Thailand's recurring droughts have become an issue for Siam Kubota Corporation (SKC), the farm machinery maker, but it remains optimistic that revenue will increase 5-10% in 2020, largely from farm machinery.
Newly appointed president Takanobu Azuma said SKC expects a sales boost from government support for farmers, such as measures to increase crop prices and help with debts.
"SKC forecasts that the drought will not pressure sales of farm machinery much," he said.
Mr Azuma said SKC plans to adopt agricultural innovations such as farm management, crop improvement and cost reduction to help farmers and agricultural companies.
"These innovations will solve the Thai labour shortage and assist in smart farming by using automation," he said. "SKC plans to adopt Internet of Things sensors, GPS telematics and drones for agricultural product management."
The company expects to sell 38,000 tractors and 3,000 combine harvesters in 2020, with a goal to reach 60,000 units of both products by 2024.
In 2020, SKC set aside 300 million baht, with half for development of Kubota Farm in Chon Buri on a plot of 220 rai. The remainder is allocated to improve SKC's manufacturing facilities at Nava Nakorn Industrial Park in Pathum Thani and Amata City Industrial Estate in Chon Buri.
The Nava Nakorn factory normally produces diesel engines and power tillers with annual production of 240,000 units. It also serves as the site for Kubota's parts distribution centre and R&D hub for Asean.
Tractors and combine harvesters are made at the Amata City facility with output of 77,000 units a year.
Founded in 2010, SKC is a 60:40 joint venture between Kubota Corporation and Siam Cement Group.
SKC posted 2019 revenue of 54 billion baht, a 2% rise from the year before, with 33 billion baht domestically and 21 billion baht from exports to Southeast Asia, Australia and India.
In 2019, the company sold 35,000 tractors and 2,700 combine harvesters.
Senior executive vice-president Somsak Mauthorn said SKC seeks to export Thai-assembled farm machinery to Africa, where there are higher-potential markets.
The company has diversified its farm machinery products to other dry crops and vegetable segments such as cassava, sugar cane and corn.
"Most Kubota products are for rice farming," Mr Somsak said. "Because of the drought, farmers cannot grow off-season rice, while high-season rice farming will be postponed."
He said SKC is preparing to provide farm machinery for horticultural crops to diversify amid drought risk.
Trendsetter
Japan's Kubota aims to become a major global brand by 2030, banking on its expertise in digital and innovation.
Yuichi Kitao, president of Kubota Corporation, said digital disruption is the biggest challenge. He said the company needs to invest more in the Internet of Things and analytics in a bid to transform Kubota's business to deal with future changes.
"Kubota supports globalisation through innovation, and we are committed to developing machinery that benefits and helps economic development globally," Mr Kitao said.
He said many of the challenges leading up to 2030 are related to global demographic shifts, including the rising global population and increasing demand for food. The larger population will also expand the middle classes.