Bruce Caris The Green Valley Pecan Company 2013 PECAN OUTLOOK NPSA MEETING AUSTIN SEPTEMBER 6, 2013

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1 Bruce Caris The Green Valley Pecan Company 2013 PECAN OUTLOOK NPSA MEETING AUSTIN SEPTEMBER 6, 2013

2 PRESENTATION OVERVIEW South Africa Acres planted, new plantings and supply Current Situation: Supply Demand Cold Storage Exports in shell

3 Louis Trichardt Area Nelspruit Area Vaalharts Area Orange River Valley: Hopetown to Upington Pongola Area 3

4 AREA PLANTED 2007 tree census: 7354 ha From 2007, industry has been growing rapidly roughly hectares planted per annum. Current Hectares planted estimated at +-18,000 Hectares. 750 producers Farmers continue to plant at a rate of +-200,000 trees per year, this will continue while prices remain relatively good.

5 Vaalharts Irrigation Scheme Established ,000 ha (79,040 ac.) Irrigated Cropland Currently 11,000 ha (21,170 ac.) in Pecans Trees range from 1 st leaf to 18 yrs. 3,800 ft. to 4,100 ft. elevation Hot summers/cool winters Peak rainfall is in Jan./Feb. (Monsoon) Other crops in the area: Alfalfa, Corn, Peanuts, Grains Use both flood, drip & pivot irrigation 5

6 Vaalharts area Orchards Mostly Wichita, Navajo, Western, Choctaw and Pawnee on Ukulinga root stock. Trees are generally planted on 10m x 10m spacing (33 X 33 ). A few are 12m x 6m (39.5 x ) Local nursery trees are available for continued expansion. Other nurseries are in the Nelspruit area. Production costs are typically R15,000 to R18,000 per hectare including harvest. That translates to $600 to $800 USD per acre annual growing costs. 6

7 Vaalhart Yields High yields of 8,000 lbs./ha (3,238 lbs/ac.) on 14th leaf Wichita in an on year. Lows of 800 lbs./ha (323 lbs/ac.) on same trees in off year. Starting to alternate bear due to little or NO Pruning program. Have been experiencing late(oct.) and early (May) freezes reducing yield. 7

8 Orange River Valley Hopetown to Prieska 10,000 ha (24,700 ac.) Irrigated Cropland Currently 1600 ha (3,952 ac.) in Pecans Including 70 ha organic 1000 ha (2,470 ac.) are producing trees Trees range from 1 st leaf to 15 yrs. 3,400 ft. to 3,800 ft. elevation Hot summers/cool winters Peak rainfall is in Jan./Feb. (Monsoon) Other crops in the area: Alfalfa, Corn, Grains Use both flood, drip & pivot irrigation Douglas Orange River Valley Hopetown 8

9 Green Valley Nut Prieska 300 ha (741 ac.) of new plantings ha (865 ac.) balance to plant in 2013 & 2014 Mostly Wichita, Western and Navajo Planted on 10m x 10m (33 x33 ) spacing Micro sprinkler irrigation on trees 9

10 Upington Growers Expanding acreage along the entire Orange River Valley. Includes ha ( ac.) planted in Namibia. Water costs are similar to other areas - $102-$105 /ac. per year. Nursery trees are available from several local growers. 10

11 Production Advantages Inexpensive water sources. Abundant water supply. Low cost utilities (electricity). Inexpensive & available labor. $12/ day - labor rate. Grower use of micro-irrigation. Ideal growing climate. (western growing areas). Production Disadvantages Some areas with water quality issues. Eastern areas with disease & quality problems. (tropical) Potential salt problems (Vaalharts). Lack of a pruning program. Unstable Rand : to USD variance in 10 days. Relying on marketing to one area (China). Ukulinga rootstock may have limitations. 11

12 SOUTH AFRICAN PROJECTIONS RSA PECAN PROJECTIONS mt ton Export Actual Local Use

13 GRAPH SHOWS PRONOUNCED ALTERNATE BEARING. Hail in 2011 Drought in 2012/13 summer rain region. Farmers converting from cash crops to tree farming. Different style of farming that needs a long term investment mindset. Industry very young and small and needs technical help. Climate change may also be a factor in the disappointing yields.

14 SA SALES TO CHINA / HONG KONG

15 SITUATION IN crop Size estimated to be 40-50% smaller than 2012 Industry small and still immature, and farmers need to understand trees vs. cash crop management differences. Trees are a long term investment. Management mind set is very different to cash crop management, some orchards are not achieving their potential.

