European Investor Engagement in Agribusiness in Sub-Saharan Africa

1. Why does an European Investor engages in Agribusiness in Sub Saharan Africa? Pedro Marques dos Santos Principal at Quifel Natural Resources Geneva, November 2010

2. What is Quifel?Lisbon based Holding for Multiple Businesses in Multiple Geographies Editions/Books IT Real Estate Financial Services Wines Energy Agribusiness

3. Why is Quifel interested in Agribusiness? Strategically Interesting Financially Reasonable What do experts say? What can Investors do about it? Why Include Agribusiness in a portfolio? “The best sector in the world that I know right now is probably agriculture. Everybody should become a farmer. Farming is going to be one of the greatest industries of our time for the next 20 to 30 years. I’m convinced that farmland is going to be one of the best investments of our time” Jim Rogers, 2009 (Jim Rogers cofounded the Quantum Fund with George Soros which gained more than 4,000% in 10 years, while the S&P rose less than 50%.) • Agribusiness represents a dynamic investment opportunity and is fast becoming an established asset class. • Agribusiness investments have the potential to produce an income or growth on your original amount invested and has historically had little, or no correlation to traditional investments such as the stockmarket. i.e. investment returns don’t follow the stockmarket up and down “Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050. With limited land and water resources, this will automatically lead to increased valuations of productive land.” Joachim von Braun, Director General at the International Food Policy Research Institute, 2009 What are the benefits? • Diversification – Negative correlation with the stockmarket is a good way of ensuring the value of your portfolio doesn’t go through the floor • Alternative asset classes – Agribusiness schemes can be a good alternative to investing in traditional assets such as direct shares or stock market based managed funds. • Tax benefits – Some countries encourage investment into Agribusiness, by introducing a series of tax incentives “Is the current food crisis just another market vagary? Evidence suggests not; we are undergoing a transition to a new equilibrium, reflecting a new economic, climatic, demographic and ecological reality.” Japanese Prime Minister, Taro Aso, 2009

4. So how does Quifel look at the Fundamentals?

5. 2 major long term trends have determined Quifel’soverall business development and investment strategy in Agribusiness Context Need for higher productivity Marginal improvements expected (after decades of fast growth due to biotech enhancements and farming techniques)… Demand Side Food Trends • Increasing population (increasing demand) • Globalization of consumption patterns (convergence) • Increasingly globalization of the supply chain Supply Side Land Trends • Asian land scarcity • Brazilian current availability will decrease through time (and with increasing prices) • Sub Saharan Africa’s available and less expensive land Need for more land … Will lead to a greater emphasis on land expansion Land development as a no regret approach Source: The Economist, August 28th 2010

6. Although Agricultural production is concentrated in the North, it is in the South that growth prevails Oil seed and cereal crop production in the World (Million tonnes) in 2009 48% 2,7% 18% 2,3% 1.288 19% 1,9% 85% of total agricultural production 488 495 Europe Northern America Asia 7% 4,1% 7% 2,2% 1% 0,1% 172 189 38 Africa Oceania Latin America Share of world production CAGR (2000-2009) Source: FAO Statistics

7. In the Future, Africa should become increasingly relevant since it represents nearly 42% of available land in the world Cropped area Vs available land for agriculture (Million Hectares) in 2008 Asia Northern America Europe Africa Latin America Oceania Expected Agricultural Flow Cropped area • Latin America and Africa represent 75% of available land in the world • Africa alone stand for 42% Available land Source: FAO and USDA statistics

8. Different regions, different challenges • Northern America • Europe • Asia • Latin America • Eastern Europe • Sub Saharan Africa Optimization Conversion of land use (to agriculture; frontier lands) Land expansion (revamp of past large plantations) Land Availability

9. So what to expect from Agribusiness in SSA ?

10. Investment flows in Sub Saharan Africa will strengthen contributing to another Agribusiness Revolution (and with increasing liquidity) Investment Flow in Agriculture Projects Rapidly increasing investment mainly from operators Steady investment flows mainly by institutional investors Tens of Million USD per year Hundreds of Million USD per year Current Investment Flow Emerging Investment Flow

11. The gap between SSA’s increase in harvested area and production is a clear indicator of the potential underlying the growth of commercial farming SSA Harvested Hectares (Cereals + Oilseeds) CAGR1,6% 199.323.693 92.734.318 364,4 USD Sub-Saharan Africa percentage in Total World harvested area (1961) Sub-Saharan Africa percentage in Total World harvested area (2009) 1961 2008 SSA Production in Tons (Cereals + Oilseeds) CAGR 2,5% 206.996.596 61.943.983 364,4 USD Sub-Saharan Africa percentage in Total World production (1961) Sub-Saharan Africa percentage in Total World production (2009) 1961 2008 Source: FAO

12. ç Examples of Agribusiness Companies already operating in large scale projects in SSA • Sesame Seed • One of the biggest agribusiness producer in the world • Sugar Cane • 10.000 ha • Palm Oil • 40.000 ha • Sugar Cane • Africa’s biggest producer • Pineapple • Exports 2.000 tons/year • Maize • Mills ~70.000 tons per year • Sugar Cane • 100.000 Ha • Sunflower seed • 30.000 ha Source: Press Clippings and Publicly available information

13. Nevertheless, long term land concessions in SSA must address very relevant issues Context • The growing demand for vegetable oils • Excluding Brazil, Sub-Saharan Africa represents the “last frontier" for large scale agricultural projects • Large available areas • Access to land at a low cost • Aggressive policies to attract FDI • Need to have a strong realism about the operational difficulties Africa (and the global management capacity to address them) Strategy for obtaining land concessions (2007-2012) 1 • Establishment of a portfolio of land previously explored • Proven • Scale and Utility 2 • Based in: • Geographical diversification • Diversification of crop systems • Risk • Mitigation 3 • Infrastructural development and crop testing • Operational • Confidence

14. So how does Quifel approach Agribusiness in SSA?

15. Congo Tanzania Angola Malawi ç Mo In 2007, QNR started its Agribusiness initiatives towards the creation of a multi geography operation • The deployment of Agribusiness in 3 regional centers in Africa will: • Diversification of crop systems • Maximize yields at farm level, through economies of experience and R&D regional centers • Create conditions for the know-how transfer and the possibly of innovative biotechnology projects Ivory Coast Sierra Leone Ghana Liberia Equatorial Guinea Current Concessions: 20.000 ha for Staple Foods, Fruits and Sugar Cane Concessions under legal process: 15.000 ha for Palm Gabon Current Concessions: 10.000 ha for Soy, Sesame and Sunflower Concessions under legal process: 30.000 ha Current Concessions: 28.000 ha for Soy, Sesame and Sunflower Concessions under legal process: 20.000 ha

16. These initiatives were conducted following on a two step approach Business Model for Agribusiness Today Today Angola and Sierra Leone Mozambique • Strategic definition (Which Grains? Where? How?) • Land scouting and selection • Soil testing and climate evaluation • Technical feasibility studies • Operational deployment study • Management Team selection • Seeds, fertilizers, agrochemicals and machinery selection and testing • Machinery acquisition • Agricultural infrastructure development (example: grain containers) • Soil preparation and plantation • Harvests • Seed enhancement • Increasing acreage development

17. SSA Project Deployment in Mozambique

18. SSA Pre-Deployment in Sierra Leone