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DR. MATTHEW PHILLIPS

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  1. DR. MATTHEW PHILLIPS Partner Phillips McDougall

  2. GLOBAL AGROCHEMICAL & SEED MARKETS – INDUSTRY PROSPECTS Dr. Matthew Phillips The New Agricultural Forces

  3. The Global Agrochemical and Seed Markets Industry Prospects Presentation at CropLife Canada Annual Meeting 3rd December 2008 Phillips McDougall Vineyard Business Centre Saughland Pathhead Midlothian EH37 5XP Tel : 01875 320611 phillipsmcdougall@dial.pipex.com 1

  4. Market Performance 2007 (Distributor level – average exchange rates - Nominal US$) Year Crop Non - Crop GM Conventional Protection Agrochemicals Seed Seed ($m) ($m) ($m) ($m) 1998 28995 1653 14324 1999 28090 2172 2000 27830 2434 13799 2001 25760 2839 13365 2002 25150 4270 3314 12890 2003 26710 4445 3940 1329 0 2004 30725 4675 4700 14300 2005 31190 4905 5296 14456 2006 30425 5150 6050 14290 2007 33390 5365 7275 14435 +20.2 +1.0 200 7 /200 6 % +9.7 +4.2 Seed = $21,710 +6.7% Agrochemicals = $38,755 +8.9% 2

  5. Market Development Since 1994 3

  6. Regional Crop Protection Market Development 4

  7. Agrochemical Market Development by Sector 5

  8. Crop Protection Market Real Growth 1990-2007 US glyphosate price fall Improved Crop Prices Europe, 5% set-aside LAM Recovery / Asian Rust Excellent Ag year in the USA GM Crop Expansion Weaker Commodity Prices Adverse weather Energy Prices Brazilian economy El Nino Freedom to Farm GATT 6.0 4.7 4.3 3.7 4.0 2.8 EU ‘CAP’ Reform 2.2 2.1 2.0 -0.5 -0.5 0.0 0.1 -1.0 -2.0 Strong Commodity Prices Improved weather Biofuels GM Crop Expansion Recovery in Brazil -1.6 -1.6 -2.5 -4.0 -3.0 GM Crops Weak Crop Commodity Prices Reduced Support LAM / Asian Economies Weak -5.0 -6.0 -5.7 Drought in North Europe -6.5 -6.8 -8.0 1996 1997 1998 1999 2000 2001 2002 2003 2007 1993 1994 1995 2004 2006 1992 1991 2005 1990 6

  9. US Soybean Export Price $/Ton Real Growth % 7 350 6 300 5 250 4 200 3 150 2 100 1 50 0 0 -1 -50 -2 -100 -3 -150 -4 -200 -5 -250 -6 -300 -7 -350 1994 1996 1997 1998 2000 2002 2006 1992 1993 1995 1999 2001 2003 2005 1990 1991 2004 2007 Crop Protection Market Real Growth v Commodity Price 7

  10. USDA Global Production/Inventory Expectations (Tonnes million) 8

  11. 2007 9

  12. Company Agrochemical Sales 10

  13. 2008 11

  14. Brazil Argentina South Africa USA EU - 15 EU - 27 Wheat 3.5 0.2 n.a. 5.6 6.0 7.4 Maize 3.9 12.1 9.2 - 8.1 3.6 5.3 Soybean 2.6 2.8 - 9.8 17.5 - 13.0 - 9.4 Sunflower 16.5 11.7 52.5 4.4 14.4 14.9 Oilseed Rape n.a. n.a. n.a. - 14.4 - 5.1 - 0.5 Cotton - 0.5 18.0 n.a. - 13.3 n.a. n.a. 2007/8 Planting 2008 – Change in Area (%) 12

  15. Company Half Year Agrochemical Sales 13

  16. Company Agrochemical H1 Sales v Final Market Growth ($m) +28.9% Dollar growth of 28.9% is equivalent to 11.9% in Euro terms 14

