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Hay Dairies turns down land awarded for new goat farm, cites Covid-19 related higher building costs

SINGAPORE — Goat farm Hay Dairies has turned down a plot in Lim Chu Kang just weeks after winning a tender for the land, citing construction costs driven up by the Covid-19 pandemic and a lease insufficient to cover the cost of its planned high-tech farm.

Hay Dairies' existing goat farming operation at Lim Chu Kang Lane 4.

Hay Dairies' existing goat farming operation at Lim Chu Kang Lane 4.

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  • SFA said on Tuesday that Hay Dairies had turned down a plot of land in Lim Chu Kang
  • The goat farm had been awarded the land last month
  • Farm owner Leon Hay said Covid-19 had driven up construction costs by 30 per cent
  • To make up for the lost land, Mr Hay said he will build a new farm with a higher structure

 

SINGAPORE — Goat farm Hay Dairies has turned down a plot in Lim Chu Kang just weeks after winning a tender for the land, citing construction costs driven up by the Covid-19 pandemic and a lease insufficient to cover the cost of its planned high-tech farm.

The Singapore Food Agency (SFA) said on Tuesday (April 6) that it had awarded the 10,000 sqm plot of land along Neo Tiew Road to SG Quail for a bid price of S$420,000 after Hay Dairies withdrew from the tender.

The agency did not provide further details in its updated press statement, which superseded an earlier statement on March 11. An online search suggests SG Quail is a recently formed company involved in poultry and hatcheries.

Hay Dairies was initially awarded the land parcel for general agriculture (food) farming on March 11. It had won the tender with a bid of S$500,000, excluding goods and services tax.

Its existing farm, which produces goat milk, is located at 3 Lim Chu Kang Lane 4. Set up in 1988, it is home to more than 800 goats and employs 12 staff.

In its original press release, SFA had said that the land parcel was tendered using the concept and price tender method.

In this method, the farm’s concept is assessed on its production capability, production track record, relevant experience and qualification, and innovation and sustainability in the first stage.

Tenderers who pass the first stage are evaluated on price in the second stage.

Companies that submitted their proposals incorporated productive and innovative farming systems as well as eco-friendly features such as solar panels, said SFA in its release.

Speaking to TODAY on Tuesday, owner of Hay Dairies, Mr Leon Hay, 42, said that Covid-19 had driven up the construction costs of two new planned farms by 30 per cent.

In addition to the plot he was awarded on March 11, he had also been awarded a 10,000sqm plot of land also along Neo Tiew Road last January. The tendered sale price was S$500,000.

Mr Hay said that the estimated construction cost for both plots of land was close to S$30 million.

He added that he plans to approach SFA to recover the cost of the withdrawn tender.

With only a 20-year lease for both plots of land, the tenure is not long enough to recover the cost of investment, he added.

“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,” he said.

In addition, a new government fund to support local farms in adopting technology would not be enough to help cover the costs of his planned farm.

This is because the grant quantum is lower for farms that do not produce leafy vegetables, food fish or hen eggs, said Mr Hay.

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.

For a goat farm such as Hay Dairies, the co-funding is 50 per cent and up to S$700,000 for eligible farms.

The fund, which will be open for applications later this year, is part of Singapore’s push to increase the productivity of farms so that they can meet the nation’s “30 by 30” target of producing 30 per cent of its nutritional needs by 2030.

Mr Hay said that to date, he has spent about S$100,000 on consultancy fees to draw up plans for the farm and conduct soil and survey tests. This is in addition to what he has paid for both plots of land so far.

Now that he has given up one plot of land, Mr Hay says he plans to expand his farm by “building higher” at his other plot along Neo Tiew Road.

“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.

The new farm is slated to be operational in 2023.

With the lease of his existing farm also due to expire this December, he is also seeking an extension on his lease until 2023 before moving into the new farm at Neo Tiew Road.

Related topics

farm 30 by 30 sustainability

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