Ep 32 | Dr. Neoh on Food Security and the Agricultural Sector

In another new episode of the second season, we speak to Dr. Neoh Soon-Bin, Managing Director, Soon Soon Group, about food security, price inflations and learn about the benefits of governmental partnerships in the agricultural sector. Dr. Neoh brings an insightful perspective from the food and feed ingredients industry in Malaysia, and listen to the end for a quick introduction to the making of the Peranakan dish - Assam Laksa.

Transcript

Hi everybody, I’m Duke Hipp, host of Asia’s Farm to Fork: 5 Good Questions podcast and we've got another great guest with us today.

We have today, Dr Neoh Soon-Bin who is the Managing Director of Soon Soon group of companies in Malaysia.

Dr Neoh, how are you?

I’m great! Thanks for asking me to come on.

Excellent! We’re glad you could do this and if it’s okay, in the spirit of the 5 Good Questions, we’ll start with the first one and get going.

Yeah, sure.

Okay, first question I have for you is, I suppose, the tougher one out of the gate here, it’s around food security. Food is always topical and timely across Malaysia and across all of Asia and with good reason. According to the latest data from the United Nations just last year, the number of hungry people in Asia in 2021 rose from 419 million to 425 million.

That means of course, in Asia, our region continues to lead the world when it comes to the number of people affected by hunger.

Could you maybe share a little bit about Soon Soon Group and how you see your work within the organisation and your company helping support the larger effort in driving food security in Malaysia and elsewhere?

Okay, I understand. You guys are based in Singapore and two years ago, we stopped exporting chickens to you because we were short of chickens. 

That’s right.

And Singaporeans were up in arms without their chicken rice. Until today, I feel that the portions are smaller in the Mandarin Hotel.

So obviously, food security is an issue that affects the whole world.

I may have people lining up to buy food in the United Kingdom, I mean, in Malaysia, we’re short of eggs, chickens and everything else.

So, this is obviously an issue, which is, should we say, very important to every country and every government.

And the reason why this is happening — and I believe that it might get worse before it gets better — is because of the changes that happen especially after 2020.

Of course, you had the pandemic, which effectively destroys the workforce.

What happened during the pandemic was, there was a dislocation of labour, because Malaysia depends on foreign labour for its agricultural sector.

So about 2 million workers actually left and nobody came back for a couple of years. So there were actually shortages, serious shortages in farms.

The other problem of course was the dislocation of the supply chain.

Containers that used to come in a month would come in two to three months, and nobody knows when it’s going to come.

So there was a big panic. Many countries including Malaysia ran out of certain raw materials.

So, what happened was, in 2020 our company changed our stocking policy from “just in time”, which is normal, to “just in case”.

Subsequently, most countries did that and that resulted in even more shortages.

Especially with the geopolitics, you know what happened in Russia and Ukraine, created kind of like a chain effect, causing India to stop their export of wheat as well, and the prices to (?) skyrocketing.

That was actually quite scary at the time because many flour mills in this region had contracts in Ukraine and India, which suddenly disappeared.

Of course, geopolitics has a very big effect on food supply because essentially, countries can say, “I don’t like you,” “I don’t buy your food,” or “I don’t sell it to you.”

We are so dependent on trade to keep our food chain alive that any kind of disruption like the Ukraine-Russia war, has a very big impact on prices and availability.

So, food supply and security has become a priority. So that actually creates perhaps not such a healthy consequence, which is — countries will try to grow their own food.

Like, for example, Malaysia imports almost 80 to 90 percent of its food and raw materials - all the wheat, all the corn, all the soybeans are imported, and a lot of the rice.

So the government starts to say, “why don’t we grow corn?”

I attended a seminar and I told the government - in America, they can achieve almost ten tonnes per hectare of corn per hectare. But in Malaysia, so far, we can only achieve three tonnes.

However, we can produce 3.5 tonnes of palm oil, which is something like four to five times the value of corn.

So, why would we produce corn, which has about one-fifth the actual value? Then the land that you use for producing corn becomes ineffective, and you wouldn’t produce palm oil.

Therefore, you wouldn’t have income for the poor people. A lot of palm oil plantations are also smallholders in Malaysia.

They don’t get income, so you are going to make them poor. So it comes back to the basic point - what is the price you need to pay for food security?

Now, of course the third elephant in the room is the sustainability issue especially the new green deal in the EU, which essentially says, look, we want to be a carbon-neutral continent by 2050 and reduction of greenhouse gas emissions by 55 percent by 2030.

What that would imply because of the Scope 3 which measures third-party greenhouse gas emissions, you can’t supply anything to the EU from outside if it produces a lot of carbon.

So essentially you couldn’t import raw materials from, let’s say America, like corn and soybean, make it into chicken feed, feed it to chickens and export it back to Europe. That won’t work because you didn’t get a 55 percent reduction by the year 2030.

