Fruit Marketing System in Thailand. Pattana Jealviriyapan. Agribusiness Management towards Strengthening Agricultural Development and Trade

International Symposium Agribusiness Management towards Strengthening Agricultural Development and Trade III : Agribusiness Research on Marketing and Trade Fruit Marketing System in Thailand by Pattana Jealviriyapan Multiple Cropping Center, Chiang Mai University National Chung Hsing University The Ministry of Agriculture and Cooperatives 2001

III : Fruit Marketing System in Thailand 209 Fruit Marketing System in Thailand Pattana Jealviriyapan 1 1. Introduction The agricultural sector has played an important role in the Thai economy. However, the major emphasis was placed on grain or field crops for a long time in its history. Production and marketing of fruits have received very little attention in national policy until recently. The explainable reason is that fresh fruits are perishable and difficult to market, and therefore, most of the fresh fruit productions aimed to serve the domestic market, until the past two decades where the processed fruits industry expanded. Fresh fruits and fruit products have gained more interest from the government sector and received some support for production and export under national policy. Figure 1 shows that the export value of fresh fruits and fruit products has increased steadily in the past decade. Table 1 indicates that the export quantity and value of fresh fruits increased from 62,360 tons or 814.6 million baht in 1987 to 190,192 tons or 4,062.4 million baht in 1998 which was an increase of 20 and 52 % annually. The major fresh fruit export from Thailand has been durian. In 1998, Thailand exported 130,757 tons or 2,605 million baht of fresh and frozen durian which accounted for more than 50 % of the total value of fresh and frozen fruits export. Thailand also exports fresh longan at a high value. However, export quantity and value of longan change from year to year depending on production pattern. (Table 1) Thailand also exports a high value of fruit products. The major processed fruit exported from Thailand is pineapple in the form of air packed pineapple, pineapple juice and pineapple preserved with sugar. The total export value of processed pineapple was 10,651 million baht in 1998, which accounted for 73 % of the total export value of fruit product in this category. (Table 2) 1 Assistant Professor, Department of Agricultural Economics, Faculty of Agriculture, Chiang Mai University, Thailand.

210 Agribusiness Management towards Strengthening Agricultural Development and Trade 1,000 baht 30000000 25000000 20000000 15000000 10000000 5000000 Year 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Fresh Fruits Fresh Fruits and Fruit Products Figure 1 The Comparison of Value Exported Fresh Fruits and Total Fresh Fruits and Fruit Products

Table 1 Quantity and Value of Exported Fresh Fruits of Thailand in 1987-1998 Quantity : metric tons ; Value : 1,000 baht Items 1993 1994 1995 1996 1997 1998 Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Fresh Orange 4,318 25,579 2,816 18,946 4,181 24,925 3,076 19,463 1,710 12,684 3,175 21,024 Fresh Tangerine 487 2,326 1,389 7,544 682 4,012 819 5,591 643 5,290 601 4,890 Fresh Pamelo 6,901 64,354 6,150 51,404 7,077 63,704 5,916 50,469 7,039 66,624 5,889 71,854 Fresh Lime 81 1,103 40 725 114 3,207 98 1,489 27 1,196 10 363 Fresh Grape 226 4,093 178 3,400 618 5,821 238 2,636 54 1,566 52 1,139 Fresh Banana 1,829 9,652 1,575 9,586 3,623 23,945 2,435 18,602 2,141 16,988 2,241 15,591 Fresh Mango 3,736 28,309 6,713 49,727 4,205 30,171 5,724 37,358 3,236 26,132 3,947 31,616 Fresh Water Melon 1,398 5,819 1,802 9,789 694 5,133 445 3,681 276 1,382 1,221 9,315 Freshor or Frozen Longan 2,860 94,384 12,704 222,796 3,368 80,616 14,542 220,499 7,924 179,797 13,098 316,142 Freshor or Frozen Durian 11,303 239,414 6,694 185,754 8,288 225,002 15,654 374,545 9,550 284,615 17,507 450,771 Fresh Papaya 4,178 24,983 4,132 25,354 1,235 8,597 247 2,196 89 936 75 1,465 Fresh Rambutan 2,027 15,865 1,726 13,525 601 5,761 2,219 14,282 871 7,109 1,700 10,746 Freshor or Frozen Pineapple 17,747 214,381 16,893 213,215 17,452 237,750 7,127 102,188 5,349 98,654 4,603 82,392 Fresh Sugarapple 1,248 10,331 1,220 10,145 589 5,963 459 5,368 334 3,783 38 530 Fresh Lychee 1,460 34,241 776 17,385 744 18,458 769 21,451 563 18,715 1,447 59,181 Freshor or Frozen Mangosteen 1,301 17,770 1,780 37,134 1,523 82,016 1,481 43,103 725 31,272 1,818 80,071 Avocardo and Guava Freshor or Frozen Other Fruits 1,260 22,016 5,172 92,214 13,824 190,919 13,585 235,036 17,634 281,987 25,505 377,150 Total 62,360 814,620 71,760 968,643 68,818 1,016,000 74,834 1,157,957 58,165 1,038,730 82,927 1,534,240

