PIC Symposium 2011 | Nashville, TN Global Pork Outlook David Nelson, Rabobank Global Strategist

PIC Symposium 2010 | Nashville, TN Key Macro Issues Section I

PIC Symposium 2011 | Nashville, TN The connection to wealth creation But GDP growth is accelerating demand growth Source: World Bank, IBGE, National Bureau of Statistics China, India Central Statistical Organization Introduction

PIC Symposium 2011 | Nashville, TN While most yield improvements are decelerating Introduction

PIC Symposium 2011 | Nashville, TN Meat production growth < demand World GDP growth = higher prices Macro Overview

PIC Symposium 2011 | Nashville, TN What is the market telling us? Brazil will grow more, but... China will have to pay more. If corn cost $5.00, then soy cost $ Price gravitates to marginal cost of production Introduction

PIC Symposium 2011 | Nashville, TN Brazil’s farmers have not benefitted as much from rising soy prices as in the US due to appreciating Real Prices need to rise to stimulate incremental production Brazil: higher but not so volatile Other key issues

PIC Symposium 2011 | Nashville, TN Russia, Ukraine and Kazakhstan are the primary incremental producers of the world’s grain Black Sea region rising in importance… Black Sea Region

PIC Symposium 2011 | Nashville, TN All grain ex-China fell to 13.6% in 1972/73, and reached 12.8% in 95/96. Corn ex-China was 9.8% in 72/73, and reached 7.6% in 95/96. With and Without China World Grain Stocks-to-Use Ratios

PIC Symposium 2011 | Nashville, TN It would take a record yield and nearly a 5 million acre increase in planted area for the corn stocks to use ratio to get back over 10% -- which is not a terribly comfortable level. Feed costs: No Light at the End of the Tunnel Source: USDA, Rabobank U.S. Corn Yield and Area Sensitivity

PIC Symposium 2010 | Nashville, TN Key Global Animal Protein Issues Section II

PIC Symposium 2011 | Nashville, TN Emergence of the Brazilians has been the big news in recent years China’s pork companies will move much higher in the next few years Growth at Cherkizovo from Russia and MHP from Ukraine will move them into the top ranks Key Global Animal Protein Issues

PIC Symposium 2011 | Nashville, TN The 14 largest pork packers that represented 20% of the industry in 2009 are being pushed to grow and consolidate by the government to have 50% share by Industrialization of China’s pork processing industry China

PIC Symposium 2011 | Nashville, TN Most markets are fragmented compared to the US Intra-country consolidation Key Global Animal Protein Issues

PIC Symposium 2011 | Nashville, TN Total meat imports Key Global Animal Protein Issues

PIC Symposium 2011 | Nashville, TN Russia is rapidly becoming self sufficient in chicken... Reducing elasticity of export capability Russian poultry self sufficiency Key Global Animal Protein Issues

PIC Symposium 2011 | Nashville, TN Grain trapped due to poor infrastructure Two areas with rapid growth in animal protein production Key Global Animal Protein Issues

PIC Symposium 2011 | Nashville, TN Russia’s goal is to be 85% self sufficient by 2015 and 95% self sufficient by 2020 Russian pork: eventual self sufficiency Key Global Animal Protein Issues

PIC Symposium 2011 | Nashville, TN Government Supports in Developing Countries

PIC Symposium 2011 | Nashville, TN New proposed USDA GIPSA rules – there will be unintended consequences Key U.S. Meat Industry Issues

PIC Symposium 2011 | Nashville, TN EU policy measures threatening competitiveness Key Pork Industry Issues

PIC Symposium 2011 | Nashville, TN Questions from around the world

PIC Symposium 2011 | Nashville, TN U.S. Average Gasoline Prices

PIC Symposium 2011 | Nashville, TN Approximately 1.2mmt swing in 2011 outlook in recent months Key Pork Industry Issues

PIC Symposium 2011 | Nashville, TN USDA 2011 production estimates for the top 3 world pork producers are overstated:  China FMD, most recent sow estimate is -3%  EU dioxin contamination causing liquidation  U.S. breeding herd - 1% YOY in December, but hog prices rising faster than feed costs 2011 Outlook Source: USDA Key Pork Industry Issues

PIC Symposium 2011 | Nashville, TN The China corn conundrum China

PIC Symposium 2011 | Nashville, TN If industrial hog production grows from 55% to 60%, and modified from 11% to 21%, deficit expected to be 23 MM MT by 2015 –Assuming 10 bu. of corn per pig Industrialization of China’s hog production industry China

PIC Symposium 2011 | Nashville, TN Even with only 2% pork production growth, China could be importing 25 MM MT of corn per year by 2015 due to industrialization China’s corn balance sheet China

PIC Symposium 2011 | Nashville, TN China coal trade China

PIC Symposium 2011 | Nashville, TN Source: Japanese Ministry of Ag., Forestry and Fisheries, USDA Japan  Japan estimates $198b - $309b in damage vs. $81b for Katrina  Earthquake, tsunami and nuclear disaster affected Tohoku and Kanto regions – NE Japan.  These two regions account for 44% of hog herd and 27% of broilers.  Assuming only eastern half of regions are affected implies 281,600 mt pork production and 172,800 mt broiler production  US pork exports to Japan = 391,000 mt  EU pork exports to Japan = 220,000 mt  US broiler exports to Japan = 48,000 mt  EU broiler exports to Japan= minimal  Cold storage most likely destroyed  Product is flowing through southern ports

PIC Symposium 2011 | Nashville, TN Source: Robert A. Brown/Tyson Foods Pork Demand

PIC Symposium 2011 | Nashville, TN Currencies

PIC Symposium 2011 | Nashville, TN The End

PIC Symposium 2011 | Nashville, TN Meat Consumption