16 2013 PROBLEMS Chinese buyers selected Large nuts only, but the radically reduced crop, limited supply of suitable product, meant that the auction with farmers continued fiercely. Farmers would change loyalty for as little as one US$ ONE cent. Extremely difficult for shippers. Early contracts were out bid by later ones.

17 AND NOW THE NUMBERS FOR USA

18 January 260, , , , , , , , , , , ,784 February 301, , , , , , , , , , , ,909 March 295, , , , , , , , , , , ,239 April 289, , , , , , , , , , , ,458 May 259, , , , , , , , , , , ,157 June 252, , , , , , , , , , , ,930 July 239, , , , , , , , , , , ,689 August 219,848 94, , , , , , , , , ,438 September 186,497 70, ,539 71, ,629 75, ,319 94,194 91,033 95, ,213 October 135,420 51,746 77,653 50, ,174 66, ,996 87,521 66,047 88, ,503 November 130,154 91,495 94,764 54, , , , ,804 75, , ,463 December 164, , , , , , , , , , ,015 SOURCE:

19 Crop Year Sept 30 Carry In Crop size Mexico Total Supply Consumption , ,500 55, , , , ,900 46, , , , ,100 72, , , , , , , , , , , , , , ,300 80, , , , , , , , , , , , , , , , , , , , , , , , , , , , Est 122, , , , , Est 187, , , ,000

20 '000 POUNDS INSHELL SUPPLY CONSUMPTION Supply = Carry-in + Imports + US Production Consumption = US Usage + US Exports 700, , , , , , , / / / / / / / / / /2013 est CROP YEAR 2013/2014 EST

21 '000 pounds in shell 700, ,000 Total Supply Components US and Mexico Sept 30 Carry In Crop size Mexico Total Supply 500, , , , , Est13-14 Est

22 100,000,000 90,000,000 Total Exports CROP YEAR Meats and In-Shell Converted to In-Shell Pounds Reporting Period: 10/2007-6/ ,543,142 80,000,000 70,000,000 73,548,983 63,433,617 60,000,000 50,000,000 41,459,928 45,139,405 43,274,975 40,000,000 30,000,000 20,000,000 10,000,

23 KERNEL EXPORTS Crop Year Shipments Reporting Period: 10/2008-6/2013 (Shown in Pounds) Period/Period Country Qty Qty Qty Qty Qty Qty % Change (Qty) Canada 6,797,664 5,885,400 6,049,643 6,104,317 6,258,418 7,210, Netherlands 4,107,831 3,433,003 4,207,700 4,636,274 3,752,450 4,393, United Kingdom 2,746,050 1,985,022 1,692,471 2,158,524 3,042,348 4,099, Mexico 1,423,069 1,353,183 1,613,767 3,007,956 5,484,163 3,280, Israel 2,501,119 1,181,004 1,957,685 1,634,711 1,290,793 2,993, France 1,671,087 1,176,154 1,375,891 1,477,523 1,561,518 1,471,571-6 Germany 22, ,918 43, , , Korea, South 203,264 57, , , , , Hong Kong 311, , , , , , China 13,448 5,735,046 9,610,513 33, , , Belgium-Luxembourg 0 172, , , , ,820 1 United Arab Emirates 33,951 57,099 78,484 44, , , Spain 23,589 75,838 65,477 90,830 73, , Japan 279, , , , , , Italy 91, , , , , , Saudi Arabia 19,621 26,455 19,400 56,438 53, , Kuwait 74,736 51,808 79,366 78,043 25, ,

24 Total Exports for June: Meats and In-Shell (Converted to In-Shell Pounds) 3,000,000 2,500,000 2,389,786 2,000,000 1,500,000 1,000, ,000-1,468, , , ,476 9,

25 In-Shell Exports (Shown in Pounds) Reporting Period: 7/2007-6/2008 to 7/2012-6/ ,000,000 98,927, ,000,000 80,000,000 60,000,000 44,188,782 37,311,091 57,673,438 44,605,231 62,786,788 40,000,000 20,000,

26 SUMMARY Strong growth for Demand for China Recent activity from HK and China STRONG Smallest crop since Prospect for best quality from Mexico in awhile Prices firming dramatically over past six-eight weeks

27 QUESTIONS?? Answers?