Temperate seaweed markets, an overview (part 2: a look forward)

Following on from last week’s newsletter, what might the future hold for temperate seaweed markets?

South Korean gim exports

The market for South Korean gim seems set to continue to rise strongly due to a combination of factors: on the one hand, declining competition from Chinese and Japanese production is lowering supply, on the other hand the still-growing popularity of Korean cuisine as part of the hallyu Korean wave is increasing demand. 

The recent price hikes outlined in last week’s newsletter suggest that current production growth of around 1 percent per year is not enough to address the growing demand. The two key challenges for South Korea are labor and seed stock. Large labor shortages exist in rural areas and are set to rise with the average age of the South Korean farmer at 66 years old. However, only 19% of Koreans support an increase in immigration. With this in mind, seaweed producers have strong incentives to increase investments in mechanization to address growing labor shortages.

When it comes to seed stock, the South Korean government’s Golden Seed Program is bearing fruit. More cultivars are being registered in an effort to balance resilience, productivity and taste. The focus is on Pyropia spp. where the amount of registered cultivars went from 1 in 2014 to 13 in 2019.

In conclusion, while demand for Korean gim is set to continue to rise, recent price movements indicate that the work on cultivars and automation is not moving quick enough to offset the negative effects of climate change and labor shortages in the near term, which leads us to conclude prices will continue to rise in the near future. This in turn is likely to spur innovation and a search for new geographies. 

Biostimulants 

According to The Nature Conservancy and Bain, the seaweed biostimulants market is expected to grow at 13% per year. Starting from $1 billion in 2023, that would make it roughly a $2.5 billion market in 2030, covering about 1% of all global farmland. Dunham-Trimmer estimates the total biostimulant market was worth $3 billion in 2023 and projects it to double by 2030, implying a 10.4% growth rate. With the market share for seaweed extracts stable at around 30%, that would make it a $1.8 billion market, which is in line with The World Bank’s estimate of $1.87 billion by 2030.

Agrochemical giants are more bullish in their projections for their biologicals divisions, with Bayer and Corteva projecting 17% until 2035 and FMC even 20% until 2033. I have written previously about the challenges and trends in biostimulants, as well as the growing involvement of Big Ag in the sector, the latest example being Acadian’s tie-up with BASF.

High-G alginates

In 2010, a review of the hydrocolloid industry concluded: “Within the last 10 years, a marked shift has taken place in the seaweed species being used to extract alginates. In 1999, Ascophyllum and Macrocystis accounted for 58% of the wild harvest, but today Laminaria and Lessonia are dominant, accounting for 81% of the harvest. This reflects a shift in market demand. Today’s most important and profitable applications require the high-G extracts from Laminaria and Lessonia, not the low-G extracts from Ascophyllum and Macrocystis.” 

In 2022, according to FAO numbers, that picture largely remained the same, with 84% of alginate-bearing wild harvested seaweeds coming from Lessoniaceae (314,000 tons) and Laminariaceae (180,000 tons). Ascophyllum nodosum harvests have rebounded from a low of 56,000 tons in 2015 to 78,000 tons in 2022, however, the majority of this harvest now goes to biostimulants. 

Advances in scientific research of applications for alginates in food and medical fields suggests the demand for wild harvested Lessonia spp. and Laminaria spp. will continue to grow as they are the main sources of the high-G alginates in demand by these industries. 

To fill growing demand, harvesting capacity of Laminaria hyperborea from Norway is expanding. Harvest numbers of Lessonia spp. from South America, along with reports of overexploitation, seem to suggest that this is a source that has plateaued. While harvest numbers quickly grew from 100,000 tons in 1999 to 330,000 tons in 2014, they have not grown further since, stalling to 315,000 tons in 2022 (Vásquez 2016; FAO 2024). At the same time, prices went from $350 in 2000 to $950 in 2009, peaking at $2500 in 2023 before coming down again to $1250 in 2024. The price surge suggests that demand is not being met.

However, no high-G alginate is currently under commercial cultivation. Alginate from bacteria is an avenue that has so far not been seriously explored by science and industry. 

With growing demand and constrained supply, we expect a continued price rise for high-G alginate-bearing species, which is likely to spur a more concerted effort to supplement wild harvests with cultivated alternatives.

Mixed-G alginates

A second source of predicted demand growth for alginates is biomaterials. Over the past decade, startups have developed biomaterials made in part from alginates for the commercial market. This includes textiles, foams, coatings and plastics. With varied approaches and material requirements, these applications are less in need of high-G alginates, and can instead tap into a variety of species with different M:G ratios.

However, commercial roll-out has been hampered by a lack of demand for products that are seen as uncompetitive by the market in terms of cost and functionality compared to incumbent materials, despite their ecological credentials.

Projections of the segment’s evolution vary widely. Financial institutions predict the biomaterials market to grow enormously: the World Bank values seaweed-based textiles and bioplastics collectively at $1.6 billion by 2030, while Standard Chartered predicts the value of seaweed bioplastics alone to reach $1.8 billion by 2030 and an enormous $45 billion by 2050. On the other hand, consulting outfit DNV sees little significance for the biomaterials market in seaweeds.

At the time of writing, the total market for seaweed-derived biomaterials is estimated by stakeholders at no more than a few million dollars in total. While it is possible that seaweed biomaterials manage to overcome challenges of cost competitiveness and functionality in the mid to long term, the evidence suggests that they will not reach the significant size predicted by financial institutes in the near term.

New sources of low to medium-G alginates under development include Sargassum spp. from harmful algal blooms in the Caribbean and cultivated Macrocystis pyrifera from Namibia, Alaska, New Zealand and Chile.

