Financial Perspective:  Impact of Tomorrow's Technology Trends and Developments on Animal Agriculture

Deborah PerkinsRabobank International

April 2013

Contents

Section 1:

Section 2:

Section 3:

Key Drivers Behind Technology Developments

Factors Affecting Uptake of Technology

Implications from a Financier’s Perspective

2

Demand for agricultural commodities is increasing Population Growth Income Growth Urbanization

World population growing at 1.1%p.a.Concentrated on emerging economiesGlobal income has been improving mostly in emerging marketsUrbanization leading to westernization of diet and demand for higher value added foods

3

Food Demand Additional Demand

Food production to grow over 40% by 2030 and over 70% by 2050

Bio-fuels increasing the demand for sugarcane, grains and oilseeds

Source: USDASource: USDA

Source: USDA Source: USDA

World corn yield % change, 5 yr moving avg World wheat yield % change, 5 yr moving avg

World soybean yield % change, 5 yr moving avg World rice yield % change, 5 yr moving avg

While productivity growth is in decline19

6519

6719

6919

7119

7319

7519

7719

7919

8119

8319

8519

8719

8919

9119

9319

9519

9719

9920

0120

0320

0520

0720

09

-2%-1%0%1%2%3%4%5%6%7%

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0%

1%

2%

3%

4%

5%

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

-2%-1%0%1%2%3%4%5%6%7%

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

Land is availability is limited

1960 1970 1980 1990 2000 2007 4,200,000

4,300,000

4,400,000

4,500,000

4,600,000

4,700,000

4,800,000

4,900,000

5,000,000

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Agricultural land area Agricultural land area per capita

Thou

sand

hec

tare

s

World Agricultural Land per Capita

6

Globalization and trade are both increasing

7

Food safety has become increasingly important

Weather events have a significant impact

Sustainability is a key business driver

10

Uptake of technology

Access to innovation is necessary for adoption

Public R&D spending by region

Sufficient scale is necessary to be able to access technology

<500 500-2,000 >2,0000

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1997 2002 2007

Farm size, Acres

Num

ber

of f

arm

s, '0

00

Dedicated supply chains are changing the way farmers access technology

• Source: Rabobank, 2013

The value proposition is about adding value rather than chasing price

• Source: Rabobank, 2013

15

Changing consumer demands impact which technologies will be adopted

Safety

Environment & ethics

Local vs Organics

Time

Value for money

Quality

Experience & emotion

Health & Wellness

Technologies with a positive impact on profitability will be attractive to players all along the chain

17

Implications

What does it mean?

• Pick the winners• Capital expenditure• Increased working capital requirements• Risk management

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