Price analysis of the Indonesian carrageenan seaweed industry

Abstract

Indonesia is the world's largest producer of carrageenan seaweeds, an industry that supports the livelihoods of over 250,000 coastal households. Seaweed farming brings a range of positive benefits to household livelihoods, including cash income. However, the industry is subject to volatile price and production cycles to which seaweed farmers are vulnerable. Despite the central importance of seaweed farming to Indonesian coastal livelihoods, no formal analysis of prices has been undertaken. This paper addresses this gap by drawing on fortnightly price data for 13 locations in Indonesia over a 10-year period. It examines the social, economic and ecological drivers of price trends, seasonality, volatility and transmission. The paper offers four key findings. Firstly, that demand from international carrageenan processors drives long-term price trends. Secondly, that prices follow a consistent intra-year pattern across the country despite differing seasonal production patterns. Thirdly, that prices are not significantly related to product attributes such as moisture, sand and salt content, suggesting low price-grade differentials. Finally, that price levels are determined by key central aggregation and transport hubs and transmitted to remote areas. This indicates that there is substantial opportunity to upgrade the industry through improved coordination between value chain actors.