Adecoagro S.A. (Form: 20-F, Received: 04/30/2012 06:16:47)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2011

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

COMMISSION FILE NUMBER: 001-35052

Adecoagro S.A.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Grand Duchy of Luxembourg

(Jurisdiction of incorporation or organization)

13-15 Avenue de la Liberté

L-1931 Luxembourg

R.C.S. Luxembourg B 153 681

+352 2689-8213

(Address of principal executive offices)

Abdelhakim Chagaar

13-15, avenue de la Liberté

L — 1931 Luxembourg

Email: abdelhakim.chagaar@atcgroup.com

Tel: +352.2689.0112

(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.


Title of Each Class				Name of Each Exchange on Which Registered

Common Shares				New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

The number of outstanding shares of each of the issuer’s classes of capital stock

as of December 31, 2011:

120,531,045 Common Shares, par value $1.50 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨

International Financial Reporting Standards as issued

by the International Accounting Standards Board x

Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow: Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

TABLE OF CONTENTS


		Page
Forward-Looking Statements			ii
Presentation of Financial and Other Information			iii
PART I			1
Item 1. Identity of Directors, Senior Management and Advisers			1
Item 2. Offer Statistics and Expected Timetable			1
Item 3. Key Information			1
	A. Selected Financial Data		1
	B. Capitalization and Indebtedness		8
	C. Reasons for the Offer and Use of Proceeds		8
	D. Risk Factors		9
Item 4. Information on the Company			34
	A. History and Development of the Company		34
	B. Business Overview		37
	C. Organizational Structure		82
	D. Property, Plants and Equipment		82
Item 4A. Unresolved Staff Comments			83
Item 5. Operating and Financial Review and Prospects			83
	A. Operating Results		85
	B. Liquidity and Capital Resources		114
	C. Research And Development, Patents and Licenses, Etc.		120
	D. Trend Information		121
	E. Off-Balance Sheet Arrangements		121
	F. Tabular Disclosure of Contractual Obligations		121
	G. Safe Harbor		121
Item 6. Directors, Senior Management and Employees			122
	A. Directors and Senior Management		122
	B. Compensation		126
	C. Board Practices		126
	D. Employees		129
	E. Share Ownership		129
Item 7. Major Shareholders and Related Party Transactions			132
	A. Major Shareholders		132
	B. Related Party Transactions		134
	C. Interests of Experts and Counsel		135
Item 8. Financial Information			135
	A. Consolidated Statements and Other Financial Information		135
	B. Significant Changes		136
Item 9. The Offer and Listing			136
	A. Offer and Listing Details		136
	B. Plan of Distribution		136
	C. Markets		136
	D. Selling Shareholders		136
	E. Dilution		137
	F. Expenses of the Issue		137
Item 10. Additional Information			137
	A. Share Capital		137
	B. Memorandum and Articles of Association		137
	C. Material Contracts		145
	D. Exchange Controls		146
	E. Taxation		149
	F. Dividends and Paying Agents		155
	G. Statement by Experts		155
	H. Documents on Display		155
	I. Subsidiary Information		155
Item 11. Quantitative and Qualitative Disclosures About Market Risk			155


Item 12. Description of Securities Other than Equity Securities		156
	A. Debt Securities	156
	B. Warrants and Rights	156
	C. Other Securities	156
	D. American Depositary Shares	156
PART II		156
Item 13. Defaults, Dividend Arrearages and Delinquencies		156
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds		156
Item 15. Controls and Procedures		156
Item 16A. Audit Committee Financial Expert		157
Item 16B. Code of Ethics		157
Item 16C. Principal Accountant Fees and Services		157
Item 16D. Exemptions from the Listing Standards for Audit Committees		158
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers		158
Item 16F. Change in Registrant’s Certifying Accountant		158
Item 16G. Corporate Governance		158
Item 16H. Mine Safety Disclosure		160
PART III		160
Item 17. Financial Statements		160
Item 18. Financial Statements		160
Item 19. Exhibits		160

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions. The forward-looking statements included in this annual report relate to, among others:

•

our business prospects and future results of operations;

•

weather and other natural phenomena;

•

developments in, or changes to, the laws, regulations and governmental policies governing our business, including limitations on ownership of farmland by foreign entities in certain jurisdiction in which we operate, environmental laws and regulations;

•

the implementation of our business strategy, including our development of the Ivinhema mill and other current projects;

•

our plans relating to acquisitions, joint ventures, strategic alliances or divestitures;

•

the implementation of our financing strategy and capital expenditure plan;

•

the maintenance of our relationships with customers;

•

the competitive nature of the industries in which we operate;

•

the cost and availability of financing;

•

future demand for the commodities we produce;

•

international prices for commodities;

•

the condition of our land holdings;

•

the development of the logistics and infrastructure for transportation of our products in the countries where we operate;

•

the performance of the South American and world economies;

•

the relative value of the Brazilian Real, the Argentine Peso, and the Uruguayan Peso compared to other currencies; and

•

the factors discussed under the section entitled “Risk Factors” in this annual report.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this annual report might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Certain Defined Terms

In this annual report, unless otherwise specified or if the context so requires:

•

References to the terms “Adecoagro S.A.,” “Adecoagro,” “we,” “us,” “our,” “Company” and “our company” refer to, Adecoagro S.A., a corporation organized under the form of a société anonyme under the laws of the Grand Duchy of Luxembourg, and its subsidiaries, except in the case of historical financial and operating information and results where we are referring to IFH LLC and unless otherwise indicated.

•

References to “IFH” and “IFH LP” mean International Farmland Holdings, LP, a limited partnership (previously International Farmland Holdings, LLC, or IFH LLC) organized under the laws of Delaware, and its subsidiaries.

•

References to “Adecoagro LP” mean Adecoagro, LP, a limited partnership (previously Adecoagro, LLC) organized under the laws of Delaware, and its subsidiaries.

•

References to “$,” “US$,” “U.S. dollars” and “dollars” are to U.S. dollars.

•

References to “Argentine Pesos,” “Pesos” or “Ps.” are to Argentine Pesos, the official currency of Argentina.

•

References to “Brazilian Real,” “Real,” “Reais” or “R$” are to the Brazilian Real, the official currency of Brazil.

•

Unless stated otherwise, references to “sales” are to the combined sales of manufactured products and services rendered plus sales of agricultural produce and biological assets.

Financial Statements

Background

As part of a corporate reorganization (the “Reorganization”), Adecoagro, a Luxembourg corporation under the form of a société anonyme , was formed as a holding company for IFH for the purpose, among others, of facilitating

iii

the initial public offering (the “IPO”) of our common shares, completed on January 28, 2011. Before the IPO, Adecoagro had not engaged in any business or other activities except in connection with its formation and the Reorganization. For an additional discussion of the Reorganization, see “Item 4. Information of the Company—A. History and Development of the Company—History.”

The Reorganization was limited to entities which were all under the control of the same shareholder group and was implemented in part to facilitate the IPO. In accordance with IFRS, the Reorganization did not qualify as a business combination under common control; rather, it was a simple reorganization of the capital of IFH. The Reorganization was completed on October 30, 2010. In accordance with IFRS, the Reorganization was retroactively reflected in the consolidated financial statements as of and for the year ended December 31, 2010. Therefore, all financial and other information herein relating to December 2010, 2009, 2008 and 2007 are presented using the historical values from the consolidated financial statements of IFH. However, the issued share capital reflects that of Adecoagro as of the Reorganization date.

On January 10, 2011, our board of directors voted in favor of a proposal to change the nominal value of the equity shares of the Company from the nominal value of $1 each to the nominal value of US$1.50 each (the “Reverse Stock Split”). This proposal was approved at a duly convened extraordinary general meeting of shareholders held on January 24, 2011, pursuant to Luxembourg law, which reduced our total shares outstanding from 119,999,997 shares to 79,999,985 shares. On February 2, 2011, the Company completed its IPO when it increased its total shares outstanding from 79,999,985 shares to 120,069,222, after giving effect to the exercise of the underwriters over-allotment option on February 11, 2011.

During 2011, we contributed the net proceeds of the IPO to increase our interest in IFH from 98% to 98.64%.

During March, 2012, we issued 696,618 shares to certain limited partners of IFH in exchange for their residual interest in IFH, totaling 0.57230%, thereby increasing our interest in IFH to 99.2%.

The consolidated financial statements as of December 31, 2011, 2010, and 2009 and for the years then ended included in this annual report have been prepared in accordance with International Financial Reporting Standards of the International Accounting Standards Board (“IASB”) and the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), together IFRS. All IFRS issued by the IASB, effective at the time of preparing the consolidated financial statements have been applied. The consolidated financial statements as of December 31, 2011, 2010 and 2009 and for the years then ended are hereinafter referred to as the “consolidated financial statements”.

Non-IFRS Financial Measures

We present Adjusted Consolidated EBITDA, Adjusted Segment EBITDA, Adjusted Consolidated EBIT and Adjusted Segment EBIT in this annual report as supplemental measures of performance of our company and of each operating segment, respectively, that are not required by, or presented in accordance with IFRS. Our Adjusted Consolidated EBITDA equals the sum of our Adjusted Segment EBITDAs for each of our operating segments. We define “Adjusted Consolidated EBITDA” as consolidated net profit or loss for the year, as applicable, before interest expense, income taxes, depreciation and amortization, foreign exchange gains or losses, other net financial expenses and unrealized changes in fair value of our long-term biological assets, primarily our sugarcane and coffee plantations, and cattle stocks. We define “Adjusted Segment EBITDA” for each of our operating segments as the segment’s share of consolidated profit from operations before financing and taxation for the year, as applicable, before depreciation and amortization and unrealized changes in fair value of our long-term biological assets. We believe that Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are important measures of operating performance for our company and each operating segment, respectively, because they allow investors and others to evaluate and compare our consolidated operating results and to evaluate and compare the operating performance of our segments, respectively, including our return on capital and operating efficiencies, from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), tax consequences (income taxes), unrealized changes in fair value of biological assets (a significant non-cash gain or loss to our consolidated statements of income following IAS 41 accounting), foreign exchange gains or losses and other financial expenses. Other companies may calculate Adjusted Consolidated EBITDA and Adjusted Segment EBITDA differently, and therefore our Adjusted Consolidated EBITDA and

Adjusted Segment EBITDA may not be comparable to similarly titled measures used by other companies. Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are not measures of financial performance under IFRS, and should not be considered in isolation or as an alternative to consolidated net profit (loss), cash flows from operating activities, segment’s profit from operations before financing and taxation and other measures determined in accordance with IFRS. Items excluded from Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are significant and necessary components to the operations of our business, and, therefore, Adjusted Consolidated EBITDA and Adjusted Segment EBITDA should only be used as a supplemental measure of our company’s operating performance, and of each of our operating segments, respectively. We also believe Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are useful for securities analysts, investors and others to evaluate the financial performance of our company and other companies in the agricultural industry. These non-IFRS measures should be considered in addition to, but not as a substitute for or superior to, the information contained in either our statements of income or segment information.

Our Adjusted Consolidated EBIT equals the sum of our Adjusted Segment EBITs for each of our operating segments. We define “Adjusted Consolidated EBIT” as consolidated net profit or loss for the year, as applicable, before interest expense, income taxes, foreign exchange gains or losses, other net financial expenses and unrealized changes in fair value of our long-term biological assets, primarily our sugarcane and coffee plantations, and cattle stocks. We define “Adjusted Segment EBIT” for each of our operating segments as the segment’s share of consolidated profit from operations before financing and taxation for the year, as applicable, before unrealized changes in fair value of our long-term biological assets. We believe that Adjusted Consolidated EBIT and Adjusted Segment EBIT are important measures of operating performance, for our company and each operating segment, respectively, because they allow investors and others to evaluate and compare our consolidated operating results and to evaluate and compare the operating performance of our segments, from period to period by including the impact of depreciable fixed assets and removing the impact of our capital structure (interest expense from our outstanding debt), tax consequences (income taxes), unrealized changes in fair value of biological assets (a significant non-cash gain or loss to our consolidated statements of income following IAS 41 accounting), foreign exchange gains or losses and other financial expenses. Other companies may calculate Adjusted Consolidated EBIT and Adjusted Segment EBIT differently, and therefore our Adjusted Consolidated EBIT and Adjusted Segment EBIT may not be comparable to similarly titled measures used by other companies. Adjusted Consolidated EBIT and Adjusted Segment EBIT are not measures of financial performance under IFRS, and should not be considered in isolation or as an alternative to consolidated net profit (loss), cash flows from operating activities, segment’s profit from operations before financing and taxation and other measures determined in accordance with IFRS. Items excluded from Adjusted Consolidated EBIT and Adjusted Segment EBIT are significant and necessary components to the operations of our business, and, therefore, Adjusted Consolidated EBIT and Adjusted Segment EBIT should only be used as a supplemental measure of the operating performance of our company, and of each of our operating segments, respectively. We also believe Adjusted Consolidated EBIT and Adjusted Segment EBIT are useful for securities analysts, investors and others to evaluate the financial performance of our company and other companies in the agricultural industry.

Fiscal Year and Harvest Year

Our fiscal year begins on January 1 and ends on December 31 of each year. However, our production is based on the harvest year for each of our crops, rice and coffee. A harvest year varies according to the crop, rice or coffee plant and to the climate in which it is grown. Due to the geographic diversity of our farms, the planting period for a given crop, rice or coffee may start earlier on one farm than on another, causing differences in their respective harvesting periods. The presentation of production volume (tons) and product area (hectares) in this annual report, in respect of the harvest years for each of our crops, rice and coffee, starts with the first day of the planting period at the first farm to start planting that harvest year and continues to the last day of the harvesting period of the respective crop, rice or coffee on the last farm to finish harvesting that harvest year, as shown in the table below.

LOGO

Product area for cattle is presented on a harvest year basis given that land utilized for cattle operations is linked to our farming operations and use of farmland during a harvest year. Production volumes for dairy and cattle operations are presented on a fiscal year basis. On the other hand, production volumes and product area in our sugar, ethanol and energy business are presented on a fiscal year basis.

The financial results for all of our products are presented on a fiscal year basis.

Certain Weight Units and Measures in the Agricultural Business

Weight units and measures used in agriculture vary according to the crop and producing country. In order to permit comparability of our operating data with operating data from the international markets, the following table sets forth key weight units and measures used in the agriculture industry:


Agricultural weight units and measures
1 metric ton	1,000 kg	1.102 U.S. (short) tons
1 cubic meter	1,000 liters
1 kilogram (kg)	2.20462 pounds
1 pound	0.45359 kg
1 acre	0.40469 hectares
1 hectare (ha)	2.47105 acres
Soybean and Wheat
1 bushel of soybean	60 pounds	27.2155 kg
1 bag of soybean	60 kg	2.20462 bushels
1 bushel/acre	67.25 kg/ha
1.00 U.S. dollar/bushel	2.2046 U.S. dollar/bag
Corn
1 bushel of corn	56 pounds	25.4012 kg
1 bag of corn	60 kg	2.36210 bushels
1 bushel/acre	62.77 kg/ha
1.00 U.S. dollar/bushel	2.3621 U.S. dollar/bag
Cotton
1 bale	480 pounds	217.72 kg
1 arroba	14.68 kg
Coffee
1 bag of coffee	60 kg	132.28 pounds
1.00 US$ cents/pound	1.3228 U.S. dollar/bag
Dairy
1 liter	0.264 gallons	2.273 pounds
1 gallon	3.785 liters	8.604 pounds
1 lbs	0.440 liters	0.116 gallons


1.00 U.S. dollar/liter	43.995 U.S. dollar/cwt	3.785 U.S. dollar/gallon
1.00 U.S. dollar/cwt	0.023 U.S. dollar/liter	0.086 U.S. dollar/gallon
1.00 U.S. dollar/gallon	0.264 U.S. dollar/liter	11.622 U.S. dollar/cwt
Sugar & Ethanol
1 kg of TRS equivalent	0.95 kg of VHP Sugar	0.59 liters of Hydrated Ethanol

1.00 US$ cents/pound	22.04 U.S. dollar/ton

Presentation of Information — Market Data and Forecasts

This annual report is based on information provided by us and by third-party sources that we believe are reliable, including data related to the economic conditions in the markets in which we operate. Unless otherwise indicated, information in this annual report concerning economic conditions is based on publicly available information from third-party sources which we believe to be reasonable. The economic conditions in the markets in which we operate may deteriorate, and those economies may not grow at the rates projected by market data, or at all. The deterioration of the economic conditions in the markets in which we operate may have a material adverse effect on our business, results of operations and financial condition and the market price of our common shares.

Rounding

We have made rounding adjustments to reach some of the figures included in this annual report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

vii

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. SELECTED FINANCIAL DATA

The following tables present selected historical consolidated financial data of Adecoagro for the periods indicated below. We have derived the selected historical statement of income, cash flow and balance sheet data as of and for the years ended December 31, 2011, 2010 and 2009 from the consolidated financial statements included elsewhere in this annual report. The historical results for any prior period presented are not necessarily indicative of our results to be expected for any future period.

We have derived the summary historical statement of income, cash flow and balance sheet data as of and for the year ended December 31, 2008 and 2007 from the consolidated financial statements as of and for the year ended December 31, 2008 and 2007, which are not included in this annual report. Certain reclassifications have been made to the consolidated financial statements as of December 31, 2008 and 2007, and for the year then ended, to conform to the current presentation.

Certain reclassifications have been made to previously issued Financial Statements including, the Income Statements, Statements of Financial Position and the Statement of Cash Flow, which do not affect the net results or the equity of the Company. These reclassification are:

•

We changed the policy for presenting certain biological assets, mainly sugarcane and coffee plantations, from current assets to non-current assets. Current and non-current assets were retroactively restated as a result of this change. We consider that classification of these biological assets as non-current is more appropriate based on their nature, as capable of sustaining regular harvests in the long-term. Classification as non-current is also consistent with comparable from peer companies in the industry. This reclassification has not affected the total equity, statements of income, statements of cash flows. Comparative financial statements were revised as a result of such change, reducing current biological assets and increasing non-current biological assets in $ 29.3 million and $ 20.4 million as of December 31, 2010 and 2009, respectively.

•

In addition, in December 2011, as permitted under IAS 7, we changed the policy for presenting interest paid in the statement of cash flows, classifying it under financing activities instead of operating activities. We effected this reclassification in our statement of cash flows for the year ended December 31, 2011. Cash flows from financing and operating activities were retroactively adjusted. We consider that this presentation is more appropriate on the grounds that interest paid reflect the cost of obtaining sources of finance, which in turn are consistent with internal analysis purposes and comparable from peer companies in the industry. This change has not affected the statement of financial position, total equity, or the statement of income. In turn, cash flow from operating activities increased, and cash flow from financing activities decreased by $33.2 million, $25.8 million, $16.3 million and $5.6 million for the years ended December 31, 2010, 2009, 2008 and 2007.

•

Additionally, during the year ended December 31, 2011, we revised our consolidated statements of financial position for the years ended December 31, 2010 and 2009, to properly reflect the classification of deferred tax assets and deferred tax liabilities on a net basis, which were originally presented without offsetting of balances within the same tax jurisdiction. The impact of this revision was a reduction of total assets and total liabilities in an amount of $ 20.4 million and $ 29.5 million, respectively; which represents approximately 1.5% and 2.3% of total assets and 3.3% and 5.8% of total liabilities as of those dates.

For further details, please see note 2.3 of our consolidated Financials Statements included in this Annual Report.

The consolidated financial statements are prepared in accordance with IFRS as issued by the IASB and the interpretations of the IFRIC. All IFRS issued by the IASB effective at the time of preparing the consolidated financial statements have been applied.

You should read the information contained in these tables in conjunction with “Item 5. Operating and Financial Review and Prospects,” “Item 8. Financial Information”, “Item 18. Financial Statements” and the consolidated financial statements and the accompanying notes included elsewhere in this annual report.


