Exporter Guide

An Expert's View about Agriculture and Animal Husbandry in Singapore

Posted on: 27 Nov 2011

Singapore’s global imports of agricultural, fish and forestry products increased 24 percent to US$9.7 billion in 2010, reflecting the significantly improved economic performances in the individual economies of Singapore’s major trading partners.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 11.1.2011 GAIN Report Number: Singapore Exporter Guide 2011 Approved By: Chris Rittgers Prepared By: Bernard Kong Report Highlights: The Singapore economy made a remarkable turnaround in 2010, with a 14.5 percent jump in growth rate, a sharp contrast to the 2 percent decline in 2009. The significant improvement in the overall economy was widespread with several sectors showing double digit growth. Global trade, manufacturing, wholesale and retail trade all experienced remarkable growth rates. Post: Commodities: Singapore Executive Summary: Section I. MARKET OVERVIEW Economic Situation Following the upward trend which started in the beginning of 2010, the Singapore economy rallied strongly for the rest of the calendar year. All major economic sectors, especially manufacturing and financial services, showed extremely buoyant growth in 2010. The uptrend was also clearly evident in the global trade. Singapore?s total trade increased 20.7 percent from US$548.1 billion in 2009 to US$661.6 billion in 2010. In the same calendar year, exports increased 22.4% to US$351 billion while imports increased 18.8% to US$310 billion. The wholesale and retail trade experienced a 15.1% percent jump for the entire calendar year of 2010. Similarly, the manufacturing sector showed an extraordinary increase of 29.7 percent, while financial services also experienced sharp gains of 12.2% for 2010. Net job creation for the whole year was recorded at 112,000. As a result, the full year unemployment rate in 2010 fell to 2.2 percent down from 3.0 percent in 2009. Singapore?s global imports of agricultural, fish and forestry products increased 24 percent to US$9.7 billion in 2010, reflecting the significantly improved economic performances in the individual economies of Singapore?s major trading partners. The Singapore economy is not expected to continue the strong growth performance it experienced in 2010. The Singapore government has provided preliminary forecasts that the Singapore economy will grow at a lower rate of 5 per cent for the entire year of 2011. With one of the highest per capita incomes in Asia, Singapore is the most developed economy within the ASEAN region. The fact that Singapore strategically lies on the cross-roads of major air and sea routes within the Asia Pacific region enhances its traditional role as a major transshipment center for much of the Southeast Asian region and the Indian subcontinent. The above factors also contribute to Singapore's position as a regional food showcase and headquarters for international food and agricultural related companies. The Market for Consumer Oriented Foods As the Singapore population of 5 million is almost entirely dependent on imported foods, it is not surprising that the total value of imported consumer oriented foods exceeded US$4.9 billion in 2010. An additional US$909 million of fish and seafood products were imported in 2010. Not all the imported foods are consumed locally. It is estimated that routinely, about 75% of food imports are re-exported mostly to neighboring countries. Major product categories include dairy products, frozen poultry and poultry parts, fresh fruit and vegetables, red meats, alcoholic and non-alcoholic beverages, snack foods and other consumer-oriented products. Growth rate for the consumer oriented foods category averaged about 10 percent per annum over the calendar period 2008-2010, declined temporarily by 12 percent in 2009 but recovered again by 22% in 2010 in line with the improved global economic situation. The U.S. market share of the consumer oriented foods category in the 2008-2010 period averaged between 8-9 percent. Demography and Socio-economic impact Like most developed and highly urbanized economies, Singapore?s indigenous population growth rates have been falling rapidly in the last decade as a result of the decreasing number of births by Singapore citizens. However, due to the growing influx in the number of foreigners, the number of Singapore residents increased at the annual rate of 1.8 percent in 2010. This factor alone augmented the slow natural growth (estimated at less than one percent per annum) in the number of Singapore citizens. The total population of 5.07 million comprised of 