At Agland, we strive to balance our activities across the wide range of projects we are involved in, bringing a private sector perspective to public sector projects with practical, results-oriented solutions. We continue to assist our clients in the application of cutting-edge technologies to new initiatives, ranging from biofuels to precision vineyard crop management. Over the past twenty-one months, Agland has completed a number of projects and begun exploring new horizons. We successfully completed projects in Macedonia, Turkey, Colombia, Peru, Honduras, and Nigeria. One of the popular frontiers is the push for alternative energy sources, particularly biofuels. We explore this subject and other projects in the following pages.

Ethanol and biodiesel are two of the main biofuels that can be produced. Sugar cane is by far the most efficient feedstock for producing ethanol (see chart below). Sugar cane is cost-effective, replenishes the land in which it is grown, and can be developed using environmentally sound practices. Recent research demonstrates that sugar cane has a much better net energy balance compared to other feedstocks, such as corn.

Although there are many feedstocks that can be used to produce biodiesel, ranging from soy to restaurant grease, the African Palm provides the highest yielding feedstock. Jatropha is also a plant with strong potential for producing biodiesel. Although the yields are lower than palm, there are some advantages, such as lower water requirements and the opportunity to grow the plant on marginal land.

We note that biofuels are caught up in the “food versus fuel” debate, in part because of the use of corn in the USA as the raw material for ethanol production. There is a finite amount of good quality land for corn production in the USA and taking 25 percent of the corn out of the feed and food market will have an impact on price. Corn is also relatively high-priced and not the most energy efficient method of producing ethanol, which has tarnished ethanol’s image. Also, the input of one unit of energy in production of ethanol in Brazil yields 8 or 9 units of energy, while in the USA the ration is close to 1 to 1. It is the 1 to 1 ratio, coupled with subsidies, that has led to considerable criticism of corn-based ethanol production.

As you might suspect, we believe in “harvesting the sun” through photosynthesis and the sun shines the longest and brightest in the tropics. It is here that alternative fuels can be produced and transported to markets at the lowest net cost.

Biofuel Project Development

Agland’s approach is to build integrated plantation and plant operations that offer the ideal combination of lowest price and highest quality. This is accomplished by focusing on feedstocks such as sugarcane and palm oil that produce the best production yields per hectare and by developing processing plants using leading edge technologies and processes. Agland focuses on countries that offer optimal conditions for the growth of these feedstocks; most of these countries lie in the tropical belt. Agland is currently focused on biofuel projects in Egypt, Brazil, Peru, and Vietnam.

Venture and Private Equity Capital Roundtable
Agland continues its membership in a group of Silicon Valley venture capitalists and private equity fund managers that meet once a month to discuss new business opportunities. In fact, Agland was asked to make a presentation on international biofuel investment opportunities.

International Agricultural Land Investments
In 2008, we have seen an awakening to the issues related to sufficient energy and food to power and feed expanding populations and economies. We are bullish on agricultural crop land investments and operations in Latin America, particularly Brazil, Argentina, and Colombia.

Similarly, last year we focused on investment opportunities in Turkey, working with several local investment banking institutions. Turkey is a very attractive site for low-cost production of high-quality horticultural crops. In October, 2007, we carried out initial studies on the feasibility of developing and operating integrated almond, pistachio, and pomegranate orchards in southeast Turkey (not far from the Syrian border) on lands currently owned by the Government. The Government of Turkey is anxious to attract private capital into integrated agribusinesses and financial returns on farming and processing operations that mirror California operations are very attractive. Discounted returns on equity of 35 to 45 percent are possible. As global markets expand in terms of buying power and interest in a more diverse diet, opportunities arise to supply these emerging markets, not only from California but from diverse global production sites. The long term benefits of agricultural land investments are now evident to many investment groups and we are ready to assist in implementing agricultural land and farming investments.

Cape Verde: Irrigation and Post-Harvest Activities
Agland is the prime contractor for a Millennium Challenge Corporation (MCC) project in Cape Verde, 300 miles off the coast of West Africa. The project is a mixture of infrastructure development and training. We are working with farmers and micro-credit institutions to install drip irrigation so that farmers can sell high-value, high-quality produce into growing tourist markets. We are also designing and installing post-harvest facilities with packing, grading, and cold storage facilities on three different islands.

