Sitangkai, Tawi-Tawi

The Seaweeds Capital of the Philippines

LOCATION MAP OF SITANGKAI, TAWI-TAWI

Of the total foreshore area of 66,450 hectares, more than 60,000 hectares are suitable for seaweeds farming.

To date only 10,000 hectares are planted.

POTENTIAL AREA

PRODUCTION

Sitangkai is producing 3,000 MT of dried seaweeds per month. This is

about 50% of the total production of the Philippines.

About 80% of the population of Sitangkai are directly and indirectly benefiting from seaweeds farming

More or less 20,000 families are seaweeds farmers

FARMERS BENEFITTING

Poor & Disorganized Seaweed Farmers

Less Intervention from Concerned Gov’ t. & Development Agencies

Poor Production Technology &

Insufficient Post Harvest Facilities

Proliferation of Traditional Industry

Players Driven by Old Paradigm

Affects the Quality of Seaweeds

Low Price

Insufficient Capital

Poor Access to Financial

Institutions

Cyanide Fishing and Natural Occurrence

Analysis of the Divides of the Seaweeds Industry in Tawi-Tawi

Low Income

Low Production

Crop Diseases

THE OLD PARADIGM IN THE SEAWEED INDUSTRY

From the time the first family farm went into operation in 1972, the Eucheuma farming industry saw a rapid expansion and growth. There has been a fifty -fold increase in exports of farmed Eucheuma (Hollenbeck III, 1983). Sitangkai, Tawi-Tawi became the largest Eucheuma farming area in the Philippines. In 1974, Eucheuma production was estimated to be in the order of 12,000-14,000 tons which was a tremendous jump from 500 tons in 1972. Two other companies filled up their inventories and stopped buying. They purchased only 7,500 tons. The price of seaweed dropped to PO.30/kg.

This accounts for the ad hoc nature of economic studies made on Eucheuma farming. Ad hoc information gathered so far indicated that the Eucheuma farming industry is “able to absorb a wide range of output price and cost shocks and that the industry is still resilient (Padilla and Lampe, 1989).” The output price fluctuations and costs shocks referred to here may be due to the oligopsonistic structure of the Eucheuma seaweed farming industry.

http://www.fao.org/docrep/field/003/AC067E/AC067E02.htm

Price/kg

36 3218

-1 02 03 04 0

Dinas,Zamboanga

del Sur

Liloy,Zamboanga

del Norte

Sitangkai,Tawi-Tawi

Price/kg

PROBLEMS ON PRICINGPROBLEMS ON PRICING

Low buying price Low buying price of seaweeds in of seaweeds in SitangkaiSitangkai

Price/kg

-

10.00

20.00

30.00

40.00

Sept. 2004 Dec. 2004 Apr. 2005

Price/kg

3330

28

25

18

15

0

5

10

15

20

25

30

35

4th Qtr 04 1st Qtr 05 2nd Qtr 05 3rd Qtr 05 4th Qtr 05 1st Qtr 06

Wild fluctuation of Sitangkai Prices of Dried Seaweeds

From 4th Qtr 2004 up to the 1st Qtr 2006, the

price went down by

54.5%

PROBLEMS ON PRICING

8.168.47 8.49

8.78 8.95

7.267.7 7.72 7.85 8.03

0

2

4

6

8

10

4th Qtr 04 1st Qtr 05 2nd Qtr 05 3rd Qtr 05 4th Qtr 05

ARPNG

World Prices of Carrageenan in USD

AR – Alcohol Precipitated Refined

PNG – Philippine Natural Grade

Average Growth Rate

AR 10%

PNG 11%

Source: International Market Research

www.hydrocolloid.com

SOCIO - ECONOMIC

Farming communities in Sitangkai mirror the contradictions of the industry.

The monthly average income of a family is 2500 pesos as per SSIMP.

Basic social services are very inadequate.

Literacy rate and life expectancy are very low compared to the national average.

