Confidential - for Internal Use only 1

Confidential - for Internal Use only 2

Cocoa Sustainability at Mars

VECO Conference Ingmar Streese, Mars Incorporated

Leuven, 14 October 2011

Confidential - for Internal Use only

Mars Incorporated – a global Family Business

•Privately-owned for 100 years •2010 net sales > $30 billion •> 65,000 associates in 71 countries •365 sites, including 132 factories •Diverse business with Iconic brands

Confidential - for Internal Use only

Mars Incorporated – Business Segments

Chocolate

Petcare

Wrigley

Food

Drinks

Symbioscience

Confidential - for Internal Use only

Our Principles in Action www.mars.com Cocoa certification Ensuring our entire cocoa supply is sustainably produced by 2020

Fish sustainability: Committed to using only sustainably sourced fish by 2020 MSC certified petfood in Europe end 2010

Coffee and Tea certification Coffee 2013 Black Tea 2015

Palm oil certification sustainably sourced palm oil by 2015

UN Business & Biodiversity Initiative Cocoa and Rice commitments

Certification Capacity Enhancement Cooperation between certifiers

iMPACT: a $4.5 million commitment addressing environmental, economic and social needs of cocoa communities

Cocoa Livelihoods Program Gates Foundation + Partners, GIZ as contractor

Confidential - for Internal Use only

How to ensure a healthy cocoa industry long term?

6

Confidential - for Internal Use only

Cocoa Origins

Origin's Contribution to Total 2006/07 World Production (MT), similar 2010/11

1.289.000

608.000 540.000

126.000

449.000

40.000 48.000

125.000

216.000

CdI Ghana Indonesia Brazil Cameroon

& Nigeria PNG DR Ecuador ROW

DR – Dominican Republic

CdI – Côte d‘Ivoire

ROW – Rest of World

PNG – Papua New-Guinea

Confidential - for Internal Use only

Future demand LOOKS GREAT ! Good for farmers too?

High Chocolate consumption mostly in Europe/US

Future growth is expected: • New Consumers • New Products (health, dark chocolates)

Confidential - for Internal Use only

FARMERS LOOSE - due to Pest and Disease and Soil Fertility

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

Fertility

Black

Pod

Miri

ds

Rod

ents

CPB

WB

FPR

Lo

ss

US

$ v

alu

e

Cote d'Ivoire Ghana Nigeria Cameroun Indonesia Latin America

Lost potential in US$ by Issue

Confidential - for Internal Use only 10

Our Wake-up Call… Avg yield around 400 kg/ha and dropping

Deteriorating tree and soil conditions

No tolerance for cutting down additional

forests

Children not interested or attracted to cocoa

farming

Average Daily income below $2 per family

member

Deteriorating Quality from Many Countries

Pest & Disease issues continue

Confidential - for Internal Use only

Mars Cocoa Sustainability Vision

Global Program: Certification

Vietnam starting

Priority Countries – Focused Program

Indonesia Scaling up

Philippines developing

Cote d’Ivoire Vision for Change

CDC & CVC Community

Empowerment

Policy Dialog

& Partner Engagement Sustainable

Management Govt/

Extension

Planting material

productivity

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We will certify our entire cocoa supply by 2020

12

Certification

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Certification PLUS – Tool for Improvement Certifying Sustainability

Cannot certify poverty…certification must be credible

Certifying Poverty

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14

Mars’ Vision for Change

Social

A Revitalized Cocoa Sector (Côte d’Ivoire)

Economic

Goals

Building a reliable supply of cocoa and improving farmer livelihoods

Vision

Environmental

Improve Farmer Income Improve Environmental Management of Cocoa Growing Areas Invigorate Rural Communities

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PRODUCTIVITY PILLAR:

Cross-cutting ‘Policy’ Pillar

Monitoring & Evaluation

PRODUCTIVITY PILLAR:

Planting Material

Sustainable Management

Cocoa Development Centers

Extension

= The “Engine”

COMMUNITY PILLAR:

Community Empowerment

Agricultural Policy Partnership Management

National Scale-Up Strategy Communications Campaign

&

V4C – Key Elements

Communities

Partners

Confidential - for Internal Use only

Knowing how to increase yields 3x

Note: Poverty level defined as income of $1/day/person

Source: World Development Report 2008; C. Peter Timmer, “Agriculture and Pro-Poor Growth“,

Syngenta Foundation

Sub-Saharan Africa: Flat Cereal Yields, Persistent Poverty

South Asia: Increasing Cereal Yields, Decreasing Poverty

450

135

585

351

0

200

400

600

800

1000

1200

1400

1600

Current Knowledge

/ Pest

Control

Plant

Material

Fertilizer

Potential Impact of Côte d’Ivoire Cocoa

Farm Productivity Increases (gains in Kg/Ha)

New Productivity – 1521 Kg/Ha

>3X

Coco

a Y

ield

(K

g /

Ha)

Confidential - for Internal Use only

Private

Sector

Cocoa Development Centers Cocoa Village Centers

Soubre & Bas

Sassandra

CVC CVC

CD

C

CV

C

Farm

ers

CVC CVC

Farmers

CDCs • Training of trainers • propagation of clonal material and hybrid seeds • 75 CDCs needed to reach 150,000 farmers

Knowledge, germ plasm, inputs, credit?

Knowledge, germ plasm, inputs, credit?

Inputs, credit

CVCs • Leading cocoa grower trained at CDC then leads CVC as village business

(20 CVS à 100 farmers) • Focus on productivity, sales of approved planting materials & provision of

skills

150,000 farmers reached in Soubré by 2020 • Accessibility to knowledge, germplasm and inputs through CVC

and supporting CDCs

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Mars CDCs - geographical locations for 2010 - 2013

2010 CDC

2012/13 CDC

2011 CDC

Mars will partner with like-minded companies

to set up additional CDC/CVC networks

2010

2 Mars CDC 0 partner CDC

2012

11 Mars CDC 10 partner CDC

2015

19 Mars CDC 30 partner CDC

2018

25 Mars CDC 50 partner CDC

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19

Grafting as a method of farm rehabilitation

New germplasm via farmer owned nurseries

CDC and CVC Interventions

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MCCS/CEPLAC/INIAP/CATIE/CRU

Breeding • 400 germplasms • 120 progenies • 2 mapping populations (CEPLAC, UESC) • 20 ha of trials

Agro-forestry: • Cacao • Rubber Tree • Wood Trees • Cassava • Pineapple • Banana

Laboratory Research: • Chemical • Bio-chemical • Tissue Culture • Sensory Lab • Chocolate Making

MCCS - Mars Center for Cocoa Science Science

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MOU with VECO

•increasing farm productivity through intensification and diversification •training programs for smallholder farmers in Sulawesi and Flores – 26 trainers, farmer field schools •30 demonstration plots, 6 CVCs

•Mars factory in Makassar (processing 17,000 tons)

•Premium for quality cocoa

PT Mars support for Indonesia cocoa farmers

Confidential - for Internal Use only 22

Higher Income from Sustainable Agriculture

$ 1.13 per kg cocoa

40 fruits per tree

$ 0.9 per kg cocoa

30 fruits per tree

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Short, easy to manage trees of high performing varieties

From Indonesia to Africa: Support to extension services through CDC and CVC

High productivity guaranteed – but it requires

‘farming as a business’

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Our Asian specialists in Cote d’Ivoire: •rehabilitation interventions (grafting, fertilizer, training)

•Mars trains up to 25 Africans in Indonesia, and builds training capacity in Cote d’Ivoire

From Indonesia to Africa: Capacity Building