Perkins by yaoyufang

VIEWS: 12 PAGES: 35

									                Bright prospects
                Naturally inspired

                Challenges & Opportunities
                for U.S. farmers
December 2006


                Deborah Perkins


                                     Rabobank International
Contents


    Section 1:   Rabobank

    Section 2:   Global Demand Drivers

    Section 3:   Global Production Drivers

    Section 4:   Trade Developments

    Section 5:   Going Forward




2                                            Rabobank International
Rabobank is a Cooperative bank…




3                                 Rabobank International
… with offices all around the world

                           London
                           London                     Singapore
                                                      Singapore
Toronto
Toronto                    Dublin                     Mumbai
                           Dublin                     Mumbai
New York
New York                   Antwerp                    New Delhi
                           Antwerp                    New Delhi
Chicago
Chicago                    Frankfurt                  Jakarta
                           Frankfurt                  Jakarta
Atlanta
Atlanta                                   Warsaw
                                           Warsaw
                           Paris
                           Paris                      Bangkok
                                                      Bangkok
Dallas
Dallas                                    Poznan
                                           Poznan
                           Madrid
                           Madrid                     Taipei
                                                      Taipei
San Francisco
San Francisco                             Moscow
                                           Moscow
                           Milan
                           Milan                      Hong Kong
                                                      Hong Kong
Washington
Washington                                Istanbul
                                           Istanbul
                                                      Beijing
                                                      Beijing
                                                      Shanghai
                                                      Shanghai
                                                      Tokyo
                                                      Tokyo

Mexico City
Mexico City                                           Sydney
                                                      Sydney
Curaçao
Curaçao                                               Melbourne
                                                      Melbourne
São Paulo
São Paulo       Country banking sales network:        Brisbane
                                                      Brisbane
Santiago
Santiago                                              Perth
                                                      Perth
                Australia & New Zealand
                Australia & New Zealand
Buenos Aires
Buenos Aires
                U.S.A.
                U.S.A.                                              Auckland
                                                                    Auckland
                Ireland
                 Ireland
                Poland
                 Poland
                Brazil
                Brazil
4                                                        Rabobank International
The global FAR team has 80 members
 in 12 different countries




                                     Utrecht (Global HQ)

                                                            Beijing            Tokyo
              New York
                                                                          Shanghai
                                             New Delhi
     Mexico City                                                          Hong Kong
                                               Mumbai


                                                           Jakarta    Singapore




                         São Paulo                                                  Sydney
                                                                 Melbourne
                                                                                             Christchurch



5                                                                            Rabobank International
    Thought for food

    Global Demand Drivers




6                      Rabobank International
Income and population growth are the
key drivers expected to lead to increased
food consumption

                                        Expected population and income growth, selected countries

                               2.0%                                                             India

                               1.5%                                   Mexico
                                                                                                          China
    Annual Population Growth




                               1.0%
                                                                                     Brazil
                                                     France            US
                               0.5%
            2005/10




                                             Germany          Japan
                               0.0%
                                       0.0     1.0      2.0 Italy 3.0          4.0        5.0       6.0   7.0        8.0       9.0
                               -0.5%

                               -1.0%
                                                                            Russia
                               -1.5%

                               -2.0%                            Expected Income Grow th 2005/10 (%)




      Rabobank analysis based on UN-Population department and IMF data


7                                                                                                               Rabobank International
            The higher income will lead to an
            increase in the demand for meats…


                            Per capita meat consumption of selected countries, 2005-2010f

            140

            120

            100
kg/capita




             80

             60

             40

             20

                0
                    US   Argentina     Brazil          EU   Mexico     China   Eastern   Russia       Japan      India
                                                                               Europe

                                                               2005   2010f

Source: Rabobank analysis based on FAPRI projections


            8                                                                                     Rabobank International
…. vegetable oils ….


                          Per capita vegetable oil consumption for selected countries, 2005 - 2010f

                45

                40

                35

                30
    kg/capita




                25

                20

                15

                10

                 5

                 0
                     EU              US              China     Brazil        Japan       Argentina       India

                                                             2005   2010f

    Source: Rabobank analysis based on FAPRI projections


9                                                                                             Rabobank International
… and dairy products


                        Per capita consumption fluid milk, selected countries, 2005 - 2010f

             100
              90

              80

              70

              60
 kg/capita




              50

              40

              30

              20

              10

               0
                   US       Russia        EU            Brazil    Argentina     Mexico   Japan     India      China

                                                                 2005   2010f

 Source: Rabobank analysis based on FAPRI projections


10                                                                                               Rabobank International
Consumers become more concerned
about quality as they spend less of their
income on food

                    Share of expenditure on food for selected countries


         %
          80

           70

          60

           50

          40

          30

          20

             10

             0
                       a
            In i a

                        )




                     nd




                      le
             do )




                                                                n

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             ge a




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                    (e




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                    (e




                                                            an
                    si




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                   az




                                                            ad
                    si

                   in
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                   hi

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                  la




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                                                          an
                ne




