1. Food in the world and emerging
opportunities for Chile
Bill Cordingley
Head of Food & Agribusiness Research and Advisory
Americas region
Rabobank International, New York
Rabobank International

2. Rabobank Food & Agribusiness Research and Advisory
A global network of research professionals!
Over 70 people
in 12 different
countries
Focus areas: London
−Animal Protein Utrecht
Beijing
−Beverages New York Shanghai
New Delhi Hong Kong
−Dairy
−Farm Inputs Mexico Mumbai
City
Singapore
−Food Retail
−Fruits & Vegetables
−Grains & Oilseeds
Sao Paulo
−Sugar & Sweeteners Sydney
Santiago Melbourne
de Chile Buenos Aires
Christchurch
2

3. Contents
Section 1: Global economy
Section 2: The big picture for global agriculture
Section 3: Emerging markets: Brazil, China and India
Section 4: Some key trends shaping the global market
Section 5: Chile: positioning for the future
3 Rabobank International

4. CONFIDENCIAL
The financial market has been severely impacted:
Global banking system almost USD 1.1completely! -
credit write-downs are almost failed trillion so far
downs
IMF estimates write offs of $2.2 trillion 2.2 trillion
IMF predicts losses of USD
Change in market value (USD billion) of selected banks
Value Jan. 20, 2009
Value 2Q 2007
RBS BNP UBS
Paribas
Deutsche Societe Barclays Unicredit
Bank Credit Generale
Morgan 120 108 116
Agricole 93
Stanley 91
76 80
49 67
16 4.6 10.3 26 32.5 26 35
17 7.4
Citigroup
HSBC
255 JP Morgan
215
165
Goldman Santander
Sachs
Credit Suisse 116
100
75
27 35 64 19 85 97
Source: Bloomberg, 10th 2009
Food & Agribusiness Research and Advisory

5. The global financial crisis and “great recession”
The deepest economic contraction in the last 50 years, and not just in the U.S.
The worst financial and banking crisis since the Great Depression of the 1930’s
Large and growing public deficits
Lack of liquidity in the financial system and rapid deleveraging adding to the
credit crisis
Millions of insolvent individuals (foreclosures)
Contraction in consumption and consumer confidence at lowest levels since they
started measuring
Doubling in unemployment in key developed markets

6. Recovery from great recession better than
expected driven by developing world!
6

7. Latin America has been a new millennium success story!
Brazil v Chile stock index

8. Contents
Section 1: Global economy
Section 2: The big picture for global agriculture
Section 3: Emerging markets: Brazil, China and India
Section 4: Some key trends shaping the global market
Section 5: Chile: positioning for the future
8 Rabobank International

9. Strong fundamentals support Global demand
growth in agribusiness
Global Demand Drivers Selected Commodities Consumption
[MM MT]
World population has been growing at
Population 1.7%p.a. 1,100 FAPRI
Growth Growth is mostly concentrated on Corn Projections
emerging economies 1,050 Wheat
Soybean
Income Global income has been improving 1,000 Sugar
mostly in emerging markets +110
Growth
950 939
Urbanization process in large countries
increases the consumption of 900
Urbanization industrialized food, with direct impact on
the demand for vegetable oils and 841 +66
850
proteins
800
Based on the factors above, food demand
tends to continue growing at strong levels 750
Food Demand
FAO expects food production to grow over
40% by 2030 and over 70% by 2050
Strong biofuel programs are under
Additional 300 287 +56
development in various countries,
Demand increasing the demand for sugar-cane,
cane,
grains and oilseeds 250
200 184
Greater Global Demand for +43
0
Agribusiness Products 99 01 03 05 07 09 11 13 15 17 19
Source: FAO, FAPRI, Rabobank

10. Population growth 484 mln (+8.8%) in 10 years in
the selected countries
Suc :U
or e N

11. Economic growth has two effects: eat more and
eat more expensively
Source: Bob Thompson, University of Illinois, World Bank

12. The effect of economic growth and population growth
combined: Food markets to grow by 109% in ten
years
Source: Rabobank, based on KEO, Economist Intelligence Unit and FAO

