Alliance Grain Traders “From Producer to the World”

Australian Grain Industry Conference 2008

July 2008July 2008

Alliance Grain Traders OverviewCompany Overview• Saskatchewan based leader in pulse processing and distribution with value

Alliance Grain Traders Overview

Share Performance Last 12 Months

• Saskatchewan based leader in pulse processing and distribution, with value-added plants in Canada, U.S. and Australia and a global customer base

Share Performance- Last 12 Months

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$18.00

$20.00

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• Listing – AGT UN (TSX-Venture)

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Listing – AGT.UN (TSX-Venture)

Headquarters – Regina, Saskatchewan

USA Bismarck and Williston North Dakota

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Australia – Horsham and Adelaide

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A Global Leader in PulsesA Global Leader in Pulses

• Saskcan Pulse Founded in 2001• Saskcan Pulse Founded in 2001

• January 2003, shipped first load of red split lentils

• July 2003: acquired Saskcan RosetownJuly 2003: acquired Saskcan Rosetown

• August 2006: acquired Saskcan Horizon

• August 2007: TSX-V deal to form Allianceg• 225 full-time staff

• Exports to 85 countries

F t f $375 illi i 2008• Forecast revenue of $375 million in 2008

• Largest lentil exporter in the world

• Continued focus on expansion globally

• July 2008: new public offering finalized for $15 million

Alliance Grain Traders FacilitiesAlliance Grain Traders - Facilities

“Value-added” facilities in diversified regions

• Largest value-added splitter of pulses in the world• Global production capacity of over 5500K metric tonnes in p p y

Canada, U.S. and Australia: eight production plants

• Proprietary technology and process lead to superior margins & efficienciesmargins & efficiencies

Saskcan Pulse Trading - Main Plant – Regina SK Australia Milling Group – Horsham, Australiag g g p ,

Alliance Grain Traders FacilitiesAlliance Grain Traders - Facilities

Value-added facilities in diversified regions• 6 Saskatchewan production

facilities (Regina, Rosetown (2), Mil Ab d )Milestone, Aberdeen)

• 13 production lines for cleaning, sizing, splitting, colour sorting &

kpackaging

• 500,000 metric tonnes capacity

• North Dakota splitting facility

Saskcan Pulse Trading Rosetown, SK

p g y• 100,000 metric tonnes capacity

• Australia splitting facility with l d d f 2008planned upgrades for 2008• 75,000 metric tonnes capacity

Saskcan Horizon Aberdeen, SK

Rural RenaissanceRural Renaissance

“a future in which agriculture provides societal solutions tosocietal solutions to energy supplies, health promotion and climate h ”change.”

“whatever producers andwhatever producers and processors do, they must be done in innovative ways thatinnovative ways that resonate with their customers.”

What Is a Pulse?What Is a Pulse?Derived from latin “puls, pultis” meaning thick soup

• Seeds of legumes• Pea, bean, lentil, chickpea and faba bean crops

• High quality protein source

• Important nutrition for developing countries

• Additional benefits of pulse crops• Valuable component of crop rotation

• Help reduce nitrogen costs• Help reduce nitrogen costs

Pulse Crop IndustryPulse Crop Industry

• Factors affecting resurgence of acres:

•Competitive crop pricesp p p

•Marketing factors: demand, price and world supplypp y

•Costs of inputs - Fertilizer

•RotationRotation

•Cashflow control

Pulse Crop IndustryPulse Crop IndustryThe Four Fs

FOOD High protein, low glycemic ingredient

FUEL

glycemic ingredient

Biodiesel and ethanol

FIBRE

alternative energy

Nutritional andFIBRE Nutritional and industrial use

S f f d f li t kFEED Safe feed for livestock industry

Global Pulse MarketGlobal Pulse MarketIncreasing Global Demand Gap for Pulses • 90% of global pulse consumption comes from developing countries

•Demand expected to continue at ~6% year due to steady population growth

• Low per-acre yields in developing nations creating opportunities for o pe ac e y e ds de e op g at o s c eat g oppo tu t es odeveloped nations•Advanced farming practices and significant research in new crop varieties

allow Canada to become a major player in global trade of pulses

Global Peas MarketConsumption Production

Global Lentils MarketConsumption Production

• Global pulse trade averages ~7.4M tonnes annually•Canada accounted for 38% of world pulse exports in 2006/2007

Syria5%

India28%Other

22%

Canada27%

Other33%

India37%

Other38%

Consumption Production Consumption Production

Other38%

India21%

Turkey 18%

5%

U.S.A7%

Canada20%

China11%

India8%

France 10%

Russia11%

Spain8%

Pakistan2%

Bangladesh5%

China10%

UAE13%

Pakistan10%

Bangladesh7%

Algeria11%

5%

Who Will Supply the World?Who Will Supply the World?

Comprehensive R&D program Must maintain position as• Comprehensive R&D program. Must maintain position as the low cost producer so research needed to improve yields. Chart below illustrates that Developed country i ld i d l i iyields outpacing developing countries

2,000

2,500

/ Hec

tare

.

