Potential scale of Scottish seaweed-based industries: research paper

Executive Summary

Overview

There is growing interest in further developing the existing commercial seaweed-based industry in Scotland. The current industry is relatively small-scale with many businesses being considered artisanal (micro-enterprises), although a few larger companies are well established. There is also a wide range of organisations involved in supporting and developing the seaweed-industry in Scotland through research and development (R&D), innovation and enterprise.

In 2020, the sector was almost entirely dependent on wild harvesting of seaweed for use as raw material, primarily the species Ascophyllum nodosum (Egg wrack), although a wide range of other species are also harvested in lower quantities. Whilst interest in cultivating seaweed and incorporating farmed seaweed into products is high, commercial farming in Scotland is still in its infancy (one commercial farm and two research farms in 2020), although the number of marine licence applications, and licensed sites, for cultivating activities is increasing. Consultation with stakeholders^[1] highlighted a range of barriers to the development of seaweed cultivation in Scotland, including:

• Large start-up investment costs, access to finance and financial risk
• The relatively low value and uncertainty regarding markets for species that can currently be cultivated
• The scale of cultivation potentially required to achieve economic viability (and need for mechanisation to achieve these scales)
• The need for supply chain and infrastructure development within Scotland

In 2020 the Scottish seaweed-based industry as a whole had an estimated Gross Value Added (GVA) of £510,000 per annum and employed a total of 59 people^[2]. Seaweed-based products ranged from relatively low value processed seaweed for inclusion in animal feed, to higher value products such as food for direct human consumption, horticultural products and bioactive products for use in the cosmetic, nutraceutical and pharmaceutical industries.

There was the intention for growth amongst almost all businesses consulted, both in terms of increasing production for existing markets and developing new products for existing and new markets. There was also interest in the development of biotechnology processes enabling the production of multiple high value products. This report presents two potential future scenarios exploring how the future development of the industry could impact on Scotland's economy and communities.

Global markets and status of Scottish Industry

The global seaweed industry is estimated to be worth €8.1 billion per year (Barbier et al. 2019). Globally, seaweed production is dominated by cultivated seaweed from Asia, whilst in Europe, production is predominately from harvesting wild seaweed. Whilst there is increasing focus on cultivating seaweed in Europe, the sector is still an emergent industry and relatively small-scale. Wild seaweed harvesting in Scotland is of the order of 8-15 thousand tonnes per year^[3], which is less than the production from wild harvesting in other European countries such as Norway (141-169 thousand tonnes per year), France (19-69 thousand tonnes per year) or Ireland (around 30 thousand tonnes per year).

Seaweeds can be used as raw material for multiple end uses (human foods, hydrocolloids, animal feed, horticultural products and bioactives for use in nutraceutical, pharmaceutical and cosmeceutical industries). Wider applications include potential for bioremediation purposes. There is growing demand in EU markets for seaweed-based food products (7-10% per annum) and the bioactive supplement market (6-7% per annum up to 2025). No information on future market trends for seaweed-based animal feed or horticultural products was sourced, however some stakeholders thought these could both be high growth markets. Similar to several other countries (e.g. Norway, France, Ireland), there is interest in Scotland for using biotechnology to develop a circular (zero waste) economy using cultivated seaweed to produce multiple products with a range of values.

Scottish seaweed-based products face competition from other countries for all product markets (e.g. France and Spain for sea vegetables; France and Portugal in the bioactives sector), however some Scottish products have already penetrated global markets and the Scottish sector could potentially benefit from promotion of Scottish seaweed provenance due to the high profile of Scottish food and drink globally.

Scenario analysis

Two projected future growth scenarios were developed to explore the potential impacts of seaweed-based industries on the Scottish economy, communities and wider industries to 2040. The growth scenarios were developed for key existing product types and those most likely to develop, informed by the review of the current seaweed industry in Scotland, stakeholder consultation on aspirations for growth, raw material requirements, processing capability, constraints to sector growth and evidence of trends in market demand. Both scenarios assume that all projected sector growth including the establishment of new seaweed-related businesses occurs within Scotland.

The scenarios were:

• Business as Usual (BAU): the sector continues to grow through increased production of existing products and development of new high value products. Commercial-scale seaweed farming does not develop, and raw material is supplied entirely by wild harvesting; and
• Higher Growth: Commercial-scale seaweed cultivation develops, providing additional raw material and enabling a higher growth of the component industry sectors. A biorefinery is developed in Scotland utilising cultivated seaweed.

Under the Business as Usual (BAU) scenario, it is assumed that:

• The food product sector grows 5% per year, with one new business established each year to 2030, then one every other year to 2040.
• The bioactives product sector has 7% growth per year, with two new businesses established (in 2025 and 2030);
• There is no substantial growth in the animal feed sector (growth rates confidential);
• The horticulture product sector experiences high growth to 2025, then lower growth rates to 2040 (rates confidential).
• Raw material for this growth is supplied entirely by wild harvesting of seaweed in Scotland, with supply increasing to 25,000 tonnes by 2040.

