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  1. Investing in Brazil with a Biofuel Focus Brazilian American Chamber of Commerce New York City May 4th, 2010

  2. South America offers the most competitive conditions for food & renewable sustainable production South America Strengths Brazil and Argentina are Top Food & Renewable Exporters (sugar, ethanol, corn, soybean) Human & Technology Natural conditions • Abundant water • Fertile soils • Mild temperature • Land availability • Cutting edge Technology • Mechanization • Management skills • Environmental sensitiveness Geopolitical Economical • Private land • Food surplus • No trade barriers • Corporate farming • Low production cost • Cheap land • Good infrastructure • Vertical integration Good quality farmland is globally limited Source: Atlas of Global development, World Bank, 2008 2

  3. Biofuel can be globally produced without decreasing land availability for crops • The right crop in the right place: changing from grassland into sugarcane 1% Source: IBGE. Elaboration: UNICA. • There is room for Cattle to strongly increase its efficiency (operational, crop productivity, feedlots) 3

  4. Renewable energy and food can complementary be produced without affecting food supply • High crop yields means higher biofuel production per unit of land • Complementary production: ethanol + sugar + bioelectricity Source: UNICA Bioelectricity's Strengths The higher crop productivity, the higher biofuel production and the better use of land • Synergy with hydro production (dry season) • Carbon Credit feasibility • Use of straw could increase its potential 4

  5. Powercane is the most efficient and clean feedstock for ethanol production Energetic Balance (MJ/ha) More important than the Energy Balance (heat) is the Portable Fuel Balance!

  6. 1.5 . 1.0 Water storage capacity (in/8 in) 0.5 0.0 NO TILL TILL Best Practices as No Till should be applied to achieve sustainable biofuel production No-till Benefits Improving water storage capacity • Improves water efficiency • Reduces erosion risk • Increases organic matter • Decreases use of pesticides • Improves soil fertility • Reduces CO2 emissions Higher and stable yields & lower costs year by year Decreasing pesticides usage Decreasing fossil fuel usage Carmen & Abolengo farms (Humid Pampas) 2.5X No-till increases land productivity and returns over time 6

  7. The convenient Generation 2.5 of biofuels is already on stage performed by efficient operations A NEW MODERN MILL PROJECT REQUIRES 8 YEARS TO ACHIEVE FULL CAPACITY (BIOLOGICAL PROCESSES) Start Milling Start Planting Sugarcane = 75 tons Ethanol = 4.3 m3 Sugar = 4.1 tons Power (2) = 4.5 MWh Need to integrate biofuels industry around the world 1 hectare of Sugarcane (1) Infrastructure should be fixed and suited for biofuels (1) Includes replanting area; average of 7 years cycle; 60% ethanol – 40% sugar (2) Does not consider use of straw 7

  8. US gasoline production cost for refineries can be estimated as oil price x 1,05 Distribution & Marketing Refining costs and profits – 6% of Gasoline price – 9% of oil price (estimation 5% costs & 4% profit) Taxes: Federal, State, and local government taxes (not including county and local taxes) accounted for about 15% of the national average retail price of regular gasoline in February 2010. Federal excise taxes were 18.4 cents per gallon and State excise taxes averaged 22.01 cents per gallon. Crude Oil: The cost of crude oil as a share of the retail price varies over time and among regions of the country. In February 2010, refiners paid an average of about $77 per barrel of crude oil, which accounted for about 69% of the national average retail price of a gallon of regular grade gasoline. 1 Barrel = 42 Gallons $77 per barrel = 1,833 per Gallon Cost 1 gallon of crude oil -1,833 ≈ 1,814 - Cost of crude oil in 1 Gallon of Gasoline What do US Consumers pay for on a Gallon of Regular Grade Gasoline? The US national average retail price of a gallon of regular gasoline in February 2010 was $2.64. There are four main components that make up the retail price of a gallon of gasoline: 10% 6% 15% 69% $1,814 Cost of gasolineforrefineries OilCost≈ Oil Price Refiningcost = 5 % of OilCost Oil Price x 1,05 = + ≈ Source: U.S. Energy Information Administration 8

