PNG Carrageenan Story of Innovative Entrepreneurship – 2 of 2

(Start of Part 2 of 2)

Europe’s farmers and processors fought hard to resist the entry of Shemberg’s cheaper carrageenan into Europe to compete with their E407 class. In a battle of specifications, indeed the differences in species of raw materials and chemical (vs. solvent) extraction process left much more (15%) insoluble cellulose in the product.

From a commercial perspective, though, the product worked in most uses and very well with respect to certain applications like meat and dairy where color is not as important. It was a very hard fight. I knew about this in 1997. On a slow boat from Cagayan de Oro to Cebu, the government’s DA attaché assigned to help Shemberg told me the story.

In 1998, the EFSA finally relented and approved its use. Unlike in the U.S. where it was added to the general list, EFSA created a sub-category of E407a labeled PES for processed eucheuma seaweed. It was a hollow victory for the European processors and a big one for Shemberg. But the six years difference allowed the Europeans to make adjustments. In less than a year, they had joint ventures with other Philippine players. Processors like Danisco revised their specs to differentiate and allow the use of E407a beside E407.

Eventually, product manufacturers adjusted formulations to accept the differences in attributes contributed to the final product. The solvent-extracted carrageenan, being more expensive because of the cost of alcohol removal, became a niche ingredient where the final product required clarity. The Europeans learned to blend the two ingredients to meet specific customer requirements.

Despite some problems during the 1997 crisis, Shemberg moved on with the Philippines to become the leading supplier of carrageenan in the world today. The Indonesians have started to farm the neighboring seas while the Chinese have started around Hainan. At the semi-refined stage, the Chinese have also become formidable competitors due to lower processing cost.

This epic, 40-year story of Shemberg’s and Mr. Benson Dakay’s success in innovative entrepreneurship is worthy of emulation. We know from its very exception, that in Philippine agriculture another such success, while our extreme wish, will be long in coming. Kudos!

Click here for Part 1 of 2.