Laos Durian Dreams Grow as Plantations Rise to Feed China

High-speed railway fuels investment in 'king of fruits' amid worries over forest loss

Chinese businessman Tao Jian spends an entire day navigating muddy roads on the Bolaven Plateau in southern Laos, inspecting his durian empire of 50,000 trees. The area is nicknamed the country's coffee capital, but soon it may also be known for the smelly, spiky "king of fruits" for which China has an insatiable appetite.

Tao's company Jinguo -- literally "golden fruits" in Chinese -- just had its very first harvest this year. "I believe Laos will soon become the world's fourth-largest durian producer, after Thailand, Vietnam and Malaysia," the 54-year-old said.

Chinese investors like Tao are flocking to establish durian plantations in Laos, aiming to export their pungent produce back to China. The sprouting industry -- part of a broader influx of Chinese investment including the launch of a high-speed railway connecting China and Laos -- promises to be an economic boon for one of Southeast Asia's poorest and least developed countries.

At the same time, the durian craze could come at a high cost, according to local villagers and experts who are concerned about pollution and the loss of forests and biodiversity.

Another sticking point is that China does not yet allow Laotian durians into its market. But the two countries are reportedly in talks on this, and investors are convinced it is only a matter of time. Bounchanh Kombounyasith, Laos' director general of the Department of Agriculture, was quoted in a state-owned Chinese newspaper on Sept. 24 as saying that Laotian durians will be exported to China soon, as the two nations were preparing market access documents.

The fruit omits an odor so overpowering that it is banned from public transportation in places such as Hong Kong and Thailand. But its distinctive aroma and sweet taste have earned a huge following in China, driving a rapid expansion of trade. China takes in as much as 95% of global durian exports, according to the United Nations Food and Agriculture Organization. And last year, it bought $6.7 billion worth of the fruit from Southeast Asia -- 12 times more than in 2017 -- according to Chinese state media.

Much of the region has mobilized to cater to China's craving. In the last 12 years, Thai durian production almost tripled. Vietnamese coffee farmers have pivoted to growing durians. Rainforests in Malaysia were cleared for durian plantations. But it is still not enough -- the reason investors are increasingly looking at landlocked Laos, with its suitable climate, cheap labor and vast uncultivated land.

Durians can sell for anywhere from $10 to hundreds of dollars per kilogram, depending on the variety. Healthy and mature trees can generate lucrative returns for decades. But as it takes more than five years for them to bear fruit, farming requires meticulous care, a large plot of land and high, long-term investments.

Even though the durian is native to Southeast Asia, the industry in Laos is only just taking root. Until a decade ago, the fruit was mostly found on trees in the backyards of Laotian families, not cultivated on a large scale.

But Chinese investors have the means to build the industry, as well as an urge to park their cash outside of China.

Tao used to invest in real estate projects back home, but in 2017, he saw a housing crisis looming and decided to shift away. "My vision is to leave China, but to invest in something related to China and to cater to the demand of 1.4 billion people," he said.

China's desire for durian persists even though its overall economic picture is bleak, with the government resorting to a host of stimulus measures to shore up flagging growth. Like Tao, many Chinese investors are searching for profitable ventures abroad, spurring outbound investment to new highs -- with Asia as the largest recipient.

Another Chinese player that has joined Laos' durian rush is Jiarun, an infrastructure builder. It has vowed to establish the world's largest durian plantation in Attapeu, a remote province in southern Laos. In 2022, the company secured a 50-year lease from the Laotian government for 5,000 hectares of land, 15 times the size of New York's Central Park. The company intends to plant durian trees across more than half of that area.

"We want to combine the Chinese agricultural model with Laotian resources," said He Ruijun, 42, deputy manager of Jiarun's local subsidiary. "Southeast Asia is now a land of opportunity, unlike China where the room for growth is now limited."

China has been the largest foreign investor in Laos since 2016. Providing extra momentum is the Laos-China railway, a crucial component of Beijing's Belt and Road Initiative. Launched in December 2021, the train line shortens the travel time from Laos' capital of Vientiane to Kunming, a major trade hub in southwestern China, to less than 10 hours.

