Flood boosts sales of farm machinery

Flood boosts sales of farm machinery

People walk through flood waters in Nonthaburi's Wat Phlap Phla community, which was submerged by the Chao Phraya River in October.
People walk through flood waters in Nonthaburi's Wat Phlap Phla community, which was submerged by the Chao Phraya River in October.

The Federation of Thai Industries (FTI) expects demand for agricultural machinery to keep growing in both domestic and overseas markets as damage caused by recent flooding should increase sales.

The positive business prospects are expected to last for 1-2 years, but Chinese products may intensify competition once Beijing lifts its zero-Covid policy, according to the Agricultural Machinery Club of the FTI.

Emerging markets such as Africa will play a key role in driving demand for farm equipment, which will boost exports, said club chairman Yanapol Limpanachokchai.

"African farmers need light agricultural machinery. This is a good opportunity for Thai manufacturers because they can make quality products at affordable prices," he said.

Thailand can export more machinery based on simple technology to African markets, said Mr Yanapol.

The federation expects the export market to grow by around 10% a year, mostly driven by sales of small machinery.

"Agricultural machinery is usually made by small and medium-sized enterprises (SMEs), and their manufacturing does not require high technology," he said.

There are a total of 3,628 companies in the agricultural machinery industry in Thailand. Up to 95% of them are SMEs.

According to the FTI, the value of the agricultural market stands at 150 billion baht, with 100 billion belonging to the domestic market and the remainder generated by overseas markets.

The FTI believes machinery manufacturers will take advantage of severe flooding that damaged local farm equipment and caused farmers to buy new machines for the upcoming crop season.

The inundation wreaked havoc in many provinces countrywide between September and October, disrupting transport and damaging many factories.

Some 14,995 of more than 60,000 factories surveyed by the FTI were flooded.

The floods caused damage worth 6-12 billion baht, according to the FTI.

Despite a positive business outlook for agricultural machinery manufacturers, rivals from China may change the projection, said Mr Yanapol.

The club is concerned about the possibility of China flooding the market in Thailand and elsewhere with cheap goods.

If Beijing ends its harsh lockdown measures to contain the spread of Covid-19, eventually leading to a full reopening of the country, Chinese manufacturing could revive quickly, he said.

"Prices of Chinese-made agricultural machinery are usually lower than Thai products because of their lower operational costs," said Mr Yanapol.

"We are worried about this issue and want the government to protect the local market against dumping."

The club plans to work closely with the FTI to monitor global economic conditions, including the impact of the Russia-Ukraine war and the US-China trade spat.

In a related development, the FTI is working with the Commerce Ministry and Kasetsart University to hold the 16th Thailand Tractor & Agri-Machinery Show from Dec 1-10 in Nakhon Pathom to provide updates on new agricultural innovations and faciliate business-matching events.

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