Farmers in southern Chile still remember when they could make a living just by picking up seaweed at the beach.

Not just any seaweed, but the red algae used to make agar-agar -- a jelly-like substance used in a plethora of products from ice cream to dietary supplements to cosmetics.

Chile is one of the world's largest producers of the algae, which it exports mostly to Asia -- China, Japan and Thailand.

But demand for this "green gold" and pressure on the ecosystem have grown so great that now it is under threat.

Today, instead of gathering whatever seaweed Mother Nature provides, farmers plant and harvest it in carefully regulated quantities.

On Coihuin beach at low tide, farmers with horse-drawn carts sow their seeds in the sand as the cold waters of the Pacific lap the bay, the snow-capped Andes mountains towering in the backdrop.

The chilly waters are perfect for the species, Gracilaria chilensis, which Chileans call "pelillo."

Once the seeds grow into tangles of red algae, it will be harvested and processed to make agar-agar, a versatile substance whose many uses -- textile dyes, plastics, cosmetics -- include acting as a gelatin substitute.

That has created booming demand in recent years from vegetarians, vegans and people avoiding meat for religious or health reasons.

Chile, Spain and Japan, the world's top producers, account for 60 percent of agar-agar output, according to the Food and Agriculture Organization.

Chile exports 1,800 tons a year.

- 'Danger of extinction' -

At Coihuin, farmers grow the algae old-school, planting it by hand, with no machines.

"In fifteen days it will be ready to harvest," says one, Carlos Leiva.

"After that we'll harvest two or three more times before February or March."

But despite the speed with which it grows, the algae is increasingly scarce.

Leiva, who started harvesting algae as a boy, remembers when all he had to do was pick what grew naturally at the beach.

"Years ago, all this was full of seaweed. It came to my knees -- my waist, even," another farmer, Pedro Soto, told AFP with nostalgia.

"Not a single patch of beach was bare," he said. "This year there's less."

Alejandro Buschmann, director of the Center for Research and Development of Marine Resources and Environments, echoed the farmers' claims.

"Nearly all the (naturally occurring) algae has disappeared," he said.

Last year, a study by the biology department at Catholic University of Chile with French research institute CNRS warned Chile's red algae was in danger of extinction.

Archaeological evidence shows native Chileans have been eating foods made from the algae for some 15,000 years.

Over-exploitation is not the only thing threatening it.

A worm that feeds on the algae has also hit the region. Waste from nearby salmon farms is likewise threatening the plants, and the 2,000 people who depend on them for a living.

"Fish farming has filled the beach with salmon excrement," said Soto.

The money is not what it used to be, either.

Prices have fallen sharply as supply has surged. A kilo of wet pelillo sells for 70 pesos (10 US cents) today, down from 400 in the 1980s.

Chile produces several types of algae along its 4,500-kilometer (2,800-mile) coast, exporting 6,000 tons per year.

Last year, the industry had $246 million in exports, according to the national Fisheries Promotion Institute.