Speech CEO FrieslandCampina Roelof Joosten. Good evening your Excellencies / distinguished guest, ladies

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1 Speech CEO FrieslandCampina Roelof Joosten 5 FrieslandCampina CEO Roelof Joosten and Chairman Engro Corporation Hussain Dawood met with Prime Minister of Pakistan Nawaz Sharif, on 1 February 2017 in Islamabad, to jointly discuss possible opportunities to develop the dairy industry in the country through knowledge transfer and provision of nutritious valueadded products amongst others. Good evening your Excellencies / distinguished guest, ladies 10 and gentlemen, On the twentieth of December of the year two thousand and sixteen [2016], FrieslandCampina obtained a key position in the Pakistan dairy sector through a strategic partnership with Engro Foods. As I told your Prime Minister with whom I had a 15 cordial meeting this afternoon, we are proud and excited about this partnership with Engro Foods, a well organised and highly successful company. In our route2020 strategy Central Asia is one of the future markets that FrieslandCampina would like to get access to. In 20 view of this, you can imagine that we were pleasantly surprised to be offered the possibility to obtain an interest in the Engro Foods in Pakistan, a country located on the border between Central Asia and Western Asia. FrieslandCampina is operational in many markets with a broad range of products. Each market situation is different and FrieslandCampina focuses on a number of specific product market combinations. The expected growth of the market in combination with FrieslandCampina's ability to grow in this market is an important factor and, of course, also a possibility to gain profit in the product market combination. 1

2 Together with Engro Foods we expect to take advantage of the conversion of the market from loose to packaged dairy products, which is expected to accelerate in the near future as a result of a growing middle income class as well as increasing 35 urbanisation, and the desire for milk of a higher quality that is also affordable and available all year through. Together we can play a role in meeting these demands. It goes without saying that all, the dairy industry as well as provincial and national governments, need to endorse the importance of safe and healthy nutrition by ensuring clear standards and legislation. This includes, for example, pasteurisation of milk. Pasteurisation is important as it kills harmful bacteria, micro-organisms such as Salmonella, E. coli and Listeria that cause food-borne diseases. Pasteurisation of raw milk has certainly contributed to the high level of public health we enjoy today in the Netherlands. Also authorities should play a role in establishing a level playing field in import and export of dairy products, for example by ensuring realistic and competitive import charges 50 enabling high added value dairy products can be imported. This will contribute to the development of the whole country, benefiting consumers and dairy industry alike. We are really looking forward to making a contribution to Pakistan's dairy sector through transfer of knowledge based on our experience about producing high-quality dairy products from locally sourced milk supplied by local Pakistan farmers, but also through our established FrieslandCampina Dairy Development Programme in which our farmers also play important roles by transferring their knowledge. Ladies and gentlemen, 2

3 I will now tell you something about FrieslandCampina and its home country, the Netherlands. The Netherlands is a small country that is about twenty-on times smaller than your country. Like in Pakistan, dairy forms 65 an important part of the daily diet in the Netherlands. The country is situated on the North Sea coast in a river delta and has a population of nearly seventeen million people. With a population density of about four hundred and ten [410] people per square kilometre, the Netherlands is classified as 70 very densely populated. Only a few countries in the world have a higher population density. Nevertheless, the Netherlands is the world's second-largest exporter of food and agricultural products, following the United States. This is partly due to its mild climate and fertile 75 meadowlands. This mild climate in the Netherlands is a result of the influence of the North Sea and the Atlantic Ocean, which gives us cool summers and mild winters. Because of its small size, our country has little regional variation with respect to the climate, 80 although the influence of the ocean is less perceptible in the more inland regions. Rainfall is spread over the year with a 'dryer' period from April to September: the grazing season. 'Netherlands' literally means 'lower countries', which refers to its low land and flat geography with only about fifty percent of 85 the land rising one metre above sea level. Most of the areas below sea level are man-made. Since the late sixteenth century, large areas we call these 'polders' - have been reclaimed from the sea, amounting to nearly twenty percent of the country's current land surface. 3

4 The dairy sector is one of the most important drivers of the Dutch economy. The Dutch dairy farming sector and the dairy industry together have a total production value of thirteen billion euro. In the last few years, the dairy sector annually exported products to an amount of nearly six billion euro. The Dutch dairy sector is responsible for about forty-four thousand [44,000] direct jobs. This represents one sixth of the total food industry in the Netherlands, which is more than the Dutch electrical appliance, pharmaceutical or automotive industries. The dairy sector is inextricably linked to the Netherlands. Our climate and soil are ideal for grass and dairy cows. The Netherlands is strategically located in Europe, with its good potential markets, and it has an excellent logistics infrastructure. Most Dutch dairy farmers co-own their dairy plants. The same goes for Royal FrieslandCampina. The company is owned by nineteen thousand [19,000] farmers and this makes it one of the world's largest dairy cooperatives. Its cooperative tradition dates back to the second half of the nineteenth 110 century. It all began in the year eighteen hundred and seventy-one [1871] in the small village of Wieringerwaard, when nine farmers joined forces and started a small dairy plant. One of the reasons for doing so was the lack of cooling. The farmers 115 had to work together in order to be able to quickly deliver the milk to their customers. Another reason to join forces was to gain more power in the market. Many of these farms from the nineteenth century are still associated with us today and their 4

