Workers at a longan drying factory prepare the fruit to be dried before selling them to Chinese buyers in Phrao district, Chiang Mai, Thailand, Aug. 17, 2024. [BenarNews]

Original published: Benarnews Thailand

Longan, a tropical fruit known for its milky-white translucent flesh and subtle sweetness, has captivated the taste buds of millions of Chinese consumers as one of Thailand’s most prized agricultural exports.

Known locally as “lamyai,” the fruit is grown in lush orchards of northern Thailand, but farmers and exporters warn that the Thai longan industry faces challenges because it relies too heavily on a single market for exports: China.

Last year, about 95% of China’s longan supply – a volume valued at U.S. $400 million – was imported from Thailand, according to the Thai Ministry of Commerce.

Although that statistic might give people in the Thai longan industry plenty to cheer about, Thai farmers and exporters point to it as a telling sign of the power that Chinese middlemen wield in controlling prices for longans shipped from Thailand.  

“The current state of the longan market is completely controlled by Chinese merchants, both for fresh and dried longan,” said Niwat Kantawong, an exporter of dried longans based in Phrao, a district of Chiang Mai province.

“When demand from China is high, prices are good, and everyone’s happy. But when production exceeds their demand, dried longan factories and longan orchard owners struggle,” Niwat told BenarNews.

“It’s as if the Chinese buyers are controlling the production themselves. The bargaining power is entirely in the hands of Chinese merchants."

Thailand is the world’s biggest longan exporter, according to the Thai Ministry of Commerce.

This is a testament to the Southeast Asian country’s reputation as a global agricultural powerhouse. Thailand is also regarded as one of the world’s top producers and exporters of rice, durian, rubber, and other products.

In Thailand’s bustling markets for longan and other fruits, middlemen play a crucial role, operating through fruit-packing houses, known as “Lhongs.” 

Chinese middlemen joined the local longan industry around 2012, as Thailand’s fruit exports to China rose, researcher Mittraporn Sitthidetand Watcharee Srikham of Ubon Ratchathani University wrote in December 2019.

And it’s not only the longan sector. Beijing’s huge demand for fruit products, such as durian, has led to various Chinese investments in Thailand’s fruit industry. 

Chinese interests control around 70% of the Thai durian wholesale and logistics business, The New York Times reported in June.

These Chinese merchants often are married to Thai nationals or partner with local businessmen, according to the Office of Farmers’ Reconstruction and Development Fund, a Thai government agency.

“We really can’t escape the influence of the Chinese-owned Lhongs, especially with the Thai government welcoming investment from Beijing,” said Chawanwit Jaikard, a longan farmer in Lamphun province’s Ban Hong district.

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The entry of Chinese middlemen has greatly affected local longan farmers by diminishing their bargaining power and increasing their dependence on such buyers, according to research conducted by Li Jun Wang, a social scientist at Chiang Mai University, in 2022.

“While the expansion of Chinese Lhongs offered export opportunities, it led to the loss of longan varieties and market monopolization, creating new risks and lifestyle changes for farmers,” according to her study, which examined the livelihoods of longan farmers in Lamphun province.

According to a separate report by the Farmers’ Reconstruction and Development Fund, the impact of Chinese middlemen began to be felt in Thailand around 2017.

“Thai Lhong operators could no longer bear the rising costs of agriculture, leading some to become nominees or lease their operations to Chinese Lhong during that period,” the agency said.

In other words, Chinese middlemen can set purchase prices and quality standards as they wish, bearing little risk while monopolizing the local longan market.

Meanwhile, Thai farmers are unable to predict the prices to cover their production costs. 

If prices fall in a year, farmers may face losses and incur debt.

Longan trees also take years to mature and produce fruit only once a year. A single misstep in investment therefore can have long-lasting effects.

“In years with low production yields, like this year, longan prices are good, with Lhongs able to set higher purchase prices for the fruit,” said Chawanwit, the longan farmer in Ban Hong.

“But in years with high longan production, Lhongs can lower their purchase prices or, even stop buying altogether.” 

Fruit owners have no choice but to accept the fate determined by these buyers, Chawanwit said. 

This situation – along with other chronic problems faced by Thai longan farmers, such as debt and lack of stable income – has made many young people reluctant to join the longan market.

“Gen Y and Gen Z like me often opt for steady salaried jobs or more stable work than longan farming,” said Chawanwit, 27.

“The memory of family members in debt due to longan farming and the lack of stable income drive younger people to seek work elsewhere. Only some Boomers, Gen X, and a few Gen Y continue longan farming. In extreme cases, some decide to sell their orchards because there’s no one to continue the work.”

New markets, new strategies

The Thai government is taking steps to address various issues facing the fruit industry, according to Deputy Prime Minister Phumtham Wechayachai. But, he said, farmers must take the responsibility to maintain the quality of their produce. 

“We aim to solve the problems in a timely manner, ensuring people are well cared for and stay competitive in global markets,” he told journalists in late August. 

He noted that Cambodia, Thailand’s main competitor in longan exports to China, had increased its market share to 5% in 2023 from 0.5%. That means the Thai longan industry needs to maintain high standards for its products to keep prices competitive, he said.

There have also been calls for the country to find new markets and strategies to secure a future for the longan industry.

In July, Rangsan Maneerat, an MP from Lamphun province, proposed a bill to establish a committee to address the issues of the longan industry.

“We want to see solutions to unfair longan pricing, the application of scientific research to develop value-added longan products, and relevant ministries negotiating new markets for longan,” he said.

More diverse processing methods and new markets are the way forward for the entire longan industry, said Donlawat Sunsuk, a researcher at The Glocal, a Thai think-tank.

“The longan export industry must adapt by developing new products and exploring markets beyond China,” Donlawat told BenarNews. “If one day they stop buying, the entire Thai longan system could collapse.”

“We should find new processing methods and new markets. I’d like to try making spirits, beer, or wine from longan, so we’re not just exporting to China alone.” Niwat said.