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Presented by Bruce A. Scherr Chairman of the Board Chief Executive Officer

American Agriculture’s Economic Landscape: Prospects for the Future and Business Implications. Presented by Bruce A. Scherr Chairman of the Board Chief Executive Officer. National Corn Growers Association Agri-Industry Council Summer Meeting Amelia Island, FL. August 17, 2010.

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Presented by Bruce A. Scherr Chairman of the Board Chief Executive Officer

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  1. American Agriculture’s Economic Landscape: Prospects for the Future and Business Implications Presented by Bruce A. Scherr Chairman of the Board Chief Executive Officer National Corn Growers Association Agri-Industry Council Summer Meeting Amelia Island, FL August 17, 2010

  2. The U.S. Economy “Slow Growth”

  3. U.S. Macroeconomic Outlook 2008 2009 2010 2011 Economy GDP (Ann. % Chg.) 0.0 -2.6 2.9 2.5 Real Disposable Income (% Chg.) 1.7 0.6 1.6 2.9 Consumption (% Chg.) -0.3 -1.2 1.5 2.5 Business Fixed Investment (% Chg.) 0.3 -17.1 5.3 6.5 Net Exports (Bil $) -504 -363 -401 -407 Inventory Investment (Bil $) -37.6 -113.1 59.6 19.0 Industrial Production (% Chg.) -2.2 -9.7 5.4 4.4 Fed Budget Surplus (Bil $) -455 -1413 -1338 -1429

  4. Gross Domestic Product Annual Percent Change 2000-2011 10.0 8.0 6.0 4.0 2.0 Percent 0.0 -2.0 -4.0 -6.0 -8.0 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q4 2011

  5. No Inflation • Anemic Job Growth • Recovery? Erratic Retail Sales

  6. U.S. Macroeconomic Outlook 2008 2009 2010 2011 Inflation GDP Price Defl. (% Chg.) 2.2 0.9 0.9 1.8 CPI-All Urban (% Chg.) 3.8 -0.3 1.7 2.3 Hourly Compensation (% Chg.) 3.1 1.8 1.2 2.5 Employment Unemployment Rate (%) 5.8 9.3 9.6 9.0 Corporate Profits, After Tax (% Chg.) -11.5 -4.9 24.7 16.7 Personal Savings Rate (%) 4.1 5.9 5.9 6.1

  7. Monthly Change in US Non-Farm Payrolls (000) January 2003 - June 2010 600 400 200 0 -200 -400 -600 -800 -1000 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 May-03 May-04 May-05 May-06 May-07 May-08 May-09 May-10

  8. U.S. Unemployment Rate 11 10 9 8 Percent 7 6 5 4 3 Q1 1990 Q3 1990 Q1 1991 Q3 1991 Q1 1992 Q3 1992 Q1 1993 Q3 1993 Q1 1994 Q3 1994 Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q4 2011 Source: BLS, Employment Situation

  9. Banking System • Good Shape • Not Lending

  10. London Interbank Offered Rate (Libor) 1 0 8 7 August 9, 2010 = 0.41 6 5 3 Month Libor 4 3 2 Jul-98 Jul-03 Jul-10 Jul-99 Jul-00 Jul-01 Jul-02 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jan-98 Jan-04 Jan-10 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

  11. TED Spread 3 Month Libor minus 3 Month T-Bill 0 4 3.5 3 August 9, 2010 = 0.27 2.5 2 1.5 1 0.5 Jul-98 Jul-99 Jul-00 Jul-02 Jul-04 Jul-07 Jul-10 Jul-01 Jul-03 Jul-05 Jul-06 Jul-08 Jul-09 Jan-00 Jan-02 Jan-03 Jan-05 Jan-07 Jan-09 Jan-98 Jan-99 Jan-01 Jan-04 Jan-06 Jan-08 Jan-10

  12. Yield Curve Rates as of April 6, 2006; February 15, August 21 and December 10, 2007; August 15, September 15, 2008; May 27 and August 9, 2010 6.00 5.00 4.00 Interest Rate (Percent) 3.00 2.00 1.00 0.00 90-Day T Bill 5-Yr. 10-Yr. 30-Yr. Maturity December 10 April 6 February 15 August 21 May 27 August 15 August 9 September 15

  13. The Fed Low Rates Long Term

  14. U.S. Federal Funds Rate 9.00 8.50 8.00 7.50 7.00 6.50 6.00 5.50 5.00 Percent 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Q1 1990 Q3 1990 Q1 1991 Q3 1991 Q1 1992 Q3 1992 Q1 1993 Q3 1993 Q1 1994 Q3 1994 Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q4 2011 Source: FRB G.13 'Selected Interest Rates' Release

  15. Global Growth Engines

  16. Other Select World Macroeconomic Indicators Indicator Indicator 2008 2009 2010 2011 Real Growth (% Chg.) World World 1.7 -1.9 3.2 3.8 Asia/NIC/Emerging * Asia/NIC/Emerging * 7.1 5.6 9.6 7.4 Latin America Latin America 4.1 -2.2 5.4 4.5 Eurozone Eurozone 0.4 -4.1 1.0 0.9 Country Specific Country Specific United States United States 0.0 -2.6 2.9 2.5 Canada Canada 0.4 -2.5 3.0 3.2 United Kingdom United Kingdom -0.1 -4.9 1.3 1.4 Japan Japan -1.2 -5.3 3.0 2.5 China [Inflation Rate ’10 2.9%] 9.2 8.4 11.1 8.2 India India 7.4 6.8 9.1 8.7 * Note Asia (NIC): Korea, Taiwan, Hong Kong, Singapore; NIC (Newly Industrialized). Emerging: China, India, Indonesia, Malaysia, Thailand.

  17. Food: A Case Study

  18. Trigger Levels of Gross National Income Per Capita forDifferent Types of Foods and the Potential Impact of China’s Emerging Middle Class on Consumption

  19. The Dollar: Still Relatively Weak

  20. $ / Euro 1.80 1.60 1.40 1.20 1.00 0.80 0.60 Q1 1989 Q3 1989 Q1 1990 Q3 1990 Q1 1991 Q3 1991 Q1 1992 Q3 1992 Q1 1993 Q3 1993 Q1 1994 Q3 1994 Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q4 2011

  21. Commodities As An Asset Class

  22. Monthly Reuters - CRB Futures Index January 1970 – July 2010 625 600 575 550 525 500 475 450 425 400 375 Index (1967=100) 350 325 300 275 250 225 200 175 150 125 100 75 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

  23. The Outlook For Crops • Wheat • Corn • Soybeans

  24. Wheat

  25. Corn

  26. A Digression On Corn-Based Ethanol

  27. Soybeans

  28. Evolving U.S. Farm Structure

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