Table 1 (Continued) Quantity : metric tons ; Value : 1,000 baht Items 1993 1994 1995 1996 1997 1998 Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Fresh Orange 4,760 28,202 2,251 14,307 2,514 64,941 3,576 53,662 3,372 39,660 5,376 53,396 Fresh Tangerine 810 6,111 709 6,237 434 4,241 612 6,090 574 6,818 453 6,264 Fresh Pamelo 5,083 53,159 3,985 67,813 4,776 56,122 6,182 66,907 3,274 44,375 4,496 66,317 Fresh Lime 214 1,360 94 1,580 82 2,480 32 1,149 23 538 29 1,664 Fresh Grape 40 861 34 707 31 545 22 509 38 839 31 1,006 Fresh Banana 2,804 16,490 1,957 27,326 2,153 24,747 2,868 31,345 2,194 26,441 1,790 30,572 Fresh Mango 2,940 26,110 3,411 48,459 3,658 42,174 8,250 120,135 8,522 148,939 10,209 201,489 Fresh Water Melon 2,165 12,157 1,963 7,055 741 3,772 487 2,243 90 515 123 2,423 Freshor or Frozen Longan 21,469 407,937 32,769 765,097 31,880 891,569 61,284 1,298,955 81,872 2,134,625 2,800 169,405 Freshor or Frozen Durian 21,201 553,996 30,245 738,218 52,263 1,204,783 71,330 1,483,724 78,480 1,733,624 130,757 2,605,016 Fresh Papaya 94 1,543 355 2,231 8 253 5 209 44 1,184 29 1,264 Fresh Rambutan 1,196 8,748 1,363 15,645 1,629 20,367 2,784 38,914 3,537 46,577 3,187 78,859 Freshor or Frozen Pineapple 4,078 74,026 4,351 80,103 3,812 64,385 5,276 92,376 5,817 111,841 3,510 99,442 Fresh Sugarapple 78 1,006 852 14,869 151 3,691 29 774 137 5,081 5 823 Fresh Lychee 1,862 72,689 994 36,535 3,257 118,585 11,603 336,437 11,158 327,136 1,511 72,453 Freshor or Frozen Mangosteen 2,679 76,415 1,541 70,370 3,844 112,306 2,984 99,535 3,328 101,538 2,950 71,832 Freshor or Frozen Other Fruits 31,421 460,218 37,820 555,028 34,009 584,063 24,074 465,185 30,371 638,866 22,936 600,171 Total 102,894 1,801,028 124,694 2,451,580 145,242 3,199,024 201,398 4,098,149 232,831 5,368,597 190,192 4,062,396 Sources : Office of Agricultural Economics, 1992, 1996 and 1999.

Table 2 Quantity and Value of Exported Fruit Products of Thailand in 1987-1998. Quantity : metric tons ; Value : 1,000 baht Items 1987 1988 1989 1990 1991 1992 Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Fruit in sulphur salt water 32 695 223 5,528 1,024 21,513 2,129 52,410 3,366 98,219 3,576 100,762 Other Dried Fruits 623 13,535 645 13,345 411 12,089 269 5,252 182 7,041 107 4,738 Processed Fruits not in air packed 17,474 607,437 13,554 392,151 36,632 866,234 48,246 1,177,326 79,048 1,880,624 73,807 1,694,144 Dried Banana 52 2,413 24 588 2 120 1 101 1 33 7 2,153 Dried Pineapple 62 1,975 18 219 15 688 2 91 3 445 9 795 Dried Longan 49 4,711 521 46,535 154 27,849 837 81,071 779 105,219 724 117,726 Air packed Pineapple 259,805 3,728,341 341,414 4,675,434 345,248 4,399,898 398,301 5,523,507 417,670 7,264,280 491,367 8,274,285 Air packed Rambuton 1,630 41,976 2,313 60,651 1,698 45,167 1,604 41,763 1,707 55,349 1,558 50,320 Air packed Longan 1,954 73,103 8,199 256,497 3,227 112,828 8,554 254,482 4,073 167,410 7,973 291,692 Air packed Mango 1,332 32,710 2,256 51,145 2,939 67,982 4,254 95,220 6,270 143,797 6,716 147,124 Air packed Lychee 474 15,735 1,546 51,060 5,879 186,841 3,775 132,120 4,371 171,220 9,788 350,843 Air packed Other Fruits 9,876 222,935 17,436 356,975 13,039 307,087 19,345 478,426 20,426 513,212 18,417 456,953 Rambutan with Pineapple in Sugar 1,944 55,108 2,742 72,449 3,346 90,876 3,835 104,757 4,603 147,584 3,294 106,949 Syrup Pineapple Juice 28,220 447,674 40,167 670,678 58,636 883,149 73,680 1,591,586 79,961 2,642,728 79,278 2,006,593 Other Fruits Juice 1,659 43,769 13,987 163,111 5,269 142,067 7,120 201,675 9,700 259,037 21,628 540,792 Pineapple Preserved with Sugar 0 0 7,121 287,219 7,545 312,948 6,746 292,609 7,647 336,016 8,661 370,451 Other Fruits Preserved with Sugar 0 0 278 20,292 249 13,933 130 7,744 94 5,364 148 8,366 Total 325,186 5,292,117 452,444 7,123,877 485,313 7,491,269 578,828 10,040,140 639,901 13,797,578 727,058 14,524,686

