AGCO and Russian Machines, part of the Basic Element group and one of the leaders in the Russian machinery sector, have announced the creation of a new joint venture in order to manufacture and distribute agricultural equipment and replacement parts in Russia. AGCO and Russian Machines plan to make a total investment of approximately US$100 million in the joint venture over the next three years.
The joint venture is expected to begin operations in early 2014, with AGCO and Russian Machines each having an equal ownership. The manufacturing facility will be located in Golitsyno, near Moscow, with a total area of nearly 12.5 hectares including 27,000 square meters of production facilities. The site will include a product show room, a training center and will feature state of the art manufacturing processes. The training center will offer courses designed to educate customers and dealers on the latest agri machinery technologies. Additional plans include the creation of a Model Farm, based on the agricultural business of Basic Element, to develop and disseminate modern full-cycle agricultural solutions that help to improve efficiency of Russian farmers.
The joint venture plans to offer comprehensive agricultural solutions for medium and large scale farmers, including support services such as financing and insurance, leveraging Russian Machines’ supply chain strengths and providing AGCO with a strong local partner. AGCO will introduce more of its high-tech products into the Russian market, while Russian Machines will provide the necessary production capabilities and support with local business development expertise.
“This joint venture is a very significant step in AGCO’s growth strategy for the Russian market,” said Martin Richenhagen, AGCO Chairman, President and CEO. “The agricultural sector in Russia has significant potential but needs modernization and efficiency gains. The joint venture between AGCO and Russian Machines is to join forces in bringing local farmers a wide range of professional farming equipment, technologies, services and solutions.”
Siegfried Wolf, Chairman of Russian Machines commented, “We believe that the combination of AGCO’s technology driven products with Russian Machine’s local production capabilities will lead to a highly successful business operation that will enhance the shareholder value of both companies.”