Presenter name Subject

1. Agrimark trends Agric outlook 2 October 2008 Presenter name Subject

2. Agricultural outlook - Content • General market trends • Field crops • Maize, Wheat, Sunflower, Soya • Fibre • Cotton, Wool, Mohair • Livestock • Poultry, Pork, Beef, Mutton, Dairy Ostrich • Vegetables • Tomato, Potato, Cabbage, Carrots

4. SA Agricultural's Exposure to the International Market 45,000 80% 40,000 70% 35,000 60% 30,000 50% 25,000 (R '000) 40% 20,000 30% 15,000 20% 10,000 10% 5,000 0 0% 1980 1985 1990 1995 2000 2005 Exports Imports Import + Exports as % of GPV Economic market principals with in agriculture • Comments • South African farmers face a 60% plus price exposure to the outside world and are therefore by implication global players in a global market. • They therefore have very little control over pricing levels and tend to be price takers, with prices ranging between import parity and export parity depending on local supply and demand resulting in increased price volatility • Factors influencing prices over which they have no control are international production trends, international farming subsidies, exchange rates, import and export tariffs. • Production risk due to nature also contributes to production volatility which in turn lead to an increase in price volatility • Framers therefore have to manage PRICE and PRODUCTION if they want to make a success of their business

5. New Market environment – Technology is changing the world • Pointers • Demand technology • Taste enhancement / Packaging / Presentation / Time value enhancements • Variety, safety and convenience is taken as a given • Information technology • Connectivity • Here now attitude • Transport technology • World is becoming a smaller place • Delivery just in time • Storage technology • Improved shelf life • No more seasonality • Production technology • GMO’s - Selection / fertilizers etc. • Productivity enhancement

6. Agric Cost curve

7. Economic market principles within agriculture • Cost curve • In the long term agriculture is experiencing a cost curve of approximately 3% per annum (The price of Farming requisites increases faster than producer prices however for 2008/09 season we expect a cost curve of more than 30% • To survive this, farmers need to become more productive (increase output in relation to inputs) this is mainly done by: • Improving production efficiencies (use of technology) • Value adding • Lowering fixed costs (economies of scale) • World agriculture is poised to enter a new growth phase that will be much greater than colonization and industrialization. • During the period of industrialization after the second world war, agricultural production expanded exponentially, compared to the growth in population (due to the development of fertilizer and production machinery). • Production of coarse grains, beef and mutton however peak during mid eighties as these commodities were mainly dependent on the availability of natural resources. Commodities like poultry and pork continued to grow as they were able to utilize surplus coarse grains. • Production has however once again since the mid nineties started to increase due to advances in geo-technology (GMOS etc.) • The net effect of the above is that production volumes will continue to increase thus improving the survival potential of agriculture in general

8. Agricultural economic indicators

9. Economic market principals with in agriculture • World agriculture commodity prices to increase substantial over the medium term. • There are two main driving forces at work that will have a positive impact on agricultural commodity prices namely: • Global Warming • Sentiment around global warming is driving legislature around the world to continuously push for the implementation of so-called carbon friendly legislation. As agriculture is the prime beneficiary this type of legislation (due to the ability of plants to extract carbon from the air) new markets will place upward pressure on agricultural commodity prices. Agriculture could however never produce enough energy to replace all fossil fuels. • Demand for Food and Energy • During the late nineties Capitalism replaced Communism as economic system in the world (signs of the time where the collapse of the Berlin wall in ’98 the repatriation of Hong Kong in to China in ‘99) • This led to an exponential economic growth in Eastern European, Middle East and Asian countries with a resulting increase in the buying power of these consumers, hence the growth in demand for food and energy

10. Grain industry outllok

12. Agricultural outlook - Content • General market trends • Field crops • Maize, Wheat, Sunflower, Soya • Fibre • Cotton, Wool, Mohair • Livestock • Poultry, Pork, Beef, Mutton, Dairy Ostrich • Vegetables • Tomato, Potato, Cabbage, Carrots

13. World maize trends

14. South African maize trends

15. SA Yellow maize price trends

16. SA White maize price trends

17. World sunflower price trends

18. South African sunflower price trends

19. South African sunflower price trends

20. Soyabean world trends

21. SA Soyabean trends

22. World wheat trends

23. SA wheat trends

24. SA Wheat price trends

25. Agricultural outlook - Content • General market trends • Field crops • Maize, Wheat, Sunflower, Soya • Fibre • Cotton, Wool, Mohair • Livestock • Poultry, Pork, Beef, Mutton, Dairy Ostrich • Vegetables • Tomato, Potato, Cabbage, Carrots

26. World fibre production trends

27. World cotton trends

28. SA cotton price trends

30. SA Wool price trends

31. World mohair production trends

32. Mohair price trends

33. Agricultural outlook - Content • General market trends • Field crops • Maize, Wheat, Sunflower, Soya • Fibre • Cotton, Wool, Mohair • Livestock • Poultry, Pork, Beef, Mutton, Dairy Ostrich • Vegetables • Tomato, Potato, Cabbage, Carrots

34. Poultry production trends

35. Poultry Price trends

36. Pork price tends

37. SA Beef Herd Numbers

38. SA Beef prices

39. Mutton Price trends

40. SA Producer milk price trends

43. Domestic Ostrich Live Bird and Skin prices

44. Agricultural outlook - Content • General market trends • Field crops • Maize, Wheat, Sunflower, Soya • Fibre • Cotton, Wool, Mohair • Livestock • Poultry, Pork, Beef, Mutton, Dairy Ostrich • Vegetables • Tomato, Potato, Cabbage, Carrots

45. Cabbage market trends

46. Carrot market trends

47. Onion market trends

49. Summery – every thing is market driven

50. Thank you for the opportunity to share some ideas Contact details E Janovsky Tel (011) 350 6102 Emailernst.janovsky@absa.co.za