A few slides comparing potential for agriculture in Latin America (esp Mercosur countries - Brazil, Argentina, Uruguay, Paraguay) vs. Africa (esp East Africa from Ethiopia/Sudan down to Mozambique) - Latin America is an immediate opportunity with less sociopolitical risk, more water availability per capita better infrastructure in silos, freight and storage while Africa is an opportunity that will take 10 to 20 years to play out.

1. Demand side – India will become a net importer of food and grains 215m Source: WorldwatchInstitute.

2. India – Projected Supply/Demand Gap Source: Surabhi Mittal, ICRIER

3. The Water Perspective We must always keep in mind that agriculture is a water based business. Without this scarce resource there is no agriculture at all. Water availability is key to this business. Projected global water consumption is tightly related to producing grains and food in general. So, what is the current and projected water situations both in Africa and South America? See UNEP/GRID Arendal Maps and Graphics Library. 2009. Trends in global water use by sector. http://maps.grida.no/go/graphic/trends-in-global-water-use-by-sector

4. The Water Perspective Source: International Water Management Institute analysis done for the Comprehensive Assessment of Water Management in Agriculture using the Waterism model; chapter 2. See UNEP/GRID Arendal Maps and Graphics Library, Areas of physical and economic water scarcity, http://maps.grida.no/go/graphic/areas-of-physical-and-economic-water-scarcity

5. Operational Revenues: Crop Yields Anatomy of a successful case: Argentina Taking yields to full internationally competitive standards, require important local R&D efforts. As seen on the graph to the right (above), about 100 varieties are registered per year (in one decade that means more than 1000 varieties). Each tackle very specific issues not only at country level but at region level (212 of these ‘varieties’ are soybean). We can also see the importance of local R&D in this process; on average about 60% of registration are originated from local R&D. Another interesting aspect to note is that the international push really started during the 90’s, when the Argentinean agriculture scenario started growing at impressive rates and so there was an interesting market for international players. It’s difficult to visualize the top leading international seed and R&D players really committing resources in the amounts required to produce agro leaps in Africa, until the market is really attractive, their sense of security for their patents is strong, etc. International players will probably do something, as it will look nice in their marketing materials and ‘social responsibility’ claims, but without the local knowledge and scientific capabilities, growth in yields will be very slow. A typical seed project in South America takes between 7 to 10 years to become commercial, and this is starting with the infrastructure, resources, scientists, long-time experience, extensive knowledge base and germplasm banks, etc. all in place. In many African countries, this process is starting from scratch. We are probably looking at a 15 to 20 year lag. With international cooperation and cross country agreements, maybe it can be shortened to a 10 - 15 year, not much more than that.

8. The Social Perspective Political and Freedom Index 2009 0-2 Free Countries 2-5 Relative Freedom 5-7 No Freedom

9. The Social Perspective

10. The Social Perspective

12. The Land Ownership Risk Map and some Emblematic Cases: Africa vs South America ZIMBABWE: 70% Rural Population Low development indexes High Political instability = Almost all farms owned by “white” people have been confiscated since 2000. MADAGASCAR: 75% Rural Population Medium Political instability Daewoo announced a big farmland lease agreement at the end of 2008. = Immediate scandal and popular uprising, the deal was terminated. PARAGUAY: 40% Rural Population Low development indexes Medium Political instability President Lugo won election, among electoral campaign proposals was an important land reform. = A law (not very radical) on this topic has been presented but has been stopped in parliament given that his party hasn’t got majority in congress. ARGENTINA I: 8% Rural Population Relative good development index High political instability in 2001 (big economic crisis, government was out-thrown by social up-rise, 5 different presidents in 20 months.) = Not once throughout the turmoil the topic of big farms or foreign investors in land appeared. ARGENTINA II: The government needing additional funds, planned to increase taxes on some crops to farmers, the strategy to sell its project was talking about large land tenants, big groups in farming, etc. = Not only the bill was stopped in parliament, but there were public demonstrations in urban areas supporting the farmers.

13. Risk of ‘African Singurs’ – from rural population displaced from large-scale agriculture

14. In Africa, risk of ‘Singurs’ from population growth; favorable/cheap land leases are usually granted by governments with little political legitimacy; so risk of being overturned later Source: UN Population Database Population growth (in millions) 2005 2025 2050 2005 2025 2050 Argentina 39 46 51 Ethiopia 75 120 174 Brazil 186 214 218 Kenya 36 58 85 Uruguay 3 4 4 Tanzania 39 67 109 Paraguay 6 8 10 Madagascar 18 28 43 Mozambique 21 32 44 Senegal 57 91 133 Sudan 39 57 76

15. Population density (population per sq. km) Source: UN Population Database Year 2005 2025 2050 Argentina 14 17 18 Brazil 22 27 30 Uruguay 19 20 21 Paraguay 15 20 24 India 345 440 504 Ethiopia 68 109 157 Kenya 62 99 147 Tanzania 41 71 116 Madagascar Mozambique 26 39 55 Sudan 15 23 30

16. Some other Indicators that might affect the initial ‘equilibrium’ in the future

17. Some other Indicators that might affect the initial ‘equilibrium’ in the future

18. South America vs Africa Brazil Ethiopia

19. Also less water per capita in Africa compared to South America Source: UN Aquastat TARWR/ m3/percapita/year Argentina 20,940 Ethiopia 1,680 Brazil 45,470 Kenya 930 Uruguay 40,420 Tanzania 2,420 Paraguay 55,830 Madagascar 18,830 India 1,750 Mozambique 11,320 Sudan 1,880

20. South America is an immediate opportunity South America Africa Buy/Lease Land Yes No (lease only) Service Providers (planting/spraying etc.) Yes No Qualified Manpower Yes No Political Risk (low populations, democracies, corruption etc.) Low High Tested high yield crop/seed varieties Yes No

21. Regarding Almost “Free land” in Africa: Maintaing a gift elephant is not free Note: Numbers based on median Latin American land conversion rates to convert raw land to agriculture ready land. Africa figures could be higher/ Making improvements on leased land is like putting in new brakes, clutch and tyres on a rental car

22. Other South American advantages for Indian investors

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