2. Brazil Area: 8.5 mln Km2 States: 28 Population: 176 mln Life Expectation: 69 years Unemployment: 7.3% GDP (US$): 500 bln Currency: Real (R$3,00=US$1,00)

3. Brazil Population Country Urban

4. Credit Cards 0 5 10 15 20 25 30 35 40 45 199719981999200020012002 Number of Credit Cards (mln) Total Expenses (US$ bln)

5. Income Held by the Richest 10% of the Population 20% 30% 40% 50% 60% 70% 80% 1990 1991 199219931994 1995 1996199719981999

6. Per Capita Income US$ 4.993 3.584 2417 4.423 3.181 4.981 4.866 4.399 4.553 4.755 4.891 3.255 2.200 2.700 3.200 3.700 4.200 4.700 5.200 1991 19921993 1994 1995 1996 1997 199819992000 2001 2002

7. Cane Producing States

8. Regions Productivity Cane Production: - 1 mlm / ton 78 tons/ha 80 tons/ha 82 tons/ha 75 tons/ha 40 tons/ha 48 tons/ha 70 tons/ha 75 tons/ha 50 tons/ha 67 tons/ha 65 tons/ha 51 tons/ha 35 tons/ha 73 tons/ha 50 tons/ha

9. Cane Production Evolution Million Tons 77 93 102 111 118 143 151 126 152 172 0 50 100 150 200 250 300 350 92/9393/9494/9595/9696/9797/9898/9999/0000/0101/02 02/03 03/04 147 141 151 154 178 185 170 156 130 139 147 173 167 Estimate: 340 million tons 35% 46% 51% Sugar Ethanol

10. Sugar Balance CSNNEBrazil 118696814 18.6983.73022.428 7.0561.7858.841 11.3502.15013.500 200(200)0 210691901 18.7003.62022.320 7.1201.8008.920 11.0002.00013.000 350(350)0 4408611.301 0%(3%)0% 1% (3%)(7%)(4%) 75% - Exports Transference (CS - NNE) Production Consumption Stocks Forecast 30 April, 2002 Stocks Forecast 30 April, 2003 Exports Transference (CS - NNE) Production Consumption 2002/03 Crop 2003/04Crop Transference (CS - NNE) Exports % Variation 2003/04 Vs 2002/03 Production Consumption Stocks Forecast 30 April, 2004

11. Export Parity R$/50kg Equivalent (ex-mill) VHP Export No5 export ESALQ Anhydrous

12. Brazilian Exports per Port in 2002/03 Crop (000 tons) 525 Others 76 1.467 202 28 8.132 2.463 69 165

13. Soil Varieties Types of Soil: Productivity t/ha A1 >100 A2 96-100 B1 92-96 B2 88-92 C1 84-88 C2 80-84 D1 76-80 D2 72-76 E1 68-72 E2 < 68 C / D A2 / B / C C / D C / D / E

14. Rainfall Pattern B A B C A D D E Rainfall: A - 1000 - 1300 mm B - 1300 - 1600 mm C - 1600 - 1900 mm D - 1900 - 2200 mm E - 2200 - 2500 mm

15. Brazilian Exports per Sugar Type mln tons mttq 0 2 4 6 8 10 12 14 2000/012001/022002/03 RawVHP CrystalRefinned EU

16. Other Sugar Cane Products  Energy Co-generation;  Yeast for animal food;  Molasses for yeast production and for export;  Vinasse for irrigation and fertilisation;  Filter waste for fertilisation;  Carbon Credit Sales.

17. Environmental Issues  Cane Burning During the Harvest:  Sao Paulo State approved a law to abolish the cane burning until 2031, according to the table below. Mechanisable Area Non-Mechanisable Area 200280%100% 200670%100% 201150%90% 201620%80% 20210%70% 20260%50% 20310% Parcel of the Area Allowed to Burn

18. Environmental (Carbon Credit, Childhood labour and Bio Diesel)  Around 20 mills are implementing carbon credits.. programmes.  A mill that produces 100 mln litres of alcohol can have an. extra income of around US$ 1.1 mln with carbon credits.  Biodiesel blend of 5% on the conventional diesel is under.. National Petroleum Agency analysis.  61 mills in Brazil are enrolled in childhood labour combat.. programme.

19. Weaknesses and Strengths Industry Diversity Political Environment Currency Other  High potential for area expansion.  Lower production costs.  The devaluated currency increases Brazilian......competitiveness in the world market.  Strong lobby with the Government.  The generation of US Dollar income increases.. the industry political power. Strengths  Brazilian industry is less exposed to the....international sugar prices than others.  Other sugar cane products helps to reduce the....dependence of sugar and alcohol.

20. Weaknesses and Strengths Logistics Political Environment Marketing Features  Lack of an overseas marketing programme.  Competition with soya at the port terminals in the CS.  Long vessel lines during season causes shipment delays.  Poor industry co-ordination.  Poor rail system.  Long distances between CS mills and ports increases...freight cost. Weaknesses

21. Weaknesses and Strengths Logistics Political Environment Marketing Features Weaknesses  Can be addressed via Additional Investment though....raises total cost - especially to produce No.11....deliverable sugar  Industry needs to become aligned  Requires change of approach

22.  Limited knowledge of Overseas Markets  Customers are a handful of International Trade Houses  Sales dependent upon Sugar Trade requirement and...not end user driven / limited direct relationships  Exposed to ‘Trade Squeeze’  F.O.B. sales to the Trade results in loss of control and...higher logistics costs and potential port delays  Lack of knowledge of end user requirements exposes...Brazilian industry to adverse changes in market place  Brazilian industry adopts a speculative approach to sales,...which is not end user focused and creates volatility Marketing Features

23. Conclusion  Brazil will continue to grow  Will continue to be the lowest cost producer  Will continue to diversify in products and industry complexity  Ethanol reassumes strategic importance in the longer term

24. Conclusion  Queensland must aim to be the second most competitive.....Producer, driving down domestic cost of production:  Maintain and develop excellent relationship with customers  Continue to be the preferred origin to the majority of first....class global raw sugar buyers  Make every effort to jealously guard the geographical.....advantage Australia has in the Far East marketplace How to meet this challenge?