, increase their purchasing power of material goods, acquired assets like 16

housing, vehicle and appliance among others (Seaweed Farmers’ Survey, 2013). In particular, seaweed farming has had a remarkably positive effect on the socio-economic status of female farmers as it allows them to engage in an income-earning activity that can be undertaken without neglecting traditional household chores. b. Employment. At the farm-level, about two to three family members were actively participating in seaweed farming. The head of the family is the one directly involved in seaweed farming, from procurement of seedlings, seedling production, planting, maintenance, harvesting to drying. Normally, the women attended to the marketing tasks. The farmer’s house was adjacent to the seaweed farming area, just a walking distance so that women still were able to attend to the needs of the family. Elder children provided their support in production and marketing of activities but only those tasks appropriate to their age. They hired labor for planting, harvesting and drying activities because these were considered as labor-intensive tasks.

Around 200,000 families, or 1.2 million individuals, are currently engaged in seaweed farming in the country. The Department of Agriculture (DA) identifies 255,000 hectares nationwide as potential seaweed farms. BFAR, in partnership with SIAP, is expanding seaweed hectarage. Major seaweed producers are Tawi-Tawi, Sulu and Sarangani, which harvested a total of 686,450 MT in 2011. It is now emerging to be an important and major livelihood in the coastal areas, particularly in the southern Philippines. c. Seaweed Farmers’ Associations. Two seaweed farmers’ associations were established in Calatagan, Batangas: The Batangas Seaweed Farmers’ Association (BASEFA) in Poblacion Dos and the Barangay Uno Seaweed Farmers’ Association. These associations were established primarily to avail of financial and in-kind assistance from R&D projects and government agencies such as UP MSI, PCAMRD and BFAR. The services of these associations later on expanded to include: a) credit; b) marketing support; c) better pricing (with a Php 2.00/ kg price premium to output of members). Members paid a fee of Php200 for lifetime membership. BASEFA initially had 10 members then eventually increased to 35 members, including ex-officio (non-seaweed farmers) of about 10. d. Agri-related Enterprises. In Calatagan, Batangas, the gatherers of seaweed seedlings were substantially reduced and many seaweed farmers with technical competencies developed from technology trainings and technical/consultative services begun to establish seaweed nurseries. Many fishermen were motivated to engage in seaweed farming since seaweed seedlings and farm paraphernalia were distributed to them, through BFAR Region 4-A and the farmers’ cooperatives/associations. In addition, they also realized that they were earning additional income both from seaweed farming and operating seaweed nurseries. However, they still engaged in fishing as they face uncertainty and risks in seaweed farming. e. Production Volume

Calatagan, Batangas. Calatagan is the major seaweed producing area in Batangas. In 1996-2001, Batangas posted an AAGR of 35.26%, from 182 MT in 1996 to 567 MT in 2001 (BAS, 2012). This period coincided with the implementation of the DOST-UNDP GAINEX Project in 1997-2001. After the project, productivity declined by almost 92.85% in 2002 (Table 4). Perhaps, this could be attributed to the prevalence of “ice-ice” disease that adversely affected the overall health and the productivity of the seaweed.

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Table 4. Production Volume for the CALABARZON: Batangas and Quezon, 1996-2012. 1996 1997 1998 1999 2000 2001 2002 2003 2004 CALABARZON Batangas 182 178 139 130 391 567 294 625 591 Quezon - - - - 20,100 22,350 25,003 29,353 24,847 TOTAL 20,491 22,917 25,297 29,978 25,438 2005 2006 2007 2008 2009 2010 2011 2012 Batangas 526 703 982 869 1,410 1,451 1,370 548 Quezon 23,328 27,002 25,599 43,311 59,581 42987 45,462 44583 TOTAL 23,854 27,705 26,581 44,180 60,991 44,438 46,832 45,131 Source: Bureau of Agricultural Statistics, 2002-2012.

Seaweed farming in Batangas recovered in the next 10 years, exhibiting an AAGR of 15.59% in 2001- 2010. This performance was attributed to the efforts of BFAR Region 4-A as they distributed seaweed seedlings and farm paraphernalia to the small-scale farmers at the start of the seaweed cropping season. Then, the productivity declined to almost 54.92% annually in the last three years from 2010 to 2012 for reasons earlier presented (FGD of six seaweed farmers in Baranggay Balitoc, Calatagan Batangas, May, 2013).

The average production of seaweeds per hectare for a 45-day cropping period is about 26,000 kilos or about 5,200 kilos for one-fifth hectare (2,000 square meters). Given the farmers’ average yield of 2,055.5 kilos per cropping season, the technical efficiency ratio was pegged at 39.52% (using manual computation). Based on the maximum value of 4,075 kilograms per cropping season, the efficiency ratio was calculated at 78.36% but this farm performance was achieved only by few well-experienced seaweed farmers.

The Country’s Production Volume. Based on BFAR data in 1989-1996, the seaweed industry contributed an average of 47% share to the aquaculture production and an average of 14% to the whole fisheries sector of the country. The seaweed industry continued to grow as it increased to an average of 70% to the aquaculture production and an average of 25% to the whole fisheries sector from year 1997- 2002. In 2003-2010, the seaweed industry maintained an average of 70% for its contribution to the aquaculture division, and grew an average of 32% to the whole fisheries sector.

