Grain Supply Chain Infrastructure and Corridors

Fields on Wheels

Winnipeg, MB December 2, 2015

Agenda

�  Production and Supply �  Infrastructure �  System Performance �  Summary

Introduction

�  Despite the challenges, the past 20 years has seen many changes and extraordinary improvements in the Western Canadian GHTS

�  Canada continues to have a world class grain delivery supply chain that is continually working to move more, faster and more effectively

�  The changes we have seen in the past 20 years can tell us a lot of the potential for the next 20 …

15-12-14

Production and Supply

Production – 1980 -2015(P) (‘000 tonnes)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Cereals Canola Special Crops Other

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 *

Tonn

es (0

00)

Production Carry In

Total Supply (Western Canada Production and Carry In Stock)

81.977.1

66.2P

Country Elevator Throughput

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

MB SK AB BC

Tonn

es (0

00's

)

Where does Western Grain Go? (2014-15)

[CATEGORY NAME]

[VALUE]MT [PERCENTA

GE]

[CATEGORY NAME]

[VALUE]MT

[PERCENTAGE]

[CATEGORY NAME]

[VALUE]MT [PERCENTA

GE] [CATEGORY NAME]

[VALUE]MT [PERCENTA

GE]

[CATEGORY NAME]

[VALUE]MT

[PERCENTAGE]

Tonnes (,000)

Total = 51,778 MT

Western Canada Traffic (2014-15)

[CATEGORY NAME]

[VALUE]MT [PERCENTA

GE]

[CATEGORY NAME]

[VALUE]MT [PERCENTA

GE]

[CATEGORY NAME]

[VALUE]MT [PERCENTA

GE]

[CATEGORY NAME]

[VALUE]MT [PERCENTA

GE]

[CATEGORY NAME]

[VALUE]MT

[PERCENTAGE]

Total = 37,855 MT

Tonnes (,000)

Total Volume Movement to Western Ports

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1999

-200

0

2000

-200

1

2001

-200

2

2002

-200

3

2003

-200

4

2004

-200

5

2005

-200

6

2006

-200

7

2007

-200

8

2008

-200

9

2009

-201

0

2010

-201

1

2011

-201

2

2012

-201

3

2013

-201

4

2014

-201

5

Tonn

es (0

00)

VANCOUVER PRINCE RUPERT CHURCHILL THUNDER BAY

�  Annual Growth Rate is 3%

�  West Coast Annual Growth rate = 5% ¡  Lower Ocean Freight ¡  Proximity to markets

�  A Record Total of 38 MMT in 2014-15

Truck to US (Tonnes)

�  Initial results of trucking data analysis

�  A comparison of Single desk (2011-12) to this past crop year show a steady increase

�  More detailed trucking data will be included in Annual Report

1,906 1,57

7

2,273

3,214

0

500

1000

1500

2000

2500

3000

3500

2011-2012 2012-2013 2013-14 2014-15

15-12-14

Infrastructure

Grain Company 1988 2001 2007 2012 2015 Current Assets

Continental Grain Assets

purchased by Richardson

19 Facilities Richardson International

4 Port 66 Country

Pioneer/ Richardson

Manitoba Pools Agricore Agricore

United Viterra Glencore Viterra

(Glencore) 4 Port

71 Country

Alberta Wheat Pool

UGG

Saskatchewan Wheat Pool

Cargill Cargill 2 Port 29 Country

Paterson Alliance Grain

Terminal

Paterson 1 Port 30 Country

Parish and Heimbecker

Parish and Heimbecker

3 Port 22 Country

Louis Dreyfus Louis Dreyfus 1 Port 11 Country

CWB/ G3 G3 4 Port 11 Country

Consolidation of the Grain Industry

First country elevator in 1998

Primary Elevator Facilities

0

200

400

600

800

1,000

1,200

AU

G 1

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

Q2

Q4

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Manitoba Saskatchewan Alberta BC Delivery Points

Primary Elevator Storage Capacity

4,000

4,500

5,000

5,500

6,000

6,500

7,000

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Tonn

es ('

000s

)

