Kelp Crisis

Kelp Supply Chain Challenges Highlight Market Weakness

Kelp farming industry in North America is displaying structural weakness.

Kelp has been promoted as a sustainable and potentiallyprofitable business. Early misstepsthough have exposed the industry’s unstable foundation. The fact is that the largest
seaweed producers are unprofitable despite some being in business for almost 20

Kelp farming is still a modest enterprise although growthhas been strong the past few years. Muchof this growth has been driven by a handful of early movers promoting kelp as a
food and based on seasonal growth patterns.

The facts are both these drivers are ill advised and haveplaced the whole industry at risk.

Kelp as a center of the plate food is ill advised. Kelp hasnot been demonstrated to be safe. High iodine levels, heavy metals, and other contaminants,
place consumers at risk. Promoting kelp withoutdisclosing its potential risks as a food is irresponsible. The industry needs to develop transparentfood safety standards before promoting seaweed, especially kelps, as a desirable
food stuff.

Of course, kelp has many valuable and beneficial componentsthat consumers may benefit from. The potential benefits though must be balanced
with the risks and only consumers and regulators can make that decision based
on reliable data. Data that is eithernot being collected or not being disclosed.

Besides the inherent risk to the industry from food safety issues,basing the industry on seasonal kelp farms is also ill advised.

The seasonal growth model results in huge amounts of seaweedbeing harvested in a short period of time. This mass harvest requires that this seaweed be either frozen or driedin industrial dryers. This reduces theseaweeds quality and generates large amounts of greenhouse gasses—in fact such
practices often add 10 times or more the amount of carbon removed from the sea
by growing kelp back into the ocean and atmosphere. This is simply not
sustainable and discourages professional aquaculturists from entering the
industry due to the limited season and earnings potential not to mention the
irresponsible level of greenhouse gas emissions.

The highest value of kelp is not as a whole plant productbut for its components. The bulk of the global seaweed market is based on
seaweed extracts. These extracts are generally produced in large and expensive
industrial factories that use harsh chemicals, are environmentally suspect, and
generate massive amounts of greenhouse gasses. The extraction process also
destroys much of the kelp’s inherent value in isolating the desired target

This industrial model requires large amounts of seaweed thatsimply do not exist in North America.

So, the North American kelp market is exposed to two fatalrisks. The first is that kelp as a food is not sustainable from both a food
safety and market acceptance perspective. The second is that the infrastructure
and supply chain are not suited to large scale extraction enterprises.

With non-existing profits the industry is currently focusedon stabilizing current production in a suitable form while awaiting demand to
grow. However, there is no evidence demand will grow quickly, if at all. Seaweed as a food is a niche product withlittle upside potential in the near future. So where will the demand come from
to absorb the growing kelp production?

Without demand downward price pressure will dramaticallyincrease. Many seaweed farmers aregetting around $0.60 per pound and are mostly unprofitable. Any further
depression in prices will result in many growers exiting the market often with
real harm to local communities and economies.

Kelp stabilization is currently in either frozen or driedform. Frozen kelp is an inferior productthat is poorly suited to both food and extraction markets. Dried forms from
fresh kelp are preferable to frozen product although it generally must be
milled (and often blended) to be sold as a product of uniform quality. Dried
kelp made from frozen kelp is of poor quality.

In both Alaska and Maine there are efforts to promote dried seaweedas the “seaweed solution” to provide a shelf stable seaweed ingredient. The
problem is that the dried seaweed market is very small. Inevitably dried
seaweed supplies will burgeon resulting in oversupply, downward price pressure,
and producer failures.

What can be done? Oneapproach is to identify extraction methods that are suitable for small to
middle size operators and growers.

Springtide Seaweed, LLC is developing a seaweed process thatpermits researchers and industry to extract valuable seaweed bio-compounds
without the downsides of current industrial extraction methods. This product,
Acadia Gel™, would allow for high volume, low footprint processing capacity in
the region, would reduce processing steps between seaweed farm and end-markets,
and would open new end market applications for sustainably farmed American

Another approach is to support research into alternativeproducts in which dried seaweed can be utilized.

No matter what approach is taken, the strategy for domestic seaweedproduction is not mass-produced seaweed that have low commodity values, but
niche value added products with price premiums above commodity pricing.

While work progresses on appropriate products and uses for farmedseaweed, measures must be taken to maintain supply channels. The industry must
look to increasing farmer resiliency and professionalism. Seaweed farming
operations must shift to year-round operations that can produce multiple
seaweed species as well as alternative species such as oysters or urchins.
These year-round operations should be structured not as a source of supplemental
income, but enterprises that can provide a working wage that supports families
and communities.

There is already evidence that the seaweed market is atrisk. Many growers cannot sell theircrop and many have either stopped farming or are considering doing so. Some buyers
of seaweed have exited the market and others are freezing their crops at great
expense in money and the planet in the hope of demand miraculously growing.

The evidence suggests that the seaweed farmers that willsurvive will be diversified year-round producers of multiple species, with a targeted
high value market. Both these options will take time to implement. Time that
may well be running out.