"For fruit producers like us, the Laos-China railway is very convenient, as it saves costs and time," said He.

Transportation of durians is a race against time, as ripe, fresh fruit can rot within days. Trains are the most cost-effective and reliable means of carrying them. The Laos-China railway has already proven a game changer for Thai durians, which are increasingly transported to China via the link.

Cutting open one of the first durians harvested from his Laotian farm, Jinguo's owner Tao looks forward to a near future when such fruit quickly ends up in Chinese shops. "In less than 48 hours [after being harvested], durians will get to the Chinese consumers," Tao said.

While early investors like Tao have harvested their first crops, newcomers such as Jiarun's He have just started to clear trees for orchards.

When He first set foot in the dense tropical forest, he was both terrified and amazed by the rugged landscape and the sounds of wildlife at night. When his company's bulldozers entered the forests, he saw something unexpected. "We ran into elephants -- a mother and a calf," he said. "I felt uneasy because we occupied their homeland." By his account, the animals left and never came back.

Jiarun's durian plantation is not far from two national conservation zones but sits on a production forest area, which can be used for cultivation and logging, according to Laos' Forestry Law.

"It's an untouched land. We were reluctant to develop it," said He. "But then I think the 'economic forest' can be just as beautiful, and that it can bring economic growth to the villagers and the government."

Laos contains some of the last remaining intact tropical forests in mainland Southeast Asia, home to diverse species of flora and fauna. But the area of primary forest in Laos decreased by 14% from 2002 to 2023, according to Global Forest Watch. Illegal logging, infrastructure construction and large-scale agriculture are among the main drivers of deforestation, which accelerated to 137,000 hectares in 2023 from 93,000 the previous year. Local farmers have also razed forests to make room for cassava, one of the most profitable agricultural products in the country.

On Chinese social media, Jiarun promotes its durian project as a green initiative and calls its approach tui lin huan lin, which means replacing the original forest with trees of high economic value. And Jiarun is not the only Chinese durian grower in Laos to tout this "reforestation." A Hong Kong company leased 5,100 hectares of nearby land in 2022, aiming to develop eco-friendly tourism in durian orchards.

But experts say plantations can never replace pristine forests. "Some aspects of a monoculture plantation appear similar to a forest, but the biodiversity is much lower," said Miles Kenney-Lazar, a scholar at the University of Melbourne who studies plantations in Southeast Asia.

Additionally, villagers might lose access to forest food, such as mushrooms and bamboo shoots.

In communities near the Jiarun farm, many locals remain unaware of the vast durian orchard next door. A group of villagers told Nikkei Asia that they were not consulted before the land concession was granted, nor informed about its progress since.

Those who know about the plantation have mixed feelings. "If the project is done properly and follows the law, I will support it because it benefits our country's economic development," said one resident.

Others worry about pollution. "I am very concerned that this project will cause negative impacts to our environment, especially due to the use of chemicals," one said, referring to fertilizers and pesticides. In 2016, a Chinese-driven banana boom in northern Laos left workers sickened and water sources polluted, which prompted the Laotian government to ban the opening of new banana plantations.

Balancing economic development and environmental conservation has always been a delicate issue for agriculture-reliant countries like Laos. The government has high hopes that the durian industry will help alleviate poverty. During a recent visit to durian plantations in the south, Prime Minister Sonexay Siphandone urged investors to create jobs and build infrastructure without contaminating the land.

The Jiarun farm has received strong political support. Last October, Sommad Pholsena, vice president of the National Assembly of Laos, praised Jiarun as "an outstanding example" of Laos-China cooperation, according to Beijing's mouthpiece China Daily.

On the ground, it appears that the project has yet to blossom. Two years after acquiring the land, Jiarun has only managed to plant durian trees on 1% of its plot. Worse still, the earliest trees died due to water mismanagement and insect infestation.

The manager He still believes the future is bright. "It will be a really pretty scene," he said, "when all the trees are dripping with durians."

[Source: Nikkie Asia.com]