1,000

1,500

Tonn

es /

0

500

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Developed Countries Developing Countries

More Land NeededMore Land Needed

The world needs another 84 million acres under continuous crop byacres under continuous crop by the year 2016 to meet biofuel

dneeds.

Pulses and other crops can’t keep pace with demand unless yieldspace with demand unless yields

rise.www.statpub.com

World Acreage OutlookWorld Acreage Outlook(million hectares)

www.statpub.com

Australian Pulse Production by State

1200

y

800

1000

1200

600

800

('000

ha)

200

400 (

0WA Vic SA NSW Qld

Lupins Field Peas ChickpeasLupins Field Peas Chickpeas

Faba Beans Lentils

Australian Pulse Production (1993-2005)( )

3000

2500

0t)

2000

on ('

000

1000

1500

oduc

tio Lupins $150/t

Lentils $420/t

$

500

Pro Faba beans $260/t

Chickpeas $350/t

Field peas $220/t

01993 1995 1997 1999 2001 2003 2005

Field peas $220/t

Red LentilsRed Lentils

www.statpub.com

Australian Desi ChickpeasAustralian Desi Chickpeas

www.statpub.com

Australian Dunn PeasAustralian Dunn Peas

www.statpub.com

World Pulse MarketsWorld Pulse Markets –– IndianIndian--World Pulse Markets World Pulse Markets IndianIndianSubSub

•• Bangladesh, Sri Lanka, India, PakistanBangladesh, Sri Lanka, India, Pakistan•• Pulses are food staple and main source ofPulses are food staple and main source of•• Pulses are food staple and main source of Pulses are food staple and main source of

proteinprotein

20

World Pulse MarketsWorld Pulse Markets –– MiddleMiddleWorld Pulse Markets World Pulse Markets Middle Middle EastEast

•• Egypt is third largest importer in the Egypt is third largest importer in the worldworldI S di A bi D b i/UAE II S di A bi D b i/UAE I•• Iran, Saudi Arabia, Dubai/UAE, Iraq, Iran, Saudi Arabia, Dubai/UAE, Iraq, TurkeyTurkeyHigh pulse consumption Main staple ofHigh pulse consumption Main staple of

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•• High pulse consumption. Main staple of High pulse consumption. Main staple of dietdiet

W ld P l M k tW ld P l M k t EEWorld Pulse Markets World Pulse Markets -- EuropeEurope

•• Spain, France, Greece, Italy, Germany, U.K.Spain, France, Greece, Italy, Germany, U.K.•• Regular consumers in Czech BulgariaRegular consumers in Czech Bulgaria•• Regular consumers in Czech, Bulgaria, Regular consumers in Czech, Bulgaria,

RomaniaRomaniaHigh ethnic populations as wellHigh ethnic populations as well

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•• High ethnic populations as well High ethnic populations as well

W ld P l M k tW ld P l M k t Af iAf iWorld Pulse Markets World Pulse Markets -- AfricaAfrica

N th Af iN th Af i Al i MAl i M•• North Africa North Africa –– Algeria, Morocco, Algeria, Morocco, Egypt Egypt Central AfricaCentral Africa Sudan EthiopiaSudan Ethiopia•• Central Africa Central Africa –– Sudan, EthiopiaSudan, Ethiopia

•• Large recipient of pulses as food Large recipient of pulses as food aidaid

23

aidaid

World Pulse MarketsWorld Pulse Markets –– SouthSouthWorld Pulse Markets World Pulse Markets South South AmericaAmerica

•• Mexico, Latin AmericaMexico, Latin Americal b ll bl b ll b•• Colombia, Mexico, Peru are all big Colombia, Mexico, Peru are all big

consumers of green lentils and peas consumers of green lentils and peas •• Brazil: Canary SeedsBrazil: Canary Seeds

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World Pulse MarketsWorld Pulse Markets –– ChinaChinaWorld Pulse Markets World Pulse Markets China China and Asiaand Asia

•• Not traditional consumer of pulses but Not traditional consumer of pulses but emergingemergingg gg g

•• Pea starch used in vermicelli noodle Pea starch used in vermicelli noodle productionproduction

25

p oduct op oduct o

World Pulse MarketsWorld Pulse Markets –– NorthNorthWorld Pulse Markets World Pulse Markets North North AmericaAmerica

•• Limited domestic consumption but Limited domestic consumption but growing with ethnic populationsgrowing with ethnic populationsg g p pg g p p

•• Highest consumptions correspond with Highest consumptions correspond with ethnic populationsethnic populationsethnic populationsethnic populations–– NY, NJ, CA, IL, MI in the U.S.NY, NJ, CA, IL, MI in the U.S.–– Toronto, Montreal, Vancouver in CanadaToronto, Montreal, Vancouver in Canada

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Toronto, Montreal, Vancouver in CanadaToronto, Montreal, Vancouver in Canada•• Food Uses???Food Uses???

