New global links are needed in the food supply chain of the future.
Singapore’s response to the COVID-19 outbreak — including the action it is now taking in the face of the new spike in cases – has been typically decisive. Even so, the crisis has shone a spotlight on the country’s dependence on the outside world to feed itself. Indeed, it was fears over the lockdown in neighbouring Malaysia that prompted bouts of panic buying in February and mid-March.
More than 90% of Singapore’s food is imported and, early on in the pandemic, supply disruption made clear the importance of a diversity of markets to ensure food security. Fortunately, there have been many examples of the government acting quickly - both in response to immediate food supply needs and in bolstering its strategy for the future.
In the case of vegetables from Malaysia, for example, the government swiftly ensured new supply lines from markets such as Indonesia, Vietnam, China and Taiwan. In another example in late March, Singapore joined Australia, Brunei, Canada, Chile, Myanmar, and New Zealand in a joint affirmation of their commitment to ensuring supply chain connectivity; and in early April the Singapore Food Agency announced a new “30X30 Express” fund – providing a $30m grant to boost the agrifood industry and setting the goal of domestically sourcing 30% of Singapore’s food by 2030.
Singapore’s threefold approach - increasing homegrown food supply, stockpiling as necessary, and diversifying imports - was established following the MERS and SARS outbreaks. It was developed precisely because of the situation in which the world now finds itself. And the simple fact is that we now must accept that new challenges and potential pandemics are probably a very real part of our global future.
In the short term, Singapore has made good choices by ensuring essential supply chains remain up and running: food processing companies, packaging manufacturers, caterers, importers and vital logistics sites such as warehouses and cold storage facilities are among the key business allowed to remain open. The government also retains a national stockpile of essential supplies to see its citizens through an emergency.
The importance of the third pillar – that of looking to new markets for food imports – has become all the more clear. COVID-19 arrived on this country’s shores a full ten years before the 2030 target date for 30% self-sufficiency – meaning that the most immediate food supply solution, therefore, is to ensure greater import diversification.
As Singapore’s Minister for Trade and Industry Chan Chun Sing said in one recent interview: “We must have a plan B, if not a plan C and plan D.”
According to the World Bank and World Trade Organization, Singapore currently imports most of its food from just five countries – Malaysia, France, the UK, China and Indonesia – all of them markets where supply chains have been hit hard by the ongoing crisis.
An experienced, global trading hub like Singapore is well placed to look further afield, not only to its established markets, but also to growth markets.
Indeed, its established source markets are all in high demand from multiple partners so there is a strong argument for breaking new ground with countries such as Kazakhstan – a market admittedly close to us at Kusto Group – but which is already the world’s six-largest exporters of wheat, as well as a significant producer of barley, cotton, sugar, flax, rice and beef.
Much of Kazakhstan’s agricultural potential – as indeed with many other high potential markets from Central Asia - remains largely untapped. Fully unlocking its ability to export to countries such as Singapore requires international expertise, investment in technology, and integration into complex international supply chains – as well as an intimate understanding of the local trading environment and risks on the ground. In responding to the current crisis, private sector companies including us at Kusto are working hard to further develop Kazakhstan’s export capacity. But a key part of Singapore’s future food security strategy could be in offering countries like Kazakhstan the trading infrastructure and networks they need to thrive as an exporter.
COVID-19 has shown just how vulnerable the world’s food supply chains are to external shocks. Beyond enduring the current storm, Singapore, more than many, needs to spread its risk in the future.
Ensuring long-term resilience in its food security will require Singapore to explore new partnerships – and, in a time of so much tragic loss around the world, establish the kind of win-win scenarios that will help it emerge stronger and better-prepared for the challenges of the future.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Alex Donov is a Board Member and the Chief Financial Officer of Kusto Group. Kusto Group is a multi-billion-dollar industrial holding which invests in and produces innovative and reliable manufacturing products across multiple sectors, including agribusiness, construction materials, oil & gas, and real estate.