	For the Year Ended December 31,
	2011			2010			2009			2008			2007
	(In thousands of $)
Statement of Income Data:
Sales of manufactured products and services rendered		365,857			294,529			183,386			117,173			69,807
Cost of manufactured products sold and services rendered		(237,404	)		(219,201	)		(180,083	)		(105,583	)		(63,519	)
Gross profit from manufacturing activities		128,453			75,328			3,303			11,590			6,288
Sale of agricultural produce and biological assets		182,227			131,738			130,217			127,036			72,696
Cost of agricultural produce sold and direct agricultural selling expenses(l)		(182,227	)		(131,738	)		(130,217	)		(127,036	)		(72,696	)
Initial recognition and changes in fair value of biological assets and agricultural produce		86,811			(30,528	)		71,668			61,000			26,935
Changes in net realizable value of agricultural produce after harvest		10,523			7,999			12,787			1,261			12,746
Gross profit/ (loss) from agricultural activities		97,334			(22,529	)		84,455			62,261			39,681
Margin on manufacturing and agricultural activities before operating expenses		225,787			52,799			87,758			73,851			45,969
General and administrative expenses		(65,142	)		(56,562	)		(52,393	)		(45,633	)		(33,765	)
Selling expenses		(59,404	)		(52,528	)		(31,169	)		(24,496	)		(14,762	)
Other operating income, net		24,581			18,224			13,071			17,323			2,238
Excess of fair value of net assets acquired over cost		—			—			—			1,227			28,979
Share of loss of joint ventures		(1,034	)		(50	)		(294	)		(838	)		(553	)
Profit / (loss) from operations before financing and taxation		124,788			(38,117	)		16,973			21,434			28,106
Finance income		9,132			16,559			11,553			2,552			12,925
Finance costs		(62,341	)		(39,496	)		(34,216	)		(50,860	)		(12,458	)
Financial results, net		(53,209	)		(22,937	)		(22,663	)		(48,308	)		467
Profit/ (loss) before income tax		71,579			(61,054	)		(5,690	)		(26,874	)		28,573
Income tax benefit/(expense)		(14,662	)		16,263			5,415			10,449			59
Profit/ (loss) for the year		56,917			(44,791	)		(275	)		(16,425	)		28,632
Attributable to: Equity holders of the parent		56,018			(43,904	)		(260	)		(18,947	)		28,587
Non-controlling interest		899			(887	)		(15	)		2,522			45
Earnings/ (Losses) per share for (loss)/profit attributable to the equity holders of the parent during the year:
Basic		0.4787			(0.5488	)		(0.0033	)		(0.253	)		0. 449
Diluted		0.4753			(0.5488	)		(0.0033	)		(0.253	)		0.438


	For the Year Ended December 31,
	2011			2010			2009			2008			2007
Cash Flow Data:
Net cash generated from/ (used in) operating activities (2)		56,586			60,221			(20,010	)		(5,115	)		(44,206	)
Net cash used in investing activities		(140,493	)		(111,725	)		(114,386	)		(188,515	)		(265,189	)
Net cash generated from financing activities		360,792			46,545			130,250			196,888			286,802
Other Financial Data:
Adjusted Segment EBITDA (unaudited)(3)
Crops		42,563			33,613			21,12			34,04			27,216
Rice		6,639			7,121			13,244			13,966			2,014
Dairy		3,426			2,649			484			(2,159	)		1,051
Coffee		1,285			(2,854	)		(3,550	)		(1,693	)		(3,440	)
Cattle		4,686			4,369			1,525			(761	)		(1,188	)
Farming subtotal		58,599			44,898			32,823			43,393			25,653
Ethanol, sugar and energy		109,520			51,735			(26,903	)		(6,979	)		(10,146	)
Land transformation		8,832			20,837			18,839			15,201			33,114
Corporate		(26,885	)		(22,353	)		(22,262	)		(23,077	)		(11,435	)
Adjusted Consolidated EBITDA		150,066			95,117			2,497			28,539			37,186

(1)

Consists of two components: (i) the cost of our agricultural produce and/or biological assets sold as appropriate plus (ii) in the case of agricultural produce, the direct costs of selling, including but not limited to, transportation costs, export taxes and other levies. The cost of our agricultural produce sold represents the recognition as an expense of our agricultural produce held in inventory valued at net realizable value. The cost of our biological assets and/or agricultural produce sold at the point of harvest represents the recognition as an expense of our biological assets and/or agricultural produce measured at fair value less costs to sell, generally representing the applicable quoted market price at the time of sale. Accordingly, the line item “Sales of agricultural produce and biological assets” is equal to the line item “Cost of agricultural produce plus direct agricultural selling expenses.” See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Policies and Estimates—Biological Assets and Agricultural Produce.”

(2)

For the years ended December 31, 2008 and 2007 , the retroactive reclassification of interest paid outflows from Net cash generated from/(used in) operating activities to Net cash generated from financing activities totaled $16,312 thousand and $5,551 thousand, respectively. For further information, please see Note 2.3 to the consolidated financial statements.

(3)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBITDA and Adjusted Consolidated EBITDA and reconciliation table below.


	As of December 31,
	2011		2010		2009		2008		2007
	(In thousands of $)
Statement of Financial Position Data:
Biological assets		239,600		186,757		230,454		125,948		102,562
Inventories		96,147		57,170		57,902		61,221		58,036
Property, plant and equipment, net		759,696		751,992		682,878		571,419		538,017
Total assets		1,700,695		1,320,444		1,239,717		1,028,105		944,991
Non-current borrowings		203,409		250,672		203,134		4,099		62,09
Total borrowings		360,705		389,472		306,781		228,313		159,925
Equity attributable to equity holders of the parent		1,079,876		708,532		741,934		581,159		556,321
Non-controlling interest		14,993		14,570		15,222		57,269		60,544
Number of shares (1)		120,533		80,000		80,000		74,947		63,663

(1)	After giving effect to the Reorganization and the Reserve Stock Split.

The following tables show a reconciliation of our segments’ profit from operations before financing and taxation, the most directly comparable IFRS financial measure, to Adjusted Segment EBITDA, and a reconciliation of our net profit (loss) for the year, the most directly comparable IFRS financial measure, to Adjusted Consolidated EBITDA:


	As of December 31, 2011
	Crops		Rice		Dairy			Coffee			Cattle		Farming Subtotal			Sugar, Ethanol and Energy			Land Transformation		Corporate			Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation		41,094		3,547		4,329			(639	)		4,460		52,791			90,050			8,832		(26,885	)		124,788
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)		—		—		(1,503	)		1,394			—		(109	)		(8,797	)		—		—			(8,906	)
Adjusted Segment EBIT (unaudited)(2)		41,094		3,547
Depreciation and amortization		1,469		3,105		600			530			226		5,930			28,254			—		—			34,184
Adjusted Segment EBITDA (unaudited)(2)		42,563		6,652		3,426			1,285			4,686		58,612			109,507			8,832		(26,885	)		150,066
Reconciliation to Profit
Profit for the year																									56,917
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)																									(8,906	)
Income tax(expense) / benefit																									14,662
Interest expense, net																									25,998
Foreign exchange, net																									12,683
Other financial results, net																									14,528
Adjusted Consolidated EBIT (unaudited)(2)																									115,882
Depreciation and amortization																									34,184
Adjusted Consolidated EBITDA (unaudited)(2)																									150,066


	As of December 31, 2010
	Crops		Rice		Dairy			Coffee			Cattle		Farming Subtotal			Sugar, Ethanol and Energy			Land Transformation		Corporate			Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation		31,902		5,041		5,836			(5,753	)		4,000		41,026			(77,627	)		20,837		(22,353	)		(38,117	)
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)		—		—		(3,610	)		2,450			36		(1,124	)		96,795			—		—			95,671
Adjusted Segment EBIT (unaudited)(2)		31,902		5,041		2,226			(3,303	)		4,036		39,902			19,168			20,837		(22,353	)		57,554
Depreciation and amortization		1,711		2,080		423			449			333		4,996			32,567			—		—			37,563
Adjusted Segment EBITDA (unaudited)(2)		33,613		7,121		2,649			(2,854	)		4,369		44,898			51,735			20,837		(22,353	)		95,117
Reconciliation to (Loss)
(Loss) for the year																									(44,791	)
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)																									95,671
Income tax benefit																									(16,263	)
Interest expense, net																									33,028
Foreign exchange, net																									(7,324	)
Other financial results, net																									(2,767	)
Adjusted Consolidated EBIT (unaudited)(2)																									57,554
Depreciation and amortization																									37,563
Adjusted Consolidated EBITDA (unaudited)(2)																									95,117


	As of December 31, 2009
	Crops		Rice		Dairy			Coffee			Cattle			Farming Subtotal		Sugar, Ethanol and Energy			Land Transformation		Corporate			Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation		19,054		11,792		113			(16,782	)		1,299			15,476		4,920			18,839		(22,262	)		16,973
Initial recognition and changes in fair value of “long term” biological assets(l)(unrealized)		—		—		(32	)		12,662			(127	)		12,503		(57,335	)		—		—			(44,832	)
Adjusted Segment EBIT (unaudited)(2)		19,054		11,792		81			(4,120	)		1,172			27,979		(52,415	)		18,839		(22,262	)		(27,859	)
Depreciation and amortization		2,066		1,452		403			570			353			4,844		25,512			—		—			30,356
Adjusted Segment EBITDA (unaudited)(2)		21,120		13,244		484			(3,550	)		1,525			32,823		(26,903	)		18,839		(22,262	)		2,497
Reconciliation to (Loss)
(Loss) for the year																									(275	)
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)																									(44,832	)
Income tax benefit																									(5,415	)
Interest expense, net																									27,750
Foreign exchange, net																									(10,903	)
Other financial results, net																									5,816
Adjusted Consolidated EBIT (unaudited)(2)																									(27,859	)
Depreciation and amortization																									30,356
Adjusted Consolidated EBITDA (unaudited)(2)																									2,497


	As of December 31, 2008
	Crops		Rice			Dairy	Coffee			Cattle				Farming Subtotal	Sugar, Ethanol and Energy			Land Transformation		Corporate			Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)

Profit/(Loss) from Operations Before Financing and Taxation		27,523		13,256	(667)			864			1,289		42,265			(12,955	)		15,201		(23,077	)		21,434
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)		—		—	(1,840)			(3,355	)		(2,567	)	(7,762)			(13,448	)		—		—			(21,210	)
Adjusted Segment EBIT (unaudited)(2)		27,523		13,256	(2,507)			(2,491	)		(1,278	)	34,503			(26,403	)		15,201		(23,077	)		224
Depreciation and amortization		6,517		710	348			798			517		8,890			19,424			—		—			28,314
Adjusted Segment EBITDA (unaudited)(2)		34,040		13,966	(2,159)			(1,693	)		(761	)	43,393			(6,979	)		15,201		(23,077	)		28,538
Reconciliation to (Loss)
(Loss) for the year																								(16,425	)
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)																								(21,210	)
Income tax benefit																								(10,449	)
Interest expense, net																								21,830
Foreign exchange, net																								24,932
Other financial results, net																								1,546
Adjusted Consolidated EBIT (unaudited)(2)																								224
Depreciation and amortization																								28,314
Adjusted Consolidated EBITDA (unaudited)(2)																								28,538

Adjusted Segment EBITDA

(unaudited)


	As of December 31, 2007
	Crops		Rice		Dairy			Coffee			Cattle			Farming Subtotal			Sugar, Ethanol and Energy			Land Transformation		Corporate			Total
	(In thousands of $)

Profit/(Loss) from Operations Before Financing and Taxation		25,729		1,363		1,720			2,809			2,184			33,805			(27,378	)		33,114		(11,435	)		28,106
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)		—		—		(1,009	)		(6,571	)		(3,814	)		(11,394	)		11,117			—		—			(277	)
Adjusted Segment EBIT (unaudited)(2)		25,729		1,363		711			(3,762	)		(1,630	)		22,411			(16,261	)		33,114		(11,435	)		27,829

Depreciation and amortization		1,487		651		340			322			442			3,242			6,115			—		—			9,357
Adjusted Segment EBITDA (unaudited)(2)		27,216		2,014		1,051			(3,440	)		(1,188	)		25,653			(10,146	)		33,114		(11,435	)		37,186
Reconciliation to Profit
Profit for the year																										28,632
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)																										(277	)
Income tax benefit																										(59	)
Interest expense, net																										4,094
Foreign exchange, net																										(5,971	)
Other financial results, net																										1,410
Adjusted Consolidated EBIT (unaudited)(2)																										27,829
Depreciation and amortization																										9,357
Adjusted Consolidated EBITDA (unaudited)(2)																										37,186

(1)	Long-term biological assets are sugarcane, coffee, dairy and cattle.

(2)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.

B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable.

D. RISK FACTORS

Investing in our common shares involves a high degree of risk. Before making an investment decision, you should carefully consider the information contained in this annual report, particularly the risks described below, as well as in our consolidated financial statements and accompanying notes. Our business activities, cash flow, financial condition and results of operations could be materially and adversely affected by any of these risks. The market price of our common shares may decrease due to any of these risks or other factors, and you may lose all or part of your investment. The risks described below are those that we currently believe may materially affect us.

Risks Related to Our Business and Industries

Unpredictable weather conditions, pest infestations and diseases may have an adverse impact on agricultural production and may reduce the volume and sucrose content of sugarcane that we can cultivate and purchase in a given harvest.

The occurrence of severe adverse weather conditions, especially droughts, hail, floods or frost or diseases are unpredictable and may have a potentially devastating impact on agricultural production and may otherwise adversely affect the supply and price of the agricultural commodities that we sell and use in our business. Adverse weather conditions may be exacerbated by the effects of climate change. The effects of severe adverse weather conditions may reduce yields of our agricultural activities. Additionally, higher than average temperatures and rainfall can contribute to an increased presence of insects. Commencing during the middle of 2008 and lasting until the middle of 2009, the areas in which we operate suffered one of the worst droughts of the last 50 to 70 years, which resulted in a reduction of approximately 15% to 40% of our agricultural production per hectare, depending on the affected commodity, compared with our historical averages.

We experienced drought conditions during December 2011 affecting some of our farms in Argentina and Uruguay. As a result, the expected yield used in the Biological Asset model was reduced generating a negative impact in “Initial recognition and changes in fair value of biological assets and agricultural produce” of US$ 4.5 million. The final effects of this drought will be determined at harvest.

The occurrence and effects of disease and plagues can be unpredictable and devastating to agricultural products, potentially rendering all or a substantial portion of the affected harvests unsuitable for sale. Our agricultural products are also susceptible to fungus and bacteria that are associated with excessively moist conditions. Even when only a portion of the production is damaged, our results of operations could be adversely affected because all or a substantial portion of the production costs have been incurred. Although some diseases are treatable, the cost of treatment is high, and we cannot assure you that such events in the future will not adversely affect our operating results and financial condition. Furthermore, if we fail to control a given plague or disease and our production is threatened, we may be unable to supply our main customers, which could affect our results of operations and financial condition.

Our sugar production depends on the volume and sucrose content of the sugarcane that we cultivate or that is supplied to us by growers located in the vicinity of our mills. Both sugarcane yields and sucrose content depend primarily on weather conditions such as rainfall and temperature, which vary. Weather conditions have historically caused volatility in the ethanol and sugar industries. Future weather patterns may reduce the amount of sugarcane that we can harvest or purchase, or the sucrose content in such sugarcane, and, consequently, the amount of sugar we can recover in any given harvest. Any reduction in the volume of sugar recovered could have a material adverse effect on our operating results and financial condition.

As a result, we cannot assure you that future severe adverse weather conditions or pest infestations will not adversely affect our operating results and financial condition.

Fluctuation in market prices for our products could adversely affect our financial condition and results of operations.

Prices for agricultural products and by-products, including, among others, sugar, ethanol, grains and coffee, like those of other commodities, have historically been cyclical and sensitive to domestic and international changes in

supply and demand and can be expected to fluctuate significantly. In addition, the agricultural products and by-products we produce are traded on commodities and futures exchanges and thus are subject to speculative trading, which may adversely affect us. The prices that we are able to obtain for our agricultural products and by-products depend on many factors beyond our control including:

•

prevailing world commodity prices, which historically have been subject to significant fluctuations over relatively short periods of time, depending on worldwide demand and supply;

•

changes in the agricultural subsidy levels of certain important producers (mainly the U.S. and the European Union (“E.U.”) and the adoption of other government policies affecting industry market conditions and prices;

•

changes to trade barriers of certain important consumer markets (including China, India, the U.S. and the E.U.) and the adoption of other governmental policies affecting industry market conditions and prices;

•

changes in government policies for biofuels;

•

world inventory levels, i.e. , the supply of commodities carried over from year to year;

•

climatic conditions and natural disasters in areas where agricultural products are cultivated;

•

the production capacity of our competitors; and

•

demand for and supply of competing commodities and substitutes.

For example, we reported a loss of $96.8 million for the year ended December 31, 2010 compared to a gain of $57.3 million in the same period in 2009 for our sugarcane business segment in the line item “Initial recognition and Changes in Fair Value of Biological Assets and Agricultural produce.” This loss was generated mainly by a decrease in price estimates used in the discounted cash flow (“DCF”) model to determine the fair value of our sugarcane plantations. In the DCF model, the price of future harvested sugarcane is calculated based on estimates of sugar price derived from the No. 11 futures contract (“NY11”) quoted on the ICE-NY. Sugar price estimates decreased due to lower sugar market prices. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Year ended December 31, 2010 as compared to year ended December 31, 2009.”

Further, because we intentionally do not hedge 100% of the price risk on our agricultural products, we are unable to have minimum price guarantees for all of our production and are, therefore, exposed to risks associated with the prices of agricultural products and their volatility. We are subject to fluctuations in prices of agricultural products that could result in our receiving lower prices for our agricultural products than our production costs.

In addition, there is a strong relationship between the value of our land holdings and market prices of the commodities we produce, which are affected by global economic conditions. A decline in the prices of grains, coffee, sugar, ethanol, or related by-products below their current levels for a sustained period of time could significantly reduce the value of our land holdings and materially and adversely affect our financial condition and results of operations.

Ethanol prices are correlated to the price of sugar and are becoming closely correlated to the price of oil, so that a decline in the price of sugar will adversely affect both our ethanol and sugar businesses, and a decline in the price of oil may adversely affect our ethanol business.

A vast majority of ethanol in Brazil is produced at sugarcane mills that produce both ethanol and sugar. Because sugarcane millers are able to alter their product mix in response to the relative prices of ethanol and sugar, this results in the prices of both products being directly correlated, and the correlation between ethanol and sugar may increase over time. In addition, sugar prices in Brazil are determined by prices in the world market, so that there is a strong correlation between Brazilian ethanol prices and world sugar prices.

Because flex-fuel vehicles, which have become popular in Brazil, allow consumers to choose between gasoline and ethanol at the pump rather than in the showroom, ethanol prices are now becoming increasingly correlated to gasoline prices and, consequently, oil prices. We believe that the correlation among the three products will increase over time. Accordingly, a decline in sugar prices would have an adverse effect on the financial performance of our ethanol and sugar businesses, and a decline in oil prices might have an adverse effect on that of our ethanol business.

The expansion of our business through acquisitions poses risks that may reduce the benefits we anticipate from these transactions.

As part of our business strategy, we have grown primarily through acquisitions. We plan to continue growing by acquiring other farms and production facilities throughout South America. We believe that the agricultural industry and agricultural activity in Argentina and Brazil are highly fragmented and that our future consolidation opportunities will continue to be significant to our growth. However, our management is unable to predict whether or when any prospective acquisitions or strategic alliances will occur, or the likelihood of a certain transaction being completed on favorable terms and conditions. In addition, we are unable to predict the effect that changes in Argentine or Brazilian legislation regarding foreign ownership of rural properties could have in our business. See “—Risks Related to Argentina— Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “—Risks Related to Brazil— Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.” Our ability to continue to expand our business successfully through acquisitions depends on many factors, including our ability to identify acquisitions or access capital markets at an acceptable cost and negotiate favorable transaction terms. Even if we are able to identify acquisition targets and obtain the necessary financing to make these acquisitions, we could financially overextend ourselves, especially if an acquisition is followed by a period of lower than projected prices for our products.

