BANGKOK: Japanese machinery maker Kubota looks to expand production capacity by 50% for rice combine harvesters in Thailand to take advantage of growing sales in Southeast Asia. North America remains the company’s top revenue source, accounting for 40% of group profit in 2016, but Kubota’s farm machinery sales in that region have flattened amid the slump in the cereal grain market. Demand for farm equipment is flourishing in Southeast Asia, where the company’s sales have doubled over the past four years.
Kubota already boasts a large share for farm equipment in Southeast Asia, reportedly topping 70% of Thailand’s market for combines, which supports sales of around 5,000 units a year. Boosting production of rice combines in Thailand may let the company expand exports to neighboring countries and deepen its presence. Kubota estimates the overall Southeast Asian market for combines will grow by 17% from 2016 to reach 70 billion yen in 2019. The Japanese company intends to spend roughly 3 billion yen ($26.1 million) in its first major investment to expand capacity in Thailand since building a factory for combines in 2009. Kubota will enhance the painting and soldering facilities at its main Thai factory for farm equipment, located in the Amata Nakorn industrial estate and run as a joint venture with Siam Cement Group. The manufacturer aims to boost annual capacity for rice combines to 20,000 units by autumn.
The company plans to increase production of its best-selling models in Thailand, which have engines of 70 to 100 horsepower and sell for 4 million yen to 6 million yen. These combines have fewer features than the ones sold in Japan, and go for around half the price. Kubota in May opened a research and development center in Thailand to develop farm equipment geared toward the locally grown varieties of rice. The Japanese company’s expertise in combines and tractors puts it in position to establish deep roots in Southeast Asia and stay a step ahead of rivals Deere of the U.S. and CNH Industrial of the Netherlands. Those two companies focus on large-scale farm equipment for dry-field crops, and they have been slow to enter Southeast Asia, where wet-paddy rice agriculture dominates.