The new green deal is encouraging local inefficient production of food.

Of course one of the big export items from the US to all over the world is soybeans and in the tropics, they grow soybeans. The average yield is 1.5 tonnes per hectare, and in the US it’s 3.3 tonnes.

So if you start attempting to grow more soybeans, that means you have to grow less of something else. And you could even make the shortages worse.

So I think I don’t have an answer to your question, but I think I have a lot of questions myself. How are we going to navigate through this incredibly complicated future, which has geopolitics and sustainability issues, efficiency of production, livelihood of people…

Very complex, Duke, it’s not easy to answer that question.

All understood. Thank Dr. Neoh. I would like to get into some of these topics, it’s a very thorough answer, appreciate your views on that.

If it’s okay, I’d like to go onto the second question. I’d like to maybe dive specifically into the Europe part of the discussion around food security. Looking a little bit in more detail into the food and feed industry that you’re with.

The question is, a greater awareness around where food comes from, generally, is a (?) just like growing development, but at the same time, greater awareness is not exactly a deeper understanding of where your food comes from and there’s certainly a lot of misperceptions that come with that.

Are there any misperceptions when it comes to again, the role of food and feed ingredients industry and that your company and others are playing here in the region?

Absolutely. I think consumers do not understand where their food comes. I mean, to be quite honest, that’s a deliberate act by food companies.

And if you knew, for example in the UK I read that fresh fish in Sainsbury's is actually 14 days old. You don’t want that information to be on the package.

So, people don’t really understand how the food and feed ingredients actually interact with each other.

For example, does the average consumer know that it takes only 30 days to grow a chicken to 2kg using only 1.4 kilogrammes of feed? That information is not readily available and therefore, the romantic notions of having a few chickens in the backyard…

Yeah, it’s not going to cut it because that’s going to take probably 6 months and you’ll probably only get 1 kilogramme.

The food industry is an extremely efficient and connected industry. If you remove any part of it using sustainability reasons, then you could cause a huge inefficiency, or worse, shortages.

That is something that I think we are very aware of. But the consumer, no.

They still have the romantic idea that all these happy chickens are still running around in circles. That kind of thing is not happening today, not in our industry.

Efficiency is the most important because to be fair to the industry, they have managed to keep the cost of meat and food relatively cheap compared to inflation.

I always tell people that the price of chicken today in the market is about the same as the when I was growing up in the sixties.

So how efficient is that? The inflation is probably more than a thousand percent since the sixties.

So I believe consumers are not aware because they also need low prices. Low prices would need certain efficiencies to be built into the system, which is very dependent on supply chain and production disruptions here.

Yeah, thank you again for that answer. There are no easy questions here unfortunately. We talked about food security, we dived a little deeper into the perception of consumers and now, I’d like to move over to sustainability, something you touched on there specifically just a few moments ago.

You know sustainability has grown from less of a buzzword to more of a societal expectation around natural resources, healthier diets and greater awareness when we talk about where food is coming from.

One initiative that you already referenced here in our chat that’s been getting a lot of attention globally and in the region, that’s the EU Green Deal, specifically, the case for food in Asia. 

Can you share your thoughts on how we can drive more sustainable food production and supply chain here in Asia, and your view specifically on the Green Deal.

I think the Green Deal, like it or not, it’s a European deal, right? But I’m not sure that that’s a good deal for them even.

For the rest of the world… I talked to USSEC and the Americans, and they said that they have analyzed it and it is going to cause food inflation.

Prices are going to go up if you implement the Green Deal.

Of course, that causes a little bit of a panic, because the Green Deal is insisting that the Scope 3, which is the emissions of third parties, have to be taken into account.

You can’t say, I’m going to grow my chickens in Thailand and ship it in, no.

You have to do a lifecycle analysis, and come up with the greenhouse gas emissions, and that’s the number they want.

So what that actually does is that it’s telling people that you need to have raw materials close by and in a reliable manner.

So the only way to do that is to grow your own. But as I’ve said, the yield of soybeans in Asia is only 1.4 tonnes actually, and in the US it’s 3.3 [tonnes].

Now in China, there’s a big, shall we say, pressure from the authorities to grow more soybeans. But if you grow more soybeans inefficiently, what would happen?

Then you don’t have enough wheat, then you don’t have enough corn. So how does that help the overall picture? It doesn’t, right?

Obviously, you’re getting corn and wheat from more countries than you can from soybeans, so politically or strategically, that might be a good idea.

But from the perspective of efficiency and livelihood, I don’t think that’s such a great idea.

So basically, what the Green Deal says, that they also want to build sustainable economies and nobody is going to be left behind.

If they are serious about that, and they were to look into the livelihoods of farmers in Southeast Asia that export to Europe, maybe they can see that the livelihoods of these people will be seriously impacted if they couldn’t export to Europe because of the greenhouse gas emissions.