With assistance from the Institute of Tropical Agronomy at the University of Lisbon, the project is designing training materials for farmers and extension agents for the management of drip irrigation and post-harvest facilities, and developing high value agricultural opportunities in the marketplace in Cape Verde. Working with Value-Add, a Washington-based firm, the project has also been working to train micro-credit institutions and defining lending practices appropriate to the agricultural sector.

Iraq: INMA Agribusiness Program
Iraq is in the news continually and Agland, as a "can do" firm, is working in Iraq to get the food and agriculture sector moving forward under difficult conditions. It is too early to say what can be done, but the project is well-funded (although modestly funded by Department of Defense standards) and we see opportunities.

Agland is currently working with Louis Berger Group, Inc. to implement the INMA Agribusiness Program. INMA, which means "growth" in Arabic, will work with the Government of Iraq to support the development of agribusinesses and agricultural markets. The project will help build meaningful linkages between farmers, agribusinesses, financial services, and domestic and international markets.

Agland currently has agribusiness consultants in the field of farm management, food processing, and orchard development and marketing in Iraq. The activity will improve the livelihoods of farmers while energizing Iraq's agriculture industry, the single largest source of employment and second largest contributor to the overall gross domestic product in the country. Technical advisors will support national and local government agencies as they adapt to the rapidly evolving legal, regulatory, and public service needs of a free market economy. By promoting public-private partnerships and dialogue, INMA will stimulate local and national policy-making opportunities.

Peru: Asparagus/Artichoke Venture Due Diligence
Agland was asked to participate in a due-diligence review of a leading Peruvian agribusiness company, Camposol S.A., along with several other international agribusiness consultants. Camposol is an impressive company that was built over a ten-year period into a leading producer and exporter of asparagus, sweet peppers, artichokes, avocados, and mangos as fresh, frozen, and canned products. It is located on the arid coast of Peru, where irrigated land is extremely productive. The company owns 11,000 hectares of agricultural land in three different coastal locations. Camposol has now successfully gone public through a stock exchange in Europe and the stock was over-subscribed. It is an excellent example of combining unique agricultural resources, investment capital, good management, and an expanding market into a very successful enterprise.

Turkey: Ceylanpinar Agro-Park Pre-Feasibility Analysis
Agland developed an initial business model and pre-feasibility evaluation for the establishment of an agro-park at the Ceylanpinar Farm. The Ceylanpinar Farm is a large, state-owned farm located in the GAP region in southeastern Turkey. The purpose of the analysis was to provide the basis and direction for a further evaluation and preparation of a business plan for the project. Agland consultants worked in cooperation with consultants from a Turkish firm to prepare the report. The analysis explored the formation of an agro-park at Ceylanpinar, evaluated market opportunities, discussed agribusiness opportunities, presented a financial model, and developed a framework for creating the business plan. Potential agribusiness opportunities for Ceylanpinar include almonds, pistachios, pomegranates, and beef cattle. Agland's pre-feasibility analysis is an important step in developing public-private partnerships to further develop the agricultural resources of Ceylanpinar Farm.

Turkey: GAP Competitiveness
Agland worked with a leading international competitiveness firm in the Southeastern region of Turkey. Agland focused on expanding food and agricultural opportunities (which are many) and the overall effort was embraced by the Turkish Government. There is talk of establishing a $15 billion development fund for the Southeast region, which has always lagged in development beyond Western Turkey.

Honduras: Prefeasibility Study for a National and Regional Logistics Service Platform
Agland recently completed a Prefeasibility Study for the Implementation of a Logistics Platform for National and Regional Service in Honduras. The focus of the study is a definition of a refrigerated facility suitable for both export and import of perishables, coupled with space to carry out value-added products such as fresh cut fruits and vegetables.

A look at the list of countries where we have projects shows that we do not shy away from challenging and complex situations!

A special thank you to the many specialized consultants who worked on these
projects—many of you delivered far beyond initial plans and expectations. We always love to hear from you, so please write or call with your comments or ideas for joint projects.

Sincerely,

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