  17. Growth Markets Growth Markets Static to Slow Growth Static to Slow Growth Static to Decline Static to Decline Crop Protection Market 2008 NAFTA Increase in soybean area Increase in wheat and sunflower areas Reduced cotton and maize area Increase in GM area and number of GM traits Glyphosate price improvement Strengthening Farm Economy US Dollar remains weak Energy and fertiliser costs Registration review US Farm Act GLOBAL Increased crop prices Higher fuel and fertiliser costs Rising glyphosate prices Higher prices of Chinese agrochemicals Doha Round of WTO Increased fuel and fertiliser prices Europe Zero set aside Increase in cereal and rapeseed acreages Reduction in sugarbeet area Mild wet winter and spring in North Adoption of Single Farm Payment Shift in Market to new EU member states Re-registration Improving ag economies in Ukraine and Russia Asia Reduction in rice area in Japan Increase GM uptake in China and India Improved weather situation in Australia Increased investment in grains in China Biodiesel drives palm oil demand Latin America Increased GM uptake in Region Higher maize areas in Argentina and Brazil Higher soybean areas in Argentina and Brazil Growth in Developing countries Increase in use of sugarcane for bioethanol Energy and fertiliser costs Higher agrochemical prices in Brazil Africa / Middle East Continued economic and Political problems Infrastructure requirements Development of specialty crop markets for export Cotton prices improving Developing public health market Increase in maize and sunflower in South Africa 15

  18. ð Opportunities Ø High grain prices § Increased off take for biofuels § Depressed European harvests § Drought in Australia § Rice consumption growth exceeding production increase Ø Brazil : high commodity prices offsetting strength of the Real Ø Increase in Chinese Agrochemical Prices Latin America 2007/8 crop areas increased Ø Ø Suspension of set - aside in the EU Ø Potential for improved weather in Australia and Europe Ø Improved in soybean area in the USA Ø Biofuel Demand ð Threats Ø Strength of Real threatens Brazilian recovery Ø Further increase i n GM area § Maize in the USA § Cotton in India and China § Soybeans in Brazil, cotton and maize in the longer term § Recent Trait expansion · Herculex XTRA · B ollgard II / Widestrike · Roundup R ead y II / Flex · Stacked varieties Ø US farm Act 2008 Ø Sugarbeet reforms, change in vine / wine support Ø Expansion of EU / ‘ Single F arm Payment ’ adoption Ø Energy and Fertiliser Prices Key Factors 2008 16

  19. Agrochemical Market Outlook – Longer Term Factors Crop Commodity Prices / Farm Income q Support for Agriculture q † Doha Round † New US Farm Act † EU ‘Single Farm Payment’ † End of EU sugar support mechanism † Expansion of EU GM Crop and Seed q † New Input Traits – Corn Rootworm, Bollgard 2, RR Flex Cotton † Geographic Expansion – Brazil and Asia † Output Traits Energy Costs q † Crops for Ethanol and Biodiesel production † Fuel and Fertiliser costs Agrochemical Prices - China q Re - Registration q Intellectual Property in WTO signatories q Increase in land use for Biofuel crops q Resistance and regulatory issues create opportunities for new products q Seed Treatments q 17

  20. Chinese Agrochemical Prices 18

  21. Chinese Agrochemical Production 19

  22. Bio Fuels 20

  23. Bio Fuel Production The US Energy Independence and Security Act of 2007 calls for an increase in biofuel production, from 9.2 billion gallons in 2012 to 36 billion gallons in 2022. 15 billion gallons from maize rest from biomass / cellulosic 21

  24. Theoretical Biofuel Yield per Hectare of Crop Harvested 22

  25. Usage of US Maize for Ethanol Production Source : US National Corn Growers Association / Renewable Fuels Association 23