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                us
                  a




                 nt




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                                                        Ja
                ig




                                                        an
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                ai




                                                        st
              di




                                                       Fr
         N




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                                                       er
             hi




                                                      C
                                                     G
          C




          Ar
          In




     Source: USDA

11                                                                        Rabobank International
Millennium issues are becoming increasingly
important in developed countries




 12                                 Rabobank International
              How important is price?

              % who agree and disagree with the statement
              “When shopping I always look for the cheapest prices “
  %
                                                        Agree        Disagree

80
         60
60                                                                                                     55

                          34                                38             34             35                          34
40
                                           23
20

 0

-20              -8
                                                                                                              -21
-40                                                                                                                         -33
                                                                     -36
                                                                                   -41         -41
-60                              -48
                                                  -59
-80

         Germany            France              UK           Spain         Italy         Netherlands        Poland     Czech Rep

      Source: Frontiers 98: Planning for Consumer Change in Europe

         13                                                                                            Rabobank International
                 Convenience is driving end-users and
                 consumers



                                 Ready-meal sales in the UK, 1999-2005                                                  Fresh cut sales in US, 1997-2006e

              1800                                                                                   16

              1600                                                                                   14
              1400
                                                                                                     12
              1200
                                                                                                     10
GBP million




                                                                                       USD billion
              1000
                                                                                                      8
               800
                                                                                                      6
               600

               400                                                                                    4

               200                                                                                    2

                 0                                                                                    0
                          1999      2000     2001     2002    2003       2004   2005                      1997   1998    1999   2000   2001   2002   2003   2004   2005 2006e


 Source: UK Chilled Foods Association                                                   Source: PMA, e= estimate




                     14                                                                                                                   Rabobank International
  Food companies are responding to the
  issues associated with obesity

                                            Obesity rate for selected countries

  Korea
  Japan
     Italy
 France
 Poland
  Spain
Germany
Canada
    NZ
Hungary
Australia
    UK
 Mexico
    U.S.

             0             5                10           15             20        25         30             35
                                                              percent

Source: Rabobank estimates based on OECD data

   15                                                                                  Rabobank International
Consumers are becoming more concerned
with health but change is slow

                Growth in U.S. beverage industry sales
       25%

       20%

       15%

       10%

       5%

       0%
                       2004                                           2005
          carbonated soft drinks                       non-carbonated drinks      bottled water
        Source: Beverage Digest Fact books, Rabobank
  16                                                                           Rabobank International
Food safety is integral to food quality




 Source: Rabobank International                          Source: Rabobank International



Consumers are driving value chain…   …or retailers whose power makes food safety a
                                     compulsion and not a choice

17                                                           Rabobank International
     Steering solutions

     Global Production Drivers




18                        Rabobank International
As consolidation takes place a smaller number
of larger farms are accounting for the majority
of agricultural production in the U.S.
                     Share of Farms and Land Producing 50% of Ag Production

                50

                45

                40

                35

                30
      percent




                25

                20

                15

                10

                 5

                 0
                     1900    1940         1969       1987        1992         1997        2002
                                                  Census Year

                                    Share Farms          Share of Land in Farms
 Source: US Census

19                                                                                   Rabobank International
These farmers are running very
professional businesses

Leading edge farmers                   Management styles

     A greater business orientation      Specialized
     Plans                               Well trained
     Goals                               Agronomy
     Finance overview                    Engineering
     Strategy                            Livestock
     Risk management                     Marketing
     Marketing                           Dynamic
     Understand importance of people     Focus on growth
     Seeking integration                 Information
     Selective relationships




20                                                         Rabobank International
North and South America continue to
dominate beef production.
                                                        Global beef matrix, 2015

                                                     100%
                                                      80%
                                                      60%                                    US
      % change net exports (2005-15)




                                                      40%                      Canada
                                                                   Argentina                  Brazil
                                                      20%                                India
                                                                                Australia
                                                       0%
                                       -2%   -1%     -20%0%            1%            2%                3%            4%
                                             EU 25
                                                     -40%
                                                     -60%
                                                                                   Mexico
                                                     -80%
                                                                                                                   China
                                                     -100%
                                                     -120%
                                                             CAGR production (2005-15)
      Size of bubble = production

     Source: FAPRI, Rabobank
21                                                                                                          Rabobank International
China continues to dwarf others in pork
production.