3.77 million citizens and permanent residents and just over 1.30 million foreign workers (and their dependents) on employment passes, work permits or long term social visit passes. The proportion of elderly residents has increased rapidly over the last ten years. Residents aged 65 years and above comprised about 9 percent of Singapore?s resident population. This proportion is expected to increase to over 20 percent by 2050. On the flipside, the youth population (aged 14 years and below) as a percentage of the population declined from 23 percent in 1990 to 17 percent in 2010. On the positive side, the mean years of schooling among resident non students aged 25-39 is 10.1 years. Ninety one percent of the population in this same group has Secondary or Higher Qualification. The number of singles has also risen in the country with the fall in the number of persons getting married over the last ten years. The age at which both grooms and brides get married has also risen. Summary of socio-economic impact of the changing demographic structure. 1) Slower growth rates in domestic demand. 2) Growing personal disposal income due to better-educated workforce. 3) Smaller household sizes due to falling marriage and birth rates. 4) Demand for food products for the mature age groups growing. 5) Growth and diversity in consumer tastes with the greater increase in the number of highly educated and more traveled Singaporeans. The rising numbers of visitor arrivals and foreign workers in the country have also contributed to the wider variety of consumer tastes. 6) With the rise in the number of working women and newly arrived single executives, there is a corresponding growth in demand for convenience foods and ready to cook prepared meals. Advantages and Challenges for U.S. Suppliers Advantages Challenges Fast growing incomes and highly educated High costs of entry into major population supermarket chains Increasing preference for higher quality products Lower prices of competing products from other countries Proliferation of western family-style restaurants and Inadequate knowledge on use of U.S. fast food chains products High promotional and advertising costs Large numbers of resident expatriate population for introducing new products familiar with western type foods SECTION II. EXPORTER BUSINESS TIPS Local Business Practices and Custom In the arena of international trade, Singapore business practices tend to follow those in the more developed and highly urbanized economies. The country?s laws are patterned after the British legal system. There is considerable reliance on international trading practices and contracts. Letters of credit are normally used for first time transactions and only after a long history of business relationship is established, the terms of payment may be mutually adjusted to an open trading account with payment terms of up to two months. It is not uncommon for buyers to request samples from first time suppliers. In some cases, U.S. exporters may request that buyers pay for airfreight charges and handling costs of samples if they become prohibitive. U.S. exporters who are exporting for the first time to the Singapore market would be advised to consider making use of local distributors or at least a local representative to help them guide through the requirements of the Singapore Food regulations and local trading practices. However, financial and credit arrangements in the domestic economy are very different. With few exceptions, supermarket chains, restaurants and other retail customers expect suppliers to provide credit terms of up to ninety days. There is also an implicit understanding to accept the return of damaged and unsold goods. On the other hand, some small retailers like Mom and Pop stores pay cash on delivery, as their order sizes are very small. Hence, if U.S. exporters decide to carry out their own local distribution, they would have to expect to meet the usual credit terms demanded by local supermarket chains. General Consumer Tastes and Preferences With rising consumer incomes, Singaporeans are prepared to pay for higher quality food products or products that will provide savings in labor and time. Hence, on the supermarket shelves we tend to see an increasing number of prepared and convenience foods. Diced vegetables and seasoned portion-control meats and poultry are in increasing demand as both spouses work. As almost all Singapore households are of Asian origin, imported foods that are to be used in local cooking have to be able to lend themselves to Asian cuisines. Asian dishes tend to be stir fried, prepared in curries or marinated in chili