Developments in Competitor Products – Soybean Specialty Oils

2007 Canola Council of Canada MeetingsVictoria, BC

21 March 2007

Agenda

• We see challenges ahead in the oils market that will impact our customers business

• Bunge and DuPont have created an alliance to help our customers meet these challenges

• We have a rich pipeline of products to address business issues

• Summary

Impact

• Spiraling health care costs are driving government regulatory changes (i.e. Trans fat label requirement)

• Increases emphasis to balance trans, saturates & cost

• Customers are demanding healthier foods that still taste great

Challenges

• Rising health issues (i.e. obesity, heart disease, Type 2 diabetes, etc.) due to an aging population, diet and lifestyle

• Trans labeling requirements forcing use of new oils

• Increasing consumer awareness regarding health, nutrition and diet

We see challenges ahead in the oils market that will impact our customers business

The Alliance integrates the capabilities of Bunge and DuPont to deliver functionally effective, large volume soy oil & meal products

• DuPont Research – Genomics & Trait Discovery

• Pioneer Research – Variety Development

• Pioneer Research – Variety Development

• Pioneer Supply Management

• Pioneer Grower Contracting Team

• Pioneer Sales Team

• Bunge Grain• Bunge Oil

Processing

• Bunge Oil Processing

• Bunge Grain• Pioneer

Grower Contracting Team

• Pioneer Grain Quality Analysis

• Bunge Oil Processing – Crushing

• Bunge Oils – Refining

• Bunge Oils – Sales

• Bunge Oils – R&D & technical service

Integrated capabilities across the Supply Chain

Seed Growers Origination Processing Sales

DuPont/Pioneer

Bunge

Genetics

Corn

Cottonseed

Lard

OlivePalm

Palm KernelPeanut

CanolaSafflower

Sunflower

Tallow, edible

Soybean

Customers are seeking a soy solution

Total US Edible Oil Consumption

~ 26B lbs

Hydro Soybean Oil

Liquid Soybean Oil

Total Soybean Oil

~ 17B lbs

Bakery Products

Spray Oil

Frying - Food

Service

Frying - Food

Processor

Total Hydro Soy~ 8.5B lbs

The primary market opportunity for specialty soy oils is replacing hydrogenated products

Customer Needs:• Functionality• Supply Reliability• Price

Zero/Reduced Trans "Opportunity" Market Volumes

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Current FutureO

il (M

M L

bs

)

Hydrogenated Soy Zero/Reduced Trans

Future improved oil

profile opportunity ~15 MM soy

acres

We have an ambitious pipeline of products

Treus™ Product Development Pipeline

TreusTM Low Linolenic Soybean Oil: Significantly reduces trans fats for light frying

Treus™ High Oleic Soybean Oil: Increase functionality & stability for heavy duty frying and industrial use

Treus™ High Oleic/High Stearic Acid Soybean Oil: Low trans fats shortening and margarine for baking

2005 2012+

Treus™ Enhanced Soybean Meal: Improved feed value for poultry and pork

Typical Soy Oil Profiles

0% 20% 40% 60% 80% 100%

Commodity

Lightly hydro

Low Lin

Heavily hydro

High Oleic

HO/HSt

Linolenic Linoleic Oleic Sats

% Trans

1

11

1

37

1

1

Matching customer and consumer needs with the research pipeline

• Functionality – Fry life, shelf life, flavor, etc.– Proven R&D support– Custom applications development

• Supply Reliability– Wide geographic production– Industry leading grower

relationships– Broad processing coverage

• Price – Competitive with alternative oils – Risk management via hedging

Customer needs Research efforts

We have developed a Low Linolenic Oil that allows a zero/reduced Trans label

• Frying Oil• Spray Oil• All Purpose

Interesterified• All Purpose Palm

Fractions• Custom formulations

produced to customer specifications

TreusTM Low Linolenic Soybean product applications

Product application testing is critical to the success of new Trans-fat alternative oils

Fry Test• Treus™ Low Lin Oil versus

Creamy Soy Liquid Frying Shortening

• Fried french fries, chicken nuggets and onion rings daily for 5 days

• Sensory evaluation of food products and analytical evaluation of oil breakdown

Test Results• No significant sensory

difference found in food products fried in the Low Lin versus the hydrogenated control

• Analysis of oil samples indicate similar fry life to the hydrogenated control

Bunge Internal – Low Lin Soy Fry Test

Building the supply chain to meet customers’ needs

2007 Low Lin Contracting Summary

CHS – Fairmont

What is on the Horizon for Next Generation Specialty Oils

• High oleic soy is the next generation specialty soy oil

• High oleic offers increased stability & functionality for heavy duty frying and industrial applications

• Availability is expected ~2008 / 2009

L Hydro Soy1

H Hydro Soy2

HO Soy3

Trans Acids 11 37 1

Saturates 18 22 11

Trans + Saturates 29 59 12

Oleic Acid (C18:1) 41 73 80+

Linoleic Acid (C18:2) 34 3 2

Linolenic Acid (C18:3) 2 1 3

1Lightly Hydrogenated, 2Heavily Hydrogenated, 3High Oleic

+10 evaluations at university and commercial pilot facilities Studies showed that low linolenic, high oleic soy and blends are

attractive alternatives to partially hydrogenated oil French fries, fried chicken, potato chips, tortilla chips, salad oil

High oleic soy typically equaled or outperformed partially hydrogenated soy in standard oil quality measurements– polars, polymers, p-anisidine, free fatty acids, peroxide value

High oleic soy generated less objectionable room odor compared to partially hydrogenated oil during frying studies

High Oleic Soy Oil Testing

Product application testing is critical to the success of new Trans-fat alternative oils

Summary

• The food industry is seeking different oil solutions than what we are providing today

• Other competing oils (i.e. palm, HO canola, corn, etc.) are eager to fill this need

• Next generation of modified oils will include High Oleic soy oil

• Low Lin soybeans are the first of many output traits being developed to improve soybean oil quality

Questions

Steve SchneblyResearch Coordinator – Pioneer Hi-Bred

(515) 253 2270Steve.Schnebly@pioneer.com