  26. EU Biodiesel Production and OSR Area Source : European Biodiesel Board / COCERAL 24

  27. GM Crops and Seed 25

  28. Proportion of Crops Planted with GM Varieties 2007 Rest 10.1% NAFTA 62.0% Canada Canola – 86.7% USA Soybean – 96.2% Maize – 80.8% Cotton – 83.3% Canola – 75.4% China Introduced 2000 Cotton – 55.5% Argentina Introduced 1997/8 Soybean – 98.7% India Introduced 2002 Cotton – 76.1% Brazil Introduced 2004 Soybean – 51.3% Lat Am 27.9% Total =280 million acres (+12.4% over 2006) 26

  29. Market Development Since 1995 27

  30. GM Seed Market – Value v Area 28

  31. Global Commercial Seed Market 2007 Total = $21,710 million 29

  32. Industry Structure and R&D Focus 30

  33. Agrochemical Company Market Shares 2007 >15% 15 - 5% 5 - 2% 2.0 - 0.8% 0.8 - 0.5% <0.5 - 0.2% Bayer BASF MAI Cheminova Phyteurop Isagro Syngenta Dow Sumitomo Chemtura Rallis Gowan Monsanto Nufarm Sipcam Sinon Amvac Albaugh DuPont Arysta Hokko SDS Biotech Ishihara Nippon Kayaku FMC UPL Nissan Excel Nippon Soda Agro Kanesho Kumiai Helm Mitsui Chemicals Nihon Nohyaku 1995 >15% 15 - 5% 5 - 2% 2.0 - 0.8% 0.8 - 0.5% <0.5 - 0.2% Ciba BASF Kumiai Cerexagri Mitsui Chemicals Monsanto Sandoz Ishihara Nufarm Shionogi DuPont Sumitomo Sankyo Nippon Soda Griffin AgrEvo FMC Rohm & Haas Sipcam Oxon UPL Zeneca Nihon Nohyaku Cheminova Atanor Bayer Hokko SDS Biotech Rallis Rhone - Poulenc MAI Nippon Kayaku Calliope Dow Nissan Isagro Cyanamid Takeda Amvac Chemtura Sinon Agro - Kanesho Caffaro 31

  34. Moves by Major Generic Companies from 2000 Nufarm Cheminova MAI United Phosphorous 2000 Proficol (Colombia) 2004 20% Cropserve (South Africa) 2000 Pytech (with Dow) 2000 Whyte (UK) 2002 FCS (Germany) 2004 AG Value (USA) 2001 Headland (UK). 2001 Agtrol (USA, Europe) 2004 Farm Saver Group (USA) 2005 Cequisa (Spain) 2001 SQI (Mexico) 2002 14% Excel (India) 2004 Farmoz (Australia) 2005 Shaw Wallace (India) 2003 Flexagri (France) 2002 Crop Care (Australia) 2004 50% of RiceCo (USA) 2005 Reposo (Argentina) 2005 CropTech (Colombia) 2004 49.9% holding Agripec (Brazil) 2005 Biomark (Hungary) 2006 Advanta seeds 2005 Ospray (Australia) 2004 Ag-seed Research (Australia) 2005 49% of Mabeno (Netherlands) 2006 100% Cropserve (South Africa) 2007 Kerolagro (Hungary) 2005 Agroquimicos Genericos (Colombia) 2007 Cerexagri 2005 Control Solutions (USA) 2006 Dovuro Seed (Australia) 2007 50% of Stahler (Germany) 2007 Icona (Argentina) 2006 Kollant (Italy) 2006 Nutrihealth (Australia) 2008 Pytech (from Dow) Evofarms (Colombia) 2008 2006 30% stake in Alligare 2006 Agrosol (Italy) 2006 75% of Agrovita (Czech R) 2007 100% of Agripec Agroproteccion and Agromedio through Proficol 2007 2008 AH Marks 2008 Etigra 2000 Propaquizafop 2002 Monsanto herbicides (Australia) 2001 Flutriafol 2003 Acifluorfen 2000 Tau-fluvalinate 2002 Fenoxaprop (Germany and Belgium) 2002 Phosalone 2003 Oryzalin 2000 Buprimate 2004 Phenoxy herbicides (BASF) 2004 Lenacil (UK, France, Italy) 2002 Acrinathrin (Europe) 2001 Clofentezine 2004 BASF product distribution (Australia) 2004 Chloridazon (UK, France, Italy) 2003 Methyl parathion 2006 Asulam 2001 Guazatine 2005 Imazapyr supply (BASF) 2003 Malathion 2006 Oxydemeton methyl 2001 Nordic cereal fungicides 2005 Imazamethabenz (outside Europe) 2005 Imidacloprid licence (Bayer) 2006 Trichlorfon 2002 Flurochloridone 2006 RR canola (Australia) 2006 Bensulfuron (outside Asia) 2003 Metamitron 2006 Diflufenican supply (Bayer) 2006 Acrinathrin (Global) 2007 Propanil (Dow) 2003 Linuron 2008 Cotton PGRs (DuPont) 2007 Fenbutatin oxide (DuPont) 2003 Cyfluthrin (Europe) 2007 Triphenyl tin (DuPont) 2003 Metasystox (Europe) 2003 Fenamiphos (Europe) 2005 Imidacloprid licence (Bayer) 2005 Tebuconazole licence (USA) 2007 Azinphos methyl (Bayer) 2007 Fluometuron North America (DuPont) 32

