2014 USA Rice Outlook Conference Little Rock, AR US Rice In The Long Term: Opportunities and Challenges Food & Agri business Research a nd Advisory Vernon Crowder Seni or Vice President & Senior Analyst December 2014 Rabobank Rabobank December 2014 1 A Team Of 90 Professionals In 12 Different Countries A Truly Global Team Rabobank December 2014 2 World Agriculture Trade Increasing Total U.S. Exports 1980 - 2013 160 140 120 Billion USD 100 80 60 40 20 Source: USDA, 2014 Rabobank December 2014 3 Population Growth And Urbanization Continue • An increasing population that is more urban means increasing demand for more than just sustenance food. • More demand for safe uniform products will drive producers to enhance quality and minimize variation. Source: Rabobank 2014 Rabobank December 2014 4 With Population Growth, Greater Demand Is Inevitable Global Population Growth Trends Source: United Nations Department of Economic & Social Affairs, 2012; Rabobank 2014 Rabobank December 2014 5 World Agricultural Consumer Demand Is On The Rise Income development Food choices North America Diet food, functional food, organic food China 2020 Fresh and convenient, segmented meals China Rural India Eastern Europe SEA Sub-Sah. Africa India Carbohydrate staples (grains, roots, tubers) Surviving Source: Rabobank 2014 Japan China Urban Prepared meals, snacks Eggs, meat, dairy, sugar, processed massmarket food, soft drinks Australia Western Europe Mass-market Convenience Foodservice Snacking International Quality Individualised Health Enjoyment Food perception Rabobank December 2014 6 Rise In Economics Lifting Protein Consumptions Source: USDA, IMF, Rabobank Rabobank December 2014 7 The Challenge’s Farmers Are Facing Food, Water, & Energy Nexus Source: Rabobank 2014 Rabobank December 2014 8 Food Production Will Continue To Meet Demand population (millions) World Population & Food Production Growth Source: Food & Agriculture Organization of the United Nations, 2012; Rabobank, 2014 Rabobank December 2014 9 World Rice Trade 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 27% 24% 26% 27% 29% 26% 13% 14% 18% 13% 12% 14% 12% 19% 12% 7% 9% 10% 8% 14% 11% 7% 9% 5% 9% 6% 10% 10% 17% 14% 9% 9% 12% 11% 16% 15% 15% 9% 19% 14% 35% 30% 11% 8% 16% 34% 10% 7% 20% 29% 6% 13% 11% 7% 21% 27% 8% 9% 9% 14% 20% 29% 9% 6% 6% 4% 7% 4% 6% 4% 6% 7% Percent of Total Exports Thailand Source: FAO, Rabobank Vietnam India US Pakistan South America Rabobank December 2014 10 Southern Rice Export Destination 2013 Other 23% Mexico 28% Ghana 5% Colombia 5% Haiti 11% Iran 6% Saudi Arabia 7% Source: FAO, Rabobank Venezuela 7% Canada 8% Rabobank December 2014 11 California Rice Export Destination 2013 Other 21% Japan 28% Mexico 4% Turkey 6% Taiwan 6% South Korea 18% Canada 8% Source: FAO, Rabobank Jordan 9% Rabobank December 2014 12 Growing Competition 8,000.00 7,000.00 Milled Tonnes (000s) 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 - US Source: FAO, Rabobank South America Vietnam Rabobank December 2014 13 Medium/Short Grain Receive Premiums 30 Annual Average Price 25 20 15 10 5 0 -5 Price Premium Source: USDA-NASS, Rabobank Long Grain Price Med/Short Price Rabobank December 2014 14 California Rice Acreage Production 600,000 500,000 Acres Planted 400,000 300,000 200,000 100,000 0 Source: USDA-NASS, Rabobank Rabobank December 2014 15 Southern Field Crops Acreage Production 25,000,000 Acres Planted 20,000,000 2,457,003 2,556,190 3,062,601 2,085,662 2,114,890 1,904,453 2,478,532 15,000,000 10,000,000 5,000,000 0 Source: USDA-NASS, Rabobank CORN SOYBEANS RICE Rabobank December 2014 16 Southern Rice Acreage Volatility 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% % Change Corn Price Source: USDA-NASS, Rabobank % Change Rice Acreage Rabobank December 2014 17 Commodity Price Change ’04 - ’08 Versus ’09 - ’13 Average Prices 80% 71% 70% Percent Change 60% 60% 50% 40% 30% 31% 32% Long Grain Short/Med Grain 20% 10% 0% Source: USDA-NASS, Rabobank Soybean Corn Rabobank December 2014 18 98% 16% 96% 14% 94% 12% 92% 10% 90% 8% 88% 6% 86% 4% 84% 82% 2% 80% 0% Med Grain Source: USDA-NASS, Rabobank Medium Grain % of Total Acres Long Grain % of Total Acres Southern Long and Medium Grain Acres Planted Long Gain Rabobank December 2014 19 Environmental Issues Burning Straw may be More Regulated in the Future Water Storage and Distribution will be Essential for Rice Producers Rabobank December 2014 20 Transparency Will Strengthen the Competiveness of US Rice Texas Mississippi Missouri 2 Mills 4 Mills 2 Mills Louisiana California 10 Mills 15 Mills Arkansas 18 Mills Percent of 2013 US Production Source: USDA, USA Rice Federation, Rabobank Rabobank December 2014 21 Conclusion • Quality May be the Opportunity for Differentiation •More Revenue Per Acre is the Long-Term Objective •Jupiter vs. CalRose •South America & Vietnam Will be Even More Competitive •Environmental Challenges and Opportunities • Supply Chain Leadership? Rabobank December 2014 22 Contact Details Rabobank N.A. “The financial link in the global food chain”™ Vernon Crowder Senior Vice President, Senior Analyst Food & Agribusiness Research and Advisory [email protected] DISCLAIMER Professional advice is recommended for all financial and strategic decisions. However, this information is not professional advice and has not been prepared to be used as the basis for, and should not be used as the basis for, any such decisions. This information is general in nature only and does not take into account an individual’s personal circumstances. No representation is made that any forecast or projected information is correct or will eventuate. Although reasonable efforts have been taken to ensure the accuracy of the contents of this publication, no warranty is given in regard to the total accuracy of the printed contents. The persons involved in the preparation and distribution of this information and their related persons disclaim all liability for any loss or damage suffered due to any use of or reliance on the information. Rabobank December 2014 23
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