1. Market concentration and the consequences for sustainability 2015 Chocoa Conference - March 6, Amsterdam Lucas Simons (CEO, NewForesight)

2. Key questions of this presentation 2 How come despite decades of support, cocoa is still considered the ‘poor mans crop’? Are there perhaps systemic reasons that determine the faith of the sector? How to get to a more healthy, vital sector? – The need to move towards more profesional farmers – The effect of consolidation in the sector – Large companies co-operating – And the importance of rewarding quality

3. Agriculture: one of the most unsustainable sectors. But why? 3

4. The sector shapes model The challenges in origin and the potential for resilience and sustainability strongly depend on the ‘archetype’ of the sector 4 Absorption capacity for better practices Farm scale PentagonInversed pyramidHybrids Flat pyramid

5. The sector archetype is determined by a set of 4 macro forces 4 forces shape the sector ‘arche’ type 5 What is the enabling environment? What do markets reward? What are barriers to enter and -success? What are alternatives? Sector Shape

6. Recent acquisitions and consolidation in the cocoa sector 6 Cargill buys ADM’s industrial chocolate business s for $440m The potential take-over of ADM’s global cocoa business by Olam ($1.3b) in June is under review by the European Commission Barry Callebaut acquired the cocoa ingredients branch of Petra Foods for $860m making it the largest player with a fully integrated supply chain In May 2014, Ecom Trading acquired Armajaro’s commodity trading division (cocoa, coffee & sugar) In general, consolidated markets in failing contexts and with little alternatives for farmers leads to: Increased standardisation of demand Increased dependency’s Preserves economies of poverty (flat pyramids)

7. Aligned Activities of CocoaAction Companies CocoaAction company programs and actions are aligned to achieve coordinated delivery of Productivity and Community Packages.. Results of CocoaAction, plus farm communities, industry, and governments over time. OUTPUTS Immediate, measurable results and effects of the collective actions of CocoaAction companies. ACTIONS Productivity Package Adoption Community Package Adoption Good Agricultural Practices FertilizerPlanting Material Education Child Labor Women’s Empowerment CocoaAction: 11 companies united in a common strategy A rejuvenated and economically viable cocoa sector providing increased opportunities to cocoa farmers and their communities A rejuvenated and economically viable cocoa sector providing increased opportunities to cocoa farmers and their communities Good Agricultural Practices Fertilizer and Soil Fertility Improved Planting Material Primary Education Child Labor Prevention IMPACT Women’s Empowerment LONGER-TERM OUTCOMES CocoaAction Companies’ Actions Inputs Training Programs CocoaAction Partners Productivity Package Activities CocoaAction Partners Community Package Activities Alignment with Governments Increased cocoa productivity and income for cocoa farmers and their families Improved quality of life in cocoa farming communities PRODUCTIVITY THRIVING COMMUNITIES NEXT GENERATION FARMERS SHORTER-TERM OUTCOMES 7

8. 8 Thank you! www.newforesight.com www.scopeinsight.com @Lucas_Simons