Sadp Durian Report_111109

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i WORKING PAPER DEPARTMENT OF AGRICULTURE AND JAPAN INTERNATIONAL COOPERATION AGENCY Formulation Team on the Drafting of the Strategic Agribusiness Development Plan COMMODITY SITUATION REPORT: DURIAN Prepared by JOSE ULYSSES J. LUSTRIA, ACQUILYN E. MORILLO, AND ALDRIN G. NACIONAL November 2009 ____________________ Mr. Lustria is OIC-Chief, Public Investment Program Division (PIPD), Planning Service, Department of Agriculture. Ms. Morillo and Mr. Nacional are Technical Assistants at the PIPD.

Transcript of Sadp Durian Report_111109

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WORKING PAPER

DEPARTMENT OF AGRICULTURE AND

JAPAN INTERNATIONAL COOPERATION AGENCY

Formulation Team on the Drafting of the

Strategic Agribusiness Development Plan

COMMODITY SITUATION REPORT: DURIAN

Prepared by

JOSE ULYSSES J. LUSTRIA, ACQUILYN E. MORILLO, AND

ALDRIN G. NACIONAL

November 2009

____________________

Mr. Lustria is OIC-Chief, Public Investment Program Division (PIPD), Planning Service,

Department of Agriculture. Ms. Morillo and Mr. Nacional are Technical Assistants at the

PIPD.

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TABLE OF CONTENTS

I. OVERVIEW ............................................................................................................. 1

A. Background ............................................................................................................... 1

B. Contribution to the Economy ..................................................................................... 2

II. SITUATIONAL ANALYSIS ................................................................................... 2

A. Production ................................................................................................................. 2

1. World Production ................................................................................................ 2

2. Domestic Production ........................................................................................... 3

B. Supply and Demand................................................................................................... 6

1. Supply ................................................................................................................. 6

2. Demand ............................................................................................................... 7

a) World demand (exports). ................................................................................. 7

b) Domestic demand. ........................................................................................... 7

C. Value Chain System .................................................................................................. 7

1. Input Supply Subsystem ....................................................................................... 8

2. Production Subsystem.......................................................................................... 9

3. Marketing Subsystem ......................................................................................... 10

4. Processing Subsystem ........................................................................................ 12

5. Support Subsystem ............................................................................................. 13

D. Prices....................................................................................................................... 13

1. World Prices ..................................................................................................... 13

2. Domestic Prices................................................................................................. 13

3. Price Formation ................................................................................................ 14

E. SWOT Analysis ....................................................................................................... 14

F. Problem Tree Analysis ............................................................................................ 15

III. SUMMARY, ISSUES AND RECOMMENDATIONS ......................................... 16

IV. REFERENCES ...................................................................................................... 22

IV. ANNEXES.............................................................................................................. 23

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LIST OF FIGURES

Figure 1 . Percentage share of top producing provinces in durian production

(in MT), 2008……………………………………………………...…

3

Figure 2 . Annual percentage share of top producing provinces in durian production (in MT), 1998-2008. …………………………………...…

4

Figure 3 . Volume of durian production (in MT) and area harvested (in Hectares), 1998-2008. ……………………………………………

5

Figure 4 . Durian Yield (in MT/Ha), 1998-2008. …………………………….… 5

Figure 5 . Value of durian production (in Million Pesos), 1998-2008. ……….… 6

Figure 6 . Agribusiness system of durian. …………………………………….… 8

Figure 7 . On farm costs in durian production. …………………………………. 9

Figure 8 . Distribution flow of durian. ………………………………………….. 11

Figure 9 . Marketing channels of durian in Davao city and districts. ………...… 12

Figure 10 . Farm gate price of durian, 1998-2008….…………………………….. 14

Figure 11 . Problem tree analysis of durian industry. ……….…………………… 15

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LIST OF TABLES

Table 1 . NSIC registered durian varieties. ……………………………………. 1

Table 2 . Durian production seasonality in the Philippines, Thailand and Malaysia……………………………………………………………….

3

Table 3 . Supply and utilization account of durian (in MT), 1998-2008……………………………………………………………..

7

Table 4 . Issues and recommendations in the durian industry. ….……………...

17

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LIST OF ANNEXES

Annex 1 . Gross value output of selected fruits (At constant prices), 1998-2008.…………………… ………………………………………

23

Annex 2 . Updated average costs and returns of durian production (in PhP/Ha), 1998-2008..……………..…… ………………………………………

24

Annex 3 . Case report on Rosario Farm ……………………………………… 25

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I. OVERVIEW

A. Background

Durian (Durio zibethinus Murray) is an exotic fruit popularly known as the “King of

Tropical Fruits”. It is one of the most highly valued and most desired among the seasonal

fruits in Southeast Asia because of its unique taste and nutritional value. It is high in

carbohydrates, calcium, phosphorous, and ascorbic acid. As a versatile crop, durian can be

grown in a wide range of agro-climatic conditions (GMA-HVCC, ____). It has been regarded

as a priority crop under the agricultural development program because of its popularity and

huge potential in the international market.

The Durian, a native of the rainforests of Malaysia and Indonesia, is a tall tree

reaching as high as 40m in the jungle rainforest or in semi-orchard. Seed trees may take 8-10

years to fruit. Grafted durian grows to 15 - 20m tall and fruits in 5 to 6 years. The fruit is

green to brown in color, pendulous, round to oblong in shape and is completely covered with

strong sharp thorns. It is a capsule which splits into five parts when ripe and each segment

contains brown seeds covered with thick, firm, creamy and yellow pulp with a strong and

very distinctive aroma (Cunningham, 2000).

Apart from being consumed fresh, it can be processed into candies, jams, pastilles,

preserves, blends or a flavoring for ice creams, cakes, pureed into fillings, for rolls and tarts

and is being processed into chips. The edible parts of the fruit is also frozen or chilled and

packed into polystyrene trays.