In the national scale, the seaweed industry has been doing a remarkable performance for the past years. Production reached 1,801,271 MT as the industry’s highest last 2011. As shown on Figure 1, there has been a general steady increase in production. This can be attributed to high market demand, good quality of produce, and assistance from both the government and private sectors to the industry. Farmers were even more encouraged to expand their areas of seaweed culture due to various interventions like distribution of good variety of cultivars and quality planting materials, enhancement program and technical assistance, and financial support from local traders (BAS, 2006). Increasing production can also be attributed to the growing demand for seaweeds and carrageenan in the international market.

In 1989-1996, AAGR for the local seaweed production posted 15%. The high jump from 1995’s 466,054 MT to 658,114 MT of 1996 local production caused a 41% AAGR. However, AAGR decreased to 5% in 1997-2002. Though production is still growing, there has been a slow increase in production during those

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Figure 1. Local seaweed production trend (Source: BAS and BFAR) years. The continuing increase of production during this period is attributed to the good quality produce which is caused by proper propagation and culture method, continued distribution of good variety cultivars, financial support from local traders, and programs and technical assistance from different LGUs and agencies like BFAR.

In 2003- 2010, local seaweed production posted an AAGR of 9% which was higher from the 5% in 1997- 2002. The rise in production was attributed to the continuous distribution of quality planting materials from the many established seaweed nurseries of the BFAR.

However, production is presently declining. In 2012, the country produced seaweeds at 1,751,070.64 MT which was 4.88% lower than 2011(BAS, November, 2012). The industry is facing problems that can be attributed to scarcity of quality seedlings, deterioration of quality seaweeds, inconsistency of the quality because the fisherfolk add foreign object (e.g. salt) to gain more weight, poor peace and order situation in seaweed-producing areas, diseases affecting seaweeds like “ice-ice” and epiphytes, erratic weather conditions like typhoons and extreme hot temperature, lack of financial assistance and R&D programs, and increasing competition in Eucheuma production with other countries such as Indonesia and China. f. Export Volume and Values. The trend of Philippine seaweed export had been erratic for the past years. It posted a 56,000 MT as its highest on year 2000 and showed a decreasing trend since that year. Export started to increase again on 2009 but still way below the 2000 volume of export of carrageenan, mainly to the USA, China and France.

Seaweed is exported in either raw form (fresh or dried seaweeds) or processed form (carrageenan and kelp powder). The country exported commercial quantities of seaweeds worth $ 155.6 M in 2010, making it the world’s top producer of semi-refined food-grade carrageenan, alkali treated chips and raw dried seaweed and the fourth biggest producer of refined carrageenan which are exported to the United States, Europe China, France, Hongkong and Thailand, mainly 75% is carrageenan (Philippine Information Agency, November, 2012).

However, the Philippine seaweed production is not enough for the growing world demand for seaweeds. China is one of the country’s top competitors for processed seaweed products as it buys raw materials 19

from the Philippines and Indonesia, and processes imported seaweeds into carrageenan but sells products cheap in the global market.

Indonesia is also the country’s keen competitor as it produced 2.79 million MT in 2009 which is 60% more than our annual output of 1.75 million MT. The country’s carrageenan processors are now importing up to 60,000 MT of dried seaweeds from Indonesia to meet or satisfy global demands. In terms of potential farm area, the Philippines only has 7,100 islands which is far from Indonesia’s 17,000 islands. At present, Indonesia only farmed less than half of its islands with more potential to grow in the near future.

2. Environmental Impacts. Prior to the implementation of the UNDP-GAINEX Project, the supplies of seaweed stocks were sourced from the wild and multiplied in the seaweed farms. This caused rapid depletion of seaweed resources in its natural environment since many farmers engaged in seaweed farming due to the profitability of the seaweed venture. Through the project, seaweed farmers adopted improved seaweed stocks and a system of farming management practices. In addition, BFAR Region 4-A currently collects from seaweed producing areas located in the other provinces. These were multiplied in the BFAR supervised seaweed farms or established private nurseries and the farm output was distributed to the seaweed farmers under BFAR Seaweed Dispersal Program. Hence, rational collection of wild stocks was now being undertaken to help ensure equitable access to the use of the coastal resources.

The clearing of the area before building of the support systems (e.g. establishing stakes and lines) in the shallow areas using fixed off-bottom method caused “initial” negative impact on the site. However, the original abundance of flora and fauna quickly recovered during the succeeding days after planting so that such impact can be categorized as “minor” and “temporary” issue.

In the case of Calatagan seaweed farmers, they experienced high productivity initially. The high production of these farms attracted more farmers to engage in seaweed farming into the same area due to profitability of the venture. This resulted in “overcrowding” (technically speaking, this was intensified farming in a limited area), exceeding the carrying capacity of the environment and changes in the overall hydrology of the farm sites may impact on other species. This also adversely affected current and/or wave action (less moderate) and the transport of nutrients to the crop in the same area. This condition resulted to the poor nutrient absorption and lower growth rates of the crop. Also, elevated seawater temperature occurred when water movement was significantly reduced due to overcrowding. The occurrence of “ice- ice” disease and epiphytes in the area was attributed to the rise of seawater temperature during the day when high irradiance prevailed.

