The year-long durian fever has created much excitement at home in Malaysia. While our heads are beginning to cool, it is good to find the answer to a key question: can we turn the aspirations (of durian as the new economic pillar) into reality. Or is it a case of too much hype, or as some industry players said, we believe in our own propaganda? Can Malaysia transform its durian small holdings into large plantations, scaling up production to meet rising demand? Can the durian fruit become the new economic pillar for the economy? Will the interest and demand in China sustained in the long run?
Let’s take a critical look:
1.Late Start: The commercial planting of durian had a late start in Malaysia. Not till about 5 years ago, beginning from 2012, the ex farm price of durian climbed to over RM10. Only then growers realized that there may be potential in commercial durian planting. The changed weather pattern in 2017 caused 90% decline in fruit harvest and prices skyrocketed to 10 times above normal. Our quintessential durian, all of a sudden, transformed into a golden fruit. From then on, the politicians, local and foreign investors have all become excited and crazy over the possibility of durian,” Now in China not even 1% people eat durian, what if all 1.3 billion join the market?” Everyone is excited at the promise of this mega market; the question remained, how can this potential be realised
2.Named Specie:The Department of Agriculture (DOA) of Malaysia registered some 205 species of durian. Musang King ( D197) and Sultan King ( D24) are two stable species that now account for majority of the “named” durian output. Different durian species grown in different climatic and soil conditions, yielding different taste, texture and quality. For Musang King, good quality and quantity are said to come from Sg Klau in the Raub area of Pahang, accounting for some 30% of total Musang King production in the country. Johore too produce a good crop every year. Thailand and Vietnam; further north of the equator, with different growing conditions; the Musang King produced is of a different quality and taste. Market excitement prompted Thailand and Vietnam to catch up on Musang King production; Thailand especially imported large quantities of seeds and seedlings from Malaysia, there is a national campaign there to plant Musang King. 。
3.Small holders: In Malaysia, durian is planted by small holders in farms average 5 to 20 acres. Unlike Thailand with 200 year of history in the crop; and their commercial durian planting has developed into a substantial industry with large acreage and matured marketing and distribution; in Malaysia, the small holders manage them like garden or small orchard crops. The planting experience is only 80 years. In Malaysia, the planting acreage nationwide is 66,000 hectares, annual production stands at around 330,000 metric tons. In 2017 export revenue reached RM 70 million. The durian planting story is one of self reliance by rural Chinese; there has been little help to support them in horticulture expertise and in marketing of the harvest. After toiling for decades, these small farmers are now detecting a glimpse of hope, is this a promise that their perseverance will finally be paying off?
4.Durian is a forest tree; it grows naturally in the wild. In the past there was little intervention like fertilising or pest control. Many orchards have no irrigation facilities; and not to mention drought management measures. Where abnormal weather is experienced; growers can do little to mitigate. Unlike the large scale oil palm plantation; durians are grown in small holdings without scale and proper management system not developed; all is in the head of the growers! Because of the lack of scale, fertiliser companies do not find it viable to make special formulation for durian trees; farmers go by trial and error, each find their own way to get a good crop. There is no SOP guiding the operation of durian farms.
5.A Premium Fruit: Because the Durian Fruit has less intervention and naturally ripen on the tree, it fetches a better price. Thai durians has become a commodity. Like truffle, cordyceps, bird nest and ginseng, we like to think that durian belongs in the category of fine food. The price should be high, or higher, durian is unique, it is not for everyone, it has its following of loyal fans. Malaysian durian must not compare itself side by side with Thai durian as its positioning as fine food will need a different development strategy.
6.Export to China:In 2015, China imported 299,000 tons of durian valued at USD568 million, excluding paste and other products. Durian ranked No 4 among imported fruits in China, after banana, cherries and grapes. In the 2010-15 period; imports of durian in China grew by 12% (in value terms); and 31% (in quantity terms). Thailand exports 358,000 tons world-wide, valued at USD380 million, Malaysia exports 20,000 tons valued at USD 17m. The average price of Thai exports per ton is USD1061, and Malaysia is USD850. In Malaysia, per durian tree can yield about 73 kg per year (61 of 1.2 kg fruit). The Agriculture Marketing Arm (FAMA) estimates that the durian crop in the country is only at 40% of its optimal yield.
