wholesale2005.ppt

Adrie Zwanenberg NUFFIELDGlobal Head F&A Research 20 February 2006

Welcome to the world of Rabobank!

The dynamics of global food and agribusiness

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The world of Rabobank

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Food & agribusiness: a global complex

Farm inputs

Food service

Farm production

Trade and distribution

ProcessingWholesale and trade

Food retail

Non food

Consumers

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Global F&ANumerous changes and challenges

• Food consumption• Agricultural production• Mature markets• Emerging markets• Food retail• Foodservice• Market power• Agricultural policy• New technology• Expansion of the EU• Co-operative issues• Trade flows• Etcetera

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Evolution of food demand

Income Food

Eastern Europe

Western Europe Japan North America

Surviving More staples

Variety Quality High tech

Rice, bread, beans

Meat, dairy, oils, sugar

Diet food, Ready to eat

Africa (Sub-Sahara)

Consumption stage

Latin America India China

Growth markets

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Non-traditional dairy regions drive growth…Market growth expectations (2003 – 2010)

0

2

4

6

8

10

12

14

16

aver

age

annu

al c

hang

e %

China/H

ongKong

Sub Saharan A

frica

S E A

siaNew E

U-10

Mid

dle East

/N A

frica

Latin A

meric

a

Russia

/the U

krain

e

India

/Pakist

anJa

pan/Kore

a

North A

meric

aEU-1

5

Total dairy market growth

India/Pakistan

EU15North America

Latin America

China

Russia/Ukraine

New EU10

Japan/Korea

OceaniaCEEC outside EU

Sub Saharan Africa

Other SE Asia

Total dairy market volume

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…driven by huge potential in per capita demandper capita consumption in milk equivalents

IndiaBrazil China

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Agricultural production growing fasterthan population

95

100

105

110

115

120

125

130

135

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Index (1990=100) Crop production Livestock production Population

Source: Food and Agric u ltu re O rganization of the U nite d Nations, 2005.

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0

20

40

60

80

100

120

140

160

180

200

220

Chin

a

US

India

Japan

Indonesi

a

France

Italy

Turk

ey

Bra

zil

Mexic

o

Spain

Russ

ian F

ed.

Germ

any

Billion USD

1993

2002

2003

Sou rc e : W orld B ank , 2005.

Cost benefits and expanding domestic markets boost farm production

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F&A companies have to adapt their strategies

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Sou rc e : Food and Agric u ltu re O rganization of the U nite d Nations,2005.

5.6%3.4%17.6%3.1%3.3%2.7%5.5%

5.7%8.0%8.2%4.9%

4.4%

3.6%2.4%

2.7%

0

10

20

30

40

50

60

70

1.

U.S

.

2.

Fra

nce

3.

Neth

erl

ands

4.

Germ

any

5.

Belg

ium

6.

Spain

7.

Bra

zil

8.

Italy

9.

Canada

10.

UK

11.

Chin

a

12.

Aust

ralia

13.

Arg

entina

14.

Denm

ark

15.

Thailand

billion USD 1993 2003

On top the CAGR 1993-2003

Latin America gains ground in F&A exports

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Sou rc e : Food and Agric u ltu re O rganization of the U nite d Nations,2005.

6.4%

2.5%

1.5%5.3%

3.3%

2.8%4.6%

10.6%3.8%

5.8%5.9%

7.6% -0.7% 3.8%0%

0

10

20

30

40

50

60

1.

U.S

.

2.

Germ

any

3.

Japan

4.

UK

5.

Fra

nce

6.

Italy

7.

Neth

erl

ands

8.

Chin

a

9.

Belg

ium

10.

Spain

11.

Canada

12.

Mexic

o

13.

Russ

ia

14.

S.

Kore

a

15.

Hong K

ong

billion USD 1993 2003

On top the CAGR 1993-2003

Boost to U.S. food & agri imports

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Sou rc e : Food and Agric u ltu re O rganization of the U nite d Nations,2005.

Emerging countries show increasing F&A trade surplus

Top 10 countries with largest trade surplus, with on top export and import (in 2003)

Ex 20.9 Im 3.6

Ex 41.9Im 25.1

Ex 13.9Im 0.7

Ex 42.1Im 30.7

Ex 15.0Im 3.9

Ex 62.3Im 53.5

Ex 10.4Im 3.5 Ex 7.9

Im 1.5 Ex 11.4Im 6.1

Ex 9.6Im 4.3

0

4

8

12

16

20

24

1. Bra

zil

2. N

ether

lands

3. Arg

entina

4. Fr

ance

5. Aust

ralia

6. U

S

7. Th

aila

nd

8. N

ewZea

land

9. D

enm

ark

10. M

alay

sia

billion USD

1993 2003

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Agricultural policy: towards more liberalised trade

• Production quotas• Border measures• Europe• U.S.• Japan• Single Farm Payment System• Farm Bill• WTO • Market access• Export support• Domestic support• Hong Kong• China• Russia• India• Brazil

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EU enlargement: New Members have immediate use of CAP market & price policy and a gradual phasing in of income support

• Ten New Member States entered the EU in May 2004

• Rumania and Bulgaria will join the EU in 2007

• Turkey and Croatia have applied for EU membership

EU-15

New Member States

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Black Sea RegionRussia, Ukraine, Kazakhstan, Rumania, Bulgaria

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The Black Sea Region is becoming a dominant force in the world wheat market

-15

-10

-5

0

5

10

15

20

25

30

35

M.

ton

nes

1975/1976 1978/1979 1981/1982 1984/1985 1987/1988 1990/1991 1993/1994 1996/1997 1999/2000 2002/2003 2005/2006

Year

Wheat* trade balance Black Sea Region

Source: USDA, 2005

* Crops: wheat and barley

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OutlookEmergence of markets in Latin America, Asia, Eastern Europe…also for research, production, processing and trade

Emerging countries will benefit most from trade liberalisation…but natural constraints are crucial

Companies have to focus on what they really excel in…be flexible and cooperate with others when needed

New forms of cooperation, further internationalisation,and growth of industry in emerging markets offernew opportunities for financing global food and agri!