Local goat farm Hay Dairies was awarded a 10,000 sqm land parcel in Lim Chu Kang on 11 Mar, but it decided to turn down the land due to the increase in construction costs and a lease insufficient to cover the cost of its planned high-tech farm.
Hay Dairies’ land parcel in Lim Chu Kang was initially tendered for S$500,000 via the concept and price tender method, as reported by ST.
TODAY reported on Tuesday (6 Apr) that Hay Dairies has withdrawn from the tender, resulting in the Singapore Food Agency (SFA) awarding the plot of land along Neo Tiew Road to SG Quail for a bid price of S$420,000.
It was said that Hay Dairies had also been awarded a 10,000 sqm plot of land along Neo Tiew Road last Jan with a tendered sale price at S$500,000, on top of the plot it was awarded on 11 Mar.
Its existing farm was established in 1988, located at 3 Lim Chu Kang Lane 4, which is home to more than 800 goats and has 12 employees.
Owner of Hay Dairies, Leon Hay told TODAY that the COVID-19 pandemic has driven up the construction costs of two new planned farms by 30 per cent.
Noting that the estimated construction cost for both plots of land was close to S$30 million, Mr Hay said that he plans to reach out to SFA to recover the cost of the withdrawn tender.
According to him, the tenure will be insufficient to recover the cost of investment with only a 20-year lease for both plots of land.
“If the lease was longer, like 30 or 40 years, we can still manage. If there is a longer period, we can plan how to recover the amount, but for a farmer to take back tens of millions of dollars in 20 years, it is really a challenge,” said the 42-year-old.
Despite a new government fund to support local farms in adopting technology, Mr Hay said it would not be enough to help cover the costs of his planned farm, because the grant quantum is lower for farms that do not produce leafy vegetables, food fish or hen eggs.
For example, a vegetable farm looking to adopt advanced technology may receive co-funding of 70 per cent up to S$4.5 million for the technology under the Agri-Food Cluster Transformation (Act) Fund.
Such farms may also receive additional co-funding of up to S$1.5 million if they are setting up a new farm site or retrofitting indoor spaces.
As for a goat farm like Hay Dairies, the co-funding is 50 per cent and up to S$700,000 for eligible farms.
Mr Hay shared with TODAY that the consultancy fees to draw up plans for the farm and to conduct soil and survey tests had cost him about S$100,000, on top of the fees that he had paid for both plots of land so far.
He now plans to expand his farm by “building higher” at his other plot along Neo Tiew Road, after giving up one plot of land.
“My initial plan was to build a farm that was two to three storeys but now I may build up to five storeys,” said Mr Hay, hinting that the new farm will be in operation by 2023.
TODAY also highlighted that Mr Hay also seeks to extend his lease until 2023 before moving into the new farm at Neo Tiew Road, given that the lease of his existing farm also due to expire in December this year.
“Govt wants to achieve food security and yet not willing to give long lease to farmers”: Netizens
Penning their thoughts under the comment section of TODAY’s Facebook post, many netizens noted that the Government should “do more” to help the local farms in Singapore if it aims to achieve the ambitious “30 by 30” goal – a target to produce 30 per cent of the nation’s nutritional needs locally by 2030.