sauces. Food Standards and Regulations Singapore food laws are delineated in the Food Act and all packaged foods sold in retail outlets have to comply with the allowable ingredients and preservatives listed in the abovementioned Act (see the latest FAIRS Report in the USDA website, www.fas.usda.gov). Singapore has a very open import regime and all foods, with the exception of alcoholic beverages and tobacco products are imported duty free. There are practically no non-tariff restrictions since there is very little local production and the current government policy is to source food products from all over the world. Customs clearance of imported food products is carried out electronically and the process is completed in less than 48 hours. Import and Inspection Procedures Export health certification is required for the import of meat, poultry products and shellfish products. In most import cases, random inspection and laboratory analysis of meat and poultry products are carried out. SECTION III. MARKET SECTOR STRUCTURE AND TRENDS Consumer-oriented Foods and Beverages & Edible Fishery Products Singapore, which has the second highest per capita income in Asia, is one of the most open economies in the world with no tariffs on all food products except on alcoholic beverages. As a result, a wide range of food products from all over the world can be found on supermarket shelves in this compact island nation of 4.9 million people. The major suppliers of fresh temperate climatic fruit to Singapore are the United States, Australia, New Zealand, European Union, China, South Africa, Argentina and Chile. Suppliers of tropical fruit are neighboring countries of Malaysia, Indonesia and Thailand. Singapore households buy mostly fresh leafy green vegetables from Malaysia, Indonesia, Thailand and China. On the other hand, most of the imported temperate vegetables originating from Australia, New Zealand, European Union and the United States are supplied to restaurants and larger supermarket stores. Singapore imports all the meats and poultry it consumes from all over the world. Poultry and pork are the main meat items consumed in Singapore. Freshly slaughtered chicken is obtained mostly by importing live poultry from Malaysia for slaughter in local abattoirs. About half of the chicken requirements are fulfilled through the imports of frozen chicken and chicken parts from Brazil, United States, China and the European Union. Since April 1999, when all local pig farms ceased production, the only source of imported live pigs (about 250,000 head annually) for slaughter comes from Indonesia. Most of Singapore?s pork requirements are fulfilled through the import of chilled pork from Australia and frozen pork from European Union and the United States. Beef, while not as widely consumed as chicken, is sold principally in the supermarkets. Major suppliers of beef include Australia, New Zealand, Argentina and China. The United States is allowed to supply only boneless beef from cattle less than 30 months of age because of BSE concerns. In the seafood category, Singaporeans consume mostly fresh and frozen finfish caught and sold by neighboring countries, i.e. Malaysia, Indonesia and Burma. Other major suppliers include Taiwan and Japan, India, Australia, Vietnam and China. In 2010, a total value of US$909 million of seafood was imported from worldwide sources. Singaporeans are very fond of fresh seafood; especially fin fish, crabs, lobsters and clams. While most of the finfish are purchased in the wet markets for home consumption, Singapore consumers generally go to restaurants for the consumption of crabs and lobsters. Food Retail Sector About 60 percent of the food retail sales of US$4.84 billion take place in supermarkets, hyper marts and modern mini marts, while the rest are sold in convenience shops, traditional provision stores (Mom & Pop stores), petrol stations and wet market stalls. Traditionally Singaporeans shop for their fresh produce, meats and fish in wet market stalls. Over the last decade however, more and more household are turning to supermarkets for their fresh produce, meats and fish requirements. Generally, importers who represent foreign brands will be responsible for the market development of the brands, advertising and promotion and increasing distribution reach to all retailers. However, in recent years, some of the large supermarket chains and several up market retailers import western-type products directly for their own outlets. Products directly imported would include frozen prepared meals, juices, jams, confectionery, biscuits, salad dressings, pre-packed deli meats