1. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2016-17 Turkey and Protein Sector Outlook Dr. Thomas E. Elam President FarmEcon LLC February 13, 2016 1 Download is available from the home page of farmecon.com

2. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Turkey breeding flock recovery essentially complete Turkey production starting to ramp up Large competing pork/broiler supply, but slow 2016 growth Turkey exports slow to recover HPAI bans still in place Strong dollar likely to last for a while Prices still historically strong for white meat and whole birds, but white meat declining Current prices and forecast production on collision courses Potential for further HPAI incidents Feed costs very likely to remain near current levels What’s Driving 2016-2017 Markets? 2

3. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Almost flat 2005-2015 production trend Per capita consumption also flat 2016 USDA forecast: Production 5.95 billion pounds, up 5.6% Per capita consumption 16.2 pounds, up 1.3% Exports 690 million pounds, up 29.7% Exports cannot increase that much every year 2017 TDET straight line projection Production 6.423 billion pounds, up 8.0% Per capita consumption 17.4 pounds, up 7.4% Exports 750 million pounds, up 8.7% 2016-2020 Turkey Production 3

4. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President TDET Turkey Production, RTC Weight 4

5. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2016 and 2017 production and consumption appear to be realistic numbers Major question: How much will prices be affected? Past 2017 there are other questions to be answered: Can the industry create demand fast enough? Significant investments are required Product development Live production Processing Will/can the industry create capacity fast enough if demand creation is successful? 2017-2020 Turkey Production 5

6. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Favorable soil moisture for a good start – best in years Large carryover stocks Strong dollar and weak export demand Ethanol demand basically flat, but still supporting corn Adds up to stable corn and meal prices through mid-2017 BUT, weather is always a concern 2016-2017 Feed Costs 6

7. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 7

8. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 8

9. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 9

10. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 10

11. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Corn and Soybean Sept. 1 Stocks 11

12. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Corn and Soybean Crop Year Exports 12

13. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Feed Cost Drivers: Corn and Soymeal (July and December futures current as of 2-16-2016) 13

14. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Years of feed cost/protein production constraints Ethanol – manmade demand Drought – natural production constraint 2014-15 saw larger feed supply/lower prices Will persist into 2016, likely 2017 Record 2015-2016 meat production Cattle numbers in growth mode Per capita consumption increasing Prices declining across the board 2016 Total Protein Outlook 14

15. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Record 2015-16 Protein Production 15

16. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2015 Protein Price Forecasts 16

17. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2015 TURKEY OUTLOOK 17

18. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2015 Wrap-up HPAI loss of about 8 million birds in April and May June to December loss of about 500 million pounds 8% of 2015 potential But no shortage of holiday whole birds! Record high white meat and whole bird pricing Relatively weak dark meat pricing, increasing stocks Difference is domestic vs. export products Production losses extend into 2016 Breeding flock loss impact likely as large as April-June direct loss Production impact through May-June, 2016 Hatching egg supply and poult shortage about over Replaced lost toms with hens that would have been destroyed 2016 Indiana HPAI is contained, minor overall impact 18

19. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President For Those Who Thought We Would Run Short Day After Thanksgiving Sale, 2015 19

20. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2016-17 Assumptions Minimal HPAI losses and resulting export disruptions Economic growth slows, but no 2008-2009 repeat No significant feed cost disruptions Continued beef, pork and broiler production increases TDET beginning to grow demand 20

21. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2015 Post-HPAI Production Losses 21

22. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Surplus Hen Poults Replace Lost Toms 22 Urner Barry Weekly Hatchery Report

23. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Turkey Feed Cost Forecast Summary Grower Ration, Monthly Averages 23

24. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Lower Feed Cost and Volatility 24

25. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2016 Turkey Forecast Overview (Production, Use and Stocks in Million Pounds) 25

26. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President U.S. Market RTC Turkey Consumption Per Capita 26 ProfitableProfitable UnprofitableUnprofitable Feed costs + High stocks!

27. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Exports Declined, Mexico and Asia Accounted for Most of Lost Tonnage 27

28. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Record-High 2014-2015 Wholesale Value (USDA Cash Cutout and Whole Birds) 28

29. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Urner Barry Frozen Hen Spot Quote 2015 Boosted to Record High by HPAI Losses 29

30. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Urner Barry Fresh Tom Meat Spot Quote 2015 Boosted to New Record by HPAI Losses 30

31. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President Urner Barry Fresh Thigh Meat Spot Quote Export Losses Weighing on Dark Meat Complex 31

32. FarmEcon LLC A source of information on global farming and food systems Thomas E. Elam, PhD President 2016 will see lower pricing, but positive margins Production recovery continuing through summer 2017 production breaks 2008 6.25 billion lb. record? Substantial increase in 2016 and 2017 per capita consumption Need to get exports back ASAP Beyond 2016 TDET goals will require 5%+ annual production capacity growth to succeed Summary 32 Please send any questions to thomaselam@farmecon.com