Acquisitions also expose us to the risk of successor liability relating to actions involving an acquired company, its management or contingent liabilities incurred before the acquisition. The due diligence we conduct in connection with an acquisition, and any contractual guarantees or indemnities that we receive from the sellers of acquired companies, may not be sufficient to protect us from, or compensate us for, actual liabilities. Any material liability associated with an acquisition could adversely affect our reputation and results of operations and reduce the benefits of the acquisition.

To support the acquisitions we hope to make, we may need to implement new or upgraded strategies, systems, procedures and controls for our operations and will face risks, including diversion of management time and focus and challenges associated with integrating new managers and employees. Our failure to integrate new businesses successfully could adversely affect our business and financial performance.

Adverse conditions may create delays in or the suspension of the construction of our Ivinhema mill and/or significantly increase the amount of our expected investments.

As part of our strategy to increase our production and increase our competitiveness through economies of scale, we are in the process of construction of the Ivinhema mill, which is expected to commence operations in 2013. See “Item 4. Information on the Company—B. Business Overview.” As of December 31, 2011 we have incurred $49.2 million in the acquisition and assembly of industrial equipment, manufacturing costs and sugarcane planting expenses. Furthermore, as of the date of this report, we have contracted the manufacturing of certain key equipment for an additional $27.0 million, including juice evaporator, substations, sugar warehouse, pipes metallic structures, steel plates, among other equipment. We estimate that we will need to invest an additional $711 million to complete the construction of the Ivinhema mill (of which $230 million were raised through the IPO). See “Item 4. Information on the Company—B. Business Overview.” We cannot assure you that we will be able to borrow the additional funds we will need to complete the project on acceptable terms, or at all.

The Ivinhema mill project involves various risks, including engineering, construction and regulatory risks, such as obtaining necessary permits and licenses as well as other significant challenges that can suspend the construction of the Ivinhema mill, hinder or delay the project’s scheduled completion date and successful operation or that can result in significant cost increases as well as foreign exchange risks associated with incurring costs in Brazilian Reais. In addition, the Ivinhema mill may not operate at projected capacity or may incur higher operating costs than estimated, and we may not be able to sell the ethanol and sugar produced by the Ivinhema mill at competitive prices.

If (1) construction is delayed or suspended, (2) we are required to invest more than the budgeted amount to complete the project, (3) we are unable to borrow the funds needed to complete the project on acceptable terms, or at all, (4) we fail to operate the mill or operate it at a lower capacity than we anticipate or (5) we are unable to sell all of the ethanol and sugar produced by the mill, our results of operations and financial condition will be materially adversely affected.

A significant increase in the price of raw materials we use in our operations, or the shortage of such raw materials, could adversely affect our results of operations.

Our production process requires various raw materials, including fertilizer, pesticides and seeds, which we acquire from local and international suppliers. We do not have long-term supply contracts for most of these raw materials. A significant increase in the cost of these raw materials, especially fertilizer and agrochemicals, a shortage of raw materials or the unavailability of these raw materials entirely could reduce our profit margin, reduce our production and/or interrupt the production of some of our products, in all cases adversely affecting the results of our operations and our financial condition.

For example, we rely on fertilizers and agrochemicals, many of which are petro-chemical based. As of December 31, 2011, fertilizers and agrochemicals constituted approximately 20.1% of our cost of production for the 2010/2011 harvest. Worldwide production of agricultural products has increased significantly in recent years, increasing the demand for agrochemicals and fertilizers. This has resulted, among other things, in increased prices for agrochemicals and fertilizers.

Increased energy prices and frequent interruptions of energy supply could adversely affect our business.

We require substantial amounts of fuel oil and other resources for our harvest activities and transport of our agricultural products. Purchases of fuel constituted approximately 9.6% of our cost of production as of December 31, 2011. We rely upon third parties for our supply of energy resources used in our operations. The prices for and availability of energy resources may be subject to change or curtailment, respectively, due to, among other things, new laws or regulations, imposition of new taxes or tariffs, interruptions in production by suppliers, imposition of restrictions on energy supply by government, worldwide price levels and market conditions. Over the last few years, the Argentine government has taken certain measures in order to reduce the use of energy during peak months of the year by frequently cutting energy supply to industrial facilities and large consumers to ensure adequate supply for residential buildings. For example, certain of our industrial facilities have been subject to a quota system whereby electricity cuts occur on a work shift basis, resulting in our facilities being shut down during certain work shifts. While some of our facilities utilize different sources of energy, such as firewood and liquefied natural gas, and have attempted to stock their required supplies ahead of higher demand periods, we cannot assure you that we will be able to procure the required energy inputs at acceptable prices. If energy supply is cut for an extended period of time and we are unable to find replacement sources at comparable prices, or at all, our business and results of operations could be adversely affected.

We depend on international trade and economic and other conditions in key export markets for our products.

Our operating results depend largely on economic conditions and regulatory policies for our products in major export markets. The ability of our products to compete effectively in these export markets may be adversely affected by a number of factors that are beyond our control, including the deterioration of macroeconomic conditions, volatility of exchange rates, the imposition of greater tariffs or other trade barriers or other factors in those markets, such as regulations relating to chemical content of products and safety requirements. Due to the growing participation in the worldwide agricultural commodities markets by commodities produced in South America, South American growers, including us, are increasingly affected by the measures taken by importing countries in order to protect their local producers. Measures such as the limitation on imports adopted in a particular country or region may affect the sector’s export volume significantly and, consequently, our operating results.

Between April 1 and October 12, 2010, China implemented a ban on the import of soybean oil with exceeding amounts of hexane residue, a chemical used in the extraction of soybean oil from oilseeds. This ban effectively forced us and other Argentine soybean oil producers who utilize hexane out of the market for Chinese imports, impacting the price we could obtain for our soybean oil production. Similarly, the European Union has a zero tolerance policy with respect to the import of genetically modified organisms, or “GMOs”. See “Some of the

agricultural commodities and food products that we produce contain genetically modified organisms.” While the recent drought in Europe has led to the relaxation of these restrictions for certain products, we cannot assure you that we will continue to be able to export any of our products with GMOs to the European Union. If the sale of our products into a particular importing country is adversely affected by trade barriers or by any of the factors mentioned above, the relocation of our products to other consumers on terms equally favorable could be impaired, and our business, financial condition and operating results may be adversely affected.

Impact of the worldwide economic downturn.

The demand for the products we sell may be affected by international, national and local economic conditions. Adverse changes in the perceived or actual economic climate, such as higher fuel prices, higher interest rates, stock and real estate market declines and/or volatility, more restrictive credit markets, higher taxes, and changes in governmental policies could reduce the level of demand or prices of the products we produce. We cannot predict the duration or magnitude of this downturn or the timing or strength of economic recovery. If the downturn continues for an extended period of time or worsens, we could experience a prolonged period of decreased demand and price. In addition, the economic downturn has and may continue to adversely impact our suppliers, which can result in disruptions in service and financial losses.

Our business is seasonal, and our revenues may fluctuate significantly depending on the growing cycle of our crops.

As with any agricultural business enterprise, our business operations are predominantly seasonal in nature. The harvest of corn, soybean and rice generally occurs from January to May. Wheat is harvested from December to January. Coffee and cotton are harvested from June to August, but require processing which takes approximately two to three months. Our operations and sales are affected by the growing cycle of the crops we process and the timing of our harvest sales. In addition, our sugar and ethanol business is subject to seasonal trends based on the sugarcane growing cycle in the center-south region of Brazil. The annual sugarcane harvesting period in the center-south region of Brazil begins in April and ends in November/December. This creates fluctuations in our inventory, usually peaking in December to cover sales between crop harvests ( i.e. , January through April), and a degree of seasonality in our gross profit. Seasonality could have a material adverse effect on our business and financial performance. In addition, our quarterly results may vary as a result of the effects of fluctuations in commodities prices, production yields and costs. Therefore, our results of operations have varied significantly from period to period and are likely to continue to vary, due to seasonal factors.

Our dairy and beef cattle are vulnerable to diseases.

Diseases among our cattle herds, such as mastitis, tuberculosis, brucellosis and foot-and-mouth disease, can have an adverse effect on the productivity of our dairy cows. Outbreaks of cattle diseases may also result in the closure of certain important markets to our cattle-derived products. Although we abide by national veterinary health guidelines, including laboratory analyses and vaccination, to control diseases among our herds, especially foot-and-mouth disease, we cannot assure you that future outbreaks of cattle diseases will not occur. A future outbreak of diseases among our cattle herds could adversely affect our milk sales and operating results and financial condition.

Our current insurance coverage may not be sufficient to cover our potential losses.

Our production is, in general, subject to different risks and hazards, including adverse weather conditions, fires, diseases and pest infestations, other natural phenomena, industrial accidents, labor disputes, changes in the legal and regulatory framework applicable to us, environmental contingencies and other natural phenomena. Our insurance currently covers only part of the losses we may incur and does not cover losses on crops due to hail storms, fires or similar risks. Furthermore, although we maintain insurance at levels that are customary in our industry, certain types of risks may not be covered by the policies we have for our industrial facilities. Additionally, we cannot guarantee that the indemnification paid by the insurer due to the occurrence of a casualty covered by our policies will be sufficient to entirely compensate us for the damages suffered. Moreover, we may not be able to maintain or obtain insurance of the type and amount desired at reasonable costs. If we were to incur significant liability for which we were not fully insured, it could have a materially adverse effect on our business, financial condition and results of operations.

A reduction in market demand for ethanol or a change in governmental policies reducing the amount of ethanol required to be added to gasoline may adversely affect our business.

Government authorities of several countries, including Brazil and certain states of the United States, currently require the use of ethanol as an additive to gasoline. Since 1997, the Sugar and Alcohol Interministerial Council of Brazil ( Conselho Interministerial do Açúcar e Álcool ) has set the required blend of anhydrous ethanol to gasoline (currently 25% ethanol to 75% gasoline by volume).

Approximately 32% of all fuel ethanol in Brazil is used to fuel automobiles that run on a blend of anhydrous ethanol and gasoline; the remaining 68% of fuel ethanol is used in flex-fuel vehicles powered by hydrous ethanol alone. Five districts in China require the addition of 10% ethanol to gasoline. Japan is discussing requiring the addition of 3% of ethanol to gasoline and increasing the requirement to 20% by 2030, and nine states and four union territories in India require the addition of 5% of ethanol to gasoline. Other countries have similar governmental policies requiring various blends of anhydrous ethanol and gasoline. In addition, flex-fuel vehicles in Brazil are currently taxed at lower levels than gasoline-only vehicles, which has contributed to the increase in production and sale of flex-fuel vehicles. Many of these policies and incentives stem from, and are mostly driven by, climate change concerns and the positive perceptions regarding the use of ethanol as a solution to the climate change problem. If such concerns or perception were to change, the legal framework and incentive structure promoting the use of ethanol may be revised, leading to a reduction in the demand for ethanol. In addition, any reduction in the percentage of ethanol required in fuel blended with gasoline or increase in the levels at which flex-fuel vehicles are taxed in Brazil, or any growth in the demand for natural gas and other fuels as an alternative to ethanol, lower gasoline prices or an increase in gasoline consumption (versus ethanol), may cause demand for ethanol to decline and affect our business.

Growth in the sale and distribution of ethanol depends in part on infrastructure improvements, which may not occur on a timely basis, if at all.

In contrast to the well-established logistical operations and infrastructure supporting sugar exports, ethanol exports inherently demand much more complex preparation and means of distribution, including outlets from our facilities to ports and shipping to other countries. Substantial infrastructure development by persons and entities outside our control is required for our operations, and the ethanol industry generally, to grow. Areas requiring expansion include, but are not limited to, additional rail capacity, additional storage facilities for ethanol, increases in truck fleets capable of transporting ethanol within localized markets, expansion of refining and blending facilities to handle ethanol, growth in service stations equipped to handle ethanol fuels, and growth in the fleet of flex-fuel vehicles. Specifically, with respect to ethanol exports, improvements in consumer markets abroad are needed in the number and capacity of ethanol blending industrial plants, the distribution channels of gasoline-ethanol blends and the chains of distribution stations capable of handling fuel ethanol as an additive to gasoline. Substantial investments required for these infrastructure changes and expansions may not be made or they may not be made on a timely basis. Any delay or failure in making the changes in or expansion of infrastructure may hurt the demand for or prices of our products, prevent our products’ delivery, impose additional costs on us or otherwise have a serious adverse effect on our business, operating results or financial status. Our business relies on the continuing availability of infrastructure, and any infrastructure disruptions may have a material adverse effect on our business, financial condition and operating results.

We may be harmed by competition from alternative fuels, products and production methods.

Ethanol competes in the biofuel market with other, established fuels such as biodiesel, as well as fuels that are still in the development phase, including methanol and butanol from biomass. Alternative fuels could become more successful than ethanol in the biofuels market over the medium or long term due, for example, to lower production costs, greater environmental benefits or other more favorable product characteristics. In addition, alternative fuels may also benefit from tax incentives or other favorable governmental treatment, from which they may benefit at the expense of ethanol. Furthermore, our success depends on early identification of new developments relating to products and production methods and continuous expansion and preservation of our existing expertise in order to ensure that our product range keeps pace with technological change. Competitors may gain an advantage over us by, for example, developing or using new products and production methods, introducing new products to the market sooner than we do, or securing exclusive rights to new technologies, thereby significantly harming our competitive position.

A substantial portion of our assets is farmland that is highly illiquid.

We have been successful in partially rotating and monetizing a portion of our investments in farmland. During the last nine years, we have executed transactions for the purchase and disposition of land for over $525 million. Owning of a significant portion of the land we operate is a key part of our business model. However, agricultural real estate is generally an illiquid asset. Moreover, the adoption of laws and regulations that impose limitations on ownership of rural land by foreigners in the jurisdictions in which we operate may also limit the liquidity of our farmland holdings. See “—Risks Related to Argentina—Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “—Risks Related to Brazil— Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.” As a result, it is unlikely that we will be able to adjust our owned agricultural real estate portfolio promptly in response to changes in economic, business or regulatory conditions. Illiquidity in local market conditions may adversely affect our ability to complete dispositions, to receive proceeds generated from any such sales or to repatriate any such proceeds.

We lease or have agriculture partnerships relating to a significant portion of our sugarcane plantations.

As for December 31, 2011, approximately 86% of our area of sugarcane plantations were leased or were subject to agriculture partnership agreements, for periods of an average of six to twelve years. We cannot guarantee that these leases or agriculture partnerships will be renewed after their respective terms. Even if we are able to renew these agreements, we cannot guarantee that such renewals will be on terms and conditions satisfactory to us. Any failure to renew the leases or agriculture partnerships or obtain land suitable for sugarcane planting in sufficient quantity and at reasonable prices to develop our activities could adversely affect our results of operations, increase our costs or force us to seek alternative properties, which may not be available or be available only at higher prices.

We may be subject to labor disputes from time to time that may adversely affect us.

Our employees are represented by unions or equivalent bodies and are covered by collective bargaining or similar agreements which are subject to periodic renegotiation. We may not successfully conclude our labor negotiations on satisfactory terms, which may result in a significant increase in the cost of labor or may result in work stoppages or labor disturbances that disrupt our operations. For example, a short-lived strike at UMA in 2009 resulted in a plant stoppage which, when coupled with the adverse weather conditions during the harvest season, resulted in a reduction of 16,000 tons of sugarcane that otherwise would have been milled during the 2009 fiscal year, with an estimated impact of approximately $100,000 to our operating results. Cost increases, work stoppages or disturbances that result in substantial amounts of raw product not being processed could have a material and adverse effect on our business, results of operations and financial condition.

We are subject to extensive environmental regulation, and concerns regarding climate change may subject us to even stricter environmental regulations.

Our activities are subject to a broad set of laws and regulations relating to the protection of the environment. Such laws include compulsory maintenance of certain preserved areas within our properties, management of pesticides and associated hazardous waste and the acquisition of permits for water use and effluents disposal. In addition, the storage and processing of our products may create hazardous conditions. We could be exposed to criminal and administrative penalties in addition to the obligation to remedy the adverse affects of our operations on the environment and to indemnify third parties for damages. Environmental laws and their enforcement are becoming more stringent in Argentina and Brazil increasing the risk of and penalties associated with violations, which could impair or suspend our operations or projects (e.g., the Ivinhema mill licensing), and our operations expose us to potentially adverse environmental legislation and regulation. Failure to comply with past, present or future laws could result in the imposition of fines, third party claims, and investigation by the environmental authorities and competent public attorney office. For example, the perceived effects of climate change may result in additional legal and regulatory requirements to reduce or mitigate the effects of our industrial facilities’ emissions.

Such requirements, if enacted, could increase our capital expenditures and expenses for environmental compliance in the future, which may have a material and adverse effect on our business, results of operations and financial condition. Moreover, the denial of any permit that we have requested, or the revocation of any of the permits that we have already obtained, may have an adverse effect on our results of operations.

Some of the agricultural commodities and food products that we produce contain genetically modified organisms.

Our soybean, corn and cotton products contain GMOs in varying proportions depending on the year and the country of production. The use of GMOs in food has been met with varying degrees of acceptance in the markets in which we operate. The United States, Argentina and Brazil, for example, have approved the use of GMOs in food products, and GMO and non-GMO grain in those countries is produced and frequently commingled during the grain origination process. Elsewhere, adverse publicity about genetically modified food has led to governmental regulation limiting sales of GMO products in some of the markets in which our customers sell our products, including the European Union. It is possible that new restrictions on GMO products will be imposed in major markets for some of our products or that our customers will decide to purchase fewer GMO products or not buy GMO products at all, which could have a material adverse effect on our business, results of operations, financial condition or prospects.

If our products become contaminated, we may be subject to product liability claims, product recalls and restrictions on exports that would adversely affect our business.

The sale of food products for human consumption involves the risk of injury to consumers. These injuries may result from tampering by third parties, bioterrorism, product contamination or spoilage, including the presence of bacteria, pathogens, foreign objects, substances, chemicals, other agents, or residues introduced during the growing, storage, handling or transportation phases.

We cannot be sure that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image, and we could also incur significant legal expenses. Moreover, claims or liabilities of this nature might not be covered by any rights of indemnity or contribution that we may have against others, which could have a material adverse effect on our business, results of operations or financial condition.

Our principal shareholders have the ability to direct our business and affairs, and their interests could conflict with yours.

As of December 31, 2011, our principal shareholders are the beneficial owners of approximately 61.25% of our common shares. As a result of this significant influence over us, our principal shareholders may be able to elect a majority of the members of our board of directors, direct our management and determine the result of substantially all resolutions that require shareholders’ approval, including fundamental corporate transactions and the payment of dividends by us. The interests of our principal shareholders may differ from, and could conflict with, those of our other shareholders.

We maintain and regularly review our internal controls over financial reporting but these controls cannot eliminate the risk of errors or omissions in such reporting and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

We maintain and regularly review internal controls over financial reporting. However, internal control over financial reporting has inherent limitations. It is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal controls over financial reporting. A failure to detect or correct deficiencies and weaknesses in a timely manner could have an adverse effect on the accuracy of financial reporting.

If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. In the future we may discover areas of our internal controls that need improvement, particularly with respect to businesses that we may acquire in the future. We are not currently required to include an attestation report of our auditors on our assessment of internal controls over financial reporting pursuant to the SEC’s rules under Section 404. We expect that these rules will apply to us when we file our annual report on Form 20-F for our fiscal year ending in December 31, 2012, which we will be required to file by April 30, 2013. If our independent registered public accounting firm are not able to certify as to the effectiveness of our internal controls over financial reporting, we may be subject to sanctions, stock exchange delisting or investigation by regulatory authorities, such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. This could harm our reputation and cause us to lose existing customers or fail to gain new customers and otherwise negatively affect our financial condition, results of operations and cash flows. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel.

IFRS accounting standards require us to make numerous estimates in the compilation and preparation of our financial results and limit the comparability of our financial statements to similar issuers using U.S. GAAP.

