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CHAPTER I

INTRODUCTION

This chapter consist the background of the study, statement of the

problem, significance of the study and the scope and delimitation.

Background of the Study

Supply chain management (SCM) is defined as a network of connected

and independent organizations mutually and cooperatively working together to

control, manage, and improve the flow of materials and information from supplier

to end user. It concerns with integration of network organizations consisting of

suppliers, manufactures, logistic providers, wholesalers/distributors, and retailers.

The SCM aims are collaborating and managing the flow of products, services,

finance, and information from suppliers to customers to achieve customer

satisfaction, profitability, added value, and to create both efficiency and

effectiveness. The primary members of a supply chain are all companies that

conduct operational and/or managerial activities that are directly related to

producing a specific product for a certain customer or market. The supporting

members are companies that support resources, knowledge, utilities or assets for

the primary members of the supply chain; they are not directly involved in the

main production process of transforming raw materials into a product.

Over the last few decades, developing countries’ integration into global

markets has accelerated due to increased participation in international commerce

and expanding inflows of foreign direct investment. As a result, there have been
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fast changes in emerging countries’ agri-food systems, as well as a quick

extension of the so-called modern supply chain. Modern food supply chains

include the production and trade of high-value produce, which is typically

targeted for export to high-income markets or supermarket retail in high-income

urban market segments. Given the interruptions to global supply chains affecting

food imports, especially agriculture which employs approximately 23% of the

workforce has expanded in importance during the pandemic. The sector has

already been designated as critical to lowering the country’s dependency on

imports and increasing self-sufficiency in the Philippine Development Plan 2017

– 2022. Aside from production concerns, many farmers who harvested their

crops experienced difficulties selling their commodities due to mobility limitations.

In addition, due to new food product advancements using red algae, global

demand for seaweed is likely to continue to rise in the future years. From 2006 to

2011, global demand for dairy applications, frozen desserts, and ice cream

increased at a rate of 5.5 percent per year. High-value seaweed products,

particularly those containing carrageenan, are currently dominated by dairy

products. Demand for pharmaceuticals and home goods is also increasing, but at

a slower rate of roughly 2%. Seaweed supply chains, which are classified as

agri-food supply chains is also challenged by the increased demand.

Seaweed is harvested all over the world as both a food source and an

export commodity for the development of agar and carrageenan goods. Seaweed

has been cultured for decades, if not centuries, in various Asian countries

including China, Korea, and Japan. The Philippines is the world’s third largest
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producer of seaweed, following China and Indonesia (FAO, 2018). Seaweed is

the top commodity produced by the aquaculture fisheries sub-sector with a total

production of 1.49 million metric tons (64 (Philippine Fisheries Profile, 2019).

Among the major seaweed-producing regions are Autonomous Region in Muslim

Mindanao (ARMM), MiMaRoPa, and Zamboanga Peninsula (Philippine Fisheries

Profile, 2019).

Seaweed farming in Philippines has contributed to changes in the socio-

economics structure coastal communities. The various factors including the

availability of socio, technology and public have contribute to seaweed industry.

Seaweed farming is also a sustainable form of aquaculture that has particularly

benefited the municipality of Sta. Fe, Romblon. The Municipality of Santa Fe is

agriculture-based area. It is most known in Region IV-B for its seaweed culture.

In 2010, with the help of the Bureau of Fisheries and Aquatic Resources (BFAR),

the municipality placed second in the region for seaweed production, after

Palawan. Santa Fe is the sole municipality in Romblon that distributes dried and

fresh sea weeds to the rest of the country particularly Cebu, Lucena, and Manila.

Through this, the present study aims to identify the supply management of

seaweed farming in the municipality of Sta. Fe, Romblon. The reason behind this

study is to help optimize the activities of each supply chain that will lead to

competition in the global market.

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Statement of the Problem

The study will aim to identify the supply chain management of seaweed

farm industry in Sta. Fe, Romblon.

Specifically, this study will seek to answer the following questions:

1. What is the socio – demographic profile of farmers in seaweed farming

activities?

2. What is the seaweed production capacity in terms of the volume harvested

per cycle?

3. What are the marketing channels in seaweed farming of Sta. Fe, Romblon?

4. What are the constraints encountered in seaweed farming?

5. What implications should be done to mitigate the problems encountered by

the seaweed farmers?

Significance of the study

The benefits and beneficiaries of the study are the farmers of seaweeds

which are the direct recipients of this research. This study will give them

awareness on how to mitigate the problems they encountered in farming.

