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0 Premium Wealth Management – Vietnam Conference April 2012
Investment opportunities in Agribusiness Profit from overcoming global inefficiencies in feeding the world Premium Wealth Management – Vietnam Conference April 2012 Bill Barbour – Director, Investment Specialist Asia Pacific and MENA

1 Important information
Issued by Deutsche Asset Management Pty Limited Australia) Limited ABN AFSL This document is not an offer of securities or financial products, nor is it financial product advice. As this document has been prepared without taking account of any investors’ particular objectives, financial situation and needs, you should consider its appropriateness having regard to your objectives, financial situation and needs. The Fund referred to is issued by Deutsche Asset Management (Australia) Limited ABN AFSL To acquire units in the Fund, complete the application form that accompanies the current PDS, which you can obtain from or by calling client services on You should consider the PDS in deciding to acquire or to continue to hold the Fund. Although specific information has been prepared from sources believed to be reliable, we offer no guarantees as to its accuracy or completeness. The information stated, opinions expressed and estimates given constitute best judgement at the time of publication and are subject to change without notice to you. This document describes some current internal investment guidelines and processes. These are constantly under review, and may change over time. Consequently, although this document is provided in good faith, it is not intended to create any legal liability on the part of Ironbark or any other entity and does not vary the terms of a relevant disclosure statement. Past performance is not an indicator of future results. All dollars are Australian dollars unless otherwise specified. All indices are copyrighted by and proprietary to the issuer of the index. An investment is not a deposit with or any other type of liability of Deutsche Bank AG ARBN , Deutsche Asset Management (Australia) Limited ABN or any other member of the Deutsche Bank AG Group and the capital value of and performance of an investment in the Fund is not in any way guaranteed by Deutsche Bank AG, Deutsche Asset Management (Australia) Limited or any other member of the Deutsche Bank AG Group. Investments are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Deutsche Asset Management (Australia) Limited is not an Authorised Deposit-taking Institution under the Banking Act 1959 nor regulated by the Australian Prudential Regulation Authority.

2 Our background Actively managed Global Agribusiness Fund to capture inefficiencies and misperceptions of agribusiness. Launched first global agribusiness investments and research in 2005, as of June 2011 over 5 billion USD in assets. Carefully cultivated network of global agribusiness experts in academia, supranationals (invited to roundtable discussion at the UN). Dedicated and seasoned global agribusiness investment team located in NY with strong focus on bottom-up research. Embedded in global thematic equity and trend analysis. Over six years of in-depth analysis at the farmgate, agri-IP, agri- R&D roadmaps. Source: Global Thematic Partners and DWS Investments

3 The case for Global Agribusiness

4 Global food prices hit all-time high – Agflation is back UN Food and Agriculture World Food Price Index Food prices ??? Source: Bloomberg; : 30th September 2011 (Monthly data to 29th February 2012)

5 Global food prices hit all-time high – Agflation is back UN Food and Agriculture World Food Price Index Supply shocks Source: Bloomberg; : 30th September 2011 (Monthly data to 31st August 2011)

6 Global food prices hit all-time high – Agflation is back UN Food and Agriculture World Food Price Index Future prices??? Source: Bloomberg; : 30th September 2011 (Monthly data to 31st August 2011)

7 Corn price – January 2000 to February 2012 USA – No
Corn price – January 2000 to February 2012 USA – No. 2 Yellow Corn in US$ per bushel Source: US Department of Agriculture as at 29th February 2012

8 World Sugar indicators
Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Agricultural Commodities, September quarter 2011.

9 Pressure on global supply/demand of grain
(%) Global Grain Consumption, Production, and Inventory Ratio According to the Japanese Ministry of Agriculture, the inventory ratio of grain will decrease to 15% in 2020 and is expected to fall below the safety zone defined by the FAO. Source:Japan Ministry of Agriculture (As of February 2011) (Million tons) FAO Safety Zone 17~18% 【1970~2010】 Total Grain inventory as a % of demand (RHS) Grain Production volume (LHS) Grain Consumption volume (LHS)

10 Agribusiness – Inevitability Global forces or catalysts for change
Soaring global population Rising incomes in the developing world Limited agricultural land Bio-fuels Global warming – climate change These forces appear to be inevitable and unstoppable Source: Deutsche Asset Management

11 World population growth forecasts Almost 1 billion more people over the next decade
Billions of people Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision, August 15, 2011;

12 The simple income / Food formula Rising income = More food and higher protein consumption
Grams per day Source: CBA, Commonwealth Research (Updated as at 31 July 2011)

