Slide sem t

1
BB Agribusiness scenario, challenges and
opportunities.
2
Agribusiness importance to Brazil
35 Brazilian exports
Brazil GDP US 1,262.3 bi
Agribusiness GDP US 296.4 bi
Agriculture US 210.7 bi (71.1)
23,5
76,5
Cattle Raising US 85.7 bi (28.9)
Agribusiness
Other
Trade Balance
Employment
Agribusiness 37
Source MAPA CEPEA-USP, SUT/CNA and IPEA
Employment data 2004
3
2008 BRAZIL GDP
Agribusiness led the GDP growth by sector in 2008
AGRICULTURAL
INDUSTRY
SERVICE
GDP
Source IBGE Brazilian Statistics and Geography
Institute
4
Brazilian rural properties profile
Small Producers
Other Producers
Credit Operations at BB 1,469,394
Credit Operations at BB 243,636

• North extractivism, fishing
• Northeast caprine-culture,chestnut, castor bean,
  bean
• Middle West beef cattle, soy, corn
• Southeast coffee, bean, corn, beef cattle,
  co-operativism
• South bean, corn, soybean, beef cattle,
  tobacco, aviculture, swineculture,
  integration, co-operativism.

• North soybean, coffee, beef cattle, florests
• Northeast beef cattle, fruits, shrimpculture,
  soybean
• Middle West beef cattle, soybean, corn, sugar
  cane, florests, aviculture, swineculture
• Southeast coffee, daity cattle, sugar cane,
  orange, co-operativism, contracts
• South corn, soybean, rice, sugar cane, beef
  cattle, aviculture, swineculture, integration,
  co-operativism.

5
Brazilian rural properties profile
Strengthens
Weaknesses

• Land regularization and environmental issues
• Producers indebtedness
• External fertilizer dependency
• Producers scale
• Financial management and producers risk
• Financial matrix
• Logistics.

• Productive process management
• Technology absorption capacity
• Embrapa
• Relief
• Climate
• Water
• Production increase capacity.

6
Brazilian share of agribusiness world trade
Source USDA PSD Online (2008)
7
Evolution...
...at grain production.
and at meat production.
Poultry 71.4 Bovine 38.3 Swine 53.8
08/09 estimated 2008/09 6º crop-year survey
(march/09)
Source CONAB, MAPA, CNA, UBA, ABIPECS and ABCS
8
BEFORE THE WORLD CRISIS

• Food consumption increases due to emerging
  countries GDP growth.
• Agro-energy.

Only Brazilian agribusiness has conditions to
attend world demand for food
CREDIT
INVESTMENT
9
BEFORE THE WORLD CRISIS
Net Income Generation Income - Production Cost
(Depreciation, opportunity costs, land and
capital costs not included )
Brazils Projection - Soy, Corn, Rice, Wheat and
Cotton
22.3
R billion
18.3
17.7
15.8
12.0
All farming considered from PAM/IBGE 2005 Source
Agroconsult April/08
10
BEFORE THE WORLD CRISIS
Accumulated Debts x Accumulated Net Income
Generation Soy, Corn, Rice, Wheat and Cotton by
State
SC
PR
SP
MS
OTHER
BA
MA-PI-TO
MG
RS
GO
MT
BRAZIL
2011
2006
2007
2008
2009
2010
Source Agroconsult April/08
11
AT THE WORLD CRISIS - GRAINS

• 2008 2nd half
• production cost was already defined.
• commercial credit reduction (tradings and
  suppliers) Rural credit, self resource and
  fertilizer deduction compensated.

• 2009 1st half
• dry weather at South and Argentina will allow
  price raise.
• marketing will be made at harvest time.
• producer is less affected by price volatility
  until harvest time. Purchaser is the one who
  participate in high prices.
• supplies price begin to decrease.
• investment capacity reduction. Margins at
  Middle-West begin to improve.

12
IN THE WORLD CRISIS MEAT, TOBACCO, ALCOHOL

• 2008 2nd half
• reduction of credit from banks (working capital).
• international banks and foreign trade credit
  reduction.
• sales volume reduction.

• 2009 1st half
• importer countries stock reduction.
• lodging reduction.
• alcohol middle crop year beginning.
• foreign trade financing recovery.