Table 2 (Continued) Quantity : metric tons ; Value : 1,000 baht Items 1993 1994 1995 1996 1997 1998 Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Fruit in sulphur salt water 949 26,800 2,016 54,389 2,187 62,045 3,957 380,626 1,844 93,508 1,970 89,132 Other Dried Fruits 301 15,526 290 16,541 625 20,659 2,814 90,608 1,837 59,416 400 37,867 Processed Fruits not in air packed 86,692 1,911,421 93,658 2,099,467 101,849 2,553,066 92,650 2,661,336 107,201 2,729,410 87,457 3,714,114 Dried Banana 15 4,115 34 9,859 9 3,017 74 20,620 99 27,340 89 22,278 Dried Pineapple 44 1,817 425 4,941 436 5,064 24 2,063 91 6,622 20 2,877 Dried Longan 879 96,029 3,335 248,225 3,655 195,514 26,850 1,046,061 38,075 2,142,864 946 85,457 Air packed Pineapple 502,836 7,190,555 707,260 6,608,089 383,990 5,763,095 346,925 6,510,060 279,513 5,901,864 226,355 6,925,013 Air packed Rambuton 2,221 72,623 5,630 180,717 7,204 250,803 12,879 475,966 10,033 388,020 8,172 380,958 Air packed Longan 8,391 338,384 10,105 373,951 10,554 415,152 16,132 609,272 15,975 753,142 4,861 272,630 Air packed Mango 4,707 102,078 6,397 138,557 5,914 136,379 6,937 175,430 5,993 182,271 5,526 206,064 Air packed Lychee 7,651 256,086 5,838 207,916 8,796 296,877 14,084 471,279 15,525 626,460 5,275 292,876 Air packed Other Fruits 15,929 395,650 18,891 420,868 17,748 446,135 16,653 454,093 11,443 377,011 13,609 505,100 Rambutan with Pineapple in Sugar 3,520 113,872 4,948 120,706 3,323 121,113 4,260 169,858 3,930 174,906 4,423 114,322 Syrup Pineapple Juice 85,187 1,448,722 103,545 1,681,164 102,367 2,348,628 83,943 2,987,958 62,182 2,215,305 68,678 2,445,272 Other Fruits Juice 4,779 87,401 151,855 974,843 35,441 830,756 6,649 122,323 10,340 197,378 6,745 120,260 Pineapple Preserved with Sugar 10,055 429,282 10,480 433,046 11,015 449,378 11,206 519,865 10,716 556,959 11,567 718,239 Other Fruits Preserved with Sugar 133 7,851 115 6,941 91 8,670 69 11,047 89 6,917 98 8,064 Total 734,289 12,498,212 1,124,822 13,580,220 695,204 13,906,351 646,106 16,708,465 574,886 16,439,393 446,191 15,940,523 Sources : Office of Agricultural Economics, 1992, 1996 and 1999.

III : Fruit Marketing System in Thailand 215 Thailand also imported some fresh fruits and fruit products from other countries, mainly temperate fresh fruit such as apple, grape and pear. The total quantity and value of imported fresh fruit and fruit products increased steadily from 1986 to the year 1995 then steadily decreased due to economic change in this region. (Figure 2) The major fresh fruits imported for Thailand is apple. The quantity and value of imported apple increased from 5,822 tons or 166.37 million baht in 1988 to 63,330 tons or 2,161 million baht in 1995 and dropped to 29,217 tons or 1,222.7 million baht in 1998. (Table 3) However, this value accounts for approximately 60 percent of the total value of imported fruits. The steady increase of agricultural products exported indicates that the agricultural sector is strong and powerful in anticipating economic crisis. In 1998, the Thai government agreed on an export promotion program for potential agricultural products. Under this pilot project, the Thai Ministry of Agriculture and Cooperatives announced 4 agricultural products, namely, durian, longan, orchid and rubber to be "Product Champion of Thailand". Which means that these products would be treated as potential products for export and received more support under this policy. The Thai government set the Center for Export Promotion of Agricultural Product in March 1998. This center will provide support for quicker export procedures including plant quarantine and other activities. Another objective of this center is to help set up national standards for grading, starting with durian, longan, and orchid (3 of the product champions) and later will expand to other products. This indicate that fruit export has received more attention and therefore marketing activities should be developed intensively, particularly, grading, packaging and processing. 1,000 baht 6000000 5000000 4000000 3000000 2000000 1000000 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Year Fresh Fruits Fresh Fruits and Fruit Products Figure 2 The Comparison of Value imported Fresh Fruits and Total Fresh Fruits and Fruit Product