IFRS accounting standards for agricultural companies require that we make assumptions and estimates relating to, among other things, future agricultural commodity yields, prices, and production costs extrapolated through a discounted cash flow method. For example, the value of our biological assets with a production cycle lasting more than one year (i.e., sugarcane, coffee, dairy and cattle) generated initial recognition and changes in fair value of biological assets amounting to $38.7 million gain in 2011, ($78.8) million loss in 2010 and $52.9 million gain in 2009. For 2011 an amount of $101.7 million gain (2010: $60.1 million loss; 2009: $29.8 million gain) was solely attributable to price changes (see Note 9 to our consolidated financial statements). In addition, the impact of price estimates on our results is evidenced most recently in our sugarcane business due to changes in the market price of sugar. These assumptions and estimates, and any changes to such prior estimates, directly affect our reported results of operations. If actual market conditions differ from our estimates and assumptions, there could be material adjustments to our results of operations. In addition, the use of such discounted cash flow method utilizing these future estimated metrics differs from generally accepted accounting principles in the United States (“U.S. GAAP”). As a result, our financial statements and reported earnings are not directly comparable to those of similar companies in the United States.

Certain of our subsidiaries have substantial indebtedness which could impair their financial condition and decrease the amount of dividends we receive.

Certain of our subsidiaries in Argentina and Brazil have a substantial amount of debt, which requires significant principal and interest payments. As of December 31, 2011, we had 360.7 million of debt outstanding on a consolidated basis, all of which was incurred by our subsidiaries and not guaranteed by Adecoagro. Such indebtedness could affect our subsidiaries’ future operations, for example, by requiring a substantial portion of their cash flow from operations to be dedicated to the payment of principal and interest on indebtedness instead of funding working capital and other business purposes, making it more difficult for them to satisfy all of their debt obligations, increasing their cost of borrowing to satisfy business needs and limiting their ability to obtain additional financing.

The substantial level of indebtedness borne by certain of our subsidiaries also affects the amount of cash available to them to pay as dividends, increasing our vulnerability to economic downturns or other adverse developments relative to competitors with less leverage; and limiting our ability to obtain additional financing on their behalf for working capital, capital expenditures, acquisitions or other corporate purposes in the future. See Item 5. – Operating and Financial Results and Prospects - Liquidity and Capital Resources—Indebtedness and Financial Instruments.”

The terms of the indebtedness of, and past breaches of financial ratio covenants by, certain of our subsidiaries impose significant restrictions on their operating and financial flexibility.

The debt instruments of certain of our subsidiaries contain customary covenants including limitations on their ability to, among other things, incur or guarantee additional indebtedness; make restricted payments, including

dividends and prepaying indebtedness; create or permit certain liens; enter into business combinations and asset sale transactions; make investments, including capital expenditures; and enter into new businesses. Certain of these debt instruments are also secured by various collateral including mortgages on certain farms, pledges of subsidiary stock and liens on certain facilities, equipment and accounts. Certain of these debt instruments also contain cross-default provisions, where a default on one loan by one subsidiary could result in lenders of otherwise performing loans declaring a default on the otherwise performing loans. For more information regarding the covenants, collateral, and cross-default provisions of our subsidiaries’ indebtedness, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness and Financial Instruments.” These restrictions could limit our subsidiaries’ ability to obtain future financing, withstand a future downturn in business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise. Moreover, by reducing the level of dividends we may receive, such indebtedness places limits on our ability to make acquisitions or needed capital expenditures or to pay dividends to our shareholders.

The terms of certain of our subsidiaries’ debt instruments contain financial ratio covenants, limitations on their levels of debt and capital expenditures and requirements on maintaining various levels of EBITDA. During 2009 and 2010, certain of our operating subsidiaries in Argentina and Brazil breached certain financial ratio covenants under their debt instruments, and subsequently entered with the lenders into amendments to redefine the terms of such financial ratio covenants. The financial ratio covenants we are currently required to meet, some of which are measured on a combined basis aggregating results of the borrowing subsidiaries and others which are measured on an individual debtor basis, include, among others, debt service coverage, minimum liquidity and leverage ratios. For detailed information regarding the financial ratio covenants, limitations on levels of debt and capital expenditures and requirements on EBITDA, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness and Financial Instruments.”

The failure by our subsidiaries to maintain applicable financial ratios, in certain circumstances, would prevent them from borrowing additional amounts and could result in a default under such indebtedness. If we or our subsidiaries are unable to repay those amounts, the affected lenders could initiate bankruptcy-related proceedings or enforce their rights to the collateral securing such indebtedness, which would have a material and adverse effect on our business, results of operations and financial condition. For detailed information regarding the terms of our subsidiaries’ indebtedness, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness and Financial Instruments.”

Fluctuations in interest rates could have a significant impact on our results of operations, indebtedness and cash flow.

As of December 31, 2011, approximately 59.2% of our total debt was subject to variable interest rates and 40.8% was subject to fixed interest rates. As of December 31, 2011, the variable-rate interest bearing indebtedness of our Argentine subsidiaries had a rate of LIBOR plus 4.45%, and the variable-rate interest bearing indebtedness of our Brazilian subsidiaries had a rate of LIBOR or other country-specific rates such as the Taxa de Juros de Longo Prazo (TJLP) or Certificado de Depósito Interbancario (CDI) plus spreads ranging between 3.42% and 16.55% per annum. Significant interest rate increases can have an adverse effect on our profitability, liquidity and financial position. Currently, our variable interest rate exposure is mainly linked to the LIBOR rate plus specified spreads. If interest rates increase, whether because of an increase in market interest rates or an increase in our own cost of borrowing, our debt service obligations for our variable rate indebtedness would increase even though the amount of borrowings remained the same, and our net income could be adversely affected. See also “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”

We occasionally use interest rate swaps and forward interest rate contracts to reduce interest rate volatility and funding costs associated with certain debt issues and to achieve a desired proportion of variable-versus fixed-rate debt, based on current and projected market conditions. We have not applied hedge accounting to these transactions and may not do so in the future. Therefore, changes in the fair value of these derivative instruments can result in a non-cash charge or gain being recognized in our financial results for a period preceding the period or periods in which settlement occurs under the derivative instruments and interest payments are made. Changes or shifts in interest rates can significantly impact the valuation of our derivatives and therefore could expose us to substantial mark-to-market losses or gains if interest rates fluctuate materially from the time when the derivatives were entered into. Accordingly, fluctuations in interest rates may impact our financial position, results of operations, and cash flows. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”

We may not be able to renew our credit lines when they mature, depriving us of needed liquidity.

Certain of our subsidiaries rely substantially on existing uncommitted credit lines to support their operations and business needs through the agricultural harvest cycle. If we are unable to renew these credit lines, or if we cannot replace such credit lines with other borrowing facilities, our financial condition and results of operations may be adversely affected.

There is a risk that we could be treated as a U.S. domestic corporation for U.S. federal income tax purposes, which could materially increase our U.S. federal income tax liability and subject any dividends we pay to U.S. federal withholding tax.

We acquired approximately 98% of IFH, a holding company which is a partnership for U.S. federal income tax purposes organized under the laws of Delaware, immediately prior to our IPO, in exchange for our stock. Under U.S. Internal Revenue Code section 7874(b), we would be treated as a U.S. domestic corporation if we were deemed to have acquired substantially all of the assets constituting the trade or business of a U.S. domestic partnership and former members of IFH were deemed to own at least 80% of our stock by reason of the transfer of those trade or business assets (ignoring stock issued in our IPO for purposes of the 80% threshold). Although we and our subsidiaries conduct no direct business activity in the United States and we believe that our acquisition of IFH should not be subject to the rules above, those rules are unclear in certain respects and there is limited guidance on the application of the rules to partnership acquisitions. Accordingly, we cannot assure you that the U.S. Internal Revenue Service (“IRS”) will not seek to assert that we are a U.S. domestic corporation, which assertion if successful could materially increase our U.S. federal income tax liability and require us to withhold tax from any dividends we pay. See “Item 10. Additional Information—E. Taxation.”

Risks associated with the Countries in which we operate

We operate our business in emerging markets. Our results of operations and financial condition are dependent upon economic conditions in those countries in which we operate, and any decline in economic conditions could harm our results of operations or financial condition.

All of our operations and/or development activities are in South America. As of December 31, 2011, based on the net book value of our combined investment property and property, plant and equipment, approximately 39.3% of our assets were located in Argentina, 59.3% in Brazil and 1.4% in Uruguay. During the year ended 2011, 56.4% of our combined sales of manufactured products and services rendered and sales of agricultural produce and biological assets were attributable to our Brazilian operations, 42% were attributable to our Argentine operations and 1.6% were attributable to our Uruguayan operations. We sell our products to a large base of customers. Type and class of customers differ among the various business segments. More than 67 % of our sales of crops are sold to ten well-known clients (both multinational or local) with good credit history with the Company. In the Sugar, Ethanol and Energy segment, sales of ethanol are concentrated in nine clients which represent the 61% of total sales of Ethanol during the year. Approximately 70% of our sales of sugar were directed through local and international commodity brokers with the remaining 30%, which mainly relates to “cristal sugar”, to a wide and diverse customer base. Energy sales are 91% concentrated in three major clients. In the dairy segment, 86% of the sales are to La Lacteo, our 50% owned joint venture. We expect that in the future we will have additional operations in the South American countries in which we now operate or in other countries with similar political, economic and social conditions. Many of these countries have a history of economic instability or crises (such as inflation or recession), government deadlock, political instability, civil strife, changes in laws and regulations, expropriation or nationalization of property, and exchange controls which could adversely affect our business, financial condition and results of operations.

In particular, fluctuations in the economies of Argentina and Brazil and actions adopted by the governments of those countries have had and may continue to have a significant impact on companies operating in those countries, including us. Specifically, we have been affected and may continue to be affected by inflation, increased interest rates, fluctuations in the value of the Argentine Peso and Brazilian Real against foreign currencies, price and foreign exchange controls, regulatory policies, business and tax regulations and in general by the political, social and economic scenarios in Argentina and Brazil and in other countries that may affect Argentina and Brazil.

The economies of the countries in which we operate may be adversely affected by the deterioration of other global markets.

Financial and securities markets in the countries in which we operate are influenced, to different degrees, by the economic and market conditions in other countries, including other South American and emerging market countries and other global markets. Although economic conditions in these countries may differ significantly from economic conditions in the countries in which we operate, investors’ reactions to developments in these other countries, such as the recent developments in the global financial markets, may substantially affect the capital flows into, and the market value of securities of issuers with operations in, the countries in which we operate. A crisis in other emerging market countries could dampen investor enthusiasm for securities of issuers with South American operations, including our common shares. This could adversely affect the market price for our common shares, as well as make it difficult for us to access capital markets and obtain financing for our operations in the future, on acceptable terms or under any conditions.

A significant deterioration in the economic growth of any of the main trading partners of Brazil or Argentina could have a material impact on the trade balance of those countries and could adversely affect their economic growth.

In 2008, the global financial crisis had an adverse impact on global economic conditions. Even though by 2010 the world economies showed certain signs of recovery, the recent economic crisis in Europe, beginning with the financial crisis in Greece, has had a new adverse impact on global economic conditions. It is yet uncertain how the current financial crisis will impact the countries in which we operate, which could include a reduction in exports, a decline in tax revenues, recession and a reduced ability to access international capital markets.

Governments have a high degree of influence in the economies in which we operate, which could adversely affect our results of operations or financial condition.

Governments in many of the markets in which we currently, or may in the future operate frequently intervene in their respective economies and occasionally make significant changes in monetary, credit, industry and other policies and regulations. Government actions to control inflation and other policies and regulations have often involved, among other measures, price controls, currency devaluations, capital controls and limits on imports. We have no control over, and cannot predict what measures or policies governments may take in the future. The results of operations and financial condition of our businesses may be adversely affected by changes in governmental policy or regulations in the jurisdictions in which they operate that impact factors such as:

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labor laws;

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economic growth;

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currency fluctuations;

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inflation;

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exchange and capital control policies;

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interest rates;

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liquidity of domestic capital and lending markets;

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monetary policy;

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liquidity and solvency of the financial system;

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limitations on ownership of rural land by foreigners;

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developments in trade negotiations through the World Trade Organization or other international organizations;

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environmental regulations;

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tax laws, including royalties and the effect of tax laws on distributions from our subsidiaries;

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restrictions on repatriation of investments and on the transfer of funds abroad;

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expropriation or nationalization;

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import/export restrictions or other laws and policies affecting foreign trade and investment;

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price fixing regulations;

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restrictions on land acquisition or use or agricultural commodity production; and

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other political, social and economic developments, including political, social or economic instability, in or affecting the country where each business is based.

Uncertainty over whether governments will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty and heightened volatility in the securities markets, which may have a material and adverse effect on our business, results of operations and financial condition.

Currency exchange rate fluctuations relative to the U.S. dollar in the countries in which we operate our businesses may adversely impact our results of operations and financial condition.

We operate exclusively outside the United States, and our businesses may be impacted by significant fluctuations in foreign currency exchange rates. Our exposure to currency exchange rate fluctuations results from the translation exposure associated with the preparation of our consolidated financial statements, the transaction exposure associated with generating revenues and incurring expenses in different currencies and the devaluation of local currency revenues impairing the value of investments in U.S. dollars. While the consolidated financial statements presented herein are, and our future consolidated financial statements will be, presented in U.S. dollars, the financial statements of our subsidiaries are prepared using the local currency as the functional currency and translated into U.S. dollars by applying: (i) a year-end exchange rate for assets and liabilities; and (ii) an average exchange rate for the year for income and expenses. Resulting exchange differences arising from the translation to our presentation currency are recognized as a separate component of equity. Currencies in Argentina and Brazil have fluctuated significantly against the U.S. dollar in the past. Accordingly, fluctuations in exchange rates relative to the U.S. dollar could impair the comparability of our results from period to period and have a material adverse effect on our results of operations and financial condition.

After reaching a high of Ps.3.87 per $1 in June 2002, the exchange rate of the Argentine Peso to the dollar has remained relatively stable. However, the increasing level of inflation is generating pressure for further depreciation of the Peso. The Peso depreciated 2.27% against the U.S. dollar in 2007, 9.49% in 2008, 10.40% in 2009, 4.72% in 2010 and 5,89% in 2011. It is impossible to predict future fluctuations in the exchange rate of the Argentine Peso or whether the Argentine government will change its currency policy.

The Brazilian currency has historically suffered frequent fluctuations. As a consequence of inflationary pressures, in the past, the Brazilian government has implemented various economic plans and adopted a number of exchange rate policies, including sudden devaluations, periodic mini-devaluations during which the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, exchange controls and dual exchange rate markets. Currently, the value of the Real against foreign currencies is determined under a free-floating exchange rate regime. Periodically, there are significant fluctuations in the value of the Real against the U.S. dollar. The Real appreciated 16.9% against the U.S. dollar in 2007, depreciated 31.6% in 2008, appreciated 25.4% in 2009,

appreciated 4.4% in 2010 and depreciated 12.6% in 2011. Against the euro, the Real appreciated 7.5% in 2007, depreciated 24.1% in 2008, appreciated 22.6% in 2009, appreciated 11.14% in 2010 and depreciated 8.74% in 2011. On December 31, 2011, the Real/U.S. dollar exchange rate was R$1.8758 per U.S. dollar, and the Real/euro exchange rate was R$2.4342 per euro, as reported by the Central Bank of Brazil. We cannot predict whether the Brazilian Central Bank will continue to let the Real float freely. Accordingly, it is not possible to predict what impact the Brazilian government’s exchange rate policies may have on us. We cannot assure you that the Brazilian government will not in the future impose a band within which the Real/U.S. dollar exchange rate could fluctuate or set a fixed exchange rate, nor can we predict what impact such an event might have on our financial condition or results of operations.

Future fluctuations in the value of the local currencies relative to the U.S. dollar in the countries in which we operate may occur, and if such fluctuations were to occur in one or a combination of the countries in which we operate, our results of operations or financial condition could be adversely affected.

Inflation in some of the countries in which we operate, along with governmental measures to combat inflation, may have a significant negative effect on the economies of those countries and, as a result, on our financial condition and results of operations.

In the past, high levels of inflation have adversely affected the economies and financial markets of some of the countries in which we operate, particularly Argentina and Brazil, and the ability of their governments to create conditions that stimulate or maintain economic growth. Moreover, governmental measures to curb inflation and speculation about possible future governmental measures have contributed to the negative economic impact of inflation and have created general economic uncertainty. A portion of our operating costs in Argentina are denominated in Argentine Pesos and most of our operating costs in Brazil are denominated in Brazilian Reais. Inflation in Argentina or Brazil, without a corresponding Peso or Real devaluation could result in an increase in our operating costs without a commensurate increase in our revenues, which could adversely affect our financial condition and our ability to pay our foreign denominated obligations.

After several years of price stability in Argentina, the devaluation of the Peso in January 2002 imposed pressures on the domestic price system that generated high inflation throughout 2002. In 2003, inflation decreased significantly and stabilized. However, since 2004, encouraged by the pace of economic growth, according to the Argentine Statistics and Census Agency ( Instituto Nacional de Estadísticas y Censos , or “INDEC”), the consumer price index increased by 6.1% in 2004, 12.3% in 2005, 9.8% in 2006, 8.5% in 2007, 7.2% in 2008, 7.7% in 2009 , 10.9% in 2010, and 9.5% in 2011; while the wholesale price index went up 7.9% in 2004, 10.6% in 2005, 7.2% in 2006, 14.6% in 2007, 8.8% in 2008, 10.3% in 2009, 14.6% in 2010 and 12.7% in 2011. The accuracy of the measurements of the INDEC is in doubt, and the actual consumer price index and wholesale price index could be substantially higher than those indicated by the INDEC. For example, according to a research center of the University of Buenos Aires, School of Economics, the consumer price index increased by 10.7% (rather than 9.8%) in 2006, 25.7% (rather than 8.5%) in 2007, 23.0% (rather than 7.2%) in 2008, 15.0% (rather than 7.7%) in 2009 and 23.4% from January through November 2010.

During 2011 the Argentine Secretary of Commerce imposed fines on some private consulting firms for releasing inflation measurements. Since then, private inflation measurements have been released mainly by the Commission of Freedom of Expression of the Argentine Congress (the “Expression Commission”). After the change in the composition of the Argentine Congress on December 2011, the Argentine Congress may no longer release private inflation measurements According to the last information released by the Expression Commission and published in local newspapers, in 2011 the consumer price index increased by 22.8% (rather than 9.5%). See “—Risks Related to Argentina—There are concerns about the accuracy of the INDEC’s measurements.”

Brazil has historically experienced high rates of inflation. Inflation, as well as government efforts to curb inflation, had significant negative effects on the Brazilian economy, particularly prior to 1995. Inflation rates were 7.7% in 2007 and 9.8% in 2008, compared to deflation of 1.7% in 2009, inflation of 11.32% in 2010, and inflation of 5.1% in 2011 as measured by the General Market Price Index ( Indice Geral de Preços — Mercado ), compiled by the Getúlio Vargas Foundation ( Fundação Getúlio Vargas ) . A significant proportion of our cash costs and our operating expenses are denominated in Brazilian Reais and tend to increase with Brazilian inflation. The Brazilian government’s measures to control inflation have in the past included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and reducing economic growth. As a result, interest rates

have fluctuated significantly. The Special System for Settlement and Custody ( Sistema Especial de Liquidação e Custódia , or “SELIC”) interest rate in Brazil at year-end was 13.25% in 2006, 11.25% in 2007, 13.75% in 2008, 8.75% in 2009,10.75% in 2010, and 11.0% in 2011 as determined by the Comitê de Política Monetária , or COPOM. If inflation in Brazil increases, the Brazilian government may choose to increase the SELIC interest rate.

