When Malaysia announced that it was going to impose a chicken export ban on 1 June in order to stabilise the prices and supply of chicken within its domestic borders, Singapore was stuck between a rock and a hard place.
First off, 33% of our chicken imports come from Malaysia, mostly live chickens, broiler chickens, and premium chickens such as kampung and black-bone chicken.
By virtue of being neighbouring countries, merely separated by a bridge, there’s an ease of transport of both goods and people, which has allowed for economic trade deals to prosper.
However, the statistics also show that Singapore is not wholly dependent on Malaysia for its chicken exports: we get half of our supply from Brazil (48%), then the United States and other countries.
While there are many negatives about liberal markets and capitalism, there’s a definite advantage to it.
When there’s demand, there will be supply. Competition will always exist.
Negotiations Between Indonesia and Singapore
One of the ways to make up for the chicken deficit is to look for alternate sources or increase the amount of supply that we’re receiving from the current pool of suppliers.
For the latter, Singapore has brought in more chicken from Thailand and Australia, which has ensured that the prices of chilled chicken aren’t as liable to huge price fluctuations.
For the former, Indonesian authorities have revealed that negotiations have begun, and they hope that the two countries can reach an agreement soon.
According to Reuters, Susiwijono Moegiarso, a senior official at Indonesia’s Coordinating Ministry of Economic Affairs has been quoted saying that “technical discussions” are ongoing, and they hope that the exports can start next month.
To corroborate with the statement, Singapore Food Agency (SPFA) has released a public statement, confirming that they are “working closely” with Indonesia as a potential source of chicken imports.
The Advantages of Choosing Indonesia
One of the main things to understand about chicken imports for Singapore is that we don’t lack in supply for frozen chicken. Brazil and the United States have more than covered.
Rather, Singapore is more concerned with fresh and chilled chicken, so geographical location plays an important role, because live/chilled chicken has a significantly shorter shelf life, and there are a lot of difficulties that come with shipping live poultry.
To any pet owner who has brought their pets overseas, you know how troublesome one animal can get; now imagine the number in the thousands. It’s a serious headache.
Hence, Indonesia, being one of the closest countries to Singapore is a plus point.
Secondly, Indonesia is the biggest and most populous country in the Southeast Asia region, with more than 270 million people living on its soil.
However, Indonesia is in a different position compared to Malaysia, wherein they have a surplus in chicken production.
Having an excess in supply would mean that the domestic price of their chicken is more likely to be lower, and they will hardly face any shortage issues that might cause price hikes.
On average, Indonesia produces 55 to 60 million birds per week, and has 15% to 20% left over after covering domestic consumption.
So think like a businessman: if you have extras that you don’t need and its poultry that you can only keep around for a limited amount of time, why not profit off it instead?
With the void that Malaysia’s chicken export ban has caused, Singapore has an estimated demand of 3.6 to 4 million chickens that needs to be filled.
It’s a figure that Achmad Dawami, the Chairman of Indonesian Poultry Breeders’ Association, believes that Indonesia can easily step into, without compromising their own domestic situation.
The Slight Snag in The Slaughter
However, there are a few problems to solve first.
Singapore wants to import live chicken for the sake of keeping their domestic slaughterhouses in operation.
On the other hand, Indonesian exports are more used to, and prefer to export slaughtered chicken, since they don’t have as much experience shipping live poultry.
There are pros and cons to this arrangement.
If Singapore accepts this deal, local suppliers can reduce the cost of labour and rent generated by slaughterhouses, since the chickens are already pre-slaughtered before shipping, which means possibly increasing their profit margin.
However, some citizens may potentially lose their jobs at the slaughterhouses, which isn’t ideal from the perspective of the Singapore government
Whereas for Indonesia, they have everything to gain and nothing to lose.
Mr Dawami is fully aware of this fact.
In his interview with Reuters reporters, he emphasised on the importance of seizing the opportunity while they can, or else they “will miss the momentum”.
After all, Malaysia has already partially lifted their chicken export ban, and has promised that the ban will be temporary.
There is only a small window of opportunity for Indonesia, if they wish to sink their figurative claws into Singapore’s chicken markets.
Given the current circumstances, it’s highly probable that Indonesia will take up a percentage of Singapore’s chicken imports, both in part of diversifying our sources and ensuring that the panic won’t repeat itself.
Meanwhile, Malaysia won’t be cut out of the equation completely, but they will lose out on a portion of their market share, just as some Malaysian economists have predicted.
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