Durian has several varieties. In the Philippines, a breeding program has resulted in a

number of cultivars of local origin. The National Seed Industry Council (NSIC) registered

durian varieties are shown in Table 1.

Table 1. NSIC registered durian varieties.

REGISTRATION

NUMBER

VARIETY

NAME

OWNER/

ADDRESS

NSIC 1995 Dr 01 ARANCILLO BPI-Davao NCRDC / Bago Oshiro, Davao City

NSIC 1995 Dr 02 GD 69 Angel Galang / MacArthur Highway, Matina, Davao City

NSIC 1997 Dr 03 ALCON FANCY Alfonso and Conchita Abad / Los Amigos, Tugbok,

Davao City

NSIC 1997 Dr 04 LACSON UNO Simeon Latayan / Lacson , Calinan, Davao City

NSIC 1997 Dr 05 OBOZA Alfonso and Conchita Abad / Los Amigos, Tugbok,

Davao City NSIC 1999 Dr 06 DUYAYA Severino Belviz / Museum Rd., Calinan, Davao City

NSIC 1999 Dr 06 DUYAYA Severino Belviz / Museum Rd., Calinan, Davao City

NSIC 2000 Dr 07 SULIT -do-

NSIC 2000 Dr 08 NANAM -do-

NSIC 2000 Dr 09 LACSON DOS BPI-Davao NCRDC / Bago Oshiro, Davao City

NSIC 2000 Dr 10 PUYAT -do-

NSIC 2000 Dr 11 UPLB GOLD Dept. of Horticulture, UP Los Baños, College, Laguna

(Source: BPI, 2009)

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B. Contribution to the Economy

The contribution of durian has been increasing but has remained relatively small. For

the period 1998 to 2008, durian recorded an average contribution of 0.60 percent to total

value of agricultural crop production and an average contribution of 0.29 percent to total

value of agricultural sector output, increasing from PhP 593 million to PhP 1,050 million

(see Annex 1).

In general, fruits contribute significantly to the economy in terms of employment,

income and foreign exchange generated through various activities; production, processing

and marketing in the fruit industry. Many of the fruit species such as Durian are classified as

multipurpose tree species that provide important ecological/environmental functions such as

biodiversity, soil erosion control, and greening effect in both upland and lowland areas.

II. SITUATIONAL ANALYSIS

A. Production

1. World Production

a) Major producing countries. The concentrations of durian production in

commercial scale are in Thailand, Malaysia, and Indonesia. The Philippines and other

Southeast Asian nations also produce durian commercially, but at much smaller levels and

mostly for domestic markets. It is difficult to calculate the exact production estimates of

producing countries with the lack of updated figures (Cunningham, 2000).

b) Productivity and competitiveness. The main producers of durian are

Thailand and Malaysia. Indonesia has been exporting significant volumes, while the

Philippines and other Asian countries produce durian at a small scale, mostly for domestic

markets. Major importers of durian are Asian countries as well. The Philippines has a

relatively low durian production and very low per capita consumption. However, if the

Philippines can increase the production of good quality fruits rapidly, it can compete with

other exporting countries.

The Philippines have the following advantages: 1) closer to potential markets such as

mainland China, Taiwan, Hong Kong, Japan, and South Korea; 2) increasing demand in

Europe, Canada, and USA; and 3) different production seasons with major competing

countries such as Thailand and Malaysia. The Philippines can tap the market originally

supplied by other durian-producing countries according to seasonal harvest (Eusebio & Anit,

2003).

Availability of durian is affected by short harvest seasons, typically only two to three

months, although smaller harvests are also reported during other months of the year. Thai and

Malaysian production is highest between June and July, although exports are also reported

during other months (mostly immediately preceding or following this period). Production in

the Philippines is mainly August to October, as shown in Table 2.

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Table 2. Durian production seasonality in the Philippines, Thailand and Malaysia.

April May June July August Sept Oct

Thailand

Malaysia

Philippines

(Source: Eusebio & Anit, 2003)

2. Domestic Production

a) Major producing provinces by volume of production. Durian is mainly

cultivated in Mindanao, particularly in Sulu and the Davao region. In 2008, production is lead

by Davao del Sur, as shown in Figure 1.

Figure 1. Percentage share of top producing provinces in durian production

(in MT), 2008.

(Source: BAS, 2009)

For the period 1998-2008, the average percentage share of Davao del Sur in

production accounts to 5.68 percent (Figure 2). There is an evident increase in share to total

production from 2007 to 2008, wherein the share accounts to 2.87 percent and 41.82 percent

respectively. On the other hand, for the same period, Sulu, registered the greatest average

percentage share to total production with share of 39.30 percent from 1998 to 2008, exhibited

by consistent high production before 2008.

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Figure 2. Annual percentage share of top producing provinces in durian production

(in MT), 1998-2008.

(Source: BAS, 2009)

b) Volume, area planted, and Productivity. There are variations in the production

volume trend of durian, exhibiting an average rate of 7.83 percent from 1998 to 2008, despite

consistent area expansion, as shown in Figure 3. A substantial 51 percent increase in 2007

production is evident. As reported by BAS, production surge was brought about by increase

in harvest in Zamboanga, good fruiting performance in northern Mindanao, increase in

number of bearing/mature trees in the Davao region, area expansion in SOCCSKSARGEN

and good harvest due to favorable weather in CARAGA. However, production decreased in

2008 due to excessive rains (BAS, 2009).

Further, Figure 4 shows that yield has been decreasing from 6.02 MT/Ha in 1998 to

2.80 MT/Ha in 2008.

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Figure 3. Volume of durian production (in MT) and area harvested (in Hectares), 1998-2008.

(Source: BAS, 2009)

Figure 4. Durian Yield (in MT/Ha), 1998-2008.