Argentina and/or Brazil may experience high levels of inflation in the future, which may impact domestic demand for our products. Inflationary pressures may also weaken investor confidence in Argentina and/or Brazil, curtail our ability to access foreign financial markets and lead to further government intervention in the economy, including interest rate increases, restrictions on tariff adjustments to offset inflation, intervention in foreign exchange markets and actions to adjust or fix currency values, which may trigger or exacerbate increases in inflation, and consequently have an adverse impact on us. In an inflationary environment, the value of uncollected accounts receivable, as well as of unpaid accounts payable, declines rapidly. If the countries in which we operate experience high levels of inflation in the future and price controls are imposed, we may not be able to adjust the rates we charge our customers to fully offset the impact of inflation on our cost structures, which could adversely affect our results of operations or financial condition.

Depreciations of the Peso or the Real relative to the U.S. dollar or the euro may also create additional inflationary pressures in Argentina or Brazil that may negatively affect us. Depreciations generally curtail access to foreign financial markets and may prompt government intervention, including recessionary governmental policies. Depreciations also reduce the U.S. dollar or euro value of dividends and other distributions on our shares and the U.S. dollar or euro equivalent of the market price of our shares. Any of the foregoing might adversely affect our business, operating results, and cash flow, as well as the market price of our common shares.

Conversely, in the short term, a significant increase in the value of the Peso or the Real against the U.S. dollar would adversely affect the respective Argentine and/or Brazilian government’s income from exports. This could have a negative effect on gross domestic product (“GDP”) growth and employment and could also reduce the public sector’s revenues in those countries by reducing tax collection in real terms, as a portion of public sector revenues are derived from the collection of export taxes.

Disruption of transportation and logistics services or insufficient investment in public infrastructure could adversely affect our operating results.

One of the principal disadvantages of the agricultural sector in the countries in which we operate is that key growing regions lie far from major ports. As a result, efficient access to transportation infrastructure and ports is critical to the growth of agriculture as a whole in the countries in which we operate and of our operations in particular. Improvements in transportation infrastructure are likely to be required to make more agricultural production accessible to export terminals at competitive prices. A substantial portion of agricultural production in the countries in which we operate is currently transported by truck, a means of transportation significantly more expensive than the rail transportation available to U.S. and other international producers. Our dependence on truck transportation may affect our position as a low-cost producer so that our ability to compete in the world markets may be impaired.

Even though road and rail improvement projects have been considered for some areas of Brazil, and in some cases implemented, substantial investments are required for road and rail improvement projects, which may not be completed on a timely basis, if at all. Any delay or failure in developing infrastructure systems could reduce the demand for our products, impede our products’ delivery or impose additional costs on us. We currently outsource the transportation and logistics services necessary to operate our business. Any disruption in these services could result in supply problems at our farms and processing facilities and impair our ability to deliver our products to our customers in a timely manner.

Risks Related to Argentina

Argentine economic and political conditions and perceptions of these conditions in the international market may have a direct impact on our business and our access to international capital and debt markets, and could adversely affect our results of operations and financial condition.

A significant portion of our operations, properties and customers are located in Argentina. The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. Between 2001 and 2003 Argentina experienced a period of severe political, economic and social crisis. In 2002, the enactment of Law No. 25,561 (the “Public Emergency Law”) ended more than a decade of uninterrupted Peso/dollar parity, and the value of the Peso against the U.S. dollar has fluctuated significantly since then.

Although general economic conditions in Argentina have recovered significantly during the past years, there is uncertainty as to whether this growth is sustainable. This is mainly because the economic growth was initially dependent on a significant devaluation of the Argentine Peso, a high excess production capacity resulting from a long period of deep recession and high commodity prices. The global economic crisis of 2008 has led to a sudden economic decline, accompanied by political and social unrest, inflationary and Peso depreciation pressures and lack of consumer and investor confidence. According to the INDEC, Argentina’s GDP, in real terms, grew by 8.7% in 2007, 6.8% in 2008, 0.9% in 2009, 9.2% in 2010 and 9.3% from January through September 2011. See “—There are concerns about the accuracy of the INDEC’s measurements” and “—Risks Associated with the Countries in which We Operate—Inflation in some of the countries in which we operate, along with governmental measures to combat inflation, may have a significant negative effect on the economies of those countries and, as a result, on our financial condition and results of operations” in this section. We cannot assure you that GDP will increase or remain stable in the future. The economic crisis in Europe, beginning with the financial crisis in Greece, Spain, Italy and Portugal, the international demand for Argentine products, the stability and competitiveness of the Peso against foreign currencies, confidence among consumers and foreign and domestic investors, a stable and relatively low rate of inflation and the future political uncertainties, among other factors, may affect the development of the Argentine economy.

In October 2011, Mrs. Cristina Fernandez de Kirchner was re-elected. During her presidential campaign Mrs. Fernandez de Kirchner did not announce any particular actions to be undertaken by her new administration. However, the prevailing economic conditions during 2011 and the beginning of 2012, including the rise of inflation, the continued demand for salary increases, the growth of the fiscal deficit (the highest since the first Kirchner administration despite the use of resources from the National Social Security System and the Central Bank), the required payments to be made on public debt in 2012 (including the Bonos del Gobierno Nacional en Dólares Estadounidenses Libor 2012), the reduction of the industrial growth and the increase of the capital flow out of Argentina have forced the Argentine government to adopt different measures, including the strength of foreign exchange controls, the elimination of subsidies to the private sector and the proposal for new taxes. See “Changes in the Argentine tax laws may adversely affect the results of our operations”.

On April 16, 2012, the Argentine government announced its intention to expropriate YPF, S.A. (“YPF”), the largest oil and gas company in Argentina, which is controlled by Repsol YPF, S.A., a Spanish integrated oil and gas company. The Argentine government submitted a bill to Congress to approve the expropriation of 51% of YPF’s capital stock. The nationalized capital stock would be distributed as follows: 49% to certain Argentine provinces and the remaining 51% to the national government. This particular measure has also sparked a strong international condemnation and could have a significant negative impact on future foreign direct investment in Argentina as well as potentially limit the country’s access to international capital and debt markets. In response to the nationalization of YPF by the Argentine government, the European Union Commission announced it may impose a partial suspension of the unilateral tariff preferences to Argentina. If sanctions by international trading blocks like the European Union are imposed on Argentina or on its agricultural exports, it may have a negative impact on our Argentine subsidiaries’ operations.

These conditions and measures could have a material adverse impact on our Argentine subsidiaries’ operations and financing.

The economy of Argentina may be affected by its government’s limited access to financing from international markets.

Argentina has very limited access to foreign financing. As of December 31, 2010, Argentina’s total public debt amounted to $144.5 billion. In 2002, Argentina defaulted on over $81.8 billion in external debt to bondholders. In addition, since 2002, Argentina suspended payments on over $15.7 billion in debt to multilateral financial

institutions ( e.g. International Monetary Fund and the Paris Club) and other financial institutions. In 2006, Argentina cancelled all its outstanding debt with the International Monetary Fund totaling approximately $9.5 billion, and through various exchange offers made to bondholders between 2004 and 2010, restructured over approximately $74.2 billion of the defaulted debt. As of December 31, 2010, the Argentine government was still in default with respect of over $6.8 billion of debt to bondholders. As of September 30, 2011, Argentina’s total public debt amounts to $175.324 billion (excluding the debt in default to bondholders).

In 2010, the Argentine government applied US$6.4 billion of the Argentine Central Bank’s reserves to the payment of public debt. In the first quarter of 2011, the Argentine government applied US$7.5 billion from the Central Bank’s reserves to repay indebtedness maturing in 2011. In March 2011, the Argentine government applied US$2.1 billion of the Argentine Central Bank’s reserves to the payment of public debt, cancelling the entire debt with international financial institutions. In addition, during 2012 the Argentine government faces the payment of approximately US$ 15 billion of public debt (including US$2.2 billion on the Bonos del Gobierno Nacional en Dólares Estadounidenses Libor 2012). Due to the lack of access to the international capital markets on March 28, 2012, the Argentine government approved a reform of the Argentine Central Bank’s Charter by which, among other things: (i) limited the availability of economic information ( i.e. expected rate of inflation, amount and composition of reserves and of the monetary base); (ii) significantly increased the Argentine government’s access to financing from the Argentine Central Bank; (iii) granted the Board of Directors of the Argentine Central Bank the discretion to determine the required level of reserves; (iv) determined that any reserves above the required level fixed by the Board of Directors constitutes freely available reserves; and (v) provided that in addition to the payment of obligations with international financial institutions, the freely available reserves may also be applied to the payment of official bilateral external debt ( i.e. Paris Club).

The reduction of the Argentine Central Bank’s reserves may weaken Argentina’s ability to overcome economic deterioration in the future. Without access to international private financing, Argentina may not be able to finance its obligations, and financing from multilateral financial institutions may be limited or not available. This could also inhibit the ability of the Argentine Central Bank to adopt measures to curb inflation and could adversely affect Argentina’s economic growth and public finances, which could, in turn, adversely affect our operations in Argentina, our financial condition or the results of our operations.

Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina.

Law No. 26,737, recently passed by the Argentine congress, and its implementing regulation Decree No. 274/2012 of February 28, 2012, impose limits on the ownership or possession of rural land by foreign legal entities or foreign individuals (excluding foreign individuals who have resided in Argentina 10 years or more; who have Argentine children and also have resided at least 5-years in Argentina; or who have been married to Argentine citizens for at least 5 years prior to the transfer of the property rights over rural land and have resided in Argentina for at least 5 years).

Law 26,737 and its implementing regulation require that “foreign ownership” of rural land may not exceed 15% of the total amount of rural land in the Argentine territory calculated also in relation to the territory of the Province, Department or Municipality where the relevant lands are located. For purposes of the law, “foreign ownership” means the ownership (whether by acquisition, transfer, assignment of rights or otherwise) over rural land by: (i) foreign individuals, regardless of whether they are Argentine residents or not; (ii) legal entities where more than 51% of the stock is directly owned by foreign individuals or entities; (iii) legal entities which are indirectly linked to or controlled by foreign entities or individuals through ownership of (a) 25% or more of their stock or (b) a number of votes sufficient to prevail in the local entity’s decision-making process; (iv) any foreign legal entity or individual operating as de facto shareholder; (v) companies that issue bonds (a) convertible in stock representing 25% or more of the company’s stock and (b) whose holders are foreign individuals or entities; (vi) trusts whose beneficiaries are foreign individuals or entities, as defined pursuant to (ii), (iii), (iv) or (v) above; (vii) joint ventures in which foreign entities or individuals hold a participating interest higher than those set forth by the law (51% under (ii) or 25% under (iii), (iv), (v) or (vi) above); (viii) foreign public law-governed legal entities; and (ix) simple associations or de facto corporations in which foreigners hold shares in the percentage set forth by the new law in relation to corporations or which are controlled by foreigners. Any modification to the capital stock of companies that own or possess rural land, by public or private instrument, may be reported to the National Registry of Rural Land (Registro Nacional de Tierras Rurales) within 30 days from the date of such modification.

In addition, foreign entities or individuals of the same nationality may not own more than 4.5% of rural land in Argentina and a single foreign entity or individual may not own more than 1,000 hectares in the “core area”, or the “equivalent surface”, as determined by the Interministerial Council of Rural Land (Consejo Interministerial de Tierras Rurales) in accordance with the provinces’ proposal, specifying districts, sub-regions or areas and taking into consideration the location of the land, the proportion of the land area in respect of the total territory of the relevant Province, Department or Municipality and, the quality of the land for use and exploitation. The “equivalent surface” regime may be modified by the Interministerial Council of Rural Lands (Consejo Interministerial de Tierras Rurales) taking into account possible changes in the quality of the land or the growth of urban populations. Pursuant to Decree No. 274/2012 the departments that comprise the “core area” are: Marcos Juarez and Union in the Province of Córdoba; Belgrano, San Martin, San Jeronimo, Iriondo, San Lorenzo, Rosario, Constitución, Caseros and General Lopez in the Province of Santa Fe; and the districts of Leandro N. Alem, General Viamonte, Bragado, General Arenales, Junin, Alberti, Rojas, Chivilcoy, Chacabuco, Colon, Salto, San Nicolas, Ramallo, San Pedro, Baradero, San Antonio de Areco, Exaltacion de La Cruz, Capitan Sarmiento and San Andres de Giles in the Province of Buenos Aires.

Foreign legal entities or individuals may not own rural land that comprise or are located beside permanent and significant bodies of water to be determined by the Interministerial Council of Rural Land (Consejo Interministerial de Tierras Rurales) and will include hydrological works and projects considered strategic and of public interest.

Law 26,787 creates a National Registry of Rural Land (Registro Nacional de Tierras Rurales) in charge of the enforcement of the provisions of the law and registry of rural land. Foreign owners will be required to report their ownership of rural land to the National Registry of Rural Land within the 180 days immediately following the issuance of the law’s implementing regulations.

Acquisition of rural land will not be deemed as an “investment” under bilateral investment treaties signed by the Argentine Republic, since rural land is deemed as “a non-renewable natural resource”.

Certain provisions of Law 26,787 and its implementing regulation raise questions over their precise meaning. Law 26,787 states that any act in violation of its provisions will be considered null and void, notwithstanding, the law expressly provides that it “does not affect any vested rights”. Hence, it should not have an adverse effect on the current rural land owned by our Argentine subsidiaries. However, our Argentine subsidiaries may be prevented from acquiring additional rural land in Argentina, which may adversely affect our financial condition and results of our operations.

The lack of financing for Argentine companies may have an adverse effect on the results of our operations in Argentina and on the market price of our common shares.

The prospects for Argentine companies accessing financial markets are limited in terms of the amount of the financing available and the conditions and costs of such financing. The default on the Argentine sovereign debt and the global economic crisis have significantly limited the ability of Argentine companies to access international financial markets.

In addition, in November 2008, the Argentine Congress passed a law eliminating the private pension fund system and transferring all retirement and pension funds held by the pension fund administrators ( Administradoras de Fondos de Jubilaciones y Pensiones , or “AFJPs”) to the National Social Security Administrative Office ( Administración Nacional de la Seguridad Social ). Because the AFJPs had been the major institutional investors in the Argentine capital markets, the nationalization of the pension fund system has led to a reduction of the liquidity available in the local Argentine capital markets. As of December 31, 2011, our subsidiaries in Argentina have relied on local Argentine financing for 43% of our total indebtedness. Lack of access to international or domestic financial markets could affect the projected capital expenditures for our operations in Argentina and, therefore, may have an adverse effect on the results of our operations in Argentina and on the market price of our common shares.

There are concerns about the accuracy of the INDEC’s measurements.

In January 2007, the INDEC modified its methodology used in calculating the consumer price index. At the same time, the Argentine government also replaced several key personnel at the INDEC, prompting complaints of government interference from the technical staff at the INDEC. In addition, the International Monetary Fund requested that the government clarify its inflation rates. In June 2008, the INDEC published a new consumer price index that eliminated nearly half of the items included in previous surveys and introduced adjustable weightings for fruit, vegetables and clothing, which have seasonal cost variations.

The new index has been criticized by economists and investors after its initial report found prices rising well below expectations. These events have affected the credibility of the consumer price index published by INDEC, as well as other indices published by INDEC that use the consumer price index in their calculation, including the poverty index, the unemployment index and real GDP. See “Risks Associated with the Countries in which We Operate—Inflation in some of the countries in which we operate, along with governmental measures to combat inflation, may have a significant negative effect on the economies of those countries and, as a result, on our financial condition and results of operations.”

If it is determined that it is necessary to correct the consumer price index and other INDEC indices, there could be a significant decrease in confidence in the Argentine economy, which could, in turn, have a materially adverse effect on our ability to access international credit markets at market rates to finance our operations.

Government intervention in Argentina may have a direct impact on our prices and sales.

The Argentine government has in the past set certain industry market conditions and prices. In March 2002, the Argentine government fixed the price for milk after a conflict among producers and the government. In 2005, the Argentine government adopted measures in order to increase the domestic availability of beef and reduce domestic prices. The export tax rate was increased and a minimum weight requirement for animals to be slaughtered was established. In March 2006, sales of beef products to foreign markets were temporarily suspended until prices decreased. Furthermore, in 2007 the Argentine government significantly increased export tax rates on exports of crops. A number of restrictions are also imposed on the grain and oilseed markets that essentially limit the access of traders to exports, resulting in a disparity between domestic and world prices. In March 2012, the Undersecretary of Transport created an “indicative price” for the transportation of grains by road which will be fixed on a quarterly basis. The actual price paid for the road transportation of grains should not be lower than 5% or higher than 15% of the “indicative price” fixed for the applicable period. In some cases, the imposition of this “indicative price” would produce increases in our transportation costs. We cannot assure you that the Argentine government will not interfere in other areas by setting prices or regulating other market conditions. Accordingly, we cannot assure you that we will be able to freely negotiate the prices of all our Argentine products in the future or that the prices or other market conditions that the Argentine government might impose will allow us to freely negotiate the prices of our products, which could have a material and adverse effect on our business, results of operations and financial condition.

Government measures to preempt or respond to social unrest may adversely affect the Argentine economy and our business.

During the Argentine economic crisis in 2001 and 2002, Argentina experienced significant social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Despite Argentina’s economic recovery and relative stabilization, social and political tension and high levels of poverty and unemployment continue. In 2008, Argentina faced nationwide strikes and protests from farmers due to increased export taxes on agricultural products, which disrupted economic activity and have heightened political tensions. Future government policies to preempt, or in response to, social unrest may include expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws and policies affecting foreign trade and investment. Such policies could destabilize the country and adversely and materially affect the Argentine economy, and thereby our business, results of operations and financial condition.

Disputes between the Argentine government and the agricultural sector may adversely affect the Argentine economy and our business.

In 2008, the Ministry of Economy and Public Finance issued a resolution which applied variable export tariffs ( retenciones móviles ) to the agricultural sector, thereby increasing the tariffs applicable to such exports. The resolution caused a strong reaction by organizations and individuals related to the agricultural sector, who considered the increase a direct confiscation of their private property. This reaction was publicly evidenced by large-scale demonstrations all over the country, resulting in the largest agricultural strike in Argentina’s history, which included road blocks by strikers to prevent traffic of any freight related to agricultural production. As a consequence, markets reacted adversely, causing a recession in local demand and a disruption in the local financial markets. After a serious institutional crisis between the Argentine congress and the executive branch, the Argentine government issued decrees limiting the effectiveness of the original resolution. However, we cannot assure you that the government’s dispute with the agricultural sector will not resume or whether a similar reaction or conflict with the same sector will not arise. Although, to date, the dispute has not materially affected us, we cannot assure you that a similar dispute will not arise and, if it were to arise, that it will not have a material and adverse effect on our business, results of operations and financial condition in the future.

The Argentine government may order salary increases to be paid to employees in the private sector, which would increase our operating costs.

In the past, the Argentine government has passed laws, regulations and decrees requiring companies in the private sector to maintain minimum wage levels and provide specified benefits to employees and may do so again in the future. In the aftermath of the Argentine economic crisis, employers both in the public and private sectors have experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. Due to the high levels of inflation, the employees and labor organizations have begun again demanding significant wage increases. It is possible that the Argentine government could adopt measures mandating salary increases and/or the provision of additional employee benefits in the future. Any such measures could have a material and adverse effect on our business, results of operations and financial condition.

An increase in export and import duties and controls may have an adverse impact on our sales.

Since 2002, the Argentine government has imposed duties on the exports of various primary and manufactured products, including some of our products. During the last eight years, such export taxes have undergone significant increases, reaching a maximum of 35%. We cannot assure you that there will not be further increases in the export taxes or that other new export taxes or quotas will not be imposed. Imposition of new export taxes or quotas or a significant increase in existing export taxes or the application of export quotas could adversely affect our financial condition or results of operations.

Pursuant to a recent resolution of the Argentine Federal Tax Authority (“Administración Federal de Ingresos Públicos—AFIP”) since February 2012, prior to the execution of any purchase order or similar document, Argentine importers are required to file before the AFIP a “Prior Import Statement” (Declaración Jurada Anticipada de Importación) providing information on future imports. Compliance with this requirement will be verified by the Argentine Customs upon arrival of the goods into Argentina and will be condition for the authorization of the payment of the purchase price by the Argentine financial entities. Even though this is intended merely as an information regime, it may be used for purposes of restricting imports into Argentina. A similar regime was also imposed in respect of the import and export of services, and could result in additional restrictions being imposed on the payments made by Argentine residents on services provided by foreign residents. The imposition of this regime may restrict the imports of goods and services of our Argentine subsidiaries which may adversely affect our financial conditions or results of operations.