F t Di tiFuture Direction

Future pulse production in Australia will be dependent on many factors

1) i t i d ti it1) improvements in productivity• cultivars, management options

2) changes in management and production costs2) changes in management and production costs• role in whole farm management, and input costs

3) changes in the environmentli h li i i h i• climate change, salinisation, pathogen, exotic

incursions

4) world prices and the relative price of pulses compared to4) world prices and the relative price of pulses compared to other crop options

• world production and demand

G l Ob tiGeneral Observations

Decision needs to be made: Is Australia a commodity producer in pulses or a food producer?

– Farmer Dressed vs. Value Added

– Development of an on-farm storage and handling system

– Freight advantage of Australia needs to be exploited

– Origin based value ad creates economic growth

Development of a broad range of food markets globally– Development of a broad range of food markets globally including canning, packing, split and food and ingredients

– Creation of an Australian “Brand” known for quality and li bilitreliability

Food Industry TrendsFood Industry Trends

• Processed food globally –$3.2 trillion(3/4 of total world food sales)

• US, EU and Japan = over 60% of retail processed food sales.

• Growth highest in developing countries like China and E. Europe

Market OpportunitiesMarket Opportunities

• Global sales of health and wellness products exceed US$420 e ess p oducts e ceed US$ 0billion.

• Emerging markets such as Brazil, Russia, India, China and MexicoRussia, India, China and Mexico show large growth in the health and wellness categoryand wellness category.

Pulse Product Releases By Country (top 10)

• 19,063 pulse products releasedproducts released since 2002

• 3.67% of all %food launches

Pulse Product Releases by Company (worldwide)

From Selling Commodities to Marketing Health & Wellness Marketing Health & Wellness

Expanding pulse markets and adding valueand adding value

Future Directions

• Traditional commodity markets will be a key

Future Directions

Traditional commodity markets will be a key destination for Global pulses for the foreseeable futurefuture

• However, we can diversify our market base and add value

• Increased focus on nutrition health and• Increased focus on nutrition, health and processing technologies

•Foods that “kids want to eat and Mom’s want to buy.”buy.

Future Directions

Focus on the food sector – Encourage use of pulses as

Future Directions

Focus on the food sector Encourage use of pulses as ingredients by food processors, food service

L g t iti & h lth i t tt ib t ( l Leverage nutrition & health, environment attributes (pulses meet consumer demands for nutritious foods, sustainability)

Target affluent markets (e.g. N. America, Europe) where consumption is low; food processing sector is sophisticated

Foster Research:Improve our knowledge of nutrition & health potential of pulsesImprove our knowledge of nutrition & health potential of pulses

Provide solutions to food processors, food service, to enable incorporation of pulses

Market Pull Nutrition & HealthMarket Pull – Nutrition & Health

P l A ibPrebiotics and Gut Health

Market Demands

Pulse Attributes•High Fibre•High Protein (Alternative to soy or wheat)High Starch (High Resistant Starch)

High Fibre, Low Fat

Diabetes•High Starch (High Resistant Starch)•Non-digestible Carbohydrates•Low Fat•Low Glycemic Index

Obesity

Weight loss•Satiating

Healthy Snack Foods

Weight loss

Low Allergenicity

Gluten Free

Pulse ingredients in food productsPulse ingredients in food products

Whole Bean Ready to EatFood Product

Increased C ti

FoodIngredient Food Product ConsumptionIngredient

Research/Market DevelopmentResearch/Market Development

Id tif d h t i f ti lIdentify and characterize functional components in pulses to fully unravel the goodness of pulsesgoodness of pulses

Understand the effects of processing

Consider nutrient enrichment to bolster current processed pulses products

Develop evidence-based health messages

Support break through researchSupport break-through research

OBJECTIVES:• More products with pulses on grocery store shelves

I d ti f l f d d t• Increased consumption of pulse food products

P l C d P l I ti P j tPulse Canada Pulse Innovation Project

Environmental “Pulls”

Peers

Food With a Message

“Climate Neutral from cow to cone”Climate Neutral from cow to coneRaises awareness of climate changePromotes Climate Change Collegethat Ben & Jerry helped establish

Sun Chips “Small Steps Sweepstakes”Sun Chips plant in Modesto CA uses aSun Chips plant in Modesto, CA, uses a

field of solar concentrators for heat Frito Lay purchases renewable energy credits toFrito Lay purchases renewable energy credits to offset 100% of electricity used in its U.S. facilities

Closing MessagesClosing Messages

• Global Demand for Safe Food

Renewable Energy: Biofuels and Politics• Renewable Energy: Biofuels and Politics

• Access to new markets. Build existing ones.

• Access to adequate capital• Access to adequate capital

• Transportation

• Demand for QualityDemand for Quality

• Development for Food and Ingredients

Thanks to all of Sources for this PresentationThanks to all of Sources for this PresentationPulse Canada and The Pulse Innovation ProjectCanadian Special Crops Association (CSCA)Pulse Breeding AustraliaStat Publishing: www.statpub.com

TSXV: AGT.unwww alliancegraintraders comwww.alliancegraintraders.comir@alliancegraintraders.com