13. Trade will continue to increase with globalization and growth
Source: FAO, UN

14. Structurally higher global demand can be seen in global
grains prices!
We are now in an environment where $3 / bushel corn looks cheap! Risks appear to increasingly be on
the upside
800 A new range?
700 US corn price seems
to have solid support
600 at above $3.
With competition for
500
US¢/bushel
corn supplies likely to
be high in coming
400
seasons it is unlikely
that consumers will let
300 coverage slide
significantly which will
200 underpin the market
100
0
1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009
Monthly CBOT Corn Prices
Source: Bloomberg, rabobank
14

15. Contents
Section 1: Global economy
Section 2: The big picture for global agriculture
Section 3: Emerging markets: Brazil, China and India
Section 4: Some key trends shaping the global market
Section 5: Chile: positioning for the future
15 Rabobank International

16. Brazil - a developing global powerhouse
‘Winter’ crop
(corn)
Summer crop
(soybeans)
16

17. Brazil is one of the largest agricultural commodity
producers with enormous potential
Highlights Brazil as Producer and Exporter of Key Commodities
- Brazil ranks number 1 or 2 on major commodities Exp. Value
production and exports Production Exports
(USD MM 2009)
- Agribusiness is a strong pillar of national economy Sugar 1st 1st 2,748
representing close to 25% of total GDP st st
Coffee 1 1 4,270
- Brazil has significant potential to increase yields for FCOJ 1 st
1 st
396
several field crops nd st
Ethanol 2 1 1,338
- Brazil still enjoys great potential to expand crop areas nd st
Beef 2 1 4,118
- Infrastructure bottlenecks play a critical role in the Soybeans 2 nd
2 nd
10,925
agribusiness expansion towards new areas rd st
Poultry 3 1 5,535
th nd
Soy Oil 4 2 1,223
Source: Rabobank analysis Source: USDA
Evolution of the Agriculture GDP Growth (%) Brazilian Agricultural Commodity Exports
[Index (2000=100)] Pulp Sugar [Million MT]
GDP Agricultural GDP Corn Animal Protein
Estimated GDP Estimated Agricultural GDP 163 Coffee Soybean
162 8,1%
73
143 142 68 65
60
142 51 54
46
122 133
100 111
00 01 02 03 04 05 06 07 08 09 10 11 12 13 03 04 05 06 07 08 09
Source: MCM Consultores Source: Bloomberg, USDA, UNICA

18. Macroeconomic fundamentals have been
consistently improving in Brazil…
Gross Domestic Product (GDP) Evolution of Interest Rates - SELIC
[US$ Trillion] Actual [Nominal] Actual
Forecast Forecast
CAGR CAGR
-5,2%
23,0%
19,1% 17,5%
18,2%
10,4% 16,2% 16,9%
15,3%
11,9% 12,5% 12,0% 10,8%
10,1% 9,8% 10,5%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 00 01 02 3 04 5 6 07 08 09 10 11 12 13
Note: current R$ converted by average exchange rate Note: annualized variation
Source: MCM Consultores (BACEN) Source: MCM Consultores (BACEN)
Evolution of Inflation Average Exchange Rate
[Consumer price index (IPCA) – annually (%)] Actual [R$/US$] Actual
Forecast Forecast
CAGR
-4%
12,5%
2,35
9,3%
7,7% 7,6%
6,0% 5,7% 5,9%
4,5% 5,3% 4,7%
4,3% 4,5% 4,5%
3,1%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Note: accumulated in the period Note: period average
Source: MCM Consultores (BACEN) Source: MCM Consultores (BACEN)

19. Chindia
19

20. Income and population growth are key drivers of
increased food consumption - 2008
Income and population growth in selected countries
2.0%
BRIC
Brazil
India countries
CAGR population (06-11)
1.5%
(06
Mexico
1.0%
Italy
US China
Canada
0.5% France
Japan Germany
0.0%
-7% -5% -3% -1% 1% 3% 5% 7% 9% 11%
-0.5% Russia
Income and population growth are key drivers of increased food consumption
-1.0%
Source: UN, IMF, Rabobank GDP growth (2008)

21. …2009 retraction…
Income and population growth in selected countries
CHINDIA
CAGR population (06-11)
now the
savior
(06
Source: UN, IMF, Rabobank GDP growth (2009)

22. …Bounce back in 2010…
Income and population growth in selected countries
CAGR population (06-11)
(06
GDP growth (2010) Source: UN, IMF, Rabobank, 2010

