Better Bean Initiative

1. Better Bean Initiative Thank you for inviting me to Orlando to update you on USB�s Better Bean Initiative. We always welcome the opportunity to provide updates and solicit feedback from our key industry allies like NIOP. As you�ll see, we�ve made terrific progress in our efforts to develop the first of many compositionally enhanced soybean varieties. Let me begin by reminding you all that the Better Bean Initiative is a massive undertaking. It�s really the first time a commodity group has taken on a project of this magnitude, and it�s entirely driven by USB�s commitment to be responsive to the ever-changing needs of the food and feed industries. We know those needs will continue to evolve. That�s why we�ve designed the BBI to be an ongoing effort. (NEXT SLIDE) Thank you for inviting me to Orlando to update you on USB�s Better Bean Initiative. We always welcome the opportunity to provide updates and solicit feedback from our key industry allies like NIOP. As you�ll see, we�ve made terrific progress in our efforts to develop the first of many compositionally enhanced soybean varieties. Let me begin by reminding you all that the Better Bean Initiative is a massive undertaking. It�s really the first time a commodity group has taken on a project of this magnitude, and it�s entirely driven by USB�s commitment to be responsive to the ever-changing needs of the food and feed industries. We know those needs will continue to evolve. That�s why we�ve designed the BBI to be an ongoing effort. (NEXT SLIDE)

2. Threats to End Users Reacting to specific business threats: Soybean meal feeders Nutrient digestibility Environmental impact of concentrated feeding operations Edible Oil Users Trans-fatty acid labeling Consumer concerns about saturated fats The goals of the BBI are a direct result of feedback from the food and feed companies on specific threats to their respective industries. The threats to soybean meal feeders relate to digestibility and environmental impacts. Oil users face potential new labeling restrictions and consumer concerns. At this time, the trans labeling final ruling is not expected until 2003. IFIC (International Food Information Council) reports to us that the FDA is waiting on a report from the National Academy of Sciences, which won't be out until the summer of 2002. Once FDA receives the NAS report it will need to go through review which is expected to take at least six to eight months. Compliance will not be required until 2006 at the earliest. But even as the labeling rules are delayed, USB�s eighth annual report on consumer attitudes shows that consumer awareness and concerns over trans fats are on the rise, making this issue even more pressing. (NEXT SLIDE)The goals of the BBI are a direct result of feedback from the food and feed companies on specific threats to their respective industries. The threats to soybean meal feeders relate to digestibility and environmental impacts. Oil users face potential new labeling restrictions and consumer concerns. At this time, the trans labeling final ruling is not expected until 2003. IFIC (International Food Information Council) reports to us that the FDA is waiting on a report from the National Academy of Sciences, which won't be out until the summer of 2002. Once FDA receives the NAS report it will need to go through review which is expected to take at least six to eight months. Compliance will not be required until 2006 at the earliest. But even as the labeling rules are delayed, USB�s eighth annual report on consumer attitudes shows that consumer awareness and concerns over trans fats are on the rise, making this issue even more pressing. (NEXT SLIDE)

3. Consumer Attitudes on Trans Fat USB�s annual nationwide survey on consumer attitudes on health and nutrition issues found that: The number of consumers who think trans is �very unhealthy� jumped from 28 percent in 2000 to 47 percent in 2001 Two-thirds of consumers say they are unlikely to buy products labeled as containing trans fat 48 percent of consumers say they are unlikely to buy products labeled as containing hydrogenated oil USB�s consumer attitudes survey was conducted by an independent research firm and includes 800 random telephone surveys. The study�s margin of error is +/- 3.5 percent and has a confidence level of 95 percent. Our data shows a sharp increase in the number of consumers who recognize trans as �very unhealthy,� 40 percent indicated that they �don�t know� if trans fats are healthy or unhealthy. Fourteen percent still believe they are healthy. With intensified information campaigns by consumer groups, we may see a shift in those numbers next year, with more consumers becoming familiar with trans and more categorizing them as unhealthy. Interestingly, more consumers say they are unlikely to buy products with a trans label than those who wouldn�t buy a product containing hydrogenated oil, though as consumers become more educated on the subject, they will most likely better connect the two. (NEXT SLIDE)USB�s consumer attitudes survey was conducted by an independent research firm and includes 800 random telephone surveys. The study�s margin of error is +/- 3.5 percent and has a confidence level of 95 percent. Our data shows a sharp increase in the number of consumers who recognize trans as �very unhealthy,� 40 percent indicated that they �don�t know� if trans fats are healthy or unhealthy. Fourteen percent still believe they are healthy. With intensified information campaigns by consumer groups, we may see a shift in those numbers next year, with more consumers becoming familiar with trans and more categorizing them as unhealthy. Interestingly, more consumers say they are unlikely to buy products with a trans label than those who wouldn�t buy a product containing hydrogenated oil, though as consumers become more educated on the subject, they will most likely better connect the two. (NEXT SLIDE)

