Summary Aquaculture Stakeholders Meeting Kona, Hawaii - August 24-26, 2011 = Soy in Aquaculture Activity ● ● ●

Global Trends ● The global aquaculture market is expected to grow by over 20 mmt in the next 10 years ● China will continue to dominate global aquaculture, controlling 60% or more of global production, with current SBM use of 7.5 mmt increasing at 300, ,000 mt annually ● China seafood demand is forecast to double in next decade – China an importer of seafood

Global Trends ● Developing Asian countries will continue to increase per capita consumption as the middle class grows - 67% of middle class in Asia by 2030 ● After China, the majority of growth will be in Southeast Asia and India - the highest increases in per capita fish consumption have occurred in East and Southeast Asia ●

metric tons 18.7 mmt growth in China, SEA & India

East and SEA Asia will continue to be the dominant market for U.S. soy products by virtue of the volume of aquaculture production and feed demand, with ~4 mmt of additional soy demand in the next decade

Global Trends – Feed Proteins ● Global fishmeal production projected to decline further in 2010/11 to 4.25 mmt from the 4.53 mmt produced last year and compared to the level of 5 – 5.5 mmt in the years 2005 – 2008 ● Forecast for soy products by the global aquaculture sector: ● SBM demand to increase 4.1 mmt in next 10 years ● SPC demand to increase 1.5 mmt in next 10 years ● SPC to become critical ingredient in more nutrient dense feeds, such as marine fish feeds

Soy Protein Concentrate ● Majority of feed-grade SPC is currently supplied by China and Brazil ● Can/will the U.S. industry provide SPC? USSEC is considering a more detailed study to identify opportunities for SPC – with study to be used as basis for discussing a strategic plan with U.S. industry

U.S Seafood Sourcing As consumption of seafood grows in Asia, where will the U.S. get the products that it now sources primarily in Asia?

Tilapia and shrimp are two of the leading cultured seafood import- export products globally – both are major U.S. import commodities

Demand for Tilapia & Shrimp ● 93% of U.S. tilapia imports and 72% of U.S. shrimp imports are from Asia ● Growing demand in Asia will likely absorb all of Asia’s production – where will the U.S. get these products in the future? ● Will not be produced in the U.S. ● Economics and demand shifts should give Latin America producers a competitive advantage in the U.S. market

2010 Prices of Tilapia Feed 2010 Prices of Tilapia Feed Price – USD/mt China (32% CP)765 Philippines(32% CP)800 Mexico (30% CP) Ecuador (32% CP) Colombia (32% CP)680 Costa Rica(32% CP) Mexico, Central and South America have a significant economic advantage over Asia in $100/mt lower feed cost

LATAM Aquaculture ● From a cost of production viewpoint, Latin America should already be taking the U.S. market from Asia ● Latin America has >98% of the fresh tilapia market in the U.S. – why not the frozen fillet market? shrimp market? Other?

Investment and Infrastructure ●Investment and infrastructure development are the primary constraints to aquaculture growth in Latin America ● Hatcheries ● Production facilities ● Processing facilities ● Market chain development ● Ancillary staff and facilities – disease labs

Suggested Strategic Focus for FY13

China - FY13 ● Continue core program of development and demonstration of soy feeds; feed-based, water conservation and food safety technologies; feed mill technical support; farmer, feed mill and industry training ●Introduce Intensive Pond Aquaculture (IPA) technology to maintain economic sustainability of China aquaculture sector in response to increasing land values, water shortages and production input costs ●Add third full-time AQ staff in response to program growth and need to train new, young staff for the future

Southeast Asia - FY13 ● Continue core program of development and demonstration of soy feeds and feed-based production technologies; feed mill technical support; farmer, feed mill and industry training; industry study tours ● Add Technical Manager in southern Vietnam - as the third largest producer of aquaculture products in the world, and with 20-30% growth projected for aquaculture, a more focused long-term approach is needed in the major production region in the south ● Expand Marine Sustainability Efforts to include activities targeting optimizing marine water resource use and harmonizing certification standards

Americas - FY13 ● Continue core program of development and demonstration of soy feeds and feed-based production technologies; feed mill technical support; farmer, feed mill and industry training ● Promote aquaculture investment in Latin America as a means to boost U.S. soy sales, both for export opportunity and to maintain the U.S. crushing industry, and to provide healthy seafood products for the U.S. and the region ● Expand research support for marine species of high interest to the Latin America industry, with emphasis on identifying nutritional requirements and developing soy-based feeds

India - FY13 ● Continue core program of development and demonstration of soy feeds and feed-based production technologies; feed mill technical support; farmer, feed mill and industry training; industry study tours ● Promote species diversification as a means to increase consumer options and boost aquaculture production and feed use ● Expand market chain development support as a means to improve market quality of aquaculture products and to develop new market outlets to boost demand for aquaculture products

Middle East - FY13 ● Focus program in Turkey and Egypt only ● Continue core program of development and demonstration of soy feeds to aquaculture production and feed manufacturing sectors in Turkey and Egypt, and industry study tours for Egypt ● Promote SPC as a replacement for fishmeal to marine fish producers throughout the region ● Promote improved tilapia genetic stock to the Egypt tilapia industry as a means to increase fish growth rate, reduce FCR, decrease production time to market and increase profitability

Europe - FY13 ● Continue research emphasis in support of the global soy in aquaculture program effort to increase soy use in aquafeeds and reduce dependency on fish meal and oil in aquafeeds ● Continue use of feeding demonstrations to bring new soy- based feeds to the Mediterranean region aquaculture production and feed industries

AQ Research – FY13 ● Maintain Linked International Marketing and New Uses research effort to address critical aquaculture research needs identified by IM field staff and contractors

IP Soy Product Promotion ● Focus on Schillinger high protein, ultra-low oligosaccharide SBM as a substitute for fishmeal ● 2012 rollout if 2011 research results with Schillinger product are positive ● Prepare 2012 rollout project proposal at end of calendar year 2011 and submit for QSSB funding