Food industry serves up palatable figures

Food is close to every Singaporean's heart and it seems the industry also pulls more weight in the economy than previously estimated.

Food manufacturing and related activities contributed about $14.4 billion to the economy in 2014 and supported 296,400 jobs, according to a study out yesterday. This was about 3.7 per cent of the economy that year, and 8.3 per cent of total employment.

This is much higher than the sector's actual output of $3.2 billion, because the study also took into account supporting activities like logistics, distribution and retail, as well as food services such restaurants, food courts and hawkers.

The study - commissioned by industry association Food Industry Asia (FIA) and conducted by Oxford Economics - also found that productivity in food manufacturing lags behind other manufacturing clusters. The value created per job in food manufacturing came up to $82,500 in 2014, slightly below the economy-wide average of $96,000.

Comparing food industry productivity against high value-added clusters like electronics might not be fair, said Mr Oliver Salmon, lead economist at Oxford Economics.

Still, he noted that firms in the sector are ramping up spending in research and development as well as automation, which bodes well for productivity in the long run.

The challenge lies in encouraging small and medium-sized enterprises - which make up the bulk of the food manufacturing industry - to become more productive, said Mr Sunny Koh, the deputy president of the Singapore Manufacturing Federation. This involves, for example, linking them up with multinational firms that can share best practices and technologies.

Mr Koh, who is also the managing director of Chinatown Food Corporation, added that there is still a place for manufacturing in Singapore despite high costs.

"For 24 years, I have not increased my export prices, even though costs like raw materials and labour have gone up. But because I've raised productivity, the bottom line is still increasing year on year," he said.

Singapore can play a leading role in areas like food safety, and is also a gateway to the rest of the region, he added.

FIA executive director Matt Kovac agreed: "It's not just about manufacturing... (It's about having) an ecosystem of multinationals and SMEs which can share best practices."

A version of this article appeared in the print edition of The Straits Times on September 29, 2016, with the headline 'Food industry serves up palatable figures'. Print Edition | Subscribe