Bounty Fresh Contract Growing

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BROILER CONTRACT GROWINGAchieving Better ProfitabilityThrough ModernizationDR. VICENTE C. MANALO, JR, EMBABounty Fresh Food IncContract Growing- Controlled Environment Systems DepartmentBFFI- CG CES

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OUR COMPANY

➢ Bounty Fresh Food Inc (BFFI), together with its sistercompany Bounty Agro ventures (BAVI), is the secondbiggest broiler integrator in the Philippines.➢ A fully integrated broiler operations, will produce140M in 2010.➢ The two companies operate in 19 branches nationwide.➢ 80% of company’s income come from broilers.➢ Only company in the Philippines that continue to investon company owned facilities (broiler farms, GP and PSbreeder farms, hatcheries, feedmills).

➢ Company is in Hog breeders, slaughter hogs, coloredbroilers, day-old chick sales, commercial layers, layerDOPs and RTL pullets.

OUR COMPANY➢ Recipient of “ASIAN LIVESTOCK INDUSTRY AWARD2009, given last October 2009 in Malaysia.➢ First and only Philippine Agricultural company toreceive the award.➢ Previous awardees include:➢ Charoen Phokpand (CP) – (Thailand 2001)➢ Leong Hup Berhad (Malaysia, 2003)➢ PT Japfa Comfeeds (Indonesia, 2005)

➢ Suguna Poultry (India, 2007)Malacanan PalaceKuala Lumpur

DavaoGeneral SantosCagayan De OroNorth Luzon (Ilocos)Western Luzon(Pangasinan)SouthernTagalogNorth Eastern Luzon(Isabela)Bicol region (Naga)ButuanPagadianZamboangaRoxasIlo IloCebuBacolodTacloban

Bounty Agro Ventures IncOrmocCalbayogTalisay

PER CAPITA CONSUMPTION OF MEAT INSELECTED COUNTRIES, in kilos, 2008BROILERPORKBEEFUAE66.2US45.128.341.2Kuwait59.7

Malaysia38.7Brazil38.512.137.2Saudi37.1Hong Kong36.869.816.2Argentina32.569.3Canada30.523.732.2

Mexico29.014.524.1Taiwan28.840.54.6EU - 2715.939.316.0Philippines8.113.94.0Source: USDA – FAS, Livestockand Poultry Outlook, Oct 2008

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INTEGRATED POULTRY OPERATIONSGRAND PARENT FARMSPARENT STOCK FARMSBROILER FARMSFEEDMILLSHATCHERIESANIMAL HEALTH GROUPQUALITY ASSURANCEPRODUCTDEVELOPMENTPROCESSINGPLANTSSALES &MARKETING

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Challenges▪ High cost of production▪ High cost of feed inputs▪ High cost of importation▪ Poor productivity of broiler farmers

▪ Housing▪ Mycotoxins▪ Diseases▪ Effect of environment▪ Third quarter syndrome▪ Heat Stress, El Nino, La Nina▪ Imports and High farm gate prices▪ AFTA

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MODERNIZATION▪ Continuous investment on new technologiesall through-out the production chain.

Broiler Hatcheries(Additional 20 machines in 2010Grand Parent/ Parent Farms(Controlled Environment)

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MODERNIZATIONSubic Grain Terminal100k MT grain capacityBulacan Feed MillInoza Feed Mill, Tarlac

Premium quality products from NMIS –compliant facilities• BFFI - Pulilan :•National Winner- Search for best meat

Establishment 2005, 2006, 2007, 2008 PDP AAAcategory.•ISO 9001:2000 (Quality Management System)•ISO 22000:2005 (Food Safety MS)•ISO 14001:2004 (Environmental MS & OHSAS)•ISO 18001:2007 (Occupational Health &SafetyMS)•Halal Certified / HACCP-GMP•Accredited to serve the export market

MODERNIZATION INBROILER GROWING▪ To produce better quality broilers throughout

the year▪ To have consistent efficiency in broilerperformance▪ To cope up with the new technology in growinghigh quality broiler▪ To have a better income and offset highproduction cost▪ Improve environment of broilers through use ofmodern equipments.▪ Ensure good return on investments for businesspartners.

What is Tunnel Ventilation ?Tunnel ventilation is a system where exhaust fans arelocated at one end of the house and two large openingsare installed at the opposite end. Air is drawn throughthese openings, down the house, and out the fans, like awind tunnel.A ventilation system alone can never reduce inside

temperatures to levels below temperatures outside thebuilding. If lower temperatures are desired, then aCooling System must be utilized

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Evaporative cooling refers to the cooling effect produced whenwater evaporates. The energy used to evaporate wateris taken from the air, cooling the air as energy isremoved.Evaporative cooling is the most inexpensive way to cool air.

The pumps and fans needed for evaporative coolingare less expensive to buy and much less expensive tooperate than conventional air conditioning that usesrefrigerants and compressors.

Evaporative Cooling SystemPage 14

Advantages vs. Open Side Systems

▪ Can grow more birds per square foot / canload up to 45% more broilers▪ No problem with environmental stressesespecially heat stress – can grow big birdseven during summer▪ Birds grow faster and more uniform▪ Better broiler efficiency▪ More cycle per year▪ Better income

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•Higher capital outlay

•Needs highly trained personnel.

DisadvantagesPage 16

Advantages with BFFI▪ We have 4 company owned broilercomplexes.▪ We recommend based on our experienceto reduce / minimize learning curve.▪ We have competent technical servicemanknowledgeable about the system.

