Run Fast Run Smart Run Lean AGRICULTURAL TRENDS

“Run Fast. . . Run Smart. . . Run Lean“ AGRICULTURAL TRENDS AND TRADE POLICIES Introduction Global trends in agriculture Trade policies and economic development WTO Public Forum Geneva, September 26 th, 2006

“Run Fast. . . Run Smart. . . Run Lean“ INTRODUCTION – A global Company Deere & Company in brief: Founded in 1837 in Illinois by John Deere, a blacksmith. Long history of integrity and commitment to its customers. Main activities: Agricultural Equipment (world leader), Construction Equipment, Commercial and Consumer equipment, Engines, Financial services. 56 factories worldwide. Manufacturing operations on 4 continents. Distribution network: 160+ countries. Net sales and Revenues: 21, 931 USD millions in FY 2005 AG equipment: 10, 567 USD millions (“We feed the world”) R&D: 677 USD millions Employees: 47, 423 on 31 Oct 2005 John Deere Public Affairs Worlwide 2

“Run Fast. . . Run Smart. . . Run Lean“ Deere facilities in the world Valley City, ND Fargo, ND Edmonton, Alberta Langley, British Columbia Rock Valley, IA Des Moines, IA Ottumwa, IA Springfield, MO Minneapolis, MN Woodstock, Ontario Welland, Ontario Klemme, IA Waterloo, IA Dubuque, IA Horicon, WIDavenport, IA Moline, IL Coffeyville, KS Zweibruecken, Germany Poznan, Poland Bruchsal, Germany Joensuu, Finland Enschede, Netherlands Horst, Netherlands Gummersbach, Germa Stadtlohn, Germa Mannheim, Germa Jiamusi, Chin East Moline, IL Greeneville, TN Tianjin, China Kernersville, NC Fuquay-Varina, NC Augusta, GA Orenburg, Russia Torreon, Mexico Monterrey, Mexico Thibodaux, LA Saltillo, Mexico Santiago, Chile Catalao, Brazil Pune, India Madrid, Spain Saran, France Arc-les-Gray, France Horizontina, Brazil Rosario, Argentina Richards Bay, South Africa Nigel, South Africa John Deere Public Tokoroa, New Zealand Affairs Worlwide 3

“Run Fast. . . Run Smart. . . Run Lean“ Growing World Population 9, 000 Developing Urban Developing Rural Industrialized Countries Transition Countries 8, 000 Population ('000's) 7, 000 6, 000 Population 5, 000 4, 000 3, 000, 000 2030 2020 2010 2000 1990 1970 0 1980 1, 000 Source: FAO Urban population growth fuels the demand for food in the future. John Deere Public Affairs Worlwide 4

“Run Fast. . . Run Smart. . . Run Lean“ Increased meat and dairy consumption Total Meat Consumption Source: FAO Income growth in developing nations is expected to shift diets from grains to meat and dairy. John Deere Public Affairs Worlwide 5

“Run Fast. . . Run Smart. . . Run Lean“ Increased grain production Feed Grain Consumption Kilograms of grain to produce 1 kilogram of meat Source: Doane Increase in feed grain consumed more than offsets the reduction in direct consumption from shifting diets. John Deere Public Affairs Worlwide 6

“Run Fast. . . Run Smart. . . Run Lean“ Crops used for renewable energy Bio-Fuel Rising fuel costs and governmental policies are driving increases in crops used for renewable energy. John Deere Public Affairs Worlwide 7

“Run Fast. . . Run Smart. . . Run Lean“ Cropland Availability Land in use, 1997 -99 (1. 4 B ha) Available land with suitable moisture & soil chemistry (4. 1 B ha) Source: FAO and IIASA Brazil has the highest potential for near-term expansion. In Africa political instability and high cost of replacing nutrients limit crop area expansion. Asia faces significant land water constraints. John Deere Public Affairs Worlwide 8

“Run Fast. . . Run Smart. . . Run Lean“ Exports Trade - Key Commodities (metric tons) 2015 2004 AR/BR Russia & CIS EU 25+ AU/NZ US & Canada Wheat, Corn, Soybeans, Beef, Pork, Poultry Source: USDA 90% of the world’s exports come from these five regions. The total amount of exports is expected to increase by 35% by 2015. John Deere Public Affairs Worlwide 9

“Run Fast. . . Run Smart. . . Run Lean“ Trade policies and AG economic development World trade agenda in the AG sector Feed the world: • AG commodities should be accessible and affordable to consumers. price- • Helping the poor to become wealthier. • Integration of developing countries in the global economy. Means for achieving that goal: - More market orientation. - Less trade-distorting support measures. - More transparent public supports for taxpayers and consumers. John Deere Public Affairs Worlwide 10

“Run Fast. . . Run Smart. . . Run Lean“ Trade policies and AG economic development - Lower costs of production in the developed and developing countries Appropriate AG techniques, AG tools and equipment, private investments. Access to the markets is one key issue to be tackled - While we don’t oppose regional agreements we still need a multilateral agreement (Doha) for: A) Locking the reforming of AG policies in the developed countries. B) Reducing tarriffs in the advanced economies but also between developing countries. Remark: Preferential access is certainly an issue for many of the poorest countries, but it’s not a sustainable system if it hampers their competitiveness. John Deere Public Affairs Worlwide 11

“Run Fast. . . Run Smart. . . Run Lean“ Tracks for reaching a multilateral agreement We don’t have the solution but we have some suggestions: - Better evaluation of a non-agreement. - New systemic approach. - Better sequencing between the EU and US. - The industry’s expectation is a balanced and ambitious DDA outcome, preferable to unilateral reforms John Deere Public Affairs Worlwide 12

“Run Fast. . . Run Smart. . . Run Lean“ Concerns for the future – WTO potential new roles Non-tarriff barriers to be closely monitored: • Pesticides • Seeds • GMOs (Panel against is a current example) • Health standards • Veterinary Our proposal: call for more science-based approach in dispute resolution. Forsdtering International standards : plants (IPPC), animals (OIE), Processed Food (Codex Alimentarius). Need for cpaicity building in developing countries. John Deere Public Affairs Worlwide 13

“Run Fast. . . Run Smart. . . Run Lean“ Perspectives for the future BIOFUELS & BIOMASS • Demand public policies could trigger the demand for AG commodities. • More arable land (South America, Africa) will be put in use. • New division of AG production. • One question to be addressed: How to qualify public support for producing bioenergy? Green box? This kind of support should be allowed for developing this sector but also disciplined. • One related issue: indigenous plants. Example of myscantus. John Deere Public Affairs Worlwide 14

“Run Fast. . . Run Smart. . . Run Lean“ Conclusion • AG development faces many challenges but there’s room for hope. Solutions will be found, through R&D, free trade, free flows of investments. • Sanitary, phytosantiray regulations will be the next major barrier to expanded trade as economic barriers become reduced in relative importance. • In the future WTO will require more scientists and technical experts (and not only lawyers and economists) for settling dispute cases. John Deere Public Affairs Worlwide 15