USDBC MEXICO MONTHLY REPORT MAY 2015

Website and Social Media Work USDBC MEXICO MONTHLY REPORT MAY 2015 The USDBC IMR in Mexico continues to develop a promotional campaign to increase the awareness of US beans for both promotion of our industry and promotion of #IYOP2016.- At the present time the following resources are active and promoting consumption of US beans. In the next month a blog with recipes to promote Legumes which includes dry beans, peas, lentils and chickpeas will be created and promoted. The purpose all of these work is to increase the presence of legumes towards IYOP2016. USDBC Mexico March 2015 Report 1

2015 SPRING-SUMMER BEAN PLANTING PROGRAM SITUATION UNTIL APRIL 30, 2015 State 2015 SPRING-SUMMER DRY BEAN PLANTING PROGRESS REPORT IRRIGATED + DRYLAND programmed Surface (Hectares) Production (MT) Yield (MT/HA) planted harvested damaged programmed obtained programmed obtained AGUASCALIENTES 9,302 576 5,967 0.641 BAJA CALIFORNIA 536 434 0.81 BAJA CALIFORNIA SUR 1,248 593 1,375 1.102 CAMPECHE 76 67 0.882 COAHUILA 5,448 21 3,610 0.663 CHIAPAS 74,055 44,725 0.604 CHIHUAHUA 133,013 128 127,347 0.957 DISTRITO FEDERAL 108 29 105 0.972 DURANGO 254,676 191,333 0.751 GUANAJUATO 89,209 3,033 62,130 0.696 GUERRERO 11,011 8,285 0.752 HIDALGO 33,030 4,750 25,659 0.777 JALISCO 12,092 6 11,174 0.924 MEXICO 7,500 113 7,079 0.944 MICHOACAN 4,717 164 5,905 1.252 MORELOS 1,168 1,228 1.051 NAYARIT 185 225 1.215 NUEVO LEON 2,847 2,765 0.971 OAXACA 34,391 118 23,035 0.67 PUEBLA 65,989 6,836 78,208 1.185 QUERETARO 11,930 179 6,992 0.586 QUINTANA ROO 40 36 0.9 SAN LUIS POTOSI 115,626 3,328 76,116 0.658 SINALOA 562 3 253 0.45 SONORA 2,680 1,385 4,263 1.59 TABASCO 87 7 64 0.736 TAMAULIPAS 5,497 5,074 0.923 TLAXCALA 4,711 513 4,213 0.894 VERACRUZ 14,145 3,365 8,042 0.569 YUCATAN 24 16 0.637 ZACATECAS 608,288 7,381 312,737 0.514 TOTAL 1,504,192 32,528 1,018,462 0.677 REGION LAGUNERA 2 Preliminary data Source: SIAP -SAGARPA Comments on the 2015 Spring-Summer Bean Planting Program: Our contacts in the states consider that the upcoming planting of the Spring-Summer cycle that officially starts on June 20 th, will be normal at least in Durango and Zacatecas where they received rainfall in the January-April period allowing their soils to keep good moisture. However, although weather forecasts indicate that the rains should be starting mid-june, it is expected that this year there will be record low cyclones in the Gulf of Mexico which lowers the possibility of good raining season for the Mexican north-central region where Zacatecas, Durango and Chihuahua are located at. Durango s planting intentions are 10 thousand hectares higher than last year s. They will probably increase their black bean planting area a little bit, which is traditionally very low between 15 and 20 thousand hectares. The remaining areas will be mostly Pinto Saltillo 80% and Azufrado, Bayo, Canario and other colored beans. USDBC Mexico March 2015 Report 2

