The Malaysian Insight

MALAYSIAN planters are ditching the oil palm for the durian tree to meet rising demand for the thorny fruit from China, as palm oil prices continue to dip in world markets. 

The government, too, is doing its part to ensure local durians, especially of the musang king variety, are exported to satisfy the appetite of Chinese consumers.

However, the rush for a share of the Chinese market is creating a headache for smaller durian planters and exporters who feel they cannot compete against big companies.

Musang king durians grow well in Malaysia because of the geography, soil composition and equatorial climate, and the growing demand for the king of fruits in China is proving to be a huge business opportunity, especially for big players.

While palm oil prices have taken a hit, musang king prices continue to rise, fetching RM60-RM100 per kg. Compared to palm oil, currently hovering at RM2 per kg, the returns on musang king can go up to 10 times the investment, even though only about 1% of the Chinese population have tasted the fruit.

Top Fruits Sdn Bhd director Tan Sue Yee said per acre of durian plantation now cost RM500,000-650,000, compared with RM50,000 per acre 10 years ago. This effectively prices out smaller players who wish to enter the business, being unable to secure hefty bank loans.

Tan told The Malaysian Insight many top industry players have converted their oil palm plantations to grow durians with the aim of grabbing a slice of China’s lucrative market for musang king.

“Each acre fetches up to RM650,000, you can’t even get a bank loan for that these days. Big companies can just convert their oil palm plantations to durian plantations instead of buying new land, so small players are at a severe disadvantage as they do not have the financial resources to get into the business,” he said.

Malaysian Durian Exporters’ Association secretary Paul Mak said the price of durian plantations is 10 times the price of 10 years ago, and he would not have been able to get into the business if he had not invested in his plantations three or four years ago.

Growing interest

Big players in the oil palm and construction industry had all diversified into the durian market, with Sime Darby owning plantations for the D24 variety, and IOI and Berjaya expressing interest in following suit. Ekovest has invested RM21 million in the durian business due to falling oil palm prices.

According to data from the Agriculture and Agro-based Industry Ministry, Malaysia has 72,464ha of durian plantations producing 251,910 tonnes of durians a year. There are 204 species of the fruit registered with the ministry.

In 2017, frozen durian exports accounted for RM76.6 million in trade, sharply spiking to RM200.2 million in 2018. The figure is expected to soar to RM350 million this year.

Malaysia has been exporting frozen durians since 2014, and the Agriculture and Agro-based Industry Ministry is now looking to export the fruit fresh.

Minister Salahuddin Ayub told The Malaysian Insight China’s Customs Department would be sending officers here to inspect 10 durian packaging factories and plantations to determine if processing methods and hygiene standards met Chinese guidelines.

“We have invited Chinese officials to visit in May, if everything goes well, we can start exporting fresh durians by the end of the year.

“We have been exporting frozen durians for three years, and our industry players have met Chinese standards. We are confident we can meet their standards to export fresh durians,too.

“Musang king is the best durian, but we are also considering further research on the Ang-Hay durian,” Salahuddin said.

The minister denied the suspension of mega, China-backed projects in Malaysia has had the effect of dampening the Chinese durian demand.

“I went to China last year and had a great experience. The ministry’s secretary-general also had a working visit to China last week, discussions have been good,” Salahuddin said.

Fresh demand

Dulai Fruits Enterprise managing director Eric Chan said among China’s import requirements for fresh durian is that the fruits must not touch the ground.

Chan said this is to prevent bacterial contamination and it can be achieved by means of nets in the plantations to catch the fruits when they fall.

“We have already set up nets in our plantations and should meet China’s requirements for export,” he said.

Chan said once fresh durians are allowed into China, the musang king will see another price surge.

Currently, there aren’t enough durians to meet China’s demands as mass planting has only recently started. With durian trees requiring seven to eight years to bear fruit, it is estimated that local growers can fully meet the Chinese demand in two years.

According to the United Nations Conference on Trade and Development, durian imports per year in China grew 15% to 350,000 tonnes worth US$510 million (RM2.4 billion). About 40% of the imports are from Thailand, the world’s largest producer of durians.

Malaysian exports make up less than 1% of the number, but it is estimated Malaysia will be exporting 22,061 tonnes of durians to China by 2030.

The government is encouraging large scale planting of durians, with the aim of raising the Chinese market share to 50% by 2030. – March 22, 2019.