13
BEYOND THE WORLD CRISIS

• Domestic market importance.
• Nevertheless, we are lucky to have agricultural
  economy commodities. Even if the world economy
  decelerate, Chinese people that already started
  eating will continue to do it so. And that is
  good for Brazil. José Alexandre Scheinkman,
  economist. Veja Magazine, 2081 ed.
• Until 2025, FAO estimates that global population
  will go from 6.2 billion people to 8.3 billion.
  Food demand will expand from 2.45 billion ton to
  3.97 billion ton. It will be necessary to double
  worlds agricultural production within 18 years.

U.S.A. new government and agro-energy?
14
BEYOND THE WORLD CRISIS - BRAZIL DOMESTIC MARKET
CORN
2007/08 2018/19
25.0
19.3
98.3
SOY
2007/08 2018/19
34.7
26.7
41.6
Source MAPA
15
BEYOND THE WORLD CRISIS - BRAZIL DOMESTIC MARKET
BOVINE
2007/08 2018/19
49.4
27.6
92.8
17,443
16,851
16,258
15,665
POULTRY
15,073
14,480
13,888
13,295
2007/08 2018/19
12,703
12,110
11,517
11,130
10,841
10,528
10,215
9,903
9,590
9,277
8,964
8,651
8,338
56.7
8,025
7,713
7,514
6,602
6,322
6,043
5,763
5,483
5,203
4,924
44.3
4,644
4,364
4,085
3,805
3,615
82.6
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
Source MAPA
16
BEYOND THE WORLD CRISIS
Nowadays
2018/19
Brazilian
Brazilian
share
Brazilian
share
Brazilian
Products
of international
Exports
of international
Exports
market
market
POULTRY
44.6
3.6 million ton
89.7
6.6 million ton
ETHANOL
52.0
3.5 billion litres
66.7
8.9 billion litres
SUGAR
58.4
21 million ton
74.3
32.6 million ton
SOY
36.0
25.7 million ton
40.0
36.5 million ton
COFFEE
28.1
26.5 million bags
30.0
29.1 million bags
SWINE
10.1
625,000 ton
21.0
1,113,500 ton
CORN
13.0
11.5 million ton
21.4
22.9 million ton
COTTON
4.8
520,000 ton
9.3
686,700 ton
Source MAPA
17
CHALLENGES

• Working capital for agribusiness companies.
• Dry weather.
• Marketing.
• 2009/2010 crop year credit.

• Contract model and credit to sector.
• Insurance and hedge.
• Rural producers and cooperatives juridical
  structure
• Logistics.
• Sanitary defense and traceability.
• Environmental aspect.

Source MAPA
18
OPPORTUNITIES Production Projection
million ton
million ton
Meat
2008
2018
Grains
2007/08
2018/19
Poultry
11.1
17.4
Soy
60.1
80.9
Bovine
10.4
15.5
Corn
58.6
73.2
Swine
3.1
4.3
Wheat
5.4
7.9
24.6
37.2
Rice
12.1
13.5
Bean
3.5
4.3
139.7
179.8
12.6 million ton (51.0)
40 million ton (28.7)
Source MAPA
19
OPPORTUNITIES Exports Projection
million ton
million ton
Meat
2008
2018
Grain
2007/08
2018/19
Poultry
3.6
6.6
Soy
25.7
36.5
Bovine
2.4
4.6
Corn
11.5
22.9
Swine
0.6
1.1
37.2
59.4
6.6
12.3
22 million ton (59.7)
6 million ton (86.4)
Source MAPA
20
OPPORTUNITIES Raising Consumption
Consumption raise More attractive countries
Source FAPRI
21
OPPORTUNITIES
USA subvention tends to decrease OBAMA
10.3 (US 476 million) of Brazilian exports
(Jan/09)
FIGHT FOR FAIR TRADE Obama and Biden will also
pressure the World Trade Organization to enforce
trade agreements and stop countries from
continuing unfair government subsidies to foreign
exporters and nontariff barriers.
Decrease tendency of agricultural subsidies in
the USA
Source OCDE/Obama-Biden Government Plan
22
OPPORTUNITIES
OPPORTUNITY FOR BRAZIL
PRICE INCREASE