Chihuahua s planting intentions with 133 thousand bean hectares are similar to last year and no changes are expected there. Zacatecas planting intentions look similar to past years, however, as we reported last month, Zacatecas is definitely reducing at least 70 thousand bean hectares that will be switched to: malted barley for beer, sunflower for oil (PEPSICO), wheat and some feed. Thus, our sources are reporting that they will plant in Zacatecas around 600 thousand hectares from which: 29,137 are irrigated planting Flor de Mayo, Flor de Junio and some Pintos, and they already planted 19,163 of these. Dryland beans will be planted in 579,150 hectares across the state. None of these have been planted as rains have not shown up yet, however, as soon as the first storm appears they will rush the planting since the rain the state continued receiving between January and April, left enough moisture in the soil to facilitate the labor. San Luis Potosi and Guanajuato are similar to last year s planting intentions and will plant close to 200 thousand dryland bean hectares of mostly colored beans for auto-consumption between the two states. Expected production is around 120 thousand MT. Just as a reminder, this is what it looked like at the end of season in 2014, when weather was favorable for beans in Mexico: 2014 SS PLANTING AND PRODUCTION END OF PLANTING SEASON EXPECTATIONS STATE PLANTED (ha) PRODUCTION (MT) YIELD (MT/HA) Zacatecas 595,534 399,007 0.67 Durango 250,100 170,068 0.68 Chihuahua 121,010 92,330 0.68 Guanajuato 80,856 61,531 0.761 San Luis Potosi 135,433 90,740 0.67 SUBTOTAL 1, 182,933 813,676 0.687 Other 279,748 195,824 0.7 TOTAL 1,462,681 1,009,500 690 CENTRAL MARKET PRICES AND SALES ANALYSIS BY USDBC USDBC Disclaimer: In the following section the USDBC Mexico office analyzes dry bean prices from SNIIM reports. In addition, the USDBC Mexico office place calls to the Mexican trade to complement the information. The USDBC will not be responsible for third party transactions based on this report. Comments from the Industry: Some members of the industry are expectant as to what the Mexican government might decide about the unilateral quota permits to import dry beans from countries Mexico has no free trade agreement such as Argentina and China, considering that there is lower volume of black beans available in Mexico. The market in general continues stable and it was commented that there are enough colored beans. USDBC Mexico March 2015 Report 3

The multi-annual unilateral dry bean quota permits for up to 100 thousand MT, are usually announced during the month of June. Last year these were announced early June and then cancelled for the year 2014 in the third week of June since there were enough beans in Mexico and the planting of the Spring-Summer cycle looked with all possibilities to succeed. Although this year the bean supply in general is not jeopardized since there are enough pintos and azufrados in the market, there might be a need to bring black beans at a reasonable price. We will continue monitoring on these permits and report if announced. Wholesale and Semi-wholesale Prices Report US Black beans prices were again stable in general in the most important markets in Mexico. Mexican black beans remained also the same in May, even with a 10% reduction in Guadalajara.. US Pinto beans: Were stable in May. Mexican pinto beans remained with similar prices as last month. U.S. Alubias: small and large alubias continue at prices from 18.50 to 22 pesos per kilo in the market. Prices of theses remained stable in May. Peruanos, Mayocoba, Azufrados. Prices remained similar as last month around 20 pesos per kilo. Colored varieties: Bayos, Canarios, Flor de Mayo and Flor de Junio.- prices of these preferred Mexican varieties are high, from 13 to 25 pesos per kilo. The highest price found corresponds to Bayo Berrendo regional variety from Jalisco selling at 25 pesos per kilo. USDBC Mexico March 2015 Report 4

