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Myconate and Harpins:- The Markets

Prepared for: PHC Technology SeminarsJune 2007

Michael B. Cloutier

Plant Health Care Inc.

Today’s Technology for Tomorrow’s Environment

Market Potentials, Market trends PHC opportunities

• Markets/Potential/AcreHarpins and Myconate

• TrendsGreen /sustainable agRegulationsBiofuelsBasic R & D dollars decreasing

• Opportunities for Plant Health careTime is right for PHC


Headlines

• Biofuels, Biofuels, BiofuelsMajor companies Bayer, Syngenta, BASF etc all want to play

• R&D in Crop protection must be reduced according to Merrill Lynch’s Steve Byrne

CPC market has been flat for 10 years @ 33 billion The pie needs to expand

• Growing segments Organic , sustainable ag, food safetyBiotechPlant health is in now in vogue

BASF, Syngenta creating awareness of this segmentThe pie is expanding


New markets

Biomass/ Biofuelsmarket

Plant healthmarket

TraditionalCPC market


Market potential - Crops

Crops in blue are seed treated

• Cereals:Wheat, Barley, Oats, Rice, Sorghum, Rye, Triticale, Millet, Flax

• Pasture and Forage Crops:Alfalfa, Clovers, Other forage and hay crops

• Pulses and Potatoes:Field beans, Peas,Peanuts, Potatoes, Sweet potatoes

• Vegetables:Carrots, Onions, Cucurbits, Lentils, Lettuce, Spinach

• Transplant crops: (transplant dip -non-fumigated soil)

Tomatoes, Peppers, Strawberries

• Energy crops:Sugar cane, Switchgrass, Miscanthus, Jatropha, Poplar, Safflower, Oil Palm

• Perennial crops: (water-based application)

Citrus and other tree fruits, Nuts, Almonds, Grapes and other vines, Olives, Berries

• T/O and other:Turf grasses, Cut flowers, Field grown shrubs, Some forest trees

• No market potential:Sugar beet, Canola and other brassicae, greenhouse crops

• Commercialized through Bayer:Corn, Soybean, Cotton, Sunflower


Crop Areas Used In Projections FAO data: 2005 (x1,000 acres)

Total CropsArea Corn Soybean Cotton Sunflower Wheat Barley Oats Rye Sorghum Cereals Total

AMERICAS: USA 75,998 72,121 13,948 2,641 50,686 3,307 1,844 282 5,803 61,923 226,630

Canada 2,740 2,924 0 187 24,570 9,719 3,271 644 0 38,204 44,055

So. Am. 36,084 92,666 4,071 4,969 39,177 1,105 1,839 169 6,085 48,375 186,164

Mexico 16,516 225 273 2 1,586 765 191 0 3,998 6,541 23,556

AFRICA: South Afr. 8,056 375 55 1,150 2,001 230 63 6 215 2,514 12,150

EUROPE: Combined 33,965 2,564 1,167 18,852 91,299 40,368 6,593 7,465 307 146,032 202,580

GRAND TOTAL 173,358 170,875 19,513 27,801 209,319 55,495 13,800 8,566 16,408 303,588 695,135


World Tree & Vine Production World Tree & Vine Production (Million Metric Tons)

Source: FAS/USDA

159.63 17.91 15.37 65.49 1.90 58.97 Total

0.51 0.51 Argentina

0.96 0.96 Greece

2.50 2.50 Poland

2.57 0.22 2.35 Iran

5.80 5.80 Mexico

10.20 7.80 2.40 France

10.99 0.82 1.67 8.40 0.10 Italy

14.66 0.66 1.11 6.90 6.00 Spain

17.50 17.50 Brazil

22.23 0.82 1.39 5.51 10.00 0.22 4.29 United States

57.60 10.12 5.83 5.34 15.80 20.50 China

TOTAL Pear Peach Grape Citrus Cherry Apples


World Vegetable and Berry Production World Vegetable and Berry Production (Million Metric Tons)

Source: FAS/USDA

509.86 115.95 2.82 328.87 21.89 23.97 16.37 Total

1.33 0.29 1.04 Spain

6.50 6.50 Italy

6.78 6.78 Egypt

8.00 8.00 Turkey

12.99 12.99 Germany

15.00 15.00 Poland

19.45 19.45 Ukraine

37.40 7.60 25.00 4.80 India

39.04 0.27 37.00 1.76 Russian Fed.

40.40 12.40 1.00 20.42 4.98 1.60 United States

132.12 30.14 0.84 75.00 10.51 8.30 7.33 China

TOTAL Tomato Straw-berry Potato Lettuce Carrots Broccoli &

Cauliflower


Plant Healthcare’s Technologies

• HarpinsN-hibit Gold (New Seed Treatment)Pro-act (foliar spray row crops)Employ (New foliar spray specialty crops)Harp-n-tek (fertilizer blends)

• MyconateMyconate supply agreement with Bayer (corn, soybean, cotton and sunflower)Developing marketing arrangements for other crops

• Mycorrhizae Spore technology


NN--Hibit Positioning in soybeansHibit Positioning in soybeans

• Reduces soybean cyst nematodes 60% No other competitorsAddresses a problemLaunch in 2008

• Different mode of action; and not shown to interfere with other products

It works from the inside outDefends from within , a sustainable product

• Grower price point $5 to $6 dependent on seeding rateROI 4 to 1

• Improves plant growth and increases yield


• “The greatest losses [to disease] across the US in 1996 and 1997 were caused by soybean cyst nematode.”