(Source: BAS, 2009)

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c) Value of Production. Durian’s contribution to the economy has been gradually

increasing from 1998 to 2008 as shown in Figure 5. There was a growth surge in 2007 with

production value of Php1495.70 million, which is evidently greater than the annual average

production value of PhP 819.29 million from 1998-2008. The gradual increase in production

value is due to the increase in production despite fluctuating nominal price.

Figure 5. Value of durian production (in Million Pesos), 1998-2008.

(Source: BAS, 2009)

B. Supply and Demand

1. Supply

The supply and utilization account in Table 3, presented the country’s durian

production as primarily for local consumption. The volume of production is relatively low for

the country to export. There has been no durian importation from 1998 to 2008.

On the average, net food disposable accounts for 94 percent of the gross supply.

Reports on processed durian, are not currently available. To provide such information, further

primary data gathering is necessary.

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Table 3. Supply and utilization account of durian (in MT), 1998-2008.

S u p p l y U t i l i z a t i o n

Net Food Disposable YEAR

PRODN

Imports

Gross Supply

Exports

Seeds

Feeds & Waste

Processing Total

Per Capita Kg./Yr.

Grams/Day

1998 29,063

29,063

1,744 27,319

0.37 1.01 1999 26,693

26,693

1,602 25,09

1 0.34 0.93

2000 25,764

25,764

1,546 24,218

0.32 0.88 2001 27,037

27,037

1,622 25,41

5 0.33 0.90

2002 31,638

31,638

1,898 29,740

0.37 1.01 2003 39,817

39,817

2,389 37,42

8 0.46 1.26

2004 40,907

40,907

2,454 38,453

0.47 1.29 2005 47,296

47,296

2,838 44,45

8 0.52 1.42

2006 48,465

48,465

2,908 45,557

0.52 1.42 2007 73,250

73,250

4,395 68,85

5 0.78 2.14

2008P 51,399 51,399 3 3,084 48,312

0.53 1.45 P - Preliminary data

(Source: BAS, 2009)

2. Demand

a) World demand (exports). In 2008, the country exported a total of three MT of

fresh durian to France, Kuwait, Saudi Arabia and United Arab Emirates. The durian supply

and utilization account of BAS does not reflect export data prior 2008, both in fresh and

processed form.

The main market for durian is in Asia. Thailand, Malaysia and Indonesia, the main

producers, are also the main consumers of the fruit. The main export markets are Singapore,

Hong Kong and Taiwan. Lesser amounts are exported to North America and Europe, where it

is consumed by members of the Asian population there. It is generally unknown to the non-

Asian population (Cunningham, 2000).

b) Domestic demand. Durian produce are mostly for domestic consumption. From

1998 to 2008, the average annual per capita consumption was 0.45 kgs., which range from

0.32 kilograms in 2000 to 0.78 kgs. in 2007.

As elaborated by Cunningham (2000), consumption of durian in the Philippines is

supply-led. Durian is a popular fruit and is relatively expensive. The fact that consumers in

Davao are prepared to pay PhP 60/kg or more for durian and that only 30% of the gross

weight may be consumable is an indication of its popularity. All produce brought to the

market clears without any problems. There are recurring reports of unavailability of product.

Given the popularity of the fruit in the Philippines there is little doubt that consumption

would increase if it was more widely available. There is also scope for reducing prices thus

making the product more affordable for a larger potential market.

C. Value Chain System

Generally, durian is characterized by a value chain, depicting farm production as its

core and a system showing the commodity flow from farm (seed) to shelf. Based on the

Durian Strategic Action Plan in 2002, the agribusiness system is presented in Figure 6.

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Figure 6. Agribusiness system of durian.

(Source: DA-SAP, 2002)

1. Input Supply Subsystem

a) Seeds and seedlings. In the Philippines, it is recommended to use three-year old

planting material or Large Planting Material (LPM) since durian can be difficult to establish

and the survival rate of LPM is much higher than one-year old seedlings. The use of LPM

shortens the gestation period of the plant. Commercial durian varieties are propagated

vegetatively. This is done by either grafting or budding. Rootstocks used vary but increasing

efforts are being made to identify rootstocks which are resistant to Phytophtera palmivora, a

soil borne fungus which is the most serious pathogen of durian and the major cause of

premature death in seedlings and trees. In Thailand, Chaynee variety is used and there are

good reports from Malaysia on the use of Durio lowianus.

ATI (2008) estimated that cost of planting materials accounts to 36 percent of total

cost of establishment for Durian without intercrop.

b) Fertilizer and Pesticide. On the average, fertilizer and pesticides accounted to 14

percent of total on farm-costs for the period of 1998 to 2008.It is considered as a major cost

driver and the increasing price of fertilizer is an absolute concern (BAS, 2009).

c) Agricultural Machinery. In durian farms, agricultural machinery and equipment

used are simple such as plow and harrow for land preparation. To remove nonproductive and

disease-infected branches, pruning shear and pruning saw are utilized. Propping implements

such as bamboo poles and polypropylene twine are used to prevent breaking and lodging

while for harvesting, cushions are used to protect the fruit (ATI, 2008).

d) Labor. Among all cost item, labor is considered a major cost driver accounting to

40 percent of durian on-farm costs. The primary cost which accounts to 29 percent of total

on-farm cost is in the form of hired labor (paid in kind).

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Figure 7. On farm costs in durian production.

(Source: BAS, 2009)

2. Production Subsystem

Durian production in commercial scale can be found in Thailand, Malaysia, and

Indonesia. The Philippines and other Southeast Asian nations also produce durian

commercially, but at much smaller levels and mostly for domestic markets. It is difficult to

calculate the exact production estimates of producing countries with the lack of updated

figures (Cunningham, 2000).

