Fish farm venture is giving some 'very good returns'.
Wed, Jul 06, 2011
The Business Times
By Chen Huifen
ANYONE who is in doubt that farming can be a viable business in Singapore just has to look to Malcolm Ong, 48.
The CEO of Metropolitan Fishery Group had ventured into fish farming as a hobby in 2007 but today runs one of the biggest fish farms in Singapore.
As the man himself told BT in a recent interview, conducted on the waters off Lim Chu Kang, it all started because he had wanted to buy a boat.
'And I'm quite stingy lah, I don't like to lose money,' said Mr Ong. 'So I calculated, and then decided to go into (fish) farming. At least with farming, you can use the boat during the weekdays. Because even if you rent (out) a boat, everybody is trying to use it on a weekend - nobody is going to use it on weekdays.'
And the more he talked with his current business partners, Tay Yong Peng and Lim Sin Guan - or Ah Peng and Ah Guan, as he affectionately calls them - the more he found fish farming to be a feasible trade. In the end, instead of buying that leisure craft that he originally wanted, he invested the money in the farm instead.
Mr Ong admitted that he knew very little about fish farming then, but he read reports of overfishing in Asia, with some painting a bleak picture of seafood disappearing from dinner tables in a few decades.
He felt that fish breeding was the way forward, and seeing how many players in the food industry are doing well, he took the plunge.
Unable to reveal absolute figures for competitive reasons, Mr Ong said the venture is giving some 'very good returns' so far, while annual sales have exceeded $1 million. In terms of volume, the annual tonnage sold rose 74 per cent year on year in FY 2011 ended March 31 to more than 480 tonnes, while tonnage growth in the previous year increased 169 per cent.
Helped by a jump in fish prices in 2008, the company expanded quickly. Excluding the output from its farm in Johor, the operation in Lim Chu Kang has raised its output to 500 tonnes a year, from about 280 tonnes last year.
Metropolitan Fishery supplies grey mullet, milkfish and mussels to supermarkets and restaurants. It also exports to Malaysia. And with demand continuing to exceed supply, the company is hatching plans to grow bigger, but much hinges on whether it can get that extra space.
Earlier this year, it received a licence to operate a new farm in Malaysia's Kukup, where it intends to rear 'more expensive fish'. Mr Ong has also put in a request for one more licence in the Lim Chu Kang area, and another in the waters off Changi.
In two to three years, he hopes to raise total output in Singapore to 1,000 tonnes a year, with at least five types of fish being offered to customers.
Despite the success achieved in a relatively short span of time, Mr Ong said that fish farming is not as easy as it seems. Like all types of farming, it is subject to changes in nature. Just a few months ago, it had to face the late delivery of fish fries due to the exceptional cold weather in the exporting country.
'The other challenge that we have is, to some extent, capital,' said Mr Ong. 'We have investors, thankfully. But let's say, when we go to a bank, if I have a house, or a factory, the bank has a process already. But if I bring a farm, the bank (officers would) scratch their heads and say, 'Aye, how do I do the valuation for a farm?'
'So I think because the industry is new, it takes a bit more time and education to talk to them and explain to them what we do and why this is such a viable business.'
Good workers are also a rarity in the sector and, like many farms, Metropolitan Fishery depends on the experience of old farm hands such as Ah Guan, who help to train foreign workers.
To be really efficient, however, getting bigger is pertinent.
'The problem is, if it's small-scale, you still need some minimum number of people,' explained Mr Ong. 'You cannot have one person carry the net. You need two, three to move the net. . . You need a minimum number of workers to work. I think three is the minimum (for one farm). And if you can't produce sufficient to cover the cost, then you only hire one or two - very tough.'
What helps is the availability of a $10 million Food Fund administered by the Agri-food and Veterinary Authority of Singapore (AVA). Metropolitan Fishery has successfully obtained support for the funding of oxygen pumps and a water-monitoring system that keeps track of oxygen levels. Local retailers, generally, have also been supportive of locally farmed products.
'NTUC has been a very good supporter,' said Mr Ong. 'They gave us a chance and we really treasure that . . . if not, I think we would not have been so successful. Sometimes you just need someone to give you one break - they gave us that one break.'
Beyond fish breeding, Mr Ong is also 'tempted' to go into fish processing, such as making fish fillets, frozen fish and carrying out other types of value add. But that may have to wait until later, as priority will be on growing the capacity at its Singapore operations.
'Actually there are so many things to do, it's just that we can't do everything,' said Mr Ong. 'Like fish processing, I'm so tempted. . . We are seriously looking at it, but farming is still the number one priority.'
For someone who came from the IT industry and almost clueless about fish farming four years ago, Mr Ong described his journey into the farming waters of Singapore as 'fascinating'. While he concedes that he is still not a fish-farming expert, leaving the daily operations to Ah Guan, he brought to the partnership business practices of the modern enterprise - from sales and marketing, to order processing, accounting and auditing.
As he continues to learn new things from his latest venture, he noted that some of the things that he had picked up from the IT industry are actually applicable here as well.
'We deal with a lot of sales and marketing on the IT side,' added the former managing director of French software company Silicomp Asia. 'So the basic principle is the principle of trust. At the end if they (customers) buy from me, I must be able to deliver. In the case of IT, I don't sell a product. I sell a service. It's not like I show you a product, then you buy. I actually promise by contract I will give you this service. So much of it, they must trust me, and I must be able to deliver.
'Similarly, this is the biggest thing that I do. I come in, I talk to people. We sit down and we say we want to go here. Then there must be an element of trust. So I trust that Ah Guan knows what he is doing in the farm. And he trusts that I know what I'm doing when I'm doing the sales and marketing.'
This article was first published in The Business Times.
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