13 Meat demand and changing diets Creating unprecedented demand for grain
Income versus meat demand in large consuming countries Kilos per person per annum USA Brazil China GDP per capita (US$) Source: USDA, FAO, US Census; Date: 13

14 Potential for an increase in food consumption 81% of the world population earns less than US $3,466 per annum 2006 Data Global income distribution in relation to world population Developed Countries Developing Countries Low Income Countries Lower-middle Income Countries Upper-Middle Income Countries High Income Countries 2,785 mn people 43% 2,506 mn people 38% 602 mn people 9% 631 mn people 10% GNI* < US$ 875 pa GNI < US$ 3,466 pa GNI < US$ 10,726 pa GNI > US$ 10,726 pa * GNI – Gross National Income on a per capita basis per annum Sources: 1) Estimated Global Population: CIA, The World Factbook 2006 2) Income Group Classification: World Bank 2006.

15 Global income distribution in relation to world population
Potential for an increase in food consumption Around half of the world population still earns less than ~ US $4,000 per annum 2011 Data Global income distribution in relation to world population Developed Countries Developing Countries Low Income Countries Lower-middle Income Countries Upper-Middle Income Countries High Income Countries 828 mn people 12% 2,499 mn people 36% 2,484 mn people 36% 1,101 mn people 16% GNI* < US$ 1,005 pa GNI < US$ 3,975 pa GNI < US$ 12,275 pa GNI > US$ 12,276 pa * GNI – Gross National Income on a per capita basis per annum Sources: 1) Estimated Global Population: CIA, The World Factbook, estimation as of July 2011 2) World Bank economies classification as of 18th July 2011 15

16 (Billions of Hectares)
Farmland per person is declining Rising demand requires higher yield from agricultural land World Population (Billions) Farmland (Billions of Hectares) Farmland per person (Hectares) 1950 2.5 1.3 0.50 1975 4.0 1.4 0.40 2000 6.1 1.5 0.25 2020 7.8 0.19 Strong growth in world population Unplanned urbanisation in many parts of the world is cannibalising potential agricultural land Most of the incremental land came from diminishing low-land rainforests which are becoming more scarce Diminishing water resources Declining output / yield due to weather changes, soil contamination and soil degradation Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision, August 15, 2011; (utilising high variant data), Lehman Brothers and Global Thematic Partners

17 Biofuels are competing for farmland

18 Rapid depletion of US Corn inventories
Millions of tons Source :Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Agricultural Commodities, September quarter 2011.

19 World biodiesel usage Source :Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Agricultural Commodities, March quarter 2012.

20 World oilseed indicator price
US$ per ton Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Agricultural Commodities, September quarter 2011.

21 Global observations per annum
Climate change Increase in global extreme weather over the last century Global observations per annum Droughts Floods Storms 1900 1920 1940 1960 1980 2000 35 30 20 15 10 5 25 200 150 100 50 250 80 140 120 40 160 60 1950 1970 2010 1990 Extreme Temperatures 40 Source: Scotia Capital

22 Source: Radar, USA – August 2009
Scarcity: Potential 150 million hectares shortage of farmland Long-term supply not sufficient Many zoning restrictions in Brazil and Africa limit farmland expansion Fragmented substance farmers in Africa, China, India, Eastern Europe require new incentive structures Land ownership unclear in many developing agri regions Undervalued price of water and lack of infrastructure need to be considered when solving the land shortage formula Source: Radar, USA – August 2009

23 Food consumption on the rise Forecast extra developing world demand - 2010 to 2015
Source: Societe General Cross Asset Research , January 2010

24 What is Global Agribusiness
What is Global Agribusiness? “Everything from agricultural commodities to consumer products" Exchanges Chicago Board of Trade AWB By products SEEDS & FERTILISER LAND/PLANTATION MACHINERY FARMERS WATER Storage Processing Product Logistics Marketing Distribution Farm Aqua Grain Animals Credit Meat Fish Grain Land Arbitrage Bio-fuels Source: Deutsche Asset Management

25 From dirt to dinner table – Allocation along the value-chain
UPSTREAM DOWNSTREAM Resource Owners Land Plantation Fertilizer Seeds Facilitators Agri. products Machinery Irrigation Infrastructure Value Adders Packag. Food Meat & Bev. Aquaculture Forestry Collectors/Distributors Retailer Logistics Distribution Services For illustrative purpose only. The above companies are not a securities recommendation. Source: Global Thematic Partners, 2011

