Singapore importing more low-priced vegetables from China

China's market share of vegetable exports to Singapore increased to 29% in 2011, an eight percentage point rise from 2002.

This still places China behind Malaysia in total market share, as Singapore's neighbor continues to hold a commanding 43%, but the former is closing the gap fast, according to a blog post from National Development Minister Khaw Boon Wan in a blog post titled "Consumer Preference and Our Sources of Vegetables."

Indonesian vegetable exports suffered the most with China's advance, dropping to 4% market share from 8% over the same nine-year period. Australia also weakened to 4% from an 8% market share.

"Price is often a major factor that influences consumer behaviour and vegetables are especially price sensitive given its daily consumption. We import most of our vegetables and the sources of import reflect our consumer preference. There has been significant change in the profile of these sources," said Minister Khaw Boon Wan.

"In the past 10 years, China, with its competitively priced vegetables, has expanded its market share of vegetables in Singapore by 8 percentage points, at the expense of traditional sources like Australia and Indonesia. Take Indonesia as an example. China’s rising export has reduced its volume of vegetable export to Singapore from 32,000 tonnes in 2002 to 21,000 tonnes in 2011," he said.

"The drop in vegetable imports from Indonesia is especially drastic for heavier vegetables like potato and sweet potato. What could have led to the drop in import of potatoes and sweet potatoes from Indonesia? Pricing is one huge factor. The difference between Indonesian and Chinese potatoes is about $0.40 to $0.65 per kg. This price differential is not small. China now has a market share of 35% (16,540 tonnes) compared to Indonesia’s 9% (4,349 tonnes)," he added.

"Meanwhile, our closest neighbour Malaysia remains our largest source of vegetables, with 43% of market share. Geographical proximity has its advantage, from logistical view point. There is potential for Indonesia to increase its export to Singapore. There is an Indonesia-Singapore Agribusiness Working Group and we will see how we can work through it to implement practical initiatives," he said.

Among these initiatives, Minister Khaw Boon Wan suggested to study the cost structure of Indonesian agri-produce to identify bottlenecks in exporting from Indonesia; to map production sites, logistics routes and facilities for key Indonesian provinces; to engage in information exchange on the list of vegetable varieties preferred by Singapore consumers and the source of seeds for targeted vegetables to help increase the yield and productivity of produce; and to hold more promotion fairs with supermarket retailers to showcase Indonesian agri-produce.

"Ultimately, the beneficiaries are our consumers. Diversified sources mean that they will have a larger basket to choose from. With added competition, prices for some vegetables will come down too," he said.