and fresh temperate fruit. Products procured from local importers would include products from the Asian region, dry groceries, tropical fruit, frozen chicken and chicken parts, frozen beef, local sauces and ethnic foods. Two major supermarket chains dominate the Singapore retail industry, Dairy Farm and NTUC Fairprice supermarket chains. The former targets principally the middle and higher income groups while the latter caters to the mass-market group. The largest supermarket chain in terms of number of supermarket retail stores is the Dairy Farm Group with 104 supermarket stores, comprising of 39 Cold Storage supermarket retail stores, 59 Shop & Save Stores, 6 premier Market Place stores. In addition, the group operates 8 Giant Hyper mart stores. A large percentage of products on their shelves comprised mostly western-type products procured from E.U., Australia, New Zealand and the United States. Eight of their outlets are located in upper middle-income residential areas and customers to these outlets are principally expatriates and upper middle-income residents. In addition, the Dairy Farm Group operates the 7-Eleven Convenience Chain of 530 stores and 128 Guardian Pharmacy outlets. The NTUC Fairprice supermarket chain which is the second largest supermarket chain in terms of number of supermarket outlets, has 92 Fairprice supermarkets, 8 Fairprice Finest stores. In addition, it operates 4 Fairprice Hyper marts. In addition, the group has 120 Cheers Convenience Stores and 20 Fairprice Convenience Stores some of which are located in Esso-Mobil Stations. NTUC Fairprice?s target audience is principally the middle and lower income groups. Competitive pricing is one of the main factors determining whether a new product should be procured for the Fairprice stores. The Fairprice chain is the most extensive in terms of consumer reach, geographically and across all income segments. Fair price stores are located in almost every large residential population concentration. Importers who require their products to be distributed island-wide and with the focus on the mass market prefer to work with NTUC Fairprice. NTUC Fairprice supermarket chain procures most of their food products from local importers. However, in recent years, NTUC Fairprice has embarked on extensive house branding of basic essentials like rice, bread, cooking oil, toilet paper, box tissue, and sugar, dish washing liquid and canned fruit. Besides Cold Storage and NTUC Fairprice supermarkets, there are several independently managed supermarkets like Isetan, Meidi-Ya, Mustafa?s, Prime Supermarket, and Sheng Siong. The most recently established supermarket chain, Sheng Siong, which has 22 small and medium sized stores and Prime Supermarket which has 17 outlets are family owned business entities which originated from small single grocery outlets to their current sizes today. Both Sheng Siong and Prime are very price competitive as they procure most of their products from China and other neighboring low cost Asian supplier countries. Customers of both supermarket chains come mostly from the lower middle-income groups. The rest of the above mentioned supermarkets are independently operated supermarket stores with only one outlet each. Isetan and Meidi-Ya target principally the upper middle-income groups and the Japanese community in Singapore. Outside the supermarket category, there are more than 23,000 mini-marts, convenience stores and traditional provision shops located in all residential housing estates all over the island. As these shops tend to be very small and, in most cases, no more than 600 square feet in retailing area, products tend to be limited to the very basic household items and to a small number of confectionery items and snack foods. Few of the shops in this category sell frozen meats and prepared meals nor is fresh produce retailed in this category. Food Service Sector It is estimated that Singaporeans spend about US$3.3 billion annually eating out. Restaurants as a group account for 38 percent, while fast food outlets account for 12 percent of the total revenue in the food & beverage services industry. Food caterers take up a 13 percent share of the food and beverage industry. Since eating out in the numerous cooked food stalls located round every corner of major housing residential estates is relatively inexpensive, most Singaporeans eat out at least once a day. As most households have working wives, Singapore families find it more convenient and, in most cases, less expensive to eat out. It is not uncommon each evening to see families walk to the nearest neighborhood cooked-food stall to have