Appropriate Technology for E407a and PNG Carrageenan – 1 of 2

Benson Dakay of Shemberg will always be associated with the global success of Philippines’ E407a
E407a and Philippine Natural Grade Carrageenan (PNG): His story is an epic example of successful innovative entrepreneurship more so because the product and process he developed qualifies as indigenous innovation.

Carrageenan is a texturant and stabilizer. Its use ranges from food, milk, beer, creams and gels, toothpaste, pharmaceutical excepient, etc.

Shemberg, with inputs from experts at universities and the Department of Agriculture, used Scan-Adapt-Diffuse as technique to find the appropriate technology in E. cotonii seaweed agribusiness and processing for an emerging market like the Philippines.

In the past, the main raw material was Irish moss (Chondrus Crispus from the class Rodophyceae). This red alga grew mainly in the colder northern countries. In Europe, carrageenan was produced by solvent extraction process that could handle a wider range of raw materials.

As an entrepreneur, Mr Dakay led with indigenous innovation at each step and all the way.

In the 1960s, Shemberg first started trading seaweed. Eucheuma was a cousin in the same class as Irish moss but native to tropical seas around the southern Philippines. As typical from wild sources, the supply was uneven and eventually ran out. After identifying eucheuma as a replacement of irish moss, his next innovative act was to develop seaweed farming to stabilize supply. He succeeded in diffusing farming technology that, based on many agribusiness failures, is a huge success by itself. I did have some personal experience here as my best friend’s college thesis in 1980 was on eucheumac cotonii farming in the shallow seas off Bohol.

In the 1980’s, Shemberg went to semi-processing but was able to trade mainly as raw material or into pet foods. The next challenge was to improve the process and meet international toxicity (lead, arsenic, et) and microbiological (e. coli, salmonella) standards.

On the process, Shemberg made a crucial decision maybe because it was the only alternative possible. Instead of copying the solvent extraction process used by the Europeans, he emulated the agar-agar process of chemical extraction. He also incrementally innovated with ultra-filtration in extracting the solution.

It was an interesting choice evocative of the disruptive innovation identified by Professor Christensen (See Post #41) in 1997. It had large consequences ultimately for the good of Shemberg. The process was cheaper but can handle only specific varieties at a time. It only worked with Shemberg because his seaweed was farmed and was always of one specie. Also, the chemical process was not as effective at removing cellulose (the best at 15%) compared to solvent extraction. Later, that made it difficult to get European approval. As with disruptive innovation, semi-refined was good enough for most applications.

In 1992, Mr Dakay succeeded in having local carrageenan accepted as GRAS (Generally Regarded As Safe) by the US FDA. Shemberg could now sell its brand in the U.S. as Philippine Natural Grade carrageenan (Sec 172.620). But Europe proved a harder nut to crack.

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