Rome 30-31 May 2008

2. Thank –you On behalf of AEM, I would like to thank our host, UNACOMA, for organizing Agrievolution 2008. And what an Evolution it is today in the Ag sectors of our various economies. This is a great opportunity for us to get together with our counterparts from around the world to share thoughts, ideas, discuss issues, and share the key events that are impacting agriculture today and what agriculture may hold in the future. I am Rusty Fowler, President and CEO of Krone, North America. I also sit on the Executive Committee of the Board of Directors at the Association of Equipment Manufacturers. I look forward to meeting you all throughout the summit and having time to get to know you and reach a better understanding of agriculture in your region of the world. We hope that this is the first of many summits for this group. I think we have much to learn from each other and a great deal we can accomplish in the future if we have a better understanding of the respective issues we face in our parts of the world and the impact we may have on each other. Thank –you On behalf of AEM, I would like to thank our host, UNACOMA, for organizing Agrievolution 2008. And what an Evolution it is today in the Ag sectors of our various economies. This is a great opportunity for us to get together with our counterparts from around the world to share thoughts, ideas, discuss issues, and share the key events that are impacting agriculture today and what agriculture may hold in the future. I am Rusty Fowler, President and CEO of Krone, North America. I also sit on the Executive Committee of the Board of Directors at the Association of Equipment Manufacturers. I look forward to meeting you all throughout the summit and having time to get to know you and reach a better understanding of agriculture in your region of the world. We hope that this is the first of many summits for this group. I think we have much to learn from each other and a great deal we can accomplish in the future if we have a better understanding of the respective issues we face in our parts of the world and the impact we may have on each other.

3. DISCUSSION TOPICS State of Agriculture in the USA Mechanization Evolution and Economic Weight of Industry Legislative Framework and Regulations Research and Technological Innovation My discussion topics today will focus in four primary areas; The Sate of Agriculture in the USA Mechanization and Economic Weight of the Industry Legislative Framework and Regulations Research and Technological InnovationMy discussion topics today will focus in four primary areas; The Sate of Agriculture in the USA Mechanization and Economic Weight of the Industry Legislative Framework and Regulations Research and Technological Innovation

4. State of Agriculture in the USA Lets just spend a few minutes talking about research and innovations in the United states to continue to drive efficiencies for the American farmer.Lets just spend a few minutes talking about research and innovations in the United states to continue to drive efficiencies for the American farmer.

5. First I would like to give you a broad picture of Agriculture in the USA. You will see many large numbers being presented in a quick fashion for which I apologize. However, as I understand it, copies will be available to attendees if requested. These statistics are provided by the United States Department of Agriculture Quote from the Chart: Today there are more than 2 million farms operating in the U.S. with a total of almost 377 million hectares of planted land. Net U.S Farm Income is projected to be more than $92 billion in 2008. 98% of the farms are Family Farms but 90% of that number have less than $250,000 in annual sales. If we look to the chart we can see that large scale farm represent only 10% of total farms, but 75% of production value. The average farm production area is 182 hectares with small family farms averaging 70 hectares, large scale farms 382 hectares and non-family farms 70 hectares. 62% of farms are owned by single families, 32% have multiple owners. First I would like to give you a broad picture of Agriculture in the USA. You will see many large numbers being presented in a quick fashion for which I apologize. However, as I understand it, copies will be available to attendees if requested. These statistics are provided by the United States Department of Agriculture Quote from the Chart: Today there are more than 2 million farms operating in the U.S. with a total of almost 377 million hectares of planted land. Net U.S Farm Income is projected to be more than $92 billion in 2008. 98% of the farms are Family Farms but 90% of that number have less than $250,000 in annual sales. If we look to the chart we can see that large scale farm represent only 10% of total farms, but 75% of production value. The average farm production area is 182 hectares with small family farms averaging 70 hectares, large scale farms 382 hectares and non-family farms 70 hectares. 62% of farms are owned by single families, 32% have multiple owners.