Moreover, the students will also benefit in this study in enriching the readers’

perception about seaweed farming. Additionally, findings in this study may serve

as basis and a reference material for future researchers in line with this field.
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Scope and Delimitation

This study will focus on the supply chain management of seaweed farming

in Sta. Fe, Romblon. However, this will only focus on, seaweed production

capacity, marketing channels and major constraints of seaweed farming.

The respondents of the study will be limited to 50 farmers of Sta. Fe,

Romblon, chosen purposively. The type of information needed for this descriptive

research is mainly primary in nature and all data have been collected from

primary sources by the face-to-face interview method through a structured

questionnaire.

This research will be conducted during school year 2022-2023.

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CHAPTER II

REVIEW OF RELATED LITERATURE

This chapter presents a review of related literature and studies that

provide support to the present study. The information included here were taken

from journals, articles, books and published studies which help to cultivate the

study.

Related Literature and Studies

Supply of Seaweed

The supply of seaweed involves seaweed farmers, local traders, and large

traders/exporters that have relative identical activities. Their activities consist of

sun drying, packaging, and transporting of seaweed by farmers and traders.

Seaweed Farmers

In terms of its social impact, seaweed farming provides many work

opportunities for local people, both men and women. Seaweed cultivation is

typically run as a family operation, with all of the adults of the household helping

out. Land preparation, planting, maintaining and harvesting are generally done by

men, while women typically make ropes, bind seedlings and dry the seaweed.

Seaweed farming is most often conducted in a community based cluster (15-20

families), where each family manages an area of approximately 0.005-0.01 km2.

Most of the farmers use the long line method which has an average of 5.8 km.

For 1 km of line can produce approximately 1.1 tons wet seaweed which is equal
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to roughly 10.9 tons per 0.01 km2 (Neish, 2013). They not only cultivate seaweed

but they also capture artisanal fish in the sea which further enhances their

income.

Farmers usually harvest the seaweed in the morning for two hours so that

it can be immediately placed in the sun to dry and to minimize loss. Directly after

harvesting, the farmers wash away any foreign materials that may be attached to

the seaweed such as sand, sludge, and shells. Finally, wet seaweed is laid out

under the sun in a drying area surrounding the farmer’s house.

There are two types of seaweed farmers: independent farmers and

dependent farmers. independent farmers have the flexibility to sell their seaweed

to a local trader or wherever else they may want to sell it. The seaweed is usually

sold based on the price offered by a local trader. Dependent farmers, on the

other hand, have to sell their seaweed exclusively to a specific local trader with

whom they have made an informal agreement, often based around opportunities

which provide financial support to the farmers.

Seaweed Farming

Ashok S. Jagtap and Surya N. Meena (2022) discovered in their study

the seaweed production has shown enormous ability to have adequate biomass

to be converted into a variety of goods for rising industries. The trend is expected

to continue in the future as new uses are discovered and the ever-increasing

human population needs healthy products and clean energy expand beyond

land-based resources. It was revealed that the ecological importance of seaweed

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farming includes carbon dioxide (CO2) fixation, which provides solution for global

warming and ocean acidification. Further, seaweed farming minimizes the

eutrophication by extracting surplus nutrients from coastal water during

cultivation and creates a habitat for specific aquatic species. Also this study

discussed the current status, ecological and socio-economic importance of

seaweed farming.

Seaweed farming has significant consequences for economic

improvement, environmental preservation, and social welfare particularly in

coastal communities in Indonesia. From an economic perspective, seaweed

farming is a major source of household income for families along coastal areas.

The majority of these farmers are marginalized fishermen whose incomes are

below the national poverty line6 .Research shows that there is a significant

relationship between seaweed farming and economic livelihood in Indonesia

(Pollnac et al., 2001; Sievanen et al., 2005).

Seaweed Classification

The Food and Agriculture Organization (FAO) stated that seaweed can be

classified into three broad groups based on pigmentation: brown, red and green.

Botanists refer to these broad groups as Phaeophyceae, Rhodophyceae and

Chlorophyceae, respectively. Brown seaweeds are usually large, and range from

the giant kelp that is often 20 m long, to thick, leather-like seaweeds from 2-4 m

long, to smaller species 30-60 cm long. Red seaweeds are usually smaller,

generally ranging from a few centimeters to about a meter in length; however,

red seaweeds are not always red: they are sometimes purple, even brownish
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red, but they are still classified by botanists as Rhodophyceae because of other

characteristics. Green seaweeds are also small, with a similar size range to the

red seaweeds.

