Agribusiness Opportunities in Brazil

1. Almanaque AprosojaOpportunities in Brazil´s
Agribusiness
October, 2010
Agribusiness
Opportunities in Brazil
October, 2010

2. APROSOJA

3. • Mato Grosso Soybean and Corn Growers Association
• Founded in February 2005
• 5000 Growers in 19 Districts
• Farmers pay compulsory checkoff of US$ 1 per hectare
• Founder of Aprosoja Brasil, ARES, Instituto Ação Verde
• International partnerships
• Main goal is to increase competitiveness of Mato Grosso
corn and soybean farmers.
• 31% of Brazil’s soybean production and 16% of the
country’s total corn production
Aprosoja

4. Focus on
Farmers Needs
Leadership
Training,
Information
and Education
Policy
Advocacy
Communications
and PR
Research
Market
Development
Aprosoja – What we do

5. World Overview

6. Land Use in BrazilLand Use in Brazil
Food Demand and Production
THE UNITED NATIONS
PROJECTS WORLD
POPULATION OF 9
BILLION PEOPLE BY
2050
BRAZIL: AGRICULTURE
SUPERPOWER –
AVAILABLE LAND AND
WATER
BRAZIL: SKILLED
PEOPLE AND
TECHNOLOGY: KEY
TO INCREASE AG
PRODUCTION
FAO: WORLD NEEDS TO
PRODUCE 70% MORE
FOOD FOR ADDITIONAL 2.3
BILLION PEOPLE BY 2050

7. World Trends in Food Demand
Evolution of the per capita consumption of food Per capita consumption of food in the world
Growth of the per capita incomesWorld Rural and Urban Population
Billionsofpeople
Rural
Urban
(kg/person/year)
(kcal/person/day)
Annualaverage
Source: FAO / UN / Icone

8. Brazil’s Competitiveness

9. Overview – Brazil
Source: CIA Factbook / MAPA
Area
8.5 million km2 (5th largest)
Population
199 million (6th largest)
GPD (2008)
US$ 1.99 trillion (10th largest)
1st
Coffee Orange Juice Sugar
Beef Soy
2nd
Poultry Meat
3rd
Corn Milk Grapes Pork
4th
5th
Cotton
Food Rank – Brazil is a Major Global Producer of Commodities

10. • Although affected by the global downturn
of recent years, the next five years are
forecast to be a period of steady growth
and continued stability
• One of the 10 biggest economies in the
world
• Conservative monetary and fiscal policies
(i.e. control of government expenses and
inflation targeting)
• Credibility from international governments
and financial community
• Significant growth in direct investments
• The current government has strong public
support
6.1%
5.1%
7.2%
4.2% 4.5% 4.5% 4.5% 4.5%
-0.2%
2007 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e
4.5%
5.9%
4.8% 4.5% 4.5% 4.5% 4.5% 4.3%4.3%
2007 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e
Consumer Inflation (% p.a)
Real GDP Growth (% p.a)Brazil Highlights
Brazilian Economy
Source: BCB / Macroconsulting

11. Brazilian Production Growth
Brazilian Meat Production Growth
Brazilian Soybean Production Growth
Million tons
Brazilian Corn Production Growth
Brazilian Cotton Production Growth
Source: Agrocosult / MAPA Area (million ha) Production (million tons)
8,02
9,92
3,24 3,95
11,62
16,63
0
2
4
6
8
10
12
14
16
18
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Beef
Pork
Poultry
Area (million ha) Production (million tons) Area (million ha) Production (million tons)

12. Regular Rainfall
0
100
200
300
400
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
AverageRainfall(mm)
Maranhão Mato Grosso Australia USA (1)
Source: USDA (1) Memphis
Source: FAO / Rabobank
Land Use in BrazilFresh Water Availability
Stable Temperatures and Abundant Solar Energy
Land Use in BrazilAvailability of Farmland
Europe, 7%
Brazil, 12% of
World's Fresh
Water
Africa, 9%
Asia, 32%
Australia and
Oceania, 6%
Rest of
Americas, 34%
(10)
0
10
20
30
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
AverageTenperature(ºC)
USA Corn Belt Mato Grosso Paraná
MMhectares
Brazil: Enormous Agricultural Potential
Current
Available
Source: FAO, MAPA, UN, SLC

13. Total
area
Amazon
forest
Pantanal Cerrado Indian
reservation
Available
land
851
420
15
303
29
84
105
79
120
Virgin a
Pasture
Currently with
crop production
Note: (1) Approximately 70% of the total gross area can’t be used in agriculture and has to be destined to legal reserves
Brazilian Land Availability Breakdown (Million hectares)
Source: Embrapa and FNP - Elaboration Macroconsulting
Agricultural Farmland in Brazil
The great amount of available arable land along with a great rainfall level gives Brazil
an unbeatable combination. Brazil has the potential to more than double its grain
area only by converting current pasture land.

