INVESTMENT IN THE AGRO-INDUSTRY SECTOR

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1 INVESTMENT IN THE AGRO-INDUSTRY SECTOR I think that it is very favorable for investment and it is a country with is being managed very well from a fiscal point of view, and it has a big labor force, so we see Colombia as a very attractive market for PepsiCo and even more so for the food and beverage sector. Indra Nooyi, President and Executive Director of PepsiCo. Sixth Summit of the Americas, April 14, L ibertad y O rd e n

2 COLOMBIA: BROAD RANGE OF ALTERNATIVES FOR AGRO-INDUSTRIAL PRODUCTION Agro-industrial sectors with a global scope: BEEF, CHOCOLATE-MAKING, CONFECTIONERY AND RELATED RAW MATERIALS, PALM, OILS AND FATS, DAIRY, FRUIT AND VEGETABLE PRODUCTION, AND AQUACULTURE. Productive Transformation Program, 2011 More than half of the land on Earth that could be used for agricultural purposes is found in only eight tropical countries: ANGOLA, ARGENTINA, BOLIVIA, COLOMBIA, BRAZIL, CONGO AND SUDAN. (FAO, 2014). 1 st 4º ranked Latin American country for precipitation levels, ranked tenth globally. (FAO, 2014). ranked country in Latin America for availability of lands for agricultural production. (FAO, 2014). As a country located in the tropics, Colombia has a diversity of thermal floors at altitudes above sea level, which go from 0 MSL (> 24oC ) up to 4,000 MSL (< 60C ). (Earthtrends, 2011).

3 SECTOR WITH THE GREATEST POTENTIAL FOR GROWTH Based on the agro-ecological zoning map, Colombia s agricultural potential corresponds to 19% of national territory, meaning: 21.5 MILLION HECTARES Instituto Geográfico Agustín Codazzi [Agustín Codazzi Geographical Institute] (IGAC) and Instituto Colombiano Agropecuario [Colombian Agricultural Institute] (ICA), Other uses: includes bodies of water, uncultivated land, urban or semi-urban areas, and marginally cultivatable areas in natural parks. 9.1% Argentina 7.0% Colombia 6.4% 5.9% 5.9% Peru Ecuador 2nd. 7% % Latam 5.2% The country was the ranked second in terms of the contribution of its farming sector to the Gross Domestic Product (7%). (Economist Intelligence Unit). Between 2010 y 2014, farming GDP in Colombia grew by close to 7%. Million hectares are used for farming, of which: 30.4 million are for livestock, 2.9 million for agriculture, 3.8 million are for forests and 0.9 million for other purposes. (Annual farming statistics- Ministry of agriculture and rural development -MADR 2013) Agricultural production in Colombia has annually increased by nearly 3.2% between 2002 and (Farming statistics - Ministry of Agriculture and Rural Development.) Brazil 4.1% 3.7% 3.6% México Venezuela Pending FARMING SECTOR S SHARE OF THE GDP FOR LATIN AMERICA, 2013.

4 LARGE FOREIGN COMPANIES HAVE CHOSEN COLOMBIA AS A PLACE TO INVEST D O L E F O O D, U N I T E D S TAT E S : the U.S. multinational specializing in the fruit and vegetable sector invested in the construction of a new production and plant will be located in Cundinamarca and will be aimed at meeting the needs of the national and international market. DANNON, FRANCE: it entered the Colombian market in an alliance with Alqueria, opening a production plant in Cajica, Cundinamarca. OLMUE, CHILE: the fruit company constructed a fruit processing plant in Valle de Cauca. OPPORTUNITIES FOR THE AGRO-INDUSTRIAL SECTOR Colombia has up to two million hectares suitable for of Cocoa Growers and the Ministry of Agriculture and Rural Development). the construction of new bio-refineries, biomass plants and development of transesterification, which allow the transformation of sugar cane and oil palm into biodiesel. Construction of production plants for processed foods like pulps, jams, preserves, sauces and other products derived from fruits and vegetables, with the aim of commercializing their production in the domestic market and exploring markets for exportation. In Colombia there are available areas (continental and maritime) that comply with the physical requirements necessary for carrying out the cultivation of di erent species like Cobia, Trout, Grouper, Bocachico, Palmaro, etc. Additionally, Colombia s tropical location, the climate and the temperature of the waters favor year-round shrimp production.

5 INCENTIVES AND BENEFITS FOR INVESTMENTS IN THE COLOMBIAN AGRO- INDUSTRIAL SECTOR Late-yield crops: in Colombia, crops that are considered late-yield such as cocoa, rubber, oil palm, citrus fruit and fruit trees that are established before December 31, 2014 are exempt from paying any income tax for 10 years, counting from when production starts. Income tax exemption for forest plantations: investments in new benefit covers plantations established after 2003 and has no seasonal restrictions. Forest Incentive Certificate (CIF): the CIF is a monetary incentive that recognizes up to 50% of the investment made in the establishment, as well as the maintenance costs up to the fifth year, of plantations of introduced or native species defined by the Ministry of Agriculture. Vallejo Plan: by virtue of this program, capital goods and spare parts2 or raw materials and supplies can be imported with total or partial suspension of customs duties (VAT and tariffs), given compliance with from simplified import procedures. COLOMBIA AS AN EXPORT PLATFORM FOR ESTABLISHING LOGISTICS HUBS An enviable logistical position with access to the Pacific and Atlantic oceans, at just: 6 DAYS BY BOAT AND 3 HOURS BY PLANE FROM THE U.S.A. 11 DAYS BY BOAT AND 11 HOURS BY PLANE FROM EUROPE Free Trade Zones: Free Trade Zones are geographical areas where companies can be established to develop industrial activities for goods or services under a regime that offers customs and tax benefits, such as the opportunity to benefit from a reduced income tax rate, as well as being able to import machinery, equipment, and supplies without incurring Colombia has: 13 customs duties. activities cannot be developed under the Free Trade Zone regime, they need to be an industrial transformation of raw materials International Air Transportation Association - IATA and Airlines-Processed by ProColombia. free trade agreements in force, including partial agreements: five signed and three under negotiation. Ministry of Trade, Industry and Tourism. Resolution No of 2002 by the Ministry of Trade, Industry and Tourism.

6 6,882 CAGR Exports: 9.5 % 4,772 2,127 2, ,617 3,119 4,095 3,446 4,433 4,.680 4,440 3,861 4,715 4,799 FUENTE: DANE AGRO-INDUSTRIAL EXPORTS// US$ MILLIONS. SUPPORT FROM PUBLIC ENTITIES FOR SECTOR DEVELOPMENT PRODUCTIVE TRANSFORMATION PROGRAM: seeks to develop world-class sectors via the formulation and execution of sectoral business plans that favor economic growth and strengthen the national productive apparatus via public-private alliances. MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT: responsible for formulating, coordinating, and evaluating the policies that promote competitive, equitable and sustainable development of processes for agriculture, forestry, fisheries and rural development, with a focus on decentralization, cooperation and participation, and which contributes to improving the standard and quality of life of the Colombian people. L ib ertad y O r d en PROCOLOMBIA: entity in charge of promoting investment, exports and tourism in Colombia.