S'pore farms hit by rising costs forced to raise prices, but demand is up amid food security threats

Local fish producer Barramundi Group said it has been facing "meteoric increases" in energy, diesel and raw material costs. PHOTO: ST FILE

SINGAPORE - Local farms are feeling the strain of rising operation costs and electricity prices, and many have had to raise the prices of their produce.

Despite higher prices, some farms report an increase in demand for their produce, partially due to recent brushes with food security threats.

Inflation and supply chain disruptions have been driving up the cost of fish feed, fingerlings - or juvenile fish - seeds, fertiliser and logistics.

Local fish producer Barramundi Group said it has been facing "meteoric increases" in energy, diesel and raw material costs.

"Even having hedged to lower electricity prices before the hikes, these electricity contracts will end and we will ultimately see almost a tripling of our kilowatt per hour costs," said its chief marketing officer James Kwan.

The prices of fish feed, a major cost for the group, have seen significant increases in the last few months with further increases on the horizon, he added.

Barramundi Group uses feed that comes from a Norwegian animal nutrition supplier.

Sustained cost shocks proved difficult to bear, and Barramundi Group raised the prices of its products by about 15 per cent from July 1, added Mr Kwan.

The 14-year-old aquaculture company runs two ocean farms in the southern waters of Singapore and also has farms in Australia and Brunei.

It sells products such as locally farmed Asian sea bass and ready-to-eat seafood to businesses and homes in Singapore.

Some of the reasons for the premium on fish feed are the supply chain disruption of grains due to the Russia-Ukraine war and recent adverse weather events in some parts of the world affecting crops.

For instance, the heatwaves currently sweeping across Europe have been wilting crops in the region.

Meanwhile, Russia and Ukraine are among the most important producers of grain and other agricultural commodities.

Russia is also one of the top three exporters of nitrogen and phosphorous fertilisers. The war has disrupted the supply of these commodities.

A spokesman for local vertical farm Sustenir said delays in farming material supplies and rising inflation have significantly increased the cost of doing business.

Sustenir's facility in Admiralty uses fully controlled environments to optimise growth of its crops.

The company, founded in 2014, produces kale, spinach, lettuce and other greens.

It has two other farms in Hong Kong and Malaysia. The produce from each country is mostly sold locally.

But amid the trying period, there is some cause for optimism as demand for local produce has seen an uptick as food security came to the fore with the global food supply crunch and Malaysia's chicken export ban, which started last month.

Barramundi Group noticed an increase in demand for its barramundi and salmon by about 10 per cent on its retail website.

A spokesman for the Singapore Agro-Food Enterprises Federation noted that some of the farms that are open to visitors have reported an increase in footfall for a few months now as people become more interested in local produce and want to learn more about the production process.

Mr Jeremy Ong, chief executive of vertical shrimp farm Universal Aquaculture, said: "The pros (of Covid-19 and the war) are that food security is now at the forefront of our world problems and producing local is gaining traction."

Universal Aquaculture has been producing vannamei shrimp in stacked tanks at its indoor Tuas farm since last year.

The farm's electricity cost has doubled and feed price has gone up by 30 per cent, said Mr Ong.

The company has not adjusted the prices of its shrimp so far.

The Fish Farmer, which has four fish farms off the coasts of Lim Chu Kang and Changi, has noticed an increase in demand for its produce since the middle of last year - around the time a shadow was cast over local seafood supply when a Covid-19 cluster last July forced Jurong Fishery Port to shut for two weeks.

Overseas supplies from countries such as Indonesia and Vietnam were disrupted as a result.

The closure caused some anxiety among shoppers who rushed to wet markets fearing there would be a shortage of chilled seafood.

Local aquaculture farms, such as The Fish Farmer, were roped in to raise their production and supply fish to supermarket chains such as FairPrice.

The Fish Farmer chief executive Malcolm Ong said: "The Jurong Fishery Port closure made people realise that if something happens, there will be a cut in supply. That brought the awareness that it is good to have local (produce)."

The firm also faces rising costs - mainly in fish feed and logistics - and has had to increase the price of its produce.

Singapore has set a goal to produce 30 per cent of its people's nutritional needs by 2030.

To combat the various economic uncertainties, local farms should adopt renewable energy and turn to innovation to rely less on conventional fertilisers, said Professor William Chen, director of the food science and technology programme at Nanyang Technological University.

He highlighted how urban farming start-up AmpleFresh is working on using fermented soya pulp - a food waste from tofu and soya milk factories - as a nutrient base for its vegetable shoots. This reduces the firm's reliance on chemical fertilisers.

"The need to push for local food production for enhanced food security is even greater against the backdrop of the headwinds in the global food system," Prof Chen added.

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