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RSSAGCO to Invest $55M in Brazilian Expansion
October 5, 2011 - Farm equipment maker AGCO Corp plans to invest around 100 million reais ($55 million) to expand three of its four plants in Brazil through 2012, the company's chief executive said on Wednesday.
The expansion should put the company in shape to address growing demand for food and biofuels in the coming years, CEO Martin Richenhagen told reporters.
About 65 million reais will be directed to AGCO's harvesters factory in the southernmost state of Rio Grande do Sul. The remainder is going to another plant in the same state and one in Sao Paulo.
Brazil is the world's top producer of coffee, cane, orange juice and beef and the second largest of soybeans.
The country's output is expected to grow over the coming years due to its availability of land and water, pushing up sales of farm machinery.
The world's third-largest maker of agricultural equipment, AGCO is also weighing the construction of a factory in Argentina to avoid the bureaucracy in exporting to the neighboring country, said the senior vice-president for South America, Andre Carioba.
"We are in advanced talks with the government to do something there... We are still analyzing how (to invest in the country)," Carioba said.
Argentina adopted earlier this year a system of non-automatic authorizations to import farm machinery and has not been granting permissions, according to the Brazilian companies. Exports from Brazil have plummeted since then.
AGCO announced on Tuesday it struck a deal to buy GSI Holdings Corp for $940 million, moving into the grain storage and livestock industries.
AGCO's rival Deere & Co, one of the world's biggest heavy equipment producers, announced earlier this week it will build two plants in Brazil to meet demand from construction and infrastructure projects.
Source: Reuters