Exchange controls could restrict the inflow and outflow of funds in Argentina.

In 2001 and 2002, the Argentine government implemented a number of monetary and currency exchange control measures that included restrictions on the withdrawal of funds deposited with banks and stringent restrictions on the outflow of foreign currency from Argentina, including for purposes of paying principal and interest on debt and distributing dividends.

Although most of these restrictions were eased in the past, as a consequence of the increase of the demand in Argentina for U. S. Dollars and the capital flows out of Argentina during 2011, the Argentine government recently

imposed additional restrictions on the transfer of funds from Argentina (e.g., to make portfolio investments) and reduced the time required to comply with the mandatory transfer of funds into Argentina (e.g., the mandatory transfer into Argentina of the proceeds of loans disbursed outside of Argentina). Since January 2012, the term for mandatory transfer was reduced from 365 days to 30 days following disbursement. Accordingly, we may face problems in the payment of external debt obligations from Argentina, we may not be able to fund and/or finance our operations in Argentina, or we may not be able to distribute dividends from Argentina. Additionally, by means of Resolution 142/2012 issued by the Ministry of Economy on April 24, 2012, and Communication “A” 5300 issued by the Central Bank, on April 27, 2012 the term to comply with the mandatory transfer into Argentina of export proceeds was reduced to 15 days. These restrictions and requirements could adversely affect our financial condition and the results of our operations, or the market price of our common shares

Changes in the Argentine tax laws may adversely affect the results of our operations.

The Argentine government is currently developing a Bill to amend the Income Tax Law denominated “Anti-Evasion Plan III”. Pursuant to the proposed Bill, among other things, deductible losses (that can be deducted within the following five years) would be limited to a 30% of the gains earned in each fiscal year; capital gains obtained from foreign individuals or entities from the sale, exchange or disposition of shares and other securities would be subject to the income tax at a rate of 35%; and payments made to individuals or entities located or incorporated in countries with law or no taxation would be subject to withholding at a rate of 35% and would not be deductible. If these amendments are passed into law, the limitations on the deductions may adversely affect the results of our Argentine subsidiaries operations; and the taxation of the capital gains will adversely impact the results of the sale or disposition of our Argentine subsidiaries’ shares.

Risks Related to Brazil

Brazilian economic and political conditions and perceptions of these conditions in international markets have a direct impact on our business and our access to international capital and debt markets and could adversely affect our results of operations and financial condition.

A significant portion of our operations, properties and customers are located in Brazil. Accordingly, our financial condition and results of operations are substantially dependent on economic conditions in Brazil. The Brazilian economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. Brazil’s GDP, in real terms, grew by 6.1% in 2007, 5.1% in 2008, decreased 0.2% in 2009, increased by 7.5% in 2010, and increased 3.0% in 2011. We cannot assure you that GDP will increase or remain stable in the future. Future developments in the Brazilian economy may affect Brazil’s growth rates and, consequently, the consumption of sugar, ethanol, and our other products. As a result, these developments could impair our business strategies, results of operations and financial condition.

Historically, Brazil’s political situation has influenced the performance of the Brazilian economy, and political crises have affected the confidence of investors and the general public, which has resulted in economic deceleration and heightened volatility in the securities issued abroad by Brazilian companies. Future developments in policies of the Brazilian government and/or the uncertainty of whether and when such policies and regulations may be implemented, all of which are beyond our control, could have a material adverse effect on us.

Changes in Brazilian tax laws may increase our tax burden.

The Brazilian government frequently implements changes to the Brazilian tax regime that may affect us and our customers. These changes include changes in prevailing tax rates and, occasionally, imposition of temporary taxes, the proceeds of which are earmarked for designated government purposes. Some of these changes may result in increases in our tax payments, which could adversely affect industry profitability and increase the prices of our products, restrict our ability to do business in our existing and target markets and cause our financial results to suffer. For example, in July 2011, the Brazilian government introduced a tax on securities transactions or IOF/Securities-Derivatives at the rate of 1.0% on the notional adjusted value of financial derivatives. Also, the government changed twice the tax charged on consumer financial transactions in 2011: an increase of 1.5% per year. In April, and a reduction of 0.5% per year in December. On March 1, 2012, the Brazilian government issued new regulations effective immediately relating to new export prepayment financing, limiting the tenor of these financings to 360 days and excluding financial institutions as eligible lenders. Exporters may continue to obtain long-term

financing from financial institutions, but these financings will not benefit from reduced foreign exchange tax IOF rate applicable to the conversion of foreign currency into raise related to borrowings under export prepayment financings and will no longer be subject to an exemption on withholding tax payable for interest. In addition, the Brazilian government implemented a 6% IOF/Exchange tax rate applicable to foreign exchange transactions related to financing from foreign financial institutions with an average life of less than five years and reduced the IOF/Exchange rate for foreign financings with an average life of more than five years to 0%. The effects of these changes and any other change that could result from the enactment of additional taxation cannot be quantified. . We cannot assure you that we will be able to maintain our projected cash flow and profitability following any increases in Brazilian taxes applicable to us and our operations.

Widespread corruption and fraud relating to ownership of real estate may adversely affect our business, especially our land transformation business.

Under Brazilian Legislation, real property ownership is normally transferred by means of a transfer deed, and subsequently registered at the appropriate Real Estate Registry Office under the corresponding real property record. There are uncertainties, corruption and fraud relating to title ownership of real estate in Brazil, mostly in rural areas. In certain cases, the Real Estate Registry Office may register deeds with errors, including duplicate and/or fraudulent entries, and, therefore, deed challenges frequently occur, leading to judicial actions. Property disputes over title ownership are frequent in Brazil, and, as a result, there is a risk that errors, fraud or challenges could adversely affect us.

Social movements and the possibility of expropriation may affect the normal use of, damage, or deprive us of the use of or fair value of, our properties.

Social movements, such as Movimento dos Trabalhadores Rurais Sem Terra and Comissão Pastoral da Terra , are active in Brazil and advocate land reform and mandatory property redistribution by the federal government. Land invasions and occupations of rural areas by a large number of individuals is common practice for these movements, and, in certain areas, including those in which we have invested or are likely to invest, police protection and effective eviction proceedings are not available to land owners. As a result, we cannot assure you that our properties will not be subject to invasion or occupation by these groups. In addition, our land may be subject to expropriation by the federal government. Under the Brazilian legal system, the federal government may expropriate land that is not in compliance with mandated local “social functions” for purposes of land reform. “Social function” is described in the Brazilian Constitution as rational and adequate exploitation of land, adequate use of natural resources available and preservation of the environment, compliance with labor laws, and exploitation of land to promote welfare of owners and employees. If the Brazilian government decides to expropriate any of our properties, our results of operations may be adversely affected, to the extent that potential compensation to be paid by the federal government may be less than the profit we could make from the sale or use of such land. Disputing the federal government’s expropriation of land is usually time-consuming and the outcomes at such challenges are uncertain. In addition, we may be forced to accept public debt bonds, which have limited liquidity, as compensation for expropriated land instead of cash. A land invasion or occupation also could materially impair the normal use of our lands or have a material adverse effect on our results of operations, financial condition or the value of our common shares.

Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.

Brazilian federal law establishes certain restrictions on the acquisition of rural property by foreigners, including that (i) foreign investors may only acquire rural properties in which agricultural, cattle-raising, industrial or colonization projects are going to be developed as approved by the relevant authorities; (ii) the total rural area to be acquired by a foreign investor cannot exceed one quarter of the surface of the municipality in which it is located, and foreigners with the same nationality may not own, cumulatively, more than 10% of the surface of the municipality in which it is located; and (iii) the acquisition or possession (or any in rem right) by a foreigner of rural property situated in an area considered important to national security must be previously approved by the General Office of the National Security Council ( Conselho de Defesa Nacional ). The restrictions mentioned in items (i) and (ii) above are also applicable for rural lease agreements executed by foreigners. “Parcerias Rurales” (agriculture partnerships agreements) have not been subject to these restrictions. However, a broader interpretation construction of the existing regulations may also include these agreements within the limitations for foreigners. In addition, the acquisition or lease by a foreigner of a rural property exceeding 100 módulos de exploração indefinida (“MEI,” a

measurement unit defined by the National Institute for Colonization and Agrarian Reform ( Instituto Nacional de Colonização e Reforma Agraria , or “INCRA”) in hectares for each region of the country) must be previously approved by the Brazilian National Congress. Brazilian federal law enacted in 1971 also establishes that the same restrictions apply to Brazilian companies that are controlled by foreign investors. Any acquisition of rural property by foreigners in violation of these terms would be considered null and void under Brazilian law.

However, the Brazilian Constitution enacted in 1988 and its amendments, in particular Constitutional Amendment No. 6, of August 15, 1995, set forth that (i) no restrictions on the acquisition of rural land in Brazil should apply to Brazilian companies; and (ii) any company incorporated and headquartered in Brazil and controlled by foreign investors must receive the same treatment as any other company incorporated and headquartered in Brazil and controlled by Brazilian investors. Since the enactment of the Brazilian Constitution in 1988, the interpretation had been that the restrictions imposed by federal law on the acquisition or lease of rural property above-mentioned did not apply to Brazilian companies controlled by foreigners, pursuant to the legal opinion issued by the Federal General Attorney’s Office (the “AGU”) in 1994, which was ratified in 1998. However, the Brazilian Justice National Council issued an Official Letter on July 13, 2010 addressed to all the Brazilian local State Internal Affairs Bureaus in order for them to adopt procedures within 60 days and instruct the local State Notary and Real Estate Registry Offices to observe the restrictions of the Brazilian law on the acquisitions of rural land by Brazilian companies with foreign equity holders. Thereafter, on August 19, 2010, the AGU revised its prior opinion, and published a new opinion confirming that Brazilian entities controlled by foreigners should be subject to the restrictions described above, and the transactions entered into by foreigners in connection with rural properties shall be subject to the analysis and approval from INCRA, the Ministry of Agrarian Development and the Brazilian National Congress, when applicable. This revised opinion was ratified by the President of Brazil and published in the Official Gazette of the Federal Executive on August 23, 2010, becoming binding as of such date. We therefore believe that the acquisitions of rural properties by Brazilian companies controlled by foreigners registered in the appropriate real estate registry prior to August 23, 2010 will not be affected by this binding opinion. However, going forward, the acquisition and leasing of rural land in Brazil, including through corporate transactions, will be subject to the above-mentioned restrictions, and will require several additional layers of review and approvals which may be discretionary (including the approvals from INCRA, Ministry of Agrarian Development and the Brazilian National Congress, when applicable), burdensome and time consuming. While we conduct our operations in Brazil through local subsidiaries, we would be considered a foreign controlled entity within the meaning of the restrictions articulated above. Therefore, if we are not able to comply with these restrictions and obtain the required approvals in connection with future acquisitions, our business plan, contemplated expansion in Brazil and results of operations will be adversely affected.

Furthermore, there is currently proposed legislation under analysis in the Brazilian National Congress regarding the acquisition of rural land by Brazilian companies controlled by foreign holders, which if approved may further limit and restrict the investments of companies with foreign equity capital in rural land in Brazil. Such further restrictions may place more strain on our ability to expand our operations in Brazil.

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy.

The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government’s actions to control inflation and other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on exports and imports. We may be adversely affected by changes in policy or regulations involving or affecting factors such as:

•

interest rates;

•

monetary policy;

•

limitation on ownership of rural land by foreigners;

•

exchange controls and restrictions on remittances abroad;

•

currency fluctuations;

•

inflation;

•

the liquidity of domestic capital and financial markets;

•

tax policy; and

•

other political, social and economic policies or developments in or affecting Brazil.

Uncertainty over whether the Brazilian government will implement changes in policy or regulations affecting these or other factors in the future may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and securities issued abroad that are supported by Brazilian issuers. As a result, these uncertainties and other future developments in the Brazilian economy may adversely affect our business, financial condition and results of operations and may adversely affect the price of our common shares.

Our business in Brazil is subject to governmental regulation.

Our Brazilian operations are subject to a variety of national, state, and local laws and regulations, including environmental, agricultural, health and safety and labor laws. We invest financial and managerial resources to comply with these laws and related permit requirements. Our failure to do so could subject us to fines or penalties, enforcement actions, claims for personal injury or property damages, or obligations to investigate and/or remediate damage or injury. Moreover, if applicable laws and regulations, or the interpretation or enforcement thereof, become more stringent in the future, our capital or operating costs could increase beyond what we currently anticipate, and the process of obtaining or renewing licenses for our activities could be hindered or even opposed by the competent authorities.

We are also subject to several laws and regulations, among others, imposed in Brazil by (i) the National Agency of Petroleum, Natural Gas and Biofuels ( Agência Nacional do Petróleo , Gás Natural e Biocombustível ) and by the Brazilian Electricity Regulatory Agency ( Agência Nacional de Energia Elétrica ) (“ANEEL”) due to our production of sugarcane and ethanol and (ii) the Ministry of Agriculture, Breeding Cattle and Supply ( Ministerio da Agricultura , Pecuaria e Abastecimento ), due to our agricultural, sugarcane and ethanol production activities. If an adverse final decision is issued in an administrative process, we could be exposed to penalties and sanctions derived from the violation of any of these laws and regulations, including the payment of fines, and, depending on the level of severity applied to the infraction, the closure of facilities and/or stoppage of activities and the cancellation or suspension of the registrations, authorizations and licenses, which may also result in temporary interruption or discontinuity of activities in our plants, and adversely affect our business, financial status, and operating results.

Government laws and regulations in Brazil governing the burning of sugarcane could have a material adverse impact on our business or financial performance.

In Brazil, approximately 54% of sugarcane is currently harvested by burning the crop, which removes leaves in addition to eliminating insects and other pests. The state of São Paulo and some local governments have established laws and regulations that limit and/or entirely prohibit the burning of sugarcane and there is a likelihood that increasingly stringent regulations will be imposed by the state of São Paulo and other governmental agencies in the near future. We currently make significant investments to comply with these laws and regulations. Although our plans for the implementation of mechanized harvesting are underway, with 87% of our sugarcane harvest mechanized during the 2010-2011 harvest, the strengthening of these laws and regulations or the total prohibition of sugarcane burning would require us to increase our planned investment in harvesting equipment, which, in turn, would limit our ability to fund other investments. In addition, the state of São Paulo has imposed an obligation on growers to dedicate a certain percentage of land used for sugarcane cultivation for native or reclaimed forest area. The cost of setting aside this land is difficult to predict and may increase costs for us or our sugarcane suppliers. As a result, the costs to comply with existing or new laws or regulations are likely to increase, and, in turn, our ability to operate our plants and harvest our sugarcane crops may be adversely affected.

Any failure to comply with these laws and regulations may subject us to legal and administrative actions. These actions can result in civil or criminal penalties, including a requirement to pay penalties or fines, which may range from US$5 to US$50 million and can be doubled or tripled in case of recidivism, an obligation to make capital and other expenditures or an obligation to materially change or cease some operations.

Risks Related to a Luxembourg Company

We are a Luxembourg corporation (“société anonyme”) and it may be difficult for you to obtain or enforce judgments against us or our executive officers and directors in the United States.

We are organized under the laws of the Grand Duchy of Luxembourg. Most of our assets are located outside the United States. Furthermore, most of our directors and officers and the experts named in this annual report reside outside the United States, and most of their assets are located outside the United States. As a result, you may find it difficult to effect service of process within the United States upon these persons or to enforce outside the United States judgments obtained against us or these persons in U.S. courts, including judgments in actions predicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it may also be difficult for you to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for an investor to bring an action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against us or these persons. Luxembourg law, furthermore, does not recognize a shareholder’s right to bring a derivative action on behalf of the company.

Service of process within Luxembourg upon the Company may be possible, provided that The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of November 15, 1965 is complied with.

As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the United States and the Grand Duchy of Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S. court. The enforceability in Luxembourg courts of judgments entered by U.S. courts will be subject prior any enforcement in Luxembourg to the procedure and the conditions set forth in particular in the Luxembourg procedural code, which conditions may include the following (subject to court interpretation which may evolve):

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the judgment of the U.S. court is final and duly enforceable ( exécutoire ) in the United States;

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the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was established in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules);

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the U.S. court has applied to the dispute the substantive law which would have been applied by Luxembourg courts;

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the judgment was granted following proceedings where the counterparty had the opportunity to appear, and if it appeared, to present a defense;

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the U.S. court has acted in accordance with its own procedural laws; and

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the judgment of the U.S. court does not contravene Luxembourg international public policy.

Under our articles of incorporation, we indemnify and hold our directors harmless against all claims and suits brought against them, subject to limited exceptions. Under our articles of incorporation, to the extent allowed or required by law, the rights and obligations among or between us, any of our current or former directors, officers and company employees and any current or former shareholder will be governed exclusively by the laws of Luxembourg and subject to the jurisdiction of the Luxembourg courts, unless such rights or obligations do not relate to or arise out of their capacities as such. Although there is doubt as to whether U.S. courts would enforce such provision in an action brought in the United States under U.S. securities laws, such provision could make enforcing judgments obtained outside Luxembourg more difficult as to the enforcement against our assets in Luxembourg or jurisdictions that would apply Luxembourg law.

You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.

Our corporate affairs are governed by our articles of incorporation and by the laws governing joint stock companies organized under the laws of the Grand Duchy of Luxembourg as well as such other applicable local law, rules and regulations. The rights of our shareholders and the responsibilities of our directors and officers under Luxembourg law are different from those applicable to a corporation incorporated in the United States. There may be less publicly available information about us than is regularly published by or about U.S. issuers. Also, Luxembourg regulations governing the securities of Luxembourg companies may not be as extensive as those in effect in the United States, and Luxembourg law and regulations in respect of corporate governance matters may not be as protective of minority shareholders as state corporation laws in the United States. Therefore, you may have more difficulty protecting your interests in connection with actions taken by our directors and officers or our principal shareholders than you would as a shareholder of a corporation incorporated in the United States.

You may not be able to participate in equity offerings, and you may not receive any value for rights that we may grant.

Pursuant to Luxembourg corporate law, existing shareholders are generally entitled to preemptive subscription rights in the event of capital increases and issues of shares against cash contributions. However, under our articles of incorporation, the board of directors has been authorized to waive, limit or suppress such preemptive subscription rights until the fifth anniversary of the publication of the authorization granted to the board in respect of such waiver by the general meeting of shareholders.

Item 4. Information on the Company

A. HISTORY AND DEVELOPMENT OF THE COMPANY

General Information

Adecoagro is a Luxembourg société anonyme (a public company limited by shares). The Company’s legal name is “Adecoagro S.A.” Adecoagro was incorporated on June 11, 2010 and on October 26, 2010 all the shares in issue in Adecoagro were acquired by IFH LLC.

On October 30, 2010, the members of IFH LLC transferred pro rata approximately 98% of their membership interests in IFH LLC to Adecoagro in exchange for common shares of Adecoagro.

On January 28, 2011, Adecoagro completed the IPO of its shares listed on the New York Stock Exchange (“NYSE”). The shares are traded under the symbol “AGRO.”

During 2011, we contributed net proceeds of the IPO to increase our interest in IFH from 98% to 98.64%.

Adecoagro is registered with the Luxembourg Registry of Trade and Companies under number B153681. Adecoagro has its registered office at 13-15 Avenue de la Liberté, L-1931, Luxembourg, Grand Duchy of Luxembourg. Our telephone number is (+352) 2689-8213.

History

Since our inception in 2002, we have optimized the use of our portfolio of land acquired from time to time and effectively worked towards reaching its productive potential. We replaced the production model used by former owners of our assets with one that is more efficient and sustainable at the same time. Every hectare of our land capable of growing crops, other than land subject to land reserve requirements, is allocated to growing crops or producing sugarcane, while our other land is used for raising dairy cows or leased for raising cattle.