4. USB Responds Mission Statement The United Soybean Board�s Better Bean Initiative (BBI) will accelerate the development and availability of soybean seed with enhanced compositional traits that will better position soybeans to meet the needs of oil and protein end users. USB initiated the BBI in the late 1990s as a commodity-scale effort to provide value-added traits for oil and meal end users. We�ve been working hard since then to communicate our mission to our oil and meal partners and to gain valuable feedback on our efforts and our progress. (NEXT SLIDE) USB initiated the BBI in the late 1990s as a commodity-scale effort to provide value-added traits for oil and meal end users. We�ve been working hard since then to communicate our mission to our oil and meal partners and to gain valuable feedback on our efforts and our progress. (NEXT SLIDE)

5. Soybean Oil - Accelerate development of soybean germplasm with superior oil attributes for human health and food quality. Soybean Meal - Accelerate development of soybean germplasm with superior meal attributes by increasing essential amino acid levels, improving digestibility and reducing environmental impacts of livestock production. Marketing System - Facilitate the development of marketing processes to commercialize the products of BBI varieties. BBI Strategic Goals From that feedback we developed three strategic goals for the BBI that address the needs of oil and protein end users. Specific targets for oil include: Reducing total saturated fatty acids for improved human health Reducing linolenic acid levels to improve flavor stability and reduce the need for hydrogenation Increasing oleic acid levels to further reduce or eliminate the need for hydrogenation in many applications The target meal compositional traits are designed to make soybean meal an even more efficient source of the basic nutrients required by poultry and swine and to reduce the environmentally harmful waste products from concentrated animal feeding operations. We are also hard at work on the marketing side of the Initiative. Today we will describe three facets of this; the Value Chain Analysis Model, our newly created brand for the family of products of the BBI, and a set of standards for using this new brand. I�ll talk more about all of these in a few minutes. (NEXT SLIDE) From that feedback we developed three strategic goals for the BBI that address the needs of oil and protein end users. Specific targets for oil include: Reducing total saturated fatty acids for improved human health Reducing linolenic acid levels to improve flavor stability and reduce the need for hydrogenation Increasing oleic acid levels to further reduce or eliminate the need for hydrogenation in many applications The target meal compositional traits are designed to make soybean meal an even more efficient source of the basic nutrients required by poultry and swine and to reduce the environmentally harmful waste products from concentrated animal feeding operations. We are also hard at work on the marketing side of the Initiative. Today we will describe three facets of this; the Value Chain Analysis Model, our newly created brand for the family of products of the BBI, and a set of standards for using this new brand. I�ll talk more about all of these in a few minutes. (NEXT SLIDE)

6. �Satelite� First step toward development of the �Better Bean� Low total saturates About 9%, compared to 15% Reduced linolenic acid About 4.5%, compared to 7% Harvested in October 2001 and processed in late December 2001 Oil now available for testing �Satelite� is the name Ag Research Services gave to the first variety tested under the BBI. This variety was endorsed by ISEO�s technical committee, and following that endorsement, USB stepped up funding to accelerate harvest and testing. The development of Satelite was accelerated through the use of multiple crops in a year. After all the work that has gone into the BBI, it was gratifying for USB directors to see some seed in the ground. However, we must stress that while we consider this an important milestone, this is just a first step toward reaching our ultimate goals. (NEXT SLIDE) �Satelite� is the name Ag Research Services gave to the first variety tested under the BBI. This variety was endorsed by ISEO�s technical committee, and following that endorsement, USB stepped up funding to accelerate harvest and testing. The development of Satelite was accelerated through the use of multiple crops in a year. After all the work that has gone into the BBI, it was gratifying for USB directors to see some seed in the ground. However, we must stress that while we consider this an important milestone, this is just a first step toward reaching our ultimate goals. (NEXT SLIDE)