Assessing further impacts of improved seaweed farming, it appears that biodiversity is enhanced in farmed areas. Seaweeds manifest high growth rates in areas where favorable environmental conditions are continuously sustained all throughout the cropping seasons. These form thick ground cover as their populations increase, serving as a habitat and feeding ground for associated fauna such as fish, invertebrates and other seaweed species. The farm support system also provides additional substrate on which the associated seaweed species grow.

In 2012, heavy rains and floods due to typhoons “Ferdie” and “Gener” and southwest monsoon had caused tremendous fish losses reaching more than P 387 M (The Fish Site, August 13, 2012). This had adversely affected about 3,000 fishers and fishpond operators who were also engaged in seaweed farming. In Region 4-A, total damage was P 14.9 M, broken as follows: P7.8 M worth of fish lost and P6.5 M worth of facilities including 169 units of boats and bancas. Specifically, in Batangas, the monsoon rains also affected 115 seaweed farmers in Calatagan as 30,000 kilos of seaweeds and bamboo rafts were swept away by strong waves or “storm surge”.

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INPUTS (R&D PROJECT Cash and in-kind expenditures)

DOST-UNDP GAINEX Project PCAMRD-UP MSI Biotechnology BFAR Seaweed Development (1997-2001) Project Program (2003-2005) (1996-present)

R&D PROJECT OUTPUTS

TECHNOLOGY Capacity built Policy Seaweed gene & seedling banks Improvements/ changes in skills, Information/ knowledge, Seaweed nurseries attitudes, and scientific models and framework for Superior seaweed cultivars knowledge policy and decision making Improved farming techniques & Facility upgrading postharvest practices

ADOPTION PATHWAY

Seminars/ Trainings/ Extension Farm visits Peer influence 3-4 day formal trainings (by BFAR 4- Visit to MCPI facilities in Bohol as Seedling bank operators A, LGU and farmers’ coops/ part of training on the technology Nursery operators associations) aspect Other experienced farmers in the Field visits by BFAR, LGU-MAO community extensionists

PROJECT OUTCOMES

Changes in quality Changes in practices Changes in policy -High carageenan content ● Adoption of new cultivars ● Seaweed farming as alternative livelihood program -Shorter production cycle ● Improved seaweed farming techniques ● Strong government support -Initially increased prices ● Improved postharvest practices ● Seaweed as OTOP

PROJECT IMPACTS

Micro (Farm Level)

ECONOMIC Social Environmental Increased production volume Improved standard of living Adoption of improved stocks and farming system Increased farm income/ profitability Increased purchasing power Reduced collection of seedlings from the wild Acquisition of farm assets (e.g., boats) Acquisition of assets (e.g., vehicle, appliances) Agri-related enterprises (e.g., nursery) Involvement of female and elder children Diversification and intercropping Sharing of knowledge and skills by experienced farmers Development of entrepreneurial skills

Meso (Community Level)

ECONOMIC Social Environmental More jobs generated due to expansion of seaweed Increased number of farmers’ associations (Pob. Uno & Seaweed as an organic crop hectarage Dos) Enhanced biodiversity More local production and supply of seaweeds Increased activities of associations Overcrowding of seaweed farms Keen competition and competitive prices Incidence of thievery Use of recycled bottles Trading of highly diversified seaweed cultivars Increased social activities (e.g., drinking sessions) Use of non-biodegradable plastic straw

Sector (Industry Level)

- Increased production volume and value - Increased export volume and value - Government intervention initiatives and strategies - Active participation of SIAP in developing the industry

21 NET BENEFITS

Figure 2. Impact Assessment Framework 4.7. PROJECT BENEFITS

4.7.1. Benefit-Cost Analysis of the Seaweeds Seed Stock Improvement in Batangas

Inputs. The input cost is a critical factor to consider in the Benefit-Cost Analysis (BCA). Inputs are not limited to cash costs incurred by the project proponent. It also includes all in-kind costs contributed by key stakeholders in the project. The initial work on research and development of the Seed Stock Improvement Project was financed primarily by UNDP and PCAMRD. However, a significant investment on extension activities and other forms of technical assistance was also made by BFAR.

A substantial part of the expenditures on this technological intervention was used in the production, testing and distribution of seaweeds seed stock in major seaweed-producing regions in the Philippines. There were also investments in laboratory facilities and capacity building. The estimate of the investments made by BFAR was derived from its total national budget for the SDP. The allocation of Batangas from the national budget was assumed to be 0.64%. This percentage represents the share of Batangas in the total national seaweed production volume. For the UNDP and PCAMRD investments, it was assumed that each project site has an equal share in the total budget of the Seed Stock Improvement Project. Furthermore, it was assumed that 75% of the project funds is contributed by UNDP and the rest are provided by PCAMRD. Table 5 shows the total nominal value of the investments made for this project. These nominal input costs were converted to year 2012 real values using the Philippine GDP Deflator (Table 6). After the real input costs were estimated, it was compounded to year 2012 using a compounding rate of 5%.