23. Chinese urbanisation - income divide has fostered this
Nearly 60% of China’s consumers are in rural areas.
Urban vs. Rural per capita disposable income Urban / rural population balance in China
Source: China Statistics Yearbook Source: China Statistics Yearbook
2009 760 million!
X 3.5
2007
2005
2003
2001
1999
1997
X 2.5
1995
1993
1991
1985
1978
0% 20% 40% 60% 80% 100%
Urban Rural

24. Today, urban consumers eat double the meat and drink
triple the milk of their rural counterparts
Urban vs. Rural per capita consumption (kg) China’s protein consumption forecast (mln MT)
Source: China Statistics Yearbook 70 Source: FAPRI, 2010
29% 10 year absolute growth
60
50
40
30
20 26%
25%
10
196%
0
Pork Beef Poultry Fluid Milk
1999 2009 2019

25. China’s Corn Position – Is it a structural change?
China will increasingly play an important role in the global corn trade, its position as a prominent
exporter is increasingly looking untenable. Increasing reliance on the US...
18 140
16
120
China’s export
14 program has
12 drawn down on
100
stocks...
Million tonnes
Million tonnes
10
80
8
6
60 China has now
4 become a net
2 40 importer of corn...
0
20 Is this an isolated
-2 weather event or
-4 0 is it a structural
issue?
Net Trade Ending Stocks
Source: USDA, Rabobank
25

26. Chile has a small share but a large opportunity!
Total trade USD million Total Exports from Chile USD million
20000 14000
12000
15000 10000
others
8000
10000 Imports (Cif) Industrial
6000
Exports (Fob) 4000 Mining
5000
2000 Primary
0 0
2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009
F&A Exports USD million Trade Agreement
1800
1600
salmon • Free trade agreement came into force
1400 Others in October 2006
1200
Wine
1000
800 Fishmeal / oil
600
T. Grapes
400
200 Other Ag
0
Pulp, paper other
2008 2009 forestry prod
26

27. India’s dynamic growth and immense production
strengths in agribusiness
# 1 – Milk producer (108 million tonne)
Agriculture represents 17.1% of GDP # 1 – Cattle /buffaloes (283 mn)
(2009)
# 2 – Arable land area (161 mn ha)
Employs 52% of the total workforce
126 million farming families engaged in # 2 – Fruit and Vegetables (188 mn tonnes)
primary agriculture
Average farm size – 1.41 Ha # 2 – Food grains (229 mn tonnes)
Favourable government policies
# 2 – Sugarcane (271 mn tonnes)
# 3 – Agri commodities
India has the potential to be :
• One of the largest food markets in the world
• One of the top global exporters
• The home base for many Indian Multinational Corporations
27

28. Rapid growth in Indian F&A sector due to…
Favourable monsoon in recent past* Increasing penetration of irrigation
Irrigated area (in mn ha)
40 105 2
Growth arte (%)
35 8 7 7 5 100
30 12 1,5
95
25
17 22 90 1
20 23
26 17
15 85
10 0,5
12 9 80
5 6 7
2 75 0
0
2004 2005 2006 2007 2008 1992-97 1997-2002 2002-2007
Cummulative irrigation created (in mn Ha)
Excess Normal Deficient
Annual growth rate (area created)
* data pertaining to the 36 meteorological sub-divisions
Annual growth rate (area utilized)
Increasing MSPs Increasing FDI in the sector (INR 10.6 bn in FY09)
1200
Tea & coffee Sugar
1000 6% 3%
Edible oils
800
6%
600
Fertilizers
400
7%
200
0 Agricultural Food
machineries processing
2005 2006 2007 2008 2009 10% Agriculture
industries
services
55%
Paddy Wheat 13%
Source: Government of India
28

29. Rising income and increasing urbanisation are in play
Income in USD/annum (PPP basis) Percentage of urban households
Source: Mckinsey Global Institute Source: Govt. of India
100%
32%
90% 18%
30% 29%
80% 27.8%
49% 25.7%
70%
33% 23.3%
60%
50% 43%
40%
30% 34%
44%
20%
23%
10% 12%
5% 3%
0% 1% 1%
2005 2015 2025
> 116,849 58,424-116,849 23,367-58,424
10,514-23,367 <10,514 1981 1991 2001 2005 2010
• Rapid growth in GDP is leading to higher disposable incomes
• The consuming and rich class is projected to grow further
• Urban population to constitute 32% of total population
29

