brazil ag market fundamentals - deere.com · brazil 27 39 44 50 58 65 93 100 107 115 136 ... brazil...

September 2014

Brazil Ag Market Fundamentals

| Brazil Ag Market Fundamentals | September 20142

Safe Harbor Statement & Disclosures

This presentation includes forward-looking comments subject to important risksand uncertainties. It may also contain financial measures that are not inconformance with accounting principles generally accepted in the United Statesof America (GAAP).

Refer to Deere’s reports filed on Forms 8-K (current), 10-Q (quarterly), and10-K (annual) for information on factors that could cause actual results to differmaterially from information in this presentation and for information reconcilingfinancial measures to GAAP.

Guidance noted in the following slides was effective as of the company’s mostrecent earnings release and conference call (13 August 2014). Nothing in thispresentation should be construed as reaffirming or disaffirming such guidance.

This presentation is not an offer to sell or a solicitation of offers to buy any ofDeere’s securities.


Agribusiness: Key for GDP and trade balanceBrazil

-100.0-80.0-60.0-40.0-20.0

0.020.040.060.080.0

100.0

'89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13

Brazilian Trade BalanceBillions, USD

Ag Non Ag TotalSource: SECEX / MDIC


Agricultural growth potentialBrazil

Grains56 million hectares

Planted forest6 million hectares

Pasture92 million hectares

Degraded pasture100 million hectares

Native forest & other597 million hectares

Source: EMBRAPA


Global commodity supplierBrazil

10%

12%

25%

27%

30%

41%

51%

Corn

Pork

Beef

Coffee

Soybeans

Chicken

Sugar

% of Global Exports Commodity Production Export

Soybean #2 #1

Coffee #1 #1

Sugar #1 #1

Orange Juice #1 #1

Beef #2 #1

Poultry #2 #1

Ethanol #2 #2

Corn #3 #3

Cotton #4 #3

Pork #4 #4

Rice #9 #8

Wheat #12 #8Source: USDA


Government support for agricultureBrazil

27

3944

5058

65

93100

107115

136

156

-

20

40

60

80

100

120

140

160

180

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Agriculture & Livestock Plan(billion Reais)

34 4

6 682

2 2

6 6

0

2

4

6

8

10

12

14

'09/'10 '10/'11 '11/'12 '12/'13 '13/'14 '14/'15

Moderfrota+PSI credit amount(billion Reais)

Original Budget Additional budget

Source: MAPA


Segments that matterLatin America

Soybeans

Sugarcane

Livestock


Importance of soybeans

Soybeans for protein

• Food for poultry and hogs, primarymeat source for 4.5 billion people

• Primary plant protein tied topopulation growth

• Expansion driving equipmentdemand and advances inproduction practices


World soybean production

16195

34

Soybean ProductionMillion metric tons

Latin America US/CA/AU/NZ Rest of World

56% of world’s production in Latin America

Source: IHS Global Insights


Soybean farm size and productionBrazil

83%

11%

4%

1%

20%

22%

31%

27%

18%

21%

32%

29%

0-100ha

100-500ha

500-2,500ha

> 2,500ha

% of Production % of Hectares % of FarmsSource: COGO Consulting, July 2014 (Censo Agropecuário)


Importance of sugarcane

Sugarcane for energy

• Highest throughput of any field crop

• Most important renewable energysource

• 9 million hectares planted in Brazil

• Mechanization and productionimprovements will drive increaseddemand for planting, harvestingand technology solutions


Sugarcane mechanizationBrazil

90%

90%

88%

59%

13%

5%

SugarcaneHarvesting

SugarcanePlanting

Sugarcane mechanization

2004 2014 2020

Sources: COGO Consulting, UNICA, RPA Consulting, Internal estimates


World sugarcane production

915

56

680

Sugarcane ProductionMillion metric tons

Latin America US/CA/AU/NZ Rest of World

55% of world’s production in Latin America

Source: IHS Global Insights


Sugarcane productionBrazil

16,000 sugarcane growers in Brazil

4 growers over 200,000 hectares

Top 6 produce 30% of sugarcane

Sources: COGO Consulting, UNICA, RPA Consulting

Key farming practices in Brazil


Multi-crop farmingTwo or more crops per year

Primarily in the Cerrados region

1st crop typically soybeans

2nd & 3rd crops corn and cotton

Narrow window between crops

Uptime is critical


Sugarcane production24 x 7 x 8

Production operations run 24 hours perday, 7 days per week, 8 months per year

Equipment used 3,000 – 4,000 hours peryear

Steps in the production process:• Field planning• Land prep• Planting• Crop care• Harvesting• Haulage• Biomass collection


Non-stop agricultureContinuous farming

3rd revolution in Brazilian agriculture1. No-till planting2. 2nd season crops in the Cerrados3. Integration of livestock, crops & forestry

Over 100 million hectares of degradedpasture

• Goal of 10 million to be recoveredbetween 2010 and 2020

Focused on sustainability• Social• Environmental• Economic

Historical market performance


Brazil market evolutionTractors

0%

5%

10%

15%

20%

25%

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 Aug '14CYTD

Mar

ket

Sha

re

Indu

stry

Uni

ts

Industry Market ShareSource: ANFAVEA, September 2014


Brazil market evolutionCombines

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 Aug '14CYTD

Mar

ket

Sha

re

Indu

stry

Uni

ts

Industry Market ShareSource: ANFAVEA, September 2014

Key investments to fuel future growth


Portfolio investmentsLocalization supporting the growth

S Series combine

Flex draper

DB planter

Sprayer

8R tractor

Catalão factory expansion

Parts distribution center expansion

Technology’s role in Brazilian agriculture


TechnologyJohn Deere FarmSight™

Machine optimization

Job optimization

Agronomic decision support

Customer’s equipment+

Our technology solutions+

Dealer services

Customer’s equipment+

Our technology solutions+

Dealer services


TechnologyFleet management solutions

Partnership with Auteq

Machine logistics, optimization &decision making tool

Mixed fleet capabilities

In-field automation

Alternative solutions for datatransfer

John Deere dealer channel


Dealer channelBrazil

50 owner groups

Over 250 locations

Over 7,000 employees

Developing one of our mostsustainable differentiators

through theDealer of Tomorrow

strategy


Obrigado!

brazil ag market fundamentals - deere.com · brazil 27 39 44 50 58 65 93 100 107 115 136 ... brazil...

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