Outcomes. The technological intervention creates changes to the industry if it is adopted by the target user population. The aim of the Seed Stock Improvement Project is to find the most appropriate seaweed cultivar that will become productive in the project site. Though the Cultivar N of Eucheuma cotonii has been the traditional variety being used in Batangas, the R&D intervention revealed that Cultivar H would be more productive. Of course, the farmers will accept the technological intervention if they see the economic benefits. Based on the survey conducted by the research team in Calatagan, Batangas, all farmers in the study site are currently using the Cultivar H. The clear advantage that was seen by the farmers is the significant reduction in the length of the growing period. It would take 90 days to grow Cultivar N. However, the newly introduced variety has a growing period of 45 days only. Because of the shorter period, the farmers were able to significantly reduce labor costs. To quantify this benefit, the gross margin of a 2,000 square meter seaweed farm using Cultivar N and H were compared. The assumptions used in this analysis were based on field survey and secondary sources (Table 7). Table 8 presents the reduction in production cost per kg. of dried seaweeds. It is apparent that Cultivar H could reduce the production cost by approximately Php 4/kg of dried seaweeds produced. At a farm gate price of Php30.kg, the k-shift is 14.32%.

As mentioned earlier, adoption is necessary to realize the benefits from a technological intervention. At Calatagan, Batangas, all farmers have adopted the new cultivar. The adoption started as early as year 2000. However, 100% adoption was achieved only in year 2006.

Impacts. The impact of the project was measured using the standard economic welfare analysis. Aggregate benefits at the sectoral level are commonly measured using this approach. It is a relatively simple way to determine the value of research interventions. The key concepts in the economic surplus method are the supply and demand. The method involves understanding the producer’s production costs and the consumer’s consumption values. All of these analyses are based on the assumption that the economy is in equilibrium. Consequently, quantities and prices at equilibrium are used as a basis for measuring shifts in the supply and demand curves. Of course, the market is never in equilibrium. Hence, the current quantities and prices were used in this analysis.

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Table 5. Investments on the Seedstock Improvement Project in Batangas Nominal Value of Investments Real Value Present Value (2012) Year UNDP PCAMRD BFAR TOTAL TOTAL (Php) TOTAL (Php) 1997 428,940.79 25,618.18 454,558.97 1,048,449.20 2,179,650.59 1998 428,940.79 45,390.92 474,331.71 893,969.63 1,769,998.71 1999 428,940.79 59,088.83 488,029.62 862,959.62 1,627,239.08 2000 428,940.79 142,980.26 85,547.96 657,469.01 1,099,776.23 1,975,040.10 2001 428,940.79 142,980.26 104,483.98 676,405.03 1,071,962.97 1,833,420.46 2002 142,980.26 143,099.68 286,079.95 435,261.35 708,994.87 2003 165,585.63 165,585.63 244,118.12 378,707.33 2004 217,721.52 217,721.52 304,198.33 449,439.48 2005 244,118.12 244,118.12 322,295.92 453,502.72 2006 304,198.33 304,198.33 382,677.72 512,824.75 2007 322,295.92 322,295.92 393,290.32 501,949.19 2008 382,677.72 382,677.72 434,195.20 527,766.98 2009 393,290.32 393,290.32 434,195.20 502,635.22 2010 434,195.20 434,195.20 459,934.25 507,077.51 2011 256,000.00 256,000.00 260,608.00 273,638.40 2012 256,000.00 256,000.00 256,000.00 256,000.00 TOTAL 2,144,703.95 428,940.79 3,439,312.31 6,012,957.05 8,903,892.07 14,457,885.38

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Table 6. Philippine GDP Deflator for the Period 1997-2012 Year GDP Deflator (Base Year: 2000) GDP Deflator (Base Year: 2012) 1997 72.52 43.36 1998 88.75 53.06 1999 94.60 56.55 2000 100.00 59.78 2001 105.55 63.10 2002 109.94 65.73 2003 113.46 67.83 2004 119.72 71.57 2005 126.70 75.74 2006 132.97 79.49 2007 137.08 81.95 2008 147.43 88.13 2009 151.52 90.58 2010 157.91 94.40 2011 164.32 98.23 2012* 167.27 100.00 Source: FAO (2013) *Derived using GDP Deflator % increase from BSP (2013)