Seaweeds are also called macro-algae. This distinguishes them from

micro-algae (Cyanophyceae), which are microscopic in size, often unicellular,

and are best known by the blue-green algae that sometimes bloom and

contaminate rivers and streams. Naturally growing seaweeds are often referred

to as wild seaweeds, in contrast to seaweeds that are cultivated or farmed.

Seaweed Cultivation Method

Seaweed grows in sea-grass beds in coastal areas that are directly

adjacent to the ocean. Seaweed is found in intertidal and sub-littoral zones with

sand seawater, a little sludge, or a mix of them. Cultivation of seaweed is

influenced by physiology resilience for adapting to external factors such as

substrate, water salinity, water temperature at 25-30°C in shallow water near the

beach, light, water movement, pressure, nutrients, and routine maintenance

According to the study of Haidir et al (2020) entitled “The strategy of

development of seaweed (Kappaphycus alvarezii) cultivation” indicates that the

the cultivation of K. alvarezii seaweed in Takalar Regency is good and can be

carried out because the R/C ratio obtained is 2.08, where if the R / C obtained is

more than 1, then the business will get a profit and can be run. Seaweed

cultivation business profits of IDR 16,030,218 per year and IDR 2,003,748 per

cycle. The Marketing institute consists of only 2 institutions, i.e., seaweed

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farmers and collector traders. Marketing costs incurred in the amount of IDR 199

per Kg, marketing margin received by the collecting traders is IDR 3,625 per Kg.

Marketing efficiency was considered efficient for collecting traders which is equal

to 0.87%. Some seaweeds can be cultivated vegetatively, others only by going

through a separate reproductive cycle, involving alternation of generation (FAO).

Supply Chain Management

Supply chain management is the handling of the entire production flow of

a good or service — starting from the raw components all the way to delivering

the final product to the consumer. Effective supply chain management systems

minimize cost, waste and time in the production cycle. One way to further

improve on this process is to analyze the data from supply chain partners to see

where further improvements can be made.

IDC’s Simon Ellis in The Path to a Thinking Supply Chain¹ defines what is

supply chain management by identifying the five “Cs” of the effective supply

chain management of the future: Connected, Collaborative, Cyber-aware,

cognitively enabled and comprehensive. Many supply chains have begun this

process, with participation in cloud-based commerce networks at an all-time high

and major efforts underway to bolster analytics capabilities.

The complementarity (or substitutability) of three As (agile, adaptable and

aligned) were analyzed in three-way and pairwise interactions; both, correlation

and performance differences methods of testing the type of interactions among

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the system’s elements were used. Supply chain-centric and firm-centric

performance metrics were used to examine the interaction types.

Feizabadi, J. et al (2021) reveals in the article entitled, “Examining the

synergistic effect of supply chain agility, adaptability and alignment: a

complementarity perspective” stated that the study did not find empirical

evidence of three-way complementarity between the three As. However, this

paper did find evidence of complementarity in bivariate interactions for alignment

and adaptability. Moreover, in the performance difference method, the study

found a substitute relationship between all pairs of As.

Supply Chain Management of Seaweed

According to the study of Bernadita et al (2020) entitles “Supply Chain of

Seaweeds in Surigao Del Sur, Philippines” stated that seaweed farmers/growers

have direct involvement in selling their product to the trader and local processor,

however the exporter is not affiliated to the farmers/growers. The exporter,

retailer, and wholesaler are all customers of the trader. Similarly, the retailer,

local processor, and wholesaler offer their products directly to customers. Direct

customers are also served by the retailer. Seaweed drying was also done by the

growers. Within barangays, municipalities, provinces, and the region, seaweed

products are traded. Environmental management in farming and harvesting, as

well as marketing, received mostly positive responses; however, some

respondents claimed that marine contamination grew as a result of farmers

failing to follow proper aquaculture procedures. LGUs and BFAR should work

together to support seaweed farmers with capital, training, technical assistance,

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inputs, and post-harvest facilities so that seaweed farmers/growers can continue

to produce high-quality seaweeds and dried seaweeds while minimizing post-

harvest losses, and expand seaweed farms to increase seaweed production

volume.

