Singapore – Vertical farm GroGrace faces imminent closure, but its co-founder Grace Lim is still looking for a lifeline to prevent her from joining the growing farm

Click here for a list of indoor farms with shutters

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Grograce, which is operated by Urban Farming Partners Singapore, announced on February 8 on social media platforms that it will close down on February 14.

However, Mr Lim, 52, told The Straits Times that he would extend the deadline until the end of this month to explore potential partnerships with other farms and investors that could keep the business going. He declined to identify the groups he is negotiating with.

With the company in arrears on rent and utility payments, Lim said he was forced to face the fact that it might be time to let go of the company.

She said: “We don’t have much time left. So if nothing materializes in the next few days, unless a miracle happens or money comes in from somewhere, we will have to close the shop.”

Speaking to ST on February 24, Mr Lim opened up in a rare interview about the challenges faced by farmers navigating the local farming scene within the farm’s Jurong premises. The farm occupies space within an industrial building.

many vegetable fields,

Including IFFI and Growy

, It has closed in the past three years. As of February 4, there were 101 licensed vegetable farms in Singapore, down from 115 in 2023.ST checks government data show.

Past farm closures were made known through liquidation notices, but the farm’s founders did not respond to requests for comment.

Agricultural technology experts and consultants attribute the closure to:

High capital and energy costs

supply chain collapse and decline in investor confidence.

In November, the government announced:

Lower local food production targets

It was first announced in 2019.

Previously, the country aimed to produce 30 percent of its nutritional needs by 2030. By 2024, locally produced vegetables will account for 3 percent of the country’s total food consumption.

One of the new targets is for Singapore to produce just 20 per cent of its fiber needs, consisting of leafy vegetables, sprouts and mushrooms, by 2035.

Ms Lim cited high operating costs as the main factor plaguing her company, which was officially launched in November 2022.

Utilities account for the largest portion of the farm’s monthly operating expenses, amounting to about $20,000. Labor costs for the four staff members who help grow and package the vegetables and maintain the farm amount to more than $15,000 a month, she added.

Mr Lim said he had not received a salary since the farm began operations. She oversees operations and performs delivery, marketing, and all other business functions.

GroGrace was first conceived in 2019. At the time, electricity costs were about 15 cents per kilowatt hour (kWh), Lim said. But in 2022, when the farm started, the rate more than doubled to 33 cents per kWh, she added.

Energy prices are rising around the world

After Russia invaded Ukraine

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In addition, the COVID-19 pandemic delayed construction of the farm, which began in 2020. Lim said the renovations, which were scheduled to last nine months, took a year and a half.

Debt began to accumulate and the company struggled to finance logistics and personnel. “We started operating the farm with a negative bank balance,” she said, adding that her farm has not been able to make a profit since it began operations.

ST has reviewed and confirmed Urban Farming Partners Singapore’s financial records through the Accounting and Corporate Regulatory Authority portal. The company has been losing money since at least fiscal year 2020, with a loss of about $400,000 in fiscal year 2024, according to documents.

Singapore Food Agency (SFA) plans to support local farmers also include subsidies disbursed under the Agriculture and Food Cluster Transformation Fund; To cover the cost of introducing technology into agricultural operations.

meanwhile

Farm soft opening in August 2022

then-Senior Minister for Sustainability and Environment Amy Cole said in a speech at the time that GroGrace had received funding to install a dry hydroponic system. In this system, plants are grown above the water surface, which improves the absorption of nutrients.

gros laceUtilizing Dutch horticultural technology to achieve higher productivity, It is estimated that up to 33 tons of agricultural products can be produced annually within the 750 square meter facility, which is the size of two basketball courts.

Having production capacity is another thing. Finding customers to sell to is another thing.

Lim recalled that the farm donated as much as 40 per cent of its vegetables. To the non-profit organization Hao Ren Hao Shi For several months, agricultural products were not sold.

According to Lim, vegetables are being sold at a loss.

She said the high price of vegetables compared to imported varieties has made it difficult for her company to secure orders.

GroGrace’s website sells 200g of curly kale for $8.60, and other vegetables such as naibai for $5.80 for 300g.

By comparison, NTUC FairPrice sells 300g of kale from the European Union for $5.99, while 300g of naibai from China sells for $1.97.

Despite claims that the vegetables were clean and pesticide-free, customers weren’t buying them. Mr Lim added: “Selling vegetables in Singapore is much more difficult than selling a Rolls-Royce or a Rolex.”

Lim said the farm is still operating at full capacity, growing up to one tonne of vegetables every week. She primarily sells to wholesalers, hotels, and e-commerce customers.

“Our biggest competitors are imports from China, Malaysia, Europe and even Australia.”. So people will ask, “Oh, why is Australian produce cheaper than yours?”” said Lim.

He pointed out that while foreign farmers often benefit from policies that subsidize farming costs, Singapore does not offer such subsidies. For example, the EU budget from 2021 to 2027 has nearly €300 billion (S$447 billion)

European Agricultural Guarantee Fund

provides income support to farmers.

Zaki Mohamad, Senior Minister for Sustainability and Environment, told Parliament in January:

We do not intend to provide subsidies.

It’s not about reducing farm operating costs or subsidizing locally grown produce. In return, governments are providing capacity building and support for new and productive farming methods to overcome land and labor constraints.

Mr Lim said even if new business opportunities come his way, he must think twice before accepting them.

For example, she was given the chance to supply vegetables to a major supermarket chain here. But she no longer had the funds to invest in the necessary logistics, including trucks and drivers.

In response to ST inquiries, the SFA said on February 12 that it was aware of the impending closure of GroGrace.

“As Singapore’s agricultural industry is still in its infancy, the SFA recognizes the challenges faced by our farmers, especially high-tech indoor farms, which, like high-tech indoor farms in other countries, are most affected by inflationary pressures in energy costs,” the agency said.

“To this end, SFA will continue to utilize space and infrastructure for agriculture, facilitate access to finance and support growing demand.”

Despite the headwinds, the SFA said the overall outlook for Singapore’s agriculture sector is promising, with productivity increasing year on year. From 2019 to 2024, farm productivity increased by 10% for vegetables, 17% for seafood, and 50% for eggs.

Mr Lim, who started the farm out of the belief that customers want clean, pesticide-free produce, said he has no intention of remaining in the industry if Grograce eventually closes.

Still, she believes indoor farming is the future of agriculture, especially as the industry is increasingly affected by climate change.

To revitalize the local agricultural sector, she suggested strengthening partnerships between farmers and agri-food research groups. This could allow commercial farms to benefit from research results, rather than breakthroughs being limited to laboratory settings, she said.

“Please use part of my farm for your innovation and commercialization,” Lim added. “Once you develop an energy-efficient component, install it on my farm and watch how crops grow on a real farm, not in a lab.”

He also expressed hope that the government could do more to help farms control operating costs, such as conducting collective bargaining between farms and electricity retailers to secure preferential energy rates.

The SFA said it “remains committed to actively supporting the growth of Singapore’s agricultural industry” as local produce is an important and renewable food source that acts as a buffer during supply disruptions.

The agency added that Singapore ensures food security through multiple dimensions, with local production being just one pillar. Other strategies for doing so include diversifying import sources, stockpiling, and forging global partnerships.