MONTHLY CENTRAL MARKET WHOLESALE PRICES REPORT MEXICO CITY MONTERREY GUADALAJARA SINALOA PRODUCT product MARKET VAR MARKET VAR MARKET VAR MARKET VAR VARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % (state/country) current before current before current before current before 05 30 15 04 30 15 05 30 15 04 30 15 05 30 15 04 30 15 05 30 15 04 30 15 BEANS Imported Black Imported 19.00 19.00 0.00% 19.50 19.50 0.00% 19.00 19.00 0.00% Jamapa Black Zacatecas Nayarit Black NAY. 13.50 15.00-10.00% Bola Black ZAC. 13.50 13.50 0.00% 13.00 13.00 0.00% Veracruz Black VER. 14.50 14.50 0.00% Imported Pinto Imported 13.50 13.50 0.00% 17.25 16.30 5.83% Pinto Saltillo ZAC. Pinto Saltillo SIN. Pinto Saltillo CHIH. 11.20 11.20 0.00% 11.00 11.00 0.00% 10.00 10.00 Pinto Saltillo DGO. 0.00 Small Alubia Imported 18.50 18.50 0.00 22.00 22.00 0.00% 18.00 18.00 0.00% Large Alubia Imported 12.00 12.00 0.00 22.00 21.60 1.85% 14.00 14.00 0.00% Flor de Junio ZAC. 17.00 17.00 0.00% 13.63 14.40-5.35% Flor de Mayo ZAC 15.00 13.60 10.29% 13.50 12.70 6.30% Bayo Berrendo JAL. 22.00 25.00-12.00% Bayo ZAC. 13.00 12.40 4.84% 10.00 10.00 0.00% Garbancillo ZAC 13.50 13.50 0.00% 16.00 18.00-11.11% Canario SIN. 11.50 11.50 0.00% Cacahuate Bola GRO. Garbancillo zarco JAL. Azufrado SIN. 17.00 17.00 0.00% Mayocoba SIN. 20.00 20.00 0.00% 16.00 16.00 0.00% Peruano SIN. 22.00 22.00 0.00% 23.00 23.00 0.00% 20.00 22.40-10.71% 16.00 16.00 0.00% ZACATECAS MERIDA DURANGO NAYARIT PRODUCT product MARKET VAR MARKET VAR MARKET VAR MARKET VAR VARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % (state/country) current before current before current before current before 05 30 15 04 30 15 05 30 15 04 30 15 05 30 15 04 30 15 04 30 15 04 30 15 BEANS Imported Black USA Jamapa Black Zacatecas 8.50 8.50 0.00% Nayarit Black NAY. 18.00 14.50 24.14% Bola Black ZAC. 11.00 11.00 0.00% 14.00 14.00 0.00% Veracruz Black VER. Imported Pinto USA Pinto Saltillo ZAC. 10.00 10.00 0.00% 14.00 14.00 0.00% Pinto Saltillo JAL. 9.00 9.00 0.00% Pinto Saltillo CHIH. 9.75 9.75 0.00% Pinto Saltillo DGO. 10.50 10.50 0.00% Small Alubia Imported 20.00 20.00 0.00 22.00 22.00 0.00% 14.00 14.00 0.00% Large Alubia Imported 12.00 12.00 0.00 15.00 15.00 0.00% 20.00 20.00 0.00% Flor de Junio ZAC. 14.00 14.00 0.00 10.00 9.00 11.11% 14.00 12.00 16.67% Flor de Mayo ZAC 10.00 10.00 0.00 14.00 14.00 0.00% 10.00 8.50 17.65% 14.00 12.00 16.67% Bayo Berrendo JAL. Bayo ZAC. 10.00 10.00 0.00 18.00 18.00 0.00% 10.00 9.00 11.11% 17.00 16.00 6.25% Garbancillo DGO. 9.00 9.00 0.00% 12.50 Canario SIN. 10.00 9.00 11.11% Cacahuate Bola GRO. Garbancillo zarco JAL. Azufrado SIN. 19.00 16.50 15.15% 16.00 16.00 0.00% Mayocoba SIN. 16.50 16.50 0.00% 16.00 13.00 23.08% Peruano SIN. 22.00 22.00 0.00 19.00 16.50 15.15% 15.00 15.00 0.00% USDBC Mexico March 2015 Report 5