According to the findings of Professor David Zilberman (2019) found that

seaweed patents are growing yearly due to its high yield potential as well as its

nutritional and product characteristics. The results show that the production of

seaweed is anticipated to grow, despite setbacks with wild seaweed harvesting

and farming. Companies like Cargill and countries like China and Japan, who

have held proprietary knowledge for decades, are continuously researching new

production methods and evaluating growth capacities in various regions. This

study acknowledge there exist supply chain risks such as wild seaweed’s

carrying capacity, other climate change risks, fluctuating market prices, and

harsh physical labor conditions. To reduce risks, the researchers recommend

that the global seaweed industry: implements more global food and worker safety

requirements; caps wild seaweed harvesting each year so that sufficient amounts

are left for regeneration; and encourages more research on seaweed’s

physiology. And also recommend more responsible sustainability ratings given by

nonprofits like poorest to larger companies like Cargill so that ecosystems are

safeguarded from overharvesting. To raise market awareness and adoption, we

recommend future product innovations that are differentiated to target

consumers, i.e. consumers who follow halal requirements or those that are health
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conscious as well as companies who strive to reduce greenhouse gas emissions

and pollution in their supply chain.

Supply Chain Risk Management

On the study of Göttingen (2015) entitles “Supply Chain Risk Management

Study of the Indonesian Seaweed Industry” stated that supply chain risk

management is applied for the first time in seaweed industry as an important field

in Indonesia. The comprehensive research of supply chain risk management is

conducted to give a valuable insight for those who are interested in this concept.

The critical steps for managing seaweed supply chain risks consist of

identification of seaweed supply chains, identification and categorization of

seaweed supply chain risks, assessment of the risks, and mitigation strategies to

minimize the risks. In this work, the concept of supply chain risk management is

developed which sustainability aspects (economic, environmental, and social

criteria) were taken into account. The triple bottom line of sustainability is

important factor in the steps of identification, assessment, and mitigation of

seaweed supply chain risks.

Based on the study of S.M Parenreng et al (2019) discussed the risk of

raw material supply, production, and distribution process at the seaweed

commodity in Jeneponto, one of the centers of seaweed development center in

South Sulawesi, Indonesia. The result shows that the main risk prioritized was
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the lack of seed supply (8.53%), water contamination (7.82%), and the cost

fluctuation by the company (8.09%). The proposed preventive action to prevent

those risks was to give joint-managed nurseries establishment, drowning longline

on forecast-based, and establish better communication with the company before

collection.

Conceptual Framework

INPUT PROCESS OUTPUT

 Demographic
profile of farmers
Analysis of supply
 Seaweed
chain management of
production capacity  Questionnaire
seaweed farm industry
in terms of the  Data Gathering
in Sta. Fe, Romblon.
volume harvested  Analysis of data
per cycle
 Marketing
channels
 Major constraints
of seaweed
farming.

Figure 1. Conceptual paradigm of the study

Figure 1 describes the conceptual framework of the study wherein the

input consist of the demographic profile of the respondents, seaweed production

capacity in terms of the volume harvested per cycle, the marketing channels
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involved in the seaweed farming activity and the major constraints encountered

in seaweed farming. On the other side, the process being used is through

questionnaire, data gathering and analysis of data. The output is the analysis of

supply chain management of seaweed farm industry in Sta. Fe, Romblon.

Theoretical Framework

Supply chain management (SCM) is the optimization of a product’s

creation and flow from raw material sourcing to production, logistics and delivery

to the final customer.

According to Keith Oliver the term supply chain management, using the

term in an interview with Arnold Kransdorff of the Financial Times, on 4 June

1982. Oliver is a British logistician. Oliver defined it thus: “Supply chain

management is the process of planning, implementing, and controlling the

operations of the supply chain with the purpose to satisfy customer requirements

as efficiently as possible. It spans all movement and storage of raw materials,

work-in-process inventory, and finished goods from point-of-origin to point-of-

consumption.”

Applying the supply chain management manufacturers and retailers

produce and transport only what they can sell. This eliminates the unnecessary

expenses associated with producing, insuring, and shipping inventory a farmers

can’t sell.
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Supply Chain Management of

Seaweeds

Seaweed Farmers

Supply Chain Theory

Strategies

Improve Improve Optimum Flexibility for

customer visibility end-to-end business
service level through IT supply chain strategy and
Infrastructure cost future growth

Figure 2. Theoretical Framework of the study

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Definition of terms

Seaweeds

Seaweed means marine aquatic plant species that are dependent upon

the marine aquatic or tidal environment, and exist in either an attached or free

floating form, and includes but is not limited to marine aquatic plants in the

classes Chlorophyta, Phaeophyta, and Rhodophyta.

Seaweed Farming

Seaweed farming or kelp farming is the practice of cultivating and

harvesting seaweed. In its simplest form, it consists of the management of

naturally found batches. In its most advanced form, it consists of fully controlling

the life cycle of the algae.