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Table 7. Financial and Technical Assumptions Parameters Cultivar N Cultivar H Source Size of farm (square meter) 2,000 2,000 Field survey (2013) No. of croppings per yer 3.00 3.00 Field survey (2013) Amount of Eucheuma seedlings per yer (kg) 500.00 500.00 Field survey (2013) Price of seedlings (Php/kg.) 10.00 10.00 Field survey (2013) Amount of dried seaweeds harvested per yer (kg.) 2,200.00 2,200.00 Field survey (2013) Price of dried seaweeds (Php/kg.) 30.00 30.00 Field survey (2013) Labor per year Planting (no. of man-days) 1.50 1.50 Field survey (2013) Cleaning/ Maintenance (no. of man-days) 75.00 45.00 Field survey (2013) Harvesting (no. of man-days) 2.25 2.25 Field survey (2013) Drying and Packing (no. of man-days) 5.25 5.25 Field survey (2013) Labor cost (Php/man-day) 300.00 300.00 Field survey (2013) Materials Qty. of stainless steel knife 1.00 1.00 DTI (2009) Cost of stainless steel knife (Php/unit) 150.00 150.00 DTI (2009) Qty. wooden basket 5.00 5.00 DTI (2009) Cost of wooden basket (Php/unit) 100.00 100.00 DTI (2009) Qty. of nylon rope (no. of roles) 21.00 21.00 Field survey (2013) Cost of nylon rope (Php/unit) 72.00 72.00 Field survey (2013) Qty. of plastic straw (no. of roles) 10.00 10.00 Field survey (2013) Cost of plastic straw (Php/unit) 75.00 75.00 Field survey (2013) Qty of empty sacks 5.00 5.00 Field survey (2013) Cost of empty sacks (Php/unit) 10.00 10.00 Field survey (2013) Qty. of anchor bar 12.00 12.00 DTI (2009) Cost of anchor bar (Php/unit) 70.00 70.00 DTI (2009) Qty. of bamboo poles 30.00 30.00 Field survey (2013) Cost of bamboo poles (Php/unit) 100.00 100.00 Field survey (2013) Repair and maintenance cost 2,000.00 2,000.00 DTI (2009) Contingency (% of total costs) 5% 5% DTI (2009) Dugout banca (Php) 8,000.00 8,000.00 Field survey (2013) Average useful life of dugout banca (years) 5.00 5.00 Field survey (2013)

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Table 8. Gross Margin of Seaweeds Production per Year Cultivar N Cultivar H 3 Croppings 3 Croppings Revenue 66,000.00 66,000.00 Operating costs Seedlings 5,000.00 5,000.00 Labor 25,200.00 16,200.00 Materials 6,802.00 6,802.00 Depreciation 1,600.00 1,600.00 Repairs and maintenance 2,000.00 2,000.00 Contingency 2,030.10 1,580.10 Total costs 42,632.10 33,182.10 Operating Profit 23,367.90 32,817.90

Production cost/kg. 19.38 15.08 Reduction in production cost per kg. 4.30 k - shift 14.32%

The change in economic surplus is the measure of the social benefits generated by the research intervention. In other words, the total economic surplus (consumer surplus + producer surplus) becomes the measure of an RD&E investment’s impact. For this analysis, the assumptions listed in Table 9 were used. By using data on input costs and adoption rates presented earlier, the estimated welfare gains were computed (Table 10).

Estimates for year 2013 to 2023 were based on forecasted input costs and adoption rate. It was assumed that BFAR will continue to invest annually a real cost amounting to Php 0.56 million starting 2013 in Calatagan, Batangas. This amount is the average investment cost of BFAR, PCAMRD and UNDP from 1997 to 2012. The adoption rate, on the other hand, was assumed to remain at 100%. The BCA shows that the Seed Stock Improvement Project in Calatagan, Batangas created positive return to the investment of UNDP, PCAMRD and BFAR. The NPV of Php49.98 million and IRR of 20.52% imply good use of the Philippine Government’s limited resources.

Table 9. Assumptions Used for the Welfare Analysis Value Source Discount Rate 5% PCAARRD (2012) Farmgate price of dried seaweeds (Php/kg) 30 Field Survey (2013) Price Elasticity of Demand -0.5 Mills (1998) Price Elasticity of Supply 0.5 Mills (1998) Volume of seaweeds production (dried) in kg. 547,860 BAS (2013)

However, it is important to take note that a number of assumptions were used in this analysis. Changes in these key assumptions may lead to changes in the final result. To address this issue a sensitivity analysis was conducted to see how the financial indicator will change as some assumptions are changed. The result of the sensitivity analysis is presented in Table 11. It is apparent that the analysis consistently reported positive returns on the investments even if the k-shift, investment costs and time-horizon are changed.

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Table 10. Welfare Gains from Seedstock Improvement in Batangas Potential Welfare Gains Adoption Estimated Welfare Gains Net Real PV of Net Real Year Rate Benefits Benefits Real Investment Producers surplus Consumers Surplus Total Surplus Producers surplus Consumers Surplus Total Surplus (in million Php) (in million Php) (in million Php) (in million Php) % (in million Php) (in million Php) (in million Php) (in million Php) (in million Php) 1997 1.05 1.2 1.2 2.4 0.0% 0.000 0.000 0.000 (1.05) (2.18) 1998 0.89 1.2 1.2 2.4 0.0% 0.000 0.000 0.000 (0.89) (1.77) 1999 0.86 1.2 1.2 2.4 0.0% 0.000 0.000 0.000 (0.86) (1.63) 2000 1.10 1.2 1.2 2.4 1.0% 0.012 0.012 0.024 (1.08) (1.93) 2001 1.07 1.2 1.2 2.4 15.0% 0.180 0.180 0.359 (0.71) (1.22) 2002 0.44 1.2 1.2 2.4 30.0% 0.359 0.359 0.719 0.28 0.46 2003 0.24 1.2 1.2 2.4 45.0% 0.539 0.539 1.078 0.83 1.29 2004 0.30 1.2 1.2 2.4 60.0% 0.719 0.719 1.437 1.13 1.67 2005 0.32 1.2 1.2 2.4 75.0% 0.898 0.898 1.797 1.47 2.07 2006 0.38 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 2.01 2.70 2007 0.39 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 2.00 2.56 2008 0.43 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.96 2.38 2009 0.43 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.96 2.27 2010 0.46 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.94 2.13 2011 0.26 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 2.13 2.24 2012 0.26 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 2.14 2.14 2013 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.75 2014 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.67 2015 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.59 2016 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.51 2017 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.44 2018 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.37 2019 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.31 2020 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.24 2021 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.19 2022 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.13 2023 0.56 1.2 1.2 2.4 100.0% 1.198 1.198 2.395 1.84 1.08 Perpetuity 11.13 23.95 23.95 47.9 100.0% 23.954 23.954 47.909 36.78 21.50 Net Present Value Php49,976,179.06 Internal Rate of Return 20.52%

