Durian Boom: Transforming Southeast Asian Agriculture and Lives
China's love for durian is turning Southeast Asia's farmers into "durianaires," proving that one person's stinky fruit is another's golden opportunity!
Dear Investors,
Two decades ago, Nguyen Thi Anh Hong and her family embarked on a new journey, relocating from Phu Tho Province in northern Vietnam to Cu M’gar District in the Central Highlands. Starting from scratch, they gradually built a new life, and after six years of hard work, Hong managed to save enough to purchase a small parcel of land and began farming durian.
Thanks to the surging demand for durian in China, prices have soared in recent years, fetching farmers like Hong billions of dong (VND1 billion = US$39,274) per harvest. Hong’s small orchard yielded 47 tons last season, sold to merchants and exporters at VND84,000 (US$3.30) per kilogram. “Deducting the VND200 million (US$7,855) costs, our orchard made VND3.4 billion (US$132,850) in profits,” she shared with Nguoi Lao Dong newspaper.
Hong’s Durian Orchard Income Statement:
Revenue: US$140,705 (47 tons x US$3.30 per kilogram)
Costs: US$7,855
Profit: US$132,850
Durian, often called the “king of fruits,” is polarizing: some praise its sweet taste and creamy texture, while others are repelled by its strong, stinky odor. However, its unique flavor and smell have not deterred Chinese consumers, whose insatiable demand has reshaped durian farming in Southeast Asia, as reported by The New York Times.
In recent years, durian has become a fashionable delicacy in China, a nation of over 1.4 billion people. Beyond being eaten fresh, it is also used in desserts and other sweet treats. Guangxi Xuan Ma Food, a company producing packaged snacks, saw sales of its durian-flavored cakes skyrocket from 800,000 yuan (US$110,097) in 2019 to over 10 million yuan (US$1,376,216) last year. “People’s obsession with durian has expanded into durian-flavored pastry and beverages,” noted Tang Chunlong, the company’s deputy general manager, to Xinhua News Agency.
The fruit has even permeated Chinese culture, becoming a preferred gift on various occasions. “My cousin got engaged last month, and my mother-in-law asked me to replace the grapes with durian, as she thinks it is more decent and fashionable,” shared Ma Qian from Henan province with the South China Morning Post.
China’s fervor for durian has fueled a 400% surge in global demand between 2021 and 2022, according to an HSBC report cited by CNBC. China accounted for 91% of this demand, importing US$6 billion worth of the fruit during those years. Last year alone, the country imported 1.43 million tons of durian worth US$6.7 billion, a 66% increase from 2022, as per data from the General Administration of Customs of China.
An Industry Transformed
Valued at US$23.4 billion in 2022, US$25 billion in 2023, and US$26.7 billion in 2024, the global durian market is set to expand at a compound annual growth rate (CAGR) of 7.00% over the next decade, according to Polaris Market Research.
Key drivers of this growth include the rising awareness of durian’s numerous health benefits, such as its anti-aging, antioxidant, anti-depressant properties, its ability to maintain blood sugar levels, and its potential in cancer prevention. The increasing use of durian as a popular filling and flavor in the food industry worldwide also contributes significantly to the market’s expansion.
The proliferation of trade agreements between durian-producing countries and importing nations, particularly within the Asia-Pacific (APAC) region, is expected to facilitate easier and more efficient import and export processes, further fueling market growth.
Moreover, entrepreneurs and food manufacturers are increasingly exploring new value-added products derived from durian. This trend includes the creation of durian-flavored snacks, ice creams, beverages, candies, and more. These innovative products appeal to both durian enthusiasts and those curious to experience the unique flavor in new and diverse forms.
Thailand, Vietnam, and Malaysia are at the forefront of meeting China’s growing appetite for durian. As demand has skyrocketed, these countries’ durian industries have expanded significantly, becoming vital to their economies.
Thailand, the first country allowed to export fresh durian to China, saw its durian exports surge to US$3.75 billion last year, a dramatic increase from US$128 million in 2012, as reported by the United Nations Comtrade database. Thailand’s durian output has grown by 180% over the last 12 years to 1.4 million tons, with the area under cultivation rising by 80%, according to Thai newspaper Khaosod English. Durian now accounts for 25% of Thailand’s top four agricultural exports, alongside rice, rubber, and cassava. Prime Minister Srettha Thavisin emphasized the government’s support for durian exports, highlighting its role as a major economic crop.
In Vietnam, the durian industry has been expanding rapidly since China approved imports in 2022. The area under durian cultivation has more than doubled since 2020 to 151,000 hectares, with production soaring from 366,300 tons to nearly 1.2 million tons. Exports to China jumped from US$420 million in 2022 to US$2.1 billion last year, encouraging many farmers to switch to durian cultivation.
Meanwhile, in Malaysia, the hills around Raub are being transformed into durian plantations to meet China’s demand. “I think durian will be the new economic boom for Malaysia,” stated Agriculture Minister Mohamad Sabu. However, the lucrative trade has led to land disputes and increased security measures, with some orchards now enclosed with razor wire and warning signs against theft.
Prosperity for Farmers
The booming durian trade has significantly improved the lives of farmers in Malaysia, Thailand, and Vietnam, making them wealthy. Eric Chan, who started his durian business 15 years ago in Malaysia, noted, “Everybody has been making good money,” referring to the previously impoverished farmers in Raub. “They switched from wood to brick houses. And they can afford to send their children overseas for university.”
In Thailand’s Chanthaburi Province, the heart of the country’s durian industry, signs of newfound wealth are evident, with modern houses and gleaming new hospitals. “When you are from another province and you arrive here, you come to realize that durian farmers are very, very rich,” said Abhisit Meechai, a car dealer serving many durian farmers.
In Vietnam, stories like Hong’s are becoming increasingly common. Thousands of durian orchards in Dak Lak’s Krong Pak District have reported multi-billion-dong profits in recent years. Nguyen Viet Suu, who owns a two-hectare orchard, harvested 60 tons of durian and earned VND3.5 billion (US$137,460) last season. Y Drin Niê, another farmer in Ea Tu Commune, Buon Me Thuot City, plans to plant 50 more durian trees, hopeful of continued prosperity. “If things remain the way they are, durian will bring prosperity to my family and many other farming households in Ea Tu,” he told Vnbusiness newspaper.
Companies to Watch
While there aren’t many publicly traded companies that focus exclusively on durian, there are a few notable ones involved in the broader agricultural and food sectors that include durian in their product portfolios. Here are some of the top publicly traded companies associated with durian:
Charoen Pokphand Foods (SET:CPF) — Charoen Pokphand Foods is one of the largest agri-food companies in the world. While CPF’s core business spans livestock and aquaculture, the company also has significant interests in the production and export of various fruits, including durian.
Nafoods Group (HOSE:NAF) — Nafoods Group is a leading Vietnamese company specializing in the production and export of fruit products. Nafoods has expanded its portfolio to include durian, capitalizing on the growing demand for this fruit in international markets.
These companies are some of the key players in the durian market, leveraging their extensive distribution networks and market reach to capitalize on the growing global demand for durian products.
I hope you found the content insightful and useful.
I wish you profitable returns on your capital.
Eric, The International Investor