EFFECTS OF THE PROBLEMS

EFFECTS OF THE PROBLEMS

WORLD MARKET SHARE

The entire industry is also in serious threat of losing its world market share.

According to seaweed industry specialists, from the 80s up to the present, Indonesia has increased its share from about 20% to 50% while the

Philippines has declined from 80% to 50% of its world market share for Eucheuma seaweeds.

Considering that in 2000, the seaweed industry is the 3 rd biggest foreign exchange earner in the fisheries sector contributing 130 Million US Dollars, this should be a serious concern of the National Government if the trend is

a reality and irreversible.

Established on March 23, 2006

Registered with SEC on May 19, 2006

MAIN OFFICE & BUYING STATIONBrgy. Panglima Alari, SitangkaiTawi-Tawi, PhilippinesZAMBOANGA CITY FIELD OFFICE AND BALING STATIONCamins Compound, Brgy. Sta. CatalinaZamboanga City, Philippines

MISSION

1. Sitangkai Seaweeds Export Company shall sell and export the best quality seaweeds from Sitangkai, Tawi-Tawi

2. It shall ensure that the seaweed farmers of Sitangkai shall benefit in terms of better price and increased production

3. It shall promote Sitangkai seaweeds brand as the best quality seaweeds available in the world market

VISION

Sitangkai Seaweeds Export Company, a world class exporter of quality seaweeds

from Sitangkai, Tawi-Tawi and a progressive social business enterprise in the

Autonomous Region in Muslim Mindanao by 2010. We are promoting Sitangkai as the most productive and biggest producer of

Eucheuma Cottonii Seaweeds in the Philippines.

The ARMM is considered the least developed Region in the country today.

It has been proven that to develop industries and social enterprises is an effective way to

improve economic condition. SITEXPORTS will dare to make this a reality by working to make it a viable social business enterprise in ARMM. SITEXPORTS will strive to reconcile its own objectives with Sitangkai’s developmental needs thru its own concept of self -reliance.

This shall be done with the hope that other industries and businesses in ARMM will adopt the social business enterprise model wherever

applicable.

Showing the way that a SOCIAL BUSINESS ENTERPRISE

in Autonomous Region in Muslim Mindanao (ARMM) can be

Practical and Viable

The establishment of SITEXPORTS is geared towards forging meaningful PARTNERSHIP among key stakeholders to resolve critical SECURITY issues for long term sustainability. This is our NEW CONCEPT OF SELF RELIANCE.

FARMERSSecurity in terms of sustainable and fair priceSecurity in terms of the availability of seedlingSecurity in terms of peace and order and governance that is responsive

SITEXPORTSSecurity in terms of marketSecurity in terms of financeSecurity in terms of raw materials supply

CARGILLSecurity in terms of confidence in supply and continued availabilitySecurity in terms of quality and properties of the raw materialsSecurity in terms of client confidence (quality and regulatory issues)

NGOs AND SUPPORT AGENCIESBeing able to efficiently perform its institutional mandate in Sitangkai with effective implementation of their programs and projects

WHERE DO WE STAND

The successful result of this partnership will be a NEW

DEAL for the seaweed farmers in Sitangkai, Tawi-Tawi and a

MODEL OF COLLABORATION in the seaweed industry.

We also recognize the rights of other stakeholders and their role and contribution in the

development of the industry.

WHERE DO WE STAND

Sitangkai seaweeds is considered to be one if not the best in the world. Laboratory tests from foreign companies confirm that Sitangkai seaweeds produce high yield

compared to other sources.

SITEXPORTS, on the other hand is the only export company established right in

Sitangkai, the major source of high quality seaweeds in the Philippines.

Our Company Slogan“QUALITY SEAWEEDS

RIGHT AT THE SOURCE”

Our Company Slogan“QUALITY SEAWEEDS

RIGHT AT THE SOURCE”

0

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9

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21

24

CARRAGEENAN YIELD

World MarketStandardSITEXPORTSResult

CARGILL Laboratory Test Result dated November 28, 2006 for Carrageenan Yield

Our Business Philosophy“OUR WORD IS OUR BOND”

This is our commitment to the NEW PARADIGM of buying seaweeds from the

farmers.

