Alaska’s fledgling seaweed growers need to lower costs to access new markets

A new report by the Alaska Fisheries Development Foundation and McKinley Group assesses the potential and bottlenecks for Alaska’s seaweed sector.

The first seaweed farm in Alaska was put in the water as recently as 2017. Although the sector has progressed rapidly since then, Alaska’s seaweed industry remains very small. The Alaska Seaweed Markets Assessment report argues the sector needs higher volumes and lower production costs to break into new markets.

To unlock productivity gains, the sector would need both public/private investment into R&D as well as a major industrial player to create the necessary efficiencies of scale, according to the report, while noting that cost structures and distance to markets are real constraints that will be difficult to overcome.

We excerpt some of the report’s findings.

State of the industry

As of 2021, Alaska’s total seaweed mariculture harvest has grown to an estimated 200 tonnes. The crop is used almost entirely for premium consumer food products, with California’s Blue Food Evolution as the major buyer.

In Southeast Alaska, Seagrove Kelp sells to several buyers, including Juneau-based Barnacle Foods (which also harvests its own wild seaweed) and California-based fertilizer company Pacific Northwest Organics. Seagrove also recently began offering kelp under its own label.

License applications for new aquaculture farms that grow seaweed (possibly together with shellfish or fish ) increased each year until 2020. 2021 saw a downturn, one that is probably Covid-related.

Applications for seaweed farming licenses are growing – Alaska Seaweed Markets Assessment

New markets out of reach for now

The challenge Alaska faces is illustrated by the graphic below. Alaska’s current seaweed farming costs are roughly $4,400 per dry metric ton (depicted with a dashed line) – a price that can be supported only by the whole foods market, according to the assessment.

The costs for farmed Alaskan seaweed need to come down considerably to enter new markets – Alaska Seaweed Markets Assessment

It should be mentioned here that the illustration leaves out cosmetics and pharmaceutical markets. These markets will buy high-quality seaweed at a similar or even higher price than the whole foods market, but they do need additional processing.

While farm gate prices have trended down, likely reflecting improvements in efficiency, costs need to lower by a factor 10 to access lower-paying markets. The report makes some suggestions as to how to achieve this.

Seaweed farm gate prices in Alaska and Maine – Alaska Seaweed Markets Assessment

Bottlenecks and a way forward

Most of the bottlenecks Alaska faces are the same as those of other regions trying to develop a seaweed industry: a lack of familiarity with the consumer, a limited amount of buyers and difficult access to wholesale markets for small growers.

A major buyer or industrial processor in the state could alleviate these issues and lower production costs by bringing the necessary economies of scale. Nonetheless, infrastructure and logistics will remain a significant (and familiar) challenge for the Alaskan seaweed industry. Technological innovation and coordination among growers will be key to overcome this hurdle.

Regulatory structures in Alaska offer some competitive advantages and at least one disadvantage – a prohibition on strain selection. Furthermore, Alaska’s non-U.S. competitors operate at larger scales (Asia) or with high levels of coordination and government subsidies in research and development (Europe).

Finally, R&D investments will be needed to grow the industry in the near future. As the numbers are too big for the small businesses currently pioneering the Alaskan seaweed sector, the report recommends pioneers develop pathways to woo investors and capture government and philanthropic grants in order to support ongoing research.