  9. US could increase ethanol % on gasoline without increasing gasoline price... …nor paying subsidies (if oil price is over USD 85 per barrel). It only has to eliminate Import Taxes on Brazilian Ethanol When blending 15-20% of ethanol, distilleries can still produce the other outputs from petroleum without significant changes (1) US Import Tax fo r Brazilian Anhydrous Ethanol - US$ 0,54/Gallon + 25% of FOB value 9

  10. E20 and E30 ethanol blends outperformed gasoline in fuel economy tests (*) KEY FINDINGS Ethanol’s energy content was not found to be a direct predictor of fuel economy. E20 and E30 ethanol blends outperformed gasoline in fuel economy tests for certain autos. Standard, non-flex-fuel vehicles operated well on ethanol blends beyond 10 percent. Vehicle emissions met EPA requirements and were improved in key areas. (*) Source: “OPTIMAL ETHANOL BLEND-LEVEL INVESTIGATION” Researchers: The University of North Dakota Energy & Environmental Research Center (EERC) & the Minnesota Center for Automotive Research (MnCAR) Testing Method: The Highway Fuel Economy Test (HWFET), a test developed by the U.S. Environmental Protection Agency to determine fuel economy Vehicles Tested: Toyota Camry (2.4 liter engine), Ford Fusion (2.3 liter engine), non-flex-fuel Chevrolet Impala (3.5 liter engine), flex-fuel Chevrolet Impala (3.5 liter engine) Fuels Tested: Various blends of undenatured ethanol & Tier 2 gasoline 10

  11. Adecoagro is already producing food and renewable energy in Brazil Cotton, Soy & Corn La Pampa 13K HA 50K TONS Coffee 1K HA 3.5K TONS Ethanol, Sugar & Power Buenos Aires 49K HA 259K TONS Producing each commodity in the right location

  12. After careful due diligence of different regions, Mato Grosso do Sul was selected for expansion Location Research Analysis Analysis of different sites in Brazil • Proper environmental conditions: • Fertile Soils • Climate • Topography • Room for growth: • Few Neighboring mills • Competition with other crops • Underutilized pastures • Property size: small or large? • Logistics: • Rail link to port? • Regional terminal? • Future link to pipelines? 12

  13. Angelica, our first ethanol Greenfield, was built in 16 months and began milling during August 2008 Cane reception Angelica Mill Boiler Juice treatment and Fermentation Cooling towers and Water treatment plant Distillery and interconnections 13

  14. Farms Industry Offices Bahia offers excellent conditions to grow cotton, soy and corn, with high potential for land transformation Bahia’s Agro Ecological Features • Sunshine: 800 Kcal/cm2/day • Rains distribution: 1,800mm and an extremely dry period • Temperature: Annual mean 23ºC • Soils are deep and well drained • Even topography allows mechanization • Skilled workers Bahia Vertical Integration Strategy Crop Rotation Scheme in Bahia • Bahia produces high quality cotton at a very competitive cost • Acquire ginning capacity • Ginning process defines final product quality: • staple length uniformity • cotton purity • Increase crop margins Year 1 Year 2 Year 3 Year 4 Corn Cotton Cotton Soy Risk Management Reduce Disease Planting Flexibility We have developed a team in Bahia qualified to execute our expansion plan 14

  15. Our irrigated & fully mechanized coffee operation differentiates us from other players BAHIA’S OPTIMUM CONDITIONS FOR SPECIALTY COFFEE PRODUCTION No frosts • Stable Quality • High Productivity • Low cost 100% Irrigation 100% Mechanization Quality grains Adjusted Technology Vertical Integration • Processing facilities at farms • 3rd Party Volume Trading • Exports to Premium Markets • International Certifications • Quality Control • Strong Client Relationship Adecoagro’s Coffee Highlights • No correlation with other crops • 1.3K hectares in production • 63,500 bags estimated harvest 15

  16. Thank You!