• “This pest [SCN] reduced soybean production in the US 213.8 million bushels in 1996 and 218.9 bushels in 1997.”

At 2007 soybean prices, those lossesequate to $1.5 billion or a loss of between $21.50 and $25 per acre across all acres.

• “Yield loss dues to this nematode were greater in the Northern than Southern US.”

Estimated Losses to SCN

, Orlando, FL, January 7-8, 1999Source: http://www.extension.iastate.edu/Pages/plantpath/tylka/scnconf/page1.html

NATIONAL SOYBEAN CYST NEMATODE CONFERENCE


N-HIBIT™ EFFECTS BEANSIncrease in plant growth: greater root mass, total plant weight, plant health and vigorSuppression of egg production of soybean cyst nematodes (soybeans)

NN--HIBITHIBITTMTM Seed Treatment Improves Soybean Growth and Reduces Soybean Seed Treatment Improves Soybean Growth and Reduces Soybean Cyst NematodesCyst Nematodes


Soybean Cyst Nematode (SCN)Soybean Cyst Nematode (SCN)Distribution in the United States, 2006Distribution in the United States, 2006

DATA SOURCE: http://www.scnfacts.org/SCN photograph courtesy University of Kentucky


Soybean acresN-hibit

Potential

$340 m$255 m$170m$85m$42.5mgrower cost

@$5.00

$85 m$63.7 m$42.5 m$21.2m$10.6m25%

68 m51 m34 m17 m8.5m170macres

40%30%20%10%5%


N-HIBITTM Partnership Program

• Current Status

144 locations

22 states

25,000 grower members

800 media outlets

2007 ASA Grower Trials


MyconatePositioning in Corn

• Yield, water economy and nutrient availability.

• Corn per acre projected Cost $7.00 / acre in corn to grower

10-12 bushel return @ $3.75 - $4.00 per buROI is 6-1

• Known to Work on other VAM crops as wellFocus: row crops, cereals, vegetables, energy crops


EXCEEDED 75,000,000 ACRES SINCE 1996


Corn acres - Myconate Potential

$605.5m$363.3m$242.2m$121.1m$60.6 mgrower cost

@$7.00

$43.3m$26.0 m$17.3m$8.65 m$4.33 mPHC revenue @ $0.50 min/acre

86.5m51.9 m34.6 m17.3 m8.65 m173macres

50%30%20%10%5%


TYPICALLY EXCEEDS 55,000,000 ACRES

Today’s Technology for Tomorrow’s Environment0

500,000

1,000,000

1,500,000

2,000,000

1992 1993 1994 1995 1997 2000 2001 2002 2003 2004 2005

Total Acres

Source: Economic Research Service, USDA

U.S. Certified Organic Farmland Acreage1992 to 2005


BiofuelsA National security

issue with a green twist.


Switchgrass: A Resource Efficient Plant For Conversion to Ethanol

• Dependable and productive yields

• Water efficient• Nutrient efficient• Low establishment costs• Low harvest costs• Land base availability• Stand longevity

• Minimal disease and insect problems

• Soil restoring• High ethanol yield (100+

gallons per ton)• Farmer friendly• Environmentally friendly• Non-disruptive to existing

cropping patterns


Value of PHC Myconate® for biofuel feedstock production

• stimulation of mycorrhizal development following sowing of seed-coated energy crops

• enhancement of growth, stress resistance and production of these crops

• reductions in crop requirements for fertilizer and seasonal rainfall

• possible benefits from annual applications even in perennial energy crops

• enabling cropping and improving production from marginal land

• these benefits lead to lower feedstock costs and hence lower biofuel costs as well as enabling increased scale of production


Value of PHC N-Hibit® for biofuel feedstock production

• reduction of disease and “hidden” losses due to nematodes following seed treatment of energy crops

• consequential improvements in growth and production of these crops

• reduced crop requirements for fertilizer and seasonal rainfall due to improved growth of root systems

• benefits from annual foliar applications even in perennial energy crops

• extension of cropping range of land with known nematode problems (switchgrass and Miscanthus are known to suffer nematode damage)

• these benefits lead to lower feedstock costs and hence lower biofuel costs as well as enabling increased scale of production


Most energy crops will respond to Myconate and N-Hibit

1. Myconate will stimulate mycorrhizal development2. N-Hibit will suppress nematodes

-

Switchgrass + Miscanthus

1 2


New markets

Biomass/ Biofuelsmarket

Plant healthmarket

TraditionalCPC market


Opportunities for Plant Health Care

• What are the trends?• Regulations are canceling existing

productsNematicides are being pulled off the marketPush to reduce other inputs

• Growing segments Organics and Sustainables

• Major basics are spending millions of dollars creating a Plant Health market category

• R&D at basics going down in real dollars (NIH syndrome is becoming LSN syndrome)

• Biofuels need increased Biomass• Biotech acres up (simplify inputs)• Generics are increasing the need for

Product extensions and patent extension this is critical for Basic

• Population is increasing

• How is PHC positioned?• Sustainable products

N-hibit safe & effective reduction of NematodesMyconate

• Organic & Sustainable are the products line

• We are Plant Health that is what we doMycorrhizae ,Myconate & harpins

• Licensing part of the planBayer deal, others?

• PHC Product increase Biomass• Increases opportunities to manage for

yield • Product extensions and patent

extension Myconate and Harpin

• Food, fiber and fuel is our future.


Plant Health Care

• The right company• In the right place • At the right time• With the right Products, People and Plan.

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