Native durian trees have been grown in the province for years, wherein production is mainly small scale / backyard. Durian produce are mostly for domestic consumption. Native durian trees have been grown in the province for years, wherein production is mainly small scale / backyard. The durian trees are grown mixed with coconut, banana and other fruit trees (BAS, 1992).

Two major operations are performed by farmers, which are crop care and harvesting.

In crop care, old trees do not need inputs and much maintenance but newly planted trees or

young trees need regular care and inputs until the tree reaches maturity. Farmers usually clear

the undergrowth near the base of the trees. In harvesting, the most common practice is to wait

for the fruit to drop, which is an indication that the fruit is ripe (BAS, 1992).

a) As a guide to durian production, the government assists farmers by providing

trainings on improved cultural management practices. It is recommended that a holistic

approach must be applied in durian production. It was emphasized that two very important

practices, water and nutrient management must be applied because of its stronger impact on

the growth and fruiting of the tree. Basic requirements for growing durian must be set so that

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the durian tree shall thrive best. It is necessary that the soil must be sandy loam or clay loam

with soil pH of 5.5 to 6.5 that is rich, deep, well drained and had high organic matter. The

environment must be moist. Areas with evenly distributed rainfall of 1,500 to 2,000 mm/year

and free from strong winds are recommended. Also, an elevation not exceeding 800m and

temperature of 25C to 30C are suggested. It must necessarily be ensured that the land is

readily prepared, with suitable acidity, canal constructions and field lay-out. Further care and

maintenance of the durian tree involves shading, mulching, irrigation, pruning, weeding and

sanitation. Likewise, a holistic approach to proper plant nutrition, which can be achieved

through balanced fertilization necessary for vegetable growth, reproduction and repair, are to

be employed. In addition, flower and fruit thinning, propping and tying shall be employed for

maintenance (ATI, 2008).

b) The quality of durian is affected by the harvest and postharvest practices of the

grower. A properly matured durian fruit commands a better market price. The indices to

measure maturity of durian are as follows (ATI, 2008):

1. The tips of the spikes turn darker brown than the base of the spike.

2. The spike tips also become slightly elastic and more flexible.

3. The grooves between spikes expand and turn darker.

4. The fruit stem becomes more stiff and flexible than unripe fruits.

5. Change in husk color from green-brown to yellow.

6. The sutures in the rind where the sections will split apart become more noticeable.

7. The fruit has a hollow sound when tapped.

8. When shaken the best fruits have a sound of something inside the fruit.

9. The sap of the fruit stem is clear and sweet. In unripe fruits, it is thick, sticky and

not sweet.

10. If a small window into the fruit is cut to check the fruit inside, the pulp is darker

than unripe fruits.

11. The aroma is stronger.

12. The abscission zone in the fruit stem just above the fruit tends to bulge

It is necessary to avoid bruising the fruit. A cushion must be provided to prevent fruits

from dropping directly on the soil. Harvest shall be done on sunny days and at least a day

after a heavy rain. Management practices after harvest must be employed from conduct of

soil and leaf tissue analysis, to pruning, weeding, foliar spraying, fertilizer application and

irrigation.

In postharvest handling, fruits must be sorted on-farm to remove deformed, infected,

and damaged fruits. It shall be delivered to packing house, must be inspected, and tagged.

Disinfectants such as soap or chlorine are recommended. Fruits shall be dried and cleaned to

finally weigh and pack.

3. Marketing Subsystem

From the major supply to the demand areas, fresh durian flows through a spatial

network of buyers/sellers, wherein the three main components of the network are a)

movements from farmers through the wholesaler to the traders within the supply area; b)

shipment from the supply area port to the major demand areas in the country (NCR, Cebu);

and c) handling/distribution to processors and types of traders and/or intermediate end-users

within the demand areas.

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Figure 8. Distribution flow of durian.

(Source: GMA-HVCC, ____).

Figure 9 shows a more detailed marketing channel for durian in Davao City, one of

the top producing provinces in the country

From the production areas, the fruits are either picked up or are delivered by farmers

to buyers in the trading centers or to traders in Davao City. The assembler delivers the fruits

procured to the assembler/distributor and assembler/shipper in the trading center or

assembler/distributor in the city. The assembler/distributor based either in the trading or

market center both sell to transient traders, processors and consumers. Those based at the

market center also sell to retailers. The assembler/shipper in the municipality ships directly to

Manila and sells the rejects to consumers and processors. Aside from shipment to Manila, the

assembler/distributor/shipper in the market center also sells to processors, consumers and

transient traders (BAS, 1992).

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Figure 9. Marketing channels of durian in Davao city and districts. (Source: BAS, 1992)

4. Processing Subsystem

Food processing is one activity that strengthens the linkage between agriculture and

industry. It enhances both upstream and downstream activities in the production-marketing

chain. With agro-processed products, the value-added contribution of agricultural fresh

produce is increased. At the same time, downstream activities are enhanced to more efficient

utilization of agricultural inputs and machineries (Elazegui, 1998).

As with other fruits, durian is processed when the fresh fruit market cannot absorb the

excess supply or because of unmet quality fruit standards, that is why, most processors are

durian farm owners. To absorb excess supply during harvest, durian is sometimes processed

into frozen durian, durian chips, durian cake, sweet dried durian, French-fried durian, ice

cream and candies. Processed durian products are mostly supplied to the domestic market,

while frozen durian is not common among local consumers (EntrePinoy, 2008).

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Durian products are developed to create value-added products, prolong shelf life of

durian, extend the marketing period, solve the odor problem (unlike fresh durian, durian

products can be shipped by air), and reduce the cost shipment.

To better understand the processing industry, please see the case report on one

processor visited by the SADP team (Annex 3).