This scenario is projected to generate a total turnover of £22.1 million per year by 2040, comprising £15.4 million for businesses who produce seaweed-based products and £3.3 million for their supply chain, as well as £2.9 million for seaweed production and £500,000 for their supply chain. This contributes £11.5 million in GVA per year to the economy by 2040 and a further £1.9 million once induced impacts are included^[4].

This activity is estimated to support 130 FTE jobs by 2040 and a further 30 FTE in the wider economy once induced impacts are included.

Under the Higher Growth scenario, it is assumed that:

• The food sector grows 10% per year, with one new business established each year to 2030, then one every other year to 2040;
• The bioactives sector grows 10% per year, with three new business established (in 2025, 2030 and 2035);
• There is no substantial growth in the animal feed sector (growth rates confidential);
• In the horticulture sector one new business is established every 5 years (growth rates confidential);
• The biotechnology sector develops, with one biorefinery business operational by 2025 (growth rates confidential).
• Raw material required for this growth is 54,000 tonnes by 2040, with 30,000 tonnes from wild harvesting and 24,000 tonnes from cultivation.

This scenario is projected to generate a total turnover of £71.2 million per year by 2040, comprising £52.6 million for businesses who produce seaweed-based products and £10.5 million for their supply chain, as well as £3.5 million for seaweed production (wild harvesting) and £590,000 for their supply chain, and £2.8 million for businesses who are cultivating seaweed and £1.2 million for their supply chain. This contributes £38.5 million per year in GVA to the economy by 2040 and a further £6.6 million per year in GVA once induced impacts are included (to reflect additional spend by those employed directly and indirectly). Overall, this would mean total GVA of £45.1 million by 2040, which could represent 0.025% of Scotland's overall GVA by 2040. This activity is estimated to support 400 FTE jobs by 2040 and a further 90 FTE in the wider economy once induced impacts are included.

Wider socio-economic impacts at the national level are unlikely to be highly noticeable by the majority of the community but may be more noticeable at regional level and could be significant should activity be located in smaller rural communities. The wider socio-economic impacts were explored in an illustrative island and mainland community.

• Under the BAU scenario, if 25% of the total industry growth was concentrated in an island community, GVA was estimated to increase by 0.5% and unemployment decrease by 12% by 2040. In a mainland community, GVA was estimated to increase by 0.2% and unemployment decrease by 3% by 2040.
• Under the Higher growth scenario, if 25% of the total industry growth was concentrated in the island community, GVA was estimated to increase by 1.6% and unemployment decrease by 36% by 2040. In the mainland community, GVA was estimated to increase by 0.7% and unemployment decrease by 8% by 2040.

Increased economic prosperity is likely to have positive impacts on job opportunities, disposable income and the costs of living. Increased employment will increase household net income. There will be positive knock-on effects for local businesses in the community. In particular, potential positive impacts are expected on the long-term sustainability of supply chains. There is potential for some temporary disruption if migration is required to fill some skilled jobs, potentially felt by the local population in addition to increased demand on essential services (e.g. schools, housing). This is more likely to occur within more remote communities with small populations.

Careful planning and location of seaweed industry could thus incentivise local and regional economies, whilst making a substantial impact on the wellbeing of individuals, communities and wider industry at a local level. Development of seaweed cultivation will increase competition for 'sea area' and interaction with other marine sectors and will need to be managed.

Conclusions

The current seaweed sector in Scotland has an estimated total turnover of around £4 million per year, and total GVA estimated at £510,000 per year. Although its scale and economic impact is small relative to other industry sectors (e.g. fishing), it provides important jobs and income locally, particularly in island communities. The sector is currently almost entirely based on harvesting of wild seaweed and dominated by small- and micro-scale enterprises.

There is growth potential in the seaweed industry; raw material requirements for this growth will continue to be met in the immediate future through wild harvesting although there is strong interest from stakeholders to develop seaweed cultivation to supply existing and emerging markets for a variety of seaweed products. Key constraints for seaweed cultivation relate to economic feasibility of farming compared to the cost of wild harvesting, including large start-up costs and access to investment and funding to establish farms and the limited range and value of species that can currently be cultivated. Review of the consenting process for wild harvesting seaweed and cultivating seaweed was outwith the scope of this study. However, several industry and wider stakeholders highlighted that the future of the seaweed-based sector depended upon the proportionate regulation of access to the wild seaweed resource and timely determinations on consent to wild harvest to enable planning of capital investment and research into product development. Similarly, the time taken to receive a marine licence for seaweed cultivation was raised as a potential issue for the industry.

The scenarios explored for growth of the sector indicate that impacts are likely to be positive with increased economic prosperity likely to have positive impacts on job opportunities, disposable income and costs of living, as well as on the long-term sustainability of supply chains. However, temporary disruption is possible if migration is required to fill some skilled jobs. Careful planning and location of the seaweed industry could incentivise and help diversify local and regional economies.

Achieving the level of growth foreseen in the Higher Growth scenario would require investment and funding support, and potential interactions with other marine industries (e.g. fishing) to be carefully managed and minimised.