S’pore farms brace themselves for rise in costs due to Mid-East war, will keep prices steady for now

SINGAPORE – A spike in global energy prices is likely to impact the agri-food sector, especially farms that have controlled indoor environments, said the Singapore Food Agency (SFA) on March 19. 

Farms here told The Straits Times they are bracing themselves for a rise in operational costs caused by higher electricity prices and more expensive fertilisers or feed in the light of the ongoing conflict in the Middle East.

Mr Webster Tham, co-founder of local agri-technology company Tomato Town, said his farm relies more on natural sunlight and has minimal use of electrical equipment. Still, he said, installing solar panels is a possible strategy to further reduce electricity costs.

Mr Ray Poh, founder of indoor vertical farm Artisan Green, said he is also expecting costs of fertilisers to go up. The farm is exploring various strategies to reduce costs, including tweaking its crop mix towards varieties with shorter growth cycles. 

Founder Malcolm Ong of aquaculture company The Fish Farmer said his farm uses little electricity, but that an increase of around 20 per cent in transport and logistics costs is affecting his operating costs. He also expects the price of fish feed to go up because of higher fuel prices. 

All three farms that ST spoke to say they are holding prices steady for now. But Mr Ong noted that he may have to raise prices if the cost differences remain steep. 

ST had approached other large-scale vertical farms, including Sustenir and the newly launched Greenphyto for input, but they declined to comment. The industry-led Singapore Agro-Food Enterprises Federation, which represents the local agri-food industry, also declined to comment.

Minister for Sustainability and the Environment Grace Fu, in a March 18 interview, said that less than 1 per cent of Singapore’s food supply comes from the Middle East. Still, food prices here could go up because of the war in Iran and the continued blockage of the Strait of Hormuz – a major shipping route, she added.

As at March 6, there were 138 land-based farms and 67 sea-based farms in Singapore.

About 1 per cent of land in the country is set aside for agricultural purposes. As some farms venture into high-tech farming, they also face the pressure of high energy costs. The high electricity prices from the last energy crisis in 2022, caused by Russia’s invasion of Ukraine, had resulted in many farms closing down.

An SFA spokeswoman told ST that farms can buy eligible energy-efficient equipment and technologies by leveraging the Agri-food Cluster Transformation Fund 2, which aims to support farms in the adoption of new farming technology through co-funding.

“This will help farms improve energy efficiency, and manage production costs and strengthen long-term resilience,” she said. 

SFA will continue to monitor the situation and provide the necessary assistance to farms, said the spokeswoman, in response to ST’s queries on how farms may be impacted by the expected increase in electricity prices. 

The conflict in the Middle East is nudging up oil and gas prices globally. This increase is expected to be reflected in the next round of electricity tariffs for the second quarter of the year, which will be announced at the end of the month. 

Artisan Green’s Mr Poh said electricity is one of the primary cost drivers for indoor farms. His farm grows a range of crops, such as baby spinach, lettuce, herbs and microgreens.

“Electricity for lighting and cooling accounts for a significant portion of our operational costs,” he said. “Beyond energy, we are also anticipating upward pressure on input costs such as fertilisers, which could further compound operational expenses.”

He added that the farm’s new site at Sungei Tengah has several measures to reduce energy consumption, such as adjustable lighting and a centralised chilled water system. “We will be deploying solar panels as part of our broader efforts to offset energy consumption and manage long-term energy costs,” Mr Poh added.

Mr Tham of Tomato Town said his farm grows crops naturally suited to Singapore’s warm climate, such as basil and tomatoes. This eliminates the need for cooling systems, which tends to be one of the biggest energy costs in indoor farms, he added. 

“Instead of adopting expensive ‘high-tech’ solutions, we focus on appropriate technologies and crops that match Singapore’s environment. This avoids unnecessary energy consumption from over-engineered systems,” he said.

He added that the farm’s aeroponic systems, where a nutrient solution is misted onto free-hanging plant roots, are built to function with a limited electricity supply.

As a result, their energy consumption remains low, and the farm does not foresee a significant increase in electricity costs or immediate price hikes for their produce due to rising energy costs, Mr Tham said.

While installing solar panels can help to offset part of the farm’s electricity use, the farm remains focused on choosing crops and systems suited to the local climate, he said. 

At The Fish Farmer, which produces a range of fish such as red snapper and barramundi, Mr Ong said he is expecting the cost of fish feed to increase, as the farm imports most of its feed from Malaysia and Vietnam, which is delivered by truck or ship.

“We expect the price to go up because some of the suppliers have already given us some indication that during the next round of delivery, they’ll have no choice but to increase the price,” he said.

As the increase in feed prices will affect not only The Fish Farmer but potentially other farms as well, Mr Ong said he hoped that the Government could help the farms cope with the cost increases, such as coordinating bulk purchases of fish feed across the aquaculture farms. 

While the farm hopes to avoid raising the costs of its products, Mr Ong said he may have no choice but to do so unless measures are put in place to help reduce operating costs.

“We are trying our best to manage, but it’s going to be tough.”