Is the market in China really that big?
According to a statistics released by the United Nations; Singapore imported 17,847 tons of durian, 93％are from Malaysia in 2017. From Malaysia’s annual production of 302,000 tons; the export volume is still very small; In 2015, export stood at RM23m, 2016 it dropped to RM18m and 2017, total exports were RM74m。Thailand is the world’s largest exporter of durian, controlling 90% of global market share. In 2012, Thai durian exports stood at 371946 tons, its primary market is China, Taiwan and Hong Kong.
In China, 300 g of frozen durian pulp retails at RMB180-220. Every 2 kg frozen whole fruit goes for RMB588, inclusive of of delivery anywhere in the country. There is a fruit distributor from the North East annually imports 1000 containers from Thailand, total 22,000 tons (each container is 22 ton). This distributor thinks that with the more superior quality of Malaysian durian, they can at least sell 300 containers; i.e. 6600 tons. The question we must ask is, would Malaysian durian be sold in the same channel as Thai durian? And at higher prices how much can we sell? How would importers adjust the retail strategy, who are these consumers?
We learnt that all those traders who now send frozen whole fruit face many constraints. now they cannot sell in the open and only do online or promotion in small kiosks. Can we pluck the durian fruit before they are ripe? An accidental discovery by a grower found that if one insists on plucking the matured fruit, it can only be done 5 days before they drop. This time window is too short to allow for the export journey. If durians need to be refrigerated and cannot be displayed in the open at the retail outlets, can we push large quantities out to the market?
How to sell premium fruit?
How is durian sold at home all these years? Each time when the durian season arrives, one can find temporary sheds along both sides of the highway or village road; these basic and make shift sheds, with no supporting facilities like toilets or wash basins, worn out plastic tables and chairs. Passing cars will stop and passengers alight to buy or eat durians by the roadside. When the durians arrive into the cities; the same selling pattern is repeated, often sold from the back of a truck. The durian seller opens the durian with his gloved hand; Malaysians eat using their bare hand. Now the Musang King’s value has gone up 6 to 10 times (to RM60 -100 per kg), people are still eating with their hands in the open air. There is nothing wrong about this; but shouldn’t we move on a little? The price of durian has risen, no much has changed to the environment in which durians are sold and its packaging.
We heard that there is a price war going on in China, and there are many Chinese players used to price cutting now in the Malaysian durian trade. If Malaysian durian is such a premium fruit and it is in short supply, and there is a loyal fan club, why are the traders diminishing the value of durian? Do they know that the price elasticity of durian is quite low? Everyone knows nobody wins in a price war? What should we do to realise durian’s value in export markets?
Admittedly there are some bad apples, especially when the industry is in its early stage. In extraction puree, some traders mixed Thai durian with Malaysian durian, mixing D24 with the village unbranded durians to maximise puree extraction. Some promote Musang King from Thailand and Vietnam as from Malaysia. This is a common phenomenon when the the industry has barely found its footing but the risk is that such practices can be self damaging — you throw the baby out with the bath water! The durian sector will not get its chance of becoming an industry; we fail before we have barely started! We shouldn’t allow this to happen, if we do that we are not doing justice to the blessings bestowed on this land the people and what an opportunity to go to waste!
Building the Durian Industry
There are three key issues here; preserving quality and uniqueness, scaling up production and appropriate market positioning and and promotion. The conditions for the durian sector to become an industry need to be created; we need to begin with a paradigm shift and a change of mind set.
- Irrigation for Planting of Durian: One of the critical condition for large scale durian planting is the availability of water. If you go to Sg Klau in Raub, you will find hundreds of pipes sucking water from the river system there. Expert said, durian require a large amount of water; on average 4000 litres of water is needed per tree, ideally irrigate once 3 days. Malaysia has plenty of rainfall, so water is not a problem, but directing the water to where they are needed require investment and effort. We do not have a network of irrigation infrastructure (holding ponds and reservoirs built to support the large expansion in durian average) spread out to the suitable planting sites. The state governments need to review and design a master plan to enable durians to be planted along the slopes of the main range, as well as on flat land. Large and small reservoir ponds to be built in strategic areas. Looking at this may achieve a one stone kill two birds effect, these water holding infrastructure may also provide a permanent solution to the annual flooding in the east coast states.