6. The map illustrates the key farming states as measured by cash receipts in the United States. There is a certain amount of specialization for each area. Upper Midwest – Corn, hogs, cattle, and dairy Corn Belt – Located in the central US dominated by grains, corn & soybean South – Noted for cattle production rice, cotton, Florida – known for vacations and Disney World the state is also a very big agricultural state with Nursery stock and orange and fruit groves California – probably the most diverse cropping area in the United States with over 300 specialty crops, including all types of fruits, nuts, and vegetables. California is also a key dairy state producing 41 billion pounds of milk (18.4 billion KG, 2.1 million Metric tons) in 2007. In general terms, one out of every 5 dairy cows in the U.S. are in California. Of course, there is agriculture in the other states however the greatest concentration of Agriculture is in the highlighted states. In the pie chart you can see the mix of commodity crops with Corn being the dominate crop (as measured by revenue generated), followed by soybeans, wheat and cotton. This information is also included in your handout of material provided for the Summit. The map illustrates the key farming states as measured by cash receipts in the United States. There is a certain amount of specialization for each area. Upper Midwest – Corn, hogs, cattle, and dairy Corn Belt – Located in the central US dominated by grains, corn & soybean South – Noted for cattle production rice, cotton, Florida – known for vacations and Disney World the state is also a very big agricultural state with Nursery stock and orange and fruit groves California – probably the most diverse cropping area in the United States with over 300 specialty crops, including all types of fruits, nuts, and vegetables. California is also a key dairy state producing 41 billion pounds of milk (18.4 billion KG, 2.1 million Metric tons) in 2007. In general terms, one out of every 5 dairy cows in the U.S. are in California. Of course, there is agriculture in the other states however the greatest concentration of Agriculture is in the highlighted states. In the pie chart you can see the mix of commodity crops with Corn being the dominate crop (as measured by revenue generated), followed by soybeans, wheat and cotton. This information is also included in your handout of material provided for the Summit.

7. I wanted to highlight two of the crops, Corn and Soybeans, that have always been important in the United States and have taken on increasing importance because of their role as energy sources. 37.9 million hectares of corn was planted in 2007. This is the highest planted acres of corn in the United States since 1946, representing an increase of 19% over the previous year in response to the demand for corn being used for ethanol production. The demand has also been driving up the price of corn to record levels. The price has doubled in the last 24 months which has been good news for corn producers seeing significant increases in their revenues as we will see in a later slide. Because of the large demand in corn last year, many hectares stayed in corn instead of converting to the normal Soybean rotation. This resulted in a decrease in Soybean production which also drove up the price of soybeans. Now, with the price increase in Soybeans, 35 million hectares less corn will be gown in the US this year and with more going back to Soybeans. The point of that confusing explanation is that the basic economic principals of supply and demand and market returns are at work as the market responds to filling the need for food and energy with these key crops. I wanted to highlight two of the crops, Corn and Soybeans, that have always been important in the United States and have taken on increasing importance because of their role as energy sources. 37.9 million hectares of corn was planted in 2007. This is the highest planted acres of corn in the United States since 1946, representing an increase of 19% over the previous year in response to the demand for corn being used for ethanol production. The demand has also been driving up the price of corn to record levels. The price has doubled in the last 24 months which has been good news for corn producers seeing significant increases in their revenues as we will see in a later slide. Because of the large demand in corn last year, many hectares stayed in corn instead of converting to the normal Soybean rotation. This resulted in a decrease in Soybean production which also drove up the price of soybeans. Now, with the price increase in Soybeans, 35 million hectares less corn will be gown in the US this year and with more going back to Soybeans. The point of that confusing explanation is that the basic economic principals of supply and demand and market returns are at work as the market responds to filling the need for food and energy with these key crops.

8. You can see the dramatic shift in corn usage with less than 5% of the annual harvest going toward the production of ethanol until 2002. At this point we see a dramatic shift in utilization of the crop to fill a roll in meeting the energy needs of the United States. Today 30% of the corn crop will go into energy production. We now have 147 ethanol plants in operation in the United States most of which have been built in the last 5 years. 55 more plants are under construction And 6 existing plants being expanded to increase their current capacity All these recent activities are to meet the current ethanol demand. You can see the dramatic shift in corn usage with less than 5% of the annual harvest going toward the production of ethanol until 2002. At this point we see a dramatic shift in utilization of the crop to fill a roll in meeting the energy needs of the United States. Today 30% of the corn crop will go into energy production. We now have 147 ethanol plants in operation in the United States most of which have been built in the last 5 years. 55 more plants are under construction And 6 existing plants being expanded to increase their current capacity All these recent activities are to meet the current ethanol demand.

