Rod Cook Ag-View Consulting

For each of the three crops

World Production Consumption Trends Opinions about the near future Conclusions for the Chilean Industries

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1,500
MillionLbs. Asia& Pacific

1,200 900 600 300 0 2005 2007 2008 2009 2010 2011 2012

SouthernAfrica Med.&N.Africa Europe SouthAmerica NorthAmerica

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Region Russia Serbia USA Chile Poland Germany Ukraine Hungary China Canada France EnglandScotland Others Total
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Area(Ha) ?? 15,500 10,000 12,000 10,000 1,000 1,500 1,700 1,000 2,500 1,300 1,000 6,000 63,500

% 24% 16% 19% 16% 2% 2% 3% 2% 4% 2% 2% 9%

2006 USA Canada 65.000 10.500

2007 73.500 9.800

2008 (estimado) 75.000 10.000

Chile
UK France Germany Serbia Hungary Poland Ukraine Russia Others TOTAL Ag-View Consulting

60.000
12.200 7.000 6.000 72.000 9.000 52.000 7.000 100.000 20.000 421.700

57.000
13.000 5.500 6.000 65.000 6.000 55.000 7.000 100.000 30.000 434.800

42.000
13.000 7.000 5.000 55.000 5.000 50.000 6.500 100.000 35.000 411.000

Little printed information about world imports and Exports Chilalimentos shows that of the Chilean raspberry crop 36% goes to the US. World wide the US and the EU are clearly the top consumers with Japan a distant third. NOTE: No real data is available on Russian production nor markets. It is assumed it is mostly consumed internally

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All three share the USA as the largest single market World production on blueberries is rising the fastest and will continue to do so for a number of years as recent plantings begin to mature

Raspberry yields are struggling around the world

Huge percentage increases in South America with huge acre increases in North America Even with no new plantings we will see continued increases in production for four or five years

Strawberry seems to be growing sufficient demand to keep up with slowly rising supply
The only one of the three where process is a waste stream

Record pricing is driven by weather related crop shortages not due to increased consumption Recent grower pricing will encourage increased plantings (already seeing this in British Columbia) Chilean governmental actions encouraging small farms (IDNAP and regional economic development programs) will encourage small farm production

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Concern about rising inventories of fruit in the number one market (USA) suggest that the world economic conditions are affecting fruit buying patterns US consumer trend in buying healthy has been replaced by buying cheap
x Markets wont disappear but they will become more price sensitive

Many older US citizens have lost the dream of retiring early After years of leading the world in consumption of goods the US buyer is trying to save their money

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Research shows suggests that only 13% of US consumers will return to old buying patterns (Fortune magazine 31/8/09) The two new powerhouses of consumption will most likely be China and India

Large populations Economies that have continued to perform so far in the world economic crisis Rapidly increasing demand for improved lifestyle

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McKinsey Global Institute

MGIs analysis shows that if India continues on its current high-growth path, over the next two decades the Indian market will undergo a major transformation. Income levels will almost triple, and India will climb from its position as the twelfth-largest consumer market today to become the worlds fifth-largest consumer market by 2025. As the incomes of the new middle class rise dramatically, China will become the third-largest consumer market in the world by 2025. A key characteristic of Chinas new middle class will be that these households will begin to spend a larger proportion of their income on discretionary items, thus significantly changing the patterns of spending in the economy.

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World Banks projections are that China will overtake Japan for the second largest economy by 2011

A lot of this was driven by export to the US and the EU World economic crisis collapsed many of the export markets for China The Chinese government has begun funding internal growth through infrastructure, environmental initiatives and DOMESTIC CONSUMPTION (Fortune Magazine 31/8/09)

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Why are these economies growing while western economies are not?

They were not debt ridden to begin with so subsidies to consumers get spent as opposed to being used to pay off debt These nations have poor infrastructure so investments in the nation have significant impact on productivity and open up markets for consumers

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Consumption Patterns are different

Heritage of dried fruit
x Raisins x Figs x Nuts

Heritage of health and medicinal uses of fruit

x Infusions x Teas x Fruit Drinks

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Are you ready to meet the requirements of the new markets?

Increased finished goods Little to no frozen logistics will mean a significant change away from processed fruit being
x Frozen in a bag for consumer packs x Frozen bulk for ingredients

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Grower

Must be low cost producers Must produce fruit to world class levels
x Traceability x Good Farming Practices x Sustainable or Organic

Must diversify among the crops to avoid the bubbles ala Blueberry

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Processors needs are similar

x HACCP x GMP x ISO9000+

Must be low cost producers Must continue to produce at world class levels

Must look beyond the commodity products

x Beverages Juego Framboisa x Dried fruit beyond the standard items x Finished goods for the world

x Look for synergies or core businesses on which you can build for the new markets

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Most of our fruit crops are commodities

Shortages, real or imagined cause spikes in the market High pricing results in over planting Currently only strawberry shows any likelihood of balancing demand and production The great consumers, the US and the EU are changing buying habits New markets are opening but for very different product styles To participate in the new markets will require innovation, low cost and high quality

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Statistics provided by

California Strawberry Commission US Highbush Blueberry Commission Felipe Rosa Consulting Antonio Dominguez, Chilalimentos Washington Red Raspberry Commission Dahlberg Consulting - Santiago US Department of Agriculture Shelford Consulting The Economist Vol. 382 Number 8644

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Rod Cook Olympia, WA