Singapore Secures China as Future Food Source

Transcription

1 24 September 2010 Singapore Secures China as Future Food Source Amanda Chang FDI Researcher Gary Kleyn Manager FDI Global Food and Water Crises Research Programme Summary As a result of growing unease over food security, particularly since the food price hikes of 2008, many countries and private corporations have been purchasing foreign land to ensure sufficient food for their country. This strategy consists of sending home agricultural products that were grown on land purchased or leased in foreign countries. Likewise Singapore is entering the land grab quest in an attempt to boost its food security. An indication of this new strategy, as an alternative to the standard practice of importing food purchased from the exporting country, is reflected by its plans to develop a large-scale food zone in China. The Super Farm deal could change the relationship between Singapore and its existing partners, such as Australia, and is likely to increase China s influence over the city-state. Analysis Known as the China Jilin Modern Agricultural Food Zone, the Singaporean-Chinese jointventure was reported in Singapore s national newspaper, the Straits Times. 1 Located on the North-Eastern region of China and north of Beijing, the zone covers 1,450 square kilometres an area roughly 200 times larger than the size of Singapore s indigenous farm land. According to the Singapore Agri-Food and Veterinary Authority s website, Singapore allocates a little more than one per cent of the country s 710 square kilometres of land to agriculture. Due to urbanisation, the current 7.34 square kilometres of farmland is expected to shrink further, even though local production is already limited to chickens, eggs, fish and vegetables. 1 Lee Yen Nee, S pore eyes huge China farm project, The Straits Times, 22 May 2010, pa13.

2 Singapore currently imports the bulk of its food from neighbouring countries such as Malaysia and Indonesia. This may soon change, however, as the Super Farm is expected to serve the appetite of Singapore with pork, beef, dairy products, rice, corn and grapes. There is also the possibility of exporting surplus crops to the surrounding heavily populated cities, including Shanghai, Beijing and Seoul. The entire project is anticipated to take 15 years to complete and cost an estimated 110 billion yuan ($18.04 billion). Source: Straits Times Although the forecast output of the food zone has not been given, the Jilin Government has stated that total meat production from farms in the Jilin province was already around 3.5 million tonnes in This alone is enough to feed the entire Singaporean population of five million about nine times over. 2 As of 2009, Singapore imports an estimated total of 400,000 tonnes of meat per year. Considering Jilin s current large production of meat, 2 Singapore s per capita consumption of meat in 2009: 75.9kg. Estimated population: 5 million. Source: Agri- Food and Veterinary Authority (AVA).

3 perhaps an inference can be made that the Super Farm will sustainably provide for the appetites of the Singaporean population in the long run. Besides increasing Singapore s food security, the food zone will increase employment opportunities for the Jilin residents. Emphasis will also be placed on R&D advancement in developing high-tech industries, food processing, green zones, natural water catchment areas and bio-technology. In the wider context, R&D in crop genetics and farming procedures developed in the Jilin Food Zone could be applied to agricultural areas with similar climates, and contribute to the larger body of international agricultural research. The agricultural collaboration is expected to provide China s first internationally competitive, modern, disease-free, agricultural zone. According to the article, Singapore, China jointly establish a feed to meat pilot project, 3 by efeedlink, an independent research firm for the meat and livestock industry, one of the aims of the Jilin Food Farm is to tackle the challenges of food productivity and safety. The article also described the intention of Jilin s vice mayor, Wang Zhihou, to combine Jilin s agricultural endowments with Singapore s technology and its regulatory and export standards. The entire project is said to include a complete industrial chain; from growing feed grains, livestock, meat processing and distribution, right down to the supermarket. Overall, it appears that both countries could benefit from the collaboration. However, Singapore s strategic position and independence may be jeopardised. Investing in a partnership of such significance with China may challenge Singapore s sovereignty and potentially could have a negative impact on existing relations with countries in the Asian region, particularly those that have existing agricultural trade relations with Singapore. According to the Central Intelligence Agency (CIA) 2009 MAJOR IMPORT PARTNERS: SINGAPORE World Fact Book, Singapore s third US (14.7%) largest import partner, China, is 15% Malaysia (11.6%) expected to overtake Malaysia and 12% 55% China (10.05%) clinch the second position in the 11% Japan (7.6%) near future. In recent years, despite Malaysia being Singapore s Other countries 8% nearest geographical neighbour and a fellow member of The Source: CIA, 2009 Association of South East Asian Nations (ASEAN), Singapore has focused on trading with other countries; for example, as reflected in Singapore s increasing food imports from China. As shown in the graph below (Major Food Import Sources for Singapore), the gap between food imports from Malaysia and China has been decreasing since Brooks, E.J., Singapore, China Jointly Establish a Feed to Meat Pilot Project, FBA Issue 33, July/August 2010.