26 Opportunities

27 High farm income good news for capital expenditure
Farm income and capital spending (Diffusion Index) The outlook for the farmer’s wallet at this point in the cycle is equally enthusiastic as farm income has “soared” in the fourth quarter of In comments made mid-month by Thomas Hoenig, the President of the Federal Reserve Bank of Kansas City, before the Senate Committee on Agriculture, Nutrition and Forestry noted that “strong demand and tight supplies for most farm commodities contributed to a sharp rebound in farm profits, which then supported sales in farm equipment and other farm-based industries.” This sentiment was echoed across the Atlantic at the SIMA farm show in Paris on 2/20 as analysts noted that the mood was very positive with high attendance indicating improving fundamentals for both the livestock and soft commodity producers. Company order books are estimated at roughly twice as strong as a year ago in the Euro 27 area. As a result of stronger farm income, a Fed survey reported that farmers have been pre-paying for next year’s crop inputs and using vendor credit to finance seed, fertilizer and equipment purchases. 27 Source: Kansas City Federal Reserve as of 28th February 2011

28 High farm income good news for capital expenditure
Rising farm incomes spur spending on tractors (% change from prior year) The outlook for the farmer’s wallet at this point in the cycle is equally enthusiastic as farm income has “soared” in the fourth quarter of In comments made mid-month by Thomas Hoenig, the President of the Federal Reserve Bank of Kansas City, before the Senate Committee on Agriculture, Nutrition and Forestry noted that “strong demand and tight supplies for most farm commodities contributed to a sharp rebound in farm profits, which then supported sales in farm equipment and other farm-based industries.” This sentiment was echoed across the Atlantic at the SIMA farm show in Paris on 2/20 as analysts noted that the mood was very positive with high attendance indicating improving fundamentals for both the livestock and soft commodity producers. Company order books are estimated at roughly twice as strong as a year ago in the Euro 27 area. As a result of stronger farm income, a Fed survey reported that farmers have been pre-paying for next year’s crop inputs and using vendor credit to finance seed, fertilizer and equipment purchases. 28 SourceUSDA, Association of Equipment Manufacturers; Note: 2011 Ag Equipment Sales are YTD through March

29 Opportunity: Ag-Biotech Enhancing farm and land productivity through science
Food production will have to increase 70% over the next 40 years* The population growth necessitates the use of transgenic crops. These are plants which have artificially introduced genetic material. Scientists develop these crops to obtain better quality, higher yield, pest control and resistance to weather volatility. Company examples include: Monsanto (USA) Syngenta (Switzerland) Vilmorin & Cie (France) KWS Saat AG (Germany) *Food and Agriculture Organisation, October 2009, The above companies are not a securities recommendation and are provided for information purposes only.

30 Global growth in genetically modified (GM) crops A huge investment opportunity - Essential to feed the word

31 Ag-Biotech example Monsanto’s “SmartStax” seed technology
Monsanto has introduced seed technology breakthroughs for corn and cotton Seeds include herbicide tolerance and insect-protection genes for 8 different above and below ground insects This is forecast to enhance crop yields by 7% to 8% Source: Monsanto.com; 2009 and 2011

32 Wheat crop threat UG99: A potential future driver of famine
A new Puccinia graminis fungus originated in Uganda and was discovered in 1999 (UG99). The fungus causes stem rust that eventually distract plant nutrients relevant for growth. Roughly 90% of the world wheat production has no protection against the virus. 40 million acres in US are currently susceptible to UG99 stem rust, placing annual production of over 2 billion bushels, worth $9 billion, at great risk. Wheat rust has spread 5,000 miles in the last decade. In June of last year scientists announced the discovery of two new strains in South Africa, the most important food producer yet infected. Directly impacts wheat growers, grain handlers, exporters, the US milling and baking industry, and consumers through lower crop yields, reduced grain supplies, poorer grain quality, and higher commodity prices. Global wheat crop could be severly threatened as scientists are concerned that UG 99 might spread as far as Russia and India. Source: The Economist: July 1, 2010

33 Share of fish production 1997
Opportunity: Aquaculture Substitution and increased consumption of protein Global fish demand forecast to increase by 26% to >50% by 2030* Current per capita consumption p.a. of 17 kgs = 26% demand increase by 2030 An increase to only18 kgs per capita p.a. = 50.9% demand increase by 2030 Most of this increase must come from Aquaculture, with largest growth in Asia Share of fish production 1997 Forecast share of fish production 2030 * Source: DeAM and United Nations & FAO: World Review of Fisheries and Aquaculture 2010, 2008 and 2006, and FAO Committee on Fisheries , Sub-committee on Aquaculture, Fourth Session, Puerto Varas, Chile 6-10 October 2008.