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Table 11. Sensitivity Analysis of the Seedstock Improvement Project in Batangas Critical Assumptions NPV IRR Base Scenario K-shift is equal to 14% Php49,976,179.06 20.52% Scenario 1 k-shift is equal to 10% Php26,907,202.21 15.28% Scenario 2 Investments from year 2013 to Php47,750,206.04 20.38% perpetuity increased by 20%

Scenario 3 Streams of benefits and costs are Php14,948,877.48 17.59% measured up to year 2013 only

V. CONCLUSIONS AND RECOMMENDATIONS

In summary, there are some problems/issues associated with management and conservation of seaweeds such as unavailability of good quality seedlings (e.g. inconsistency of the quality due to adulteration with foreign materials to the seaweed); shortage of raw materials; pollution in the farming areas (industrial waste etc.); lack of capital to venture into the industry; false cultivation method (e.g. farmers are strongly urged to stop using raffia string for seaweed cultivation and replace them with nylon strings because using raffia string will affects the quality of carrageenan); diseases affecting seaweeds (ice-ice); weather inconsistency (flooding, waves); and insufficient R&D programs (UNDP-FAO, 2011).

Using the techniques of gap analysis from “The Seaweed Industry: Status and Investment Opportunity”, a number of needs of the Philippine seaweed industry had been identified earlier such as measures to combat diseases pestering the seaweed farm; measures to prevent toxic wastes affecting seaweed farming; improved farming techniques to realize high volume of production; improved quality of seaweeds; post-harvest facilities like solar driers and warehousing; and wide market linkages.

To effectively manage and conserve commercial seaweed species, it is indeed important to capitalize on the country’s key strengths such as availability of vast cultivation areas, established culture techniques, low operation cost involved, and strong government support and policies. In short, there are five major areas worth looking into in order to increase seaweed aquaculture production in the country: infrastructure, manpower, product quality, transfer of technology, and industrial support and marketing (UNDP-FAO, 2011). However, there is a need for improved coordination among government, seaweed farmers, researchers, and processors in the seaweed industry to make sure of the success of efforts to increase production of seaweed aquaculture in the country. Government support, R&D development, institutional cooperation, farmers effort, NGO and seaweed policy is important tools to manage and conserve seaweeds population.

1. Institutional Interventions. In Calatagan, Batangas, the seaweed farmers encountered various problems and constraints such as pollution in the seaweed production areas from the water wastes released by the nearby fish farms; diseases affecting the seaweeds such as the “ice-ice” disease and the epiphytism disease and the natural calamities. To address these problems and constraints, the DA-BFAR should continue to provide strategic interventions such as establishment of additional seaweed nurseries, promotion of seaweed health management, provision of post-harvest facilities and establishment of a pilot semi-processing plant.

2. Financing. Seaweed traders and farmers are seeking government financing to boost production, in the face of the twin threats of raw seaweed shortage and competition from Indonesia’s fledgling carrageenan industry (Ismael Abubakar, Jr., SIAP chairman and former speaker of the ARMM Regional Legislative Assembly, 2009). Seaweed processors used to advance the funds to cover production costs of the farmers under their group’s Adopt-an-Island program, which allowed the processors to privately develop seaweed farms to complement government efforts to boost supply. But funds for seaweed farming have

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dried up. In Indonesia, the farmers have all the support, financial and technical, from the government. SIAP members warned that a commodity price war could erupt as processors and traders scramble for supplies when Indonesia, which supplies a third of Philippine processors’ requirements, bans the export of raw seaweeds in 2012 to stimulate its seaweed processing industry.

In the long run, seaweed farmers must strive to procure their own farming supplies to avoid dependency syndrome with BFAR 4-A, traders and processors and expand seaweed operations through cooperative efforts. The microfinance schemes that have proved to be so successful in places such as Bangladesh and India may provide a viable means for dependent farmers to break free from disadvantageous arrangements with suppliers of farming materials. Given that the initial capital requirements of seaweed farming are not excessively high, microfinance might be available from banking institutions or through organizations.

3. Postharvest Facilities and Farm- to-Market Roads. SIAP has identified problems/issues such as the lack of credit facilities for the farmers, shortage of high-yielding seaweed seedling banks, lack of post- harvest and farm-to-market facilities, and global warming responsible for the declining Philippine seaweed output.

