Elite Producer Business Conference Las Vegas, Nevada November 6, 2012

Chris Policinski President and CEO Land O’Lakes, Inc.

Telling Our Story… Listening to the Marketplace

Our Story….

The Great Untold Productivity Story of American Agriculture

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U.S. Farmers Lead Ag Productivity

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1984 1972 1960 1948 2006 1996

Total inputs2

Total output 1

SOURCE: Productivity Growth in US Agriculture, USDA (2007); Economic Research Service; American Farm Bureau Federation

Changes in US agricultural output, inputs, since 1948 Index 1948 = 100

In 1930…

Today…

• One farmer fed 10 people

• One farmer feeds 155 people

• 25% of income spent on food

• 10% of income spent on food

• 22% of the US workforce in Ag

• 2% of the US workforce in Ag

~250%

• Farming practices

• Technology

1 Total output is an aggregation of crop and livestock commodities and related services 2 Total input is an aggregation of land, labor, capital and intermediate inputs like fertilizer, feed and seed

U.S. Ag Productivity Drivers • Adoption of modern business, production management

practices on the farm • Application of safe, proven agricultural technologies

In Agriculture….Consumer Perceptions

Big = “Bad” Technology = “Scary”

The Great Divide “Good” or “Bad” Agriculture

Large or Small Specialized or Diversified High-Tech or Traditional

Biotech or Conventional or Organic

The Risk of Misperception 98%+ of U.S. population are NOT farmers

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False perceptions can take root … influencing public opinion Public opinion can quickly become public policy

“Productivity Story” Even More Important…

“The food industry is one of the great growth industries of our era.”

• World population to grow from 6.8 billion to more than 9

billion by 2050

• Global food production will have to increase 70% to meet higher demand

SOURCE: United Nations Food and Agricultural Organization World Food Day 2010

Challenge: Finite / Stressed Resources • There is, at most, 12% more

arable land available globally • Analysts expect only 5% more

land will be cultivated by 2050 • Demand expected to outstrip

water supply by 40% by 2030

SOURCES: OECD-FAO, global water supply/demand model; agricultural production based on IFPRI computed general equilibrium model base case; A Daunting Task, Prof. Robert Thompson (2010)

We will have to produce more with less.

The Risk… “There has been further rioting in parts of the Algerian capital by hundreds of youths angry over increasing food prices.”

– BBC, January, 2011

“Indications are that the food crisis of 2008 was a dress rehearsal for future crisis.”

– Paul Krugman, March 2009

“Riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to a boiling point and catapulted it to the forefront of the world's attention.”

– CNN, April 2008

Highly Publicized Food Riots 2007-2011

What Can We Do? 1. Build a fact-based understanding of

agriculture – Advocate … but also educate

2. Listen to messages from the marketplace – Feedback = opportunity to learn / respond – Translate into stronger agriculture and food systems

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100

150

200

250

300

U.S. Farmers Lead Ag Productivity

13

1984 1972 1960 1948 2006 1996

Total inputs2

Total output 1

SOURCE: Productivity Growth in US Agriculture, USDA (2007); Economic Research Service; American Farm Bureau Federation

Changes in US agricultural output, inputs, since 1948 Index 1948 = 100

In 1930…

Today…

• One farmer fed 10 people

• One farmer feeds 155 people

• 25% of income spent on food

• 10% of income spent on food

• 22% of the US workforce in Ag

• 2% of the US workforce in Ag

~250% • Farming

practices • Technology

1 Total output is an aggregation of crop and livestock commodities and related services 2 Total input is an aggregation of land, labor, capital and intermediate inputs like fertilizer, feed and seed

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SOURCE: FAO Expert Meeting on How to Feed the World in 2050 (2009)

Arable land expansion / cropping intensity

Yield increases via technology / management

practices

Sources of growth in crop production, 2005-2050 Percent

Advances in production practices and technology are needed to achieve the yields the world requires

23%

77%

Advanced Management Practices, Technology Are THE Most Essential Productivity Levers

Need Size / Technology to Feed 9 Billion!

“The world has the technology,

either available or well-

advanced in the research

pipeline to feed a population of

10 billion people.