Table 3 Quantity and Value of Imported Fresh Fruits and Fruit Products of Thailand Quantity : metric ton ; Value : 1,000 baht Items 1988 1989 1990 1991 1992 1993 Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Dried Grape 103 5,785 81 4,328 32 1,764 35 1,962 8 517 81 4,997 Fresh Grape 287 18,934 165 12,583 317 22,972 455 32,731 845 65,136 1,633 131,785 Fresh Lychee 10 627 11 633 15 1,037 680 17,417 90 3,249 295 8,151 Fresh Apple 5,822 166,372 14,392 412,362 23,571 685,425 17,873 559,269 26,230 917,357 45,602 1,625,355 Fresh Pear and Quinz 1,456 50,479 1,625 53,625 1,606 57,103 1,233 43,254 1,821 71,327 1,903 91,814 Other Fresh Fruits 620 42,604 430 28,901 431 29,425 710 39,973 763 56,350 797 65,324 Frozen and DriedMelon and 68 3,015 110 4,858 96 6,532 97 14,565 142 20,328 120 10,815 Orange Peel Frozen Fruits 11 1,124 7 838 9 1,243 13 1,666 3 260 27 1,919 Other Dried Fruits 47 1,622 64 2,355 59 2,326 66 2,708 70 3,517 116 7,270 Orange Juice 31 1,605 55 4,138 20 1,451 129 5,430 197 9,193 283 12,658 Processed Fruit 421 26,107 552 34,506 575 39,915 632 40,559 617 46,454 1,054 77,792 Fruit Juice 45 1,585 92 3,905 55 1,710 384 11,609 290 10,437 976 28,872 Total Fresh Fruits + Fruit 8,921 319,859 17,584 563,032 26,786 850,903 22,307 771,143 31,076 1,204,125 52,887 2,066,752 Products Total Fresh Fruits 8,195 279,016 16,623 508,104 25,940 795,962 20,951 692,644 29,749 1,113,419 50,230 1,922,429

Table 3 (Continued) Quantity : metric ton ; Value : 1,000 baht Items 1994 1995 1996 1997 1998 Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Dried Grape 53 2,573 79 3,597 189 6,992 206 9,366 172 10,336 Fresh Grape 2,326 177,474 2,318 183,479 2,591 191,624 3,640 262,769 1,005 89,910 Fresh Lychee 720 20,431 22 1,569 378 8,499 90 3,439 102 7,579 Fresh Apple 57,816 2,034,715 63,330 2,161,047 63,327 2,147,427 52,060 1,873,547 29,217 1,222,700 Fresh Pear and Quinz 1,855 89,457 2,248 110,799 2,254 112,212 1,235 58,998 964 46,378 Other Fresh Fruits 858 68,480 1,302 94,015 2,051 89,893 2,658 115,901 1,276 50,423 Frozen and DriedMelon and Orange Peel 111 4,601 101 5,372 124 4,795 100 4,237 98 6,411 Frozen Fruits 32 2,637 19 2,331 26 2,471 687 31,833 51 6,118 Other Dried Fruits 302 9,642 127 8,481 104 8,194 42 3,635 48 5,998 Orange Juice 384 16,449 560 25,381 877 35,144 994 38,455 1,016 59,621 Processed Fruit 1,243 88,875 1,745 116,968 1,573 122,473 1,887 137,562 1,721 137,400 Fruit Juice 1,298 40,238 1,755 51,397 1,640 56,424 2,256 98,496 1,739 100,640 Total Fresh Fruits + Fruit Products 66,998 2,555,572 73,606 2,764,436 75,134 2,786,148 65,855 2,638,238 37,409 1,743,514 Total Fresh Fruits 63,575 2,390,557 69,220 2,550,909 70,601 2,549,655 59,683 2,314,654 32,564 1,416,990 Sources : Office of Agricultural Economics, 1992, 1996 and 1999.

218 Agribusiness Management towards Strengthening Agricultural Development and Trade 2. History of Thailand Fruit Marketing and Policy The agricultural sector has played an important role in the production of food and absorbs a greater percentage of the labor population. For several decades, the Thai Government has emphasized agricultural development. Development of fruit marketing started from production for domestic consumption and later expanded to the export market. Thailand can produce many kinds of fruit commercially. Major fresh and frozen fruits produced for export are durian, mango, longan, pineapple, lychee, rambutan, mangosteen and pamelo. Production and marketing policy for export of fresh fruit has changed over time and could be summarized as follows. During the 1 st 4 th national economic and social development plans (1951 1971) the agriculture policy aimed at production development and increased production for export. The government supported export of many agricultural products including fresh tamarind, orange, lemon and banana. During the 5 th national economic and social development plan (1972 1976) export of fresh fruit was promoted more seriously. The major export market for Thai fresh fruits were Hongkong, Malaysia, Singapore, and the target market for exports were Japan, Europe and USA Fresh fruits exported during this period were durian, longan, rambutan, mango and pamelo. By the end of this 5 years period (1976) export quantity of fresh fruits were 351,199 tons or 5,402.08 million baht. Export value of fruit ranked number seven in plants and products category. During the 6 th National Plan (1977 1981) government policy changed from increasing production alone, to improving efficiency of export products as well. Several actions had taken place such as quality improvement and promotion. Twenty-seven kinds of fruit, i.e., orange, pamelo, papaya, banana, jackfruit, strawberry and longan received governmental support for production and marketing for domestic and export use. By the end of this period, the quantity of exported fruits and fruit products were 698,066 metric tons or 14,836.31 million baht. During the 7 th National Plan (1982 1987) the main objective for agricultural development were (1) to stabilize prices of agricultural products (2) to improve average income levels of farm families and income distribution and (3) to protect the environment and develop natural resources for agriculture. Since 1984, GATT (General Agreement on Tariff and Trade) members have signed an agreement to open up markets for export and reduce subsidies for production and marketing. Thailand has gained advantage in fruit export and could increase export of fruits and its products to 878,328 metric tons or 20,878 million baht in value. In 1997 which was the first year of the 8 th National Plan period, the economic crisis happened. It had a