9. Increased corn, soybean use for biofuels Increased global population Increased demand for quality food due to global prosperity Decreased global yield due to low rainfall in other countries Result: Decreased U.S. corn and wheat stocks Another way to look at the impact on demand for crops being used for both food and energy. You will see in in these ending Stocks to use charts the overall impact of the corn usage. You can see the corn reserves being dramatically decreased and you can see the result the result of the decrease in soybean production last year and now with the increase in prices more hectares being planted in soybeans consequently the reserves we see are being increased. To be fair these corn reserves are lower than most are comfortable with. According to the World Food & Agricultural Organization or FAO, the world has only 11 weeks of consumable corn reserves left, the lowest inventory since record keeping began. Consequently, corn prices will likely remain unstable until producers can sort out the relationship between food cropping and biofuels. Another way to look at the impact on demand for crops being used for both food and energy. You will see in in these ending Stocks to use charts the overall impact of the corn usage. You can see the corn reserves being dramatically decreased and you can see the result the result of the decrease in soybean production last year and now with the increase in prices more hectares being planted in soybeans consequently the reserves we see are being increased. To be fair these corn reserves are lower than most are comfortable with. According to the World Food & Agricultural Organization or FAO, the world has only 11 weeks of consumable corn reserves left, the lowest inventory since record keeping began. Consequently, corn prices will likely remain unstable until producers can sort out the relationship between food cropping and biofuels.

10. As mentioned in the previous slide, reduced global food supplies and the demand for farm commodities in developing countries continues to drive exports. The U.S. corn exports in 2007-2008 market year has increased to 2.45 billion bushels of corn. If we combine that with the use of corn to assist in meeting the US energy needs, the result is an increasing demand and consequently the price of corn It is the same story with soybeans. This increase prices received for these commodities by the US producer is presently outpacing the increased energy and input costs for producing these crops. Consequently, net farm income has significantly outpaced the 10 year average with net farm income projected to be almost $90 billion in 2009. As mentioned in the previous slide, reduced global food supplies and the demand for farm commodities in developing countries continues to drive exports. The U.S. corn exports in 2007-2008 market year has increased to 2.45 billion bushels of corn. If we combine that with the use of corn to assist in meeting the US energy needs, the result is an increasing demand and consequently the price of corn It is the same story with soybeans. This increase prices received for these commodities by the US producer is presently outpacing the increased energy and input costs for producing these crops. Consequently, net farm income has significantly outpaced the 10 year average with net farm income projected to be almost $90 billion in 2009.

11. MECHANIZATION EVOLUTION AND ECONOMIC WEIGHT OF INDUSTRY I would like to turn our focus on mechanization and the economic importance of agriculture to the United states.I would like to turn our focus on mechanization and the economic importance of agriculture to the United states.

12. We talked about Net Farm Income and how it has been increasing because due to the increase in demand for the commodities. Not surprisingly this increase in Net Farm Income drives increases in agricultural equipment sales. These are the figures showing sales in the US for various horsepower tractors and combines. You can see that the categories that are tied to corn production are seeing significant growth with 28% in 100HP & above, 30.8% in 4 wheel drive tractors and 10.8 % in combines. This years performance is repeating double digit growth in these same categories. We talked about Net Farm Income and how it has been increasing because due to the increase in demand for the commodities. Not surprisingly this increase in Net Farm Income drives increases in agricultural equipment sales. These are the figures showing sales in the US for various horsepower tractors and combines. You can see that the categories that are tied to corn production are seeing significant growth with 28% in 100HP & above, 30.8% in 4 wheel drive tractors and 10.8 % in combines. This years performance is repeating double digit growth in these same categories.