The more pertinent question

today is whether farmers and

ranchers will be permitted to use

this new technology.”

Dr. Norman Borlaug

Listen to Messages From the Marketplace

Feedback =

Opportunity to Learn / Respond

Stewardship / Sustainability No one has a greater stake in good

stewardship of the environment and sustainable agricultural practices

than the farmer.

Productivity Drives Sustainability!

• 2007 vs. 1944: per gallon of milk, dairy farmers used – Only 10% of the land – Only 35% of the water resources

• 2007 vs. 1944: per gallon of milk, dairy

farming generated – Only 24% of the manure – Only 43% of the methane

cattlenetwork.com July 7, 2010 Megan Pierce, Dairy Herd Magazine

1930 – 2010 650% more corn… on 13% fewer acres

Source: USDA Economic Research Service

Productivity Drives Sustainability!

Responding to the “Green” Message

The facts are very friendly!

Productivity = Authentic Sustainability

And… Go on the offensive to improve

sustainability performance in agriculture

Let’s talk about production agriculture not only in output or

economic terms … but also in

environmental terms.

Animal Welfare Message

The public wants and demands, responsible animal care.

Undercover video shows abuse of sick cows – USDA begins investigation to discover if ‘downer cows’ may have ended up in school lunches

CBS News

Animal rights group’s video depicts abuse of chickens at egg farms

San Francisco Chronicle

The Irony of the Animal Welfare Debate

Most farmers are very sensitive to animal well-being and already operate at a high standard.

“I have my life invested in my farm and my animals … of course, I want to

provide the best care I can … they are the future of my operation.”

“Quality care is in my best interests, healthy animals are more productive. It makes economic sense and it’s just the right thing to do.”

Responding to the Animal Welfare Message

Most farmers are sensitive to animal care issues … but not all

We must advocate … the industry must adopt formal animal care standards … and

self enforce

Food Safety / Quality Message

The public wants assurances that

the food they purchase is safe and healthful.

Food Safety / Quality Reality = Perception

“The American food supply is the safest in the world, thanks to industry and government efforts.”

Dr. Jean Weese, PhD., Professor and Food Scientist Extension Specialist,

Auburn University

Recalls Create Concern

Food Safety / Quality There is not “good” versus

“bad” food based on the type of agriculture…

just different food.

There is Not Just One Nutritious Food Supply

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SOURCE: Nutritional quality of organic foods: a systematic review (The American Journal of Clinical Nutrition, 2009)

1 A statistically significant (at P=0.05) difference in the reported mean nutrient counts of conventionally and organically produced foodstuffs

2 Due to an insufficient number of studies to compare nutrient content for specific foodstuffs, nutrient categories were compared across all studies. Only nutrient categories reported in 10 or more studies were included in this analysis

Higher concentrations in organic or conventional crops?1,2

Based on a review of selected studies between Jan 1958-Feb 2008

Nitrogen

Titratable acidity

Phosphorus

Magnesium

Calcium

Vitamin C

Potassium

Zinc

Total soluble solids

Copper

Phenolic compounds

Nutrient Conventional Organic No difference

A review of 55 available studies indicates that organic and conventional foods have similar nutrient content

Organic vs. Conventionally Grown Foods

New Stanford University Study Confirms No Significant Differences

• ....“the most comprehensive meta-analysis to date of existing studies comparing organic and conventional foods”

• “They did not find strong evidence that organic foods are more

nutritious or carry fewer health risks than conventional alternatives”… Source: Stanford University, Sept. 3, 2012

Call to Action

1. Tell our story Advocate Educate

2. Listen to the marketplace Learn Respond

Co-existence and Choice Large and Small

Specialized and Diversified

High-Tech and Traditional

Biotech, Conventional and Organic

Conclusion:

Large-scale farms driven by science and technology, connected to consumers through global supply chains

Small-scale farms connected to

consumers through local

food networks

AND

Meet global food demands Keep local/rural communities and infrastructure vibrant

Future Success will be Driven by Co-existence and Choice

Food Security Economic Security Political Security

We Have To Get This Right!

THANK YOU!