The start of a new year is always a time to pause and take stock and look to the future. It is also a time to renew friendships and if our paths have not crossed recently, we hope this letter will help to keep you posted on our activities.

At Agland, we work hard to maintain balance. We try to bring a private sector perspective to public sector projects and practical, solution-oriented results in our environmental work.

Our assistance to clients continues to be a mix of applying new, cutting-edge technologies, such as green energy and information technology applications, to the food sector, coupled with multi-year rural international development projects.

Agri-Food Informatics Institute This proved to be a new and exciting project for Agland We were selected by the Great Valley Center, a foundation focused on policy and growth issues within the Central Valley of California, to prepare a business plan for the formation of an Informatics Institute at the new University of California campus at Merced. The campus is in the heart of the food and agricultural economy of California, and the administrators and faculty were looking for a way to provide outreach to the local economy as well as identify challenging research projects. The purpose of the Institute is to research new information-based technologies and technology applications, particularly for use in the agri-food system. It seems fitting that this discipline should find a home in a state that is a world leader in both information technology and agriculture!

Agland successfully completed a business plan for the Institute. The Great Valley Center and campus leadership are enthusiastic and want to enlarge the concept in order to tackle the bigger issues facing a region whose population is expected to double within 20 years.

Sierra Nevada Conservation Plan Agland continued its work for the Sierra Business Council on how best to preserve the economic viability of agriculture in the Sierra Nevada. Our studies showed that innovation and network building are critical to the survival of agriculture in the Sierra. County planners are primarily concerned with the explosive growth of housing and services, which leaves little time to spend thinking about agriculture. Agriculture needs to partner with the other sector that is interested in open space and land use-environmental groups. Since these two sectors have often been at odds, it won't be easy. Again, pragmatic solutions and balance are critical in making progress and lasting, long-run solutions.

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

Macedonia: Our long-term advisor, Dr. Mahlon Lang, returned to the United States after two years in Macedonia. He did an excellent job for us, leaving behind a legacy of successful programs and trained local staff. We are now working with that staff to carry forward our programs. We have concentrated on 1) increased exports 2) improved quality control and 3) investment and business development. Our focus on helping Macedonians develop sales in new markets has helped to increased exports substantially. Our training programs in HAACP and EurepGAP food safety and agricultural practice guidelines and regulations have allowed a number of Macedonian firms to become certified, opening up new markets and business opportunities. New products developed by Agland food technology consultants have increased the sales of several companies. We worked with Macedonian businesses to identify potential investors and bring investment into the sector. We brought a staff member of OPIC to look at potential investment in Macedonia. We are planning more investment activities in 2006.

Afghanistan: In late 2003, we joined with a non-profit organization, Roots of Peace, which was already working in Afghanistan on mine removal. We were successful in a bid to focus on the rehabilitation of vineyards and the fresh table grape and raisin industry after 25 years of war and general neglect; the project is often referred to as "Mines to Vines." The 2004 season was mainly focused on research trials. In 2005, we were able to initiate new cultural and post-harvest practices, including pre-cooling and new packaging material similar to that used in California. There were many "firsts" recorded including the first shipments of pre-cooled grapes for export, the first exports of Afghan grapes to Saudi Arabia and Dubai. The farmers who participated often earned 20% more through the Roots of Peace/Agland marketing program.

Recently Mr. Abdul Salam Munir, President, Export Promotion Board, Ministry of Commerce, Afghanistan commented in a December 2005 speech, "Largely due to these efforts by Roots of Peace, last year fresh and dry fruit exports were 50,000mt. During the first nine months of this year, fresh and dry fruit exports were 94,880mt. That is an increase of nearly 100%." There is much more to be done!"

Colombia: Agland is in the process of preparing a business plan for a perishable crop "Inspection and Treatment Center" located in an agribusiness industrial park near the Bogotá Airport. The project is funded by the United States Trade and Development Agency, which is an independent US government body that promotes the export of American goods and services. Agland has a long history in Colombia, as Bill Mott was involved in forming the first export-oriented cut flower greenhouse operation in Colombia in 1970, which has since grown to over $600 million in flower exports. The purpose of the current project is to provide facilities and markets particularly for export-oriented fruit and vegetable crops. Flavio Feferman is Project Manager.

West Bank and Gaza: Agland joined with another consultant, CARANA, and together were successful bidders in a project to support the conversion of over 500 acres of greenhouse vegetable crops in Gaza under Israeli ownership to Palestinian ownership. As one might expect, this is a complex process with numerous political overtones. The season for producing vegetables started in mid-November and we await further developments.