13. As indicated in the chart there are fewer and fewer farm but the average farm size continues to increase. Then read the bullets Less than 2% of the U.S. population today works in agriculture. At the turn of the 20th century, one farmer in the U.S. could feed 25 people; today, that ratio is 1:130 (in a modern grain farm, a single farmer can produce cereal to feed over a thousand people). With continuing advances in agricultural machinery, the role of the farmer will become increasingly specialized. This is a clear when we consider that between 1900 and 1945 the average number of commodities produced on farms was an average of about 5 commodities. Today that average is slightly more than 1 Automation continues to be critical for diminishing number of farmers in the United States as these remaining farmers continue to help meet the world demands for food and energy into the future. As indicated in the chart there are fewer and fewer farm but the average farm size continues to increase. Then read the bullets Less than 2% of the U.S. population today works in agriculture. At the turn of the 20th century, one farmer in the U.S. could feed 25 people; today, that ratio is 1:130 (in a modern grain farm, a single farmer can produce cereal to feed over a thousand people). With continuing advances in agricultural machinery, the role of the farmer will become increasingly specialized. This is a clear when we consider that between 1900 and 1945 the average number of commodities produced on farms was an average of about 5 commodities. Today that average is slightly more than 1 Automation continues to be critical for diminishing number of farmers in the United States as these remaining farmers continue to help meet the world demands for food and energy into the future.

14. As indicated in the chart, and following fewer but larger farms, the evolution of Farm Machinery has trended toward fewer but larger machines Then read the bullets. The days of the 70s are fond memories for me and they were fantastic times for the farm machinery business. I remember the 80 as well, but not so fondly, as the new realities of the business set in leading to a complete restructuring of companies including major consolidations between famous names in Agricultural Machinery Manufacturing organizations. Today, we are seeing favorable increases in product demand driven by the forces discussed in earlier slides. It is true that the overall number of machines has declined from the 70s but consider that 160 hp/2wd tractors then are replaced with 260 hp/2wd tractors today. In the 70s, top end Combines had 150 hp, 146 bushel grain tanks and accommodated 20 foot grain heads and 8 row corn heads. Today top end combines have 470 hp, 300 bushel grain tanks and accommodate 35 foot grain heads and 12 row corn heads. This trend toward larger machines with higher efficiencies and productivity gains will continue. As indicated in the chart, and following fewer but larger farms, the evolution of Farm Machinery has trended toward fewer but larger machines Then read the bullets. The days of the 70s are fond memories for me and they were fantastic times for the farm machinery business. I remember the 80 as well, but not so fondly, as the new realities of the business set in leading to a complete restructuring of companies including major consolidations between famous names in Agricultural Machinery Manufacturing organizations. Today, we are seeing favorable increases in product demand driven by the forces discussed in earlier slides. It is true that the overall number of machines has declined from the 70s but consider that 160 hp/2wd tractors then are replaced with 260 hp/2wd tractors today. In the 70s, top end Combines had 150 hp, 146 bushel grain tanks and accommodated 20 foot grain heads and 8 row corn heads. Today top end combines have 470 hp, 300 bushel grain tanks and accommodate 35 foot grain heads and 12 row corn heads. This trend toward larger machines with higher efficiencies and productivity gains will continue.

15. If we overlay farm income history on top of new farm tractor sales history in the same period, we see that the sales of farm tractors closely follows the trend of farm income. When farmers make money they also spend money. If we were to do the same exercise with combines, tillage, planting equipment and other farm machinery categories the results would be similar. Because of this the economic influence of the industry is significant. Agriculture comprised 0.9% of the U.S. Gross Domestic Product of $13.86 trillion in 2007. Although only a fraction of the overall GDP, agriculture is still is fundamental industry in the United States. The agricultural industry creates. (From list in chart) $82.0 billion in revenue $6.2 billion in exports 250,000 employed in industry $8.5 billion payroll It is easy to understand from previous slides of the primary Ag regions that this economic influence is heavily concentrated in regions where Agriculture is heavily concentrated. This influence spreads from East to West and North to South considering MN, Il, WI, NE and IA in the midwest and upper midwest, California on the west coast, Texas in the south and North Carolina and Florida in the East. If we overlay farm income history on top of new farm tractor sales history in the same period, we see that the sales of farm tractors closely follows the trend of farm income. When farmers make money they also spend money. If we were to do the same exercise with combines, tillage, planting equipment and other farm machinery categories the results would be similar. Because of this the economic influence of the industry is significant. Agriculture comprised 0.9% of the U.S. Gross Domestic Product of $13.86 trillion in 2007. Although only a fraction of the overall GDP, agriculture is still is fundamental industry in the United States. The agricultural industry creates. (From list in chart) $82.0 billion in revenue $6.2 billion in exports 250,000 employed in industry $8.5 billion payroll It is easy to understand from previous slides of the primary Ag regions that this economic influence is heavily concentrated in regions where Agriculture is heavily concentrated. This influence spreads from East to West and North to South considering MN, Il, WI, NE and IA in the midwest and upper midwest, California on the west coast, Texas in the south and North Carolina and Florida in the East.

