INVESTMENT IN THE AGRO-INDUSTRY SECTOR

“I think that it is very favorable for investment and it is a country with enormous potential. The GDP is growing at very attractive levels, the country is being managed very well from a fiscal point of view, and it has a big labor force, so we see Colombia as a very attractive market for PepsiCo and even more so for the food and beverage sector.”

Indra Nooyi, President and Executive Director of PepsiCo. Sixth Summit of the Americas, April 14, 2012.

GROWTH, CONFIDENCE AND OPPORTUNITIES TO INVEST

Libertad y Orden

COLOMBIA: BROAD RANGE OF ALTERNATIVES FOR AGRO-INDUSTRIAL PRODUCTION

Agro-industrial sectors with a global scope: More than half of the land on Earth that could be used for agricultural purposes is found in only eight tropical countries:

As a country located in the tropics, Colombia has a diversity of thermal floors at altitudes above sea level, which go from 0 MSL (> 24oC ) up to 4,000 MSL (< 60C ). (Earthtrends, 2011).

Productive Transformation Program, 2011

BEEF, CHOCOLATE-MAKING, CONFECTIONERY AND RELATED RAW MATERIALS, PALM, OILS AND FATS, DAIRY, FRUIT AND VEGETABLE PRODUCTION, AND AQUACULTURE.

ANGOLA, ARGENTINA, BOLIVIA, COLOMBIA, BRAZIL, CONGO AND SUDAN.

ranked Latin American country for precipitation levels, ranked tenth globally.(FAO, 2011).

ranked country in Latin America for availability of lands for agricultural production. (FAO, 2011).

3rd

4º

(FAO, 2011).

Instituto Geográfico Agustín Codazzi [Agustín Codazzi Geographical Institute] (IGAC) and Instituto Colombiano Agropecuario [Colombian Agricultural Institute] (ICA), 2011.

1. Other uses: includes bodies of water, uncultivated land, urban or semi-urban areas, and marginally cultivatable areas in natural parks.

SECTOR WITH THE GREATEST POTENTIAL FOR GROWTH

14.4 MILLION HECTARES

Arg

entina

Colo

mbia

Ecu

ador

Lata

m

Méxi

co

Venezu

ela

9,1%

6,4% 5,9% 5,9% 5,2%4,1% 3,7% 3,6%

6,5%

FARMING SECTOR’S SHARE OF THE GDP FOR LATIN AMERICA, 2012.

Based on the agro-ecological zoning map, Colombia’s agricultural potential corresponds to 12.7% of national territory, meaning:

In 2012, the country was the ranked second in terms of the contribution of its farming sector to the Gross Domestic Product (6.5%). (Economist Intelligence Unit).

Between 2010 and 2012, farming GDP in Colombia grew by close to 5%. (DANE, Departamento Administrativo Nacional de Estadística [National Administrative Department of Statistics]).

million hectares are used for farming, of which: 29.1 million are for livestock, 2.9 million are for agriculture, 3.6 million are for forests, and 1.8 million are used for other purposes. (Annual farming statistics - Ministry of Agriculture and Rural Development 2011).

Agricultural production in Colombia has increased by nearly 16% between 2002 and 2012. Farming statistics - Ministry of Agriculture and Rural Development).

2nd.

5%

16%

37,6

Bra

zil

Pendin

g

Peru

Colombia has up to two million hectares suitable for cultivating cocoa. (Corpoica - The Colombian Corporation of Farming Research, Fedecacao - The National Federation of Cocoa Growers and the Ministry of Agriculture and Rural Development).

The growing production of oil palm and sugar cane requires the construction of new bio-refineries, biomass plants and development of transesterification, which allow the transformation of sugar cane and oil palm into biodiesel.

LARGE FOREIGN COMPANIES HAVE CHOSENCOLOMBIA AS A PLACE TO INVEST

D O L E F O O D, U N I T E D S TAT E S : the U.S. multinational specializing in the fruit and vegetable sector invested in the construction of a new production and distribution plant for fruit and vegetables in Colombia. The plant will be located in Cundinamarca and will be aimed at meeting the needs of the national and international market.

