Certain Dry Pasta from Italy and Turkey

Domestic Industry Hearing Presentation

July 11, 2013

KELLEY DRYE

Public

Italian Responding Producers

Turkish Responding Producers

Public

Turkish Unused Pasta Capacity

Public

450,000

Responding Turkish Producers, Dry Pasta Total Turkish Industry, Dry Pasta

KELLEY Source: ITC Prehrg. Rep. at IV-25; Dom. Ind. Prehrg. Brf. at Ex. 5 ((International Pasta Organisation DRYE ("IPO"): The World Pasta Industry in 2011) and Ex. 11.

Italian Unused Pasta Capacity

Public

o o o

p o u n d

1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

268,901

1,533,653

Responding Italian Producers, Dry Pasta Total Italian Industry, Dry Pasta

K E L L E Y Source: ITC Prehrg. Rep. at IV-17; Dom. Ind. Prehrg. Brf. at Ex. 5 ((International Pasta Organisation DRYE ("IPO"): The World Pasta Industry in 2011) and Ex. 11.

Purchasers' Comparisons between

U.S.-Produced and Italian-Produced Dry Pasta

Factor United States vs. Italy

Superior Comparable Inferior

Availability 4 7 1

Delivery terms 4 7 1

Packaging 1 10 1

Product Consistency 1 11 0

Quality exceeds Industry standard 0 12 0

Quality meets Industry standard 0 11 1

Product range 0 10 2

Technical support/service 2 10 0

Source: ITC Prehrg. Rep. at 11-30. 6

Public

Exports of Dry Pasta, by Country

Country Volume (1,000 pounds)

Italy 3,525,588

Turkey 961,573

United States 225,398

Canada 95,319

Thailand 130,417

Egypt 132,921

Other 1,713,788

World 6,785,002

K E L L E Y D R Y E Source: ITC Prehrg. Rep. at IV-34 (HS 1902.19 (non-egg pasta)).

Public

Subject Dry Pasta Imports' Post-Order Trends

350,000

300,000

I 250,000

200,000

150,000

100,000

50,000

1995 2012

•Imports from Italy •Imports from Turkey

D R Y E Source: ITC Prehrg. Rep. at I-8 (1995) and official Commerce statistics (2012).

Public

U.S. Market Share of Specialty "Niche" Products to All Dry Pasta

Other Types and Shapes, 98.11%

/

Gluten Free, 0.85%

Specialty Novelty, 0.002%

Organic, 0.90%

Specialty Specialty Nested, Flavored, 0.04% 0.11%

D R Y E Source: Nielsen data.

Public

Importance of Price in Purchasing Decisions

Somewhat Not Factor Very Important Important Important

Price 15 2 0

K E L L E Y D R Y E

Source: ITC Prehrg. at II-27 (citing purchasers'questionnaires).

Public

Comparison of Key U.S. Industry Trade Variables

Trend from 1995-2012

U.S. Apparent Domestic Consumption

U.S. Industry Market Share

Capacity

Production

Shipments (quantity)

PRWs

Hours Worked

11

Public

Corn is replacing wheat plantings leading to

higher raw material costs and increased vulnerability.

12

Public

Domestic Producers' Share of U.S. Market

88.0%

86.0%

84.0%

82.0%

80.0%

78.0%

76.0%

74.0%

87.0% 87.0% 87.0%

82.0%

87.0% 87.0%

78.6%

87.0%

78.6%

87.0%

i i

78.6%

1993 2006 2012

KELLEY Source: ITC Prehrg. Rep. at I-6 and I-7. DRYE

Public

Underselling by Subject Dry Pasta Imports January 2007-March 2013

Source Underselling

Based on Quarterly Comparisons

Underselling Percent

Average Margin

(percent)

Italy 110 of 190 58 18.1

Turkey 68 of 68 100 45.6

Total 178 of 258 69 28.5

KELLEY Source: ITC Prehrg. Rep. at V-36. DRYE 14

Public

Italian Dry Pasta Production

Responding Italian Producers, Dry Pasta

Total Italian Industry, Dry Pasta

1,153,633

6,580,913

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000

1,000 Pounds

D R Y E

Source: Source: ITC Prehrg. Rep. at IV-17, IV-25; Dom. Ind. Prehrg. Brf. at Ex. 5 (International Pasta Organisation ("IPO"): The World Pasta Industry in 2011) and Ex. 11.

Turkish Dry Pasta Production

Public

Responding Turkish Producers, Dry Pasta 1,089,587

Total Turkish Industry, Dry Pasta 1,690,165

500,000 1,000,000 1,500,000 2,000,000 2,500,000

1,000 Pounds

* Source: Source: ITC Prehrg. Rep. at IV-17, IV-25; Dom. Ind. Prehrg. Brf. at Ex. 5 (International Pasta DRYE Organisation ("IPO"): The World Pasta Industry in 2011) and Ex. 11.