Supply Chain

A supply chain is an entire system of producing and delivering a product

or service, from the very beginning stage of sourcing the raw materials to the

final delivery of the product or service to end- users. The supply chain lays out all

aspects of the production process, including the activities involved at each stage,

information that is being communicated, natural resources that are transformed

into useful materials, human resources, and other components that go into the

finished product or service.

Supply Chain Management

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Supply chain management is the management of the flow of goods and

services and includes all processes that transform raw materials into final

products. It involves the active streamlining of a business’s supply-side activities

to maximize customer value and gain a competitive advantage in the

marketplace.

Hypotheses/ Assumptions of the Study

The following hypotheses were conceptualized for the purpose of this study:

1. There is no significant relationship on the demographic profile of seaweed

and in analyzing the supply chain management of seaweed in Sta. Fe,

Romblon.

2. There is no significant effect on the seaweed production capacity

harvested by the farmers per cycle in analyzing the supply chain

management of the seaweed farmer in the Sta. Fe, Romblon.

3. The marketing channel and major problems that the seaweed farmers

encountered have no significant effect in analyzing supply chain

management of seaweed in the farmers of Sta. Fe, Romblon.

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CHAPTER III

RESEARCH METHODOLOGY

This chapter outlined the methodology that will used in the research study. The

geographical area where the study was conducted, the study design and the

population and sample are described. It further identified the instrument that will

be use to collect the data, including methods implemented and how data analysis

was conducted to maintain validity and reliability of the instrument.

Research Design

Research Method

The researcher used descriptive-quantitative method which focused on

the supply chain management of seaweed farming in Sta. Fe, Romblon. The

major purpose of descriptive research design is to provide information on

characteristics of a population or phenomenon. Descriptive research is used as a

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precursor to quantitative research designs as it provides the general overview

giving some valuable pointers as to what variables are worth testing

quantitatively. The researcher attempted to get the answers to the problem and

to justify and satisfy the objectives of the study.

Research Locale and Time of the Study

Sta. Fe, Romblon will be the chosen area of the study. Sta. Fe is a

peninsular town on the southernmost part of Tablas Island, Province of Romblon.

It is a fifth-class municipality bounded on the northwestern side by the

municipality of Looc, on the northeastern side by Alcantara, on the west by

Tablas Strait and Santa Fe Bay, on the eastern and southern side by Sibuyan

sea and Guinbirayan Bay. The municipality is geographically located at

coordinates 12’9’ latitude and 121`59` longitude. According to their cadastral

survey, Santa Fe has a total land area of 63.52 km2 subdivided by 11 barangays

wherein only one is not coastal (Danao Sur). The latest census of Philippine

Statistics Authority in 2020 recorded a total population of 17,802 with a total

households of 3,691.
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This study will took place during the first semester of the academic year

2022-2023.

Figure 3: Location map of the study.

Population and Sample of the study

A target population consists of a specific group to whom findings might be

generalizable. In this study, the target population will be the seaweed farmers in

Sta. Fe, Romblon.

Sampling Procedure Used

Sampling is the process of choosing a statistically representative sample

of individuals from a population of interest, according to Majid et al (2018).

Purposive sampling is used by the researcher to determine the sample for this

study. Purposive sampling is a non-probability sampling strategy in which the

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researcher decides the sampling by setting particular criteria that are consistent

with the research aims and are expected to provide answers to the research

difficulties. Respondents that are chosen are engaged in seaweed farming

activities in Sta. Fe, Romblon.

Research Instruments

In this study, formulated questionnaires will be use to obtain data relevant

to the study’s objectives and research questions. The questionnaire is design to

gather information about the supply chain management of seaweed farming in

Sta. Fe, Romblon.

The questionnaire was composed of three (3) parts. Part I, is the socio-

demographic profile of the respondents in terms of their age, sex, educational

attainment, years in business and main source of capital. On the other hand, part

II is the seaweed production capacity and the part III is the major constraints of

encountered in seaweed farming activity.

Validation

The questionnaire was forwarded to the three teachers who are experts in the

field of research for content validation. The suggestions, feedbacks, and

comments made by the validators were incorporated on the final copy of the

instrument.
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Method of Data Analysis

The data gathered was analyzed using descriptive analysis. Descriptive

statistics (e.g. frequencies, mean) help to describe and understand the features

of the specific data set by giving short summaries about the sample and

measures of the data. Weighted mean was used by the researcher to analyze

and interpret the data.

The results were then presented using figures and tables for easiness of

understanding and analysis.

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