In September 2002, we commenced our operations with the acquisition of 100% of the equity interests of Pecom Agropecuaria S.A., an Argentine corporation ( sociedad anónima ), and we rapidly became one of the largest agricultural companies in Argentina. Involving more than 74,000 hectares of farmland, this acquisition represented one of the largest stock purchase transactions in South America in 2002. In connection with the acquisition, Pecom Agropecuaria S.A. changed its name to Adeco Agropecuaria S.A. (“Adeco Agropecuaria”).

Adeco Agropecuaria was the platform from which we executed our expansion plans, including the acquisition of additional land and the diversification of our business activities.

In 2004, we began our regional expansion and acquired our farm in Uruguay (approximately 5,000 hectares). In 2005, we continued the expansion of our crop business in Argentina with the acquisitions of La Agraria S.A. (approximately 4,857 hectares) and Establecimientos El Orden S.A. and Cavok S.A. (approximately 15,157 hectares).In 2005, we acquired our first sugar and ethanol mill, Usina Monte Alegre S.A., with a crushing capacity of 0.9 million tons of sugarcane per year at that time.

In 2006 and 2007, we continued our land portfolio expansion and vertical integration through the acquisitions of Pilagá S.A. (formerly Pilagá S.R.L. and before that, Pilagá S.A.G.), one of the largest and oldest agriculture companies in Argentina, with more than 88,000 hectares and two rice processing facilities, and one additional farm of approximately 2,400 hectares in Argentina and five farms of approximately 24,000 hectares in Brazil for the production of sugarcane and coffee. In 2007, we also acquired La Lácteo S.A., our Argentine dairy processing joint venture company, with two milk production facilities and an installed processing capacity of 150,000 liters of milk per day at that time. This joint-venture was entered with Agropur Cooperative, Canada’s second largest milk processing company.

Also, in December 2007, we acquired Bañado del Salado S.A. and Agro Invest S.A., with more than 43,000 hectares for crop production in Argentina, and one farm in Uruguay of approximately 3,177 hectares. In Brazil, we bought more than 13,000 hectares for the planting of sugarcane for our sugarcane cluster in Mato Grosso do Sul.

Additionally, in August 2010, we acquired Dinaluca S.A., an agricultural company consisting of a farm located in the province of Corrientes, Argentina, and with more than 14,000 hectares for crop production in Argentina.

On October 30, 2010, as part of the corporate reorganization, referred to herein as the Reorganization, AFI Ltd., a subsidiary of IFH LLC and the parent of Adecoagro LLC, distributed its interest in Adecoagro LLC to IFH LLC and commenced a process of dissolution, making IFH LLC the direct parent of Adecoagro LLC. Thereafter, our shareholders transferred pro rata 98% of their membership interests in IFH LLC to Adecoagro (a corporation organized under the laws of the Grand Duchy of Luxembourg with no prior holdings or operations, formed for the purpose, among others, of facilitating our IPO) in exchange for 100% of the common shares of Adecoagro.

In connection with the Reorganization, Adecoagro converted IFH LLC from a limited liability company to a limited liability partnership, IFH LP, a Delaware limited partnership. Following the Reorganization, IFH LP was owned 2% by our shareholders, approximately 98% by Adecoagro, in each case as limited partners, and the remainder by Ona Ltd., a newly formed Maltese corporation, as its general partner. IFH LLC also converted Adecoagro LLC to Adecoagro LP, a Delaware limited partnership. Following the Reorganization, Adecoagro LP was owned approximately 100% by IFH LP as limited partner, and the remainder by Toba Ltd., a newly formed Maltese corporation, as its general partner.

On January 28, 2011, we successfully completed the IPO of our shares listed on the NYSE. We issued 28,405,925 shares, at a price of US$11 per share. The shares trade under the symbol “AGRO.”

On January 28, 2011, we also issued and sold to Al Gharrafa Investment Company (“Al Gharrafa”), a wholly owned subsidiary of Qatar Holding LLC and one of our shareholders, 7,377,598 common shares at a purchase price of $10.65 per share, which is equal to the price per common share paid by the underwriters acting in the initial public offering of the Company, pursuant to an agreement entered into on January 6, 2011.

During 2011, we contributed net proceeds of the IPO to IFH and increased our interest in IFH from 98% to 98.64%.

In addition, on February 11, 2011, we issued 4,285,714 shares when the over-allotment option was exercised by the underwriters in our IPO.

Furthermore, in August 2011, we acquired: (i) Compañía Agroforestal de Servicios y Mandatos S.A., an agricultural Argentine company owner of more than 4,900 hectares of land in the Argentine province of Santiago del Estero, and (ii) Simoneta S.A., an agricultural Argentine company owner of more than 4,600 hectares of land in the Argentine province of La Pampa.

Finally, in November 2011 we acquired 3,400 hectares of land for crop production in the province of San Luis.

During March, 2012, we issued 696,618 shares to certain limited partners of IFH in exchange for their residual interest in IFH, totaling 0.57230%, thereby increasing our interest in IFH to 99.2%.

The diagrams below illustrate our corporate structure as of December 31, 2011

LOGO

*	Private Shareholders refer to shareholders of record prior to our IPO and transferees.

**	Does not account for an immaterial amount of shares required to be owned by other persons pursuant to Maltese law.

Principal Capital Expenditures

Capital expenditures totaled $165.3 million, $130.6 million and $138.6 million for the years ended December 31, 2011, 2010 and 2009, respectively.

For a discussion of our capital expenditures and future projections, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditure Commitments.”

B. BUSINESS OVERVIEW

Our Company

We are a leading agricultural company in South America, with operations in Argentina, Brazil and Uruguay. We are currently involved in a broad range of businesses, including farming crops and other agricultural products, cattle and dairy operations, sugar, ethanol and energy production and land transformation. Our sustainable business model is focused on (i) a low-cost production model that leverages growing or producing each of our agricultural products in regions where we believe we have competitive advantages, (ii) reducing the volatility of our returns through product and geographic diversification and use of advanced technology, (iii) benefiting from vertical integration in key segments of the agro-industrial chain, (iv) acquiring and transforming land to improve its productivity and realizing land appreciation through strategic dispositions; and (v) promoting sustainable agricultural production and development.

As of December 31, 2011, we owned a total of 293,423 hectares, comprised of 23 farms in Argentina, 13 farms in Brazil and 1 farm in Uruguay. In addition we own and operate several agro-industrial production facilities including four rice processing facilities in Argentina, a dairy operation with approximately 4603 milking cows in Argentina, two coffee processing plants in Brazil, twelve grain and rice conditioning and storage plants in Argentina and two sugar and ethanol mills in Brazil with a sugarcane crushing capacity of 5.2 million tons as of December 31, 2011.

We believe that we are:

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one of the largest owners of productive farmland in South America, with more than 230,549 owned hectares as of December 31, 2011 used in productive activities (excluding legal land reserves pursuant to local regulations and other land reserves) located in Argentina, Brazil and Uruguay, producing a wide range of agricultural products.

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a leading producer of agricultural commodities in South America. During the 2010/2011 harvest year, we harvested 167,104 hectares (including 37,694 leased hectares) and produced 491,533 tons of grains, including soybeans, corn, wheat, sunflower and cotton.

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one of the largest producers of rough (unprocessed) rice in the world, planting 27,542 hectares (including 4,568 leased hectares) and producing 172,034 tons during the 2010/2011 harvest year, which accounted for 10% of the total Argentine production according to the Confederacion de Molinos Arroceros del Mercosur (“Conmasur”). We are also a large processor and exporter of white rice in Argentina, accounting for 13% of total white rice production capacity in Argentina and 16% of total Argentine white rice exports during 2011, according to Aduana Argentina and the Federacion de Entidades Arroceras , respectively.

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a leading dairy producer in South America in terms of our cutting-edge technology, productivity per cow and grain conversion efficiencies, producing over 51.2 million liters of raw milk during 2011.

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one of the largest producers of green bean coffee in the world, with 1,632 fully integrated and mechanized hectares devoted to coffee production as of December 31, 2011.

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a growing producer of sugar and ethanol in Brazil, where we are in the process of building what we expect will be one of the most cost-efficient sugarcane crushing clusters in Brazil. In the sugar and ethanol area:

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we currently own two sugar and ethanol mills in Brazil with an aggregate installed crushing capacity of 5.2 million tons per year and cogeneration (the generation of electricity from sugarcane bagasse, the fiber portion of sugarcane that remains after the extraction of sugarcane juice) capacity of 112 MW as of December 31, 2011;

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we are currently building our third sugar and ethanol mill in Brazil, which, when combined with our existing Angélica mill (“Angélica”), will form a cluster that we believe will allow us to become one of the lowest-cost producers of sugar, ethanol and energy from sugarcane in Brazil; and

•

we expect our planned cluster to have a total installed sugarcane crushing capacity of 10.3 million tons per year and a cogeneration capacity of 296 MW once it reaches full capacity in 2017, resulting in a total sugarcane crushing capacity of 11.5 million tons per year for our three mills together at that time.

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one of the leading companies in South America involved in the acquisition and transformation of undermanaged land to more productive uses, generating higher cash yields. During the last six fiscal years, we sold over 29,608 hectares of developed land, generating capital gains of approximately $104 million.

We are engaged in three main businesses:

Farming Business : We believe we are one of the largest owners of productive farmland in South America. As of December 31, 2011 we owned 280,142 hectares (excluding sugarcane farms) of farmland in Argentina, Brazil and Uruguay, of which 130,344 hectares are croppable, 18,210 hectares are being evaluated for transformation, 72,219 hectares are suitable for raising beef cattle and are mostly leased to a third party beef processor, constituting a total of 220,773 productive hectares, and 63,503 hectares are legal land reserves pursuant to local regulations or other land reserves. During 2011/2012 harvest year we held leases or have entered into agriculture partnerships for an additional 61,417 croppable hectares. We own the facilities and have the resources to store and condition 100% of our crop and rice production. We do not depend on third parties to condition our production for sale. Our farming business is subdivided into five business areas:

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Crop business : We produce a wide range of agricultural commodities including soybeans, corn, wheat, sunflower and cotton, among others. In Argentina, our farming activities are conducted mainly in the Argentine humid pampas region, where agro-ecological conditions are optimal for low-cost production. Since 2004, we have expanded our operations throughout the center-west region of Uruguay and the western part of the state of Bahia, Brazil, as well as in the northern region of Argentina. During the 2010/2011 harvest year, we planted approximately 163,033 hectares of crops, including second harvests, producing 491,813 tons of grains, including soybeans, wheat and corn, sunflower and cotton. We also planted an additional 4,071 hectares where we produced over 44,158 tons of forage that we used for cow feed in our dairy operation. During the 2011/12 harvest year, we planted approximately 199,465 hectares of crops, including second harvest, and also planted an additional 4,889 hectares of forage.

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Rice business : We own a fully-integrated rice operation in Argentina. We produce irrigated rice in the northeast provinces of Argentina, where the availability of water, sunlight, and fertile soil results in one of the most ideal regions in the world for producing rice at low cost. We believe that we are one of the largest producers of rough (unprocessed) rice in Argentina, producing 172,034 tons during the 2010/2011 harvest year, which accounted for 10% of the total Argentine production according to Conmasur. We own four rice mills that process our own production, as well as rice purchased from third parties. We produce different types of white and brown rice that are both sold in the domestic Argentine retail market and exported. During the 2011/12 harvest year, we planted 31,497 hectares of rice.

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Coffee business : Our integrated coffee operation is located in the western part of the state of Bahia, Brazil, where conditions are well-suited for producing “specialty coffee” due to the availability of water for irrigation, the absence of frosts and the flat topography that allows for a fully mechanized harvest. We grow coffee on 1,632 owned hectares and have available land and water to expand our operations to 2,700 hectares.

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Dairy business : We believe that we are a leading dairy producer in South America in terms of our utilization of cutting-edge technology, productivity per cow and grain conversion efficiencies, producing over 51.2 million liters of raw milk during 2011, with an average of 4,603 milking cows, delivering an average of 30.5 liters of milk per cow per day. Through the production of raw milk, we are able to transform forage and grains into value-added animal protein. We believe that our “free-stall” dairy in Argentina is the first of its kind in South America and allows us to optimize our use of resources (land, dairy cow feed and capital), increase our productivity and maximize the conversion of forage and grain into raw milk.

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Cattle business : Until December 2009, we owned 58,348 head of cattle, which we fattened for sale to meat processors and in Argentina’s livestock auction markets. In December 2009, we sold 55,543 head of cattle from our herd, not including cattle used in our dairy business, to a meat processor for a total price of $14.2 million. Additionally, we entered into a long-term lease agreement pursuant to which the meat processor leases over 72,219 hectares of grazing land from us to raise and fatten the purchased cattle. The lease agreement is tied to the market price of beef at the end of each quarter.

The following table sets forth, for the periods indicated, certain data relating to our farming business:


	Year Ended December 31,
	2011		2010		2009
Sales	(In thousands of $)
Crops(l)		147,946		108,162		92,029
Rice(2)		83,244		61,585		69,350
Coffee		14,170		7,572		14,265
Dairy		19,697		14,297		11,894
Cattle(3)		5,709		6,125		28,478

Total		270,766		197,741		216,016


Production	2011/2012 Harvest Year		2010/2011 Harvest Year		2009/2010 Harvest Year		2008/2009 Harvest Year
Crops (tons)(5)		98,403		491,813		524,890		317,582
Rice (tons)(6)		NA		172,034		91,723		94,968
Coffee (tons)		NA		2,742		2,221		2,412
Total		NA		666,589		618,723		414,962


	Year Ended December 31,
	2011		2010		2009
Dairy (thousands of liters)(7)		51,239		41,597		47,479
Cattle (tons)(3)(8)		108		359		4,149


	2011/2012 Harvest Year		2010/2011 Harvest Year		2009/2010 Harvest Year		2008/2009 Harvest Year
Planted Area	(In hectares, including second harvest)
Crops (9)		204,354		167,104		168,241		139,518
Rice		31,497		27,542		18,142		17,258
Coffee (10)		1,632		1,632		1,632		1,632
Cattle (11)		72,219		76,245		87,392		106,375

(1)	Includes soybeans, corn, wheat, sunflower and cotton, among others.

(2)	Sales of processed rice, including rough rice purchased from third parties and processed in our facilities.

(3)	In December 2009, we sold 55,543 head of cattle to a third party. The third party currently leases grazing land from us to raise and fatten the cattle, and our payments under the lease are tied to the market price of beef. See “—Operations and Principal Activities—Farming—Cattle Business.”

(4)	As the date of this annual report, the 2011/2012 harvest years crops were not fully harvested. Harvested tons corresponds to wheat harvest, which had been harvested until the 31st of December.

(5)	Crop production does not include 44,158 tons 52,482 tons and 52,960 tons of forage produced in the 2010/2011, 2009/2010, and 2008/2009 harvest years, respectively

(6)	Expressed in tons of rough rice produced on owned and leased farms . As the date of this annual report, the 2011/2012 harvest year of rice harvest had not began.

(7)	Raw milk produced at our dairy farms.

(8)	Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in “live weight” of each head of beef cattle.

(9)	Include 4,889 hectares, 3,841 hectares, 3,653 hectares and 4,561 hectares used for the production of forage during the 2011/2012, 2010/2011, 2010/2009 and 2008/2009 harvest years, respectively.

(10)	Reflects the size of our coffee plantations, which are planted only once every 18 to 20 years.

(11)	Comprised of land devoted to raising beef cattle, which, since December 2009, is mostly leased to a third party. See “—Operations and Principal Activities—Farming—Cattle Business.”

Sugar , Ethanol and Energy Business: We believe we are a growing and efficient producer of sugar and ethanol in Brazil. We cultivate and harvest sugarcane which is then processed in our own mills to produce sugar, ethanol and energy. As of December 31, 2011, our total sugarcane plantation consisted of 65,308 hectares, planted over both own and leased land. We currently own and operate two sugar and ethanol mills, UMA and Angélica, with a total crushing capacity of 5.2 million tons of sugarcane per year. UMA is a small but efficient mill with over 75 years of history which is located in the state of Minas Gerais, Brazil, with a sugarcane crushing capacity of 1.2 million tons per year, full cogeneration capacity and an associated sugar brand with strong presence in the regional retail market ( Açúcar Monte Alegre ). We plant and harvest 99% of the sugarcane milled at UMA, with the remaining 1% acquired from third parties. Angélica is a new, advanced mill, which we built in the state of Mato Grosso do Sul, Brazil, with a current sugarcane crushing capacity of 4 million tons per year, highly mechanized harvest, two high pressure boilers and three turbo-generators with the capacity to use all the sugarcane bagasse by-product to generate electricity that is used to power the mill, with excess electricity being sold to the grid, resulting in the mill having full cogeneration capacity. We plant and harvest over 91% of the sugarcane milled at Angélica and are able to vary the product slate between ethanol and sugar with a 60%/40% production ratio for both sugar and ethanol.

We have started the construction of our third mill, Ivinhema, in the state of Mato Grosso do Sul, Brazil, 45 km from our Angélica mill, in order to complete our planned sugarcane cluster (consisting of Angélica and Ivinhema) in that region. We plan to fund part of the construction costs of the Ivinhema mill using $230 million from the proceeds of our IPO. Subject to procuring the necessary licenses and the remainder of the required funding, we anticipate

completing the construction of the Ivinhema mill in 2017. See “—Sugar, Ethanol and Energy—Our Mills” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industries—Adverse conditions may create delays in or the suspension of the construction of our Ivinhema mill and/or significantly increase the amount of our expected investments.” We expect the Ivinhema mill to begin operating during the first half of 2013, reaching 2.0 million tons of nominal crushing capacity during that year, and gradually increasing its milling capacity until it reaches a full milling capacity of 6.3 million tons of sugarcane per year by 2017.

In the year ended December 31, 2011, we crushed 4.17 million tons of sugarcane. Our mills produce both sugar and ethanol, and accordingly, we have some flexibility to adjust our production (within certain capacity limits that generally vary between 40% and 60%) between sugar and ethanol, to take advantage of more favorable market demand and prices at given points in time. In the year ended December 31, 2009, we produced 52,968 tons of sugar and 132,492 cubic meters of ethanol. During the first half of 2010, we completed the construction of our Angélica mill in Mato Grosso do Sul with the sugar factory commencing the production of sugar in July 2010. As a result, in the year ended December 31, 2010, sugar production increased to 235,690 tons while ethanol production reached 174,303 cubic meters. In the year ended December 31, 2011 we produced 247,805 tons of sugar and 161,385 cubic meter of ethanol.

As of December 31, 2011, our overall sugarcane plantation consisted of 65,308 hectares of sugarcane in the states of Mato Grosso do Sul and Minas Gerais, Brazil, of which 9,145 hectares of sugarcane were planted on owned land, and 56,163 hectares were planted on land leased from third parties under long term agreements.

The following table sets forth, for the periods indicated, certain data relating to our sugar, ethanol and energy business:


	Year Ended December 31,
	2011		2010		2009		2008
Sales	(In thousands of $)
Sugar		130,348		98,385		26,143		20,495
Ethanol		116,599		114,793		62,811		29,385
Energy		24,393		15,040		8,216		—
Other		5,978		308		417		1,291
Total(1)		277,318		228,526		97,587		51,171

(1)	Includes sales of sugarcane and other miscellaneous items to third parties.


