Geneva Grains

Conference

Latin America

Global population increase: 9.3 billion in 2050

Concentration of growth in developing countries

Urban population to reach 70% of the total global

population (50% today)

Increased wealth around the world

Unequal distribution in agricultural production

Continued dependence on international trade

Global trade of corn, soybeans and wheat in 2030

to increase by 150 million tons to 465 million tons

Significant part of this additional volume to come from Brazil, Argentina and Eastern Europe

0

2

4

6

8

10

1960 1980 2000 2020 2040

Bn

Total population Rural population

Urban population

Demand driven by population growth and

increased global trade

Population growth and urbanization Increased global trade

0

100

200

300

400

500

1990 2000 2010 2020 2030

Import in m tons

Corn Soybeans Wheat

310m

tons

465m

tons

Protein Demand Growth & 10 YR Projection

0

2

4

6

8

10

12

14

16

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Meat Consumption Emerging Mkts Meat Consumption Developed Mkts

Linear (Meat Consumption Emerging Mkts) Linear (Meat Consumption Developed Mkts)

MMT

USDA

Beans, Corn and Wheat Production (MMT) vs. Index (dollars/bushel)

0

2

4

6

8

10

12

0

20

40

60

80

100

120

140

160

180

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

BCW Prod. Argentina BCW Prod. Uruguay BCW Prod. ParaguayBCW Prod. Bolivia BCW Prod. Brazil BCW Index

HARVESTED AREA (Million HA) GROWTH vs. INDEX ($/bushel)

0

2

4

6

8

10

12

0

10

20

30

40

50

60

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Beans Harvested Area (million HA) Corn Harvested Area (million HA)

Wheat Harvested Area (million HA) BCW Index

Increased production is required to satisfy growing demand

Breeding &

Biotechnology 250%

Farm

Practices

Improved

InfrastructureLand100%

(0%) Up to

20%

50%

80%

FUTURETODAY

Necessary increase in food availability, driving the demand for higher crops

Land availability (at the current agri prices) is a key limitation in crop growth

Majority of the growth in crop production to come from higher yields and increased cropping intensity

Higher yields and intensity required

CHALLENGE: 1-NEW LAND

•Simple equation to rent as inflation hedge: Investment = $2250+$100 rent. In the first year your cost is $1000 to plant and revenue is $800. In second year $1000 to plant and revenue is $850 (on improving yields)... fifth year producer will produce sufficient yield to break even By then out of pocket will still be $3000 and producer will finally be “profitting” on $100 to pay off initial invesment.

-3500

-3000

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20

Invesment

Rent

Planting Cost

Revenue

Net

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brazil (av 1100km) USA (av 1000km) Argentina (av 300km)

11.00

60.00

2.00

36.00

35.00

18.00

53.00

5.00

80.00

Barge Rail Truck

CHALLENGE: 2-INTEGRATE TRANSPORT SYSTEM

CHALLENGE: 3-INFRASTRUCTURE INVESTMENTS

•FAO (UN): optimum 1:1,2 ratio for production x storage capacity •USA is 1:2,5

•Argentina 1: 1 (half of which are silo bags)

•Brazil 1: 0,7

•Multiple consequences: inability to harvest during ideal window leading to quality issues, major transport system overhaul creating inefficiencies at elevators, rail and port terminals causing losses of over $12,000,000,000 every year.

CHALLENGE: 4- CREATING EFFICIENT PIPELINE

•Modernize and increase use of rail & waterways. •Long term financing for port projects from BNDES. •Complete overhaul of the rail monopoly (ALL). •Reduce beauracracy & more transparent legal framework surrounding environmental laws. •Reduce union control over port facilities. •Integrate and create greater synergies between the various transhipment facilities.

Crop technology is the answer for growing demand for food and feed

Impact of crop technology on yield of key crops

Tons/Ha Tons/HaWheat Corn Soybean

Breeding &

Biotechnology 250%

Farm PracticesImproved

InfrastructureLand100%

0% Up to 20%50%

80%

FUTURETODAY

Tons/Ha

2,91,9

4,5

10,0

0,0

4,0

8,0

12,0

Global Low Tech* High Tech** Present Limit

5,1 5,08,9

18,0

0,0

5,0

10,0

15,0

20,0

Global Low Tech* High Tech** Present Limit

2,61,7

2,9

5,5

0,0

2,0

4,0

6,0

Global Low Tech* High Tech** Present Limit

Locals

(Coops, Farmers)

Industry dynamics have changed

More dependent on buyers

Limited information

No capital nor storage

Financed locals & owned

storage

Benefitted from market in

carry

Controlled entire supply

chain

No government investments

in local industry

Dependence on the crushing

plants of big trading houses

No control over food price

Pa

st

Less dependence on big

trading houses

Well informed

Capitalized and with own

storage capacity

Less bargain power

Market inverted benefitting

smaller asset infrastructure

Supply chain more evenly

distributed

Government subsidizing

local industry

Less dependence on

crushing plants of big trading houses

Better control over food price

Pre

sen

t &

Fu

ture

Traders

(Big trading houses)End Consumer

Locals

(Coops, Farmers)

Traders

(Big trading houses)End Consumer

REFERENCES 1. Cover Slide. Picture Mato Grosso Imagens @ Querencia 2. Nidera Research 3. USDA 4. USDA 5. USDA 6. Nidera Research 7. BNDES & ANTT 8. BNDES/ ANTT/GV 9. USDA/EMBRAPA 10. BNDES/IMEA/USDA 11. Nidera Research 12. Nidera Research