2011 CHS Inc. Who controls the kingdom? Exploring Food Sovereignty Mark Palmquist Executive Vice President & Chief Operating Officer Ag Business

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1 CHS Inc.

2 2011 CHS Inc. Who controls the kingdom? Exploring Food Sovereignty Mark Palmquist Executive Vice President & Chief Operating Officer Ag Business

3 What in the world is the world going to eat? A look at: The world s growing and evolving population Why hungry nations want food sovereignty Impacts on U.S. agribusiness CHS system strategy

population division Accelerating growth 1804 1 billion (after 250,000 years)

4 Welcome, Baby 7 Billion The world s population hit 7 billion on October 31, according to the U.N. population division Accelerating growth billion (after 250,000 years) billion billion billion billion billion billion 2050 projected 9.3 billion 2011 CHS Inc.

5 Market Drivers: Demographics

6 Market Drivers: Grain supply and demand outlook Net grain imports in developing countries Global grain production Source: FAO

7 Feeding the world: Global Challenges Geopolitical risks Government intervention/distortion World economy/capital Food safety For growing nations, it s about Food Sovereignty 2011 CHS Inc.

8 What do we mean by Food Sovereignty? The ability of a nation to dependably access food to meet its citizens dietary requirements either by internal production or dependable imports 2011 CHS Inc.

9 The issues: Geopolitical Risks Arab Spring What happens next? Ongoing Iraq/Iran/Turkey turmoil Unpredictable Pakistan CHS Inc.

10 The issues: Government intervention/distortion In challenging times, we want to safeguard food supply: Russia Ukraine Argentina China European Union United States CHS Inc.

11 The issues: World economy/capital Slowing world growth European financial crisis Inflation in emerging countries Currency manipulation CHS Inc.

12 Controlling food destiny is name of the game Nations want to ensure: Supply Distribution Price Safety If you can t raise it, control the source! CHS Inc.

13 The headlines tell the story Saudi investors put $100 million into Ethiopian farm UAE stepping up agricultural investment in Sudan Pakistan offers farmland to foreign investors Korea s Daewoo leases Madagascar land for feed, fuel Short of food? Rent half a country Asian nation s invest in Brazilian production CHS Inc.

14 Food safety poses challenges 2009 Hola Pops from Mexico contaminated with lead 2008 baby milk scandal with melamine from the contaminated protein working into the food chain a year later 2007 pet food recalls, another result of Chinese protein export contamination resulting from melamine as an adulterant CHS Inc.

15 CHS Inc. Impact on U.S. agriculture? A new competitive world

16 The world we live in today Old World U.S. agribusiness sources inputs domestically and globally U.S. originated grain moves to the domestic and global marketplace New World Global players originating grain from U.S. producers U.S. players sourcing grain globally Crop nutrients imported and exported Global growth creates tighter crude oil and energy supply/demand Outside investors invest in commodity businesses Aggressive market rationalization

17 Asian influence in grain China Chongqing Grains COFCO Sino Grain South Korean Government Japan Marubeni Mitsui Itochu Mitsubishi Sumitomo Zen-Noh CHS Inc.

18 A look at two multinationals Tokyo, Japan Actively investing in U.S. agriculture 35% of the Marubeni Group is owned in common stock by Financial Institutions Grain: Columbia Grain Crop Nutrients: Helena Omaha, NE Gavilon was formed in 2008 by investment funds: Ospraie Special Opportunities Fund General Atlantic Soros Fund Management Gavilon Management CHS Inc.

New export players converge on PNW TEMCO; Tacoma (11.7%) (CHS, Cargill) LDC; Seattle(12.2%) AGP; Grays Harbor (3.8%) (AGP) EGT; Longview (16.9%) (Bunge, Itochu, Pan Ocean) UGC; Vancouver (8.

19 New export players converge on PNW TEMCO; Tacoma (11.7%) (CHS, Cargill) LDC; Seattle(12.2%) AGP; Grays Harbor (3.8%) (AGP) EGT; Longview (16.9%) (Bunge, Itochu, Pan Ocean) UGC; Vancouver (8.5%) (Mitsui ) CLD; O-Dock, Portland (2.4%) (Cargill, LDC) KEC; Kalama (18.3%) (ADM, Gavilon, MSK) CHS; Kalama (14.1%) CGI; T-5, Portland(7.7%) (Marubeni) CLD; Irving, Portland (4.3%) (Cargill, LDC)

20 Bunge Port of Longview Facility in PNW Joint Venture between Bunge, Itochu, and Pan Ocean (EGT, LLC) State-of-the-art export grain terminal First export terminal built in the U.S. in more than two decades Capable of holding four 110-car unit trains at any given time Shuttle train and barge unloading capabilities on the Columbia River Can handle 8 million metric tons annually 2011 CHS Inc.

21 Regional Market Dynamics Aggressive pursuit of assets Overvalue pricing for assets Intimidation with new sites Approaching key personnel Conversion funding for business Retro-fitting asset base to next generation assets CHS Inc.

22 Closer to home: Shuttle Expansion Proposed Shuttles Announced Rumor 2011 CHS Inc.

23 Multinational go-to-market strategy Partner We would like to partner with you. Buy We would like to buy you. Build We will build next to you CHS Inc.

24 The CHS system addresses global food needs

25 CHS system strategy Domestic investments Strengthening U.S. origination through strong cooperative system alignment Building out global grain and crop nutrient origination capability CHS Inc.

26 PNW export investments Additional CHS PNW capacity Combination cargo loading capability Alternative rail destination for corn and soybeans Bulk products capability Top-tier loading speed

27 CHS U.S. Business Operations

28 CHS System Locations Each dot represents a CHS location, member company or business affiliation

29 Country Operations Locations CHS Inc.

30 Stronger cooperative alignment Traditional buy/sell relationships Specific formal relationships including JVs and LLCs Opportunity to become fully part of CHS through Country Operations CHS Inc.

31 Growing CHS global origination footprint Diversify origination Be a reliable food source for global customers Market knowledge Risk diversification Increase/diversify fertilizer supply Additional profit opportunities Expand demand base Increase market share of our producers products Mitigate risk Additional profit opportunities for member-owned system CHS Inc.

32 CHS Global grain/cn footprint Tacoma Kalama Friona Mexico Duluth/Superior Collins Myrtle Grove Geneva Barcelona Romania, Hungary, Bulgaria, Serbia Kiev Krasnodar Amman Hong Kong Shanghai Brazil Australia Argentina

33 Main Black Sea ports Constanta 33

34 The cooperative advantage As growing nations seek food sovereignty, cooperative relationships are attractive: Farmer ownership Dependability Transparency Integrity CHS Inc.

35 2011 CHS Inc. Questions?

36 CHS Inc.

An essential partnership, International Grain Trade and Plant Protection.

An essential partnership, International Grain Trade and Plant Protection. Pressure has never been greater on agriculture to provide for global food security, food defense and energy security while maintaining