MEXICO NEWS CLIPPINGS USDBC Disclaimer: In the following section the USDBC disseminates information published in Newspapers and Magazines related to beans (excerpts). The statements or numbers shown in each article are not necessarily in agreement with the USDBC. 24 Thousand Bean Hectares will switch to other Crops in Sombrerete NTRZACATECAS.COM June 3, 2015 Sombrerete.- It is intended to increase in 20 percent the number of bean hectares converted to other crops such as sunflower for oil, wheat, malted barley and pumpkin. Gilberto Correa director of the Rural Development Support Center (CADER) in Zacatecas informed that they have programmed at state level that 75 thousand bean hectares will switch to other crops from which 32 percent belong to Sombrerete, where 20 thousand were converted last year. He commented that the main reason why they are changing the bean hectares for other crops is the low prices of beans last year vs. the higher prices of wheat and barley and the better yields. He also detailed that the bean production costs are higher than those of other crops plus those that sign up for the crop conversion program receive the seed to plant the other products. Impossible to Add Value to Beans Without Investment NTR Zacatecas June 2, 2015 Zacatecas.- Francisco Echevarria State Director of INIFAP (Ag Research Institute) said that in order to solve the bean low quality problem, they must add value to help the producers recover their money. He said that the main problems are the poor communication and lack of investment. He Explained that despite there are people interested in processing in investing in the bean processing, they decline at the end because of they do not have enough resources. Echevarria added that in order to increase the consumption demand, it is necessary to create marketing strategies. He stressed that it is necessary to transform the beans into bean flour to develop nutritional foods for the new functional market trends, for people with diabetes or obesity. He emphasized that this legume is produced in large volumes in this state however, they have trading problems because of the low quality. University of Guadalajara Patented Two New Bean Varieties Notisistema May 20, 2015 The University of Guadalajara Ag. Extension patented two new bean varieties: Azufrado Bolita and Cuarenteno, which have been planted by some 40 producers already in the South, Valley and Central Jalisco areas. Prof. Rogelio Lepiz explained that they are looking to produce more beans for the state s local consumption and reduce the shortage they have now. We have an 80% dry bean production deficit, with a consumption of 75 thousand MT per year in the state and we are buying 60 thousand MT of beans per year from the neighbor states. Peruano beans are the most consumed in Guadalajara, coming from Sinaloa and the Pintos or Bayos, Flor de Mayo and Flor de Junio from Zacatecas, Durango, Chihuahua and San Luis Potosi. USDBC Mexico March 2015 Report 6

Bean Producers Afraid of a Fifth Year of Low Income La Jornada en Línea May 18, 2015 México, D.F. The almost 600 thousand bean producers do not see sign of a better income for the fifth consecutive year. Under pressure by the intermediaries and large traders, affected by the increase of imports, -averaging 100 thousand MT per year- and subject to the weather conditions, they receive 11 thousand pesos per MT, not enough to recover their investment. Their losses are not just economic but also many of them have to leave their land looking for better income for their families. Must Rotate Crops in Carlos Real Bean Area El Siglo de Durango May 17, 2015 Durango.- Producers in Carlos Real bean production area received a soil assessment with the recommendation to rotate crops in orderto let the soil recover nutrients, and not plant only beans but also feed crops. Producers in this district requested the study to find out which other products they can plant there besides o beans. Amongst the recommendations made, they should plant mostly wheat and triticale. New Bean Variety Resistant to Droughts in Veracruz Alcalorpolitico.com May 15, 20115 Papantla Veracruz.- The new bean variety Verdin will be released soon. It is a new class different to the ones in the market since it is resistant to droughts and plague. It is expected to be an alternative to producers because of its low cost and quality, a 100 percent profitable. Municipal authorities met at the research fields in Martinez de la Torre Veracruz, where the company that created this bean is based at. They showed the different crops and their development that will benefit the producers. Once the intermediate elections are over, the seed will be delivered at no cost to different bean areas to be planted as an experimental stage. If the results are good, a large volume of seed will be acquired to be planted in different communities. The cost of the seed is 40 pesos per kilo, the yield is 1.8 MT per hectare and the growing cycle is 3 months, no worries about slack of water or plague. 70 thousand Bean Hectares to Be Rotated this Cycle NTR Zacatecas May 15, 2015 Zacatecas.- Local SAGARPA and SECAMPO (State Department of Ag.), launches crop diversification program with option to plant: barley, wheat and sunflower. Planting starts in June. This week a good amount of technicians started to work with the producers that during the upcoming Spring-Summer cycle decided to participate in the crop conversion program. This scheme proposes more profitable crops than dry beans. The options are barley, wheat and sunflower with secured prices and buyers. The entire barley production will be sold to the local beer industry, and the sunflower will be purchased by one of the leading snack manufacturers. This cycle they expect to plant 50 thousand hectares of barley, 10 thousand of wheat and 10 thousand of sunflower. This strategy intends to lower the pressure over the state s overproduction of beans, lower consumption and lower prices. The producers that chose to rotate to these crops will receive from the Zacatecas government 5 thousand MT of barley seed, 1 thousand MT of wheat seed and 37.5 Mt of sunflower seed. USDBC Mexico March 2015 Report 7

