The Next Step in Singapore’s Food Story: Encouraging Demand for Local Produce
By Bryan Teo Jun Kai (’24), Lee Shao Ming (’24), Shaharaj Ahmed (’23), and Thomas Bean (’24)
To bolster Singapore’s food security, the Singapore Food Agency (SFA) should address demand-side deficiencies by launching a local produce cashback scheme that subsidises the monthly rent of hawkers when they purchase local produce for use.
Background and Analysis
Despite being ranked the most food secure country in the world, Singapore imports 90% of its domestic food consumption.  As a result, supply chain disruptions present several risks to Singapore’s food security.  Most recently, the COVID-19 pandemic triggered fears of instability in food supplies, driving panic buying at supermarkets and hoarding behaviour amongst Singaporeans. 
The obvious solution would be for Singapore to begin producing food locally and achieve some degree of self-sufficiency. Amidst growing realisation that food security is an existential issue to contend with, the SFA unveiled their ‘30 by 30 vision’ in early 2020, which aims to locally produce 30% of the country’s nutritional needs by 2030.  To support producers looking to use technology to grow more with less, the SFA has enhanced the Agriculture Productivity Fund  and pushed out the 30×30 Express grant . Additionally, the SFA has been working with the Housing and Development Board (HDB) to identify non-traditional alternative farming spaces and compensate for Singapore’s low available land mass.  These recently introduced policies reflect the government’s interest in moving Singapore towards becoming a more self-reliant and food-secure society.
However, the lack of popular demand for local produce presents an issue. Without sufficient consumers ‘buying local’, there could be a surplus in produce and subsequently, more food wastage. While 94% of respondents in a survey were willing to buy local produce, only 65% of them could identify local produce when shopping for their groceries , suggesting that intentions to consume local produce might not translate into actual consumption. Consumers do not tend to actively source for locally produced food, especially if it is not clearly certified as ‘locally-grown’ or ‘organic’ and placed at the eye-level in supermarket shelves. 
The issue of low demand for local produce can also be attributed to local producers not growing the right kinds of vegetables that are consumed by the majority of the population on a day-to-day basis. Due to Singapore’s land scarcity, there is a great push towards vertical farming and plant factories as the future of local vegetable production. However, not only is it technically difficult to grow popular local vegetables at competitive rates in these ‘upgraded’ farms, it is also a lot more cost-effective to grow salad greens that can be sold for a premium. Overall, it is of utmost importance that we “match demand for local produce with supply” instead of over-producing vegetables that not enough people like to eat. 
Ultimately, the government has focused heavily on the upstream nature of food security issues, providing farmers with the appropriate space, technology, and funding. If local food producers are to attain critical mass and break-even without further government support, it is crucial that the problem of low local demand is tackled. After all, supply-side efforts will not be effective if there are no consumers to drive the sustainable growth of this industry.
- Singapore currently imports over 90% of its domestic food consumption, but is seeking to meet 30% of local needs by 2030 through domestic production.
- According to a food perception survey conducted by the SFA and the Ministry of Sustainability and Environment on 1,500 people in 2020, an overwhelming majority of Singaporeans (94%) are willing to buy locally-produced food.
- However, consumers do not tend to actively source for locally produced food, especially if it is not clearly certified as ‘locally-grown’ or ‘organic’ and placed at the eye-level in supermarket shelves.
The lack of demand for local produce undermines the capability of local farmers to sell their products and attain critical mass. This adversely impacts the nation’s ability to achieve food security and their 30-by-30 target.
Short-term subsidies in the form of cashbacks to hawkers aim to increase local demand for local produce and may help local producers achieve economies of scale sooner. This reduces the price of local produce to competitive levels, stimulating further demand and bringing Singapore closer to its food security goals. This local produce cashback (LPC) scheme also boosts public awareness by bringing delicious local produce to domestic consumers, hence directly tackling the issue of low demand.
The Policy Idea
We propose to boost demand for local produce by introducing a LPC scheme in National Environmental Agency (NEA) hawker centres. Under this scheme, an incremental cashback on monthly rent to hawkers will be provided for every added quantity of local produce purchased. The pilot trial of the LPC scheme in the five most popular hawker centres could be funded by the SFA.
The LPC scheme aims to integrate local production into the current food and beverages (F&B) industry ecosystem. It builds on the popularity of hawker centres to expose all Singaporeans to the benefits of consuming local produce. The recent addition of hawker centres to the United Nations Educational, Scientific and Cultural Organisation (UNESCO) Intangible Cultural Heritage list  presents a window of opportunity for the effective introduction of this policy. By extensively marketing the fact that domestic hawkers now serve local produce in their cuisine, consumers will perceive local farms as a source of national pride, thus raising demand for their products.
Apart from generating direct demand for local produce, the LPC scheme presents an opportunity to boost public awareness of Singapore’s local food ecosystem. Just as how home-grown produce at supermarkets and retailers are labelled , hawker centres that use local produce should also be labelled as such (including the name of the producer), allowing consumers to know where exactly their food was sourced from. If consumers enjoyed their experience ‘eating local’, they might choose to ‘buy local’ in the future as well. Hence, with a successful roll-out, the LPC scheme would be able to effectively tackle the issue of low demand for local produce by subsidising demand in wholesale buyers like hawkers while increasing public awareness and generating further demand from individual consumers.
Not all hawker centres will find the LPC scheme suitable for their needs, as Singapore does not produce either the mass variety or quantity of food required at present. Agri-food producers preferentially grow specific varieties of vegetables due to economic and technological constraints, and may be unable to meet the hawkers’ needs entirely. To ensure the fairness of the scheme, the cashback offered should be balanced such that it offers a net benefit to hawkers who choose to opt-in, while not presenting any financial disadvantage to hawkers who are ineligible for the scheme or choose to opt-out. Supporting policies are required to encourage the production of other vegetable varieties in the long-term: contracts between hawkers and food producers would allow local food producers to grow new varieties of vegetables with guaranteed demand, reducing innovation risk.
The government has already injected huge amounts of funding into the local agricultural industry, leaving some concerned that producers might become overly dependent on government subsidies. Unlike direct subsidies to farmers, the LPC scheme is designed to be a short-term measure to incentivise hawkers to adopt local produce, so as to avoid leaving either farmers or hawkers dependent on the continuation of this subsidy. Once the scheme expands, local producers will have sufficient demand to achieve economies of scale. Economies of scale for local producers will allow them to sell crops that are grown in high-tech facilities at competitive prices relative to imported food grown via conventional farming methods. When Singapore achieves enough local demand for local produce and the prices of local produce can compete with imported food, the government can roll back the LPC scheme without the concern that local hawkers cannot afford local produce.
The NEA will be in charge of implementing the scheme in their hawker centres, issuing the cashbacks while they collect rent. The SFA will finance the scheme, on top of providing all necessary support: promoting the scheme to hawkers, matching hawkers with appropriate local food producers, assisting hawkers with labelling, and marketing local produce to consumers.
During its pilot trial at the five hawker centres, the agencies should aim to get 50% of hawkers operating in the participating centres on board with the scheme. Following which, the SFA can review its success, taking into account feedback from producers, hawkers, and consumers, to decide whether to (i) expand the scheme nationwide, (ii) tweak the amount of cashback, or (iii) slowly wean producers and hawkers off the scheme.
Other supporting policies should be adopted, modified, and/or kept with the LPC scheme to further encourage demand for local produce. This includes modifying the education curriculum in primary and secondary schools to include Singapore’s food story, continuing financial support for local producers to increase productivity, and developing government-supported platforms to encourage partnerships between local food producers and F&B companies.
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Image Credit: The Straits Times
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