LESS SUBSIDIES

SUPPLY REDUCTION

AMERICAN EXPORTS REDUCTION
Source USDA/New York Times/Obama-Biden
Government Plan
23
BB AGRIBUSINESS CREDIT PORTFOLIO R 63.7 billion
59.8 market share
28.3 of BB credit portfolio
120.000
62,6
R million
100.000
59,9
59,8
58,7
80.000
58,3
60.000
54,3
53,6
40.000
20.000
0
dec/04
dec/05
dec/06
dec/07
jun/08
nov/08
dec/08
SNCR
BB
Market Share
Source 4Q08 Performance Analysis
24
Disbursements are 29 larger than the same period
at last crop year
BB and 2008/09 Crop Year
Source Dirag
25
BB and 2008/09 Crop Year
69 of Agricultural Costs contracts are covered
with insurance or Proagro.

Reinsurance distribution at 2008/09 crop year


COMPANY

IRB
25
SCOR
15
SWISS RE
15
PARTNER RE
15
MUNICH RE
10
CATLIN
4
MAPFRE RE
3
HANNOVER
3
TOTAL
90
Source 4Q08 Performance Analysis
26
Rolled over credit portfolio evolution
without third part risk
June/08 to December/08
6.0
-16.7
June/08
September/08
December/08
R 57.5 bi
R 56.3 bi
R 59.5 bi
22.0
26.4
22.7
Credit Portfolio R 13.1 bi PCLD R 2.6
Credit Porfolio R 12.8 bi PCLD R 2.2
Credit Portfolio R 15.2 bi PCLD R 2.6
78.0
77.3
73.6
Credit Portfolio R 43.5 bi PCLD R 2.1
Credit Portfolio R 42.3 bi PCLD R 2.1
Credit Portfolio R 46.4 bi PCLD R 2.1
Regular Credit Portfolio
Rolled over Credit Portfolio
Source 4Q08 Performance Analysis
27
BB and 2008/09 Crop Year Costs Contracting Profile
28
Thank you!
Agribusiness Board Phone. [phone] Fax
55.61.3310.2481 agronegocios_at_bb.com.br
José Carlos Vaz Director
29
Support material Margins by Product/Region/State
30
Margin - Soy
Projected margin in February/09 at Middle-West
and South regions contemplate production loss
caused by dry weather