                                                         Global pork matrix, 2015

                                         100%

                                                                                             Brazil
                                          50%
       % change next exports (2005-15)




                                                                                          Canada
                                                      EU 25
                                                                       Russia
                                                              US                Romania    Ukraine
                                           0%
                                                 0%     1%               2%                  3% Mexico         4%

                                         -50%


                                         -100%


                                         -150%
                                                                                    China


                                         -200%
                                                              GAGR production (2005-15)
      Size of bubble = production

      Source: FAPRI, Rabobank
 22                                                                                                   Rabobank International
Globally chicken production continues
to increase in line with demand
                                                                Global poultry matrix, 2015

                                      140%
                                      120%
                                                                                                                  Thailand
     % change net exports (2005-15)




                                      100%
                                       80%
                                       60%
                                       40%                                       Argentina
                                                                                 US
                                       20%
                                                                Brazil              Russia      India
                                        0%
                                      -20%0%           1%            2%        3%          4%           5%   6%         7%
                                                                                      China
                                                                EU
                                      -40%                                          Mexico
                                      -60%
                                      -80%
                                                                          CAGR production (2005-15)
       Size of bubble = production

                                      Source: FAPRI, Rabobank
23                                                                                                                Rabobank International
                              The U.S. is expected to maintain its
                              dominance in the world corn market


                                                    World Corn market 2005/06e. Selected Indicators
                                      12


                                      10
                                                                                                                        US
Yield (tonnes per hectare)




                                       8       EU

                                                             Argentina
                                       6
                                                      China
                                       4
                                                Ukraine
                                                    Brazil
                                  Mexico
                                       2


                                       0
                  -10                      0             10              20             30             40   50          60            70
                             Size of bubble = production                      Exports (million tonnes)

             Source: USDA WAP, WASDE




                             24                                                                                  Rabobank International
The U.S. also remains the main soybean
supplier, but production in South America
has grown strongly

                                               World Soybean Market. Selected Indicators. 2006/07f.

                                                                            3.5

                                                                             3            Argentina
                                                                                                                          US
      Yield (tonnes per hectare)




                                                                   Canada
                                                                            2.5
                                                                                      Paraguay                Brazil
                                                                             2
                                               China
                                                                            1.5

                                                                             1
                                                                                  India
                                                                            0.5

                                                                             0
                                   -40000   -30000     -20000   -10000            0        10000      20000       30000     40000         50000
                                                                         Exports (thousand tonnes)
      Size of bubble = production
      Source: USDA
 25                                                                                                              Rabobank International
There are obvious incentives to produce
more corn in the U.S.
                         Comparative yields bushels/acre
                                   (last 4 years)


                                 Corn               Soy         Ratio


Brazil                            51                42            1.2


Argentina                         94                40            2.3


U.S.                             137                37            3.7

Source: CBOT, Rabobank



26                                                         Rabobank International
Ethanol is the fastest growing application for
corn

           70%                       U.S. corn usage
           60%
           50%
           40%
           30%
                                                      18%
           20%
           10%
             0%
                              Feed   Exports    Ethanol       HFCS           Other
                                      2001     2003   2006e
Source: USDA- ERS, Rabobank
e = estimate

      27                                                         Rabobank International
     Cultivating growth

     Trade Developments




28                        Rabobank International
As food demand is growing faster than production in
some regions; trade is likely to increase…




 29                                       Rabobank International
…especially if we see ongoing liberalization of trade


       Policies Affecting Trade          Trade negotiations

          Domestic support                 WTO negotiations complex and
          Tariffs and quotas               slow

          Export subsidies                 Bilateral trade agreements
                                           replacing WTO negotiations
          Phytosanitary barriers are
          becoming increasingly common     Permits trade agreements that
                                           would conflict with WTO
          Requirement to meet retailer
                                           guidelines
          protocols such as EUREPGAP
                                           Could be more protectionist
                                           and therefore harder to
                                           develop markets


  30                                                          Rabobank International
The U.S. is a major exporter although South
America provides strong export competition
Commodity                           U.S.            Argentina          Brazil

                            Share          Rank   Share   Rank   Share       Rank

Corn                        62.7%          1st    23%      2nd    3%            5th

Soybeans                    38%            2nd    15%      3rd   39%            1st

Soybean meal                12%            3rd    45%      1st   30%            2nd

Soybean oil                 6.4%           3rd    52%      1st   27%            2nd

Wheat                       25%            1st     6%      6th     -             -

Beef                         4%            8th    10%      3rd   25%            1st

Pork                        25%            2nd      -       -    14%            4th

Poultry                     34%            2nd     2%      6th   41%            1st

31   Source: USDA-FAS-PSD                                          Rabobank International
As a result the U.S. is exporting higher-
valued products to remain competitive

                                U.S. agricultural exports                               CAGR
                 70                                                                     (97-05)
                 60
                 50                                                                      -0.2%
   USD billion




                 40
                                                                                          0.3%
                 30
                 20
                                                                                          3.3%
                 10
                 0
                      1990 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005
                           Consumer oriented   Intermediate   Bulk
       Source: USDA, Rabobank
   32                                                                Rabobank International
     Next steps for success

     Going Forward




33                            Rabobank International
 As we go forward:
• Monitoring consumers preferences and investing in
  developing products that meet their needs will continue
  to be critical
• There will be a smaller number of larger farmers using
  technology and best practice management practices
  supplying a consistent quality product
• Ongoing implementation of QA programs to meet the
  rising standards relating to food quality and food safety
• We will see farmers increasingly working together –
  locally and globally
• Development of niche opportunities will continue as the
  big companies continue to get bigger
 34                                           Rabobank International
Rabobank International….




                     “The financial link in the
                       global food chain”®




35                                   Rabobank International

								
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