Singapore imports 90% of its food – how is it dealing with inflation?

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

Lauryn Ishak| Bloomberg | Getty Images

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

The increasingly urgent issue has been placed in the national spotlight following recent food export bans – in particular, the ban on chicken exports by neighboring Malaysia, from which Singapore imports 34% of its chickens.

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

With the country vulnerable to many external headwinds, the government has launched a “30 by 30” initiative to produce 30% of its nutritional needs by 2030.

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

Food prices rose 4.1% in April from a year earlier, up from 3.3% in March, the Monetary Authority of Singapore and the Ministry of Commerce and Industry said.

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Street vendor stall owners in particular are starting to feel the pinch as they are under pressure to keep prices low for the masses.

Remus Seow, owner of Fukudon, a street vendor’s stall selling Japanese rice bowls, is an example.

In the past six months, prices for the products he buys, such as cooking oil, eggs and meat, have risen by between 30% and 45%, he said.

Seow recently raised prices for the first time since opening his stall two years ago. If prices keep rising, 20% to 35% of customers may not come to your stall again, he said.

The Monetary Authority of Singapore said high global food prices are likely to continue to contribute to local food inflation beyond 2022.

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

Food shortages will continue for the short term, and possibly even the next year or two, said Dil Rahut, a senior researcher at the Asian Development Bank Institute.

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

Likewise, Paul Teng, an adjunct senior fellow at St. Rajaratnam’s School of International Studies, warned that even if the war ends, food prices will not immediately return to pre-war prices.

That’s because factors such as rising fuel costs, labor shortages and a disrupted supply chain will exacerbate current food shortages, keeping prices high, Teng said.

The World Bank said food prices are expected to rise by about 20% this year before falling in 2023.

Obstacles

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

“Singapore has underestimated agriculture and imported food,” he said. “Now we’ve made a U-turn and started accelerating, but that needs time to bear fruit,” he added.

The “30 by 30” plan aims to give Singapore a level of self-production sufficient to overcome difficult times, but that will not be enough to completely replace imports, Teng said.

That’s because the government decided to invest more in the growth of gross domestic product and average household income than investing in agricultural activities, he added.

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

But while it is “technically and technologically” possible for Singapore to achieve its goal, two questions remain – prices and consumer attitudes towards “novel foods”, he added.

Teng said consumers are picky about buying “natural foods” and may not accept “new foods” – like lab-grown chicken and alternative protein sources – which is a big part of the “30 by 30” goal.

But Rahut warned that reaching the target would be “very difficult” because the deadline is looming and Singapore is still producing just 10% of its own nutritional needs.

People will also buy imported food products if they are cheaper than local products unless the government can subsidize the products, he added.

Seow, likewise, said he would not buy local products unless prices are compatible with imports.

“But the only way (move forward) is for the government to go ahead and do what it can to sustain the prices, quality and demand of what we need,” he said. “And then people are slowly accepting (local products).”

Rahut also suggested that marketing local products as nutritious, high-quality foods might encourage consumers to buy them at a higher price, just as some are 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 disadvantaged, for example through cash payments or vouchers.

But Teng added that one of Singapore’s weaknesses is that while it tries to diversify its imports from a basket of countries, it still relies heavily on just one or two countries.

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

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

At the political level, it will be important to diversify imports for different types of products, Teng said, such as finding more sources of live chickens to import.

The government could also encourage more Singaporean companies to grow food abroad and enter into agreements with other governments to ensure production is not subject to export bans, he added.

“The general solution is to ensure that producing and exporting countries have a surplus (of food), and there are many ways to help other countries do that,” Teng said.

Likewise, Rahut added that as Singapore is a technologically advanced country, it could help other countries improve their food production systems.

“This will not only help Singapore stabilize its price and food security, but global food security and food prices as well,” Rahut said.

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