M O N D E L É Z , U N I T E D S TAT E S : t h e U. S . m u l t i n a t i o n a l M o n d e l é z I n t e r n a c i o n a l a c q u i r e d K r a f t F o o d s , w h i c h m a d e a n i n v e s t m e n t i n t h e e x p a n s i o n o f i t s m a n u f a c t u r i n g a n d c o n f e c t i o n e r y p l a n t i n C a l i .

OLMUE, CHILE: the fruit company constructed a fruit processing plant in Valle de Cauca.

DANNON, FRANCE: it entered the Colombian market in an alliance with Alqueria, opening a production plant in Cajica, Cundinamarca.

OPPORTUNITIES FOR THE AGRO-INDUSTRIAL SECTOR

Construction of production plants for processed foods like pulps, jams, preserves, sauces and other products derived from fruits and vegetables, with the aim of commercializing their production in the domestic market and exploring markets for exportation.

In Colombia there are available areas (continental and maritime) that comply with the physical requirements necessary for carrying out the cultivation of different species like Cobia, Trout, Grouper, Bocachico, Palmaro, etc. Additionally, Colombia’s tropical location, the climate and the temperature of the waters favor year-round shrimp production.

Late-yield crops: in Colombia, crops that are considered late-yield such as cocoa, rubber, oil palm, citrus fruit and fruit trees that are established before December 31, 2014 are exempt from paying any income tax for 10 years, counting from when production starts.

Income tax exemption for forest plantations: investments in new forest plantations and sawmills are exempt from the income tax. This benefit covers plantations established after 2003 and has no seasonal restrictions.

Forest Incentive Certificate (CIF): the CIF is a monetary incentive that recognizes up to 50% of the investment made in the establishment, as well as the maintenance costs up to the fifth year, of plantations of introduced or native species defined by the Ministry of Agriculture.

Vallejo Plan: by virtue of this program, capital goods and spare parts2 or raw materials and supplies can be imported with total or partial suspension of customs duties (VAT and tariffs), given compliance with certain export commitments. The Vallejo Plan also allows for benefiting from simplified import procedures.

Free Trade Zones: Free Trade Zones are geographical areas where companies can be established to develop industrial activities for goods or services under a regime that offers customs and tax benefits, such as the opportunity to benefit from a reduced income tax rate, as well as being able to import machinery, equipment, and supplies without incurring customs duties.These benefits are not subject to export commitments. Purely agricultural activities cannot be developed under the Free Trade Zone regime, they need to be an industrial transformation of raw materials 13

An enviable logistical position with access to the Pacific and Atlantic oceans, at just:

free trade agreements in force, including partial agreements: five signed and three under negotiation. Ministry of Trade, Industry and Tourism.

Colombia has:

International Air Transportation Association - IATA and Airlines-Processed by ProColombia.

COLOMBIA AS AN EXPORT PLATFORM FOR ESTABLISHING LOGISTICS HUBS

6 DAYS BY BOAT AND

3 HOURS BY PLANE FROM THE U.S.A.

11 DAYS BY BOAT AND

11 HOURS BY PLANE FROM EUROPE

INCENTIVES AND BENEFITS FOR INVESTMENTS IN THE COLOMBIAN AGRO-INDUSTRIAL SECTOR

2. The capital assets that are the object of this benefit are those that are established in Resolution No. 1148 of 2002 by the Ministry of Trade, Industry and Tourism.

SUPPORT FROM PUBLIC ENTITIES FOR SECTOR DEVELOPMENT

MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT: responsible for formulating, coordinating, and evaluating the policies that promote competitive, equitable and sustainable development of processes for agriculture, forestry, fisheries and rural development, with a focus on decentralization, cooperation and participation, and which contributes to improving the standard and quality of life of the Colombian people.

PRODUCTIVE TRANSFORMATION PROGRAM: seeks to develop world-class sectors via the formulation and execution of sectoral business plans that favor economic growth and strengthen the national productive apparatus via public-private alliances.

PROCOLOMBIA: entity in charge of promoting investment, exports and tourism in Colombia.

AGRO-INDUSTRIAL EXPORTS// 2002-2012. US$ MILLIONS.

2002

2.127 2.2072.617

3.1193.446

4.0954.772

4.4333.861

4.440 4.680

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Libertad y Orden

Source: DANE

CAGR 2002-2012Exports: 8.2%