Walmart Steals Market Share from Competitors El Financiero June, 2, 2015 In the last 15 months, Walmart has used their retail experience to win market share in Mexico in spite of the weak consumption last year, achieving 63 percent of the market. In 2014, Walmart earned 7 points reaching 62 percent. In the first quarter of 2015, they were able to earn one more point reaching wining 63 percent of the market share. Chedarui has a 10 percent market share. In the middle of the sector s reorganization, the 30 retail chains members of ANTAD (Retailers Assoc.), have been the most impacted especially Casa Ley, COSTCO, HEB and Waldo s Mart. In 2014 Walmart opened 132 new stores, Chedraui 9 stores, Soriana 16 stores and Comercial Mexicana 2 stores. Mexicans Consume Less Alcohol OECD Reforma May 12, 2015 The per capita consumption of alcohol in Mexico is lower than the average of the most important countries within the OECD (Organization for Economic Cooperation and Development). According to them it has remained the same in the last 30 years. In 2012, Mexicans consumed an average of 5.7 liters of pure alcohol per year, while the rest of the OECD countries consumed an average of 9.1 liters. The report Fight against massive alcohol consumption: Economic Policies and Public Health is the first of its kind and also compares the legislation of the 34 OECD members in relation with alcoholic beverages. In comparison with other countries, Mexico has implemented a widely restrictive legal frame on alcoholic beverages, says the report. Mexico King of Shopping Centers Milenio May 18, 2015 Mexico has positioned as the most dynamic market in Latin America and is expecting the opening of at least 38 new shopping malls in 2015. In 2014, 23 shopping malls were opened in Mexico reaching a total of 584 malls with 16.2 millions of square meters. This information was announced during the convention ReCON Latin America organized by the International Council of Shopping Centers attended by more than a thousand exhibitors and retail specialists from countries like Colombia, Mexico and Brazil.ReCON LATAM informed that the growth in this sector in Mexico will continue and they expect that by 2025, Mexico will have a 30 percent growth with 760 shopping centers. According to the report 2015 Shopping Centers Industry in Latin America, also presented during this convention, Mexico is the country with more businesses in the region and assured that these developments have started to replace the traditional and informal trade, being Mexico City and metro area the one with more establishments 196, Monterrey with 50 and Guadalajara with 45 shopping centers. In the last 10 years, Mexico has doubled the number of shopping centers however the growth in the last 3-4 years has been boosted by factors such as new financial instruments for investors, and in spite of the lower than expected economic growth in the country, the growth has been consistent and the middle class has maintained and even grown, multiplying the number of families that are able to consume in this kind of establishments. Foreign trade policies have also influenced the change, such as the lower duties for Chinese products allowing the arrival of retailers that manufacture their goods in Asia, such as H&M, Forever 21, GAP, etc. You can tell by looking at the shopping mall s directory and you will find: Bath Bed & Beyond, PETCO, Red Lobster, Olive Garden Cheesecake Factory. USDBC Mexico March 2015 Report 8

