Siam Kubota Leasing Co (SKL), a subsidiary of farm machinery maker Siam Kubota Corporation (SKR), expects flat growth in farm machinery leasing this year.
The forecast is based on weak prices for agricultural products, which are expected to remain low for another year and are likely to cut demand for farm machines.
Managing director Suksri Panyakorn said low farm product prices would put the company's leasing value at an estimated 25 billion baht, unchanged from last year.
"We see the Thai agricultural sector not performing well this year, so we expect to see flat growth in leasing value," she said.
But Ms Suksri said the expected severe drought this year would have a lesser effect on the company's leasing business, as most customers were in the Northeast, where the farming pattern continued to be one crop a year.
"About 65% of our customers are in the Northeast, which will see no effect from the drought," she said.
"However, some farmers in the central region, which accounts for 12% of total customers, will be affected by the drought."
SKL is willing to help farmers facing the problem of low yields this year, as it has for more than 10 years since starting the business, Ms Suksri said.
The assistance will include consulting services to help farmers increase the yield of their products.
Half of SKL's customers are rice farmers, 20% grow field crops and 30% are in rubber, oil palm and fruits.
The company has observed a new trend of crop switching after farmers were encouraged by the government to grow less rice, which is seen as a non-lucrative crop, and more field crops such as sugar cane, cassava and maize.
The trend is expected to boost demand for new machinery as farmers adjust accordingly.
Another factor likely to lend support to the company's business is a labour shortage in the farm sector that grows more serious every year, forcing Thai farmers into mechanisation rather than using a human workforce.
SKL predicts improved prospects for Thai agriculture as infrastructure investment leads to an improved water management system.
Parent SKR has already begun to invest in Cambodia, Laos and Myanmar.
The expansion in those countries will require more support from SKL.
The leasing unit began operations in 2006.
It has more than 350,000 customers, of whom more than 170,000 have already paid up, holding the company's non-performing loans (NPLs) below 1%.
"We'll maintain our NPL rate at below 1%," Ms Suksri said.
Most of the company's customers are high-earning farmers with average annual income of 250,000 baht.
From now on though, the company plans to tap lower-income farmers to expand the customer base.