The Agriculture Department has recently asked the industry to give feedback as it will be finalizing its export protocol to be submitted to China in July. The application for market access to China has gone on for over 10 years, and in this decade-long period, the competitive landscape has changed. One of the key changes is is the competition from suppliers from Vietnam and Thailand. In this short piece, I present the case on Why Exporting Fresh Whole Fruit For JACKFRUIT may NOT A good idea for MALAYSIA, and recommend that the government to put effort to value adding for the industry and work on global access on fruit-based derivative products.
Why fresh whole fruit export makes no sense for Malaysian Jackfruit producers:
- China market has recognized Thai and Vietnam Jackfruit, including smaller volume from Hainan which has quality quite close to Malaysian Jackfruit specie. Looking at the chart below, in terms of extraction rate ( Edible Pulp to whole fruit); and Brix ( sweetness); Malaysian jackfruit has a weak case to justify a higher price. Moreover if all Jackfruit are to go to the big Jiaxing Jackfruit Market which in 2018 already traded over 38,000 tons ( more than Malaysia’s national production). We would be drowned by the shere quantity from Vietnam and Thailand. For the Chinese consumer, Jackfruit is a everyday table fruit, they may not be persuaded to pay more.
- Vietnam and Thailand has become bigger scale producers; manifold of the production from Malaysia. Vietnam and Thailand has bigger land mass, larger working population and a bigger domestic market; all these combined with their proximity to bigger markets; gave them the scale advantage to bargain in the market. They send their produce via land route and a sea freight Fruit Express, which is less than 7 days to reach Chinese ports ( from Sa Pa in Lao Cai Province in Vietnam via land route to China) Via Port Klang or Kuantan, the transit journey to Shanghai can take up to 15 to 20 days, and better at chilled temperature; which will increase the cost of logistics. Again, at what maturity index to cut the fruit to ensure that the fruit will reach destination market in best condition requires more research and test.
- The price difference for Whole Fruit is not going to be big to justify this exercise. Now average price at the Jiaxing market is RM2-5; even at RM5, the margin is small for the importer, and there will not be any premium for local producers in Malaysia, without god margins, impoters are not going to champion your product. Why would farms want to support this export drive if they are not going to get more value? There is a huge exercise to certify the farms; making them syriah/halal compliant and MyGap certified, and ensuring no return from importers because of quality issue. When Malaysian Farms sell their products locally or to processing house, they can get this price. So why the hassle?
- The challenge explaining the stagnation of the industry is the lack of support for prices for farmers to focus on caring and growing their acreage. Lack of attention and focused effort to developed local and foreign market, without a market, producers have no incentive to care for their farms. Weak prices and uncertain demand do not make sustainable production. In comparision, there is government support prices to mop up harvests in other countries, enabling the industry to grow and upgrade. To get a perspective, current production of jackfruit is 10% of durian, and Jackfruit prices stands at 10% of durian ex farm prices.
- Why w o u l d Malaysian jackfruit want to stay at the ex farm agriculture commodity sale? When the whole world is looking at using Jackfruit to make plant-based meat, the government should change direction and give support to this area. An average plant based meat retails at RM40 per 125 gm which is RM320 per kg. Say at the factory level, one can get 50% of this value, which is RM150 per kg, 75x that of ex farm price of the Jackfruit.
- WE urge the govenrment to review its current policies; put more time to review and dedicate resources to research and development in the following areas: i) Malaysian farmproductivity are functioning at below optimum; The existing planting acreage nationwide of 3469 hectares are functing only at 51.28%. With focus effort to improve quality and productivity; improve extraction rate, stabilize brix, and productivity per tree, we can easily double output with perhaps only a 30% increase in cost. Today cost per kg of final fruit production at the farm averages from RM1.50 -RM1.80. ii) Invest and support R & D on the use of Nangka: a) as a table fruit — use IQF technology to process so that there is minimal waste of the fruit in the distribution process. IQF also improves shelf life from 3 days to 18 months. b) as processed food such as fillings for curry puffs, pastries, bread, pizza and have them export or sold as forzen food. Long shelf life and higher value. As puree and jam also has multiple uses. A R & D fund in this area to find products of high value for the Jackfruit will help to create employment and promtoe culinary creativity in the country. c) As puree for the creative beverage industry; add jackfruit puree to any plant based milk -almond, soya, walnut, oats will make a delightful and nutritious drink for the Bubble Tea Shops. d) as plant-based meat. This sector is now reciving the most attention in the world, and plant based protein sector is registering double diggit growth. Report from foodvive: “ From plant- based burgers to chick’n nuggets, companies have launched a variety of new products in recent months and acquired brands to get prime products in the alternative protein space. Investors have also poured more than $16 billion into U.S. plant-based and cell-based meat companies in the past 10 years — $13 billion of it in 2017 and 2018.The numbers show that trend continuing. Growth of plant-based protein and meat alternatives is projected to increase from $4.6 billion in 2018 to a whopping $85 billion in 2030, according to investment firm UBS.With consumers pushing for both healthier and more sustainable diets, the space is primed for continued growth. A recent study from DuPont Nutrition & Health found that 52% of U.S. consumers are eating more plant-based foods and they believe it makes them feel healthier.” ( https://www.fooddive.com/news/plant-based-protein-tracker/564886/)
7. Invest in national and global marketing of Malaysian tropical fruits — Durians, Nangka, MD2 Pineapple etc. Today marekting, creative design and applications will add value to
the agricultural products. For 100 years the country allow oil palm to stay at the commodity sector, low value and vulnerable. For the tropical sector, we have to move from agriculture to ingredient and final product. Take the tapioca pearls for bubble tea for example, its value went from USD0.20 100x to become the pearls in the bubble tea. Agriculture must get into the creative industry to drive value.
Malaysia has to do more and get on to tell its story well to the world. Malaysian produce are unique becuase of our GPS or geographical position; the fact that we are in the equatorial zone; having long hours of direct sunlight and good rainfall ( we are the top 10 region in the world with the most rainfall). This uniquness need to be told to the world as this is the value in our fruits and herbs. This is our comparative advantage that allow us to give the world products with goodness. Malaysia governmetn should also invest into organic farming to drive higher value.
Foong Wai Fong, Executive Director of the Dusun Matahari Group and Author of “Culture is Good Buisness” WhatsApp 60123838229 Copyright reserved.