  35. Sales ($m.) Chemical Crop Protection Seeds / Biotechnology R&D ($m.) Company Sales and R&D Expenditure 2007 33

  36. Product Introductions and R&D Products Introduced 1990-2007 Currently in R&D Bayer 41 6 Syngenta 24 4 BASF 22 5 Dow 26 1 Sumitomo 18 3* DuPont 10 3 Monsanto 2 0 Other Japanese 50 18 Rest 21 7 Total 213 48** * In co-development with other companies ** some outward licensed products counted twice 34

  37. Product Introductions and R&D by Crop Number of new Active Ingredients Time period 1980/89 1990/1999 2000/2007 In R&D 12 Herbicides Cereals 15 12 4 Soybean 11 10 1 0 Maize 2 10 7 5 10 Rice 11 19 3 F&V 2 1 0 0 Other 10 5 2 0 Total 51 57 32 12 Insecticides F&V 11 16 10 6 Rice 5 2 3 2 Cotton 9 12 4 2 Others 4 7 5 4 Total 29 37 22 14 Fungicides F&V 13 8 13 7 Cereals 14 16 8 7 Rice 9 5 6 2 Others 0 0 0 1 Total 36 29 27 17 Others 7 3 4 1 Total 1 23 126 85 44 Average annual rate of introduction 12.3 12.6 10.6 8.8 35

  38. Current Status of EU Re-registration procedure List No. of Products of Accepted Re - registration Not accepted Products Commercial into pending / Not Significance* Annex 1 / resubmitted Suppo rted Existing Products 1 90 90 55 0 35 2 148 114 32 0 82 30 3 389 262 85** 147 4 204 11 7 4 Total 831 477 117 92 268 New Active Ingredients 81 53 7 Total Existing + New a.i.s 198 145 * as active ingredients for crop protection ** 49 removed from system and resubmitted 343 36

  39. New Active Ingredient Introductions 37

  40. Success of New Product Introductions 38

  41. Patented v Generics 39

  42. Proprietary v Off Patent Market Share - 2007 Patented 24.9% Off - Patent 75.1% Proprietary 24.9% Proprietary Off Patent 32.9% Generic 42.2% 40

  43. Proprietary v Off Patent Market Share 41

  44. Generic Companies Share of World Market 42

  45. Market Development 43

  46. Market Forecast 2007 to 2012 44

  47. Disclaimers The information contained in this presentation constitutes our best judgement at the time of publication, but is subject to change. Phillips McDougall do not accept any liability for any loss, damage or any other accident arising from the use of the information in this presentation. The information given in this presentation has been drawn from analyses and reviews presented in the Phillips McDougall products AgriService, AgriService Seed Supplement and AgreWorld. For more information about these products please visit www.phillipsmcdougall.com www.agreworld.com 45