El Niño-induced drought is expected to cause 48 billion baht in damage to crop farming, especially rice, between this year and next, dealing a serious blow to Thai agriculture, says farm truck maker Siam Kubota Corporation (SKC).
Damage to paddies is estimated at 38 billion baht.
The company remains optimistic that water scarcity will be short term, from October this year to March 2024, said Phisanu Milintanuch, vice-president and general manager of SKC.
"The agricultural sector is going to face a new challenge after flooding is expected to end later this month," he said.
The Agriculture and Cooperatives Ministry earlier warned that Thailand would be hit by El Niño near the end of this year and advised farmers to grow drought-resistant crops.
SKC expects economic crop farming to decrease by 1.6% this year. But the 2023 outlook of the whole agricultural sector remains good, with its growth expected to increase by 1.5-2.5%, thanks to the government's measures to help farmers and ensure their supplies correspond with market demand, said the company.
The country's agricultural machinery market is expected to reach 50 billion baht in value this year, but it is likely to fall next year because of a mix of factors, ranging from El Niño to high household debt and interest rates, all of which will affect people's purchasing power.
SKC plans to increase its sales by letting farmers buy farm equipment more easily, extending the instalment period to eight years, up from 4-5 years normally, said Mr Phisanu.
The company sells tractors, rice harvesters, excavators and drones.
"Drone sales grew by up to 92% this year, compared with excavator sales with 15-16% growth," he said. "Farmers use drones because they reduce working time and can solve labour shortages."
SKC expects its revenue in 2023 to be less than the target of 67 billion baht. Last year, the firm earned 63 billion baht.
"Our total sales have decreased both in Thailand and Asean, especially Laos, Cambodia and Myanmar, because of economic slowdown," said Mr Phisanu.
The firm expects its sales to improve in the last quarter because it is the harvesting season when farmers will receive revenue.
Up to 60% of SKC products are sold domestically, with the remaining 40% exported overseas, including to South America, Central America and Africa. Around half of the exports are sold in Asean.