Rabobank says that the U.S. farming industry is well positioned to succeed in an increasingly competitive global market as a result of ongoing consolidation and integration, and its early adoption of new technologies.

In a research report analyzing trends and issues in U.S. farming, Rabobank's Food and Agriculture Research group says that U.S. farmers must, however, continue to grow, innovate, and use domestic advantages in order to overcome challenges such as high land costs, increasing environmental regulations, changes in governmental support, and global competition.

Rabobank is in turn repositioning its U.S. farm lending business to better serve the evolving financial needs of American producers.  Beginning in August, 2005, Rabo AgriFinance will strengthen its lending platform, expand
its product offerings, and increase its local presence in markets across the country by:

• Providing customers with a full range of agricultural lending products -- real estate-based term lending, operating and input financing, and crop and livestock insurance -- through a single point of contact, a locally-based Relationship Manager.
• Opening 15 new U.S. offices and increasing field staff by 50% over the next 3 months, to be closer to our customers and their operations.
• Investing in systems and technology to increase efficiency, service and account management.

"Rabobank is committed to the success of American agriculture over the long-term," said Cor Broekhuyse, head of Rabobank International in the Americas, "so we are repositioning our farm lending business to ensure that
U.S. farmers have ready access to the deep resources, great financing options, and agricultural expertise they need to compete effectively in a global market.  By expanding our sales teams, opening new locations, and
strengthening our systems, we will be more responsive and efficient in serving the financial needs of our U.S. customers."

Trends and Advantages in U.S. Farming

In its U.S. Farming report, Rabobank identified key trends which will help ensure the competitiveness of U.S. farming in the years ahead:

• Consolidation will continue as U.S. farmers seek larger operations and incomes in order to spread their fixed costs, achieve greater efficiencies through the use of technology, gain access to lower cost capital, and strengthen their bargaining power.
• Integration and contracting with wholesalers, processors and retailers will allow even smaller farming operations to capture a market premium while reducing risk and locking in sales.  While contracting is already well-established in the protein sector, the grains and oilseeds sector will see more integration in the future, as well as premiums for specialty crops such as low-linolenic soybeans.
• U.S. farmers enjoy several key advantages that will help them compete globally, including a relatively low cost of capital; access to cutting-edge technology; strong managerial skills; and a strong domestic market, as well as favorable access to Canadian and Mexican markets for U.S.-produced commodities.

Overcoming Challenges to U.S. Farming

Rabobank says that U.S. farmers do face certain competitive challenges, however, such as higher land costs relative to other markets, and changes in government support, both in the 2007 Farm Bill and trade-driven reductions in price supports and crop subsidies.  Going forward, U.S. government support will increasingly shift from direct payments to indirect incentives that will support demand and consequently prices.

While the U.S. will continue to focus predominantly on its large affluent domestic market, export markets beyond North America represent potential growth opportunities for U.S. commodities. Over two billion people around the
world have rising incomes that support a growing demand for meat, dairy products, and processed foods.

"Globalization puts pressure on farmers everywhere to be more efficient and competitive," continued Mr. Broekhuyse.  "Rabobank's knowledge of global agriculture is just one of the strengths that we offer U.S. customers. Through our insights into international markets, we give American farmers the information they need to anticipate change, capitalize on trends, and remain highly competitive.  As the U.S. farming industry continues to evolve and respond to changing market dynamics, Rabobank will continue to provide the expert financial services that make us a valued and long-term partner to American agriculture."