GCC Agriculture Presentation v5

Feb 23, 2015

Middle East, Dubai

THE AGRICULTURE

INVESTMENT LANDSCAPE

A view from

the GCC

2Global AgInvestingFebruary 2015

GCC Agriculture == Production

1.8% of total land in the GCC used for

farming and contributing only 1.4% of GDP

- Mohammad Obaid Al Mazroni (AAAID)


GCC Agriculture == Production

2015 2025 2050

Acute Water

Scarcity

50%

reduction

Absolute

Water

Scarcity

No

water

UAE data

GCC deficits

16 million MT

3 million MT

1.8 million MT

0.5 million MT

Water Situation


Food = Water = Life

1 Kg

steak

15,000 LITRES OF WATER

Water needed

To produce

more cropsFor animal feed

production

For livesock

consumptionFor processing


GCC by Numbers

Source – FAO and EIU

US$ 100 bn

spend on water

infrastructure by ‘16

4.6%

CAGR GCC food

consumption

> 80%

water used

for agriculture

85%

food

imports

US$ 53 bn

food imports

by 2020

40%

known

oil reserves

5%

world’s

population

1-2%

GDP

Agriculture

< 1%

fresh

ground water

Poor Agri

fundamentals

today

Going to get

much worse


Current Landscape

Price Control

& Consumer

Subsidies

Trade

Diversification

Strategic

Reserves

Domestic

Investments

Investing

Abroad

GCC

Governments

This is changing – Governments are seeking sustainable returns from investments

Food

Security

Initiatives

Focus on

Upstream

Secure

supply of

Basic

Commodities


Current Landscape

Meat / Fish

Dairy

PoultryProcessing

Distribution

Private

Sector

Land-based

protein

Focus on

Downstream

Focus on

Investment

Returns


Profile of Key GCC Players

Limited

(3 or less food groups)

Diversified

(more than 3 food groups)

International

production for

Regional markets

Regional production

for Regional

markets

Local production

for Local markets


Transactions and Trends

Less crop production

More protein production

More storage & logistics

Egypt - Land on border

with Sudan. Irrigated. Sold

locally

2011 - 25% stake in Adeco

Agro (Brazil, Argentina,

Uruguay)

Serbia - 51% of Rudnap

Group. US$ 400 million.

Food and fodder

2015 - Acquired stake from

AAAID in A’Saffa

2014 - US$100 million in

Indian Basmati rice company

(Bush Foods)

2009 - 250,000 acres of land

in Sudan (unsuccessful)


Transactions and Trends

Jordan (2014) – US$

35 million equity

investment in Al Jazeera

Agricultural Company.

Significant minority

stake. Fully integrated

poultry and chicken feed

producer and distributor

2014 – US$ 27 million food

processing facility in Dubai

Investment Park

2013-14 - Brazil’s BRFSA,

the world’s largest chicken

exporter (SADIA brand), US$

150 million processing plant,

80,000 MT pa

2014 - Fruit juice, bottled

water US$ 411 million facility


Landscape for the Future

Production

(basic, feed, meat)

Logistics

(transport, storage)

Processing

(equipment, packaging)

AgTech

technology, research


Production Landscape

TRADITIONAL

FARMING

COMMERCIAL

FARMING

PROTEIN

PRODUCTION

Date, Fresh, Camel Date, Olive Meat, Milk, Eggs

Use of less water

Greenhouse

Consolidation and/or

Reduction

More sustainable (less

water)

Reduced subsidies

Technology based

(hydroponics)

Large scale producers

dominate

Increased vertical

integration

Increasing consumption

Limited

Water saving

technologies

Saline / Arid cultivar

introduction

Agri technologies

Sustainable production

not using too much

water still promoted

Upstream production

(feed)

Downstream value-added

production & processing

Packaging

Typ

eT

ren

ds

Op

po

rtu

nit

ies


Logistics Landscape

GOVERNMENT PRIVATE

Basic staples Storage and Distribution

Strategic Reserves

increased

More storage

(Oman - adding 300,000 MT

UAE - added 200,000 MT)

More capacity and sophisticated

Bulk dry handling increasing

Increase in warehousing facilities

Refrigerated and non-refrigerated distribution

B.O.T. of storage

facilities

Downstream value-added

production & processing

Regional 3PL

Typ

eT

ren

ds

Op

po

rtu

nit

ies


Processing Landscape

PRIVATE

Human Food

50% of food consumed in the GCC is processed

Consumption set to increase by 7%

(urbanisation, population and income increase)

Region as a hub for other growth markets (eg.

East Africa, Somalia pasta from UAE/Oman)

Better quality and shelf-life food

Value-added dairy and meat products

Halal food products

Ready-to-eat food items

Typ

eT

ren

ds

Op

po

rtu

nit

ies

Animal Feed

Need for feed increasing (due to

human consumption)

High productivity feed used

Large scale production

More sophisticated


AgTech Landscape

PRIVATE

Food Production Technology

Limited hydroponic production used being recognised

Irrigation innovation

Animal health / welfare management

Food Factory

Ag Finance

Water Technologies

Research and Development

Typ

eT

ren

ds

Op

po

rtu

nit

ies


Challenges

Dominant incumbent players

Relatively small market size

Logistics efficiency

Climate (production, product restrictions)

Industry capital base

Traditional banking practices

Management capability and capacity


The Future


GCC potentially choking

Strait of

Hormuz

81%

grains

into GCC

81% rice

into GCC

88%

GCC oil

exports


The Future

GCC has embarked on a US$ 200 billion regional rail network


GCC gets connected


Summary

International

Trade

Increase

land based

protein

production

Improve

entire agri

value chain

Add value

and process

Utilise

technology

Professional

Management

Documents

GCC Agriculture Presentation v5