Vancouver March 21 2007 CANOLA Growing Great

Vancouver, March 21, 2007 CANOLA – Growing Great 2015! FSU Oilseeds - Raising the Curtain Thorsten Tiedemann Toepfer International, Hamburg CCC Vancouver March 21, 2007 1

ACTI‘s Office Locations 40 offices 900 employees Turnover 40 mln t Hamburg Dublin Rotterdam Antwerp London Paris Winnipeg Athens Shanghai Beijing Rostov Dalian Odessa Kiev Minneapolis New Orleans Budapest Bucharest Sofia Basle Madrid Warsaw Tehran Tampa Cairo Amman Bangkok Taipei Mumbai Manila Sao Paulo Rosario Montevideo Buenos Aires CCC Vancouver March 21, 2007 Ho Chi Minh City Singapore Jakarta Adelaide 2

CCC Vancouver March 21, 2007 3

The Appearance of the FSU-12 on the World Grain Market Export Surplus due to a Drop in Grain Use Exports Source: USDA Imports CCC Vancouver March 21, 2007 4

FSU-12: Grain and Oilseed Acreage Development since 1990 in mln ha Source: USDA CCC Vancouver March 21, 2007 5

FSU-12: Oilseed Production by Type of Oilseed Source: USDA CCC Vancouver March 21, 2007 6

World Sunflower Production Almost 50% produced in the Black Sea Region World Production: 30. 6 mln t in 2006 Source: USDA CCC Vancouver March 21, 2007 7

Russia: Sunflower S&D in mln t Source: USDA CCC Vancouver March 21, 2007 8

Russia: Exports of Sunflower Seed and Oil Source: USDA CCC Vancouver March 21, 2007 9

Ukraine: Sunflower S&D in mln t Source: USDA CCC Vancouver March 21, 2007 10

Ukraine: Exports of Sunflower Seed and Oil Source: USDA CCC Vancouver March 21, 2007 11

Russia & Ukraine: Projection of Sunflower Production & Trade Projection Russia • • • Projection Ukraine Source: Toepfer & USDA Sunflower acreage reached its peak (crop rotation) Higher acreage possible in years with grain winter kill etc. Yield increase due to better varieties (hybrids, high oleic) & farming practices Crush capacity sufficient to crush the local crop Seed exports only in very good crop years Domestic use to increase slightly, exports to increase slightly as well CCC Vancouver March 21, 2007 12

Russia & Ukraine: Trends in Rapeseed Production • • • Source: Toepfer & USDA Russia New 00 winter-varieties available Royalty problem solved with hybrid seed Huge difference between well and poorly managed farms – Poorly managed: < 1 t/ha – Well managed: > 4 t/ha in Ukraine • Well managed farms have invested in: – Soil preparation & seeding technology – “Western-style” crop protection – Harvest technology • Production Development in Russia – Based on export tax of 20 % – Profitability of competing grain – To triple by 2010 • Ukraine CCC Vancouver Production development in Ukraine – No export tax so far – Logistics – Production to quadruple by 2010 March 21, 2007 13

Russia: Rapeseed S&D in 1, 000 t Source: Toepfer & USDA • Local rapeseed crush subsidised by differentiated export tax • Crush to increase, exports of rapeseed oil or RME • Exports should be very volatile depending on the crop year and crushing capacity • Exports of rapeseed difficult to predict, but on average low CCC Vancouver March 21, 2007 14

Ukraine: Rapeseed Acreage by Oblast Source: Toepfer Rapeseed production concentrated in central oblasts CCC Vancouver Acreage in 1, 000 ha March 21, 2007 15

Ukraine: Rapeseed S&D in 1, 000 t Source: Toepfer & USDA • Estimate based on the assumption that export tax is not going to be implemented • However, export tax possible, which should lead to sign. lower exports • Trend for further increase in production • Crushing industry should increase slightly • Biodiesel industry hardly viable without subsidies • Exports of rapeseed to increase in this scenario CCC Vancouver March 21, 2007 16

Ukraine, the new Competitor on the World Rapeseed Market in 2007/08 (Exports in 1, 000 t, Estimates for 2006/07 and 2007/08) Source: Toepfer CCC Vancouver March 21, 2007 17

Russia: Trends in Soybean Production (in mln t) Source: Toepfer & USDA • Soybean production in Siberia and Southern Russia to increase • Russian soybean trade negligible, also in the next years • Soybean crush to increase due to strong demand increase for soybean meal (livestock sector well protected from world market and very profitable, especially poultry production) Summary: Soybean production to increase but little linkage to world markets CCC Vancouver March 21, 2007 18

Ukraine: Trends in Soybean Production (in mln t) Source: Toepfer & USDA • Soybean production to increase in central and south-eastern Ukraine • Crush is also expected to increase, but local demand for Soybean meal restricted so far • Therefore, increasing export potential for soybeans Summary: Soybean production to increase, should be used partly domestically but increasing export potential CCC Vancouver March 21, 2007 19

Conclusion I 1. Oilseed production has gained momentum in Russia and Ukraine: • • • Favourable prices compared to grain Improved production technologies and varieties Improved logistics 2. Future development of oilseed production based on: • • • Price development on the oilseed and grain market (fight for acreage) Further improvements in logistics Structural change in the farming sector – management is the scarce factor in the FSU-12 agriculture, not capital 3. Export potential depends on: • • • Trade policies, especially the export taxes Biofuel policies in these countries Investment climate, i. e. how attractive it is foreign investors to built crushing plants in Russia and Ukraine CCC Vancouver March 21, 2007 20

Conclusion II 4. Impact on the Canadian Canola Industry: • Russia, but especially Ukraine new important factor in World Rapeseed trade • However, production potential of all countries urgently needed to meet the world’s ever increasing demand • Interdependency of grain and oilseed markets • Markets will tell what to grow every year • Canadian farmers in excellent position to react in spring on the potential competition from the Black Sea region and other exporters CCC Vancouver March 21, 2007 21