Vilmorin & Cie - Annual report 2017-2018

1 ANNUAL REPORT Vilmorin & Cie 19 2017-2018 The development of precision farming American farmers today have broad access to different services accompanying them in the management of their farms. Based on the use of new technologies, precision farming makes more and more detailed, updated and personalized data available to them, through connected objects (connected underground probes, sensors installed in livestock pens, on machines, etc.). The objective is to guide farmers in their decision-making to enable them to better manage their farm and analyze its performances: choice of varieties to be sown according to the characteristics of their plots, sowing density or farming practices. For example, yield maps are used on about 40% of corn and soybean acreage in the United States. This trend also concerns other geographical zones, particularly Europe. The market for seeds in new development zones South America With average annual growth of nearly 5% over the past five years, the South American market represented more than 20% of the world value market for seeds in 2017, a total of 8.3 billion USD; it is positioned as the second largest world seeds market in terms of value (Source: Phillips McDougall 2018) . While soybean holds a prominent place, corn is also a widely cultivated crop in South America: more than 25 million hectares were devoted to corn in 2017, including more than 16 million hectares in Brazil (Source: USDA 2018) . Brazil is a special case since, in certain regions, there are two corn harvests per year: “safra” (summer crop) and “safrinha” (winter crop). In 2017-2018, acreage for “safra” and “safrinha” fell significantly, owing to a particularly difficult market context this year for corn, after an extremely dynamic fiscal year 2016-2017. The country is also characterized by a very high adoption rate of genetically modified varieties, in particular for corn, which stood at 89% in 2017 (up from 88% in 2016). Brazil is therefore the second largest world market in terms of GM* corn acreage (Source: ISAAA 2018) . Asia With the fourth largest seeds market in the world, Asia represents almost 6 billion USD (Source: Phillips McDougall 2018) . Characterized by a continuous population increase, the emergence of middle classes and changes in consumption patterns, the Asian market is a great opportunity. The main crops in terms of value in Asia are rice, vegetables, corn and cotton. In this geographical region, China and India are both positioned as key countries: China is a major producer of cereal crops, and one of the major players in the world for rice and corn acreage. Its seed market is characterized by the modernization of its agriculture, progressive concentration of the local players and the involvement of the Chinese authorities in this sector, which is considered to be highly strategic. Chinese players have thus recently achieved a high- ranking position in the seed sector. In India, where self-sufficiency in food continues to be a major challenge, the seed market is evolving very fast. It is characterized by a trend towards greater concentration of the numerous local seed companies, and a rate of commercial seed use by farmers gradually increasing. Africa By 2050, Africa will contain almost a quarter of the world’s population (Source: United Nations Food and Agriculture Organization/FAO) . In order to satisfy these immense food needs, farmers will require access to efficient varieties, which the majority do not have today. The African market, which today represents less than one billion USD, has a low rate of adoption of commercial seeds, and in particular hybrid* seeds. It is therefore a very promising market with considerable development in years to come. Corn is the main crop grown in Africa, and in 2017 represented around 21% of world grain corn acreage, with around 38 million hectares (Source: ISAAA 2018) . This concerns mainly white corn, which along with vegetables and poultry is a staple food for Africans, although acreage for yellow corn, intended for animal feed, is progressing to meet increasing poultry feed requirements. Source: USDA 2018. Bioethanol Animal feed Other applications Export 0 00/0101/0202/0303/0404/0505/0606/0707/0808/0909/1010/1111/1212/1313/1414/1515/1616/1717/18 50 100 150 200 250 300 350 400 Evolution of the total applications for corn in the United States (in millions of tonnes) 1.3. The seed market PRESENTATION of Vilmorin & Cie