5. Support Subsystem

Support for the fruit industry comes from, government, non government and private

institutions. The DA through its GMA-HVCC banner program provides a comprehensive

package which includes:

a) Production Support Services;

b) Market Development Services;

c) Credit Facilitation Services;

d) Irrigation Development Services;

e) Other Infrastructure/ Post-Harvest Development Services;

f) Extension Support, Education and Training Services;

g) Research and Development;

h) Regulatory Services;

i) Information Support Services and

j) Policy Formulation, Planning and Advocacy Services.

Various donor countries or agencies have also provided support – both technical and

financial assistance.

D. Prices

1. World Prices

World market price cannot be analyzed due to unavailability of data on world market

prices.

2. Domestic Prices

The farm gate price of durian in 2008, as shown in Figure 10, was PhP32.62/kg. In

1998-2008, the price was fluctuating with a recorded average farmgate price of PhP34.36.

The lowest price was Php25.48 per kilogram in 1999 and hit its highest in 2000 at P54.93 per

kilogram. Analysis on wholesale and retail prices cannot be provided due to lack of data.

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Figure 10. Farmgate price of durian, 1998-2008.

(Source: BAS, 2009)

3. Price Formation

Small farmers retailing at the supply level normally based their selling price on the

perceived prevailing market price. The prevailing market price may have been learned

through word of mouth. Small farmers are not too conscious of the price.

Medium and large farmers are more price-conscious. They canvass price in

prospective destinations before delivering to the location. Distributors often dictate the price

but farmers could negotiate based on their canvass. Retailers, who sources from small

farmers, have the freedom to name their price according to normally prevailing market price.

E. SWOT Analysis

The SWOT of the durian industry is as follows (GMA-HVCC, ___; PCARRD, 2003;

DA-SAP, 2002 and SADP consultation and field visit, 2009):

Strengths

Availability of areas highly suitable to durian production,

Availability of technical expertise and farm labor, and

Availability of improved technologies on production, handling, and processing.

Weaknesses

High cost of production,

Lack of efficient marketing system,

Lack of farm-to-market roads,

Poor technology transfer,

Inaccessible credit facilities,

Poor market information, and

Inadequate postharvest facilities and technology access for processing.

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Opportunities

Growing demand in local and export markets,

Proximity to export markets ,

(Singapore, China, Japan, Hongkong, Taiwan and South Korea),

The Philippines capacity to supply export demand at certain period of the year

when supply in Thailand and Malaysia becomes scarce or limited, and

Unmet demand for fresh and processed fruit.

Threats

Presence of destructive diseases like Phytopthara,

Drought (El Niño), and other calamities.

F. Problem Tree Analysis

The problem tree (Figure 11) shows us graphically the linkages among the various

problems in the durian industry. The SWOT analysis was used as a main input in its

formulation.

Figure 11. Problem tree analysis of durian industry.

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III. SUMMARY, ISSUES AND RECOMMENDATIONS

As one of the most highly valued and most desired seasonal fruit in Southeast Asia,

opportunities abound the durian industry. It has been regarded as a priority crop under the

Philippine agricultural development program because of its popularity and huge potential in

the international market. Despite the relatively small economic contribution, durian

production is expected to expand further. The consumption of durian is supply-led. It can be

consumed fresh or can be processed.

The Philippines can take advantage of the increasing demand in both local and export

markets. To set foot in the export market, the yield and production of durian in the country

must be improved. Increase utilization of superior and high yielding varieties, improved

cultural management practices and postharvest technologies are necessary activities to

facilitate development.

Among the cultural management practices expected to contribute to the increasing

yield include proper plant nutrition, irrigation, pruning, and control of pests and diseases.

Moreover, technologies related to pre- and post- harvest treatments should be available to

extend the shelf life of both fresh and minimally processed products. (Eusebio & Anit, 2003)

Table 4 illustrates the issues and gaps in the durian industry. Accordingly,

recommendations were also provided.

Moreover, reviews on the existing programs formulated by the government to solve

the concerns of the industry - from access to agricultural resources and services to market

information - is imperative in strengthening its competence in dealing with the prevailing

issues of the fruit industry. One good example is the Food Terminal Concept which is

developed by DA. This concept is especially designed to develop market infrastructure of the

industry by establishing chain of marketing facilities from farm to consumers and developing

distribution centers (food terminal hubs) which are designated regional or provincial agro-

industrial centers for proximity to value-adding and processing activities. Active involvement

of LGUs, NGOs, private sector GOs, and joint-venture between any of the parties above is

highly encouraged to operate the hubs so that trading system will be more efficient and

transparent and market information will be more accessible to the agents of the market.

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Table 4. Issues and recommendations in the durian industry

Supply chain/Element Issue/Gap Recommendation

I. Input Supply Subsystem

Seeds and Seedlings, etc. Insufficient planting materials with

high quality

Development of new varieties, varietal improvement

through biotechnology, accreditation of nurseries, and

intensification of R & D through SUCs and other agro-

based research and development institutions

Limited supply of reliable scion

groves

LGUs to establish scion groves in every municipality.

Variety Susceptibility of existing varieties

to Phytopthara

Conduct of focused research and development for the

development of Phytopthara-resistant varieties.

Screening and testing of varieties for resistance to

Phytopthara.

Fertilizer and Pesticide Increasing costs Improvement of logistics; utilization of organic

fertilizers; development of alternative means or product

efficacy

High tariff rates for imported

chemical inputs.

Lowering of tariff for agricultural input; government

subsidy.

Agricultural

Machinery/equipment Need for standards in farm

equipment

Establishment of agricultural machinery and equipment

standards

Labor Increasing cost of labor Maximum utilization of family labor

Site Selection/ Crop

Establishment Durian plant is exacting in its soil

and agro-climactic requirements,

e.g. evenly distributed rainfall,

typhoon -free areas. Growers

operating in areas with long dry

season realize low yield and profit

Mapping of areas suitable to durian to promote year-

round supply and increase yield; implementation of crop

zoning.

