Singapore imports 90% of its food – how does it deal with inflation?

A rooftop farm in Singapore on May 27, 2020. The small island nation lacks natural resources and imports more than 90% of its food from more than 170 countries and territories.

Lauren Isaac | Bloomberg | Getty Images

Singapore is known for its wide variety of street foods and local cuisine, but many may not know that it faces an ongoing challenge – food security.

The increasingly pressing issue has been pushed into the national spotlight after the recent ban on food exports – in particular, a ban on the export of chicken by neighboring Malaysia, from which Singapore imports 34% of its chicken.

As a small island nation, Singapore lacks natural resources – it imports more than 90% of its food from more than 170 countries and territories.

With the country exposed to several external headwinds, the government has launched a “30 x 30” initiative to produce 30% of its food needs by 2030.

But the country is already feeling the effects of rising food inflation.

The Monetary Authority and Singapore’s Ministry of Trade and Industry said food prices rose 4.1% in April from a year earlier, up from 3.3% in March.

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Hawker booth owners, in particular, are starting to get upset as they are under pressure to keep prices low for the masses.

One example is Remus Seo, owner of Fukudon, a peddler stall selling bowls of Japanese rice.

He pointed out that the prices of the products he buys during the past six months, such as cooking oil, eggs and meat, have risen by between 30% and 45%.

Seow recently raised prices for the first time since he opened his booth two years ago. He said that if prices continue to rise, 20% to 35% of customers may not do business with his kiosk again.

The Monetary Authority of Singapore said that high global food prices are expected to continue contributing to domestic food inflation beyond 2022.

Global food prices had already started to rise during the pandemic, but the Ukraine war exacerbated inflationary pressures.

The food shortages will persist in the short term, perhaps even the next year or two, said Del Rahut, a senior researcher at the Asian Development Bank Institute.

Other countries cannot jump quickly to fill the gap left by Ukraine and Russia because it takes at least one year to grow fresh produce, Rahut said.

Similarly, Paul Teng, Senior Associate Fellow at the S Rajaratnam School of International Studies, warned that even if the war were to end, food prices would not immediately return to pre-war prices.

This is because factors such as the rising cost of fuel, labor shortages and a disrupted supply chain will exacerbate existing food shortages, keeping prices high, Teng said.

The World Bank reports that food prices are expected to rise by about 20% this year before declining in 2023.

Obstacles

Teng said that while Singapore is still doing relatively well in maintaining food security, its future is unknown.

“Singapore has underestimated the importance of agriculture and food imports,” he said. “We have now done a full turn and are starting to ramp up, but this needs time to pay off,” he added.

Teng said the “30 x 30” plan aims to give Singapore a level of self-production that is sufficient to weather tough times, but that will not be enough to completely replace imports.

He added that this is because the government decided to increase investment in the development of the country’s GDP and average family income instead of investing in agricultural activities.

“As long as you have the money, as long as there is no disruption in the supply chain, you can always buy food somewhere because the volume we need (relatively) is not very high,” Teng said.

He added that while it would be “technically and technologically” possible for Singapore to achieve its goal, there were still two issues – prices and consumer attitudes towards the “new food”.

Teng said consumers are interested in buying “natural food” and may not accept “new food” — such as lab-grown chicken and alternative sources of protein — which is a big part of the “30 x 30” goal.

But Rahut cautioned that achieving the target would be “very difficult” because the deadline is approaching and Singapore still produces only 10% of its food needs.

He added that people would also still buy imported food products if they were cheaper than local ones unless the government could subsidize the products.

Similarly, Seow said he would not buy domestic products unless prices were able to match those of imports.

“But the only way (to move forward) is for the government to go ahead and do its best to maintain prices, quality and demand for what we need,” he said. “And then people will slowly accept (the local products).”

Rahut also suggested that marketing local produce as nutritious, high-quality food might motivate consumers to buy them at a higher price, just as some would be willing to pay more for products marketed as organic.

What can Singapore do?

Both Teng and Rahut said the government could, in the short term, provide safety nets for the underprivileged, for example through cash payments or vouchers.

But Ting added that one of Singapore’s weaknesses is that despite trying to diversify its imports from a basket of countries, it is still too dependent on just one or two countries.

For example, Singapore imported 48% of its chicken from Brazil, and 34% from Malaysia in 2021, according to the Singapore Food Agency.

Teng also noted that most of the chicken imported from Malaysia is live chicken, while the rest of the chicken imported from Brazil and other countries is frozen.

At the policy level, Teng said, it would therefore be important to diversify imports for different types of products, such as finding more sources of live chicken to import from.

He added that the government could also encourage more Singaporean companies to grow food abroad and conclude agreements with other governments to ensure products are not subject to export bans.

“The big picture is to make sure that the producing countries and the exporting countries have surpluses (of food) and there are a lot of ways we can help other countries do that,” Teng said.

Similarly, Rahut added that since Singapore is a technologically advanced country, it could consider helping other countries improve their food production systems.

“This will not only help Singapore with food price stability and food security, but also global food security and food prices,” said Rahut.

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