4 It was reported in 2008 that Singapore Food Industries (SFI) made plans with the Malaysian Authorities to jointly develop an anchor farm in Sarawak that would produce 250,000 pigs a year. But until now, no MAJOR FOOD IMPORT SOURCES FOR SINGAPORE concrete progress has been made and this could explain why SFI has now shifted its Malaysia focus from Malaysia to China. First showing interest in the Super Farm project and, in China May this year, unveiling plans to develop pig farms in the Jilin food zone. The production will begin with 100,000 pigs, with the aim of reaching one million pigs per annum within six years. SFI predicts that Jilin s pig production will sustainably supply Singapore s long term pork demand. Source: Global Trade Atlas, 2008 Bilateral relations between Singapore and Malaysia have been a longstanding cause for debate amongst Singaporeans and Malaysians alike, with many describing the interactions of the countries as two bickering neighbours. Disputes about water supply and land reclamation can be traced back as far as In the past, concern was raised over the threat posed the possibility of Malaysia cutting the water supply to Singapore. In response, Singapore embarked on a different approach in the hope of lessening its dependence on Malaysia. Achieving water independence has been highly successful for Singapore, particularly with technology like the potable recycled sewage water, NEWater, which was first developed in A view widely held by Singaporeans, is that Malaysia uses its leverage over water supplies to coerce Singapore into complying with its wishes. Perhaps in light of this, Singapore s collaboration with China is to create a counterbalance that could prevent further political pressures from Malaysia and reduce upward pressure on the import prices of its products. However, diversifying its food sources away from Malaysia could further strain political relations and potentially tarnish Singapore s image within the ASEAN circle. Conversely, China could exercise this new alliance with Singapore to gain a foothold into the South East Asian region. In recent years, although China has established its presence internationally, what it possibly lacks is a reputable hub in the area. Singapore could very

5 well become that gateway for China, due to its strategic position as a sea -port and financial centre for foreign investments. Are there any implications for Australia? At present, Singapore is Australia s largest trade and investment partner in the ASEAN region. Statistics published by Australian Department of Foreign Affairs and Trade (DFAT) indicate that dairy production is one of Australia s largest export industries, generating about $2 billion annually. Major export markets for dairy products include Japan, Philippines, Singapore and Malaysia. However, if Singapore forges a stronger partnership with China, Australia s export markets, particularly in the agricultural sector, could be damaged. Also, the location of the Jilin Food Zone may be advantageous as it is geographically closer to the other countries mentioned above. This presents the possibility of lower transport costs and an ability to reach the South East Asian markets faster. Already, Singapore s imports of milk and cream from Australia experienced a 24.2 per cent decrease and total merchandise exports of Australia to Singapore fell by 12.6 per cent over the past three years. Source: dfat.gov.au Moreover, Singapore, with its population overwhelmingly Chinese, may gravitate towards dealing with China because it offers a more familiar business culture and approach. Also, Singapore along with other South East Asian countries, could perceive trading with China as a good opportunity to strengthen political ties with the third largest economy in the world and increase their own clout in the region. With a possible shift of trading partners by Singapore in favour of China, Australia may witness a decrease in its export sector, which

6 could impact upon the level of employment in Australia. It is therefore prudent to investigate ways in which Australia can further enhance its relations with its current trade partners in the Asia region and search for new opportunities with others. With agricultural exports, Australia can leverage its ability to supply food products during the northern hemisphere s off-season. Investing in advanced R&D that uses less input for additional output without decreasing quality, could further differentiate Australia s exports as being in a class of their own. In addition, the possibility of selling and/or leasing land to foreign countries for crop cultivation is an avenue that could be given more emphasis and could, for example, be considered an important source of investment funds for the development of the Ord River Scheme in Western Australia s northern Kimberley region. In recent years, there has been increasing foreign interest in land purchases globally. Considering that not only Singapore, but also the Middle Eastern countries, are actively seeking arable land, Australia could improve trade relations by meeting that need through land sales. The underlying point is that the bilateral relationship with Singapore is one of Australia s closest and most comprehensive in South-East Asia, and it must not be undermined by Australia. ***** Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International. Future Directions International, 2010 Desborough House, Suite 2, 1161 Hay Street, West Perth, WA 6005, Australia Tel: +61 (0) Fax: +61 (0) Gary Kleyn: gkleyn@futuredirections.org.au Web: Page 6 of 6