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SCALING UP SUSTAINABLE COMMODITY SUPPLY CHAINS

SCALING UP SUSTAINABLE

COMMODITY SUPPLAY

CHAIN

KATOOMBA XIX – Iguazu Falls, Brazil – March 2014

KATOOMBA XIX IGUAZU FALLS, Brazil, March 2014.

Agr. Ing. Mag. Sebastian Senesi

Director Agribusiness Master

University of Buenos Aires

1

Mercosur as a big supplier

Content

• XXXX Argentina: Soybean

Argentina: Milk

Argentina: Beef

Conclusion

2

The growth rates of the uses of the grain is significantly higher than the production

Crecimiento anual promedio 2013 - 2022.

Fuente: En base a Organization for Economic Co-operation and Development (OECD) – Food and Agriculture Organization (FAO) Outlook.

7,9%

PBI/Cápita

3,5%

Meat

5,1%

Bio-fuels

2,5%

Soybean

2,6%

Corn

3

It is projected that 48% of the growth in production of vegetable protein in the world will take place in the MERCOSUR

Percentage growth of vegetable protein production 2013-2022

.

1

48% of the

total growth

Fuente: En base a Organization for Economic Co-operation and Development (OECD) – Food and Agriculture Organization (FAO) Outlook.

Projected growth

3

4

23

21

6 15

14 13

Only 3% of the world is

suitable for agriculture

without irrigation

Increasing urbanization

Water Scarcity

Desertification and land

degradation

Stable institutional

framework for generating

rules

4

Argentina: The most optimistic projections indicate that annual soybean crop will not exceed 61 million tons in 2020

Millons of tons. Millons of hectares

Fuente: Elaboración propia en base a Organization for Economic Co-operation and Development (OECD) – Food and Agriculture Organization (FAO) Outlook.

54,3

2014

52,2

2016

57,8

2012 2020

+2%

61,8

2019

59,6

2017

56,2

2015 2018

47,8

42,9

2010

48,0

53,5

2011

49,9

2013

Proyección de producción de soja a 2020

CAGR*

Planted

Area 19,9 20,8 19,7 21,4 21,6 21,7 21,9 22,1 22,3 22,4 22,6

5

Argentina tends to export most of its production of soybeans, while Brazil consumes a large part of it

29,6

7,4 38%

Local 17%

16,5

Exportado

83%

94%

6%

62%

86%

14%

Grain Oil Meal Total

53,5

2014e, Millons of tons, Soybean and Subproducts inclustocks.

Brasil Argentina

100% 31% 55% 14%

Fuente: Programa de Agronegocios de la Universidad de Buenos Aires (PAA-UBA) y Associação Brasileira das Indústrias de Óleos Vegetais (ABIOVE).

• Argentina exports most of its processed into meal and oil production,

however ...

Brazil ... tend to consume more of, such as grain and soybean exports and

consume processed either as flour or oil

The role of biodiesel is crucial to raise domestic oil consumption

Grain

67%

83,2

Total

48,0

33%

86%

14%

53%

81%

Meal

28,0

47%

Oil

19%

Exportado

7,1

Local

100% 58% 34% 8%

Share of total

production

6

In a scenario with idle capacity bargaining power of the oil industry, there will be a strong tension between actors.

Fuente: Programa de Agronegocios de la Universidad de Buenos Aires (PAA-UBA)

4,7

Nidera Terminal 6 Noble Cargill

+50%

Otros

3,5

LDC Vicentin

8,6

(16%)

3,3

55,3

2,9

7,0

(13%)

3,1

2,3

Destiny

Meal

Molinos Bunge Total

Capacity

6,6

36,9 6,6

Oleag. San

Lorenzo

AGD

6,6

Cosecha disponible para molienda vs. capacidad instalada y utilización aparente de la industria aceitera

43 Number of

Industries

2014e, Millones de Toneladas.

4 1 2 1 4 2 1 1 2 1 24

The TOP5 concentrates 60% of

installed capacity

7

The bulk of potentially exportable products are consumed domestically (83%) and import targets are atomized

2013, Millons tons.

Production of exportables*

Fuente: United States Department of Agriculture (USDA) y Organization for Economic Co-operation and Development (OECD) – Food and Agriculture Organization (FAO) Outlook.

