Agricultural equipment maker AGCO Corporation (AGCO - Analyst Report) and Russian Machines have entered into a 50-50 joint venture to manufacture and distribute agricultural equipment and replacement parts in Russia. The joint venture will improve efficiency and farm income of the Russian agricultural sector through innovation.
Russian Machines is a unit of Basic Element group, involved in the modernization of machinery-building enterprises, introduction of innovative technologies as well as the manufacture of new and competitive products. In the joint venture, Russian Machines will its share production capabilities while AGCO will introduce its high-tech products into the Russian market.
Per the joint venture, AGCO and Russian Machines will invest around $100 million over the next three years to build a new plant near Moscow. The production facility which covers an area of 27,000 square meters, include a product show room and training center.
The training center will offer courses to educate customers and dealers on the latest technologies related to agriculture along with the modern manufacturing processes. In addition, a model farm will be established for the development of agricultural solutions to make Russian farmers more efficient.
Through this joint venture, medium and large-scale farmers will also benefit from Russian Machines’ extensive supply chain and gain a wide range of support services such as financing and insurance with the help of professional farming equipment, technologies, services and solutions.
This is a significant step in AGCO’s growth strategy for the Russian market. The joint venture, which is expected to begin operations in early 2014, will help in enhancing the shareholder value of both the companies.
AGCO remains committed to its plans of expanding its business in international markets. It expects elevated agricultural commodity prices in 2013 to support healthy farm income and sustain equipment demand.
Duluth, Ga.-based AGCO is a global leader focused on the design, manufacture and distribution of agricultural machinery. AGCO supports more productive farming through a full line of tractors, combines, hay tools, sprayers, forage equipment, tillage, implements, grain storage and protein production systems, as well as related replacement parts.
AGCO currently retains a short-term Zacks Rank #3 (Hold).
Other companies in the machinery and farming industry are Alamo Group, Inc. (ALG - Snapshot Report) , Kubota Corporation and Lindsay Corporation (LNN - Analyst Report) . While Alamo Group and Kubota Corporation sport a Zacks Rank #1 (Strong Buy), Lindsay holds a Zacks Rank #2 (Buy).