US base scenery Direo (oct R 1.83 jan
R 2.28) US pessimist scenery Direo (oct R
2.20 jan R 2.48)
Sources Costs - RTA Quotation -
BMF May/09
31
Projections and simulations 08/09 Crop Year
Soy
(b) estimated income without productive loss
(c) estimated income with productive loss
(d) estimated income with productive loss
March/09 quotation, from 02.09.09 to
02.13.09 medium, (-) base difference R 2.28
US 1.00, EO scenery. Base, 02.12.2009 R/bag
60 kg PR 46.33 RS 47.84 MT 40.22 MS 43.80 GO
44.36 BA 43.42
32
Projections and simulations - 08/09 Crop Year -
Soy PR
October/2008
Profit Area
3
2
1
4
Prejudice Area
BMF quotation in May/09 (US 20.79/bag less
base differential and dollar at R 1,80)
RTA Projected Price (R 41.93/bag converted do
dollar at R 1,80)
1
3
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 2.20)
2
RTA Projected Price (R 41.93/bag converted do
dollar at R 2.20)
4
Sources RTA, BMF and Direo
33
Projections and simulations 08/09 crop year
Soy PR
February/2009
Dry weather production loss contemplated
Profit Area
1
2
3
4
Prejudice Area
1
3
RTA Projected Price (R 41.75/bag converted to
dollar at R 2.28)
BMF quotation in May/09 (US 21.93/bag less base
differential and dollar at R 2.28)
2
BMF quotation in May/09 (US 21.93/bag less base
differential and dollar at R 2.48)
RTA Projected Price (R 41.75/bag converted to
dollar at R 2.48)
4
Sources RTA, BMF and Direo
34
Projections and simulations 08/09 crop year
Soy RS
October/2008
Profit Area
3
2
1
4
Prejudice Area
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 1.80)
1
RTA Projected Price (R 39.58/bag converted to
dollar at R 1.80)
3
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 2.20)
2
4
RTA Projected Price (R 39.58/bag converted to
dollar at R 2.20)
Source RTA, BMF and Direo
35
Projection and simulations 08/09 crop year
Soy RS
January/2009
Profit Area
1
2
3
4
Prejudice Area
BMF quotation in May/09 (US 21.64/bag less base
differential and dollar at R 2.28)
1
RTA Projected Price - US 18.54/bag (R 39.84/bag
converted to dollar at R 2.28)
3
BMF quotation in maM/09 (US 21.64/bag less base
differential and dollar at R 2.48)
2
RTA Projected Price - US 17.04/bag (R 39.84/bag
converted to dollar at R 2.48)
4
Sources RTA, BMF and Direo
36
Projections and simulations 08/09 crop year
Soy MT
October/2008
Profit Area
1
2
3
4
Prejudice Area
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 1.80)
1
RTA Projected Price (R 34.39/bag converted to
dollar at R 1.80)
3
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 2.20)
2
4
RTA Projected Price (R 34.39/bag converted to
dollar at R 2.20)
Sources RTA, BMF and Direo
37
Projections and simulations 08/09 crop year
Soy MT
January/2009
2
1
Profit Area
3
4
Prejudice Area
BMF quotation in May/09 (US 21.64/bag less base
differential and dollar at R 2.28)
1
RTA Projected Price - US 19.03 (R 34.39/bag
converted to dollar at R 2.28)
3
BMF quotation in May/09 (US 21.64/bag less base
differential and dollar at R 2.48)
2
RTA Projected Price - US 17.50 (R 34.39/bag
converted to dollar at R 2.48)
4
Sources RTA, BMF and Direo
38
Projection and simulations 08/09 crop year
Soy BA
October/2008
Profit Area
3
1
2
4
Prejudice Area
RTA Projected Price (R 42.40/bag converted to
dollar at R 1.80)
3
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 1.80)
1
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 2.20)
2
4
RTA Projected Price (R 42.40/bag converted to
dollar at R 2.20)
Sources RTA, BMF and Direo
39
Projection and simulations 08/09 crop year
Soy BA
January/2009
Profit Area
2
1
3
4
Prejudice Area
RTA Projected Price - US 21.26 (R 42.17/bag
converted to dollar at R 2.28)
3
BMF quotation in May/09 (US 21.64/bag less base
differential and dollar at R 2.28)
1
BMF quotation in May/09 (US 21.64/bag less base
differential and dollar at R 2.48)
RTA Projected Price - US 19.54 (R 42.17/bag
converted to dollar at R 2.48)
2
4
Source RTA, BMF and Direo
40
Projections and simulations 08/09 crop year
Soy GO
October/2008
Profit Area
3
2
1
4
Prejudice Area
RTA Projected Price (R 42.97/bag converted to
dollar at R 1.80)
3
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 1.80)
1
BMF quotation in May/09 (US 20.79/bag less base
differential and dollar at R 2.20)
2
4
RTA Projected Price (R 42.97/bag converted to
dollar at R 2.20)
Sources RTA, BMF and Direo
41
Projection and simulation 08/09 crop year Soy
GO
January/2009
Profit Area
2
1
3
4
Prejudice Area
RTA Projected Price - US 21.65 (R 43.07/bag
converted to dollar at R 2.28)
3
BMF quotation in May/09 (US 21.64/bag less base
differential and dollar at R 2.28)
1
BMF quotation in May/09 (US 21.64/bag less base
differential and dollar at R 2.48)
2
RTA Projected Price - US 19.91 (R 43.07/bag
converted to dollar at R 2.48)
4
Sources RTA, BMF and Direo
42
Margin - Cotton








Sources costs - RTA quotation
ICE/Nybot July/09
US base scenery Direo (Oct R 1.83 Jan
R 2.25) US pessimist scenery Direo
(Oct R 2.20 Jan R 2.42)
43
Margin - Corn
Projected margin in February/09 at Middle-West
and South regions contemplate production loss
caused by dry weather
Sources costos RTA quotation BMF
March/09
44
Projections and simulations 08/09 crop year
Corn
(b) estimated income without productive loss
(c) estimated income with productive loss
(d) estimated income with productive loss
march/09 quotation, 02.02.09 to 02.13.09 medium,
(-) base difference R/bag 60 kg PR
18.49 RS 20.40 GO 17.29 SP 20.99 BA 18.04
45
Margin - Rice
Source RTA