1 Elders Rural Services Mike Guerin, Managing Director 29 th August 2008

2 Some Big Issues our Industry Faces Agribusiness – Significance & Trends Future Challenges & Issues Demand Drivers & Outlook Elders - Responding to Change & Our Clients Questions Presentation Outline

3 Farm Ownership & Land Leverage ? Genetically Modified ‘GM’ Crops ? Greenhouse Gas Emissions / Carbon Trading ? Water - Allocations / Murray Darling Basin – National vs State ? Biofuel - Food vs Energy ? Infrastructure – Road & Rail Investment – Agribusiness vs Resources Sector ? Labour Resources / Ageing - Transient vs Permanent, Mining vs Agriculture ? Some big issues …that our Industry faces

4 Beef Grains Sheep Agriculture is a substantial sector … national presence … strong export contributor The agriculture farm sector accounts for: GDP - 3% of gross domestic product Employment: 3.5% of total employment - at 355k Exports value of $28 billion, which accounts for: * 2/3 rd of gross value of farm production * 20-25% of the value of Merchandise exports Gross Value of Farm Production * $40bn in 2008; $46bn in 2009

5 Farmers Terms of Trade Declining terms of trade (net farm income) has been a recent feature of Australian agriculture ( ). The strong global food commodity outlook should see improved terms of trade ( ). Farms continue to consolidate Farm land size is increasing Fewer small and more large farms Larger farms tend to be more profitable Source: Productivity Commission, Trends in Australian Agriculture (2005); ABARE, Australian farm survey results ( to )

6 Trade Barriers, Tariffs, Subsidies AUD/USD: 26-year high at 0.98 on 15 th July 2008 Global uncertainty, inflation and interest rates Rising Input Prices - Fuel, Chemicals, Fertiliser Greenhouse Gases / Carbon Trading Water Resources & Allocations Labour - Resources sector & Ageing population Supply Security for Global Customers - Guaranteed Base Future Challenges ….. several new ones emerging Source: ABS Census

7 Fertiliser Increased Demand / Agricultural Production  for Food, Livestock feed, Bio-fuels Trade – China export taxes increased Feb/April 2008 Increased cost of energy, freight rates, offset by higher A$ Capacity constraints - lack of investment from low margins  New Investment to steady / ease rising prices, next 3 years Agricultural Chemicals Higher prices from strong demand + capacity constraints Capacity quicker to build than fertiliser – faster response as China increases capacity Input Costs ….. Fertiliser & Chemicals

8 Current Status Government moratoriums currently limit commercial use to Cotton (QLD, NSW) and Canola (NSW, VIC) For Increasing Food Demand / Starvation, Land constraints, Minimisation of chemicals (use/waste) / increased yield Against Risks to Health / Environment + Ability to Control Future Take Up Will Depend On Consumptive use:  Easier - if not consumed by Humans (eg. Cotton)  More Rigour - if directly consumed (eg. Wheat, Horticulture) Demonstration of Benefits to Consumer (eg. Health)  Current benefits to farmers – yield, disease, chemical use The Big … GM … question Cotton Canola

9 Murray Darling’s Significance to Agriculture It is 3,370km long, drains 1 / 7 th of Australian land mass, and receives 6% of Australia's annual rainfall It has 42% of Australia’s farmland + 40% of our Food 70% of Australia's irrigation is concentrated there Current State Unprecedented dangerous water shortage exists Over-allocations Murray-Darling Basin Authority created August 2007 VIC agreed to participate on 26 th March 2008 Increasing concerns of high salinity levels and need to replenish the Murray River's lower basin / lakes. Future Federal vs State management / control Need for urgent action - for both food & communities The Big … Water … question Source: Murray-Darling Basin Commission

10 Underinvestment in road & rail infrastructure Agribusiness competes with Resources Sector 2009 Australian Crop Production double that of 2008 The Big … Infrastructure … question Reduced Rail Access in Grain Regions Source: Australia 2020 Summit; April 2008

11 Agricultural commodity outlook is … positive … over the short to medium term  PopulationExpected to grow from 6.7 billion to > 9 billion by 2050  IncomeDisposable income / dietary changes – growth especially in China and India  Land constraintArable land up 10% from 1961 to 1997, but has been declining since  Trade reform … and reduced domestic subsidies  Biofuel Policies support higher production, but could rapidly change with food price pressures.  Input costsHigher input costs, especially if world crude prices continue to remain strong  Farm LandSubstitution of farm land for urbanisation  EnvironmentalConcerns re: climate change, droughts, floods & and water supply constraints  TechnologicalAdvances to improve yield / reduce costs or GM crops  ProductivityImprovements in agricultural productivity Demand Drivers are significantly influencing prices.. will continue into future.. impact on prices being:

12 Elders’ case for change ……. Is compelling Project 2008 Elders Rural Services in 2008 Our market share is challenged The market is evolving and Elders has not kept pace Whilst our revenue is healthy and growing our operating model needs to be more cost efficient Our domestic (Australia & NZ) operations do not integrate with our international operations (Indonesia, China, Germany, Turkey) Business has not delivered for shareholders Expanding our horizons… beyond 2008 Re-focus and re-invest in our traditional network business through improved performance mgt, reward and retention Organise our roles to place decision making authority closer to our client Establish regions defined by common client and market characteristics; informed by thorough ‘Go to market’ research Prepare ourselves to be able to take our Elders models and repeat in other international locations

13 The program of work …….. Is gaining shape at Elders

14 Farm Ownership & Land Leverage ? Genetically Modified ‘GM’ Crops ? Greenhouse Gas Emissions / Carbon Trading ? Water - Allocations / Murray Darling Basin – National vs State ? Biofuel - Food vs Energy ? Infrastructure – Road & Rail Investment – Agribusiness vs Resources Sector ? Labour Resources / Ageing - Transient vs Permanent, Mining vs Agriculture ? Some big issues …that our Industry faces Questions

15 Elders Rural Services Mike Guerin, Managing Director 29 th August 2008