Exploring Food Sovereignty Mark Palmquist Executive Vice President & Chief Operating Officer Ag Business © 2011 CHS Inc

1 © 2011 CHS Inc. Who controls the kingdom? Exploring Food Sovereignty Mark Palmquist Executive Vice President & Chief Operating Officer Ag Business © 2011 CHS Inc. What in the world is the world going to eat? A look at: • The world’s growing and evolving population • Why hungry nations want “food sovereignty” • Impacts on U.S. agribusiness • CHS system strategy Welcome, Baby 7 Billion . The world’s population hit 7 billion on October 31, according to the U.N. population division . Accelerating growth • 1804 – 1 billion (after 250,000 years) • 1927 – 2 billion • 1960 – 3 billion • 1974 – 4 billion • 1987 – 5 billion • 1999 – 6 billion • 2011 – 7 billion • 2050 – projected 9.3 billion

Net grain imports in developing countries

Global grain production

Source: FAO Feeding the world: Global Challenges . Geopolitical risks . Government intervention/distortion . World economy/capital . Food safety

For growing nations, it’s about “Food Sovereignty”

© 2011 CHS Inc. What do we mean by “Food Sovereignty?” • The ability of a nation to dependably access food to meet its citizens’ dietary requirements either by internal production or dependable imports

If you can’t raise it, control the source!

12 © 2011 CHS Inc. The headlines tell the story . Saudi investors put $100 million into Ethiopian farm . UAE stepping up agricultural investment in Sudan . Pakistan offers farmland to foreign investors . Korea’s Daewoo leases Madagascar land for feed, fuel . Short of food? Rent half a country . Asian nation’s invest in Brazilian production

13 © 2011 CHS Inc. Food safety poses challenges . 2009 Hola Pops from Mexico contaminated with lead . 2008 baby milk scandal with melamine from the contaminated protein working into the food chain a year later . 2007 pet food recalls, another result of Chinese protein export contamination resulting from melamine as an adulterant

Old World New World . U.S. agribusiness sources . Global players originating inputs domestically and grain from U.S. producers globally . U.S. players sourcing grain . U.S. originated grain globally moves to the domestic . Crop nutrients imported and global marketplace and exported . Global growth creates tighter crude oil and energy supply/demand . Outside investors invest in commodity businesses Aggressive market rationalization Asian influence in grain China Japan . Chongqing Grains . Marubeni . COFCO . Mitsui . Sino Grain . Itochu South Korean . Mitsubishi . Government . Sumitomo . Zen-Noh

Tokyo, Japan Omaha, NE

Actively investing in U.S. . Gavilon was formed in agriculture 2008 by investment funds: . 35% of the Marubeni Group . Ospraie Special is owned in common stock Opportunities Fund by Financial Institutions . General Atlantic . . Grain: Columbia Grain Soros Fund Management . . Crop Nutrients: Helena Gavilon Management

TEMCO; Tacoma (11.7%) LDC; Seattle(12.2%) (CHS, Cargill)

AGP; Grays Harbor (3.8%) (AGP) EGT; Longview KEC; Kalama (18.3%) (16.9%) (ADM, Gavilon, MSK) (Bunge, Itochu, Pan Ocean) CHS; Kalama (14.1%) UGC; Vancouver CGI; T-5, Portland(7.7%) (8.5%) (Marubeni) (Mitsui ) CLD; Irving, Portland CLD; O-Dock, Portland (4.3%) (2.4%) (Cargill, LDC) (Cargill, LDC) Bunge Port of Longview Facility in PNW . Joint Venture between Bunge, Itochu, and Pan Ocean (EGT, LLC) . State-of-the-art export grain terminal . First export terminal built in the U.S. in more than two decades . Capable of holding four 110-car unit trains at any given time . Shuttle train and barge unloading capabilities on the Columbia River . Can handle 8 million metric tons annually

© 2011 CHS Inc. Regional Market Dynamics . Aggressive pursuit of assets . Overvalue pricing for assets . Intimidation with new sites . Approaching key personnel . Conversion funding for business . Retro-fitting asset base to next generation assets

Proposed Shuttles Announced Rumor

23 © 2011 CHS Inc. The CHS system addresses global food needs CHS system strategy . Domestic investments . Strengthening U.S. origination through strong cooperative system alignment . Building out global grain and crop nutrient origination capability

25 © 2011 CHS Inc. PNW export investments . Additional CHS PNW capacity . Combination cargo loading capability . Alternative rail destination for corn and soybeans . Bulk products capability . Top-tier loading speed CHS U.S. Business Operations CHS System Locations

Each dot represents a CHS location, member company or business affiliation Country Operations Locations

29 29 © 2011 CHS Inc. Stronger cooperative alignment . Traditional buy/sell relationships . Specific formal relationships including JVs and LLCs . Opportunity to become fully part of CHS through Country Operations

30 © 2011 CHS Inc. Growing CHS global origination footprint . Diversify origination • Be a reliable food source for global customers • Market knowledge • Risk diversification • Increase/diversify fertilizer supply • Additional profit opportunities . Expand demand base • Increase market share of our producers’ products • Mitigate risk • Additional profit opportunities for member-owned system

Tacoma Kiev Geneva Kalama Duluth/Superior Krasnodar Barcelona Collins Friona Romania, Amman Myrtle Grove Hungary, Shanghai Mexico Bulgaria, Serbia Hong Kong

Brazil Australia Argentina Main Black Sea ports

Constanta

33 The cooperative advantage As growing nations seek food sovereignty, cooperative relationships are attractive: • Farmer ownership • Dependability • Transparency • Integrity