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18

II. Production Subsystem

Inconsistent supply; fragmented

production

Expansion of production areas; integration of supply;

policy/legislative work on issues such as public land

access

Pest/ Disease Management Prevalence/existence of pests and

diseases

Strict quarantine regulation to prevent spread of pest and

diseases and intensified information campaign about the

threat of disease

R, D and extension program aimed at developing an

effective and efficient Integrated Pest Management

(IPM) Strategies

Limited awareness on control of

Phytopthara disease which affects

seedlings and mature trees.

Information dissemination on control measures, e.g.

sanitation, well-drained soil, use of large planting

materials, etc.

Cultural Practices Non-adoption of production

technology on fertilization,

irrigation, pruning, etc.

Intensification of technology information dissemination

through model farms and conduct training on improved

cultural methods; distribution of information technology

materials

Poor fruit quality: only about 50% of

harvest meet requirements for export

due to improper harvesting,

inappropriate maturity index,

mishandling and physiological

defects due to poor weather, poor

drainage and sanitation, nutrient

deficiency, etc.

Development and implementation of Good Agricultural

Practice Program to minimize pre-harvest defects and

disorders.

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19

III. Marketing Subsystem

Inefficient marketing system

Poor access to timely market

information

Improvement of logistics (to address high postharvest

losses); establishment of trans-shipment facilities; revisit

of the Food Terminal approach

improvement of market intelligence, information

systems and database improvement., particularly on price

monitoring, supply and demand forecasting and analysis

Difficulty in producing economic

volumes due to fragmented and

backyard planting/production.

Promotion of production-marketing clusters

Lack of market promotion activities

for small growers.

Market promotion program through trade fairs,

exhibitions and missions.

Transport-high air freight cost; lack

of refrigerated transport facilities.

Establishment of cold chain systems in strategic areas

IV. Processing Subsystem

Inadequate postharvest and

processing facilities; need for

standards in equipment

Increase and improvement in processing and postharvest

facilities (e.g., processing and packaging plants, peeling

and cutting machines); utilization of biotechnology.

Exploring of guarantee and credit facility for facilities

improvement to meet quality and safety standards.

Low awareness on proper

postharvest handling

Establishment of postharvest clinic to address

postharvest related concerns in the area

Conduct of capability building

Lack of awareness of importing

countries standards

Compilation/updating of importing countries standards

and dissemination of these information to processors

Local standards are not harmonized

with international standards

Harmonization of local standards with market leaders

like Thailand and Malaysia

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20

Limited access and high cost of

product testing and quality/safety

system certification services

Supplementing of Food Development Center testing

services available only in Manila; upgrading of DOST

regional testing laboratories to conform with the Codex

guidelines for the assessment of the competencies of

food testing laboratories.

Need for government-sponsored accredited laboratory

conducting complete food laboratory analysis

Overhaul the food import and export inspection and

certification systems to conform with Codex guidelines.

To supplement FDC testing services available only in

Manila, upgrading of DOST regional testing laboratories

to conform with the Codex guidelines for the assessment

of the competencies of food testing laboratories.

Poor fruit quality: only about 50% of

harvest meet requirements for export

due to improper harvesting,

inappropriate maturity index,

mishandling and physiological

defects due to poor weather, poor

drainage and sanitation, nutrient

deficiency, etc.

Development and implementation of Good Agricultural

Practice Program to minimize pre-harvest defects and

disorders.

Inherent perishability and short

shelf-life (2-3 days under ambient

conditions) of the fruit

Application of wax coating to inhibit moisture loss.

Refrigerated storage/transport (15C to extend shelf life

to 15 days). Blast freezing and other technology.

Insufficient supply and inconsistent

quality of raw materials

strengthening of backward integration,

Expanded GMP and HACCP training program

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21

V. Support Subsystem

Inadequate support systems Provision of more support facilities such as ports, farm-

to-market roads, cold chain systems, irrigation facilities;

also regulatory and food safety system (e.g., traceability,

database/s); promotion of GAP and monitoring of

compliance; accessible credit and crop insurance

facilities; strengthening of the Research and

Development-Extension system in the different levels of

government, from national to local government level

Note: Issues and Recommendations were identified from (through) key informant interviews, secondary data, workshops, consultations and field visits

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22

IV. REFERENCES

Agricultural Training Insitute (ATI). Department of Agriculture. (2008). A Guide to Durian Production: Economics of Durian. Brochure.IES Material Series No. 4-6. Knowledge Products Management Division.

Bureau of Agricultural Statistics, Department of Agriculture (2009) Countrystat. Retrieved on

September 2009 from <http://www.countrystat.bas.gov.ph> Bureau of Agricultural Statistics, Department of Agriculture (1992). Marketing and

Information Needs Assessment for Davao City. Technical Report. Bureau of Agricultural Statistics, Department of Agriculture (1992). Marketing and

Information Needs Assessment for Davao Norte. Technical Report. Bureau of Plant Industry, Department of Agriculture (2009). NSIC Registered Fruit Crops

Varieties, CY 1995-2008. Cunningham, T. (2000). Durian Market Report. Project ALA - 97/68 Upland Development

Programme in Southern Mindanao (UDP). Retrieved on December 2008 from

<http://www.saveuplands.org/plugin/library/download.php?id=228> Department of Agriculture. (2002). Durian strategic action plan. April 2002. Elazegui, D.D. (1998). Food processing in the Philippines: Issues and challenges. Working paper no.

98-03. ISPPS, CPAF, UPLB.

Eusebio, J.E. and E. Anit. Philippine Council for Agriculture, Forestry and Natural Resources Research and Development. (2003). Industry Situationer: Durian. <http://maidon.pcarrd.dost.gov.ph/joomla/index.php?option=com_content&task=view&id=745>

EntrePinoy, (2009). Utilization and Processing of Durian Fruit. October 2006. Retrieved on

October 2009 from <http//www.mixph.com/2006/10/utilization-and-processing-of-durian-fruit.html>.