4. Monitoring of seaweed production. The Philippines, once the world’s largest suppliers of raw Eucheuma cottonii seaweed, has become a seaweed importer and a major supplier of carrageenan, a seaweed derivative used as ingredient in processed meat, pet food, dairy and pharmaceutical products. Exports of value-added carrageenan have surged, topping 140,000 tons as of May, 2013. About four tons of dried seaweed is needed to produce a ton of carrageenan. But raw seaweed production has plummeted to about 60,000 tons this year from a high of approximately 150,000 tons during the Philippine seaweed industry’s so-called golden years (1977-1990). Seaweed production has not been able to keep up with the demand.

Seaweed processors have had to deal with raw material shortage since 2004, when Chinese traders invaded the Philippine market and started sourcing their seaweed requirements from Mindanao. Demand outstripped supply, despite a government program launched that aimed to increase annual production by through the expansion of existing seaweed farms and development of new ones in other provinces.

5. Entrepreneurial and business skills. A number of challenges may constrain development of seaweed farming in the future. Low prices seriously hamper the revenue-generating potential of seaweed farming. As long as farmers continue to depend on BFAR 4-A, traders, and processors for the procurement of their farming materials, their leverage to negotiate higher prices would be compromised. The farmers must be equipped with entrepreneurial and business management skills to manage seeweed farms as enterprises.

6. Research and Development. The impact of “ice-ice” disease has seriously impacted the farming of K. alvarezii. Seaweed farmers have diversified to the farming of the more resistant E. denticulatum in an attempt to maintain farm yields. However, farm revenues have nevertheless declined as E. denticulatum normally fetch lower prices than K. alvarezii. Research needs also to be conducted on disease-resistant strains of K. alvarezii in order to reduce the impact of “ice-ice” and other diseases.

7. Technologies. In order to counteract the effect of low prices, farmers are engaging in deep-water methods (which reduce the impact of diseases on the higher-priced K. alvarezii) and value-added processes leading to the production of seaweed-based soaps, lotions, powder, etc. These strategies provide at least a partial solution to the predicament of low prices and as such must be pursued further.

8. Managerial Capability. The managerial capability of farmers determines the level of success of seaweed farming in some places. In order to increase profitability, farmers may have to resort to new farming methods (e.g., deeper-water farming) and scale up the size of operations, all of which will require enhanced farm management skills. The ability of farmers to work effectively in producer cooperatives will also be essential in order to reduce production costs and improve price-negotiation skills. 29

In conclusion, seaweed farming of K. alvarezii and Eucheuma species has generated positive socio- economic impacts in many coastal communities around the world due to unique characteristics such as low capital and technological requirements and short growout cycles. However, these positive contributions have been diminished in some places due to the effects of low prices and diseases. As long as strategies are implemented to address these issues, seaweed farming would continue to enhance the standards of living of some of the poorest coastal communities in the world.

According to Dr. Gavino Trono of UP MSI, seaweed farming in the Philippines is indeed mature, with simple but more innovative culture techniques. As we earlier shared the technology to our neighbors, Indonesia has overtaken the country, in terms of seaweed production volume. The seaweed farms should diversify and expand to other seaweed species and varieties with potential for high value products. The farmers must also use the technology in order to gain better income.

VI. REFERENCES

ARCBC.org.ph. Balayan Bay and Calatagan Peninsula. Retrieved from www.arcbc.org.ph/wetlands/philippines/phl_balbaycalbay.html on September 24, 2013.

BFAR Region 4-A. (2007) . Annual Accomplishment Report - BFAR Region 4A ONLINE. Retrieved from region4a.bfar.da.gov.ph/pages_all/heading/Downloads/annual_report/...on September 24, 2013.

Bureau of Agricultural Research. (2012). Seaweed. Retrieved from www.bar.gov.ph/agfishtech- home/fisheries/214-marine/1327-seaweed on May 15, 2013.

Bureau of Agricultural Statistics. (2006). Seaweed Situation Report 2001-2005. Retrieved from http://www.bas.gov.ph/ on February 4, 2013.

Bureau of Agricultural Statistics. (2011). Seaweed Situation Report 2006-2010. Retrieved from http://www.bas.gov.ph/ on February 4, 2013.

Bureau of Fisheries and Aquatic Resources Region 8. Seaweed Farming: Eucheuma spp. Retrieved from http://region8.bfar.da.gov.ph/brochures/Eucheuma%20Farming.pdf on February 4, 2013.

Bureau of Fisheries and Aquatic Resources. (2008). Annual Accomplishment Report- BFAR Region IV A Online. Retrieved from region4a.bfar.da.gov.ph/pages_all/heading/Downloads/annual_report/ ... on May 7, 2013.

Bureau of Fisheries and Aquatic Resources. (2008). Commodity Road Map: Seaweeds. Retrieved from http://www.bfar.da.gov.ph/images/pdf/commodityroadmap-seaweeds.pdf on February 4, 2013.

Davis J., Gordon J., Pearce D. and Templeton D. (2008). Guidelines for Assessing the Impacts of ACIAR’s Research Activities. Australian Centre for International Agricultural Research (ACIAR). Retrieved from http://aciar.gov.au/files/node/10103/ias58_pdf_20268.pdf on February 4, 2013.

