The Durian Industry In Malaysia: Supply, Demand, And Export Potential Essay.

Durian Production and Uses

Question:

Discuss about the Supply And Demand Of Durian In Malaysia.

Durian is one of the most favored tropical fruits in the world. Durian production is mostly found in Southeast Asian countries especially in countries enjoying tropical climate such as Malaysia, Indonesia, Thailand and Philippines. This is a fruit, which is green to brown in color, round in shape and covered completely with sharp thrones. This has a variety of uses. In addition to direct consumption, processed durian is used into pastilles, jams, for flavoring cakes, ice cream and rolls.The edible part of durian is frozen and packed in polystyrene trays. Durian is of great economic importance in these countries because of its value in domestic and export market. The derived export potential is realized from environmental differences between countries leading to diversified fruit schedule among countries. The widely extended export market especially that of Asia opens up high opportunity for durian industry.

The essay critically discusses durian industry in Malaysia. The short run and long run supply and demand of durian in Malaysia is discussed. Today China constitutes a high demand for Malaysian Durian. Many tourists from China visit Malaysia to taste Durian. The rapidly growing demand of durian in China it one of largest importer of Durians from Malaysia.          

Durian supply

Except Singapore almost all Southeast Asian countries produces Durians. The marketing of durian in these countries focus both on the local and international market to meet domestic and international demand. In terms of volume of production,Malaysia stands second, next after Thailand (Amekawa et al., 2017). In off-season when there is shortage of durian supply in Malaysia then it imports Durian from Thailand to fulfill domestic demand.

In order to have fully grown durian it needs one to two months for flowers to develop into fully fruit. Durian is produced in different regions of Malaysia. In West Malaysia, there are two seasons for fruiting. It is grown during south west and north east monsoon or both. In West Malaysia the supply of durian is divided into three region.

North Region

The north region zone covers states like Kedah, Penang, Perils and northern Perak. These states have wet weather during August to November and a dry weather is realized during December to February. The flowering timing in these regions is January to March.  A short dry spell in June often gives a second flowering season during July or August. However, this depends on locality and intensity. In the north region the main durian harvesting season is June July. Some local areas as in Seberang Jaya has harvesting season in the late of April.  In the Penang Island and some of the eastern region the harvesting seasons starts in May (Arshad & Hameed, 2014). In this crop cycle it peaks in July and ends up in August. The durian season in Northern Perak’s is generally in June.

Durian Supply in Malaysia

These region comprise southern Perak, Negeri Sembilan, Pahang, Johore, Selangor and Malacca. There are two dry spells in these regions. One is during January February for two three weeks and the other is from October to December. As a result, there are two flowering seasons- February to April and July to September. There are two fruit seasons as well. One is from June to August. The other is for a relatively small period of December-January (Daud & Mokhtar, 2017). The main regions in these zones are BalikPulau in Penang, Jasin in Malacca, BatuPahat in Johore, Parit, BatangPedangin Perak and Kuala Kangsar. There is one durian season in Jerantut. This is in December- January.

The east coast is expanded from Kelantan in north and stretch to down through Terengganu and include the coastal areas of Pahang to Kota Tinggi in Johore. In the east coast region, durians are grown only in one season. July to September is the main season for Durian harvesting here with flowering season being in between March and June. In the first half of North East Monsoon, there is a wet weather. The duration of north east monsoon is from October to January. The weather is moderately dry in the rest of the year. In the east Malaysia, the durian season extended between June and August. In Sabah, there is a relatively small durian season in November and December (Masrol et al., 2017).

The durians produced in these two states of east Malaysia are mainly used for meeting local demand. These two states do not export.

The estimated production of durians in the last decade was 128,555 metric tons, which rose to 180,715 metric tons. The estimated area for durian plantation is 48,000 in 1988. The increasing demand for tropical fruit requires more land to be brought under cultivation. In order to increases supply in the long runthe estimated land area has increased to 68,000 hector (Krishnen et al., 2016).

However, increasing area under cultivation is not sufficient for raising the durians. The harvests depends on the amount of rainfall and other natural factor. When supply fell short of demand, then price automatically goes up. Recently, Malaysia faces a problem of supply shortage for durians. The low harvest is the result of heavy rainfall. The harvest regions are not receiving high rainfall. This hampers durian production. The reduced supply of durians given its demand directly affect the price. The domestic consumer now facing excessive price hike. One popular category of durian is Musang King Durian, locally known as Mao Shan Wang has been sold at a recorded high price of RM100 per kg.  Because of wet weather condition, durian trees find it difficult to bear flowers. Bearing flowers requires dry weather for at least one month or two. The farmers are worried as harvesting cannot be improved even using fertilizer. The Chemical fertilizer cannot resolve the problem of unfavorable weather condition.

The Effect of Weather on Durian Production and Prices

The Malaysian Durians are exported worldwide. Apart from domestic demand, there is high demand of durian export. The producers and exporters of Durians in Malaysia mainly target the European market. From the side of market demand, the largest demand are coming from United Kingdom. France and Germany follow UK in terms of demand (Chamhuri & Batt, 2015).

Today China constitutes huge demand for Durian. China becomes one of the largest importers of durian in these days. China imported nearly 299 thousand tones Durian from Malaysia and Thailand. This figure does not include durian paste and other products. The amount nearly equal to the entire production of Malaysian Durian.  In China, Durian ranks fourth in China’s fruit import. The import demand raises at an annual growth rate of 12 percent and the valuation increases by 31 percent (www.themalaysianinsight.com, 2017).