Public

Italian and Turkish Dry Pasta Production

Responding Italian + Turkish Producers, Dry Pasta

Total Italian + Turkish Industry, Dry Pasta

2,243,220

8,271,077

2,000,000 4,000,000 6,000,000 8,000,000 10,000,000

1,000 Pounds

K E L L E Y D R Y E

Source: ITC Prehrg. Rep. at IV-17, IV-25; Dom. Ind. Prehrg. Brf. at Ex. 5 (International Pasta Organisation ("IPO"): The World Pasta Industry in 2011) and Ex. 11.

Public

Production of Responding Subject Producers

3,000,000

2,500,000

1 0 2,000,000 0

p o u n d s

1,500,000

1,000,000

500,000

0

2007 Italy Turkey

2012 u Italy + Turkey

D R Y E Source: ITC Prehrg. Brf. at IV-17; IV-25.

I

Public

Italian and Turkish Dry Pasta Capacity

12,000,000

K E L L E Y Source: ITC Prehrg. Rep. at IV-17, IV-25; Dom. Ind. Prehrg. Brf. at Ex. 11 Dom. Ind. Prehrg. Brf. at Ex. 5 D R Y E and 11 (International Pasta Organisation ("IPO"): The World Pasta Industry in 2011).

Public

Italian and Turkish Unused Dry Pasta Capacity

2,500,000

KELLEY Source: : ITC Prehrg. Rep. at IV-17, IV-25; Dom. Ind. Prehrg. Brf. at Ex. 5 (International Pasta DRYE Organisation ("IPO"): The World Pasta Industry in 2011) and Ex. 11. 21

Public

Pasta Production Is Growing in Third-Country Markets

Egypt • Iran

Guatemala • India

Ghana • Ecuador

Russia • Mexico

Peru • Costa Rica

Oman • Cote d'lvoire

Tunisia • Mauritius

Argentina

K E L L E Y

D R Y E Source: Dom. Ind. Prehrg. Brf. at Ex. 5 (IPO report) and Ex. 7 (GTIS data). 22

All Pasta Consumption

Public

1 o 0 0

p o u mi d s

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

* * * * * M M

M M * * * * *

* * M * * * * *

* * * * * * * * *

* * * * * * * * *

* * * * *

United States Italy

in United States = Italy a Turkey

Turkey

K E L L E Y Source: Dom. Ind. Prehrg. Brf. at Ex. 5 ((International Pasta Organisation ("IPO"): The World Pasta 23 D R Y E Industry in 2011).

Public

Italy's AUVs to United States and Other Top Ten Export Markets

January - February 2013

Country AUV $/Pound

United States 0.68

Germany 0.53

France 0.52

United Kingdom 0.52

Japan 0.68

Russia 0.51

Sweden 0.58

Netherlands 0.56

Belgium 0.62

Austria 0.56

K E L L E Y D R Y E S o u r c e : D o m " l n d - P r e h r 9 - B r f - a t E x - 7 ( G T I S d a t a ) - 24

Public

Turkey's AUVs to United States and Top Ten Export Markets

January - February 2013

Country AUV $/Pound

United States 0.33

Angola 0.32

Benin 0.31

Togo 0.31

Niger 0.35

Japan 0.39

Congo 0.34

Cameroon 0.32

United Arab Emirates 0.32

Djibouti 0.32

Israel 0.31

Source: Dom. Ind. Prehrg. Brf. at Ex. 7 (GTIS data). 25

Public

Responding Subject Producers' Responding Subject Producers' Unused Capacity as a Share of Unused Capacity as a Share of

U.S. Market, 1995 U.S. Market, 2012

• Italy "Turkey

KELLEY Source: ITC Prehrg. Rep. at I-6; Dom. Ind. Prehrg. Brf. at Ex. 5 (International Pasta Organisation ("IPO"): DRYE The World Pasta Industry in 2011), Ex. 11, and Ex. 15.

Public

Total Italian and Turkish Industry's

Unused Dry Pasta Capacity as a Share of U.S. Market

• Italy + Turkey

Source: Dom. Ind. Prehrg. Brf. at Ex. 5 (International Pasta Organisation ("IPO"): The World Pasta Industry in 2011), Ex. 11, and Ex. 15.

Turkish Dry Pasta Exports

1,200,000

1,000,000

Public

Italian Dry Pasta Exports

3,550,000

Public

Turkey's Plans for Increasing Exports

In Imminent Future

• "Turkish Producers Set Eyes on Italians' Throne" (May 25, 2013).

• "Turkey Longs for Italy's Top Pasta Exporter Seat" (April 3, 2013).

• "Turkey, the second pasta exporter in the world after Italy, has eyes on Italy's seat at top" (April 3, 2013).

Source: Dom. Industry Prehrg. Brf. at Ex. 8 (Turknewsline) and http://www.hurriyetdailynews.com.

Public

Italy and Turkey are Net Exporters

4,000,000

3,500,000

1 3,000,000 o o o 2,500,000

o 2,000,000 u n d 1,500,000

1,000,000

500,000

Turkish Exports Turkish Imports Italian Exports Italian Imports

D R Y E Source: Dom. Ind. Prehrg. Brf. at Ex. 7 (GTIS data (2012)).