How Red Are the Flags in Maluku's Seaweed Downstreaming?

Food News from Indonesia | Cross your fingers. Despite its rocky past, we’re still expanding the Hilirisasi (downstreaming) program to Maluku’s seaweed scene.

Aug 26, 2024

Welcome to Kepayang’s first-ever edition of Food News from Indonesia, where I’ll sum up what’s been happening with our food scene in the last six months — plus a generous amount of my opinion. This first edition is a three-parter, which means you will have a new story every week throughout this August. That’s right, it’s the Independence Month spirit or whatever.

To remind you, Indonesia is a huge country with thousands of islands and a skewed focus on Jawa and Bali. So, to keep things fair, I'll be highlighting food news from underrepresented regions.

Last two weeks, I covered a story from our westernmost province, Aceh, particularly on its recent ganja control actions.
And last week, we went to Nusa Tenggara Timur and Sulawesi Utara to discover their strategy for combating rice dependency.
This week, we’re going to Maluku to learn how the expansion of seaweed plantations, despite promising, can also have alarming risks.

Disclaimer: I’m not a journalist – though I wish I were. I’m just a writer with a passion for food, some self-taught research skills (mostly gathered from trips to the pasar and supermarket), and a desktop research proficiency. The information below comes from news sources I personally trust, and all opinions are entirely my own and don’t represent Kepayang’s views. Well, Kepayang is my personal newsletter, so you get the idea. Please take everything with a grain of salt, do your own research, and feel free to let me know if I’ve made a mistake.

Hilirisasi (Downstreaming) is a program that's been gaining traction this year. It's all about turning raw materials into finished products through processes like refining - allowing us to add value and sell at higher prices. This concept isn’t new, in fact, Indonesia has been planning to implement it across various industries since 2010. Unfortunately, its implementation in Maluku Utara’s nickel industry has proven to cause many issues with living conditions in the surrounding areas. Yet, the government plans to expand the program to the seaweed industry in Maluku.

What are the differences, and should we be sceptical to prevent the same story from repeating? Let’s dive in.

The backstory of nickel downstreaming in Maluku Utara may not directly relate to the current seaweed downstreaming initiative, but I think, we need to talk about this to show how the Indonesian government has been neglecting these regions, treating them just as investment opportunities.

Long story short, in 2009, Indonesia’s Minister of Energy and Mineral Resources introduced a regulation banning the export of nickel, a metal used in stainless steel and batteries, in its raw form. After many revisions and attempts to find loopholes, the regulation was eventually finalised in its current form in 2020. These regulations promote a downstream processing strategy, meaning that mining companies which previously exported raw nickel now must process and refine it before exporting. This shift not only creates a new industry and job opportunities but also increases the value of exports. At least, that’s the hope when the new nickel processing facility finally opened in Pulau Obi, Maluku Utara in 2021.

TLDR since it’s Monday Morning:

In 2009, Indonesia’s Energy Boss was like, “No more selling raw nickel!”
Raw nickel sellers were like, “Huh???” and found sneaky ways to keep selling.
By 2020, the Energy Boss said, “Seriously, no raw nickel. You need to process it first.”
Sellers said “Alright” and built processing plants. This made new jobs and made nickel more valuable. Or is it?

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What was meant to boost the economy, has instead led to new problems.

Mongabay reported that this downstream processing of nickel created a harder living condition around the facilities in Maluku Utara, and caused much environmental damage (2023). This happens because the nickel processed in these facilities leaches into the surrounding environment, contaminating not only agricultural lands but also forests, fish farms, water sources, and the sea, especially areas used for seaweed cultivation. This has caused many people, especially fishermen and seaweed farmers, to lose their livelihoods, made worse by the fact that their waters are now frequented by ships transporting mining materials.

Interestingly, the program that led to this mess is being revived, particularly in early 2024.

If you look closely, interest in the term ‘hilirisasi’ was virtually nonexistent over the last ten years. It wasn’t until 2022 that interest began to grow, peaking around January 2024 when it became a buzzword during Indonesia’s last presidential candidate debate.

One of the presidential candidates (we know who) believed that this downstreaming program should be continued, if not, expanded to a few other industries outside of mineral and coal, including plantations, forestry, marine affairs, and fisheries – and it’s already happening in Maluku’s seaweed plantation, just 200km south of the nickel facilities.

You need to realise, that Indonesia is the world’s second-biggest seaweed exporter just before China. It is a no-brainer since we naturally have a lot of water areas to cultivate them. Unfortunately, as 60% of our exports are still in the form of raw seaweed, export price tends to be fluctuating, if not, very low from time to time. This is why, despite the increasing quantity of seaweed exports, this growth doesn’t necessarily translate into higher revenue.

Like nickel downstreaming, seaweed downstreaming aims to get producers to process seaweed into higher-value products before exporting.

There are many ways seaweed can be processed. To start, seaweed can be turned into ready-to-eat or ready-to-cook products like chips or noodles. It can be transformed into food additives such as agar-agar, carrageenan (a stabiliser), and alginates (a food thickener). And outside of food, seaweed is also useful for organic fertilisers, skincare products, and even renewable energy sources (biofuel).

If this sounds too good to be true, it’s because it is. While turning seaweed into chips and noodles is relatively easy, converting them into biofuel, something that is in demand on the international market, is unfortunately not as straightforward. The Conversation found that the Indonesian government has started supporting research into biofuel production from seaweed. However, as of today, the costs are still too high, and further investment is required.

Furthermore, the risk associated with seaweed downstreaming is also looming.

First, there’s the risk of Indigenous lands being taken and occupied for these projects, a situation that has occurred several times in the region.
Second, banning the export of raw seaweed might end up being a bad move. Since local demand only takes up about a third of what’s produced, not selling it abroad would lead to a surplus and drive prices down.
And third, there are risks of overharvesting, especially if the demand growth isn’t supported by a solid production foundation.

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Despite these red flags, the program continues this year, as the government have finished identifying potential areas for new seaweed plantations across Maluku. A total of 8,662 hectares across Hoat Sorbay, Pulau Warbal, and Tanimbar Kei are a few of the identified spots for this new plantation. And it is reported, that these are only 5% of the total planned areas of 150,000 hectares. Massive, massive project.

According to reports, the government is confident this program will be profitable and is making sure local people are empowered, and involved in the decision-making process, and keep the surrounding ecosystem sustainable. But honestly, with the troubled history of a similar program happening on the island next to it, I can’t help but be sceptical and hope that this new program, doesn’t just become a way for the government to wash its hands of responsibility after they’re done with the nickel program.

If you have any opinions, please let me know!