1. 18 February 2015 Absa AgriBusiness Economic - outlook Presented By Ernst Janovsky Disclaimer: Although everything has been done to ensure the accuracy of the information, the Bank takes no responsibility for actions or losses that might occur due to the usage of this information.

2. 2 A. Demographics effects Pointers 1.Population to grow by 2 billion in next 35 years (Demand shift from West to East) 2.Aging West Les innovative Slower growth Place more demand on Entitlement, Social security and Medicare (1950 16 workers/retiree, 2050 to drop below 2:1 Baby Boomers to start retiring) Savings to decline effecting capital markets Increasing pressure on Government to cut discretionary spend (ex Defence spend)

3. 3 Demand shifts Global food consumption in the next 40yr’s is to exceed total food production over the last 500 years

4. 4 Demand for food and oil outstrip prediction based on population growth Pointers 1.Growth in demand for food can easily be met by unlocking production growth in Africa and South America 2.Oil production expected to continue to grow however new technologies to inhibit growth in oil demand in spite expected growth in world economics

5. 5 B. The rise of the rest Pointers Diffusion of power in world USA was at some stage 50% of GDP Expansion of Middle Class in rest of world 3,5 billion in 2050 Globalization means more competition for jobs as Middle Class is mobile and well educated

6. 66 Investment opportunities in Sub- Sahara based on the economic prospects Growth in demand can easily be met by unlocking production growth in Africa and South America.

7. 77 Investment in agriculture needs to be match to investment in infrastructure Other factors to consider before investing 1.Asset Management Risk (access to title or asset through leasehold) 2.Operational risk (ease of doing business, accesses to inputs etc.) 3.Marketing risk (Market access, Price discovery, Government intervention etc.)

8. 88 Social every thing / distribute eve Investment risk rating (PESTLE) for selected Africa countries

9. 99 Urgency to do reform in South africa The following options are available Under your control NDP model Share equity schemes Right of first refusal Long term leasing scheme 49-99 year leas scheme Participation not under your control BEE Scorecard equity scheme Expropriation legislation 50% to labours shared title No compromise to title or market value Compro- mise of title and / or market value Failed state indicator Social revolt 25% Labour unrest 50% Land Grab 25% This emphasize the urgency of land reform to be done

10. 10 D. Economic outlook - Global Economic power base shifts immanent driven by Energy prices and effect thereof on GDP growth

11. 11 South Africa’s - Competitiveness

12. 12 Pressure to up the cost of capital is growing softer

13. 13 Producers do not have any control over price and are deemed to be price takers

14. 14 Through productivity increases, Farming Enterprises can continue to remain profitable in spite of a Cost Curve 1. Demand technology Taste enhancement / Packaging / Presentation / Time value enhancements Variety, safety and convenience is taken as a given 2. Storage technology Improved shelf life - Dairy – UHT Apples - CA treatment 18mth Year round Avocado’s Production (Area and cultivar) No more seasonality 3.Information technology Connectivity Precision farming – Effective utilization of inputs, optimizing of yields Positioning of seed Improved Management - Measurement Automation tractors, dairy etc. Here now attitude / instant gratification 4. Energy efficiency and Transport Green energy (Solar, Wind, Bio-fuels etc.) Adaptation to farming practices (No till from 65L/ha to 12-17L/ha) Fuel efficient tractors and transport Delivery just in time 5. Production technology Biological farming Bacterial soups and under cover farming Organic and Chemical Genetic technology Selection via gene traits (Breading) Manipulation of genes (GMO) Improved Efficiency's 6. Economy of scale Size efficiency

15. 15 Maize productivity improvement through yield improvement

16. 16 Given all challenges and opportunities farming remain profitable

17. 17 Thank you for the opportunity to share a few ideas Any Questions Contact details: E Janovsky Tel (011) 350 6102 Email ernst.janovsky@absa.co.za Disclaimer: Although everything has been done to ensure the accuracy of the information, the Bank takes no responsibility for actions or losses that might occur due to the usage of this information.