30. India offers immense opportunities….but can be a
tough environment requiring a long term perspective
Fragmented sub-sectors and small scale
sectors
F&A is more than a commodity play, but commodity risk cannot be avoided
High working capital during the year is normal
Lack of infrastructure
Limited adoption of modern agricultural practices and use of technology
F&A sector is highly regulated
There is limited research coverage, given the small number of listed players
30

31. Chile's exports to India challenged by market
complexity, persistence required
Total Trade USD million Total Export USD million
3000
2500
2500
2000
2000
others
1500
1500 Imports (Cif) Industrial
1000
1000 Exports (Fob) Mining
500 500
Primary
0 0
2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009
F&A Exports (Inc. Forestry) Selected F&A Export to India
50
Other n/e
45 • “Partial reach” trade agreement
40 Others
35
30 Wine • Signed August 2007
25
20 Fishmeal / oil • Immediately after signature 98% of Chilean
15 exports (91 % of Indian exports) underwent
T. Grapes
10 an average 20% decrease of import duties
5
Fresh apples
0 • The number of products exported to india
2008 2009 Pulp, paper other represents only 2.7% of the total number of
forestry prod
prods exported by Chile
31

32. Contents
Section 1: Global economy
Section 2: The big picture for global agriculture
Section 3: Emerging markets: Brazil, China and India
Section 4: Some key trends shaping the global market
Section 5: Chile: positioning for the future
32 Rabobank International

33. Rising protein and calorie consumption in
Asia…
33

34. The new frugal consumer – they have no choice!

35. Despite the recession consumers still becoming
more demanding world wide…
• Kellogs – Special K
‘Efficient Nutrition’
• Maggi Atta Noodles
• Sunfeast Kit Fit
‘The Time factor’
CONVENIENCE
‘The Knowledge factor’ HEALTH
‘Guilt Free indulgence’ ‘Convenience Plus’
INDULGENCE
• Kurkure
• Gelatos • Haldiram Namkeen
• Sugar free chocolates (Kit
Kat lite)
• Pro-biotic ice cream
‘The Sensory Experience’
35

36. Environment becoming more important for
consumers – a challenge and opportunity for Chile
36

37. Growing concerns about food safety also
presents opportunities!
37

38. Consumer trust in the modern food system is
shaken
38

39. Contents
Section 1: Global economy
Section 2: The big picture for global agriculture
Section 3: Emerging markets: Brazil, China and India
Section 4: Some key trends shaping the global market
Section 5: Chile: positioning for the future
39 Rabobank International

40. Chile’s great advantages
40

41. Chile has earned its success!
Global Rankings
Index Position
Corruption Perception Index 2009 Global Ranking Position: 25
(Transparency International) Latin American Ranking Position: 1
Business Environment 2005-2009 Global Ranking Position: 19
(The Economist Intelligence Unit) Latin American Ranking Position: 1
Economic Freedom Index 2010 Global Ranking Position: 10
(Heritage Foundation) Latin American Ranking Position: 1
Global Competitiveness Index 2009 Global Ranking Position: 30
(World Economic Forum) Latin American Ranking Position: 1

42. Food and Agribusiness enjoys a prominent and
important position in the Chilean economy
• 19% of GDP
• 29% of work force
• Geographically diverse across Chile
• FTAs with key F&A importing countries
• 21% of exports – USD 11.2 billion in 2009
Fresh fruit – $3b
Processed food – $2.3b
Salmon - $2b
Wine - $1.4b
Fisheries - $1.2b
Meat 0 $0.75b

43. Chile's strengths compelling in a globalizing world
• Highly prized premium food exports – fresh fruit, vegetables,
seafood, wine, meat, further processed premium foods
• Counter seasonal supply
• Domestic systems and infrastructure that support exports and new
market development
• Sanitary and phytosanitary conditions that are conducive to trade
into premium markets
• Excellent market access provisions through bilateral negotiations
• A very stable and welcoming environment for capital, technology
and knowhow
• A cultural and political view to the world that encourages
connections and trade

44. The challenges for Chile
• Leverage rankings
• Build on market access gains by developing commercial, trade and
government trade links
• “Brand Chile” and “Destination Chile” together.
• Prioritize premium quality, food safety and environmental
stewardship in products, production processes and brand positioning
in developed and developing markets
• Be aware of the competition and never stand still
• Differentiate from competitors on the basis of Chile’s unique strengths
• The others are doing better, how does Chile stay ahead and profit from this?
• Invest in export markets, value chains and relationships

45. “The financial link in the
global food chain”™