34 Performance comparison: DAX Global Agribusiness Index vs MSCI World Index (in USD)
% DAX Global Agribusiness Index -3.15% MSCI World Index Source: Bloomberg as of 29th March Note: Commencement date 15th September 2006=100 Performance in USD. Past performance is not necessarily indicative of future performance.

35 Performance comparison from global market bottom
Performance comparison from global market bottom* DAX Global Agribusiness Index vs MSCI World Index (in USD) % DAX Global Agribusiness Index +90.59% MSCI World Index Source: Bloomberg as of 29th March Note: * The MSCI World Index bottomed on 9th March 2009 =100 Performance in USD. Past performance is not necessarily indicative of future performance.

36 Global food consumption and economic crisis Grain demand uncorrelated to GDP
Scatter chart of world GDP growth and grain demand Source: Citi Investment research and US Government sources (1980 to 2009) 5.0% 4.5% 4.0% 3.5% 3.0% 2.0% 1.0% 0% 2.5% 1.5% 0.5% -2.0% -1.0% 6.0% World GDP growth Grain demand R Squared =

37 Continuous growth in global demand for Grain and Oilseeds 1960 to 2011 (Recessions shown with red bars) Million Tonnes World grain and oilseed use Source: US Department of Agriculture 2011 and Global Thematic Partners

38 World stock of Grain and Oilseeds near historic lows
Million Tonnes Stock to use ratio Source: US Department of Agriculture 2011 and Global Thematic Partners.

39 Grain prices Common based at 100 from 1st January 2010 to 31st August 2011
Source: Bloomberg as of 6th October 2011 (Active contracts from Chicago Board of Trade, Source data in UD Dollars) Past performance is not necessarily indicative of future performance.

40 Grain prices Common based at 100 from 1st January 2010 to 6th October 2011
1st September 2011 Source: Bloomberg as of 6th October 2011 (Active contracts from Chicago Board of Trade, Source data in UD Dollars) Past performance is not necessarily indicative of future performance.

41 CF Industries Holdings Inc
CF Industries Holdings Inc. – US fertiliser company Share price in USD from 1st of July 2010 -36% Source: Bloomberg as of 6th October 2011 This is not an investment recommendation and is for information purposes only. Past performance is not necessarily indicative of future performance.

42 CF Industries Holdings Inc
CF Industries Holdings Inc. – US fertiliser company Share price in USD from 1st of July 2010 2012 P/E = 8.95 2012 P/E = 5.70 Source: Bloomberg as of 6th October 2011 This is not an investment recommendation and is for information purposes only. Past performance is not necessarily indicative of future performance.

43 CF Industries Holdings Inc
CF Industries Holdings Inc. – US fertiliser company Share price in USD from 1st of July 2010 2012 P/E = 8.95 2012 P/E = 7.92 2012 P/E = 5.70 Source: Bloomberg as of 29th March 2012 This is not an investment recommendation and is for information purposes only. Past performance is not necessarily indicative of future performance.

44 An interesting insight – correlations over time
Two years daily correlation with Fund* Source: Bloomberg as of August 2011; Correlation data in USD. *DWS Global Agribusiness* is a US mutual fund and has not been registered in Australia with ASIC and is shown for information purposes only. Past performance is not necessarily indicative of future performance.

45 Australia - Agribusiness opportunities Sector contribution to total Australian GDP 2010-11
Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Agricultural Commodities, September quarter 2011.

46 Australia - Agribusiness exports Exports in billions of AUD
Sector = 2011 imports exceed exports Source :Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Agricultural Commodities, September quarter 2011.

47 Listed Australian Agribusiness companies A small and limited opportunity set
Company examples include: Australian Agricultural Company Limited $419 million Elders Ltd $126 million GrainCorp Ltd $1,477 million Incitec Pivot Ltd $5,489 million Nufarm Limited $1,139 million Ridley Corporation Ltd $326 million Ruralco Holdings Ltd $171 million Recent takeovers: ABB Grain Ltd (Acquired by Viterra Inc – Canada) AWB Ltd (Acquired by Agrium Inc -USA) Market capitalisation Source: Bloomberg and Deutsche Asset Management Market capitalisation data at close of business 7th of October 2011 in AUD. The above companies are not a securities recommendation and are provided for information purposes only.

48 Rising prices for Agriculture & Food related products and investments
Global Agribusiness An inevitable investment opportunity Urbanization Increase in life expectancy Growing Global Population Strongest Population Growth in Asia Rising prices for Agriculture & Food related products and investments Limited Resources Land & Water Scarcity Changing Weather Increasing Pollution Slowing Yield Gains Bio-fuels Rising Incomes Increasing demand for High-Protein food … … and “healthy” quality food (Organic) Source: Deutsche Asset Management


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