Exports Volume

USA 7,4

(18%)

European Union 15,3

37%)

Total 41,4

OthersOtros 4,5

Egipt 0,8

Australia 0,9

Argentina 0,9

(2%)

Russia 1,0

Brazil 1,5

China 1,7

4%)

New Zeland 2,7

(7%)

India 4,8

12%)

Otros** 0,70

Chile 0,03

Turkey 0,04

Canadá 0,05

Uckrain 0,07

Uruguay 0,13

Argentina 0,41

(6%)

Australia 0,47

(7%)

USA 0,87

(12%)

European Union 1,94

(27%)

New Zeland 2,52

(35%)

Total 7,23

*

**

***

Leche en polvo entera y descremada, queso, manteca y suero en polvo.

En orden de importancia: Turquía, Rusia, Filipinas, Malasia e India y más de 20 países.

En orden de importancia: Brasil, Unión Europea, Tailandia, Australia y más de 26 países.

Imports Volume

Otros*** 3,08

(43%)

Philipins 0,20

(3%)

Indonesia 0,24

USA 0,27

Egypt 0,28

Argelia 0,32

JapónJapan 0,32

México 0,38

Saudi Arabia 0,43

(6%)

Russia 0,62

(9%)

China 1,07

(15%)

Total 7,23 1,9%

Average annual growth projected for 2022

3,5%

1,7%

-0,5%

1,8%

-1,1%

0,5%

4,7%

1,2%

2,3%

1,9%

1,2%

1,9%

1,5%

1,5%

4,5%

1,0%

2,2%

1,5%

1,6%

-0,6%

1,6%

-1,0%

2,5%

1,4%

0,7%

1,7%

2,7%

1,2%

1,9%

1,4%

1,8%

0,6%

0,8%

1,8%

1,5%

8

Argentina: The main growth of dairy fresh products will outpace and globally in the past decade, but low global impact

Índice base 1999, Millones de toneladas.

Growth projected milk products

2022

Fuente: United States Department of Agriculture (USDA) y Organization for Economic Co-operation and Development (OECD) – Food and Agriculture Organization (FAO) Outlook.

* CAGR: Compound Average Growth Rate, muestra el crecimiento promedio anual punta a punta para un período.

1999 2005 2010 2015 2022

40

60

80

100

120

140

Manteca

Descremada

en polvo

Productos

frescos

Queso

Entera

en polvo

0,6%

0,9%

-1,7%

1,4%

-0,8%

1,2%

1,1%

-0,1%

1,5%

0,9%

0,7%

-3,2%

CAGR* Millons ton projected a 2022

0,6

0,3

2,0

0,06

0,04

9

Argentina's participation in the world market for beef is not relevant, if the Brazilian

2013; Millons tons..

Fuente: Elaboración propia en base a Organization for Economic Co-operation and Development (OECD) – Food and Agriculture Organization (FAO) Outlook.

Producción global

Percentage of meat for export

Total

ResoOthers 16,7 (25%)

Russia 1,7 (3%)

México 1,8 (3%)

Australia 2,2 (3%)

Argentina 2,7 (4%)

India 3,4 (5%)

Subsahrian Africa 3,8 (6%)

China 6,5 (10%)

European Union 7,8 (12%)

Brazil 10,0 (15%)

USA 10,6 (16%)

67,2 14%

12%

15%

4%

1%

41%

7%

4%

68%

24%

0%

16%

10

Argentina: The beef production levels will be similar to last years, mainly by institutional arrangements

Millones de toneladas.

Fuente: Elaboración propia en base a Organization for Economic Co-operation and Development (OECD) – Food and Agriculture Organization (FAO) Outlook.

83%

10%

90%

7%

85%

7%

2,6

+2%

17% 17% 17%

83%

3,2 3,1 3,1

Exportación

83% 83%

17%

-26%

Consumo

local

2017 2016

3,0

2015

2,8

2013

2,7

2012 2011

2,9

2014

2,8 2,6

3,4

3,1

2009

2,5

2010 2008 2007

3,2

2018

83%

14%

80%

2019

17% 20%

12%

93% 93%

14%

86%

15%

83%

2020

88%

17%

86%

Projection to 2020 beef production

CAGR*

Massive liquidation of

stocks due to drought and

price controls Increased export volumes

due to lower economic

activity

11

Conclusions

Argentina will remain a major player as a producer of vegetable

proteins. The increase in volume is going to be mainly generated

by productivity.

However, the increase of 1 million hectares of soybeans will be on

new areas, which must comply with the relevant laws.

The pressure to produce more milk and beef will be global and not

local.

Argentina is one of the few countries in the world able to provide

acceptable foods in quantity and quality. This tradition has a

strong predisposition towards technological innovation, and also

availability of large areas of arable land that can be incorporated.

The challenge is to use this opportunity available, without generating

social and environmental drama.

Una visión

desde

Argentina