Throughout the past 5 years, the harvest area for durian in Malaysia has been expanding, as durian is one of the most profitable fruits for farmers and exporters. The Malaysian Musang King durian has one of the highest Brix levels out of all durian varieties with a Brix level between 39 and 44. Of the several varieties of durian produced and exported in Malaysia, the Musang King variety is the most popular. Around 65%-70% of the Musang King variety is produced in Pahang, located in central Malaysia. In 2018, the Musang King production volume was between 18K tons and 25K tons and is expected to reach 40K-50K tons in the next five years.
The global trade of durian fruit is currently dominated by two countries, whereby China dominates the import activities, while Thailand dominates the export. In 2016, Thailand had reported exporting 402 million kilograms of durians, occupying 95% of the global trade, followed by Malaysia with approximately 4%. On the other hand, in the same year, China had dominated the global imports with 292 million kilograms or 66% of the overall trade, followed by Vietnam, Singapore, and Hong Kong, with a percentage of 19% for Vietnam and 4% for Hong Kong and Singapore, respectively.
Generally, the durian fruit has a high demand in its raw fruit form compared to durian-based end products. Furthermore, the retail value of durian’s request, both domestically and internationally in the form of natural fruit, which is fresh, frozen, paste and pulp, were estimated to be worth more than 9 USD billion in 2016. The global demand and trade are expected to grow further, exceeding 25 USD billion by 2030, driven mainly by the Chinese’s demand.
The Durian Ecosystem in Malaysia
Sindiyan Group owns the largest durian plantation in Malaysia. It is a plantation company with the specialty of providing sustainable agricultural, agroforestry, food manufacturing, and related services. They currently own 9,588 acres of private land in Lojing Highlands, Gua Musang, Kelantan and have successfully planted nearly 100,000 Musang King durian trees within 2,500 acres of land. They are working on creating a plantation integrated with agriculture and eco-tourism, transforming into an internationally renowned Musang King Durian Eco Park that brings positive ecological and socio-economic development.
The cultivation of durian in Malaysia used to be a small-scale operation. The majority were characterized by “Dusun” or smallholdings of half or 1 hectare each. Usually, durians are also intercropped with other fruit trees. The local farmers did not see this fruit-growing as a money-spinner compared to other commercialized crops like oil palm, cocoa, rubber, etc. However, soon, the interest in durian farming had increased over time with the decrease of price in oil palm, cocoa, and rubber. Ever since the past few years, durians have been highlighted as one of the chosen fruits grown in the Malaysian National Agro-food Policy (2011-2020). The durian has also been identified as a new source of agricultural wealth when the government announced plans to encourage farmers to invest in agro-tourism in May 2019.
In July 2017, the price of Musang King had increased steadily, reaching over RM100 per kilogram. The price rise has caused an increase of interest in durian cultivation by many folds. Since then, the durian has become the most popular crop planted in Malaysia, occupying 41% of the land cultivated, or approximately 70,000 hectares, achieving a total production volume in 1,000 metric tons of 210,870 (Figure 4). These days, durians, especially Musang King, have been considered as a brand-new source of income for Malaysia. In 2016, durian production decreased slightly mainly due to the prolonged drought condition in the major growing areas such as Penang, Pahang and Kedah; however, the cultivated area and production increased back to nearly 73,000 hectares in the year 2018.
The demand for frozen and fresh durians, especially Musang King from China, is increasing annually. With Hernan Corporation as Malaysia’s most prominent and leading exporter of Malaysian durians, the overall export volume of Malaysia’s durian has expanded by 143% within the five years between 2012 and 2017. The price of the durians has increased by 530% within the same period. The general cultivated area devoted to the durian plantation in Malaysia has also doubled multiple times. In May 2011, Malaysia had successfully obtained permission from the General Administration of Customs China to export frozen durian to the China market. Many farmers and plantation owners, including foreign investors from China, are eager to grab this golden opportunity when this good news is first released. Hence, plans to increase the production volume further to meet the growing China market demand is made.
Based on the figure above, the annual production volume of durians in Malaysia seems to drop from 2015 until 2017. This is due to the replanting of old trees with new types or new varieties of crops. Tropical fruits like durians tend to take between 3 to 7 years before they start fruiting.