III : Fruit Marketing System in Thailand 219 great and long lasting impact on the economic structure. After receiving support from the IMF, Thailand had to restructure many things. While industrial sectors slowed down, the agricultural sector has expanded. Thailand has a comparative advantage in fruit production, therefore, the agricultural policy for fruit is to expand production and increase exports in order to gain some trade balance. Thailand has been very successful in increasing production of fruit such as durian, longan, mango etc. However, the support from government or policy to improve marketing is still minimum and until recently this contributed to low prices for many kinds of fruit. Since fruit production in highly seasonal, the harvesting season usually ranges between 3 4 months while some fruit can be grown all year round. These factors make it more difficult for marketing. Thailand has no auction market for fruit as in Taiwan or other countries and a central market for fruit is still not functioning efficiently. This study aims to provide the understanding of Thai fruit marketing and policy as compared to fruit marketing in Taiwan. The following section will explain marketing structure for fruit in the overall picture and later focuses on marketing of durian which has the highest value of the fresh and frozen fruits exported. The major export markets for fresh durian are Hong Kong and Taiwan, and the markets for frozen durian are USA, Taiwan and Hong Kong, respectively. 3. Marketing Structure of Fruits in Thailand As mentioned earlier, most of the fruits are produced to supply the domestic market. The structure of the domestic market can be divided into 3 major sub-markets. 1) Local center market 2) Bangkok market 3) Other provincial market 1) Local center markets are scattered in production areas of each fruit, mainly in the north for longan and in the east for durian, rambutan, mangosteen etc. Market structures at this level are perfectly competitive. The center market can be formal or informal depending on the area. Sometimes there are only temporary points of purchasing where large traders will come and any fruit sellers can go to sell their products. Marketing information is available at the market place. Negotiation between traders and growers are common in this market. However, most of the growers do not have strong farmer s associations or cooperatives and therefore, have less bargaining power. Price of fruit at this market, depends on the demand and supply.

220 Agribusiness Management towards Strengthening Agricultural Development and Trade 2) Bangkok market: Bangkok is the major wholesale market for fruits in Thailand. Local collectors, traders and some growers will bring their products to this market from all over the country. This market operates all year round with different fruits in different seasons. The major fruit markets in Bangkok are Mahanak market, Pakklongtalad market, and Si mummuang market. At these markets there are wholesalers from different provinces, retailers and exporters as buyers, and wholesalers in Bangkok and large growers or cooperatives as sellers. Regular contracts exist in this market and therefore the structure here is more of monopolistic competition. Most of the fruit exporters are located in Bangkok area. 3) Other provincial markets mean fruits markets in other provinces excluding the production areas. Wholesalers and retailers in other provinces can either purchase the fruit from local center markets, or from Bangkok market and sell the fruit regularly in their own province. Grading of fruits usually applies at the local markets. Transportation of fruits to this market are either small or medium size truck. Pricing of fruits in this market is a marked up price from the purchasing point. 4. Marketing System The marketing system for each kind of fruit varies from one to another, depending on demand, supply, marketing practice and storage period. The following section will explain marketing of durian as an example case of fruit marketing. 5. Marketing of Durian Thailand is the world s major producer of durian. The production area of durian has increased from 607,735 rais in 1992 to 751,956 rais in 1996 or 4.63 percent per year. Total production increased from 711,371 metric tons in 1992 to 917,689 metric tons in 1996 (A.E.O., 1999). Thailand is also a world exporter of fresh and frozen durian. The major markets for fresh durian are Taiwan and Hong Kong, which absorb about 90 percent of total export value (Table 4). Taiwan imports many kind of fresh fruits from Thailand. The highest value of Thai fruit imported into Taiwan is durian followed by mangosteen (Table 5). The total quantity and value are also increasing steadily. Therefore, one can consider this as a potential export market given that we can improve our quality and marketing standard. Durian is also exported

