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The hope for sustainable Colombian barley crops is reborn in the fields of the Cundinamarca-Boyacá high plains (Translation)

8 December 2009

Bogota, December 1st, 2009. Bavaria SA, the leading beverage company in Colombia, today presented the first brew from barley, grown in the development phase of its barley-growing project. With the support of the Ministry of Agriculture, Corpoica and Fenalce, Bavaria has been pursuing sustainable commercial cultivation of brewer's barley in the country. A total of 1.603 tons of barley was harvested in this first crop.

The development phase up to today
In the initial stages of the project, the company planted 146 varieties of barley in the Cundinamarca- Boyacá high plains, including those varieties currently imported and used, such as the Metcalfe and Scarlett varieties, which showed a good performance both in the field and the malting and brewing processes, as did others on a smaller scale.

Following these tests in 2008, a group of 26 farmers joined ranks with Bavaria to cultivate 771 hectares in fields of both Boyacá and Cundinamarca, with the technical support, seeds and fertilizers provided by the company. Out of these 771 hectares, 85% were sowed with Metcalfe, 10% with Scarlett, and the other 5% with other varieties of barley, which showed promising agronomic behaviour and good brewing characteristics.

Atlantic Coast opportunity
Although the varieties of barley tested during the first phase are ideal for growing in cold climates - to be malted in the Tibitó malting plant in Cundinamarca - Bavaria has continued to research other varieties, looking to identify a type of barley which can be successfully grown in warmer climates, in order to better take advantage of the Tropical malting plant in Cartagena. For this, Bavaria will begin technical research in February 2010 in the Atlantic Coast with the support of Fedearroz, which will analyze the performance of a set of Brazilian varietals provided by EMBRAPA - Empresa Brasileira de Pesquisa Agropecuária.

Challenges ahead
This long-term mega-project should provide a substantial opportunity for local farmers, as Bavaria seeks to maximise the replacement of its imports of barley. But finding interested farmers is only a first step - to continue, several other conditions need to be met.

First, international competitiveness is essential, which is influenced by the exchange rate, agricultural yield and quality, farming scale, investments in modern equipment, transport costs and general economic and business conditions. Bavaria is targeting a yield of more than 4 tons per hectare in order to safeguard future competitiveness.

Second, there are several sets of criteria for viable and sustainable local production such as barley characteristics (suitability for beer in aspects like protein content and viscosity), phyto-sanitary performance (disease and pest resistance) and available area for cultivation. While arable, less than 4% of Colombian land is cultivated for agricultural production. There should be ample opportunity to find or develop further suitable land, although ownership and scale are important concerns. Bavaria is still searching for growers to provide 3.000 hectares for cultivation by February 2010.
 
Investment and profitability
According to Bavaria's calculations, the Colombian high plains need an investment of around COP 4 billion in agricultural equipment, including sowing and harvesting machines. It is thought that nearly 15% of a harvest gets lost as current machines are not sophisticated enough to collect the totality of barley grown.

In order to improve farming profitability, barley can be planted in rotation with other crops such as potatoes, corn, sugar beet, and vegetables such as peas and carrots. Barley is a very attractive crop rotation option for growers, as the average planting lasts only five months - usually from February to August - allowing them to concentrate on other varieties during the rest of the year.


Next steps and mega-project potential
With today's presentation, Bavaria has demonstrated its faith in the Colombian agricultural industry, and is calling for the expansion of plantings in 2010 to 3.000 hectares, which should yield approximately 11.000 tons of local barley.

The potential of the project is demonstrated by the production capacity of Bavaria's two malting plants, which produce a combined 220.000 tons of malt a year. Tibitó, in Cundinamarca, accounts for 70.000 tons and Tropical, in Bolivar, for another 150.000 tons. In order to produce this amount of malt, the company would need 335.000 tons of harvested barley, which would imply an ultimate need for 110.000 hectares of cultivation.

To date, the project has generated nearly 5.500 jobs. If it scales up to the capacity of the malting plants, and international competitiveness is maintained, which would allow for full import replacement, up to 150.000 sustainable, rural jobs could be created.


Bavaria S. A. is the largest beverage company of Colombia. Its brands Águila, Águila Light, Club Colombia, Cola & Pola, Costeña, Costeñita, Peroni, Pilsen, Póker, Redd's and Pony Malta are leaders in their respective beverage categories in Colombia.


For additional information please contact:
COMMUNICATIONS MANAGER
Juan David Lee Aguirre

Juan.Lee@bav.sabmiller.com

Phone +57-1-638 9290

Bogotá, D.C.

BAVARIA S.A.
http://bavaria.com.co


This SABMiller subsidiary news release has been translated from its local market lan-guage to English language for publication on www.sabmiller.com  We have attempted to provide an accurate translation of the original material but due to the difficulties of trans-lation slight differences may exist. 
 
Note, the news release was first published in its local market on 01-12-09.

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