Linking Commercial and Development Opportunities in the Global Marketplace. Carol Kitchen SVP and General Manager, Global Ingredients

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1 Linking Commercial and Development Opportunities in the Global Marketplace Carol Kitchen SVP and General Manager, Global Ingredients

2 Land O Lakes #210 on the Fortune nd Largest U.S. Ag Cooperative 9,500 Employees at 300+ facilities 3,000 Producer-members & 1,00 member co-ops Serving 300,000 producers VALUE ADDED BRANDED BUSINESSES Leading market positions in butter, deli cheese, branded dairy Foodservice, Ingredients Leader in Livestock and Lifestyle feed Leading CPP and Seed wholesaler

3 Challenge: Long Term, Global Food Demand Population growth From 7 billion people today to 9.2 billion by % increase in food production needed 30%+ increase from economic growth in low ~2 X as much dairy ~2 X as much meat ~1.5 X more cereals income countries 1 On a per-day basis, global food consumption is ~17 trillion Kcal in 2000, ~18 trillion Kcal in 2005, and ~28 trillion Kcal in From ~475 to ~892 million tons of dairy, ~1 to ~1.44 billion tons of cereals, ~227 to ~464 million tons of meat, over the period of 2000 to 2050

4 Challenge: Limited Resources At most, only 12% more arable land is available globally Only 5% more land is projected to be cultivated by 2050 Demand to outstrip water supply by 40% by 2030 We must produce more food, with fewer resources and less environmental impact! Source: OECD-FAO, global water supply/demand model; agricultural production based on IFPRI computed general equilibrium model base case; A Daunting Task, Prof. Robert Thompson (2010)

5 Challenge: Efficiency and Effectiveness 2.6 billion people currently live on less than $2.00 per day 1 billion are unable to afford 1,800 calories per day As incomes rise from $2 to $10 per day, demand increases for agricultural commodities: meat, dairy, eggs, oils, fruits & vegetables The number of people lifted out of poverty is the most important uncertainty regarding future global demand

6 Land O Lakes Positioned To Participate In Global Growth Opportunity Of Agribusiness and Expertise In Increasing Productivity Agricultural Insights Food Production Research and Development Innovation Food Systems

7 Land O Lakes International Objectives Commercial: To build a sustainable international business leveraging Land O Lakes value-added products and proprietary knowledge through local investment and export Increasing Intersection Development: To generate economic growth, improve health and nutrition, and alleviate poverty by facilitating market-driven business solutions.

8 Commercial China Initiatives: Dairy Nutrition and Swine Feed JV with Great Wall Group, a leading ag & food company in Asia Relationship with Nestle on Dairy Farming Institute Bringing total nutrition (feed and forage) to dairy producers Future: Expand feed footprint Increase sharing of expertise, technology

9 Commercial China Initiatives: Winfield Solutions Ag Chem active ingredients Developing market for alfalfa hay & seed 3 alfalfa demo plots Demonstrating variety selection Future: Alfalfa seed exports Promote GMO adoption

10 Land O Lakes Legacy in China Contaminated Milk 2008 Melamine Scare 2011 Aflatoxin Disease Swine mortality: 25MM/year 2011 Foot & Mouth: Swine, Cattle, Goats, Sheep Productivity 40% fewer pigs/sow than US China milk/cow = 1/3 of US Quality Feed Enhanced testing Supply chain scrutiny Animal Health Confinement hog production expertise Agriculture Expertise Ruminant nutrition Forage production

11 International Development Overview Established in 1981 as a not-for-profit division of Land O Lakes, Inc. Leverages our corporate and global technical expertise to assist farmers in emerging markets Funded primarily by grants from USAID and USDA To date, IDD s 260+ projects have improved the quality of life for millions of people in 76 nations

12 International Development Impact Areas Agricultural Productivity & Competitiveness: Adding value to staple products in the Republic of Congo Enterprise & Cooperative Development: Improved incomes & access to credit for 20,000+ farmers in Kenya Food Systems & Safety: Improved food quality standards and testing facilities in Macedonia Nutrition & Health: Helped develop food products formulated to meet nutritional needs for Ethiopians & Rwandans living with HIV Food Security & Livelihoods: Raised 2,700 farmers out of poverty & food insecurity in Zambia

13 Development Key Initiative: Kenya JibuPlots Based on Winfield Solutions AnswerPlots Winfield Solutions staff donated time to pilot 3 JibuPlots, now managed by field-based agronomists Inputs donated by partners Monsanto, Syngenta, Kenya Seed Company, MEA Ltd. and Farmchem Traditional vs. modern farming practices demonstrated Local farmers attend Farmer Field Days to learn how to increase productivity

14 Land O Lakes Legacy in Kenya Increased Productivity Significant improvement in crop yields and cost effectiveness Livelihood Training mostly female farmers; women bear primary responsibility for farming & care of livestock Poorest households are headed by women, elderly or children Future Winfield funding with potential from dollars from USAID Intend to scale to 30 locations Key factor: linking commercial input suppliers to producers

15 Enterprise Wide Leverage and Legacy Dairy Powder Sales Connecting smallholder output to commercial-scale food producers Customer Dairy Imports Ag Productivity Expertise Feed Sales/Jibu Plots Utilization of corporate expertise in emerging markets Customer Local Mfg ing Technology Smallholder Value Chain Development IDD = market scout for future opportunities Customer Producer Development Foundational Themes: Expertise, Productivity, Technology

16 Integral Part of Growth Strategy Significant growth goals in place Earnings x 2 Bottom Line x 2+ International is a critical component Today only 2% of sales is from international business Target is 10 15% to achieve growth goals Domestic markets are mature so these markets are key drivers to the future Africa represents an unprecedented opportunity. We are uniquely positioned.

17 Adding Lasting Member Value Leverage our R&D investment in new markets; longer lifecycle for older research Develop new markets for products produced here Provide the infrastructure for members to participate in global growth opportunities IDD s Washington DC exposure increases our voice in domestic and international farm policy

18 THANK YOU!! 18