We Make a Call to the United States to Cancel the COOL Labeling Law and to Comply with their International Commitments : Ildefonso Guajardo, Secretary of Economy Press Release Mexico and Canada Notimex May 19, 2015 Retaliation Against the USA for Meat Controversy The WTO ratified today that the United States enforces a labeling rule that discriminates the products from Mexico and Canada violating the international rules. As soon as this was announced, the two affected countries announced that they will impose trade retaliation in the case of Canada for US$1,100 million and Mexico for US$563 million for the Mexican meat producers. The affected countries stated in a press release: in the light of the WTO decision and because the COOL law (Country of Origin labeling) remains active, our governments will request authorization to implement retaliation over the imports from the United States. According to the sector s sources, the approval for the amount to be sanctioned will take two months and will be at least for US$1,700 million. Because of this, the Secretaries of Economy from Mexico- Ildefonso Guajardo and Canada-Edward Fast, and their corresponding Secretaries of Agriculture, invited the United States to cancel the COOL law. This situation has already started to put pressure over the U.S authorities since close to a hundred companies grouped in the Reform Coalition COOL, - amongst which are: Cargill, Coca-Cola, General Mills, Kellog s, Kraft, Anheuser Bush, Pepsico, Unilever and Walmart-, asked the U.S Congress to cancel it as the retaliation will affect their exports to Mexico and Canada. Since 2013, Canada announced their list of products to be sanctioned for an amount of US$100 million in case the USA declined to cancel COOL. Since 2008, Mexico and Canada presented their controversy to the United States and despite the WTO requested them to change their rules, the United States hardened the law. This is the fourth time the WTO ratifies their decision against the COOL. Economic Report In spite of the current difficulties for the Mexican economy caused by the low prices of oil and the lower economic growth expectations from economists, the National Statistics Institute INEGI reported this month that Mexico s GDP grew more than expected with 2.5 percent in the first quarter of 2015. The primary sector was the most collaborative with the positive result with 6.8 percent growth, followed by the tertiary sector with 2.9 percent and the secondary sector with 1.5 percent. The mining, electricity, water and gas supply to the final consumer, construction and manufacturing industries registered an important growth that altogether represent 32.2 percent of the national GDP in comparison with the same period last year. The food and transportation industries had also an unexpected positive behavior, participating with 43.9 percent within the manufacturing sector. The trading sector contributed with 16.8 percent of the total GDP. The agricultural, forestall, fishing and hunting sectors registered and increase that represents 3.5 percent of the national GDP. In other good first quarter news from INEGI, Mexico attracted record high Direct Foreign Investment for US$7.5 billion, the highest recorded in history for a first quarter of the year, this is 30.1 percent higher than the previous in the same period in 2014. Amongst other 357 important foreign investment mainly in the manufacturing segment, the positive result for this indicator was activated by important acquisitions from telecommunications sector, as two important Mexican cellular phone companies were purchased by ATT. In order of importance, the DFI came from the following countries: USA with 59.4 percent; Spain with 14.3 percent; Japan with 8.2 percent; South Korea 4.8 percent; France 2.9 percent; Netherlands 2.3 percent and 48 other countries that decided to invest in this nation contributed with the remaining 8 percent. USDBC Mexico March 2015 Report 9

In order to continue promoting the needed economic growth, the Mexican government announced that they will support eight key industries in conjunction with the private sector, from which tourism, gastronomy and aerospace products manufacturing and supply are the top three considered strategic for this purpose. The other very important sectors that are included in this project are the retail industry, auto parts, agri-industrial, electric and electronic products and energy. The project contemplates different actions focusing on using public financial support and the Energy Reform s opportunities, that are expected to boost the productivity in these industries. In this order of ideas, President Pena-Nieto stated that in past years there was economic growth, however, with the new Structural Reforms, there will be better results because of the legal base established with these that promote foreign and domestic investment and new jobs creation. The President put as an example the important growth of the retail industry in Mexico in the last decade, passing from 3 thousand stores nationwide to close to 32 thousand stores and 580 shopping malls nationwide. Exchange Rate Average exchange rate in May was 15.30 pesos per U.S. dollar. Exchange rate on the last business day of May was 15.37 pesos per U.S. dollar. The Mexican currency continues under pressure because of the reports of lower unemployment rate in the United States amongst other factors. And although oil prices started to recover, the prices of raw materials are starting to increase and it will drive the currency to continue at 15 peso per dollar levels. The Mexican private sector stated this month that they consider the exchange rate will never go back to the 13.00 peso per U.S. dollar even if oil prices recover completely to the levels of last year. This first week of June, the Mexican peso depreciated to 15.51 pesos per U.S. dollar, surpassing the bottom barrier of 15.50 registered last March. Weather Folllow-up Following are the maps showing the accumulated preciitation from January 1 st to June 1 st, 2015 in the bean states for the 2015 Spring-Summer cycle: USDBC Mexico March 2015 Report 10

Zacatecas (Spring-Summer cycle) accumulated precipitation map from January 1 to June 1 st, 2015 Rain milimiters: Durango (Spring-Summer cycle) accumulated precipitation map from January 1 to June 1 st, 2015 Rain milimiters: USDBC Mexico March 2015 Report 11

Chihuahua (Spring-Summer cycle) accumulated precipitation map from January 1 to June 1 st, 2015 Rain milimiters: San Luis Potosi (Spring-Summer cycle) accumulated precipitation map from January 1 to June 1 st, 2015 Rain milimiters: USDBC Mexico March 2015 Report 12

Guanajuato (Spring-Summer cycle) accumulated precipitation map from January 1 to June 1 st, 2015 Rain milimiters: Mexico s accumulated precipitation map from January 1 to June 1 st, 2015 Rain milimiters: USDBC Mexico March 2015 Report 13