16. LEGISLATIVE FRAMEWORK AND REGULATIONS PERTAINING TO AGRICULTURE 

17. The Food, Conservation and Energy Act of 2008“The Farm Bill” Reauthorizes crop subsidies and conservation programs Tightens income eligibility limits for farm payments Boosts funding for Food Assistance programs Expands land conservation programs Offers new incentives for alternative energy research and development Programs for Farm, Nutrition and Conservation through 2012. Overwhelming bi-partisan support in Congress. 1000+ Ag groups supported the bill sent to the President President Bush vetoed the bill as too expensive, lacking major reform Congress overwhelmingly rejected his veto. The bill will expand food security programs, protect vital natural resources, promote healthier foods and local food networks and reform commodity and biofuel programs to reflect the priorities of the nation. Provides $1.1 billion to fund programs that will help the renewable energy industry invest in new technologies that use a variety of sources beyond feed grains. Corn ethanol tax credit reduced and redirected to incentives for cellulosic ethanol Creates a loan guarantee program and a program to encourage and develop production of dedicated energy crops. The American public and elected officials agree that climate change is happening and that human activity is a contributing factor. To what extent off road equipment contributes and what changes in its use and technology can be made to minimize any harmful effect is of significant concern to the equipment sector The bill will expand food security programs, protect vital natural resources, promote healthier foods and local food networks and reform commodity and biofuel programs to reflect the priorities of the nation. Provides $1.1 billion to fund programs that will help the renewable energy industry invest in new technologies that use a variety of sources beyond feed grains. Corn ethanol tax credit reduced and redirected to incentives for cellulosic ethanol Creates a loan guarantee program and a program to encourage and develop production of dedicated energy crops. The American public and elected officials agree that climate change is happening and that human activity is a contributing factor. To what extent off road equipment contributes and what changes in its use and technology can be made to minimize any harmful effect is of significant concern to the equipment sector

18. Research and technological innovation Lets just spend a few minutes talking about research and innovations in the United states to continue to drive efficiencies for the American farmer.Lets just spend a few minutes talking about research and innovations in the United states to continue to drive efficiencies for the American farmer.