5 farmers are just as firmly anchored in their regions and local 120 communities as their ancestors were. Industrial developments enabled these farmers to process milk with machines into a huge variety of products. First there was butter, then cheese came. Later these were followed by condensed and powdered milk and, more recently, by infant & toddler nutrition and pharma lactose. Dairy also became an export product in the form of condensed milk and found its way to other continents by sea. Through their dairy plants, these farmers managed to conquer the world and add value to their milk. Over the years, the member dairy farmers have, together with our FrieslandCampina employees, built up a dairy company that is among the largest in the world. FrieslandCampina has offices and dairy plants in thirty-three [33] countries and employs over twenty-two thousand [22,000] people. During its hundred and forty [140] years of history, FrieslandCampina has built strong market and brand positions based on recognisable brands and distinguishing quality. The unique Dutch milk chain is a valuable tool for permanently binding customers and consumers to FrieslandCampina's products and brands. Frisian Flag, Dutch Lady, Peak, Campina, Chocomel and Frico are examples of brands that have existed for many generations. Let's get back to Pakistan. Pakistan is classified among the emerging and growth-leading economies of the world and it is 145 backed by one of the world's largest and fastest growing middle classes. The challenge for Pakistan will be to provide all its people with food of a reliable quality, such as healthy and nutritious dairy products! 5

6 Ladies and gentlemen, FrieslandCampina can be a good partner in facing this challenge. Providing the growing world population with the proper nutrients will be the challenge for the coming decades. By offering reliable, relevant and nourishing dairy products, FrieslandCampina contributes to food and nutrient security. Our purpose statement nourishing by nature implies better nutrition for the world, a good living for our farmers, now and for generations to come. This is what FrieslandCampina stands for. FrieslandCampina is the sixth largest milk producer in the 160 world and although the Netherlands is the fifteenth largest milk producing country in the world, when looking at the yield per cow and the quality of our dairy products, not many can match us! FrieslandCampina's unique dairy chain underpins our activities. 165 The company has reached a high level of knowledge about how to manage the dairy value chain, 'from grass to glass'. Its quality and food safety system called 'Focus planet' is well recognised as the world standard in controlling the dairy chain. In order to remain successful, we have to keep focusing on 170 sustainable growth in the most valuable product market combinations. Having an efficient organisation in place is an important prerequisite for optimum processing and valorisation of all the milk supplied. The Dutch dairy sector has set the standard for processing 175 milk into high-quality products. Besides, we at FrieslandCampina are experts in distributing a wide range of dairy products, varying from brands to ingredients with a high added value (such as pharma, infant and nutritional powders) 6

7 and mainstream dairy products. FrieslandCampina itself 180 processes more than eleven billion kilograms of milk on an annual basis, which comes down to more than one million kilograms per hour. Most of the processed milk is supplied by our member farmers, the owners of our company. As I said earlier, it is our ambition to provide the growing world population with the proper nutrients. Milk by nature contains essential nutrients, such as proteins, vitamins B2 and B12 and minerals such as calcium. By offering reliable and tasty dairy products, FrieslandCampina makes a contribution to food and nutrient security. FrieslandCampina believes in shared values: simultaneous achievement of a good income for dairy farmers, added value for customers and consumers, and personal growth and career perspectives for employees. The Dairy Development Programme plays an important role in 195 sharing knowledge and expertise concerning the sector. We do this by means of training, knowledge partnerships and initiating and supporting projects aimed at improving the dairy farming infrastructure. With our Dairy Development Programme we support local 200 dairy farmers, mainly small farmers particularly in Asia, Africa and Eastern Europe, in improving the quality of the milk, increasing the productivity per cow and gaining access to the market. In the year two thousand and fifteen [2015], local Dairy 205 Development Teams trained six thousand three hundred and six [6,306] dairy farmers in subjects such as animal welfare, fertility, calf rearing, milk quality and hygiene, feed and water 7

8 management, housing, data management and milking technology. 210 Since the start of the Programme, we have indirectly reached more than two hundred thousand [200,000] local dairy farmers in Asia, Africa and Western Europe. In this way we also contribute to food security, more sustainable production of milk and raising the standards of living for dairy farmers in countries in which we are active. We believe that by this FrieslandCampina can bring added value to the communities in which it operates. This is how opportunities are created and perspectives are offered to all stakeholders. However, to be honest we cannot do all this without the support of the Government and related authorities. The dairy sector benefits from clear standards and clear legislation. It is also important to maintain a healthy balance between locally sourced and imported dairy, otherwise it will be nearly impossible to meet the demands of the Pakistan population. Hopefully, we will jointly work on these topics in the interest of the Pakistan consumer in the near future. FrieslandCampina is committed to high standards in the fields of food safety, personal safety for its employees, quality, sustainability and transparency throughout the production chain: 'from grass to glass'. This lays the foundation for the trust of the customer and consumer in the products and safeguards the continuity that is the hallmark of FrieslandCampina. Ladies and gentlemen, 8

9 I am really looking forward to working closely together with Engro Corporation, Engro Foods and the Pakistan authorities on lifting the Pakistan dairy sector to a higher level and on providing the Pakistan people with healthy and nutritious dairy 240 products and, by doing so, making a contribution to the prosperity of the Pakistan society as whole. Thank you! 9