their dinner. According to government statistics, there are more than 5,500 cooked food stalls in the whole island. Besides these cooked- food stalls, fast food chains like McDonalds, Kentucky Fried Chicken, Burger King, Pizza Hut are located in large shopping complexes all over the island. The food service industry continued to show improvement in 2010. Restaurant sales reported an increase of 10 percent for 2010 due to the greater influx of tourists and business arrivals to Singapore. It is reported that the food service industry is reverting back to better quality but higher priced foods as customers resume their original preference for quality food ingredients. Food service companies in Singapore are widening their distribution network to other countries in the Asian region to achieve economies of scale in operation. As individual restaurant requirements are small, Singapore food service companies provide an alternative supply chain to customers who have small but frequent procurement needs for U.S. or western-type products. It is thus not uncommon to see a number of well-known U.S. brands being transshipped or distributed from Singapore. Traders here are able to provide credit terms to their counterparts in the region or to carry out specific handling, packaging or documentation requirements. Generally products which have a longer shelf life and which do not need refrigeration are more easily transshipped. Meat and poultry products, which require halal certification for Muslim consumers in the region, are generally shipped direct to the country of destination. Again, some Singapore traders may be involved in the ordering process as well as in the provision of short-term credit to the local importer in the destination country. Food Processing Sector Singapore?s food processing sector is very limited and the major food manufacturers are those in beer, non-alcoholic beverages, snack foods, fish processing and ethnic food activities. As Singapore has no crop or livestock production, practically all food ingredients are imported from a wide range of countries worldwide. According to the Singapore government statistics, there are more than 300 companies making up Singapore?s food processing sector most of which are small-scale operations with output barely sufficient for the local market. These firms manufacture food products ranging from beverages and snack foods to dairy and confectionery goods. With the exception of the beer and soft drinks plants, the scale of production tends to be small and the number of employees for each food- manufacturing establishment tends to be less than 100 each. The total output of the locally manufactured food, beverage and tobacco sector was valued at around US$4.8 billion in 2010, out of which it was estimated that over half was re-exported. Products, which are exported, include beer, soft drinks, edible oils, chocolates, processed seafood, milk powder, condensed milk, sauces and spices. The source of competition varies depending on the nature of the product manufactured. For example, Australia supplies most of the milk products and dairy ingredients while China supplies most of the corn and soybean products. Malaysia supplied nearly 20 percent of the food ingredient market and is the major supplier of live animals for slaughter, edible oils, tropical fruit and vegetables. The U.S. has significant market share in juices, juice concentrates, frozen poultry parts, fresh temperate fruit, nuts, flavorings, spices and leaf tobacco. SECTION IV. BEST HIGH ?VALUE PRODUCT PROSPECTS Product 2010 2008- Key Constraints over Market Attractiveness for Category Total 2010 Ave Market Development USA Imports Annual US$ Growth Million %) Intense Competition Availability of wide Snack 287 6 from lower cost suppliers variety of flavors. Quality Foods from neighboring ASEAN of U.S. products and region, China, EU and packaging. Australia Lower priced fruit & Quality and instant brand Fruits & vegetables juices from recognition of leading Vegetable 53 1 Australia, New Zealand & U.S. brands Juices E.U. Intense competition from U.S. has reputation of Fresh Fruit 360 8 China, South Africa, being a supplier of quality Australia and New fresh fruits Zealand Competition from low Quality of products from Tree Nuts 93 2 priced peanuts from U.S. are consistently China and pistachios maintained from Iran Strong competition from U.S. has a reputation for Fresh China, Indonesia , quality products and Vegetables 327 7 Thailand, Australia, New instant brand recognition Zealand and EU The market for pet foods U.S. brands are well Pet Foods 24 1 is keenly contested. established