Construction yet to begin on Singapore's 4th egg farm, which was scheduled to start operations in 2024

SINGAPORE: Construction for Singapore’s fourth egg farm has yet to begin despite initial plans for one of its facilities to be operational by this year. 

The update was given to shareholders who sought clarifications on why the project was delayed during an annual general meeting held by engineering and service solutions provider Ellipsiz in October. 

Singapore-listed Ellipsiz is a shareholder of ISE Foods Holdings (IFH), the local company that was formed to set up and operate the farm. IFH is collaborating with ISE Japan, a top egg producer in Japan, for the project. 

Plans for the egg farm were announced as early as 2021, when IFH signed an agreement with the Singapore Food Agency (SFA) to kickstart the development of the S$100 million (US$74.3 million) project. 

The farm will comprise four main facilities: A commercial egg farm and a day-old-chick hatchery in Lim Chu Kang, a parent layer farm in Sungei Tengah, and a parent pullet farm in Tuas.

A parent pullet farm raises imported chicks until they are about 18 weeks old, after which they are transferred to the parent layer farm, which is where chickens lay eggs that will be sent to the hatchery.

Construction was expected to start in 2022, with the 10ha commercial egg farm slated to be operational by 2024. The other three facilities were to be ready by 2026. 

Upon its completion, the farm was expected to produce 360 million eggs annually, boosting the local egg industry's ability to meet about 50 per cent of the demand for eggs here - up from about 30 per cent currently. 

However, the project has been beset by delays, with a filing by Ellipsiz in July citing the COVID-19 pandemic, supply chain disruptions and inflationary pressures from geopolitical tensions as reasons. 

Ellipsiz also noted the need to enhance the farm's biosecurity measures in light of the diseases affecting birds spreading around the region. 

The company said then that it might need to re-evaluate the viability of the egg farm.

MORE PLANNING NEEDED

During Ellipsiz's 29th annual general meeting, held on Oct 22, IFH's CEO Joseph Kang Boon Teck said the project remained viable. Minutes of the meeting were uploaded onto the Singapore Exchange on Nov 21. 

Ellipsiz's chairman David Ong Kim Huat noted that IFH's entry into the egg sector was aligned with Singapore's goal to produce 30 per cent of nutritional needs locally by 2030, as the government sought to reduce reliance on imports to enhance food security. 

This was despite recent news that a local egg farm has had to keep its production of eggs below maximum capacity due to a lack of demand for local eggs. 

Mr Ong and Mr Kang also addressed shareholder concerns about the egg farm's lack of progress. 

A shareholder who attended the meeting asked why development costs had increased despite the company's extensive preparation and studies on feasibility ahead of the project. 

She observed that the company still cited lingering effects from the COVID-19 pandemic and supply chain disruptions even though the situation had improved this year. 

This shareholder also expressed disappointment over the decision to venture into the egg farm project given that a re-evaluation of its viability was now required. She then asked if construction on the egg farm had started, and how much costs had increased. 

Another shareholder asked why the company was still discussing construction after three years, noting that costs would have been lower before the Russia-Ukraine war.

In response, Mr Ong noted that construction of the egg farm had not yet begun and that this was fortunate as it would have resulted in "significant cash outflows", according to the meeting minutes. 

Weighing in, Mr Kang referred to the rise of disease outbreaks, such as bird flu, and the effects of climate change in the past 24 months of planning. He said that IFH needed to address these issues to minimise disruptions to the farm's operations. 

Mr Ong said that more land was needed to address biosecurity concerns, and this was highlighted by a consultant IFH was working with. 

Biosecurity involves a farm taking measures to prevent the spread of infectious diseases to its animals. 

In the three existing egg farms in Singapore - Seng Choon Farm, N&N Agriculture and Chew's Agriculture - biosecurity includes isolating hens in houses fenced within a production zone. 

IFH needed to ensure that every aspect of the facility, including equipment requirements and biosecurity considerations, were considered in architectural drawings, Mr Ong said.  

Due to the need for more land and rising development costs, further planning was necessary.

While the land premium for the 10ha plot - set aside for the commercial egg farm - had been paid, IFH had to decide whether to start construction - ignoring biosecurity concerns - or to work on an alternative plan. 

"IFH then decided that it was imperative to approach SFA and propose for the egg farm to be developed in phases and at the same time explore ways to reduce development costs," the meeting's minutes recorded Mr Kang as saying. 

Mr Ong also stressed the need for "careful assessment" before starting construction as stopping the project midway could have "dire consequences". 

Mr Kang said SFA had acknowledged rising costs to be an issue and was in discussions with IFH to resolve its challenges. 

According to the records, IFH is finalising its plan to submit to SFA and is hoping to provide shareholders with an update soon. 

In October, SFA said in response to CNA TODAY's queries that it has been working closely with IFH to help it set up the farm. CNA has reached out to the agency for an update.

FUNDING 

The board also addressed queries on funding for the egg farm and construction costs. 

Mr Ong said that IFH was working on an initial amount of S$110 million to complete the egg farm project, but that the amount has since increased due to the reasons stated. 

One shareholder asked whether SFA had provided any grants to IFH so far and whether the costs would be shared among the shareholders. He noted that the group only had a cash reserve of S$50 million.

Mr Ong replied that while Ellipsiz would be expected to fund the development costs proportionately based on its shareholding interest, the egg farm project will not be funded entirely from the group’s cash reserve, as a portion of the funding would be covered by SFA grants - under the Agri-food Cluster Transformation Fund - and bank loans.

Mr Kang added that IFH was reviewing development costs and is in discussions with SFA for additional funding. IFH has not received a grant from SFA so far. 

SFA will also assist IFH in its discussions with banks to secure loans, Mr Ong said.

ISE Japan will not be providing any funding, he added.

Once the additional land was confirmed, and a grant from SFA secured, IFH would decide on its next step. Mr Ong expected that a decision on the egg farm would be reached within the next year, the records added. 

According to Mr Ong, construction of the egg farm would take around two to three years.