III : Fruit Marketing System in Thailand 221 in frozen form. The major market for Thai frozen durian is the USA with an increasing value of 174,522 million baht in 1996 to 296,631 million baht in 1999. (Table 6) Table 4 Value Exports of Thai Fresh Durian Classified by Destinations Unit: Million baht Item 1996 1997 1998 1999 2000 (Jan-Jun) Hong Kong 390,612.3 471,165.4 993,239.9 1,068,207.6 613,477.8 Taiwan 698,218.0 777,606.3 903,714.5 911,799.4 523,760.0 China 2,461.7 1,027.4 3,431.6 10,080.2 34,421.0 Malaysia 46,616.8 58,189.8 78,476.4 59,754.0 19,289.2 USA. 13,616.0 10,081.3 42,736.5 24,381.3 16,139.0 Indonesia 12,484.3 27,001.9 286.0 3,422.6 8,157.8 Singapore 12,485.2 6,509.1 14,133.9 8,339.4 6,245.0 Canada 16,863.5 30,888.5 14,699.7 11,737.3 5,627.3 Brunei 1,061.9 195.3 0.0 2,577.2 4,897.8 Japan 1,738.7 1,676.4 3,036.2 5,993.0 3,376.4 France 120.9 1,762.6 126.0 3,164.3 2,353.1 Vietnam 0.0 0.0 79.8 6,248.2 949.0 Cambodia 320.8 0.0 464.7 306.1 476.0 Laos 131.4 0.0 156.5 79.6 405.0 United Kingdom 668.1 356.9 10.0 38.9 362.5 Total 15 items 1,197,399.6 1,386,461.0 2,054,591.6 2,116,129.1 1,239,936.8 Others 4,722.7 13,164.2 7,717.9 6,593.9 1,355.1 Grand Total 1,202,122.4 1,399,625.3 2,062,309.5 2,122,723.0 1,241,292.0 Source : Department of Customs processed by Trade Statistics Center Note : 2000 is the preliminary

222 Agribusiness Management towards Strengthening Agricultural Development and Trade Table 5 Quantity and Value of Thai Fruits and Fruit Products Export to Taiwan, 1995-1997. Quantity: tons ; Value: Million baht 1995 1996 1997 Quantity Value Quantity Value Quantity Value Fresh Durian 27,066.00 659.00 33,304.00 698.00 36,767.00 778.00 Frozen Durian 87.00 2.22 338.00 6.55 60.00 2.01 Fresh Mangosteen 2,449.00 48.88 1,202.00 26.74 1,557.00 34.30 Frozen Mangosteen 140.00 2.26 139.00 5.58 50.00 2.05 Fresh Rambutan 114.00 1.42 80.00 1.82 62.00 0.83 Canned Rambutan 1,171.00 44.31 1,295.00 73.82 1,164.00 60.48 Fresh/ Dried Mango 81.00 3.36 205.00 9.24 70.00 3.28 Fresh Lychee 58.00 2.80 134.00 3.15 139.00 1.77 Frozen Longan 3.00 0.06 4.00 0.11 0.00 0.00 Dried Banana 0.61 0.04 0.00 0.00 0.00 0.00 Total 31,169.61 764.35 36,701.00 825.01 39,869.00 882.72 Source: Office of Agricultural Economics Research, 1998.

III : Fruit Marketing System in Thailand 223 Table 6 Value Exports of Thai Frozen Durian Classified by Destinations Unit: Million baht Item 1996 1997 1998 1999 2000 (Jan-Jun) USA 174,522.9 203,121.6 355,800.9 296,636.1 167,278.0 Taiwan 6,553.9 2,006.0 2,871.0 48,098.9 96,967.9 Hong Kong 7,385.4 5,617.9 36,692.8 75,040.7 52,528.4 Australia 53,070.1 62,667.5 53,836.8 102,597.9 47,248.1 Canada 22,702.8 35,126.3 69,198.3 59,584.9 42,455.8 China 3,330.3 514.3 0.0 1,764.2 4,618.0 Japan 2,094.6 3,857.4 2,377.1 1,350.4 1,819.8 Belgium 0.0 3,409.1 0.0 1,873.8 1,154.9 Netherlands 4,749.3 5,455.6 8,758.2 6,081.9 1,121.9 France 4,784.9 4,021.5 6,204.7 3,467.9 643.0 New Zealand 872.6 4,777.7 3,480.5 2,800.2 395.5 Germany 358.5 637.3 1,156.4 1,239.9 388.5 S. Korea 0.0 0.0 0.0 333.9 285.1 United Kingdom 104.4 282.2 808.9 140.8 86.2 Switzerland 88.3 0.0 231.9 218.0 41.4 Total 15 items 280,617.9 331,494.4 541,417.7 601,229.4 417,032.5 Others 983.5 2,504.3 1,832.2 871.8 22.0 Grand Total 281,601.4 333,998.7 543,249.9 602,101.2 417,054.5 Source : Department of Customs processed by Trade Statistics Center Note : 2000 is the preliminary

