São Paulo – AGCO Sisu Power, a maker of engines and agricultural equipment, is developing flex-fuel engines, to operate on diesel and ethanol, thought especially for the Brazilian market. The new engine should be available starting in 2012 and should be used in tractors and harvesters in the Valtra and Massey Ferguson brands – belonging to the American AGCO group.
The equipment is being developed in partnership between the company’s Brazilian and Finnish units. In Finland, one of the company engineers is promoting a master’s thesis on the theme, while in Brazil the practical part of the system’s electronic injection system is being developed.
The machinery with flexible fuel engines will be turned to the sugar and alcohol sector in Brazil, but should also be sold abroad, mainly in countries with warm climates, as ethanol presents a better performance in higher temperatures.
With a climate that is more than appropriate for operation of flex-fuel engines, Ricardo Huhtala, a director at AGCO Sisu Power, believes that the Arab countries in the Middle East and North Africa may be interested in Brazilian equipment. "I believe that it may be attractive if the country has ethanol available," he said. He adds that the engines the company already uses may also be fuelled with biodiesel, produced from vegetables like castor seeds, soy or sunflower, for example.
The new flexible fuel engines may replace up to 70% of diesel for ethanol. Due to the changes it will be necessary to make to the engines, the new agricultural machinery will be slightly more expensive than the conventional models, but the difference should not be very great.
"When we mention diesel with alcohol, we are not just mentioning the fuel, we are going to have to change the tractor. It will be a significant difference, but we are still studying them," he explained. Ruhtala estimates that machinery with flex-fuel engines should cost between 10% and 15% more than the traditional machines.
According to the executive, the company should observe the market acceptance of its new engines to define sales expectations for the equipment. An estimate is that sales may reach around 2,000 units a year.
Currently, AGCO exports Massey Ferguson tractors from Brazil to countries in South America, Europe, Asia and Africa. Among the Arab importers are Saudi Arabia, Morocco and Iraq. "Massey is the strongest brand in the region. We have a share in all the markets in the Middle East, mainly with Massey Ferguson," said Ruhtala.
Up to October this year, exports represented 20% of the group’s revenues in Brazil. In 2010, the main markets for the Brazilian unit were Argentina, the United States, Paraguay, Chile and Bolivia. AGCO does not expect greater exports in 2011 due to the appreciation of the Brazilian real against the US dollar.
Present in over 140 countries
AGCO Group is one of the main producers of equipment and agricultural technology in the world. The company is present in over 140 countries, and owns brands Valtra, Massey Ferguson, Challenger and Fendt, as well as other support brands that operate in financial services, technical support, parts production and engine development, among others.
In Brazil, the company has factories in the cities of Canoas, Santa Rosa and Ibirubá, in Rio Grande do Sul, and in Mogi das Cruzes, in the state of São Paulo, where AGCO Sisu Power has a production plant.
By the end of the year, the Mogi unit should have produced 20,000 engines, a total expected to rise to 40,000 in three years. AGCO Sisu Power employs 150 people in Brazil and has local revenues of around US$ 150 million. Considering all AGCO operations in Brazil, the company has 3,980 employees.
*Translated by Mark Ament
