Step aside, palm oil. Durian’s angling for your spot.
Maybank KimEng said it’s seeing growing interest in large-scale durian farming in Malaysia, amid rising consumption and pricing of the king of fruit. Previously, durian cultivation was traditionally dominated by smaller players, with less than 100 acres.
“The euphoria is understandable as Musang King durian estate is said to generate nine times more in revenue than oil palm at 150,000 ringgit per hectare (oil palm: 17,500 ringgit) in 2017. Durian may overtake oil palm as the preferred choice of new investment in the future,” it said in a note on Monday.
The higher profit margins “may compel some oil palm planters to switch crop at the next replanting cycle given the scarcity and high cost
of land in Malaysia, and rising wages,” it said.
It noted that Thailand is the global leader in exporting fresh durian, at US$495 million in 2016, with US$394 million of that headed to China, compared with Malaysia’s US$17.9 million, with China, Hong Kong and Macau accounting for US$6.8 million and US$8.0 million headed to Singapore.
“Considering the rising demand, there lies the immense opportunity for Malaysia to increase its market share once China allows Malaysia to export fresh durian as Malaysia’s durian is more superior in taste,” it said.
Maybank KimEng has a Neutral call on regional plantations, with “selected buys” on IOI, First Resources, Genting Plantations, Sarawak Oil Palms and Bumitama.