and there is a Australian brands are natural reluctance to well established and carry out brand switching have a closely for marginal price geographical advantage differences SECTION V. KEY CONTACTS AND FURTHER INFORMATION U.S. Department of Agriculture U.S. Embassy 27 Napier Road Singapore 258508 Fax:(65) 6476-9517 Tel: (65) 6476-9120 Email: agsingapore@usda.gov Agri-Food & Veterinary Authority of Singapore Ministry of National Development 5 Maxwell Road #03-00 Tower Block MND Complex Singapore 069110 Tel: (65) 6222-1211 Fax: (65) 6220-6068 Website: www.ava.gov.sg International Enterprise Singapore 230 Victoria Street, Level 10 Bugis Junction Office Tower Singapore 188024 Tel: (65) 6337-6628 Fax: (65) 6337-6898 Website:www.iesingapore.com Singapore Business Federation 10 Hoe Chiang Road #22-01 Keppel Tower Singapore 089315 Tel: (65) 6827-6828 Fax: (65) 6827-6807 Website: www.sbf.org.sg Email:info@sbf.org.sg American Chamber of Commerce in Singapore 1, Scotts Road #23-04, Shaw Centre Singapore 228208 Tel: (65) 6235-0077 Fax:(65) 6732-5917 Website: www.amcham.org.sg Singapore Retailers Association 371 Beach Road #02-04/05 Keypoint Singapore 199597 Tel:(65) 6295-2622 Fax:(65) 6295-2722 Email: info@sra.org.sg Website: www.retail.org.sg APPENDIX I. STATISTICS A. Key Trade & Demographic Information 2010 Agricultural Imports From All Countries ($Mil) /U.S. Market Share (%) 8244 7% Consumer Food Imports From All Countries ($Mil) /U.S. Market Share (%) 4964 9% Edible Fishery Imports From All Countries ($Mil) /U.S. Market Share (%) 909 2% Total Population (Millions) /Annual Growth Rate (%) 5.07 1.8 Urban Population (Millions) / Annual Growth Rate (%) NA. N.A. Number of Major Metropolitan Areas 1 Size of the Middle Class (Millions) /Growth Rate (%) N.A. N.A. Per Capita Gross Domestic Product (U.S. Dollars) / Increase over previous year 43,867 23 Unemployment Rate (%) 2.2 Per Household Food Expenditure (U.S. Dollars) Per Annum 8352 Exchange Rate in 2010 (US$1 = S$1.3635) TABLE B. CONSUMER FOOD & EDIBLE FISHERY PRODUCTS IMPORTS Imports from U.S. Market Singapore Imports the World Share (%) (In Millions of Dollars) Imports from U.S. 2008 2009 2010 2008 2009 2010 2008 2009 2010 CONSUMER-ORIENTED AG TOTAL 4628 4072 4964 393 347 452 8 9 9 Snack Foods (Excluding Nuts) 254 243 287 24 26 34 9 11 12 Breakfast Cereals, Pancake Mix 24 26 28 5 5 7 21 19 25 Red Meats, Fresh/Chilled/Frozen 370 258 435 29 19 34 8 7 8 Red Meats, Prepared & Preserved 115 117 137 13 12 14 11 10 10 Poultry Meat 234 178 215 48 32 42 21 18 20 Dairy Products (Excluding Cheese) 817 558 796 36 16 30 4 3 4 Cheese 63 54 64 4 3 4 6 6 6 Eggs & Products 96 94 106 1 1 1 1 1 1 Fresh Fruit 318 313 360 58 59 71 18 19 20 Fresh Vegetables 262 269 327 15 13 16 6 5 5 Processed Fruit & Vegetable 249 224 270 48 42 51 19 19 19 Fruit & Vegetable Juice 58 48 53 22 12 11 38 25 21 Tree Nuts 76 78 93 6 7 10 8 9 11 Wine & Beer 524 384 478 11 7 9 2 2 2 Nursery Products & Cut Flowers 66 63 77 1 1 1 2 2 1 Pet Foods (dogs & Cat Food) 21 21 24 10 8 9 48 38 38 Other Consumer-Oriented Products 1080 1045 1214 101 109 132 9 10 11 FISH & SEAFOOD PRODUCTS 853 767 909 15 13 21 2 2 2 Salmon 32 30 45 0 0 0 0 0 0 Surimi 0 0 0 0 0 0 0 0 0 Crustaceans 244 225 269 6 4 7 2 2 3 Ground fish & Flatfish 37 36 32 0 0 1 0 0 3 Molluscs 88 80 95 4 3 5 5 4 5 Other Fishery Products 452 395 468 5 4 8 1 1 2 AGRICULTURAL PRODUCTS TOTAL 7970 6589 8244 569 506 594 7 8 7 AGRICULTURAL, FISH & FORESTRY TOTAL 9117 7810 9717 649 534 639 7 7 7 Sources: Global Trade Atlas TABLE C. TOP 15 SUPPLIERS OF CONSUMER FOODS & EDIBLE FISHERY PRODUCTS Consumer Oriented Agricultural Imports (In US$ Million) Rank Pa d States Dollars rtner Countr Unitey 2008 2009 2010 1 Malaysia 755 723 880 2 Australia 552 477 557 3 United States 433 374 478 4 China 401 357 427 5 New Zealand 340 255 382 6 France 382 264 350 7 Brazil 328 268 295 8 Thailand 250 235 245 9 Indonesia 194 186 221 10 Netherlands 118 96 119 11 Japan 65 75 94 12 Germany 76 63 81 13 India 71 58 73 14 Italy 53 52 65 15 South Africa 44 41 50 Others 564 547 647 TOTAL 4,628 4,072 4,964 Imports of Fish & Seafood Products (in US$ Million) s Rank Partner ed States Dollar Countr Unity 2008 2009 2010 1 Malaysia 116 116 129 2 Indonesia 113 111 113 3 Vietnam 66 60 76 4 Thailand 64 56 61 5 China 47 46 55 6 Australia 58 41 53 7 Taiwan 51 48 52 8 Japan 42 42 52 9 Norway 44 31 46 10 India 27 27 32 11 New Zealand 15 16 25 12 Hong Kong 19 16 22 13 United States 15 13 21 14 Chile 30 16 19 15 France 7 10 16 Others 139 118 136 TOTAL 853 767 909 Source: GTIS END OF REPORT
Posted: 27 November 2011

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