7. �Satelite� Evaluate the functionality of the refined oil Flavor stability Oxidative stability Assess developmental improvements recommended by both processors and end users Move on to the next phase of development Under USB supervision, Satelite was crushed and the oil refined. One gallon cans were made available for industry to analyze the oil�s attributes. USB will directly undertake some food product evaluations, as well as undertake basic analytical evaluations. Larger quantities are available on a selective basis for those wishing to evaluate the oil in food products. Please speak to me after the meeting if you are interested in testing the oil. Meal from these Satelite beans will also be evaluated to determine if there were any changes to its attributes. (NEXT SLIDE) Under USB supervision, Satelite was crushed and the oil refined. One gallon cans were made available for industry to analyze the oil�s attributes. USB will directly undertake some food product evaluations, as well as undertake basic analytical evaluations. Larger quantities are available on a selective basis for those wishing to evaluate the oil in food products. Please speak to me after the meeting if you are interested in testing the oil. Meal from these Satelite beans will also be evaluated to determine if there were any changes to its attributes. (NEXT SLIDE)

8. Industry Feedback on Satelite Testing Institute of Food Technologists (IFT) Food Expo 2002, Anaheim, California, June 16-19 USB forum on the BBI and testing results Small group evaluation meeting to discuss testing outcomes USB is currently distributing the samples of Satelite to food companies. To date, a number of food companies have requested samples. We expect to begin receiving the results of these tests sometime in early April. USB will be presenting a panel forum at the 2002 IFT Food Expo in Anaheim that will give an overview of where things stand with the BBI and to update industry on the testing of the new oil. In addition, USB will host an off-site meeting at IFT to discuss the results of the testing with representatives from companies that have tested the new oil. This evaluation process will help us identify next steps and ensure that we�re staying on course in terms of trait developments. (NEXT SLIDE) USB is currently distributing the samples of Satelite to food companies. To date, a number of food companies have requested samples. We expect to begin receiving the results of these tests sometime in early April. USB will be presenting a panel forum at the 2002 IFT Food Expo in Anaheim that will give an overview of where things stand with the BBI and to update industry on the testing of the new oil. In addition, USB will host an off-site meeting at IFT to discuss the results of the testing with representatives from companies that have tested the new oil. This evaluation process will help us identify next steps and ensure that we�re staying on course in terms of trait developments. (NEXT SLIDE)

9. Creating Value for Soybean End Users Value Chain Analysis (VCA) Model An analysis tool to assess the value of the benefits derived from broad adoption of BBI traits. The Value Chain Analysis (VCA) Model, one of the marketing systems developed as part of the BBI�s strategic goals, is a dynamic economic tool that demonstrates the relative value of demand changes from trait improvements to each sector of the value chain, from seed company to producer to food manufacturer. USB worked with agricultural economists at Ag Education and Consulting LLC, in Savoy, IL, and with economists at NC State University to develop the model. My colleague, Chris Schroeder from AEC, will go into more detail on the specifics of the VCA model. One clear finding generated by the VCA model is that the commodity-based approach offers economic advantages to soybean producers versus a niche, premium-based approach. Producers gain the most value when we help all our industry partners gain value, by growing the entire soybean industry. (NEXT SLIDE)The Value Chain Analysis (VCA) Model, one of the marketing systems developed as part of the BBI�s strategic goals, is a dynamic economic tool that demonstrates the relative value of demand changes from trait improvements to each sector of the value chain, from seed company to producer to food manufacturer. USB worked with agricultural economists at Ag Education and Consulting LLC, in Savoy, IL, and with economists at NC State University to develop the model. My colleague, Chris Schroeder from AEC, will go into more detail on the specifics of the VCA model. One clear finding generated by the VCA model is that the commodity-based approach offers economic advantages to soybean producers versus a niche, premium-based approach. Producers gain the most value when we help all our industry partners gain value, by growing the entire soybean industry. (NEXT SLIDE)

