1. Fernando Palacios February, 2009 Today’s Feed Manufacturing Sector and a Vision for its Future Health and Profitability

2. Agenda n Environment n Implications n Q&A

3. Environment

4. 2008, What a ride n Crude oil approached $150 a barrel and dropped below $35 n Corn pushed $8 a bushel and fell below $3 n Milk prices swung more than $5 per hundredweight n Volatility was redefined n Bailout became a buzz word

5. COMPANY1975 SALES 1Kraftco13,760 2Esmark13,401 3Beatrice Foods11,874 4Greyhound (Dial)10,575 5General Foods10,410 6Borden 9,538 7Ralston Purina 8,920 8CPC International 7,766 9Consolidated FoodS7,183 10General Mills6,427 COMPANY1975 SALES 1Kraftco13,760 2Esmark13,401 3Beatrice Foods11,874 4Greyhound (Dial)10,575 5General Foods10,410 6Borden 9,538 7Ralston Purina 8,920 8CPC International 7,766 9Consolidated FoodS7,183 10General Mills6,427 COMPANY1999 SALES 1Philip Morris 31,139 2ConAgra24,594 3 Cargill 21,400 4 PepsiCo 20,367 5The Coca-Cola19,805 6 Mars 15,000 7 ADM 14,283 8IBP14,075 9Anheuser-Busch11,704 10Sara Lee10,823 COMPANY1999 SALES 1Philip Morris 31,139 2ConAgra24,594 3 Cargill 21,400 4 PepsiCo 20,367 5The Coca-Cola19,805 6 Mars 15,000 7 ADM 14,283 8IBP14,075 9Anheuser-Busch11,704 10Sara Lee10,823 Competition is changing Food Processing – 2006 COMPANY2006 SALES 1Nestle 80,834 2Cargill 75,208 3Unilever 52,338 4 PepsiCo 35,137 5 Kraft 34,356 6Tyson 25,559 7The Coca-Cola 24,088 8Mars21,000 9SABMiller18,620 10Sara Lee15,944 COMPANY2006 SALES 1Nestle 80,834 2Cargill 75,208 3Unilever 52,338 4 PepsiCo 35,137 5 Kraft 34,356 6Tyson 25,559 7The Coca-Cola 24,088 8Mars21,000 9SABMiller18,620 10Sara Lee15,944

6. Cooperatives continue to consolidate

7. As Liquidation Boost 2008 Supplies … * Terry Barr NCFC January, 2009

8. … U.S. Meat Exports Likely to Weaken while … * Terry Barr NCFC January, 2009

9. 120 130 140 150 160 170 180 190 200 210 Million pounds milk fat basis Commercial supplyCommercial disappearance … U.S. Milk Production Outpaces Demand 808284868890929496980002040608 * Terry Barr NCFC January, 2009

10. Dollar Strengthens and Global Uncertainty remains U.S. dollar reversal will erode foreign buying power and weaken demand 60 70 80 90 100 110 Indexes of major currencies/US$ 80 82 848688 90 9294969800 02 0406087072747678 * Terry Barr NCFC January, 2009

11. 70 72 7476 78 8082848688909294 96 980002 04 06 08 0 1 2 3 4 5 6 7 IndiaChinaOther developingAdvanced countries Contribution to world growth in percent China/Emerging Markets Limit Recession * Terry Barr NCFC January, 2009

12. World Grain Stocks Begin Rebound as Demand Weakens and … 7072 74 76788082 84 86889092 94 96980002 04 06 08 0 100 200 300 400 500 Million metric tons +51 * Terry Barr NCFC January, 2009

13. … Ethanol Displacing Export and Feed Use * Terry Barr NCFC January, 2009

14. Household Net Worth Falling Rapidly 767880828486889092949698000204060810 -10 -8 -6 -4 -2 0 2 4 6 Change in trillion dollars * Terry Barr NCFC January, 2009

15. Regulators are under increasing pressure to enact broad sweeping regulations n Single unified Food/Feed Agency n Import Food and Feed legislation n FDA Protection Plan n Prevention n Intervention n Response n Inspection / Audit programs n Certification n Self Inspection n HACCP

16. Changing markets demand new services of manufacturers n Vendor Managed Inventory n Multiple Manufacturing Locations n Global Sourcing n Electronic Data Interchange (EDI) n Web Order Entry

17. Other issues to consider n Lifestyle Growth n Ingredients n Food like Quality Systems??? n Workforce n Hiring n Retention n Diversity n Environmental Sensitivity n Local n State n Federal

18. * Terry Barr NCFC February, 2008 Other issues to consider

19. Implications

20. As we move into this new economy, we need to: n Reduce Cost n Deliver Value n Improve turns / reduces inventories n Manage Risk n Provide Exceptional Quality n Deliver Superior Service n Demonstrate Social responsibility l Environment l Employees l Community

21. How do we get there? To achieve and sustain preferred supplier status with all customers through: Commitment to the process of continuous improvement and simplicity in everything we do Strong customer orientation - flexible, responsive, proactive behavior Total commitment to organization excellence Demonstrated passion for quality n Must choose who is primary target customer; based on profitability and sustainability n Create margin opportunity and value through technology and service n Commitment to the process of continuous improvement and simplicity in everything we do n Strong customer orientation - flexible, responsive, proactive behavior n Total commitment to organization excellence n Demonstrated passion for quality

22. What will success look like? n Recognize customer/ consumer preferences n Optimized total supply chain cost n Improved Customer Service Levels n Sound Safety record n Increased market share n Reduced Inventory n Robust Quality System n Prevention n Suppliers n Process capabilities n Compliance n Environmental Compliance

23. Q & A