China’s reopening stirs Southeast Asia durian export competition

Competition in exporting durian to China is rising between long-time player Thailand and newbies Vietnam and the Philippines as the world’s largest market for the fruit reopens after Covid.

In the southern province of Tien Giang, Nguyen Van Dong has invested VND800 million ($33,649) in growing 200 durian trees that are expected to fruit from next year.

The 50-year-old used to grow rice and jackfruit on the land, but with their prices plunging four years ago and failing to recover, he decided to chop them off and replace them with durian, and hopes to increase his income 10-fold.

Growing durian has become the latest trend in southern Vietnam following the rise in the price of the fruit, especially after China began to allow its official import from Vietnam last September.

The country planned to have 75,000 ha under durian by 2030, but the figure has already exceeded 80,000 ha and is growing, and this has alarmed the Ministry of Agriculture and Rural Development.

Last year durian exports were worth nearly $400 million, including $300 to China.

But to put it in perspective, China’s total imports of the fruit were worth $4.2 billion, a seven-fold increase from 2017, according to its customs.

Thailand, the first and biggest fresh durian exporter to China, has been working to increase output in response to this growing demand.

In 2021 its exports to China grew 68% to 875,000 tonnes. It harvested 1.29 million tons that year, 30% higher than in 2019.

Nikkei newspaper quoted an unnamed official at the Thai embassy in Beijing as saying: “China’s imports are already high, but per capita consumption is expected to grow further. Thai farmers are highly motivated to expand production.”

But the new competition from Vietnam seems to be of concern to Thailand.

Vietnam’s farmers have an advantage because they could afford to pick their durian for export later than their Thai counterparts since shipments take less time to reach China, SCMP quoted Thai academic and agriculture specialist Sakda Sinives as saying.

“Even without any clear difference in terms of taste ... the riper fruit from Vietnam will slowly get higher prices, while the price of durian from Thailand will fall.”

Besides, Vietnam will not be Thailand’s only competitor after the Philippines recently became the third country to get approval to export durian to China.

The Philippine News Agency quoted a local agriculture official as saying durian exports to China are expected to be worth $150 million in the first year and create 10,000 direct and indirect jobs.

The country plans to export 7,500 tons to China in March.

Malaysia, which grows the “best durian in the world,” Musang King, is also seeking to meet Chinese hunger for the fruit.

The Malaysia International Durian Industry Development Association is eyeing increased exports of the fruit and related products to China through better branding and quality control.

Its chairman, Fang Ming, had said in December that while Malaysia boasts the world’s best durian, exports are affected by its lack of a streamlined process, causing it to lose market share in China.

“Although Musang King has the best taste, it is facing tough competition from Thailand and Vietnam, and maybe other markets in the future,” New Straits Times quoted him as saying.

Malaysia is the world’s second largest exporter of durian after Thailand, and China accounts for 79% of its frozen durian exports.

In November Malaysia’s PLS Plantations Bhd signed a deal with a Chinese agri-product distributor to export durian.

It hopes to achieve 30% annual growth in exports in the next three years, and plans to distribute the fruit in China’s most populous cities and provinces like Beijing, Shanghai, Guangzhou, and Shenzhen.

With ASEAN and China being each other’s biggest trade partners last year with a total of $975 billion, it is expected that more Southeast Asian countries will eye durian exports.

Quality vs quantity

Though it took four years for Vietnam to negotiate the durian trade protocol with China, it has lots to do to strengthen its farming and distribution to meet the latter’s quality requirements.

“Our exports need to meet Chinese consumers’ standards and we need to respect their desires and regulations,” To Ngoc Son, deputy head of the Asia and Africa division at the Ministry of Industry and Trade, said.

“That is how we can ensure a sustainable export channel to this market.”

However, quality does not seem to be the top priority for Vietnamese farmers, who are instead seeking to increase export volumes by growing more.

In the last three years the area under durian in Tien Giang Province has expanded by 21% to 17,600 ha. Neighboring localities such as Can Tho City and Hau Giang Province have been witnessing a similar trend, with thousands of hectares added in recent years.

Farmers say durian prices have tripled in Tien Giang since the end of 2021 to VND75,000 per kilogram now.

Durian is said to be the most profitable export fruit fetching VND1-2 billion per hectare, higher than other popular items such as dragon fruit and green skin pomelo.

As farmers chop down coffee, pepper and rice crops to farm durian despite warnings that unsuitable soil would hit yields and quality, the agriculture ministry has recently issued a warning to slow down the expansion.

“The reckless surge in durian farming could lead to oversupply,” it said in a statement targeted at farmers in the south and Central Highlands.

It also called on local authorities to make plans to cope with the loss of rice paddies and apprise farmers about which areas are suitable for growing durian.