Vincent Cloutier 1

IFMA 20 Quebec, July 2015

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Global Economic Outlook : New Horizons for Agriculture & Agri-food

Vincent Cloutier, agr.

Chief Economist

IFMA 20 Quebec, July 2015

MATTER OF PERSPECTIVE…

FOUR

NO…

THREE!

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IFMA 20 Quebec, July 2015

Economy Environment

Technology

Farmers

Consumer

IFMA 20 Quebec, July 2015

Shift of the economic center of gravity

Source : McKinsey Institute

1970 1960

1950

1820

1990 2000

1913 1940

1500 1000

1980

AD1

2025

2010

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IFMA 20 Quebec, July 2015

Source: IMF

IFMA 20

IFMA 20 Quebec, July 2015

Source : IMF

China, India, Indonesia

IFMA 20

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IFMA 20 Quebec, July 2015

Source : The Economist 1970 80 90 2000 10 14

300

200

100

0

Regional Trade Agreements – In Force

IFMA 20 Quebec, July 2015

Seeds: Highly concentrated

Rank Company Seed sales 2014

(MUSD)

Share of

world’s market

1 Monsanto (USA) 10 740 25%

2 DuPont-Pioneer (USA) 8 217 19%

3 Syngenta (Switzerland) 3 155 7%

4 Vilmorin (Groupe Limagrain) 1 993 5%

5 Dow Agricultural Sciences (USA) 1 603 4%

6 WinField (Land O Lakes) (estimation) 1 500 3%

7 Bayer Cropscience (Germany) 1 466 3%

8 KWS Group (Germany) 1 178 3%

9 DLF Trifolium (Danmark) 593 1%

10 Sakata (Japan) 511 1%

Total Top 10 30 956 72%

Sources: Annual Reports, our calculations

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IFMA 20 Quebec, July 2015

Chemicals: Highly concentrated Rank Company Chemical sales 2014

(MUSD)

Share of world’s

market

1 Syngenta (Switzerland) 11 381 21%

2 Bayer Cropscience (Germany) 10 244 19%

3 BASF (Germany) 7 234 13%

4 DOW Agroscience (USA) 5 686 10%

5 Monsanto (USA) 5 115 9%

6 DuPont (USA) 3 522 6%

7 ADAMA Ag. Solutions (China) 2 876 5%

8 Nufarm (Australia) 2 478 5%

9 Sumitomo (Japan) 1 600 3%

10 Arysta Life Science (Japan) 1 500 3%

Total Top 10 51 636 94% Sources: Annual Reports, our calculations

IFMA 20 Quebec, July 2015

Continuous consolidation…

Sources: Annual Reports, our calculations Seeds Chemicals

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IFMA 20 Quebec, July 2015

Economy • Rebalancing

• Trade, trade, trade

• Concentration

Environment

Technology

Farmers

Consumer

IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

Oil: Polarized Costs of production • Saudi Arabia: 15$-40$ COP

• North America: 55$-65$ COP

• Tar sands: 70+$ COP

IFMA 20 Quebec, July 2015

Tesla

thinks

BIG…

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IFMA 20 Quebec, July 2015

IFMA 20 Quebec, July 2015

Source: International water

Management Institute

Global

Water

Scarcity

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IFMA 20 Quebec, July 2015

Consumer Technology

Farmers

Economy • Rebalancing

• Trade, trade, trade

• Concentration

Environment • Rising awareness

• New energetic

era launched?

IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

Consumer

Economy • Rebalancing

• Trade, trade, trade

• Concentration

Environment • Rising awareness

• New energetic

era started?

Technology • Rapid implantation

Farmers

Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 1986 Adult obesity in United States

Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

BRFSS, 1987

Adult obesity in United States

Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

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BRFSS, 1988 Adult obesity in United States

Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

BRFSS, 1989 Adult obesity in United States

Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

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BRFSS, 1990 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 1991 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 1992 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 1993 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 1994 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 1995 Indice de masse corporelle ≥ ou approx. 30 lbs de surpoids par personne de 5’4’’

Adult obesity in United States

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BRFSS, 1996 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 1997 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 1998 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 1999 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 2000 Indice de masse corporelle ≥ ou approx. 30 lbs de surpoids par personne de 5’4’’

Adult obesity in United States

BRFSS, 2001 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 2002 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 2003 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 2004 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 2005 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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BRFSS, 2006 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 2007 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

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No data 10 % - 14 % ≥ 3 0%< 10 % 15 % - 19 % 20 % - 24 % 25 % - 29 %

Source : Behavioral Risk Factor Surveillance System, CDC.

BRFSS, 2008 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

BRFSS, 2009 Adult obesity in United States

Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

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BRFSS, 2010 Body mass index≥ or around 30 lbs overweight for 5’ 4’’ tall person

Adult obesity in United States

*Prevalence estimates reflect BRFSS methodological changes started in 2011.

These estimates should not be compared to prevalence estimates before 2011.

BRFSS, 2011

Prevalence* of Self-Reported Obesity Among U.S.

Adults by State and Territory

Source: Behavioral Risk Factor Surveillance System, CDC

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*Prevalence estimates reflect BRFSS methodological changes started in 2011.

These estimates should not be compared to prevalence estimates before 2011.

BRFSS, 2012

Prevalence* of Self-Reported Obesity Among U.S.

Adults by State and Territory

Source: Behavioral Risk Factor Surveillance System, CDC

*Prevalence estimates reflect BRFSS methodological changes started in 2011.

These estimates should not be compared to prevalence estimates before 2011.

BRFSS, 2013

Prevalence* of Self-Reported Obesity Among U.S.

Adults by State and Territory

Source: Behavioral Risk Factor Surveillance System, CDC

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IFMA 20 Quebec, July 2015

Quaterly Sales Change (comparable outlets)

35%

IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

Changing Consumer?

“Americans under the age of

35 prefer natural and organic

food, which often costs

more, and seek more

transparency on labels.” Bloomberg Businessweek,

quoting Goldman Sachs

IFMA 20 Quebec, July 2015

Wal-Mart U.S. Annouces New Animal

Welfare & Antibiotics Positions

« We have listened to our customers, and are

asking our suppliers to engage in improved reporting

standards and transparency measures regarding the

treatment of farm animals. »

May 22nd, 2015

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IFMA 20 Quebec, July 2015

Economy • Rebalancing

• Trade, trade, trade

• Concentration

Environment • Rising awareness

• New energetic

era started?

Technology • Rapid implantation

Farmers

Consumer • Mistrustful & Selective

• Health & Morality

IFMA 20 Quebec, July 2015

North America & Europe •Adapting to Evolving Ag Policy

•Water

•Next generation’s involvement

Eastern Europe

& Asia •Yield’s

•Pollution management

(water, air, soil)

South America • Improving Logistic

Infrastructure

Africa • Irrigation

• Yields

• Structuring Value

Chains

Océania •Water

•Next generation’s

Involvement

Inspired from PwC

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IFMA 20 Quebec, July 2015

Farm Consolidation

Sources: Statistics Canada, USDA, RICA

IFMA 20 Quebec, July 2015

Sources: Statistics Canada, USDA, Eurostat

Farm Consolidation

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IFMA 20 Quebec, July 2015

Sources: Statistique Canada, USDA, RICA, IBGE

Farm Consolidation

IFMA 20 Quebec, July 2015

Average

Midpoint

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IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

PRESERVE REFORM

IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

IFMA 20 Quebec, July 2015

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IFMA 20 Quebec, July 2015

MERCI! Vincent Cloutier, agr.

Chief Economist