What is food safety worth?

It is no surprise that, due to limited land and sea resources, most of the food that you find in Singapore come from overseas.

According to the Agri-Food and Veterinary Authority of Singapore, the island state imports over 90% of all food. Local farms and producers contribute as little as 8% of vegetables and fish and 26% of eggs in Singapore. The rest of our food comes from all over the world.

This means Singapore consumers are exposed to one of the most complicated food supply chains in the world. It is a great credit to the local authorities that supply chain shocks and crises have had minimal effect on the local market.

But as we have seen across Asia and Europe, the public is becoming increasingly aware, and concerned, about food safety and security.

The authorities can only do so much however. It is up to producers, distributors, and retailers to make sure the public has faith and trust in the businesses that are importing and selling food products. Trust must be worked for every day, and can be lost in a moment.

Are we expecting too much of food suppliers?

We want world-class health and safety, compliance with fast-evolving regulations, prompt delivery, and product innovation. At at the same time consumers expect branded suppliers to exist on a 2% gross margin.

In any other commercial environment consumers understand that quality comes at a cost, and that less expensive goods mostly means lower quality. But when it comes to food the situation is, of course, different.

The recent commentary on the rising cost in baby milk formula is a good example of this. Consumers want quality and guaranteed supply…but do they want to pay for this? If retailers and consumers want trust in their food supply chain, the reality is they should expect to pay a little more.

Public trust in the food supply chain is of paramount importance—especially when so much of our food is imported.

It's all about communication

There are a number of ways the agribusiness sector can increase trust in the supply chain and increase the value of their products:

Open book accounting: This principle is quite common in the agribusiness sector. Open book accounting basically opens aspects of a company's accounts to all stakeholders – management, employees, suppliers, and the public. In the food industry context this allows the suppliers to improve their plant and quality control and effectively pass on the costs to the retailer.

For the consumer this means there is greater transparency in relation to where product cost is coming from. Paying a 3% premium for food that has a greater investment in quality assurance is probably an acceptable margin increase.

Business integration: The more food retailers treat critical suppliers as an extension of their own business, the better the quality management will be. Retailers need to understand their suppliers' own supply chain, business continuity plans, and how they run their business.

Retailers should invest in having thier own people permanently based on site and working with the suppliers on their quality infrastructure and investment objectives.

Quality Assurance: Audit suppliers' quality control processes as part of supplier balanced score card assessments. These should include real incentives, such as better or more stringent terms of business based on their scores.

Industry cooperation: Food quality scandals hit everyone's sales. It's an industry-wide issue that requires an industry-wide approach. Erstwhile competitors should consider comparing experiences of working with (and improving) suppliers and being consistent in messages about how they should improve. Everyone benefits from more cooperation when it comes to safety.

Singapore is in a fortunate situation. The regulators and official institutions involved in food supply and safety are some of the best in the world – few others have such import-specific focused experience. But as more and more Singapore and businesses become involved in international agribusinesses, the risks become more and more complicated.

Domestically and internationally there is great potential for businesses to cooperate and collaborate to educate the public about food safety and what quality means.