Soy Canada SOYBEAN PROCESSING WORKSHOP PRESENTATION NOVEMBER 16, 2017 BRANDON, MANITOBA

Soy Canada SOYBEAN PROCESSING WORKSHOP PRESENTATION NOVEMBER 16, 2017 BRANDON, MANITOBA

Overview 1) Soy Canada & Mandate 2) Soybean Sector Update & Trends 3) Growth in Western Canada 4) Commodity Soybean Protein Levels 5) Canadian FTAs - Soy Products 6) Soy Canada s Strategic Plan 2

Soy Canada Members / Les membres de Soy Canada

Our Mandate TRADE POLICY & MARKET ACCESS GOVERNMENT RELATIONS & INDUSTRY PROFILE BUILDING COORDINATE RESEARCH & INNOVATION SUPPORT MARKET DEVELOPMENT Maintain and expand market access by working to remove barriers Seek improved trade policies/agreements Communicate and educate at all levels Build strong relationships Advocate for funding Align efforts across Canada Support and collaborate with research organizations Promote Canadian soybeans Develop new markets Promote new uses 4

Canadian Soybean Sector 2017-18 Snapshot Record high acreage and production levels across Canada: Acreage increased by 30% over the last year to 7.2 million acres Production to increase by 27% over the last year to 8.3 million tonnes 2016 exports reached 4.8 million tonnes valued at $2.8 billion 2016 Farm Cash Receipts climbed to $2.8 billion Soybean sector contributes $5.4 billion to Canada s GDP Over 31,000 farmers are growing soybeans Source: Statistics Canada CANSIM Tables, 2016 Census, Soy Canada Economic Impact Assessment 5

Acreage & Yield Trends Acreage 2008 2017 % Increase 6.5 Seeded Area (acres) 2,971,300 7,282,500 145% 4.5 2.5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2017 % Increase 45 Average Yield Yield (bu/ac) 41.5 42.2 2% 42 39 36 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Statistics Canada CANSIM Tables 6

Production & Export Trends Production (MT) 2008 2017 % Increase 3,335,900 8,321,100 149% 8.5 6.5 4.5 2.5 Production 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Exports (MT) 2008 2017 (f) % Increase 1,910,600 6,000,000 214% 7 6 5 4 3 2 1 Exports 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(f) Source: Statistics Canada CANSIM Tables 7

Soybean Processing Trends Processing (MT) 2008 2017 (f) % Increase 1,296,412 1,900,000 47% 2 Volume of Canadian Soybean Processing (2008-2017) Tonnes (millions) 1.8 1.6 1.4 1.2 1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(f) Source: Canadian Oilseed Producers Association (COPA), AAFC Outlook for Principal Field Crops, October 13, 2017 8

Soybean Sector National Outlook 2017-18 Soybeans are forecast to be the 3 rd largest exported crop from Canada Domestic processing is forecast to rise marginally to 1.9 million tonnes Exports expected to rise to 6 million tonnes World supply of soybeans estimated to rise to 4.4 billion bushels Source: AAFC Outlook for Principal Field Crops, October 13, 2017, USDA 9

Soybean Sector National Outlook 2017-18 (continued) 1,200 1,000 800 600 400 China U.S. Japan Top export markets: China, U.S., Japan, Europe, Asia EU decision on reregistration of glyphosate will have a significant impact on market access Increase in Chinese soybean imports expected to be modest resulting from domestic agriculture reforms 200 0 2014 2015 2016 Chinese efforts at encouraging the utilization of feed mixes with a large soy meal component may positively impact demand Source: Statistics Canada CATSNET Analytics 10

Soybean Sector National Outlook 2017-18 (continued) Soybean prices are forecast to decrease from last year to $390 to $430/t. Impacted by: Strengthening CDN Dollar Weaker USDA estimated weighted farm price Higher crude oil prices Key factors to watch: Harvest progress in Eastern and Western Canada US crop conditions and harvest progress US export sales South American planting conditions The strength of Chinese buying Source: AAFC Outlook for Principal Field Crops, October 13, 2017, USDA 11

Western Canada Acreage Trend Fastest expanding crop in Western Canada Soybean seeded area has increased by 506% since 2010 to 3.1 million acres in 2017 Soybean acreage represents roughly 5 percent of principal field crop total planted acres Acres (Millions) 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 WEST EAST Source: Statistics Canada CANSIM Tables 12