10. Technology Utilization Center (TUC) donations First contribution of low saturate genetic marker from Monsanto USB/ARS Memorandum of Understanding Enhance BBI by coordinating priorities and actions with ARS USB and Our Industry Partners Here are a few examples of how partnering with industry has propelled the BBI forward: Technology Utilization Center (TUC) � The TUC is a public/private �virtual laboratory� for developing technology combinations to use in creating elite germplasm. The Monsanto gift allowed ARS researchers to identify the low palmitic fatty acid trait within the soybean genome. Using the marker, researchers were able to accelerate development of varieties that yield an oil lower in saturated fat. The TUC will soon be incorporated under a more formal structure, and we will be providing updates to you soon. USB/ARS Memorandum of Understanding � This �MOU� will enhance efforts to develop soybean seeds with desired traits by identifying mutually strategic directions and in coordinating priorities and actions to maximize advancement of the Better Bean. (NEXT SLIDE)Here are a few examples of how partnering with industry has propelled the BBI forward: Technology Utilization Center (TUC) � The TUC is a public/private �virtual laboratory� for developing technology combinations to use in creating elite germplasm. The Monsanto gift allowed ARS researchers to identify the low palmitic fatty acid trait within the soybean genome. Using the marker, researchers were able to accelerate development of varieties that yield an oil lower in saturated fat. The TUC will soon be incorporated under a more formal structure, and we will be providing updates to you soon. USB/ARS Memorandum of Understanding � This �MOU� will enhance efforts to develop soybean seeds with desired traits by identifying mutually strategic directions and in coordinating priorities and actions to maximize advancement of the Better Bean. (NEXT SLIDE)

11. Marketing Initiatives USB is working with AOCS to develop measurement standards for compositional enhancements Analytical methodology used to establish a common calibration to measure quality traits and produce consistent results Continued development and eventual adoption of soybeans with improved compositional traits will depend largely on the ability to detect the presence of these enhanced traits at all stages in the value chain.. demonstrable with a high level of confidence. USB conducted several industry workshops over the past year to determine what needs to be done and who needs to do it. From those meetings it was determined that the American Oil Chemists Society (AOCS) has both the technical expertise as well as the recognition and respect on a world wide basis to carry out the development of a �Soybean Quality Trait Analytical Standards Program.� This program will allow consistent measurement results from certified labs. Continued development and eventual adoption of soybeans with improved compositional traits will depend largely on the ability to detect the presence of these enhanced traits at all stages in the value chain.. demonstrable with a high level of confidence. USB conducted several industry workshops over the past year to determine what needs to be done and who needs to do it. From those meetings it was determined that the American Oil Chemists Society (AOCS) has both the technical expertise as well as the recognition and respect on a world wide basis to carry out the development of a �Soybean Quality Trait Analytical Standards Program.� This program will allow consistent measurement results from certified labs.

12. BBI Brand Developed Cultivated for quality Striving for optimal nutrition Human health improvements Animal nutrition efficiencies Commitment to continuous improvement I mentioned that USB is actively involved in the marketing side of the BBI, not just the research side. We recognize the need to help marketing people in the private sector understand and express the benefits and the goals of this initiative. So we have actually developed a brand that expresses those benefits. QUALISOY is the umbrella identity for the soybean varieties and products that meet the goals of the Better Bean Initiative. Depending on the testing outcomes, Satelite could be the first end product in the QUALISOY family. Specific attributes of the QUALISOY brand include: Cultivated for quality Commitment to excellence The best soy available (NEXT SLIDE)I mentioned that USB is actively involved in the marketing side of the BBI, not just the research side. We recognize the need to help marketing people in the private sector understand and express the benefits and the goals of this initiative. So we have actually developed a brand that expresses those benefits. QUALISOY is the umbrella identity for the soybean varieties and products that meet the goals of the Better Bean Initiative. Depending on the testing outcomes, Satelite could be the first end product in the QUALISOY family. Specific attributes of the QUALISOY brand include: Cultivated for quality Commitment to excellence The best soy available (NEXT SLIDE)

13. BBI Brand Developed USB is currently developing standards that will have to be met before any variety or end product can carry the QUALISOY brand. It is a form of quality control or quality assurance. You�ll be hearing more from us on the QUALISOY brand launch as IFT draws closer.USB is currently developing standards that will have to be met before any variety or end product can carry the QUALISOY brand. It is a form of quality control or quality assurance. You�ll be hearing more from us on the QUALISOY brand launch as IFT draws closer.

