Bio Energy

1. Bio Energy What is going on out there with renewables ?

2. Bill Beukema • General Manager of • SoyMor is a 30 million Gallon per year Bio Diesel Plant in Albert Lea MN • SoyMor has been in operation since August 2005 • SoyMor currently uses Soybean oil as its feed stock • SoyMor was built and is currently managed by REG

3. Outline of Presentation • What is Ethanol and Biodiesel • Overview of current Renewables market • Investment opportunities for rural America • Current impact on production agriculture • Future of renewables

4. What is Ethanol • Ethanol is a molecule • Ethanol base raw material is • Shelled corn • Sugarcane • Cellulose • Ethanol by-products include • DDG • Co2 • Ethanols conversion is • 1 bushel of corn = 2.8 gallons of ethanol • 1 bushel of corn = 18 lbs of DDG • 1 bushel of corn = 18 lbs of Co2 • Ethanol energy conversion is +1.35 • Petroluem energy conversion is + .88

5. What is Biodiesel • Biodiesel is a compound • Biodiesel base raw material is • Oil seed ( SBO ) • Animal Fat • Waste Grease • Biodiesel by-products include • Glycerin • FFA • Biodiesel conversion is • 1 bushel of SB = 1.5 gallons of Biodiesel • 1 bushel of SB = 1.1 lbs of Glycerin • Biodiesel energy conversion is + 3.24 • Petroluem energy conversion is + .88

6. Overview of current Renewable Market • ETHANOL • 2005 DATA OVER 105 PLANTS TOTAL PRODUCTION OF 4.3 BILLION GALLONS 153,725 JOBS CREATED FROM DIRECT ETHANOL PRODUCTION ? PLANTS CURRENTLY UNDER CONSTRUCTION OVER 1.1 BILLION GALLONS TO BE ADDED 1.5 BILLION BUSHELS USED FOR ETHANOL 2005

7. Overview of current Renewable Market • ETHANOL • 2006-2007 Estimates 3.5 BILLION BUSHELS PROJECTED FOR FOOD AND IND USE 06-07 6.1 BILLION FOR FEED USAGE FOR 06-07 2.1 BILLION FOR EXPORT USAGE FOR 06-07 OVER ? BILLION GALLONS AT THE END OF 2007

8. Overview of current Renewable Market • Biodiesel • 2005 Data • 75 million gallons sold • 1 company marketed over half of all the product sold ( REG) • For all practical purposes biodiesel acted like a niche product

9. Overview of current Renewable Market • Biodiesel • 2006 Data • Over 120 million gallons of capacity added to the market place. • Biodiesel became widely accepted • Terminal storage • Pipeline movement (Grow Mark)

10. Investment Opportunities for rural America • Both Ethanol and Biodiesel are experiencing tremendous Return on Equity • To a producer Ethanol and Biodiesel are Hedge type investments • Factors driving ROE • U.S. interests in becoming GREEN • Favorable tax treatment • $78 dollar crude oil • $ 3.00 gasoline and diesel pricing • $2.00 corn $.255 sbo

11. Current Impact on Production Agriculture • Hedge fund activity • Supply and Demand • Basis • Supply agreements • Acreage Shifts • Increased sensitivity of the commodity value • Shift from fair market value to margin management • To date all of these have been Positive results ( past success does not guarantee future results )

12. The Future of Renewables • Long term 4 to 7 years • New technology will decrease the cost of production • Corn and Soybean acres will find a balance based on demand • Pricing points for retail will trade a at premium higher than the base commodity, but lower than the today's margin premium • Entities that respect Quality, understand commodity trading and invest appropriate amounts in R & D will own those who do not

13. The Future of Renewables • Short term 1 to 3 years • Commodity volitity will increase • Acre shifts will be more frequent • Global energy equation will continue to be difficult to manage • Industry will struggle the speed of maturity