- Scaling up from small holdings to large plantation; big scale planting requires deployment of large capital. The gestation period is a long 7 years, good durians comes from old trees, only if you have deep pocket can you have patience! One tree on average need an investment of RM5000 before you see any fruits dropping; is there any possibility to inter-crop, and if yes, what intercrop to use and how to sell them? It takes about RM30,000 to build irrigation facilities on one acre; and 10% of the total land must be reserved for water holding. Fertilisers is 50% of the input; it is well known among farmers,” if you feed the trees well, the trees will feed you well in return!” Many existing trees are under-fertilised; growers are reluctant to give fertiliser due to lack of capital or for fear of uncertain prices.
- Shortage of Knowledge Workers: Apart from capital, durian planting is also faced with acute shortage of knowledgeable farm heads and workers. Many planters just hire a team of uneducated foreign workers with a low-paying supervisor, as they said, you paid peanuts you get monkey; experienced or educated farm heads need to be paid and treated well. Modern Farming is precision science, the farm head need to know the science and art of planting; N.P.K, trace elements, EC, what, when, how much and how to apply need a SOP; and when comes to pests and diseases; a lot of care and precision understanding of the environment and horticulture is called for. Gone are the days when you can leave nature to do the job for you; in the plantation sector, you need proper management protocol to produce the desired yield to justify the investment. Big capital is important and necessary, but money alone does not guarantee success. Many large oil palm companies, attracted by the financial potential of durian, they are jockeying to enter the sector; and talks of transforming large acreage with big capital fills the air. It is wiser to begin small, build the team and train the people before scaling up.
- Nurturing he export market:It was mentioned earlier in the article that durian belongs in the category of fine food, not a commodity fruit. As such, we need to target right and get to discerning consumers with the right amount of renminbi. If the price war continues at the retail shops or on taobao; there is no meaning at all. We know for sure, presently and at least for the next 5 years, there would be big spikes in supply, as such with such scarcity in the market, should we know not use durian to promote tourism; “if anyone wants to eat Malaysian durian, come here.” Maybe we are not ready to export; if we haven’t got a good strategy in place, and we allow the importers and retailers to mark up the price at the demand side, and the money is being made by other people and elsewhere; there is really no reason why we should go this way, we need to strategize.
I have been studying the durian sector in the last 12 months and are pleased to report that a new group of durian growers are emerging. Many of these are ex professionals, retired business leaders who want to return to the rural village but still want to be productive and contributing. These group of new durian growers are open and receptive; they are “learning” growers. The big plantation companies are discovering durian planting; with their large capital and experience in plantation management; they could. do the necessary R & D in planting to increase the knowledge for the sector. FAMA has done wonderful work, these efforts can go further into branding the Malaysian durian. We need an integrated strategy that involves the government, investors and growers.
The world of business has changed, it would be wiser to strategize together and move together as a nation and community to win. Many investors could be misled into thinking that it is simple and straight forward, i.e. you get fruits after 4 years; and once they get into the business, they could be paying hefty tuition fees, they soon realise that reality is far from the appearance. A new tree can bear fruit, just like a young woman who starts to menstruate can conceive, but one has to have the patience to wait for full maturity of the body. Same with durian trees, 7 to 10 years is a must for the tree to get is anchor and get established. Most investors too under estimate the amount of CAPEX needed and have under provided. Lim Chin Khee, a durian consultant said, the casualty in new planting is very high; not 10% will succeed.
There is no room for the traders who want to cash in for the short term. For durian to become the new economic pillar for the country, we need an integrated strategy; a partnership between the government, the investment community and the planting sector. The present excitement need to be guided into proper evaluation and planning in order to yield good returns. The Durian tree is not a straight forward crop tree, it takes the nurturing by master craftsmanship of a loving grower, proper care for the tree to grow healthily. Steady hands are needed with backing of good capital for its sustainable development.
Author: Foong Wai Fong, co-founder of Megatrends Asia, best selling author ” Culture Is Good Business” presently consults with Dusun Matahari and Sun Fresh Fruit Hub to help Malaysia build an integrated model for fruit farming. Ms Foong spent 17 years in China from 2009 – 2016. Email: firstname.lastname@example.org, WhatsApp 601238383229