Overview Of The Citrus Industry In Mexico

Overview of the CitrusIndustry in MexicoRicardo Martinez ZambranoSHERATONSAND KEY RESORTClearwater, FLSept 21st, 2016

Please keep in mindThere are few official sources of information, regardingcrop volumes, exports / imports and incumbentsEven official and trustworthy sources have conflictinginformationThis presentation is built upon best data selection,industry studies and internal analysisOur intention is to provide a directionally correct accountof the industry dynamics2

MeetingAgenda Company IntroductionOverview of MexicoCitrus ProductionOrangeLemon & LimeHLB3

Grupo Proeza is a privately owned corporation, foundedsince 1959 with focus on long term sustainable growthSignificantSalesUS 2.8 Billion2015Solid Group ofCollaborators14,400GlobalFootprintPresence in16 countriesParticipation in 5 Industry Sectors4

Executive Summary: CitrofrutOverviewProduct Portfolio Agro-industrial business with 58 years ofexperience in the citrus industry.OrangeTangerine Grow citrus fruits & processes a broadportfolio of citrus and some tropical fruits.GrapefruitLime We sell to 30 countries across 5continentsMangoGuava CITROFRUT is the largest player of thecitrus industry in Mexico:- 5 processing plants- 1 distribution center in the USA.- 16,000 acres of citrus groves- 1 nursery (700k tree output)- 1 laboratory for analysis (Tristeza / HLB)Note:* Equivalent to 90lbs boxesLemonProductPresentations Juices (FC / NFC)PureesPulp CellsSpecial products(Oils, aromas, peel)ProductSpecifications FrozenOrganicAsepticUnpasteurized5

MeetingAgenda Company IntroductionOverview of MexicoCitrus ProductionOrangeLemon & LimeHLB6

Mexico a Country of Beauty, Riches and Hard workingindividualsPrivileged CoastlineUnique ArchitectureLively ColorsAcclaimed CultureTraditionsExquisite CuisineIndustrialCreativeLaboriousBeautyRiches& Hard Work7

Mexico, a young country with a privileged location, agrowing population and robust economyPopulation Geography Economy Doingbusinesswith Mexico 12th largest country by population, with 125 million inhabitants27 years is the average age in Mexican populationPopulation growing 2x the speed of the US (1.2% vs 0.7%)14th largest territory worldwide, total area is nearly 2 million Km2Mexico’s privileged geographic location functions as a bridge between Northand Latin America2nd largest economy in Latin America and 14th in the world8th largest economy globally by 2050 according to Economist Int. Unit15th largest exporter worldwideRepresents 66% of all exports in Latin AmericaMexico has the most Free Trade Agreements in the world (45 countries)9th most attractive and reliable country to invest (United NationsConference on Trade and Development)1st destination for foreign direct investment among countries in LatinAmerican8

In spite of the commodity crisis and China’s deceleration,Mexico has maintained stability vs. Lat. Am. peers201520162017Low but positive and steadygrowths in GDPConsumer Price changes in historiclow levels during the last decadeGDP growth projections (%)3.2Consumer price index change (%)3.1 3.02.4 2.52.1 1.71.82.1 2%Mexican Peso among the moststable currencies in Latin AmericaAverage Exchange Rate LCU/USD(2014 100)43ARG2.21.80.927COL25BRA 3%MEX-1.09985 443-3.05CHL63 33-3.9ARGBRACHLCOLSource: BBVA Research, EIUMEXARGBRACHLCOLMEX2014201520169

MeetingAgenda Company IntroductionOverview of MexicoCitrus ProductionOrangeLemon & LimeHLB10

Mexico is the 4th largest citrus producer in the world with 8% of total production2015/2016 Citrus World Production1 - Top 10MtonsFFMillion Tons of Fresh FruitProd. Mix3535%18%9%8%4%3%3%31.32%2%1%Others14%Total World Production: zilUSAMexicoLemons & LimesTurkeyGrapefruitEgyptArgentina S.Africa MoroccoTangerine & .31.00.41.10.82.30.71.50.70.40.2L & 0.31) European Union total production 10.4. Information not available by individual countrySource: USDA, FAO11