Food and Agriculture Organization-United Nations (2009). FAOSTAT. Retrieved on

September 2009 from <http://www.fao.org> Ginintuang Masaganang Ani-High Value Commercial Crops (GMA-HVCC). Department of

Agriculture Commodity profiles. Retrieved on October 2008 from <http://www.hvcc.da,gov.ph>

Philippine Council for Agriculture, Forestry and Natural Resources Research and

Development. (2003). Industry Profile: Durian.

<http://www.pcarrd.dost.gov.ph/divisions/crd/cin/durian/industry%20status.htm>

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IV. ANNEXES

Annex 1. Gross value output of selected fruits (At constant prices), 1998-2008.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 AVERAGE

TOTAL AGRI OUTPUT 224,172 245,874 242,318 253,131 262,788 272,011 286,245 292,581 304,000 318,068 330,396 275,599 TOTAL AGRI CROP OUTPUT 110,733 129,268 120,249 124,046 126,035 129,250 136,181 137,305 143,699 151,559 157,543 133,261

VALUE OF PRODUCTION IN AGRICULTURE AT CONSTANT PRICES, 1998 - 2008, (IN MILLION PESOS)

BANANA 6,252 8,181 8,824 9,056 9,442 9,610 10,080 11,274 12,162 13,396 15,551 10,348

PINEAPPLE 2,754 2,831 2,885 2,993 3,032 3,141 3,256 3,290 3,374 3,710 4,065 3,212

MANGO 6,307 6,297 6,167 6,392 6,950 7,244 6,947 7,058 6,589 7,341 6,338 6,694

CALAMANSI 216 908 922 927 923 923 913 1,024 1,003 1,028 1,018 891

PAPAYA 144 151 163 171 171 175 179 196 211 220 245 184

POMELO 66 68 65 61 64 61 58 57 55 54 52 60

DURIAN 593 545 526 552 646 813 835 966 990 1,496 1,050 819

MANGOSTEEN 17 16 15 16 16 16 16 17 15 15 3 15

SHARE TO TOTAL AGRI OUTPUT, 1998 - 2008, (IN %)

BANANA 2.79 3.33 3.64 3.58 3.59 3.53 3.52 3.85 4.00 4.21 4.71 3.71

PINEAPPLE 1.23 1.15 1.19 1.18 1.15 1.15 1.14 1.12 1.11 1.17 1.23 1.17

MANGO 2.81 2.56 2.55 2.53 2.64 2.66 2.43 2.41 2.17 2.31 1.92 2.45

CALAMANSI 0.10 0.37 0.38 0.37 0.35 0.34 0.32 0.35 0.33 0.32 0.31 0.32

PAPAYA 0.06 0.06 0.07 0.07 0.07 0.06 0.06 0.07 0.07 0.07 0.07 0.07

POMELO 0.03 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

DURIAN 0.26 0.22 0.22 0.22 0.25 0.30 0.29 0.33 0.33 0.47 0.32 0.29

MANGOSTEEN 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.01

SHARE TO TOTAL AGRI CROPS, 1998 - 2008, (IN %)

BANANA 5.65 6.33 7.34 7.30 7.49 7.44 7.40 8.21 8.46 8.84 9.87 7.67

PINEAPPLE 2.49 2.19 2.40 2.41 2.41 2.43 2.39 2.40 2.35 2.45 2.58 2.41

MANGO 5.70 4.87 5.13 5.15 5.51 5.61 5.10 5.14 4.59 4.84 4.02 5.06

CALAMANSI 0.20 0.70 0.77 0.75 0.73 0.71 0.67 0.75 0.70 0.68 0.65 0.66

PAPAYA 0.13 0.12 0.14 0.14 0.14 0.14 0.13 0.14 0.15 0.15 0.16 0.14

POMELO 0.06 0.05 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.03 0.05

DURIAN 0.54 0.42 0.44 0.45 0.51 0.63 0.61 0.70 0.69 0.99 0.67 0.60

MANGOSTEEN 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.01

(Source: BAS, 2009.)

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ITEM 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007R 2008P

CASH COST 10,923 10,606 11,631 12,237 12,423 13,921 16,453 18,942 19,253 20,023 25,997

Fertilizer

Organic 358 321 345 411 406 507 686 853 848 900 1,632

Inorganic 4,292 3,846 4,140 4,931 4,863 6,077 8,223 10,228 10,160 10,782 15,639

Pesticides 514 574 591 615 624 625 627 626 597 568 547

Solid 20 22 23 24 24 24 24 24 23 22 21

Liquid 494 552 568 591 600 601 603 602 574 546 526

Other material inputs 6 5 5 6 6 7 9 11 11 12 19

Hired labor 2,716 2,918 2,945 2,947 3,043 3,195 3,332 3,526 3,674 3,819 3,866

Land tax 979 989 999 1,009 1,019 1,029 1,039 1,049 1,059 1,070 1,081

Land rental 639 477 1,028 621 741 724 619 513 591 510 611

Transportation of inputs 444 474 544 607 613 634 714 845 952 957 1,059

Fuel and oil 4 4 5 5 5 6 7 8 9 9 11

Food expense 304 318 323 338 345 353 375 399 421 435 494

Repairs 667 680 706 747 758 764 822 884 931 961 1,038

NON-CASH COST 37,606

28,750

38,719

26,764

30,456

32,305

29,785

29,701

30,928

33,668 31,293

Hired labor (paid in kind) 14,969

16,081

16,234

16,240

16,769

17,374

18,118

19,172

19,979

20,766 21,023

Landlord's share 416

310

668

403

481

470

402

333

383

330 395

Harvester's share 22,221

12,359

21,817

10,121

13,206

14,461

11,265

10,196

10,566

12,572 9,875

IMPUTED COST 11,833 10,232 16,582 12,204 13,736 14,014 13,453 12,940 14,081 13,554 15,763

Operator/family labor 2,679

2,878

2,903

2,904

3,002

3,152

3,287

3,478

3,625

3,767 3,814

Exchange labor 170 182 184 184 190 200 208 220 230 239 242

Depreciation 524 576 634 697 767 844 928 1,021 1,123 1,235 1,359

Interest on operating capital

1,262 1,226 1,284 1,426 1,431 1,666 2,060 2,439 2,446 2,573 3,472

Rental value of owned land 7,198 5,370 11,577 6,993 8,346 8,152 6,970 5,782 6,657 5,740 6,876