14. BBI Next Steps Solicit feedback from testing partners on the performance of the Satelite oil Continue the quest for acceptable standards and measurement technology Demonstrate economic value of composition enhancements by sharing the Value Chain Analysis model with industry Continue working with industry partners to expedite development of enhanced soybean varieties As we move forward in developing additional soybean varieties with enhanced traits, we will continue to count on the participation of our industry allies to help expedite the process. As I mentioned earlier, we are currently distributing small quantities of Satelite for functionality testing. Please speak to me after the meeting if you are interested in obtaining a sample. We will also look to you for participation in the implementation of the VCA model to help USB show to industry the value of developing enhanced soybeans. (NEXT SLIDE) As we move forward in developing additional soybean varieties with enhanced traits, we will continue to count on the participation of our industry allies to help expedite the process. As I mentioned earlier, we are currently distributing small quantities of Satelite for functionality testing. Please speak to me after the meeting if you are interested in obtaining a sample. We will also look to you for participation in the implementation of the VCA model to help USB show to industry the value of developing enhanced soybeans. (NEXT SLIDE)

15. Continued Progress BBI is a pipeline of product improvements Satelite is the first product to emerge from the pipeline Lower saturated fat, lower linolenic and higher oleic acid currently in the BBI pipeline for future generations Once again, this is an enormous undertaking and it is imperative that we explore existing traits and look for the most efficient ways to develop varieties and traits that are desirable industry wide. We hope you�ll assist us in this effort.Once again, this is an enormous undertaking and it is imperative that we explore existing traits and look for the most efficient ways to develop varieties and traits that are desirable industry wide. We hope you�ll assist us in this effort.

16. Short-term Quality Initiatives The BBI is aimed at providing long-term soybean oil and meal end user benefits Short-term improvements may be achieved by boosting protein and oil content of overall U.S. crop U.S. soybean industry has the capability to boost total protein & oil content without sacrificing yields using currently available varieties In addition to the long-term benefits we will provide through the BBI, USB is also championing short-term measures that farmers can take to enhance the quality of U.S. Soybeans. USB conducted an analysis of existing data on the protein and oil content of the100 top yielding varieties in Illinois and Iowa Results showed that Illinois farmers could select varieties 3.4% higher in protein and 1.7% higher in oil without sacrificing yield. Similar results were found in Iowa This can be achieved if farmers and seed companies receive financial incentives to plant high-yielding varieties that also have high oil and protein content (NEXT SLIDE)In addition to the long-term benefits we will provide through the BBI, USB is also championing short-term measures that farmers can take to enhance the quality of U.S. Soybeans. USB conducted an analysis of existing data on the protein and oil content of the100 top yielding varieties in Illinois and Iowa Results showed that Illinois farmers could select varieties 3.4% higher in protein and 1.7% higher in oil without sacrificing yield. Similar results were found in Iowa This can be achieved if farmers and seed companies receive financial incentives to plant high-yielding varieties that also have high oil and protein content (NEXT SLIDE)

17. NIOP and USB We appreciate your support of U.S. soybean farmers and your continued interest in and support of the BBI. I�d like to thank all of you and the NIOP for your support of this initiative and your ongoing dialogue with USB and our representatives on our efforts to develop enhanced soybean varieties. Your input on the issues facing NIOP members has been invaluable as we work toward producing end products that will benefit processors, food manufacturers and consumers. We look forward to continuing that dialogue as we move forward. Thank you. I�d like to thank all of you and the NIOP for your support of this initiative and your ongoing dialogue with USB and our representatives on our efforts to develop enhanced soybean varieties. Your input on the issues facing NIOP members has been invaluable as we work toward producing end products that will benefit processors, food manufacturers and consumers. We look forward to continuing that dialogue as we move forward. Thank you.