Food

In response to very high prices for Palmaria spp., cultivation efforts are increasing. In Canada,  50-100 tons are wild harvested annually while onshore cultivation already amounts to 350 tons per year. Onshore cultivation is also ramping up in Belgium, the Netherlands and USA, while companies in Ireland and Denmark are piloting commercial cultivation of P. palmata at sea.

Saccharina spp. markets are in the curious situation of undersupply in Japan and possibly China, while in Europe and North America farms have excess capacity and must dump unsold crops or keep them in storage. While companies’ efforts to increase consumption of Saccharina spp. in Europe and North America are likely to continue to grow the market, the demand side gap is considered to be very large and it is thus reasonable to assume it will take many years to fill. 

The obvious answer here would be to sell Western Saccharina spp. to Eastern consumers, either directly or through joint ventures, with Asian companies making use of European and American farm waters and automation technology, while their counterparts could avail of the strong product development and marketing skills in Asia. As an example, Canadian company Acadian Seaplants produces 700 tons of onshore cultivated Chondrus crispus annually for the Japanese salad market. 

The fact that this approach has not been pursued more often points to the challenges in building that bridge: different taste and sensory profiles of the species and a lack of size and sophistication among most Western producers are some of the barriers holding back possible rapprochement between markets.

Animal feed supplements for methane reduction 

Between 2020 and 2023, the cultivation of Asparagopsis spp. as a feed supplement for livestock to reduce their methane emissions was funded by $143 million of venture capital investments. These startup companies, which began operations between 2018 and 2022, have now reached pilot stage. Although producers of Asparagopsis spp. started cultivation at sea, almost all have now moved onshore to increase growth rates and production of the key ingredient bromoform. Only in Vietnam (and possibly South Korea) trial production of Asparagopsis remains at sea.

While much science remains to be done, the fact that some companies have secured off-take agreements and are moving into the market shows that the sector is gaining traction. What is still unclear is to what extent Asparagopsis extracts can grab market share in the emerging livestock methane reduction market amid a wide range of competitors. Regulation, efficacy, cost and supply constraints will all play a role in determining the outcome. 

Ecosystem services 

Mirroring an evolution also seen in microalgae, macroalgae bioremediation of wastewater from aquaculture, households and desalination plants is an area garnering more interest from commercial actors, as some seaweeds can act as potent biofilters in a cost-effective way. Post-treatment, the seaweed biomass can be sold into different products to increase profits. Additionally, pollutant reduction credits can be obtained.

In 2017, influential environmentalist Tim Flannery started advocating for the large-scale cultivation of seaweeds to capture carbon dioxide. Since then, his ideas have come under scrutiny from phycologists and marine biologists. The verification, reporting and monitoring of possible carbon sequestered is considered to be very challenging, with many gaps in the science remaining, and a general consensus that the benefits of “blue carbon” were oversold (Williamson and Gattuso 2022; Boyd et al. 2024). Alongside, carbon credit markets saw a collapse in credibility in 2023. 

With carbon markets discredited and the largest startup dedicated to sinking seaweeds folding in 2024, the narrative focus of the majority of startups, environmentalists and academics has shifted to mitigating carbon emissions through displacing or reducing carbon emissions of livestock, biomaterials or chemicals, or through the timely pick up and processing of harmful algal blooms (see for instance Ross et al. 2023; Canvin et al. 2024; Bullen et al. 2024). The lack of life cycle assessments (LCAs), and the wide variety of end results within existing LCAs are a key impediment to be able to state these arguments as fact. Those still looking towards credits aim for the new and not yet tainted biodiversity and nitrogen credit markets.

While the idea of large-scale carbon capture through seaweed cultivation is no longer in vogue, Tim Flannery’s influence lasts, as his advocacy inspired startups either directly (Kelp Blue, Sea Forest) or indirectly (most other companies founded 2018-2022).

Conclusion

To conclude, a wide-angled look at temperate seaweed trends in supply and demand reveals several macro shifts that are likely to shape market formation in the years to come. 

1) A gradual shift away from Asia, both in consumption and production

Japan, South Korea and China are no longer the near-exclusive producers and consumers of temperate seaweeds. Although the overwhelming majority of production and consumption will stay in Asia for the foreseeable future, consumption of temperate seaweeds as food is growing globally and cultivation is now established across Europe and North America, and getting established in Australia, New Zealand, Chile and Namibia. 

2) Growing role of onshore cultivation

While temperate seaweed cultivation started and developed almost exclusively in the nearshore environment for the past 70 years, the need for controlled environments for higher-value products has seen a greater share of projects focusing on land-based operations, among others the cultivation of Palmaria for food, Asparagopsis for feed supplements and Ulva for food and abalone feed. 

3) Shift towards cultivation continues

Seaweed cultivation development is market-driven. If demand is low and natural resources adequate, cultivation is unnecessary. As demand increases, natural populations frequently become inadequate and attempts are made to increase production. Cultivation commenced in Asia, first for food markets, and later for aquafeed and hydrocolloid markets. Now market movements are pointing to the next phase with the cultivation of dulse, furcellaria, various species for bioremediation and Saccharina spp. and Macrocystis spp. for biostimulants and alginates. 

Wild harvesting however still plays an important role in the supply of alginates, abalone feed, animal feed, biostimulants, food, cosmetics, lambda carrageenans and high-grade agar that is unlikely to disappear soon. 

4) Biostimulant importance grows

The food market remains the most important market for seaweeds, both in terms of value and volume. However, biostimulants are the fastest growing segment within the seaweed sector and have already outflanked the agar, carrageenan and (perhaps) alginate markets. Projected to double in size by 2030, the biostimulant market will soon be second to food in terms of value for seaweeds globally.