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. Last Updated: 07/27/2016

U.S. Firm Eyes Deal To Make Tractors

U.S. firm AGCO Corp., the third-largest agricultural equipment maker in the world, and an excavator works in Mordovia in central Russia said Wednesday that they are close to sealing a deal to make tractors together.

By November, a prototype Massey Ferguson-type tractor is expected to roll off the production line at an excavator works in Saransk, the capital of Mordovia, said Gennady Kulebyakin, general director of the works, in a telephone interview from Saransk.

"We need this type of tractor, which has 120 horsepower," said Viktor Akishev, deputy head of the government of Mordovia, in a telephone interview. "Here we have only about half of what we need of this type of tractors."

"This agreement represents AGCO’s commitment to maintaining a long-term presence in Russia," AGCO executive chairman Robert Ratliff said Tuesday in remarks reported by Reuters.

"AGCO [based in Duluth, Georgia] is looking forward to assisting the Russian government in the development of high-quality, proven equipment."

AGCO plans to establish dealer and service centers and a leasing company to ensure efficient distribution and service of its products in Russia.

In addition, the company is willing to help Russia obtain $500 million in financing through U.S., European and other agencies, Reuters reported.

Valery Khaidukov, deputy head of the mechanization and electrification department at the Agriculture Ministry, said his ministry had no involvement in any agreement between the two ventures. He denied Ratliff’s claim that the agreement was signed by the Agriculture Ministry.

"Now we have freedom, and factories are cooperating with foreign partners directly and in the way that they consider is the best for them," he said.

Foreign tractors are known to be notoriously expensive in Russia, though their quality is typically much better than local products. But local tractors are better suited to the local soil, climate and landscape, Russian producers argue.

"The point is to make tractors that will be affordable," the excavator works’ Kulebyakin said, adding that the new tractor would have as many locally produced parts as possible.

"We will get together in the beginning of November and decide on the production capacity and how much investment is needed. In our first business plan, prepared before the [August 1998] crisis, we spoke about a $50 million investment in the project," he said.