Looking forward

Tan Si Yng | Laura Chiu | Jane Ng | Epili Sagar

KEY ISSUE

Issue Strategy Implementation

FOOD VERSUS FUEL

In line with company’s mission- a food business

Demand for more food as population grows

Increasing interest in biofuel cannot be ignored

Issue Strategy Implementation

STRATEGY - STATUS QUO

Issue Strategy Implementation

STRATEGY – LOOKING FORWARD

Issue Strategy Implementation

STRATEGY

Issue Strategy Implementation

Build up Soy Production in Brazil/Argentina

Food ProductsChina, India, Europe and USA

To meet demand created by diversion to biofuels

BiodieselPlant in Brazil

To meet some of Brazil’s growing demandSupply raw material to Biodiesel producers in

Europe/US

IMPLEMENTATION

Issue Strategy Implementation

Geographical Expansion

India – 2nd largest vegetable oil demand Increase presence in the vegetable oil

market Import oilseeds to be processed in India-

based plants

ChinaExpand presence dependent on evolution of

regulations

IMPLEMENTATION

Issue Strategy Implementation

Agricultural R&D

Improve quality of seeds

Increase crop yield to cater toFoodBiofuel

Better utilization of crop waste Drought management

IMPLEMENTATION

Issue Strategy Implementation

STRATEGY

HOW AGRIBUSINESS AFFECTED BY OIL PRICES

Farmers

Farmers

Soy Origination

Soy Origination

Oilseed Processing

Oilseed Processing

Consumers

Consumers

Oil used for farm machinery

Oil used in machines processing

oilseeds

Increased costs!

Build up Soy Geographical Expansion Agricultural R&D

Transportation Costs

HOW AGRIBUSINESS AFFECTED BY OIL PRICES

Farmers

Farmers

Grain Origination

Grain Origination

Oilseed Processing

Oilseed Processing

Consumers

Consumers

Biofuels Processing

Biofuels Processing

Consumers

Consumers

Build up Soy Geographical Expansion Agricultural R&D

BUILD UP SOY PRODUCTION

Build up Soy Geographical Expansion Agricultural R&D

BUILD UP SOY PRODUCTION

Brazil and Argentina Idle fertile land

Build up Soy Geographical Expansion Agricultural R&D

BUILD UP SOY PRODUCTION

Meet global food supply crunch from diversion of crops to biofuels

Increase of ethanol in US met from increase in corn crops

US soy crop reduced

Meet gap in supply for soy

Build up Soy Geographical Expansion Agricultural R&D

BUILD UP SOY PRODUCTION

Build biodiesel processing facilities in Brazil

Offset high oil price

High demand for biodiesel within Brazil

Benefits farmers and Bunge by lowering energy costs Used in farm machinery, processing plants etc

Pro-Biodiesel Brazilian government policies

Build up Soy Geographical Expansion Agricultural R&D

BUILD UP SOY PRODUCTION

Build up Soy Geographical Expansion Agricultural R&D

GEOGRAPHICAL EXPANSION

Build up Soy Geographical Expansion Agricultural R&D

GEOGRAPHICAL EXPANSION IN INDIA

Purchase of “Dalda” brand from Hindustan Lever Access to brand and distribution networks

Import excess oil seeds From other BGA supply-side regions into India

Import tariffs – lesser on raw materials Use processors in India to produce vegetable oil

Acquire other Indian-based processors in future to increase capacity and presence

Build up Soy Geographical Expansion Agricultural R&D

GEOGRAPHIC EXPANSION IN CHINA

Large consumption growth and limited production Match supply-demand for vegetable oil

Organic growth within China depends on regulations

If Pro-Bunge Expand processing presence within China

If Uncertain Leverage Cereol’s capability and proximity to import

vegetable oil

Build up Soy Geographical Expansion Agricultural R&D

AGRICULTURAL R&D

Research in region-appropriate soybean varieties

Improve quality and crop yield for food and biodiesel production

Look into 2nd generation biofuel - Utilization of oil crop waste

Drought management

Keep BGA ahead of growth opportunitiesBuild up Soy Geographical Expansion Agricultural R&D

STRATEGY

STRATEGY

THANKS

EXTRAIntro

FOOD VERSUS FUEL

Volatility in crude oil prices will affect commodity prices directly

Demand side: demand for food-based biofuel increases, increasing the demand for crops, increasing prices

Supply side: transportation prices increases, production cost increases.

Supply crunch as rivals enter into biodiesel

$ 100 $ 100

19801960s

EXTRASoy

HOW AGRIBUSINESS AFFECTED BY OIL PRICES

Oil important input in agribusiness Diesel powered machinery such as engines and

boilers Increase in oil prices lead to direct increase in

costs

HOW AGRIBUSINESS AFFECTED BY OIL PRICES

Increase in oil prices fuel interest in biofuels Biofuels: made from rapeseed, corn, sugarcane,

soy Competing use for oilseeds crop Drive up demand for oilseeds for biofuels

production Lead to food vs fuel argument Drastic increase in price of final consumer food

products Take away business from agribusiness to invest

in biofuels?

COMPETITIVE ADVANTAGE OF BUNGE

Able to provide assistance to farmers Financing Crop management

Integration and Decentralization Flexibility to respond quickly to changes in

market demands Leeway to structure local business to maximize

profits Insights and customer relationships born of local

knowledge Leader in Brazil

BUNGE’S COMPETITORS

EXTRAExpansion

WHY FOCUS ON FOOD

Essentially a food company

Key expertise in: Fertilizer Food products Agribusiness

Need to feed growing world population

Utilize integrated but decentralized structure Biofuels perceived as emerging opportunity

WHY NOT PALM OIL

No presence in palm oil-rich countries

Disadvantaged position Lack of value chain Strong entrenched competitors Unfamiliar plantation-farming environments

Inexperience in asset purchases and business models in Asia

Enter biodiesel market with competitive advantage in soybean oil

WHY NOT SUGAR/CORN FOR BIOFUEL

Corn more expensive to produce and less environmentally friendly than sugarcane

Sugarcane production highly competitive due to big players

Overpriced assets and late entrance into segment

Biodiesel allows BGA’s initial entrance into fuel segment to capitalize on opportunity

WHY BIODIESEL

Advocacy for environmentally friendly fuel at historic high

Alternative for farmers to offset raising oil costs

Large demand in trucking, farming and machinery industries, Europe especially, and other countries

Brazil has more than 200 million acres of currently idle irrigated land

Emerging opportunities such as train operations in Brazil

BUNGE

Food vs. Fuel Oil Prices effect on Agribusiness Bunge’s Advantage in Brazil Competitors Why focus on Food? Why NOT

Palm Oil? Ethanol (Sugarcane or Corn-based)?

Why Biodiesel?