224 Agribusiness Management towards Strengthening Agricultural Development and Trade There are three major domestic markets for durian e.g. local markets (eastern part of Thailand), other provincial markets, Bangkok market, and export market. The marketing system of durian is shown in Figure 3. Most of the durians are produced mainly for fresh consumption. The marketing structure for durian varied according to the markets. Central markets for fresh durian in the local production areas are in perfect competition with many buyers and sellers. The price of durian in this market depends on negotiation and demand for export, and for other markets. In this market, collectors and wholesalers can purchase durian in many different ways such as contract farmers, and purchase whole orchards and harvest by themselves or farmers do the harvesting and sell their fruit according to grades. From collectors, durians are then transported to Bangkok for retail market or retransport to other provinces. Prices in this market are usually by marked-up price. Exporters of durian receive different prices according to grade and demand in the importer countries. 6. Marketing Practice 6.1 Buying and Selling Buying and selling practice of durian at the farm level can be divided into 4 types 1) Purchase the whole orchard There are two ways of purchasing the whole orchard. One way is the trader will go to the orchard and see the fruits which are ready for harvest at a certain time then negotiate the price with the grower. When the fruit is ready, traders will harvest themselves, weigh the fruits and pay the price which they agreed on. Another way is purchasing the whole orchard for the whole season. This way trader and grower will agree on the price and traders has to deposit half of the price and harvest themselves for the whole season which lasts 3 4 months. This practice is not very popular because traders will bear a higher risk. 2) Time to time buying and selling at the farm gate This practice is commonly used. Trader will look around and purchase any amount he wants from any orchards. The price varies according to market prices on each day, which depend on demand and supply of durian in the market.

Exporters World Market Local Collectors Fruit Retailers in Bangkok Wholesalers in Bangkok Durian Farmers Retail Merchants Consumers District Collectors Wholesalers in Other provinces Retailers in Other Provinces Collectors from Other Provinces Durian Processors (Industries) Exporters Figure 3 Marketing System of Durian

226 Agribusiness Management towards Strengthening Agricultural Development and Trade 3) Selling in a central market Growers bring the fruit and sell in a local central market. These way traders will save the time visiting different orchards. The price in this market will be higher than farm gate price, and varied according to size and quality of durian. 4) Growers get together, transport, and sell durian directly to Bangkok wholesale market. Some growers set up export companies themselves and do their own sorting, grading and exporting. 6.2 Sorting and Grading: can be divided into 2 types 1) Sorting and grading for the domestic market Today, no official quality standards for the domestic market of durian have been set. Farmers and traders still rely on traditional grading, based on variety, maturity, size, pulp, color, interval quality and health. After harvesting, grower and trader will cull unmarketable fruits and separate marketable fruits. Fruits with irregular shape, disease, damage by rodents or insects will be marketed for a low price and regarded as unguarded. Graded durians will be of high quality and marketed at a premium. The price difference will mainly depend on the variety, size and appearance, but generally the durian that influences the market has the characteristic as follows: - Being harvested from the tree (not fallen fruit) with 80 90 % maturity (the mature green) - Being a Chanee or Monthong - Weigh between 2 4 kg each, depending on variety. Monthong is larger than a Chanee - Good shape 2) Sorting and grading for export Today the Thai Ministry of Agriculture and Cooperatives, prescribes durian standards as criteria for export voluntarily (Table 7 9 and Figure 4 6). However, this quality standard is only a guideline and no enforcements apply, therefore only some exporters have adopted this standard, but some companies still use their own company standard.

III : Fruit Marketing System in Thailand 227 Table 7 Quality Standard 1 for Export of Durian (Chanee Variety) Appearance/ Class Extra 1 2 External Appearance Shape 1, 2, 3 + 3 1, 2, 3 + 3 3 - Weight (kg) 2.0 3.5 2.0 3.0 3.5-4.5 > 3 2.5-3.0 or 1.0-2.0 Health Quality No diseases or insects. Small defects invisible. No diseases or insects. Small defects invisible. No diseases or insects. Small defects invisible. Internal Characteristic Texture No wet core or No wet core or browning No wet core or browning browning Color Yellowish Yellowish Yellowish Source : Department of Business Economics, 1989. Notes : All graded must meet other minimum standard such as good smell, sweet and rich, firm and elastic texture. For extra class maximum of 5 % of class 1 is allowed. For class 1 maximum of 5 % of class 2 is allowed. 1: Set by Quality and Standard Committee for Exported durian, rambutan and mango, 1988.

228 Agribusiness Management towards Strengthening Agricultural Development and Trade Shape1 Shape2 Shape3+ Shape3 Shape3- Shape4 Shape5 Shape6 Source : Department of Business Economics, 1989. Figure 4 Shape of Chanee Variety

III : Fruit Marketing System in Thailand 229 Table 8 Quality Standard 1 for Export of Durian (Monthong Variety) Appearance/ Class Extra 1 2 External Appearance Shape Monthong shape 3/2 Monthong shape 3/2 2/3 Weight (kg) 2.0 4.5 4.5-6 2.0 4.5 Health Quality No diseases or insects. Small defects No diseases or insects. Small defects No diseases or insects. Small defects invisible. invisible. invisible. Internal Characteristic Texture No wet core or browning No wet core or browning No wet core or browning Color Light yellowish Light yellowish Light yellowish Source : Department of Business Economics, 1989. Notes : All grading must meet other minimum standards such as good smell, sweet and rich, Firm and elastic texture. For extra class maximum of 5 % of class 1 is allowed. For class 1 maximum of 5 % of class 2 is allowed. 1 : Set by Quality and Standard Committee for Exported durian, rambutan and mango, 1988.

