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2 Feb 2022

Econ Digest

Agricultural machinery market, 2022: Growing steadily in response to technology development trend


        KResearch views that Thailand’s agricultural machinery market will continue to grow in 2022, with turnover reaching THB84.6-87.9 billion, an increase of 1.6-5.6% YoY. Although such figures are projected to be lower than the peak in 2021, they are still higher than the 5-year average of THB73.256 billion (during 2016-2020). An important factor supporting the agricultural machinery market is demand, but the growth may slow down, due to the easing of pent-up demand and lower demand for homebound workers than that in 2021. The expansion of the agricultural machinery market will likely be consistent with the overall agricultural product prices that remain relatively high. With regard to supply, Thai operators may face challenges from relatively cheap Chinese agricultural products, and high production costs, including oil and steel prices. Thus, the market may grow at a meagre pace. However, close attention must be paid to the COVID-19 situation that remains highly uncertain, which will in turn affect the demand for agricultural machinery and cause turnover to grow below the lower projection range.
        Looking ahead, Thai agricultural machinery operators – including manufacturers and distributors – should adjust themselves by focusing on the research and development of agricultural machinery that meets market demand and is suited to varied agricultural terrain. Emphasis should also be placed on the prevailing trend of increased use of high-tech farming under smart farming system for enhanced productivity. This may include the use of automation/AI/IoTs/sensors on farms – the majority of which are small-scale and primarily owned by smallholder farmers. For this reason, the prices of agricultural machinery should be kept at affordable levels and conducive to economies of scale, for example automated/driverless tractors for use in small-medium sized rice fields, or harvesting robots for small orchards. Furthermore, Thai farmers should also seek business partners with knowledge of such technology and develop the skills of their workers to support the maintenance of agricultural machinery, which has become increasingly modern and complex.

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