“This joint venture agreement is another very significant step in the growth strategy of our global engine business,” AGCO chairman, president and chief executive officer, Martin Richenhagen said.

AGCO plans to make an investment of $US9 million in the joint venture over the next three years.

AGCO and CTP will both have a 50pc ownership in the joint venture.

The joint venture will be responsible for the assembly and distribution of the full range of AGCO’s Sissu Power engines throughout Russia and CIS.

The joint venture will become the key engine supplier for all major CTP plants manufacturing both industrial and agricultural machinery between 50HP and 350HP and will also sell engines to third party customers mainly in the CIS countries.

AGCO Sisu Power will provide its technology and manufacturing know-how, while CTP will contribute a strong market position and the knowledge of the Russian market.

The agreement is accompanied by an order from CTP for 750 AGCO Sisus Power engines manufactured in AGCO’s Linnavuori, Finland manufacturing facility to be delivered during 2008 for the initial installation and development program.

“The introduction of new emissions requirements and the need for better economy and reliability mean that engine performance is becoming increasingly important to owners in Russia and CIS,” senior vice president and general manager engines, Hubertus Muehlhaeuser, said.

“The new facility will be located in one of CTP’s existing plants in Vladimir near Moscow and is planned to have an initial capacity of up to 20,000 engines per year,” he said.

“We expect that the first engines will be produced before the end of this year.

"We are very confident that the combination of AGCO’s engine technology with CTP’s existing products and customer base will lead to a highly successful business operation that will enhance the shareholder value of both companies.”