Aris Hartono
IPMI International Business School
Amelia Naim Indrajaya
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Segoro Algae is empowering Indonesia's struggling coastal farmers by providing technology and training to turn seaweed production into a sustainable business. Carrageenan and other seaweed derivatives are used by the food, pharmaceutical, and cosmetic industries. They are found in a variety of personal care products, food additives, drinks, and nutritional supplements.
The company's eco-friendly manufacturing process produces zero pollution by converting any industrial waste into other useful products, such as soil fertilizer and feed additives. Segoro Algae has also developed patented technology to process waste produced by other industries. This includes transforming fish scales into high-grade, highly-sought after secondary products like fish collagen.
Segora Algae's research-based technology converts raw marine materials into natural products, such as non-carcinogenic skin moisturizers made from seaweed extract and a dandruff product manufactured from shrimp shells. The manufacturing process produces zero pollution by turning any waste into other useful products.
Key to the company's success is an innovative partnership with Indonesia's fish farming communities. The partnership has guaranteed a quality and sustainable source of seaweed for the company's products, while improving the local economy of Indonesia's struggling coastal regions. Segoro Algae supports seaweed farmers with funding, training in good management and business skills, and ensures they get the best return for their harvest.
Faris Nurfauzi, CEO and Co-founder of Segoro Algae, says the inspiration for its business partnership with locals was to reduce the economic gap between Indonesia's poor coastal communities and its cities, by improving the livelihood of fishermen.
With 555 seaweed species living in Indonesian waters, of which 55 are known to have high economic value (such as Eucheuma spinosum, Gracilaria and Gelidium spinosum), the company's founders believed the solution was training fish farmers how to create a business that would provide a sustainable supply of high quality seaweed. "We have an understanding that seaweed is not owned by a company or owned by the government. It belongs to the farmer, so the seaweed business must involve the community as our partner," Nurfauzi said.
Segoro Algae's effort to improve the quality of life in Indonesia's coastal farming communities meets many of the UN's Sustainable Development Goals. The company has established Good Health and Well-being, Decent Work and Economic Growth, Reduced Inequalities, Sustainable Cities and Communities, and helped to Protect Life Below Water.
Good Health and Well-being: The company believes the most wonderful business model is one that can provide benefits to all parties. “We have a focus on people's health" says CEO and Co-founder, Faris Nurfauzi, "especially in cosmetic products, so we are committed to use the best materials and the best formulations.”
Decent Work and Economic Growth, Reduced Inequalities, and Sustainable Cities and Communities: The conventional method of doing business is with middleman. Instead, Segoro Algae has extended the supply chain directly to the farmer. “This is social enterprise. If we want to develop a business with seaweed, we have to deal with society as a partnership.” The partnership includes providing coastal farmers with the tools and training needed to create a sustainable business and flourish economically. The company provides instruction in good management and business skills, the cultivation of seaweed, and ensures farmers get the best price for their product. “Utilization of brown seaweed as an active ingredient in face cream benefits fishermen almost five times more than usual”.
Life Below Water: Segoro Algae educates fishermen on to how to live better with nature through management. The company teaches them about the important role seaweed plays in the marine ecosystem and how to properly harvest and replenish supplies. This is explained further in the environmental section.
Partnership for the Goals: The company collaborates closely with the Department of Aquatic Product Technology (THP), Faculty of Fisheries and Marine Science (FPIK), and Bogor Agricultural University (IPB), Indonesia. Facilities are operated and maintained in partnership with five parties, including the Indonesia Ministry of Industry, Sumbawa Barat local government, and Koperasi Pasir Putih.
Sergoro Algea's partnership with coastal farming communities has increased the supply and quality of seaweed available to the company, increasing product production. In 2010, when the company was established, carrageenan production was about 12 kg/month. By 2012, it increased 10 fold to 100 kg/month. The variety of products manufactured and sold by Segoro Algae has also increased, doubling from 10 to 20 categories.
"The company has developed a plasma system to make sure our farmer partners are always using the best planting method so they can guarantee the quality of their seaweeds," explained CEO and Co-founder, Faris Nurfauzi. By ensuring farmers get the best return for their harvest, he says the company has seen the sale price for some products increase five fold.
As of 2017, Segoro Algae has established seaweed manufacturing operations in 10 coastal areas in Eastern Indonesia, helping to turn seaweed processing into the biggest commodity in Indonesia.
The implementation of the company's business model can be applied anywhere and is suitable for organic products.
Societal Benefits:
Segoro Algae has improved the livelihood of fish farming communities along Indonesia's coast, creating a sustainable domestic industry based on the area's abundant supply of seaweed. Fishermen are trained to manage and market seaweed and taught eco-friendly methods to replenish supplies.
A good example of the impact on the life of one farmer can be found in a video produced by the company. In the video, a 32 year old farmer, named Kores, explains, “I got an increase in revenue from 300,000 rupiah ($22.50 USD) to 1,250,000 rupiah ($94.00 USD) for 100 kilograms (220 pounds) of seaweed product, doubling my monthly income from 1.5 million ($112.00 USD) to 3 million rupiah ($225.00 USD)."
As Segoro Algae expands its operations, it is promoting gender equality, targeting housewives for training so they can have the same work opportunity as their husbands. A recent training session included 5 men and 9 women.
Environmental Benefits:
Seaweed holds an important role in marine ecosystems. It acts as a food source for marine animals as well as a nutritional base. Seaweed provides a home for fish and acts as an absorbent for heavy metals, like mercury.
Segoro Algae is committed to educating fish farmers on how to live better with nature through proper management. “Usually farmers in the sea use bombs, cyanide, and FADs to catch fishes. It is good for short term," explained Faris Nurfauzik, CEO and Co-founder of Segoro Algae, "but we remind them that seaweed is not an everlasting resource.” The company's solution is to teach fishermen how to plant new supplies of seaweed so they're not depending 100 percent on fishing. This helps divert the pressure on certain ecosystems. The company's initiative was recognized by RARE, a non-profit that seeks to empower "local communities...to shift from being resource users to environmental stewards."
Segoro Alage also benefits the environment by applying zero waste technology to its seaweed processing plants. “With all the environmental risk...we have patents to mitigate the negative impact (of pollutants)," explained Nurfauzi. One patent, by company Co-founder, Dr. Linawati Hardjito, turns waste into a high nutrition fertilizer that can be used by corn farmers in Sumbawa Barat. Another converts solid pulp, produced during carrageenan production, into food for cattle.
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