Opportunities and Challenges of Marketing FGD - Gypsum to Agriculture David Flack Marketing Director Ag Spectrum Company

2 Overview Market size in acres by major row crop Value of FGD-Gypsum in Agriculture Barriers to Adoption Benefits to Agriculture Benefits to Industry Key Elements of Marketing to Farmers

3 Market Size Corn – 68,000,000 Harvested Acres

4 Market Size Soybeans – 72,400,000 Harvested Acres

5 Market Size Wheat – 45,500,000 Harvested Acres

6 Market Size Cotton – 12,200,000 Harvested Acres

7 Market Size Total Harvested Acres – 302,700,000 Acres

8 Market Size Summary Row Crop Agriculture is HUGE! –200,000,000 + acres of major row crops alone! Row Crop Agriculture is CONSTANT! –Total production acres of major row crops does not change drastically year to year Row Crop Agriculture is PREDICTABLE! –Planting intentions are accurately forecasted short and long term Row Crop Agriculture is RELIABLE! –Once a production practice is proven and adopted there is high resistance to change

9 Most farmers utilize tillage to prepare soils for planting –Tillage releases carbon from the soil into the atmosphere –Expensive in the face of high fuel, labor and equipment costs The Real Value of FGD – Gypsum in Row Crop Agriculture

10 The Real Value of FGD – Gypsum in Agriculture FGD – Gypsum allows farmers to reduce or eliminate tillage –Carbon is accumulated in soils when tillage is reduced –½ ton per acre per year in a corn/soybean rotation Carbon credits generated by reducing tillage are worth $ $4.10/ton on the Chicago Carbon Exchange (CCE) Future value of Carbon Credits $12, $17, $20 per Ton ??

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12 Barriers To Adoption Cost Most growers are located $20/ton transportation from sources There is a cap to cost for the farmer Dependable supply Developing a cropping system involving FGD-Gypsum Misinformed Agriculture Industry leadership Current failure to understand the value Material characteristics 8-12% moisture No adverse crop production effect Heavy metals meet regulated standards Regulations EPA – Each state has to approve land applications Agriculture – farm use subject to oversight of Department of Agriculture

13 Benefits to Agriculture Lowered capital requirement for equipment –Opportunity to invest equipment capital in technology and land for growth Lowered fuel costs –Environmental Stewardship Bonus Lowered labor costs –At the very least, opportunity to re-allocate labor Improved soil quality –Better air and water management equals better yields –Better soils erode less and require less applied fertilizer –Environmental Stewardship Bonus Government regulation/compliance payments

14 Benefits to Industry Long term low cost disposal –Dependable market year to year Potential carbon credit accumulation –December 2005 – Two dairyman receive first carbon credit payments in excess of $26,000 –Trade Carbon Credit Value for FGD-Gypsum Value?? Environmental Stewardship –At the plant –On the farm Public Relations –EVERYBODY WINS!

15 Key Elements of Marketing FGD- Gypsum to Farmers Limitations to marketing in Agriculture No T.V. or effective radio Limited publications and newspapers Farmers require Proof of concept before purchasing Market Noise obscures the truths of nature Every farmer has an Expert that already influences their buying decisions Successful marketing of FGD-Gypsum will occur through the Right local experts Technically competent to integrate FGD – Gypsum into a complete production plan Established farmer relationships and historical reputation of improving production results

16 Key Elements of Marketing FGD- Gypsum to Farmers Establish supply and logistics to meet current demand Direct sales transaction between the utility and the farmer Establish value equation for new farmers FGD-Gypsum as a component to a production plan that lowers cost, improves soil quality and increases yield potential Low cost, dependable supply of FGD-Gypsum available via carbon credit accumulation as a result of tillage reduction Expand demand Trial Use – Early Adopters Service – Educate the farmer in-season Monitor and Measure Results – Link role of FGD-Gypsum in the farmers mind to specific results i.e. crop emergence, crop health, air and water management, fertility management, cost reduction etc. Establish adoption via proof of local results