19. Research & Technological Innovation Biofuels Cellulosic Biomass harvesters Autonomous Tractors ISOBUS Further Commercialization of Precision Farming Mechatronics Qin Zhang -University of Illinois Automated navigation Active Rollover Protection System Smart machine health monitor Vision based side dressing In the write-up provided in the summit materials we have listed many of the newest innovations that are either being worked on today or have been recently introduced to the market. I have only highlighted a few here depicted by the pictures. As you can imagine biofuels and producing renewable energy is driving a great deal of research to seek additional methods to make ethanol out of a variety of cellulosic materials including items like corn cobs that historically have not been utilized to any great extent. For years, the problem has been how to get rid of excess crop residue so it doesn't affect crop emergence. Now, alternative fuel makers have another use for biomass, and equipment companies are scrambling for ways to handle it. The key question for manufacturers is if they should modify existing equipment, develop new prototypes or design totally different machines to collect biomass Tractors that drive themselves with a computer in control are nearly here. Some equipment manufacturers have experimented with driverless tractors but have not taken them beyond the research stage. The big problem is that the tractor must sense when a person, animal or object is near and stop or move around it. There is little room for error. But guidance technology has advanced a great deal in the last few years. Autonomous tractors can't be far away, especially for tedious fieldwork. ISOBUS – a great deal has been done with this electronic messaging between the tractors and implements so that only one monitor is needed on the tractor regardless to which implement is being used. I would urge others around the world to work to adopt this standard. We still have a long way to go for adoption of this standard around the world. Precision Farming deals with adjusting to variations in soil and crop conditions in the fields. Using Global Positioning (GPS), Sensors, Satellitea and/or aerial imaging, precision farming systems will vary seed population and/or fertilizer application rates from one field to the next, one row to the next or “even on the go”. Again, only a few examples to day of all the research and development that is going on in the world of agriculture. It is fun to be a part of agriculture these days with so many dynamic things going on. Many in the United States have referred to these times as the Golden age of agriculture. How exciting is that. In the write-up provided in the summit materials we have listed many of the newest innovations that are either being worked on today or have been recently introduced to the market. I have only highlighted a few here depicted by the pictures. As you can imagine biofuels and producing renewable energy is driving a great deal of research to seek additional methods to make ethanol out of a variety of cellulosic materials including items like corn cobs that historically have not been utilized to any great extent. For years, the problem has been how to get rid of excess crop residue so it doesn't affect crop emergence. Now, alternative fuel makers have another use for biomass, and equipment companies are scrambling for ways to handle it. The key question for manufacturers is if they should modify existing equipment, develop new prototypes or design totally different machines to collect biomass Tractors that drive themselves with a computer in control are nearly here. Some equipment manufacturers have experimented with driverless tractors but have not taken them beyond the research stage. The big problem is that the tractor must sense when a person, animal or object is near and stop or move around it. There is little room for error. But guidance technology has advanced a great deal in the last few years. Autonomous tractors can't be far away, especially for tedious fieldwork. ISOBUS – a great deal has been done with this electronic messaging between the tractors and implements so that only one monitor is needed on the tractor regardless to which implement is being used. I would urge others around the world to work to adopt this standard. We still have a long way to go for adoption of this standard around the world. Precision Farming deals with adjusting to variations in soil and crop conditions in the fields. Using Global Positioning (GPS), Sensors, Satellitea and/or aerial imaging, precision farming systems will vary seed population and/or fertilizer application rates from one field to the next, one row to the next or “even on the go”. Again, only a few examples to day of all the research and development that is going on in the world of agriculture. It is fun to be a part of agriculture these days with so many dynamic things going on. Many in the United States have referred to these times as the Golden age of agriculture. How exciting is that.

20. In closing let me say that there really is “AGRIEVOLUTION” today and we , all of us in this room, are blessed and privileged to be a part of it. Whether we are in research, manufacturing, engineering, marketing, sales or any other of the various fields of endeavor that support the Agricultural Industry, we have the longstanding obligation and opportunity to provide the ways and means of feeding and clothing the populations of this planet. And now, we have the additional obligation and opportunity to change the face of energy sourcing for generations to come. For those of us who have been in this industry for quite some years, we can truly say that we never expected to see the machines and technology that we see today. For those of you who will drive this industry to its future, I say that the “AGRIEVOLUTION” has only begun. I appreciate your attention today and again, on behalf of AEM, I would like to thank our host UNACOMA for the kind invitation and hospitality in hosting this event. It is a privilege to be here with such an esteemed group. As I stated earlier, I hope this is the first of many world agricultural machinery summits of its kind. Should there be interest, the United States would certainly offer to host the next summit in either 2009 or 2010. Thank you.In closing let me say that there really is “AGRIEVOLUTION” today and we , all of us in this room, are blessed and privileged to be a part of it. Whether we are in research, manufacturing, engineering, marketing, sales or any other of the various fields of endeavor that support the Agricultural Industry, we have the longstanding obligation and opportunity to provide the ways and means of feeding and clothing the populations of this planet. And now, we have the additional obligation and opportunity to change the face of energy sourcing for generations to come. For those of us who have been in this industry for quite some years, we can truly say that we never expected to see the machines and technology that we see today. For those of you who will drive this industry to its future, I say that the “AGRIEVOLUTION” has only begun. I appreciate your attention today and again, on behalf of AEM, I would like to thank our host UNACOMA for the kind invitation and hospitality in hosting this event. It is a privilege to be here with such an esteemed group. As I stated earlier, I hope this is the first of many world agricultural machinery summits of its kind. Should there be interest, the United States would certainly offer to host the next summit in either 2009 or 2010. Thank you.