setting the scene
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PUBLIC
HSBC AGRICULTURE
SETTING THE SCENE FOR 2015
23 October 2014
Allan Wilkinson
Head of Agriculture
allanwilkinson@hsbc.com Mobile 07836 536150
PUBLIC
GLOBAL FOOD PRICE INDICES
Source: Food Price Index, UN FAO
PUBLIC
WORLD POPULATION RANKING -
MILLIONS
Source: US Census Bureau International Database
PUBLIC
Source: Arla
PUBLIC
UK TOTAL INCOME FROM FARMING
(Real Terms)
Source DEFRA 8 May 2014
2.8
3.43.2
3 2.99 3.1
4.5 4.64.4
5.5
4.8
5.5
2.762.9 2.9 3
3.33.6
3.47 3.483.333.24
2.92.66
0
1
2
3
4
5
6
7
8
0.50
0.55
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
TIFF
Exchange Rate
Direct Support
Exch
ange
Rat
e €
to £
*
*Estimate
£ Billions
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
EVOLUTION OF THE CAP
PUBLIC
Long term supply
Source: Savills Research
PUBLIC
A SECOND YEAR OF GLOBAL GRAIN SURPLUS
- stocks not a concern for spot markets
PUBLIC
Source: FAO
GLOBAL WHEAT SUPPLY AND DEMAND –
a second strong year but major segmentation
PUBLICSource: USDA
KEY GLOBAL WHEAT PRODUCERS –
quantity not an issue
PUBLIC
Source: EU Commission,Statistics Canada, ABARES,USDA,IGC
KEY WHEAT IMPORTERS – as suspected, there is not
a consistent trend from China
PUBLICSource: IGC
EU WHEAT SUPPLY AND DEMAND – exports rather than
stocks should be the current focus
PUBLICSource: EU Commission
UKRAINE IS ONE OF THE KEY EXPORTERS
UKRAINE CROP PRODUCTION / EXPORT POTENTIAL IS
HUGE, ESSENTIAL LOGISTICS ARE ADEQUATE, PERFECT
LOCATION
PUBLIC
Source:USDA
GRAIN PRODUCTION UPS AND DOWNS
PUBLICSource: UkrAgroConsult
UKRAINE: CORN EXPORT BY
DESTINATION 2013/14
PUBLICSource: UkrAgroConsult
UKRAINE HAS 15 MAJOR PORTS ON THE BLACK
SEA AND ANOTHER 3 ON THE AZOV SEA
PUBLIC
Source: UkrAgroConsult
PUBLIC
Long Term Fundamentals
Managing Volatility
-80
-60
-40
-20
0
20
40
60
80
Year 1 Year 2 Year 3 Year 4 Year 5
Pro
fit
PUBLIC
Long Term Fundamentals
Managing Volatility
-80
-60
-40
-20
0
20
40
60
80
Year 1 Year 2 Year 3 Year 4 Year 5
Ou
tpu
t P
ric
e High unit costs
Med unit costs
Low unit costs
PUBLIC
PUBLIC
HSBC’S TOP 10 TIPS IN 2014
Few farms operate at their true economic optimum
The difference between the best and worst was large – now its
enormous
Does expansion increase/decrease profitability + cash?
Benchmarking and Budgeting are VITAL
The biggest variable in a business is YOU
The customer and consumer are king
Charles Darwin was right about dinosaurs – be adaptable
Know who your competitor is, what they do, and why?
Collaborate with your neighbour
VOLATILITY IS HERE TO STAY
PUBLIC
THANK YOU
PUBLIC
HSBC AGRICULTURE
SETTING THE SCENE FOR 2015
23 October 2014
Allan Wilkinson
Head of Agriculture
allanwilkinson@hsbc.com Mobile 07836 536150
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