ALL COSTS 60,362 49,588 66,932 51,205 56,615 60,240 59,691 61,583 64,262 67,245 73,053

GROSS RETURNS 205,583

114,354

201,593

93,534

122,047

133,639

104,104

94,222

97,645

116,190 91,271

RETURNS ABOVE CASH COSTS

194,660 103,748 189,962 81,297 109,624 119,718 87,651 75,280 78,392 96,167 65,274

RETURNS ABOVE CASH AND NON-CASH COSTS

157,054 74,998 151,243 54,533 79,168 87,413 57,866 45,579 47,464 62,499 33,981

NET RETURNS 145,221 64,766 134,661 42,329 65,432 73,399 44,413 32,639 33,383 48,945 18,218

NET PROFIT-COST RATIO 2.41 1.31 2.01 0.83 1.16 1.22 0.74 0.53 0.52 0.73 0.25

Cost per kilogram (P) 10.03 11.05 18.24 18.16 18.37 17.44 18.96 17.93 20.78 15.76 26.11

Yield per hectare (kg) 6,020 4,488 3,670 2,819 3,082 3,455 3,148 3,435 3,092 4,267 2,798

Farmgate price (peso/kg) 34.15 25.48 54.93 33.18 39.60 38.68 33.07 27.43 31.58 27.23 32.62

R - Revised estimates, P - Preliminary estimates

(Source: BAS, 2009)

Annex 2. Updated average costs and returns of durian production (in PhP/Ha), 1998-2008.

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Annex 3. Case report on Rosario Farms.

Farm Name: Rosario Farms

Sector: Fresh and processed fruits

Principal Products

and Services: Fresh and processed durian

Interviewee/s: Severino Belviz

(Durian Council Chairman),

Emmanuel Belviz and

Mary Grace Belviz

Address: Agbisit Subd., Calinan, Davao City

Interviewer: SADP Team

Date: June 08, 2009

Nature of Business: Family Business

Farm size: 30 –ha durian plantation

(Total of 50 hectares; 20 ha planted with other fruit trees and vegetables)

156 durian trees/hectare

Year Started: 1988

Durian Varieties: Chanee and Monthong (Thailand)

Arancillo,

Kob (Cob),

Puyat,

Kimbangan

D 101,

D24,

Duyaya (Reg. No. PSB 99-DR-06),

Sulit (Reg. No. PSB 00-DR-07),

Nanam (Reg. No. PSB 00-DR-08)

Peak of Harvest

and Processing: Aug, Sep and Oct

High Demand: Dec, Jan, Mar, Apr, May

Annual Harvest Volume: 8-10 tons/hectare (good year)

Recovery rate: 30-40%

Variety for Processing: Puyat

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Distribution: - Davao

Rosario’s Fruit Stop Outlet (Bankerohan Public Market, Davao),

Davao International Airport

- Tacurong

- General Santos City

- Manila*

- Visayas*

*by order only

Processing Details:

In the case of Davao, the popularity and profitability of durian attracted more growers. As a

result, the market is flooded with durian during peak season. The surplus and high rate of perishability

(short shelf-life) caused tremendous drop in prices.

Rosario farms can reach about 20 percent surplus of unsold fresh fruit during peak season. To

address this situation, the family resorted to processing fresh durian to minimally processed frozen

durian which commands high price during off-season.

Initially, this was a good strategy but it still cannot absorb the entire surplus. In 2001, product

development of durian candies was started. Trial and error and innovative cooking methods were

employed. In 2005, commercial production was started with starting volume of 500 - 1,000 packs of

durian candy per month which now reaches 2,000-3,000 packs per month.

Increasing competition in durian candy production pushed further developments. Other forms of

products were made such as jam, tarts, dried durian ornament and ube candy.

To acquire necessary technology on processing, Mary Grace Belviz, the fruit processing

manager, attended seminars and acquired technical assistance from various government offices and

private companies.

Mechanization processes employed in durian processing involves use of carajay, cooker-mixer,

molder and cutters. Hiring of employees on regular season requires 5 - 8 people and a cook. During peak

season it reaches 15, most were wives or family members of farm workers and working students on

shifting schedules. The pay depends on quantity output, usually they employ “pakyaw” system.

Production quota is maintained with 800 -1,000 packs per week (3 mos. shelf life) or 120 packs

per day. Durian sticks and cubes come in PhP 25/pack and PhP 50/pack packaging.

Durian candy processing is assisted by DTI, DA and DOST. DTI provided technical assistance

on Good Manufacturing Practices (GMP), DA with trainings on production, trade facts and market

promotions, DOST through technical assistance for plant lay-out, product testing, food safety audit and

labeling design. Also, assistance and semi-financing in the procurement of cooker mixer from DOST.

Constraints and limitations on the processing business stem from limited access to laboratory

food testing and packaging technology, which are too costly for cottage type business. Intervention of

the government on accreditation of laboratories for complete (food) analysis was recommended.

Likewise, establishment of incubation centers for processors.