California State Lands Commission: We continue to work on a contract with the State of California to identify and purchase prime agricultural land as a long-term investment for the benefit of the State Teachers Retirement Fund. Two conditions have slowed the effort. First is the scarcity of suitable agricultural land for sale, especially at prices that provide even a modest financial return. Certainly, 2004 was a banner year for increases in agricultural land values. Secondly, the State identified several changes in State law that need to be modified before it can close on a land parcel. We plan to seek additional income-producing land in 2006.

China Joint Venture Business Plan: In 2004, we worked with the largest orchid greenhouse complex in China-a firm with over fifty acres of environmentally-controlled greenhouses. Orchids have exacting temperature and humidity requirements and this firm had mastered the two year growing system required to produce mature orchid plants, starting with a few plant cells. The Phalaenopsis orchid (the one with a tall spike of flowers that can last for 4 to 5 months) is also the fastest growing potted flower in the US market with over $127 million (wholesale value) orchid plants sold in 2004 and growing. Agland prepared a business plan and identified a joint venture partner in the U.S. to make an investment and then finish and market the blooming plants.

International Agricultural Land Investments As U.S. agricultural lands increase in value, there is increased interest in land investment opportunities and specific investments being made in places such as Brazil and Australia. We have contacts in both countries. In particular, we have information on a large ranch that is for sale in Brazil, and other opportunities exist in target countries such as Argentina and Australia.

Investors' Circle We have participated for several years with an informal group known as "Investors' Circle." The group is composed of several hundred investors ranging in interest from the financing of start-ups to providing capital for expansion prior to a company entering the public market. The group is unique in that they seek investments that not only have a financial return, but also exhibit social and environmental benefits. The group has a particular interest in food and alternative energy companies, which is our area of expertise/primary interest. It is impressive to see the rapid increase in interest and capital available for investments considering the "double or triple bottom line". If you have enterprises or projects in need of capital that fit this description, please contact us.

One of the most successful business ventures in this class is "Newman's Own" which has distributed over $150 million to charitable causes since founding in 1982. And a company does not have to be philanthropic. There are examples of a number of companies that have positive environmental and social benefits and provide above average financial returns.

Agriculture and energy issues and policy have become increasingly intertwined. Today over 10 percent of the US corn crop is converted to ethanol for use as a gasoline additive. In Brazil, gasoline that is 80% ethanol is sold, and it is reported that Brazil is energy self-sufficient! Sugarcane is increasingly being recognized as the most efficient way to convert biomass into energy and with oil prices at $65 per barrel a subsidy is not required. Agland has taken a particular interest in this field and has been involved in several related projects throughout the world.

Nigeria: Agland is assisting the consulting firm Accenture in developing an ethanol strategy and production capability for ethanol production from sugarcane and possibly cassava. Even though Nigeria is a large oil producer, the country sees the need to start a program to supplement oil with alternative energy sources, and in so doing create, as has happened in Brazil, many more much-needed jobs in the agriculture sector. We have had sugar cane production specialists and a plant engineer in Nigeria to help Accenture refine its work in these areas. We expect that there may be more work in this area, as countries try to find practical solutions to reducing their dependence on oil. It is interesting to note that the most productive regions for biomass production are often in tropical and semi-tropical developing countries.

Kenya: We had a consultant in Kenya for almost six weeks managing an evaluation team looking at a cluster of USAID projects. Environmental concerns were at the forefront of this evaluation. Agland also completed a proposal for the Kenya Tea Producers Association to conduct a feasibility study for the development of small hydro schemes and biomass as a substitute for fuel oil used in the processing of tea.

California: Closer to home, Agland has been involved with the California dairy industry in developing methods to convert waste streams from milk and cheese production into energy and in so doing reduce the waste effluent discharge…..as can happen, a problem becomes an opportunity.

Croatia: We did the "Specialty Food Buyer Orientation" project in Croatia. Three experienced food buyers - two American and one from England - traveled to Croatia to train Croatian food companies on how to better position their products in European and the United States marketplaces. Their pragmatic and professional approach was well received and some companies have been able to place products in new markets.

Macedonia: Our training programs in EurepGAP and HACCP were well received, and they have led to increased sales. We are contemplating the idea of bringing English EureGAP trainers to the United States to work with fresh produce companies exporting to the European Union.

These are just some of the many stories from Agland in 2005. In 2006 we look forward to new projects in Armenia and California, continuation of many of the above mentioned activities and many more that remain to be seen. A special thank you to the many specialized consultants who worked on these projects….many of you delivered way 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.

Best regards,

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