230 Agribusiness Management towards Strengthening Agricultural Development and Trade Mon Shape Shape 3/2 Shape 2/3 Rounded Shape Crooked Shape Source : Department of Business Economics, 1989. Figure 5 Shape of Monthong Variety

III : Fruit Marketing System in Thailand 231 Table 9 Quality Standard 1 for Export of Durian (Kanyao Variety) Appearance/ Class Extra 1 2 External Appearance Shape Huad 3/2 Huad Round 3/2 3/2 Weight (kg) 3.01 4.5 2.0 3.0 2.5-4.5 2.01-3.0 1.5 2.0 Health quality No diseases or insects. Small defects invisible. No diseases or insects. Small defects invisible. No diseases or insects. Small defects invisible. Internal Characteristic Texture No wet core or browning No wet core or browning No wet core or browning Color Yellowish Yellowish Yellowish Source : Department of Business Economics, 1989. Notes : All grading must meet other minimum standards such as good smell, sweet and rich, firm and elastic texture. For extra class maximum of 5 % of class 1 is allowed. For class 1 maximum of 5 % of class 2 is allowed. 1 : Set by Quality and Standard Committee for Exported durian, rambutan and mango, 1988.

232 Agribusiness Management towards Strengthening Agricultural Development and Trade Huad Shape Lychee Shape Shape 3/2 Rounded Shape Crooked Shape Source : Department of Business Economics, 1989. Figure 6 Shape of Kanyao Variety

III : Fruit Marketing System in Thailand 233 Definition of Durian Shape 1. Chanee Variety Shape 1 : have 4 5 locules, all pulp seeds are perfect with oval shape Shape 2 : have 4 5 locules, all pulp seeds are perfect with cylinder shape Shape 3 + : have 5 locules, 3 pulp seeds are perfect with 2 imperfect seeds Shape 3 : have 5 locules, 2 pulp seeds are perfect with 3 imperfect seeds Shape 3 - : have 4 5 locules, 1 pulp seed is perfect with 3-4 imperfect seeds 2. Monthong Variety Mon Shape : have 4 5 locules, all pulp seeds are perfect Shape 3/2 : have 5 locules, 3 pulp seeds are perfect with 2 imperfect seeds Shape 2/3 : have 5 locules, 2 pulp seeds are perfect with 3 imperfect seeds 3. Kanyao Variety Huad Shape : (Lychee Shape) have 5 locules, all pulp seeds are perfect, with V shape or cylinder shape Shape 3/2 : have 5 locules, 3 pulp seeds are perfect with 2 imperfect seeds Round Shape : have 5 locules all pulp seeds are perfect with a rounded shape 6.3 Packaging 1) Domestic Market : Durians destined for the local market, are generally stacked in bulk in trucks with jute bags or canvas on the top and bottom to protect it from sunlight and rain. Upon reaching the market, they may be stacked on the floor with jute bags or cardboard or canvas underneath. However, if the durians are of high quality, they may be put on a shelf or hung for the consumer to choose from. 2) Export : The packaging of durian depends on the requirements of the destination. Durian exported to Hong Kong, Taiwan and China are fastidiously packed in a corrugated carton with 10 12 kg capacity. Each box contains 3 4 fruits. A bigger box with a capacity of 6 8 fruits is also used to reduce packaging cost. For durians exported to Malaysia and Singapore, wooden crates are used by some Thai exporters. These are much cheaper than a paper box. The wooden crates come in different sizes ranging from 10 30 kg capacity and holding between 4 15 fruits each.

234 Agribusiness Management towards Strengthening Agricultural Development and Trade 6.4 Transportation 1) Domestic Transportation: From the orchards to the market, transportation is generally by truck, with the fruit stacked without any packaging. It takes 1 2 days to reach the destination. During transportation, the trucks are covered with canvas so that the fruits are not exposed to direct sunlight. 2) Export Transportation : The mode of transportation mainly depends on the distance by truck, ship or air. Durians destined for nearby countries such as Malaysia and Singapore are usually transported by truck. For Hong Kong, Taiwan and China, transport by sea is most likely. For distant countries such as the USA and Europe, the best mode of transportation is by air. References Hirunyapradit, H. et al., 1998, Production Technology of Durian. Bangkok : Kasetsart University Publishing Co. Office of Agricultural Economics, 1992, Agricultural Statistics of Thailand Crop Year 1991/92. Bangkok : Agricultural Economics Department, Ministry of Agriculture and Cooperatives, Thailand., 1996, Agricultural Statistics of Thailand Crop Year 1995/96. Bangkok :Agricultural Economics Department, Ministry of Agriculture and Cooperatives, Thailand., 1999, Agricultural Statistics of Thailand Crop Year 1997/98. Bangkok :Agricultural Economics Department, Ministry of Agriculture and Cooperatives, Thailand., 1998, Research Production and Marketing of Agricultural Products. Bangkok : Agricultural Economics Department, Ministry of Agriculture and Cooperatives, Thailand. Trade Statistics Center, 2000, Department of Customs. (Online). Available: http://www.dir.go.th