14. Increasingly, land use will be intensified, and pasture
areas will be converted into high tech crop fields
Pasture Land
120 Million Hectares
Row Crops
Forestry
Source: Aprosoja

15. Brazil´s Agriculture is considered a reference and an
example on how to feed the world…

16. Mato Grosso State

17. Overview – Mato Grosso (MT)
Source: CONAB
Area
906.807 km2 (3rd largest in Brazil)
Population
2.85 million
GPD Annual Growth
8%
1st
Beef Soy Corn 2ndCotton
Brazil Food Rank – Mato Grosso is a major food and fiber producer
Evolution of Mato Grosso Grain Production (Last 23 years)
MT
Area
(000 ha)
Production
(000 Tons)

18. Current Agricultural Production – Mato Grosso (2010)
Source: IMEA
Soybean
18,80
Million tons
Corn 2° Crop
8,21
Million tons
Beef Cattle
27
Million Heads
Cotton
1,44
Million tons

19. Soybean Production in Brazil – Mato Grosso is the
largest producer in the country
Source: Conab / Elaborated by Aprosoja
Soybean Production in Brazil
Millions of Hectares and Millions of Tons
Area
Production
13,6 14,0 16,4 18,5 21,4 23,3 22,7 20,7 21,3 21,7 23,5 23,2
32,9
38,4
42,2
52,0
49,8
52,3
55,0
58,4 60,0
57,2
68,5
65
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
69
56%
36%
8%
Share Production (%)
CAGR 7,61%
Brazil is the second largest soybean producer in the world and 31% of this
production is concentrated in Mato Grosso state.
MATO GROSSO

20. Large Scale Farm in Mato Grosso – Soybean harvest and
corn planting in the same day (January-March)
Soybean
Harvesting
Corn
Seeding
No tillage (environmental
friendly)
• Two crops in the same year – soybeans followed by either corn or cotton
• Scale, mechanization, technology
• No irrigation

21. Standard Deviation
Expected Yield
239 a 485
179 a 239
128 a 179
31 a 128
Average Yields and Production Risk in Brazil
Avarege Yield: Source: Kleffmann Group / Standard Deviation: Source: Burgo, Marcelo Nery , ESALQ/USP Piracicaba, 2005
Above Average
Average
Below Average
Average Yields of Soybeans Standard Deviation of Yields of Soybeans
Mato Grosso state has the highest
soybean yields per hectare
…and the lowest production
risks…

22. Source: Aprosoja
SOYBEAN AREA
Waterways Roads Railroads
Logistics Infrastructure
The main weakness of Mato Grosso, its logistics infrastructure also represents an
opportunity as new projects of roads, railroads and waterways are being developed

23. Transportation Cost Reductions with BR 163
Sorriso – A. Araguaia, MT
835 km
Alto Araguaia - Santos, SP
1.100 km
Source: Aprosoja
Total: 1.935 km
Route Ferronorte
Sorriso – Santarém, PA
1.344 km
Total: 1.344 km
Cost Reduction: US$ 30/Ton
Route BR 163
Conclusion in 2013SOYBEAN AREA

24. Source: Cargill
Santarém- PA
Porto Velho - RO
• 2 Ports
• 7 Storage Facilities
• 43 Barges, 5 Towboats, 2 “Bull Truster”
(Transportes BERTOLINI)
• 650 Trucks
Case of Success in Soybean Logistics: Madeira River
Cost Reduction: R$ 70,00/Ton
SOYBEAN AREA

25. Business Opportunities

26. Credit to Farmers Timber
Grains Storage Transportation
Infrastructure
Business Opportunities in Mato Grosso

27. Source: Aprosoja
Rondonopolis
Midwest Railroad
Midwest Railroad – A Railroad in the Heart of Brazil’s
Corn and Soybean area
Source: Ministério dos Transportes, IBGE, ANTF and CIA Factbook.
International Benchmarking
Midwest Railroad
• 1.630 km - Uruaçu/GO - Vilhena/RO
• Campinorte/GO - Lucas do Rio
Verde/MT – 1.004 km - R$ 4,1
Billion.
• Lucas do Rio Verde/MT- Vilhena/RO
- 626 km - R$ 2,3 Billion.
• Conclusion - 2014
SOYBEAN AREA

28. Next Steps
Understanding the scope and business opportunities to be addressed1
Agreeing on the following steps4
Drawing a Memorandum of Understanding (MoU) regarding the identified
opportunities
3
Evaluating and agreeing on alternatives to support and develop the business
opportunities
2

29. Marcelo Duarte Monteiro
CEO
marcelo@aprosoja.com.br