Mexico’s Citrus production grew 15% in the past 5 years 15%877.36.66.8Mexico’s Citrus Production1MTonsFFCAGR‘10 –’157.67.5Total3%6.531%656%4%4358%21%Lem. & Limes4%Grapefruit1%Tangerine6%Org. Orange7%Conv. 5CAGR-6%-7%10201020112012201320142015 Orange is the most important Citrus in Mexico with 58% of total production. Estimates place Organic Orange production shy below 1% of production,and still is the largest organic orange producer in the world. In spite of HLB’s effect in Mexico’s West Coast, Lemons and Limesproduction has grown 23% since 2010.Source: SAGARPA, USDA12

65% of Mexico’s Citrus production is located close to theGulf of MexicoNuevo León5%Tamaulipas11%Veracruz45%San Luis Potosí5%Key StatisticsPlanted area:Production:Fresh fruit exports:Juice exports2:Citrus Oil exports3:Source: SAGARPA, Trademap554K Ha (1.37M acres)7.6 M tons (185M boxes1)US 377MUS 386MUS 130M10%Michoacán4% Oaxaca1) 90 lbs boxes2) FC & NFC3) Citurs oils D limonene13

Citrus crop production through the yearMexican Processing Industry SeasonEarly epOctAugSepOctNovOctNovDecDec14

MeetingAgenda Company IntroductionOverview of MexicoCitrus ProductionOrangeLemon & LimeHLB15

Mexico is the 3rd largest orange processor in the World,with 8% of the total processed 56%56%AustraliaSouthAfrica2%1%World Orange Juice Production2010: 2.2 M Metric Tons (65 Brix)2015: 1.8 M Metric Tons (65 Brix)Source: USDA16

Mexico s total OJ exports have grown 22% to anequivalent of 28Mboxes in 2015 vs 5 years ago18%27%68%Netherlands6%59%5%USAJapanOthers TPP presents an opportunity to grow in AsiaSource: Trademap9%8%17

As OJ processing has declined in the USA, imports arebecoming an important source of supplyUSA OJ ImportsSSE GalUSA OJ Imports MixSSE Gal 28%1402%4%125.010%1201003%3%5%OthersBelizeCosta zil20020102015 Imports have grown 28% in the past 5 years Mexico and Brazil have grown in participationSource: USDA,FDOC18

Clear import seasonality by country, as well as a strongoff-season for Brazil & Mexico2015 OJ US Imports From Key CountriesMillion SSE 40JanSource: FDOCFebMarAprMayDic19

For the past 4 years, Mexico’s Valencia orange crop hasbeen stable. ‘16 /17 estimates are moderately positiveMexico’s Valencia Orange Cropon Key Producing States1K tons FFM Boxes3.02.62.62.42.572 4%2.52.42.5602.0481.61.5361.0240.5120.0’10 / ’11’11 / ’12’12 / ’13’13 / ’14’14 / ’15’15 / ’16e’16 / ’17 2 No large new orange grove development - maintenance plantings only Estimated crop - 60 Mboxes3 Minimum HLB effect to date (in orange crop)0.01) Veracruz, SLP, Tamaulipas & Nuevo Leon2) Steiger crop estimate3) 90lbs boxesSource: Citrofrut analysis Steiger crop estimates20

Processors are gaining ground to the Fresh MarketFresh Market vs Industry Process MixFresh MarketK tons FFProcessM Boxes3.02.62.62.42.52.52.060%72 4%2.42.5604843%1.61.5361.02457%0.540%120.0’10 / ’11’11 / ’12’12 / ’13’13 / ’14’14 / ’15’15 / ’16e’16 / ’17 2 In the past, industry has captured between 40% & 57% This year a majority of fruit was processed, we estimate 33M Boxes Current FCOJ prices could further influence industry participation2) Based on Steiger crop estimateSource: Citrofrut analysis Steiger crop estimates210.0

A proliferation of new processors and investments haveincreased processing capacityProcessing Capacity vs Industry ProcessMtons FFK tons FFM Boxes3.0Competitive Evolution72Processing Capacity2.52.01.52.42.31.4?362000 101.01.0240.5120.00.0’10 / ’11 2748 65%1.56090’s’15 / ’16e’16 / ’1722016 30 Processing capacity has increased 65% Since 2000, many new small companies and facilitiesSource: Citrofrut analysis Steiger crop estimates22

MeetingAgenda Company IntroductionOverview of MexicoCitrus ProductionOrangeLemon & LimeHLB23

