Why this is important to Wisconsin businesses: Industrial machinery, including farm equipment, has long been Wisconsin’s top export product category. Wisconsin was ranked 11th among the 50 states in the first quarter of 2021 for industrial machinery exports.
Thailand is a key agricultural hub in Southeast Asia and a global top 10 producer of crops such as rice, cassava, sugarcane, palm oil, coconut and natural rubber. Rising levels of mechanization in the sector make it an attractive destination for agricultural machinery exports.
Nearly half of farming households in Thailand are headed by older farmers who are seeking new technologies to sustain productivity levels. The most commonly used machinery is the two-wheeled power tiller. Four-wheeled tillers, tractors, disc plows, disc harrows, transplanters, backpack sprayers, harvesting machines, water pumps, farm trucks, after-harvesting machines and watering systems also are likely to be found on Thai farms.
The use of agricultural technology is more advanced on farms contracted to large, integrated agri-food corporations, farms that grow high-value crops and those that receive financial or technical support from government agencies or universities. As land holdings are small, most farmers cannot afford to invest in large, sophisticated equipment. Agricultural service providers, which supply machinery and labor to farmers, and agricultural cooperatives, which make equipment available to members, are important customer segments for machinery suppliers.
As a sign of the importance of Thailand’s agricultural machinery market, CNH Industrial, which makes New Holland agricultural equipment, operates its regional headquarters for Southeast Asia, Pakistan and Japan in Bangkok. Leading Japanese agricultural equipment manufacturers Kubota and Yanmar have set up manufacturing facilities in Thailand for equipment such as tractors, power tillers and combine harvesters to serve the domestic and regional markets.
Several locally owned small and midsize manufacturing companies make low-cost, basic machinery, opening the market for the import of high-end equipment.
Tractors are the largest category of agricultural machinery imported by farmers in Thailand. According to the International Trade Centre’s Trade Map data, the most popular size tractors have engine power of 38-75 kilowatts. Thailand’s tractor imports have grown from $128 million USD in 2017 to nearly $130 million USD in 2019. Most of the sales are from Japan, followed by the UK, India, Denmark and Indonesia. According to Ken Research, Thailand’s agricultural tractor market is expected to grow, on average, 3.2% a year between 2019 and 2025.
Harvesting or threshing machines are another key category of imported equipment, growing by 75% from $71 million USD in 2015 to $126 million USD in 2019. Most of the imports came from Brazil, China and Japan, while the U.S. held a 7% share.
While direct imports from the U.S. are lower than those from other countries, some U.S.-owned companies have factories in Thailand’s neighboring countries. For instance, tractors and harvesters sold by John Deere (Thailand), a wholly owned subsidiary of Illinois-based Deere & Co., are imported from India and China.
The Thai agricultural sector is also transitioning to smart and precision farming, as the government is promoting the adoption of Industry 4.0 technologies—the digitization of agriculture—to increase productivity and yields. The last few years have seen Thailand beginning to adopt drones, big data, the Internet of Things, software and apps, and artificial intelligence.
For example, there are both locally made drones, such as Kaset Gen-Y, Novy and Bug Away Thailand, and imported ones, such as DJI from China and SenseFly from Switzerland. These devices have demonstrated their ability to reduce farming costs—especially for fertilizer, chemicals and labor. The use of sensors to monitor temperature, air, soil humidity and light intensity is also being explored, though currently only a few large corporations use them.
With growing opportunities for agricultural machinery and smart farming technologies in Thailand, the main way to enter the market is by appointing distributors or dealers. There are also several factors to consider, such as which particular machine or technology to bring to market and with what specifications, price points, foreign exchange, branding, competition and target buyers. An experienced local distributor or dealer should be able to help navigate these considerations. In addition, Wisconsin’s in-market trade representative in Southeast Asia is able to provide consulting and market research services, as well as helping Wisconsin companies connect with suitable local partners.