Low hanging fruit for China-Malaysia ties
Kuala Lumpur advances "durian diplomacy" to supply a bigger share of spiking Chinese demand for the pungent fruit
Musang King, a premium variety of durian, is all the rage in China.
Durians and durian-based products such as pastries, desserts and confectionery are among the most searched for items on Taobao, China’s biggest e-commerce platform, and surging Chinese demand for the spiked fruit could drive a major transformation of Malaysian agriculture in the years ahead.
Malaysian officials have recently advanced so-called “durian diplomacy” in hopes of winning a bigger share of China’s market. Currently, China does not permit the import of fresh durians from Malaysia, allowing only for frozen fruit pulp. But if negotiations with Chinese authorities to allow whole fruit exports succeed, Malaysia could soon enjoy a new type of commodity boom.
Neighboring Thailand currently has a near monopoly on China’s durian market. That’s in large part because the country is permitted to export whole fruit durian harvested from trees before ripening. Malaysia’s durian farmers, by contrast, traditionally harvest only when the fruit drops to the ground; China believes the fallen-fruit harvesting method risks exposure to dirt and pests.
Malaysian Agriculture Minister Ahmad Shabery Chee believes the prohibition could be lifted some time year, according to media reports quoting him in November. Known in Malaysia as the “King of Fruits”, officials have put high priority on courting their Chinese counterparts to expand Malaysia’s market access.
China’s new ambassador to Malaysia, Bai Tian, was treated to a durian feast earlier this month at an orchard in Bentong, a budding eco-tourism destination in Pahang, the country’s top durian-growing state. The town, roughly an hour’s drive from Kuala Lumpur, hosted an annual international durian tourism festival last year that drew huge crowds.
Apart from diplomatic niceties and pledges to forge closer bilateral ties, Bai affirmed Malaysia’s goal of bringing whole fruit exports to China and even called for Bentong to become a landmark in China’s Belt and Road Initiative (BRI).
Famous for their pungent onion-like odor and bittersweet custard, durians are a polarizing Southeast Asian delicacy. A range of textures, flavors and aromas can be attributed to the seed-bearing yellow carpels, the only edible part of the fruit, found under its thorn-covered husk.
Last October, Malaysia’s agriculture ministry helped to organize a landmark three-day durian festival in the southern Chinese city of Nanning that attracted tens of thousands of visitors. Around 3.8 tons of frozen whole Musang King durian were imported for the event, with special permission from Chinese authorities.
Malaysian premier Najib Razak, who has personally championed the country’s ‘durian diplomacy’, has publicly encouraged his country’s durian entrepreneurs to adopt global export strategies.
His advocacy for the fruit was on full display last May during a visit to Beijing where he presented a delegation of Chinese leaders with 43 premium Musang King – known elsewhere as Mao Shan Wang – durians to commemorate 43 years of bilateral ties.
Malaysia’s durian growers are well positioned to profit from spiking Chinese demand. China’s durian imports have grown an average 26% per year over the past decade, reaching a whopping US$1.1 billion in 2016.
Sales of the fruit generated US$495.6 million in revenue for Malaysian growers in 2016, with some 302,000 tons produced over a total area of 66,038 hectares. Durian trees now claim nearly half of the land cultivated for fruits in Malaysia.
Challenges posed by changing weather patterns and low crop yields have so far impeded global exports. Moreover, Malaysian durians are known to ferment quickly because they are harvested only when ripened, shortening shelf life and making long-distance exports to places like China less viable.
While Thai durians lead the Chinese market, Malaysia’s richer and more pungent durians are generally perceived as superior in quality.
China’s taste for Musang King durian make it the most profitable variety, but the premium breed has painstakingly specific water and fertilizer requirements, and is regarded as more demanding in its crop husbandry.
The Malaysian Agricultural Research and Development Institute (Mardi), a government body, is bidding to remedy some of these issues to promote more exports.
Mardi has developed new durian species designed to bear fruit at different times of the year to ensure continuous supply for export markets. The research body has also worked toward utilizing a “minimally-processed” technology designed to extend the shelf life of durian to enable better marketability by air or sea.
While these developments have been welcomed by growers and entrepreneurs, some analysts believe the sector is fragmented, with too many individual farmers and not enough large-scale commercial production.
“What the durian industry needs is a government agency responsible for the promotion and development of the industry in Malaysia, balancing domestic needs with challenges in export growth,” said Malaysian agriculture expert Lim Chin Khee.
Malaysia utilized such a scheme to bolster its palm plantations under the auspices of the Federal Land Development Authority (Felda), now the world’s largest crude palm oil producer. The agency was founded to organize smallholder farms and is now synonymous with government aid to rural Malaysia.
Palm oil, widely used as a cooking oil with applications as diverse as producing biofuels and consumer products, has been increasingly linked to deforestation and illegal slash-and-burn practices used by farmers to clear land, often resulting in massive transnational air pollution that has frequently clouded Southeast Asia’s skies.
The European Parliament recently voted to ban palm oil in motor fuels from 2021 to curb deforestation and to meet the continent’s ambitious climate goals. The move prompted protests from Indonesia and Malaysia, which together produce nearly 90% of the world’s palm oil, on grounds the ban would be discriminatory and devastate their respective rural communities.
The ban, which Indonesian and Malaysian political leaders have derided as protectionism, will likely have a near-term adverse impact on the global palm oil industry, which currently earns more than US$40 billion per year. Though the vast, state-organized palm oil industry is highly profitable, falling global demand for the crop could push Malaysian farmers into higher-income durian growing.
Agriculture Minister Ahmad recently said that durian orchards could fetch annual returns of around 100,000 ringgit (US$25,800) per hectare, or around triple the 30,000-to-40,000 ringgit (US$7,740-to-US$10,320) currently earned per hectare of oil palm. “We have found a new ‘gold’ and it’s called durian,” he recently said in promotion of turning Malaysia into a “durian economy.”
Durian’s big money-making potential and rising negative perceptions of the palm oil industry could also drive the kind of major production-boosting investments in technology long called for by entrepreneurs and enthusiasts.
“We need systematic cultivation of durian and scientific management of plantations,” said Simon Chin, a durian entrepreneur specializing in downstream products such as pastries and desserts. “It is clear that durian is the most lucrative cash crop from a value per acre perspective.”
As such, prices for durian plantations in Malaysia have almost doubled over the past year, according to the Straits Times, with Chinese investment driving the trend. Apart from rising plantation prices, another major obstacle investors must contend with is the long gestation period for new plantations: durian trees only begin to bear fruit after 10 to 15 years.
But if Chinese demand for the “King of Fruits” continues to surge and China’s import ban on Malaysian whole fruits is lifted, more growers can be expected to plant the trees with an eye towards exports and higher returns.