PAPAYA FARM, 2003Bgy. Sapang Tagalog., Tarlac CityORANGE FARM, 2002Bgy. Kawili-wili, Capas, TarlacAVOCADO FARM, 2005Bamban, TarlacMANGA FARM, 2004Bgy Sto Nino, Concepcion, Tarlac

INTERNAL BROILER COMPLEXBLUEBERRY FARM, 2010Bamban, Tarlac

Contract Growers- Cool Cell•the first contract grower in the Philippines with pre-fabricated buildings,•the first double deck building designed with a wind load of 200 km/hour inAsia

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A▪ Pre-fabricated house.• Double deck, solid wall panels, insulated ceilingand walls.• First 2 cycles, BFFI put a technician to supervise.Date Harvest DOC Age HR ALW FCR BPI net P/bird Amount Net Sq ft/b Per Hse3/31/2010117,679 29.51 95.93 1.61 1.52 34519.00 2,144,6220.5429,4202/14/2010116,824 29.23 95.97 1.51 1.57 31517.57 1,969,499

0.5529,20612/31/2009 121,145 29.11 95.05 1.60 1.55 33917.81 2,051,2720.5330,28611/16/2009 115,743 29.05 95.24 1.49 1.54 31717.91 1,973,7660.5528,9369/30/2009113,062 30.16 94.00 1.27 1.79 22113.12 1,393,8900.5728,2668/18/2009119,480 26.70 95.06 1.39 1.47 33519.13 2,172,512

0.5429,8707/6/2009113,601 29.77 96.41 1.61 1.54 34020.34 2,227,7070.5628,4005/19/2009105,578 26.80 95.53 1.45 1.43 36219.21 1,937,4870.6126,3953/31/2009103,709 27.85 96.24 1.40 1.48 32718.35 1,831,8460.6225,927

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House ft/deck40 x 400Floor Area ft216,000Density (ft/bird)0.55House L xw (m)Floor Area m21,487Birds/m2

19.56Population/cycle29,091Single Deck Pre Fab

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Grower’s OPEX per Cycle (Prefab)• Income from manure is for cool cell farms with slats.•Cost of LWP and LPG is lower with prefab as compared to

regular cool cell since prefab is well insulated & without leaks.Timing fromChick-inCool CellAmountLight, water and powermonthly1.0030,189LPG-70.6018,113Labor / Foodmonthly1.7552,830Litter Material-4

0.5015,094Med/Vac520.5015,094Repair & Maintenance520.154,528Others520.257,547Income from Manure-0.50(15,094)Income from Sacks-0.25(7,547)4.00

120,755

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ROI▪ Assume P 14 grower’s fee less P 4.00 OPEX, 7 cycles per year▪ Assume 0.55 ft2/bird▪ Assume P 10M total house cost (pre-fabricated building andequipment), 70% loan, 10% pa (loan payable in 5 years).▪ ROI of 20%Five-Year LoanYear 1Year 2Year 3Year 4Year 5

Gross Income2,840,1512,840,1512,840,1512,840,1512,840,151Less OPEX(811,472)(811,472)(811,472)(811,472)(811,472)Net Income2,028,6792,028,6792,028,6792,028,6792,028,679

Less Loan Amortization1,569,5951,569,5951,569,5951,569,5951,569,595Net Income459,084459,084459,084459,084459,084Net Income Per Bird2.262.262.262.262.26

Contract Growers- Cool CellOwn Construction

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DateDOCTonnageAgeHRALW FCR BPI net P/bird Amount Net3/23/2010 240,438 348126.55 30.84 95.01 1.52 1.53 30717.824,070,7412/5/2010239,251 314156.41 28.85 95.11 1.38 1.51 30118.044,104,16712/23/2009 244,141 371000.96 31.49 94.65 1.61 1.57 30718.044,168,210

11/5/2009 245,541 365741.97 31.07 95.06 1.57 1.54 31118.124,228,9719/12/2009 225,838 291677.36 28.94 95.00 1.36 1.61 27716.023,437,8648/3/2009243,836 347863.05 32.29 96.51 1.48 1.72 25716.423,864,4106/17/2009 246,418 333604.81 30.61 95.98 1.41 1.61 27417.004,020,5925/4/2009245,479 325111.56 28.77 95.00 1.39 1.46 31519.114,457,4923/15/2009 208,209 276202.69 30.89 95.02 1.40 1.72 25015.293,025,7641/29/2009 250,593 359785.73 29.82 96.04 1.49 1.60 30117.304,164,29012/18/2008 241,673

408833.8 33.43 96.09 1.76 1.61 31520.014,646,05710/29/2008 239,399 388611.01 35.24 96.20 1.69 1.72 26718.504,260,9939/4/2008234,279361137.1 33.90 95.11 1.62 1.67 27219.134,262,6067/11/2008 206,223 309772.77 36.08 96.17 1.56 1.83 22816.013,175,2125/15/2008 201,549 328706.22 35.48 96.98 1.68 1.75 26317.053,332,9133/28/2008 217,055 328143.54 33.07 96.88 1.56 1.62 28318.023,790,2802/6/2008228,690 337359.06 30.58 97.02 1.52 1.54 31419.024,219,748

12/15/2007 219,071321788.1 29.79 96.40 1.52 1.51 32719.004,012,496

B▪ Own construction, double deck

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Financing▪ Company has made similar presentations todifferent banks (Landbank, Security Bank,Planter’s Bank, etc.).▪ Funding from ACEF (interest free, 30-40%equity).

Design / SpecificationThree important points for effective ventilation▪ East – West orientation▪ Insulation▪ Tightness

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REQUIREMENTS FOR NEW FARMSSite for Inspection• minimum area of one (1) hectare• within the agricultural zone of thecommunity

• one (1) km away from residential area• one (1) km away from nearest poultry orpiggery farms• with reliable source of electricity andadequate potable water• All-weather road leading to and within thefarm, passable to 10-wheeler truck

Bounty Fresh Contract Growing

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