1. Current Situation “If you owe the bank $1,00 dollars, that’s your problem. If you owe the bank $1 million that’s the banks problem”

2. U.S. DOLLAR INDEX

3. Source: Pacific Exchange Rate Service

4. Dow Jones Average

5. Crude Oil

6. Cattle Industry Outlook and Strategies Florida Cattlemen’s Institute January 2009

14. +9% 500,000 HEAD IN 2008

16. Down 2% (650,000) head

22. U.S. Beef Trade and Forecasts Exports Source: U.S. Dept of Commerce, forecasts by CF

25. U.S. Dollar Index

26. U.S. Beef Exports Mexico Source: USDA/ERS S. Korea Vietnam

28. Source: USDA, CattleFax Projections U.S. Meat Exports in 2009

30. PeakTrough Length of Recession (months) Change in CH Retail Price Change in Per Capita Supply 2008??? +2-4%-2-3% Mar 2001Nov 20018+10%-1% Jul 1990Mar 19918+7%-4% Jul 1981Nov 198216+1%+0% Jan 1980Jul 19806+2%-2% Nov 1973Mar 197516+2%+5% Recessions

31. Retail Prices 2008 vs. 2007 November 2008 YTD Choice Beef $4.43 +6.6% $4.32 +3.8% All Fresh Beef $4.03 +5.1% $3.97 +5.1% Pork $3.00 +4.9% $2.93 +2.1% Broilers $1.79 +6.2% $1.74 +5.8% Turkey $1.31 +17.6% $1.24 +7.8%

32. Shifts in Beef Demand  Change in values  90s Trimmings +15%  Chuck +10%  Round +9%  Rib +0%  Loin -7%

34. FEEDGRAINS

41. Cattle Markets & Supply

43. Annual Average Prices Fed Steer Composite All Fresh Year Price Cutout Retail 2007 $92.73 $146.43 $3.77 2008 $92.76 $151.22 $3.96

45. 2009 average $91-$92

49. ► Fewer feeding companies will finish a higher percentage of the cattle. ► Cattle ownership in feed yards will become more highly concentrated. “The feed yards will own more cattle” ► The feeding industry will remain primarily located in the 5-state area (NE, CO, KS, OK, TX). ► To much capacity, tremendous loss of equity, access to capital, capacity will be idled, some move to grow yards, others will close ► Managing cost and price risk will be an essential ingredient for a successful business model. Impact on Feeding Industry

50. Packing Segment ● Tighter fed supplies – excess packing capacity ● Hide & Offal value decline to squeeze margins ● Industry is vulnerable to the loss of more packing capacity in 2009-2010

53. Role of Stocker Operator  Inventory shock absorber  Add low cost of gain  Warehouse cattle  Add value and improve quality

57. High Return Producers Don’t Cheat When it Comes to: 1.Animal Health 2.Nutrition 3.Genetics

58. Habits of High- Return Producers $ $ $ $ $ $ $ 1. Below average annual cow costs 2. Lower feed costs 3. Lower than average calf breakeven prices 4. Lower interest expense (less debt) 5. Lower general operating expense 6. Higher averaging weaning weights 7. Higher conception rates $ 8. More pounds weaned per cow exposed

59. Stair Steps to Profitability

63. Strategies for 2009 Stocker & Cow-Calf Operations ► Stocker operations must manage profits. It is the cattle feeders turn to make money. ► Narrow feeder to fed spreads. Does this present an opportunity to retain ownership? ► Narrow calf to feeder/fed spreads. Does this present an opportunity to retain ownership?

64. Impact on Cow/Calf Producers ♦ Cost management hasn’t gone away. ♦ Value capture becomes essential (calves, bred females, open females, cull bulls, etc. ♦ Precision nutritional management when supplemental feeds are being provided. ♦ “No surprises” in terms of animal health, genetics and reproductive performance is the mantra of producers. ♦ Risk management involves long-term grass leases, supply chain contracts, and more focus on managing at least part of the calf crop through the stocker and or finishing phase.

65. ♦ Optimize reproduction – rising feed and input costs will increase sensitivity to the “law” of diminishing returns”, producers are de-incentivized to maximize reproductive rates. ♦ Economies of scale become increasingly important which will force additional consolidation. ♦ Producers will only adopt technologies with very distinct financial advantages. ♦ Estate planning and inter-generational asset transfer become increasingly important. ♦ Labor availability is a limiting factor. Impact on Cow/Calf Producers

66. Thank You Have a Profitable 2009