Western Canada Production Trend (tonnes) Crop 2010 2011 2012 2013 2014 2015 2016 2017 % Increase Soybeans 435,400 413,700 770,200 1,186,600 1,271,000 1,570,300 1,971,500 3,029,100 596% Lentils 2,004,800 1,573,500 1,537,900 2,261,700 1,987,000 2,540,500 3,248,200 2,438,600 22% Peas, dry 3,018,200 2,502,000 3,340,800 3,960,800 3,810,100 3,200,700 4,835,900 3,861,600 28% Canola 12,688,100 14,498,400 13,766,500 18,461,500 16,351,300 18,316,500 18,361,300 19,633,900 55% Wheat, all 21,062,200 22,715,900 25,115,100 34,911,900 27,413,900 25,687,700 28,803,800 24,477,400 16% Oats 2,071,200 2,839,200 2,512,300 3,606,800 2,676,700 2,974,400 2,837,000 3,546,100 71% Beans, all dry 107,900 85,300 156,500 122,900 148,700 128,600 134,600 181,700 68% Barley 6,984,300 7,432,000 7,488,800 9,748,300 6,701,800 7,785,900 8,371,500 6,916,300-1% Source: Statistics Canada CANSIM Tables 13

Increasing Protein Levels Major R&D priority of the Canadian soybean sector relates to increasing protein levels in commodity soybeans High protein soybeans command a premium in the marketplace because of the rich and nutritional value they offer in livestock feeds New variety technology exists to combine yield, maturity and protein characteristics into one Increasing protein level in the west has a large role in attracting regional processing investment 14

Increasing Protein Levels Western Canadian protein levels are on the rise and are competitive against the U.S. In 2016, the average protein level of commodity soybeans in Western Canada climbed to 38.7%. In 2016, the average protein level of commodity soybeans the U.S. was 39.5% 41.0 Average U.S. Soybean Protein Levels 41.0 Average Western Canada Soybean Protein Levels Protein % (dry matter) 40.0 39.0 38.0 37.0 36.0 Protein % (dry matter) 40.0 39.0 38.0 37.0 36.0 35.0 35.0 Source: Canadian Grain Commission Harvest Survey 2016, USSEC Soybean Quality Annual Report 2016 15

Canadian Trade of Soy Oil & Meal Products Federal government recently concluded or in the process of pursuing multiple free trade agreements (FTA) with key export markets: CETA provisionally came into force this Fall, eliminating EU import tariffs on Canadian soybean oil and meal products TPP - currently under renegotiation - will reduce or eliminate all tariffs on soybean products exported to TPP countries, including existing tariffs on soybean oil in Japan, Australia, Malaysia and Vietnam, as well as soybean meal shipped to Vietnam NAFTA Existing agreement sets import tariffs on soy oil and meal products at zero. Canadian negotiators are seeking to maintain the existing tariff arrangement 16

Soy Canada Strategic Plan: 10 Million Acres of Opportunity Plan to double the growth of the soybean sector over the next decade Production targets, natural capital commitments, food-grade soybean production targets, processing and export targets Well on track to reaching production goals and targets 17

Soy Canada Goals & Targets Double production in the next decade 2016 2027 TOTAL SEEDED AREA (ACRES) 5,467,100 10,000,000 Eastern Canada 3,592,100 4,000,000 Western Canada 1,875,000 6,000,000 YIELD (BUSHELS/ACRE) 44.1 48.2 Eastern Canada 46.1 53 Western Canada 40.1 45 TOTAL PRODUCTION (TONNES) 6,462,700 13,000,000 Eastern Canada 4,491,200 5,750,000 Western Canada 1,971,500 7,250,000 Increase world-leading high-quality of food-grade production by 25% 2016 2027 FOOD-GRADE PRODUCTION (TONNES) 1,250,000 1,800,000 SEEDED ACRES 1,000,000 1,250,000 Build on Canadian soybeans contribution to natural capital Canada s soybean sector will work to improve the natural environment that supports our industry Increase competitiveness, exports and processing of commodity soybeans PROTEIN CONTENT Dry matter basis (13% moisture) Be recognized in Canada and around the world as a global leader in sustainable production of high-quality soybeans 2016 2027 Eastern Canada 40.6 (35.3) 41.1 (36) Western Canada 38.7 (33.7) 40.2 (35) Whole Soybean Exports (Tonnes) 4,500,000 10,500,000 Processing Capacity (Tonnes) 1,878,000 2,500,000

Thank You 19