De la Cruz, Rita T. (July, 2013). Stirring the Aquaculture Industry. MARID Agribusiness Digest, Volume 24, No.03. ISSN-0117-3897.

Department of Agriculture (1982). Philippine National Standards (PNS). Retrieved from bafps.da.gov.ph/index.php/component/attachments/download/82 on May 7, 2012.

Ferrer, M.S.R. (2002). National seaweed program. In: A.Q. Hurtado, N.G. Guanzon, Jr., T.R. de Castro- Mallare, & M.R.J. Luhan (Eds.) Proceedings of the National Seaweed Planning Workshop held on

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August 2-3, 2001, SEAFDEC Aquaculture Department, Tigbauan, Iloilo. (pp. 27-33). Tigbauan, Iloilo : SEAFDEC Aquaculture Department.

Focus Group Discussions of Seaweed Farmers, Sitio Layon, Baranggay Balitoc, Calatagan, Batangas. May 29, 2013. Hayashi, Leila (2013). “Eucheumoid algae.” Retrieved from www. Seaweed.ie/aquaculture/eucheuma_introduction.php on October 2, 2013.

Key Informant Interview of Alfredo A. Pedrosa, SIAP treasurer, nursery operator, seaweed grower and seaweed trader, Baranggay Balitoc, Calatagan, Batangas. June, 2013.

Key Informant Interview of Baby Ferrer, Chief of Marine Plant Section, National Fisheries Research and Development Institute (former National Coordinator for Seaweed Development Program), Quezon City. April4, 2013.

Key Informant Interview of Benson Dakay, Jr., Chief Procurement Officer, SHEMBERG Corporation, Mandaue, Cebu, June, 2013.

Key Informant Interview of Bibian Perado, Seaweed barangay coordinator, seaweed grower and seaweed trader, Poblacion Uno, Calatagan, Batangas, April 29, 2013.

Key Informant Interview of Dr. Arturo Lluisma, U. P. Marine Science Institute, Quezon City. April 4, 2013.

Key Informant Interview of Dr. Edna Fortes, U. P. Marine Science Institute, Quezon City, April 4, 2013.

Key Informant Interview of Edgardo Limoico, Seaweed nursery operator and seaweed grower Poblacion Dos, Calatagan, Batangas , May 27, 2013.

Key Informant Interview of Flora Limoico, Seaweed trader, Poblacion Dos, Calatagan, Batangas May 30, 2013.

Key Informant Interview of Grace Limoico, Seaweed trader in Poblacion Dos, Calatagan, Batangas, May 27, 2013.

Key Informant Interview of Isidro Velayo, National Coordinator, Seaweed Development Program, BFAR Head Office, Quezon City, May 20, 2013.

Key Informant Interview of Ma. Emelyn Custodio, Municipal Agriculture Officer, Calatagan, Batangas , April 29, 2013.

Key Informant Interview of Rolly Consul, Seaweed grower and caretaker of Alfredo Pedrosa, Baranggay Balitoc, Calatagan, Batangas, May 27, 2013.

Key Informant Interview of Rosella C. Lucero, Seaweed action officer, BFAR 4-A, Bambang, Los Baños, Laguna, May 2, 2013.

Pagdilao, Cesario R., Salac, Virna G. and Almazan, Cynthia V. (2004). The Potentials of Seaweeds Seedling Bank as an Enterprise. PCAMRD-DOST paper.

PCAARRD/DOST –U. P. at Los Baños Philippines (May, 2013). Seaweed Farmers’ Survey, Calatagan, Batangas.

PHILIPPINE INFORMATION AGENCY (N.D.) MORE IMPROVED QUALITY OF DRIED SEAWEEDS. RETRIEVED FROM WWW.PIA.GOV.PH/NEWS/INDEX.PHP?ARTICLE=981346989078 ON MAY 7, 2012.

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PHILIPPINE INFORMATION AGENCY. (NOVEMBER, 2012). DA ALLOTS P265 MILLION TO BOOST SEAWEED INDUSTRY. RETRIEVED FROM WWW.PIA.GOV.PH/NEWS/INDEX.PHP?ARTICLE=261353029933 ON MAY 15, 2013.

Regional Board of Investments-Autonomous Region of Muslim Mindanao. Seaweeds Industry. Retrieved from http://70.87.93.66/~rboi/uploads/DOC_FILES/Seaweedscdedf8c5153c867.pdf on February 4, 2013.

SEAWEED INDUSTRY ASSOCIATION OF THE PHILIPPINES (DECEMBER 26, 2012). PROSPECTS OF PHILIPPINE SEAWEED INDUSTRY. RETRIEVED FROM WWW.SIAP-ORG.COM/...OPTION=COM...SEAWEED- INDUSTRY&CATID=35:LATEST-NEWS ON MAY 15, 2013.

Trono, Gavino C. (June 29, 2010). Changing seaweed market for the Philippines- Low technology, high demand, keen competition. Source: www.malaya.com.ph. Retrieved from www.zuozuo.com/jelly- news-163.html on October 2, 2013.

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