Run Fast... Run Smart... Run Lean 1 AGRICULTURAL TRENDS AND TRADE POLICIES Introduction Global trends in agriculture Trade policies and economic development WTO Public Forum Geneva, September 26th, 2006

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 2 INTRODUCTION – A global Company Deere & Company in brief: Founded in 1837 in Illinois by John Deere, a blacksmith. Long history of integrity and commitment to its customers. Main activities: Agricultural Equipment (world leader), Construction Equipment, Commercial and Consumer equipment, Engines, Financial services. 56 factories worldwide. Manufacturing operations on 4 continents. Distribution network: 160+ countries. Net sales and Revenues: 21,931 USD millions in FY 2005 AG equipment: 10,567 USD millions (We feed the world) R&D: 677 USD millions Employees: 47,423 on 31 Oct 2005

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 3 Deere facilities in the world Mannheim, Germany Richards Bay, South Africa Nigel, South Africa Pune, India Jiamusi, China Stadtlohn, Germany Gummersbach, Germany Horst, Netherlands Enschede, Netherlands Bruchsal, Germany Zweibruecken, Germany Arc-les-Gray, France Saran, France Madrid, Spain Santiago, Chile Catalao, Brazil Horizontina, Brazil Rosario, Argentina Saltillo, Mexico Monterrey, Mexico Torreon, Mexico Valley City, ND Fargo, ND Minneapolis, MN Dubuque, IA Horicon, WI Waterloo, IA Moline, IL East Moline, IL Welland, Ontario Edmonton, Alberta Davenport, IA Des Moines, IA Langley, British Columbia Ottumwa, IA Springfield, MO Coffeyville, KS Thibodaux, LA Fuquay-Varina, NC Greeneville, TN Augusta, GA Kernersville, NC Joensuu, Finland Woodstock, Ontario Rock Valley, IA Klemme, IA Tokoroa, New Zealand * Tianjin, China Poznan, Poland Orenburg, Russia

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 4 Growing World Population Source: FAO 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000, Population ('000's) Developing Urban Developing Rural Industrialized Countries Transition Countries Population Urban population growth fuels the demand for food in the future.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 5 Increased meat and dairy consumption Total Meat Consumption Source: FAO Income growth in developing nations is expected to shift diets from grains to meat and dairy.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 6 Increased grain production Feed Grain Consumption Source: Doane Kilograms of grain to produce 1 kilogram of meat Increase in feed grain consumed more than offsets the reduction in direct consumption from shifting diets.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 7 Crops used for renewable energy Bio-Fuel Rising fuel costs and governmental policies are driving increases in crops used for renewable energy.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 8 Cropland Availability Land in use, (1.4B ha) Available land with suitable moisture & soil chemistry (4.1B ha) Source: FAO and IIASA Brazil has the highest potential for near-term expansion. In Africa political instability and high cost of replacing nutrients limit crop area expansion. Asia faces significant land and water constraints.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 9 Exports Trade - Key Commodities (metric tons) Wheat, Corn, Soybeans, Beef, Pork, Poultry EU25+ AR/BR AU/NZ US & Canada Russia & CIS 90% of the worlds exports come from these five regions. The total amount of exports is expected to increase by 35% by Source: USDA

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 10 Trade policies and AG economic development World trade agenda in the AG sector Feed the world: AG commodities should be accessible and price-affordable to consumers. Helping the poor to become wealthier. Integration of developing countries in the global economy. Means for achieving that goal: - More market orientation. - Less trade-distorting support measures. - More transparent public supports for taxpayers and consumers.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 11 Trade policies and AG economic development - Lower costs of production in the developed and developing countries Appropriate AG techniques, AG tools and equipment, private investments. Access to the markets is one key issue to be tackled - While we dont oppose regional agreements we still need a multilateral agreement (Doha) for: A) Locking the reforming of AG policies in the developed countries. B) Reducing tarriffs in the advanced economies but also between developing countries. Remark: Preferential access is certainly an issue for many of the poorest countries, but its not a sustainable system if it hampers their competitiveness.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 12 Tracks for reaching a multilateral agreement We dont have the solution but we have some suggestions: - Better evaluation of a non-agreement. - New systemic approach. - Better sequencing between the EU and US. - The industrys expectation is a balanced and ambitious DDA outcome, preferable to unilateral reforms

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 13 Concerns for the future – WTO potential new roles Non-tarriff barriers to be closely monitored: Pesticides Seeds GMOs (Panel against is a current example) Health standards Veterinary Our proposal: call for more science-based approach in dispute resolution. Forsdtering International standards : plants (IPPC), animals (OIE), Processed Food (Codex Alimentarius). Need for cpaicity building in developing countries.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 14 Perspectives for the future BIOFUELS & BIOMASS Demand and public policies could trigger the demand for AG commodities. More arable land (South America, Africa) will be put in use. New division of AG production. One question to be addressed: How to qualify public support for producing bioenergy? Green box? This kind of support should be allowed for developing this sector but also disciplined. One related issue: indigenous plants. Example of myscantus.

Run Fast... Run Smart... Run Lean John Deere Public Affairs Worlwide 15 Conclusion AG development faces many challenges but theres room for hope. Solutions will be found, through R&D, free trade, free flows of investments. Sanitary, phytosantiray regulations will be the next major barrier to expanded trade as economic barriers become reduced in relative importance. In the future WTO will require more scientists and technical experts (and not only lawyers and economists) for settling dispute cases.