SITEXPORTS will bridge the gap between the farmers and the world market right in

the farm.

SITEXPORTS will use part of its derived profit for Social Programs to benefit the

seaweed farmers

By limiting our volume, SITEXPORTS will not be disrupting the business activity of

other stakeholders.

When buying from farmers in Sitangkai, SITEXPORTS gives premium price to good quality

seaweeds.

When selling to foreign buyers, SITEXPORTS complies strictly

with export standards in exchange of a better price

Our Business Strategy“VALUE FOR QUALITY”

SITEXPORTS Export Price per metric ton of Dried Raw

Seaweeds to France

April 2006 USD 760October 2006 USD 830April 2007 USD 900

Our Business Strategy“VALUE FOR QUALITY”

Farmers benefit through stable and fair price

Foreign buyers benefit in terms of quality and security of supply

SITEXPORTS benefits with a minimum reasonable profit

Local traders and other exporters and processors will benefit with increased production and good quality

Local Government of Sitangkai will benefit from increase of Municipal fees and taxes.

National Government will benefit in terms of increased foreign exchange earnings

NGOs will benefit in terms of strategic fit for their programs and projects. This will further build their image and enhance their capacities.

A WINNING CONCEPT FOR ALL MAKES GOOD BUSINESS SENSE

Since April of 2006 up to June 2007, we have exported 7 times exclusively to CARGILL France for a total of 280 MT of dried seaweeds which is less than 1% of Sitangkai production for the same period.

Amount of export sales from April 2006 to June 2007 amount to USD 238,000 or PhP 11 M.

Generated employment for 20 regular and contractual workers

Our own warehouse and main buying station is located in Barangay Panglima Alari in Sitangkai with our own network of farmers and local traders.

We have a warehouse and baling station in Zamboanga City that has the capacity of baling 40 MT export quality seaweeds in 2 X 20’ containers per day.

Our total company asset is PhP 8 Million

WHERE ARE WE NOW

Philippine Development Assistance Program – Canadian International

Development Agency (PDAP-CIDA) provided the seed capital of PhP 2.5M thru

its PRIME Program

MASS-SPECC serves as the conduit financing institution of the PDAP-CIDA

assistance

CARGILL France committed to buy the production of SITEXPORTS

AGENCIES & INSTITUTONS SUPPORTING SITEXPORTS

Insufficient capital for buying of dried seaweeds to meet our increasing

export order

Lack of access to credit facilities specifically the Export Advance Line

and Bills Purchase Line due to inadequate collateral for banks, to avail of prompt payment of export

shipments

Logistical requirements specifically the availability of foreign containers in Zamboanga City, to avoid delays.

PRESENT CHALLENGES

SITEXPORTS started operation in Sitangkai with the policy of “value for quality” in buying seaweeds

3 good quality solar driers are already implemented and funded by PDAP in partnership with SITEXPORTS. Seedling banks are also to be implemented in the coming months

The Sitangkai Seaweeds Industry Master Plan is already completed and now on its way to implementation. If successful, this will revive and re-invigorate the seaweed industry of Sitangkai.

THE GOOD NEWS FOR THE SEAWEED FARMERS

THE “HAPPY COINCIDENCE” FROM MID 2006 UP TO THE PRESENT

26 27 28 2830

-5

5

15

25

35

2nd Qtr 06 3rd Qtr 06 4th Qtr 06 1st Qtr 07 2nd Qtr 07

SITEXPORTS started operation from April 2006 up to present.

Farm gate price was stable on an upward trend.

There is hope for the seaweeds farmers & for the industry

Considering that wild fluctuation of price, as

presented, has been the norm when seaweed farming in

Sitangkai started in 1970s up to 2005,

WILL THIS “HAPPY COINCIDENCE” LAST?

A bright new day filled with HOPE and PROMISE

Thank You and We Look Forward to Meaningful Partnership with You