Wuhan virus messes up durian exports to China
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THE demand for durians has taken a massive hit in China because of the novel coronavirus outbreak, resulting in Malaysian exporters suffering a glut in fruits, slow down in orders and possibly unpaid invoices for fruits delivered.
The flip side to this is that local durian lovers can expect plentiful supply at a much cheaper cost.
Malaysian Durian Exporters Association president Sam Tan told The Malaysian Insight China imported large amounts of durian in time for the Lunar New Year period but the novel coronavirus epidemic had led to a sharp drop in purchases.
“Chinese distributors stocked up on durians in preparation for the Chinese New Year celebrations, but now they can’t sell them.
Top Fruits Sdn Bhd managing director Tan Sue Sian said China has extended the holidays in response to the epidemic, first from January 30 to February 2, and now to yesterday.
He said it would only be clear this week if there is a drop in orders.
Sue Sian said durians are generally off-season after the spring holidays until June, and durian exporters can only prepare as the situation unfolds.
Tan meanwhile said suppliers freeze their durians for storage after cleaning them so they can still take orders during the off season.
“Nobody expected that as soon as we entered the Year of the Rat, this (outbreak) would happen, many exporters anticipated more orders during the spring holidays and that they’ll continue to receive orders in the coming months.
“The Wuhan virus really messed up our plans,” he said.
The outbreak began in the Chinese city of Wuhan in Hubei province six weeks ago and has infected more than 34,000 people and killed more than 800, most of them in China. Malaysia has registered 17 cases of infection.
Tan is not ruling out cancellation of orders, saying it will just be the first wave of losses that suppliers will suffer, with the second wave being the reduced demand of frozen durians after the holiday season.
Some exporters will divert their stock to the local market to mitigate their losses, he said.
“But local demand is limited. Most of these processed durian products were supposed to be sold in China. With sales being affected, there’s no way to offload such a huge amount of durian.”
Sue Sian said durians that are frozen along with their shell can be stored up to 18 months and exporters may stock up during the durian season.
“But generally speaking, the amount of durians we export to China is not meeting demands,” he said.
Sue Sian also said local distributors have told him that nobody is leaving their homes to shop in China, but the silver lining is that most of the existing stock there is sold.
“We estimated that we could have doubled the amount of exported frozen in-shell durians from 300 tonnes to 600 tonnes this year, but now we can only see what happens next and plan accordingly.”
Payment issues
Tan said the export market is slow now because of the coronavirus crisis and there’s not much exporters can do but wait and see.
He is anticipating trouble when it comes to collecting payments from Chinese businesses as well.
“Chinese buyers ordered durians last year in anticipation of the spring holidays and their billing period is usually after the Chinese New Year. Now the question is whether we will receive our payments.”
He estimates that the durian exports market will recover by June if the epidemic is brought under control soon.
Wuhan has been placed under lockdown since January 23, other cities quarantined include Huanggang in Hubei province, Fuzhou in Fujian province, Wenzhou in Zhejiang province, among others.
Deputy Prime Minister Dr Wan Azizah Wan Ismail said yesterday Putrajaya has extended its travel ban to include Chinese nationals from Zhejiang and Jiangsu provinces, after Hubei.
She said the travel restrictions will be enforced in accordance with the Chinese government’s “lockdown” of territories. Beijing has sealed off 16 cities in Hubei, including its capital, Wuhan, five cities in Zhejiang and two cities in Jiangsu.
Sue Sian said exporters are now facing logistical issues as Zhejiang province is one of the places where durians are exported to.
“So far, Malaysian durians are exported to Guangzhou, Shenzhen, Huadong and Shanghai,” he said.
Tan, meanwhile, said some logistics firms in China have stopped accepting orders because of the lockdown of several cities in China, and diverting delivery routes will also both cost more and take more time.
Cheaper musang king
The drop of exports to China, however, will be good for locals as the oversupply of the thorny fruit is set to bring down prices here.
Durian expert Lim Chin Khee has been quoted in news reports as saying that the price of the highest grade musang king variant has dropped from RM60 to RM30 per kg.
“Many of the farmers in Raub (Pahang) and other parts of Malaysia have stopped processing durians for China as they don’t want to take risks,” said Lim.
“What if the virus situation gets worse? We will have a lot of unwanted durians in cold storage.”
Chinese companies are importing less because locals in mainland China have “no mood to eat” durians given the widespread anxiety over the virus, he said.
The customs department of China on May 30, 2019 officially allowed the import of in-shell frozen durians from Malaysia. Imported durians have to meet local inspection and quarantine requirements.
After receiving the green light from Chinese authorities, Malaysia started exporting durians to China on June 17 the same year, with musang king durians reaching Shanghai within two months. Within three months, 565 tonnes of durians were exported, earning Malaysia an estimated RM24.3 million. – February 10, 2020.