Whats the Value of Cooperatives Farmers Cooperative Conference Tropicana, Las Vegas

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Whats the Value of Cooperatives?Farmers
Cooperative ConferenceTropicana, Las Vegas

• Tom McKenna, President
• United Sugars Corporation
• October 30, 2001

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Sugar Industry Model

• Snapshot of Domestic Sugar Industry
• Past Current Trends
• Competitive Positioning
• Coops Other Participants
• Coops - Do they have an advantage?
• Characteristics of Success for the Future

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Changing Customer LandscapeIndustrial Market

• Consolidation of Food Processing Industry
• Top 5 users buy 20 of Industrial volume
• Customer concentration increasing

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Changing Customer LandscapeConsumer Market

• Continued consolidation of retail grocery
  wholesalers and chains
• 10 year trend
• 12 down to 5 today represent 35 of total grocery
  sales
• Retail grocery sugar sales continue to decline

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Competitive EnvironmentRapidly Changing

• Imperial bankruptcy
• Imperial closes and offers to sell beet sugar
  assets
• Tate Lyle
• selling all U.S. beet and cane sugar assets
• Interest in Coop structure increasing
• processing
• marketing

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Midwest Beet Sugar Price ComparisonNovember,
1999 - October, 2001
Source Milling and Baking News
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Industry Consolidation Estimated Sales Volume by
Supplier
1978 28 199113 2002 8

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Why Sugar Beet Coops?

• Marketing Coop structure responds to
• slow growth opportunities
• increasing buyer consolidation
• need to reduce costs increase productivity
• Processing Coop structure responds to
• need for producers to preserve processing
  facilities or exit from market
• View of future is positive

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Characteristics of Success

• Strategic Rational for existence
• Fit with market realities
• Vision beyond just producing raw material
• Decisions made on creditable information
• Sound Financing

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Characteristics of Success

• Coop owners/Board of Directors ability to
  Govern
• Ability to source Professional Management
• Desire to be Best in Class Vs investing up the
  value chain
• Commitment to go all the way