Mexico is the largest Persian and Key Lime producerin the world and continues to growWorld L&L Prod.Million TonsMexico s L&L Prod.Million Tons ina17%Mexico y 2011/122015/16 Mexico represents 28% of the world’s Lemon & Lime’s production Production is focused mostly on Persian & Key Lime (94%) In past 4 years, world production grew 5% while Mexico s productionreached 10% growthSource: USDA, SAGARPA24

80% of total L&L production is based in 5 states, with aclear preference to a particular fruit varietyPredominantvariety productionTamaulipas5%Italian LemonPersian LimeVeracruzKey LimeColima28%8%Key StatisticsPlanted area:Production:Fresh fruit exports:Juice exports:Citrus Oil exports2:160K Ha (396k acres)2.3 M tons (60M box1)29%Michoacán10%OaxacaUS 351MUS 70MUS 12M1) Equivalent to 85 lbs boxesSource: SAGARPA,25

Increase in production mostly driven by US Export pricesUS Average Export Prices1( USD)Italian LemonPersian LimeKey Lime200620112015200620112015200620112015 24.5 22.1 29.6 11.6 15.0 16.7 14.3 16.2 19.421%Considered months during processing season:Italian Lemon: Aug- DicPersian Lime: June- OctMexican Lime: May- Sept23%30%Pricing for 40lbs boxes26

MeetingAgenda Company IntroductionOverview of MexicoCitrus ProductionOrangeLemon & LimeHLB27

Evolution of HLB in México 2009 - 201620022009201020112016Affected States None The Asian Citrus Psyllid (ACP), vector ofHLB disease, was first detected inMexico in 2002. It quickly disseminated across thecountry.28

Evolution of HLB in México 2009 - 201620022009201020112016Affected States YucatánQuintana RooNayaritJalisco HLB was first detected in Yucatán By the end of 2009, HLB was confirmedin three other states.29

Evolution of HLB in México 2009 - 201620022009201020112016Affected States CampecheColimaSinaloaMichoacán In 2010, HLB was confirmed in fourmore states30

20022009201020112016Affected States Baja California SurHidalgoChiapasTabasco In 2011, four additional states foundHLB infections31

Evolution of HLB in México 2009 - 201620022009201020112016 To date, HLB is present in all24 Citrus Production States inMéxico, either as: infected ACP only (9) infected ACP Citrus Trees (15)32

Key impact of HLB in Mexico HLB has mainly affected key lime production in the Pacific Coast In Colima, 100% of citrus trees are infected since 2013 Production loss is estimated to reach 50% because of yield reduction of HLBinfected trees As of today, yield reduction in oranges or other varieties has not beenreported or observed33

SENASICA – the Mexican Plant Health Authority HLBstrategy is focused on 5 key actionsACP monitoring Nationwide ACP monitoringwith dynamic informaticssystem (SIMDIA)ACP sampling for PCRdiagnosisGrove Inspections Centinel groves – inspect. alltrees for HLB symptomsLeaf analysis in 100% of treesnear ACP positive detections. ACP Control 2-3 times a yearCareful selection of: Biological (Tamarixia radiata) Fungui Environmental friendlyinsecticidesEstablishment of ARCOS Establishment of RegionalManagement Areas(ARCOs) where infectedACPs or citrus trees aredetected, for ACPmonitoring and control Monitoring & controlinvestments of 9.5MUSDTotal investments - 42MSUDThis drove to the asymptomatic positivedetection in Golf CoastTree Elimination Elimination of HLB positivetrees where possible. Colima has 100% of trees infected, can telimination is not possible. Awareness campaigns Monitoring & control Detection labs / Bio controldevelopment34

ConclusionsMexico is an economically stable country,favored by investors in Latin AmericaCitrus development is expected to continue growing,particularly in Lemons & LimesNext year s orange season is expected to havea moderate growth (4%)Government and industry working to monitorand control HLB, which has mainly affected the west coastRelevant processing capacity increase with new small playersExports are increasing and can be further ignited by the TPP35

“Quality, reliability & experience are the key drivers of our reputation,distinction and the image in which we pride ourselves on”

Executive Summary: Citrofrut 5 Agro-industrial business with 58 years of experience in the citrus industry. Grow citrus fruits & processes a broad portfolio of citrus and some tropical fruits. We sell to 30 countries across 5 continents CITROFRUT is the largest player of the citrus industry in Mexico: - 5 processing plants