Of course, every country now from what I know, like Thailand, Vietnam, even Philippines, and I’m not sure about Indonesia, they are trying to have their own, shall we say, sustainability programmes and do their own lifecycle analysis.

So ultimately, I think this will push production away from efficient countries like the US, South America, even Eastern Europe towards inefficient production in Indonesia, Thailand, Philippines, which obviously have much lower yield.

God gave us about 100 inches of rain and 365 days of sunshine. Why would you want to grow a crop that only needs sunshine for 3 months? What would you do with the other 9 months?

So, we want to grow crops like palm oil that needs that sunshine and rain, or like mangoes, which have much higher value.

Why should we be forced to grow things with less value?

Thanks, Dr. Neoh. It’s a tough one and a hot issue so I wanted to get your views on that. Thanks for your views.

The fourth question that I want to touch on here is in relation to this region and what your organisation is doing. 

I want to talk about the smallholder farmers because it’s something that we talk about a lot on the podcast, and we hear about the view and narrative of the smallholders because it’s such a unique one here for our region.

As you know, home to the smaller sized farms in the world, and the largest number of smallholders in the world, and so for these growers, there are so many issues that come with that.

Access to market is of course, one of the bigger ones, right? Are there any recommendations that you would have for countries in this region to help smallholders maintain and grow their competitiveness in light of these challenges that we’ve just gotten into?

I think Malaysia is one of the few countries that made small holdings successful in the palm oil industry. However, those have run into problems as well.

Because the next generation, or the two generations after the first generation, don't want to become farmers. They want to be bankers or lawyers or something.

So they are very short of labour as well.

So how that was successful was because they had government backing, and they have a, shall we say, communal harvesting, and there was a complete supply chain that was built around those farms.

So, it was very much a government intervention that made it successful.

Of course we already know that the production of corn and soybeans are much lower in Asia because essentially most of them are smallholders.

Eventually it’s all like this - if you need a lower carbon footprint to make your product exportable to Europe, then the cost of producing it, the raw materials is not as important right?

I mean, if you could sell it at a higher price, you can afford higher [priced] raw materials.

So, if the Europeans are willing to pay you a good price, technically your farmers will be able to produce the raw materials for you, maybe at a larger cost but you could pass that onto the Europeans.

So technically, this kind of compromise might actually work, but of course, that might make the prices of food go up.

It will have to be a compromise, but smallholders are obviously in a better position to supply domestically than importing it because of this new deal, the green deal that looks closely at Scope 3.

So maybe that’s the rule of the smallholders, which is that they need to be part of this sustainability programme and somebody who has to pay that extra money for their inefficiencies.

That’s the way I look at it, because there’s no other way unless the government has a massive intervention.

Thanks again doctor, again, tough issue, we appreciate your views on that as well.

We got into some complex issues in this discussion and I’d like to end this interview as we do this season talking about something a little bit lighter.

You touched earlier on chicken rice in relation to the chicken shortage from last year, and it comes down to the food we eat.

An easy question of the season, straightforward and more fun, what’s your favourite food for our region that you enjoy the most?

You know, to ask a Malaysian that question… It’s like, we’re spoilt for choice, right?

Malaysia has got the most multicultural, multiracial, and even multi culinary environment.

I think what’s interesting about Malaysia, a lot of people did not realize that the Chinese actually came much earlier in the 1500s.

I think some emperor decided to marry off his daughter, one of his daughters to the sultan here, so a big group of Chinese came.

Now obviously, they were mainly men, some women but mostly men. They married the local Malays and from there, they developed a cuisine that is known as the Peranakan or nonya cuisine.

That’s interesting because that creates a unique cuisine that obviously doesn’t exist anywhere else.

One of my favourite nonya cuisines is what we call the Assam Laksa, which is like a sour laksa.

And in particular, the one cooked by my mum. My mum was actually quite an incredibly good cook and she’s quite famous for her cooking, but her assam laksa was incredible.

However, it shows that life is not what it used to be. It takes 2 days to prepare.

First day they will boil the fish, a special fish which is full of bones.

Then they spend the whole day picking out the bones, believe it or not.

Then they put that in the fridge. The next day, early in the morning, they start boiling the soup with the fish and everything else and it goes on for about five to six hours.

By about lunch time, you have soup which you would add onto the rice noodles, and that’s what you get, the assam laksa.

So that’s my absolute favourite, however, it goes to show that we don’t have that kind of time anymore.

I think we need something that’s off a can or package or something.

That kind of dish is extremely difficult to produce but there are obviously quite good ones, so assam laksa would be one of my favourites if not my absolute favourite.

That’s a great answer, some things are worth the wait and sounds like that dish is certain well worth the wait.

Thanks Dr. Neoh for doing this, once again, you’re officially off the 5 Good Questions hotseat and we appreciate it.