Primary Elevator Storage Capacity

Railway Network: 1980

CN CP Regional/ Shortlines

Approx. 22,000 Miles

Railway Network: 2014

CN CP Regional/ Shortlines 17,424 Miles

Port Terminals – Capacity

Port Terminals – 5 Year Avg. Volumes

Grain Industry Investments

�  Grain Companies Capital Investments for Expansion and Productivity – 2013 and 2014 – Total $763 M: ¡  Port Terminals = $304 M ¡  Country Elevators = $284 M ¡  Country Elevator New Builds = $ 175 M

�  Farm Investments include: ¡  Machinery and Equipment = $25.98 B (over past 8 years) ¡  On Farm Storage = $17.5 B (70.1 M tonnes, approx. 15 M in

last 5 years) �  Railways Total Capex – 2014

¡  CP = $1.5 B; CN = $2.3 B

Beyond that …

Country �  G3 expansion and other entrants(?) �  Increasing the capacity of existing facilities Railway �  Continued increase in sidings, sidings length,

investments geared for more capacity and increased velocity, IT and Motive Power

Terminals �  More expansion of existing terminals in Vancouver �  The possible addition of G3 on North Shore

15-12-14

System Performance

Country Elevator Turnover Ratio

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

Turn

s pe

r yea

r

�  Continued and ever improving strong performance

�  Reveals a coupling of the increase in storage capacity and the reduction of facilities

Western Railway Car Cycles (to three ports)

-

5.0

10.0

15.0

20.0

25.0

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Day

s

Loading Time (days) Origin Dwell Time (days) Loaded Transit Time (days)

Destination Dwell Time (days) Unloading Time (days) Empty Transit Time (days)

Linear (Total Cycle Time (days))

Railcar Cycles - Western Canada Traffic - days

2014-15 Crop Year

14.6

12.4

12.6 23.4

42.0

27.9 39.5

38.2

20.8

23.1

Loaded Transit Time: Western Ports

0.200

0.250

0.300

0.350

0.400

0.450

0.500

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

CV

Day

s

Loaded Transit Time (days) Coefficient of Variation Linear (Loaded Transit Time (days)) Linear (Coefficient of Variation)

5 Year Trend

Port Terminal Turnover Ratios

�  Vancouver and Prince Rupert terminals have set record movements and turnover ratios

�  Reveal excellent utilization of assets

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Num

ber o

f tim

es tu

rned

ove

r

Vancouver Prince Rupert All

Vancouver Vessel Time in Port

�  One area of concern �  Driven by multiple

issues, including: ¡  Stocks not available when

vessel arrives ¡  Low Ocean vessel rates ¡  Record high volumes of

traffic �  Was 8-10 days prior to

2010 and climbing since -

5.0

10.0

15.0

20.0

25.0

30.0

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

2001-02 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Time in the System

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2013-2014 2014-2015

Day

s

Country Elevator Storage Railway Loaded Transit Terminal Elevator Storage Linear (Total (days))

Process and Approach

�  Grain Companies ¡  Match sourcing to sales ¡  Increased contracting with producers

�  Railways ¡  Adapting new car allocation concepts (i.e. DTP on CP; CFIP on CN) ¡  I Advise: First Mile - Last Mile - Improving communication with

customers via the Web (CN) ¡  CN’s Winter Ready Certified Loader Program: train air in winter

�  Terminals ¡  Increasing shifts to match volumes ¡  Adapting technological solutions to: reduce vessel loading times;

increase velocity of railcar unloading

Future Considerations

�  New build elevators in the country are moving to a loop track design … ¡  Faster loading of railcars, reduced switching

�  Loop Tracks at Port? ¡  Waterfront property constraints ¡  At least 1 new port terminal project sees it in their plans

�  Impact of Logistical Economics in the Future? ¡  Ocean Freight in the long term? ¡  Increased use of “Salty’s” on the Seaway ¡  Changes in Global demographics

Winter will always come …

Should we consider other Modes?

Summary

�  Last year saw the highest volume movement from both country elevators and from export ports … ever

�  Railway car supply and movement has been the best we have seen … ever

�  So far, in the 2015-16 crop year, volumes and logistical flows remain strong

�  Are we headed to set a new normal in terms of production, volume and exports ? – lets hope so!

15-12-14

Thank You

Reports Available Website: www.grainmonitor.ca