The growing demand from China encourages farmers in Malaysia to export to China’s market. Many tourist from China come Malaysia and visits farm there. Recently, farmers in Singapore report that Malaysian farmers are exporting a major share of their production to China. This creates difficulty for Singapore Durian lovers. Tourists from China visits Malaysian market and buy the king of fruit (www.thesundaily.my, 2017).

Demand and supply forces in the market determine the market price. When demand exceeds supply then price increases. This is what happens in the market for Durian. Increasing competition for durian is creating upward pressure on prices. As Malaysia now imports more of their harvested durians to China, sellers in Singapore face a supply shortage because of reduced supply of imported durians. The low supply makes durians more expensive in Singapore. With this share of Singapore in the Durian market of Malaysia is might be shrinking.

The demand boost in China also affects the domestic price of durian in Malaysia. Farmers in Malaysia are now more interested to export their produced and increases their earnings. As more durians are exportedabroad, the domestic market faces a shortage of supply and buyers has to pay a high price in Malaysia. Price of Durians in Malaysia has increased to an abnormally high level. The best variety of durians worldwide, Musang King is sold at a price of RM90 per kg in June from a range of RM60 – RM 68 per kg in April. The other factor responsible for high price is the off-season of production. However, last year this time price was RM-50. The durian price is determined by the factor of demand and season. Thailand Hong Xia is another popular type of Durian. The price of this variety is only RM30 per kg (www.producereport.com, 2017). The relatively low price of this variety is because of the relatively low demand. Usually, Durian are available in West Malaysia in May to August. However, this year Malaysia has to wait for a comparatively long period until November because of heavy rain.

Export Potential of Malaysian Durians

The volume of export of Durians is expected to go beyond 70 million RM.  China alone is responsible for majority of export from Malaysia. Last year durian export volume was 60 million RM, a figure higher than RM 33 million compared to the previous year. The Chairman of FAMA encourages the orchard owners to raise their production in response to high demand in the overseas market. The demand for Musang King Durian is the highest. Therefore, the farmers are encouraged to plant thus variety of fruit.

In order to maintain balance between supply and demand Malaysia develops a supply chain management. The industry faces intense competition resulted from saturation of market, concentration of the market share, elimination of entry and trade barriers (Wei, 2016). The nation gives focus on developing uninterrupted relationship buyers and suppliers in the supply chain. The durian tour to Malaysia reflects the possibility that durian farmers in Malaysia can earn a high income if they can divide into export market and supply the locally produced high quality. The natural monopoly power of tropical fruit can benefits the farmers largely if can be reaped properly.

Conclusion

The essay critically examines the durian industry in Malaysia. Durian is tropical fruit, which is highly demanded worldwide. The price of a good depends on the forces of supply and demand. The supply and demand situation of durian industry in Malaysia has evaluated. Durian is highly grown Southeast Asia nations. Thailand, Malaysia, Indonesia and Philippines are top four producers of durians. In Malaysia, Durians are produced in different regions. The regions are broadly categorized as northern region, east coastal region and west, south and central region. The durians in Malaysia are not only used to meet domestic demand and bust also heavily exported. China recently import the lion share of durian grown in Malaysia. The increasing import of China from Malaysia creates a supply shortage in Malaysia and raise prices in the home country. Buyers of durians in Singapore also faces problem of high price because of reduced volume of import from Malaysia. However, the natural monopoly of Malaysia in Durian supply can bring high income for farmers in near future.

References

Agriculture industry must step up to meet Chinese durian demands | The Malaysian Insight. (2017). Themalaysianinsight.com. Retrieved 19 November 2017, from https://www.themalaysianinsight.com/s/21398/

Amekawa, Y., Ng, C. C., Lumayag, L. A., Tan, G. H., Wong, C. S., Abdulrauf, B., ... & Chee, J. L. (2017). Producers' perceptions of public good agricultural practices and their pesticide use: The case of MyGAP for durian farming in Pahang, Malaysia. Asian Journal of Agriculture and Rural Development, 7(1), 1.

Arshad, F. M., & Hameed, A. A. A. (2014). Price transmission in selected Malaysian fruits markets. American Journal of Applied Sciences, 11(3), 347.

Chamhuri, N., & Batt, P. J. (2015). Consumer perceptions of food quality in Malaysia. British Food Journal, 117(3), 1168-1187.

Daud, W. N., & Mokhtar, S. J. (2017). 3 Landuse for Agriculture in Malaysia. Soils of Malaysia.

Durian prices spike as harvest drops. (2017). Thesundaily.my. Retrieved 19 November 2017, from https://www.thesundaily.my/news/2017/07/09/durian-prices-spike-harvest-drops

Frozen Malaysian Durians a Success Story in China Market | China Fresh Fruit and Produce News. (2017). Producereport.com. Retrieved 19 November 2017, from https://www.producereport.com/article/frozen-malaysian-durians-success-story-china-market

Krishnen, G., Noor, M. R. M., Jack, A., & Haron, S. (2016). Research, Development and Commercialisation of Agriculturally Important Microorganisms in Malaysia. In Agriculturally Important Microorganisms (pp. 149-166). Springer Singapore.

Masrol, S. R., Ibrahim, M. H. I., Adnan, S., Sa’adon, A. M., Sukarno, K. I., & Yusoff, M. F. H. (2017, August). Soda-Anthraquinone Durian (Durio Zibethinus Murr.) Rind Linerboard and Corrugated Medium Paper: A Preliminary Test. In IOP Conference Series: Materials Science and Engineering(Vol. 226, No. 1, p. 012174). IOP Publishing.

Wei, J. L. S. (2016). A Policy Review of the Agricultural Sector from The Second to the Ninth Malaysia Plans. Journal of Alternative Perspectives in the Social Sciences, 7(3).