Major Trends in the Durian Industry
Asia-Pacific Dominates the Market for Fresh Durian
Asia-Pacific has dominated the market of fresh durian, with Thailand and Malaysia contributing to the significant share in the total production in the region. Thailand exported a total volume of 496,915 metric ton of fresh durians in 2018, which shows a considerable increase compared to 486,730 metric ton in 2017 and 402,660 metric ton in 2016. In addition, Thailand has a tremendous comparative advantage in transportation cost for exporting to China, the world’s largest importer of fresh durians. This advantage has boosted domestic production to meet the surplus required for the export market.
Based on a Bank of Thailand (BOT) survey, the area under durian cultivation has increased considerably since 2016, with fresh durians accounting for 95.8% of the total share in exports. The Government of Thailand has been emphasizing strengthening the distribution channel for stimulating consumption of durians among the Thai by recording a memorandum of cooperation with giant retailers like Tops Market, The Mall, Big C, Tesco Lotus, Makro, and Tai Market.
In 2019, the Malaysian Department of Agriculture, along with the Malaysian Agricultural College, donated 900 durian trees consisting of grades D99 (Small Coffee), D159 (Manthong), D200 (Ochee), D175 (Red Shrimp), and D197 (Musang King) to boost the clone production of durians in the country. Hence, the abovementioned factors are further expected to increase overall production in the region throughout the forecast period.
Asia-Pacific: The Fastest Growing Region
A new-found demand for the creamy texture of the Malaysian Mustang King variety, along with the ever-growing demand for Mon Thong in China, has led Asia-Pacific to become the fastest-growing region for fresh durians. China accounted for 65.0% of the total share in import value in 2018, with a total imported quantity of 431,940 metric tons of fresh durians during the year compared to 224,382 metric tons in 2017.
With an expanding base of health-conscious consumers and middle-income households, the market for durians is further expected to boost the country as the fruit is a rich source of nutrients such as Iron, Vitamin C, and Potassium. In addition, the demand for the fruit has reportedly emerged as an essential topping on pizzas and hotpot broths, along with increased usage of durian pulps and pastes in the foodservice industry. Thus, we expect the market for fresh durians to register rapid growth in the region during the forecast period.
Covid-19 Affects Global Trade Volume
The durian market operated relatively unaffected during the first lockdown, which is between March and May 2020. The Malaysian durians had continued to be a massive hit in China, mainly driven by the strong demand and consumption from the Chinese. The market was picked up quickly as soon as the pandemic in the republic was successfully controlled. This is mainly because durians from Malaysia are one of their favorite fruits in China. Durians are often sought after by buyers as a special present for the Chinese’s families and friends.
The import of durian from Malaysia accounts for a tiny percentage of the market share in China, approximately 10%. Malaysia’s durians are only available in certain major cities in China, such as Shanghai, Guangzhou, Guangdong, Beijing, or online platforms. According to the Embassy’s statistics, China had imported 3,200 tonnes of frozen durian pulps and pastes from Malaysia — which amounted to USD 41 million in 2018.
However, the second lockdown has seriously damaged Malaysia’s durian market. The ongoing Covid-19 pandemic negatively impacts domestic durian sales. This situation has caused the Malaysian durian industry to rely on the Chinese market’s demand even more than previously.
The Malaysian government did not halt the export of Malaysian durian. However, the transport cost is high, and the product quality fluctuates. The uncertainty in product quality and high transportation cost has caused the Chinese demand for Malaysian durians to decline. Each shipping container can hold roughly 4 tons of frozen durian, but traders are required to control the conditions in the shipping containers strictly to maintain the stability of the product quality.
As the largest durian consumer globally, Malaysia had only received permission to export frozen durian products to China in 2011. In August 2018, only the General Administration of Customs China allowed Malaysia to export fresh and frozen durian to the Chinese market. Before the outbreak of Covid-19, Malaysia annually exported 500-800 tons of frozen durian to China. The export value reached between 64 to 96 million yuan, approximately USD 9.9 million to USD 14.85 million.
Conclusion
To sum up, it is undeniable that the durian industry in Malaysia shows a huge market potential due to its high demand for both raw and durian-based end products, not only in Asia but also among western countries. Despite the global pandemic, we can see that the market is fairly unaffected and is expected to grow alongside the trend. The market today is profitable, and investors should jump into it if they can. As the market continues to expand, durian planters should start planning to meet up with increasing demands to avoid inflation. Investors should remain optimistic and believe that the situation will recover soon, with the help of human’s innovation, technological advancements, and most importantly, the nations’ unity in fighting against the pandemic.
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