	Year Ended December 31,
Production	2011		2010		2009
Sugar (tons)		247,805		235,690		52,968
Ethanol (cubic meters)		161,385		174,303		132,492
Energy (MWh exported)		245,389		168,644		128,291


	Year Ended December 31,
Other Metrics	2011			2010			2009
Sugarcane milled (% owned)		93	%		95	%		94	%
Sugarcane crushing capacity (millions of tons)		5.2			5.2			3.3
% Mechanized harvesting operations — Consolidated		87	%		80	%		66	%
% Mechanized /harvesting operations — Angélica mill		100	%		100	%		99	%

Land Transformation Business: We believe we are one of the leading companies in South America involved in the acquisition and transformation of land. We acquire farmlands we believe are underdeveloped or underutilized and, by implementing cutting-edge production technology and agricultural best practices, transform the land to be suitable for more productive uses, enhance yields and increase the value of the land. During the eight-year period since our inception, we have effectively put into production 96,906 hectares of land that was previously undeveloped or undermanaged. During 2011, we put into production 13,676 hectares and in addition continued the transformation process of over 120,460 hectares we own. We realize and capture land transformation value through the strategic disposition of assets that have reached full development potential. We believe that the rotation of our land portfolio allows us to re-allocate capital efficiently, maximizing our return on invested capital. Our current owned land portfolio consists of 293,423 hectares, distributed throughout our operating regions as follows: 86% in Argentina, 13% in Brazil, and 1% in Uruguay. During the last six years, we have traded 29,608 hectares of developed land, generating capital gains of approximately $ 104,446

We promote sustainable land use through our land transformation activities, which seek to promote environmentally responsible agricultural production and a balance between production and ecosystem preservation. We do not operate in heavily wooded areas or primarily wetland areas.

From time to time, the company seeks to recycle its capital by disposing of a portion of its fully developed mature farms in order to acquire farms with higher potential for transformation. This allows the company to monetize the capital gains generated by its fully transformed farms and allocate its capital to acquire land with higher transformation potential, thereby enhancing the return on invested capital. Please see also “—Risks Related to Argentina—Recent Changes in Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “—Risks Related to Brazil— Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.”

The following table sets forth, for the periods indicated, certain data relating to our land transformation business:


	Year Ended December 31,
	2011			2010		2009
Undeveloped/Undermanaged land put into production (hectares)		13,676			6,490		11,255
Ongoing transformation of croppable land (hectares)		120,460			120,738		110,751
Number of farms sold		1	(*)		1		1
Hectares sold		2,439			5,086		5,005
Capital gains from the sale of land ($ thousands)		8,832			20,837		18,839

*	On November 30, 2011, we completed the sale of La Alegria, a 2,439 hectare farm located in Villegas, Buenos Aires province, for US$ 13.7 million, 23% over the Cushman & Wakefield independent appraisal dated September 30, 2011.

Our Strengths

We believe the following are our competitive strengths:

•

Unique and strategic asset base. We own strategically located farmland and agro-industrial assets in Argentina, Brazil and Uruguay. We engage in continued improvement of our operations and practices, resulting in the reduction of operating costs and an increase in productivity, ultimately enhancing the value of our properties and generating capital gains. Our operations also benefit from strategically located industrial facilities throughout Argentina and Brazil, increasing operating efficiencies and reducing operating and logistical costs. We are vertically integrated where economics and returns are attractive, where the efficiency of our primary operation is significantly enhanced, or where lack of a competitive market results in the absence of a transparent price determination mechanism. Our diversified asset base creates valuable synergies and economies of scale, including (i) the ability to transfer the technologies and best practices that we have developed across our business lines, (ii) the ability to apply value-adding land transformation strategies to farmland in connection with our farming and sugarcane operations, and (iii) a greater ability to negotiate more favorable terms with our suppliers and customers.

Owning a significant portion of the land on which we operate is a key element of our business model.

•

Low-cost production leveraging agro-ecological competitive advantages. Each of the commodity products we grow is produced in regions where agro-ecological conditions provide competitive advantages and which, through the implementation of our efficient and sustainable production model, allow us to become one of the lowest cost producers.

•

Our grain and oilseed production is based in the Argentine humid pampas region where soil fertility, regular rainfalls, temperate climate, availability of land and proximity to ports contribute to the reduced use of fertilizers and agrochemicals, high productivity and stable yields and efficient logistics, ultimately resulting in one of the lowest costs per ton of grain produced and delivered.

•

Our cotton and coffee production is focused in western Bahia, Brazil. This region is excellent for producing high quality cotton fiber and specialty coffee at a low cost due to its ideal climate, well drained soils, high altitude, availability of water for irrigation, and absence of frosts.

•

Our rice operation is located in the northeast provinces of Argentina, one of the best rice farming regions in the world due to plentiful sunlight, abundant availability of water for low cost irrigation and large potential for expansion.

•

Our dairy operation is situated in the Argentine humid pampas region, where cow feed (grains, oilseeds and forage) is efficiently and abundantly produced at a low cost and climate and sanitary conditions are optimal for cow comfort, which enhances productivity, cow reproduction rates and milk quality.

•

We produce sugarcane in the center-south region of Brazil, which has the lowest production costs in the world, significantly lower than other major sugar producing regions, including India, China, the United States, the United Kingdom, France and Germany.

•

Standardized and scalable agribusiness model applying technological innovation. We have consistently used innovative production techniques to ensure that we are at the forefront of technological improvements and environmental sustainability standards in our industry. We are implementing an agribusiness model that consists of specializing our workforce and defining standard protocols to track crop development and control production variables, thereby enhancing management decision-making. We further optimize our agribusiness model through the effective implementation and constant adaptation of a portfolio of advanced agricultural and information technologies and best practices tailored to each region in which we operate and commodity we produce, allowing us to improve our crop yields, reduce operating costs and maximize margins in a sustainable manner.

•

In our farming business, we use “no-till” technology as the cornerstone of our crop production and have been able to implement this technique in areas within our production regions where it had not been used before. Furthermore, we also utilize crop rotation, second harvests, integrated pest management, balanced fertilization, water management and mechanization. Additionally, we use the innovative silo bag storage method, utilizing large polyethylene bags with a capacity of 180-200 tons which can be left on the field for 12 months, resulting in low-cost, scalable and flexible storage on the field during harvest, which we believe allows us to expand our crop storage capacity at a low cost, generate important logistic and freight savings by moving our production in the off-season when freight fares are lower, and time the entry of our production into the market at optimal price points. See “—Operations and Principal Activities—Farming—Storage and Conditioning.”

•

In our dairy business, we believe that we were the first company in South America to implement the “free-stall” infrastructure in dairy operations, resulting in more efficient conversion of feed to raw milk and higher production rates per cow compared to our peers in the region.

•

In our sugar, ethanol and energy business, our Angélica mill (i) has a highly mechanized planting and harvesting operation, which has increased our sugarcane production, reduced our operating costs and contributed to environmental sustainability by eliminating the need to burn the sugarcane before harvest; (ii) has the capacity to use all the bagasse (a by-product of the sugar and ethanol production process) that is produced, with no incremental cost, to cogenerate 96 MW of clean and renewable electricity; (iii) is what we believe to be one of the largest continuously operating sugar plants in Brazil designed for enhanced efficiency and non-stop processing, with a production capacity of 1,800 tons of sugar per day; and (iv) has the ability to recycle by-products such as filter cake and vinasse by using them as fertilizers in our sugarcane fields, as well as recycling water and other effluents, generating important savings in input costs and protecting the environment.

•

Unique diversification model to mitigate cash flow volatility. We pursue a unique multi-tier diversification strategy to reduce our exposure to production and market fluctuations that may impact our cash flow and operating results. We seek geographic diversification by spreading our portfolio of farmland and agro-industrial assets across different regions of Argentina, Brazil and Uruguay, thereby lowering our risk exposure to weather-related losses and contributing to stable cash flows. Additionally, we produce a variety

of products, including cotton, coffee, soybeans, corn, wheat, sunflower, rice, barley, sorghum, raw milk, sugar, ethanol and energy, which lowers our risk exposure to potentially depressed market conditions of any specific product. Moreover, through vertical integration in the rice, dairy, sugar, ethanol and energy businesses, and to a lesser extent in our coffee business, we process and transform a portion of our agricultural commodities into branded retail products, reducing our commodity price risk and our reliance on the standard market distribution channels for unprocessed products. Finally, our commercial committee defines our commercial policies based on market fundamentals and the consideration of logistical and production data to develop a customized sale/hedge risk management strategy for each product.

•

Expertise in acquiring farmland with transformation and appreciation potential. During the last eight fiscal years, we have executed transactions for the purchase and disposition of land for over $521 million and sold 29,608 hectares of developed land, generating capital gains of approximately $104.4 million. We believe we have a superior track record and have positioned ourselves as a key player in the land business in South America. Our business development team has gained extensive expertise in evaluating and acquiring farmland throughout South America and has a solid understanding of the productivity potential of each region and of the potential for land transformation and appreciation. To date, we have analyzed over 9.7 million hectares of farmland spread throughout the regions in which we operate and other productive regions in the world. We have developed a methodology to assess farmland and to appraise its potential value with a high degree of accuracy and efficiency by using information generated through sophisticated technology, including satellite images, rain and temperature records, soil analyses, and topography and drainage maps. Our management team has gained extensive experience in transforming and maximizing the appreciation potential of our land portfolio through the implementation of our agribusiness techniques described above. We also have an extensive track record rotating our asset portfolio to generate capital gains and monetize the transformation and appreciation generated through our operations.

•

Experienced management team, knowledgeable employees. Our people are our most important asset. We have an experienced senior management team with an average of more than 20 years of experience working in our sector and a solid track record of implementing and executing large scale growth projects such as land transformations, greenfield developments of industrial plants, and integrating acquisitions within our organization. Recruiting technically qualified employees at each of our farms and operating sites is a main focus of our senior management and a key to our success.

Our Business Strategy

We intend to maintain our position as a leading agricultural company in South America by expanding and consolidating each of our business lines, creating value for our shareholders. The key elements of our business strategy are:

•

Expand our farming business through organic growth , leasing and strategic acquisitions. We will continue to seek opportunities for organic growth, target attractive acquisition and leasing opportunities and strive to maximize operating synergies and achieve economies of scale in each of our four main farming business areas (crops, rice, dairy and coffee). We plan to continue expanding and consolidating our crop production throughout South America. We also intend to continue expanding our rice segment in terms of production and processing capacity, consolidating our leading position in Argentina and increasing our presence throughout Brazil, Uruguay and other regions, to become a leading regional player. We plan to expand our current dairy production capacity using the “free-stall” model. We are currently building our second free-stall in Argentina, which will start operating during 2012 and will reach its full capacity by 2013. We believe that the know-how and skills gained from the construction of our first “free-stall” module can be easily replicated, allowing us to scale-up our production efficiently and at a fast rate.

•

Consolidate our sugar and ethanol cluster in the state of Mato Grosso do Sul, Brazil. Our main strategy for our sugar and ethanol business is to build our cluster in Mato Grosso do Sul, Brazil, through the construction of the Ivinhema mill, our second greenfield project, which we expect to reach a full crushing capacity of 6.3 million tons per year by 2017. See “—Sugar, Ethanol and Energy—Our Mills.” Completion of the Ivinhema mill will allow us to complete our advanced cluster with a planned total crushing capacity of 10.3 million tons per year. The consolidation of the cluster will generate important synergies, operating efficiencies and economies of scale such as (i) one centralized management team, reducing total administration cost per ton of sugarcane milled; (ii) a large sugarcane plantation supplying two mills, allowing for non-stop harvesting; and (iii) a reduction in the average distance from the sugarcane fields to the mills, generating important savings in sugarcane transportation expenses. We believe that the Ivinhema mill will allow us to become one of the

most efficient and low cost producers of sugar, ethanol and energy in Brazil. Additionally, we plan to continue to monitor closely the Brazilian sugar and ethanol industries and may pursue selective acquisitions that provide opportunities to increase our economies of scale, operating synergies and profitability.

•

Further increase our operating efficiencies while maintaining a diversified portfolio. We intend to continue to focus on improving the efficiency of our operations and maintaining a low-cost structure to increase our profitability and protect our cash flows from commodity price cycle risk. We seek to maintain our low-cost platform by (i) making additional investments in advanced technologies, including those related to agricultural, industrial and logistical processes and information technology, (ii) improving our economies of scale through organic growth, strategic acquisitions, and more efficient production methods, and (iii) fully utilizing our resources to increase our production margins. In addition, we intend to mitigate commodity price cycle risk and minimize our exposure to weather related losses by (i) maintaining a diversified product mix and vertically integrating production of certain commodities and (ii) geographically diversifying the locations of our farms.

•

Continue to implement our land transformation strategy. We plan to continue to enhance the value of our owned farmland and future land acquisitions by making them suitable for more profitable agricultural activities, thereby seeking to maximize the return on our invested capital in our land assets. In addition, we expect to continue rotating our land portfolio through strategic dispositions of certain properties in order to realize and monetize the transformation and appreciation value created by our land transformation activities. We also plan to leverage our knowledge and experience in land asset- management to identify superior buying and selling opportunities.

Operations and Principal Activities

Farming

Our Farming business line is divided into five main reportable operating businesses, namely crops, rice, coffee, dairy and cattle. We conduct our farming operations primarily on our own land and, to a lesser extent, on land leased from third parties. During harvest year 2010/11 our farming operations were conducted on a total of 317,836 hectares of land, of which we own 280,142 hectares (excluding sugarcane farms) and we lease the remaining 37,694 hectares from third parties. Some of the farms we own are used for more than one production activity at a time. The following table sets forth our production volumes for each of our farming business lines.


	Harvest Year
	2011/2012(1)		2010/2011		2009/2010		2008/2009

Crops (thousands of tons)(2)		98,403		491,813		524,890		317,582
Rice(3) (thousands of tons)		N/A		172,034		91,723		94,968
Coffee (thousands of tons)		N/A		2,742		2,220		2,412


	Year Ended December 31,
	2011		2010		2009
Dairy(4) (thousands of liters)		51,239		41,597		47,479
Cattle (thousands of tons)(5)(6)		118		359		4,149

(1)	As of the date of this annual report, the harvest of soybean, corn, sunflower and cotton, rice and coffee pertaining to the 2011/12 harvest year is ongoing. The only crop which has been fully harvested is wheat, with a total production of 98,403 tons.

(2)	Crop production does not include 44,158 tons, 52,482 tons and 52,960 tons of forage produced in the 2010/2011, 2009/2010, and 2008/2009 harvest years respectively.

(3)	Expressed in tons of rough rice.

(4)	Raw milk produced.

(5)	Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in live weight of each head of beef cattle we own.

(6)	In December 2009, we sold 55,543 heads of cattle to a third party. The third party currently leases most of our grazing land to raise and fatten the cattle. Lease prices under the lease agreements are tied to the market price of cattle. See “—Cattle Business”.

Crops Business (Grains, Oilseeds and Cotton)

Our agricultural production is mainly based on planting, growing and harvesting crops over our owned croppable area. During the 2010/11 harvest year, we planted crops over a total area of approximately 167,104, including our owned land, land leased from third parties and hectares planted in second harvests. During mid 2011 we began the planting of crops pertaining to the 2011/12 harvest year, which was concluded during the first quarter of 2012, increasing total planted area to 204,354 hectares. Our main products include soybean, corn, wheat, sunflower, and cotton. Other products, such as sorghum and barley, among others, are sown occasionally and represent only a small percentage of total sown land.

The following table sets forth, for the harvest years indicated, the planted hectares for our main products:


	Harvest Year
	2011/2012		2010/2011		2009/2010		2008/2009
Product Area	(In hectares)
Soybeans(l)		92,922		90,126		87,522		63,973
Corn(l)		45,263		30,480		27,720		20,200
Wheat		39,640		26,361		21,728		18,917
Sunflower		9,598		9,943		14,784		16,539
Cotton		6,372		3,242		425		3,159
Other crops(2)		5,670		3,111		11,501		11,348
Forage(3)		4,889		3,841		4,561		5,382
Total		204,354		167,104		168,241		139,518

(1)	Includes hectares planted until the 29 ^th of February.

(2)	Includes barley and sorghum crop.

(3)	Forage includes corn silage, wheat silage and alfalfa used for cow feed in our dairy operation.

The following table sets forth, for the harvest years indicated, the production volumes for our main products


	Harvest Year
	2011/2012(1)		2010/2011		2009/2010		2008/2009
Crop Production	(In thousands of tons)
Soybeans		N/A		199,533		241,848		96,982
Corn		N/A		165,679		180,613		115,900
Wheat		98,403		87,445		49,592		41,556
Sunflower		N/A		20,916		17,193		22,128
Cotton		N/A		8,746		1,068		9,218
Other crops		N/A		9,495		34,576		31,799
Total		98,403		491,813		524,890		317,582

(2)	As of the date of this annual report, the harvest of soybean, corn, sunflower and cotton pertaining to the 2011/12 harvest year is ongoing. The only crop which has been fully harvested is wheat.

The following table below sets forth, for the periods indicated, the sales for our main products:


	Year Ended December 31,
	2011		2010		2009
Sales	(In thousands of $)
Soybeans(l)		61,385		64,890		44,116
Corn		42,959		23,968		14,654
Wheat		24,232		7,939		10,218
Sunflower		7,413		4,880		5,517
Cotton		9,101		2,395		11,905
Other crops(2)		2,856		4,090		5,619
Total		147,946		108,162		92,029

(1)	Includes sales of soybean oil and soybean meal accounting for $8,420 thousand and $1,692 thousand for the years ended December 31, 2009 and 2008, respectively.

(2)	Includes other crops and farming services.

Soybeans

Soybeans are an annual legume widely grown due to their high content of protein (40%) and oil (20%). They have been grown for over 3,000 years in Asia and, more recently, have been successfully cultivated around the world. Today, the world’s top producers of soybeans are the United States, Brazil, Argentina, China and India. Soybeans are one of the few plants that provide a complete protein supply as they contain all eight essential amino acids. About 85% of the world’s soybeans are processed, or “crushed,” annually into soybean meal and oil. Approximately 98% of soybean meal is further processed into animal feed, with the balance used to make soy flour and proteins. Of the oil content, 85% is consumed as edible oil and the rest is used for industrial products such as fatty acids, soaps and biodiesel. We sell our soybeans mainly to crushing and processing industries, which produce soybean oil and soybean meal used in the food, animal feed and biofuel industries.

We grow soybeans in Argentina, Brazil and Uruguay. In the 2008/2009 harvest year, our total soybean production was 96,982 tons, representing 31% of our total crop production and 48% of our total planted area. In the 2009/2010 harvest year, we planted a total area of 87,522 hectares of soybeans, producing a total of 241,848 tons representing 54% of our total planted area that year, and 46% of our total crop production. In the 2010/2011 harvest year, we planted a total area of 90,126 hectares of soybeans. Soybeans comprised 16% of our total sales in 2008, 14% of our total sales in 2009, 15% of our total sales in 2010 and 11 % of our sales in 2011

Corn

Corn is a cereal grown around the world and is one of the world’s most widely consumed foods. The main component of corn grain is starch (72% to 73% of grain weight), followed by proteins (8% to 11%). Corn grain is directly used for food and animal feed (beef, swine and poultry meat production and dairy). Corn is also processed to make food and feed ingredients (such as high fructose corn syrup, corn starch and lysine), or industrial products such as ethanol and polylactic acid (PLA). Oil, flour and sugar are also extracted from corn, with several uses in the food, medicine and cosmetic industries. Additionally, there are specific corn types used for direct human consumption such as popcorn and sweet corn.

We grow corn in Argentina, Brazil and Uruguay. In the 2008/2009 harvest year, our total corn production was 115,900 tons, representing 36% of our total crop production and 15% of our total planted area. In the 2009/2010 harvest year, we planted a total area of approximately 27,720 hectares of corn, including the second harvest, producing a total of 180,613 tons of corn representing 17% of our total planted area that year, and 34% of our total crop production. In the 2010/2011 harvest year, we planted a total area of approximately 30,480 hectares of corn, including the second harvest, producing a total of 165,679 tons representing 18% of our total planted area that season and 34% of our total production.

Corn comprised 9% of our total sales in 2008, 5% of our total sales in 2009, 6% of our total sales in 2010 and 8% of our total sales in 2011.

Wheat

Wheat is the world’s largest cereal-grass crop. Unlike other cereals, wheat grain contains a high amount of gluten, the protein that provides the elasticity necessary for excellent bread making. Although most wheat is grown for human consumption, other industries use small quantities to produce starch, paste, malt, dextrose, gluten, alcohol, and other products. Inferior and surplus wheat and various milling byproducts are used for livestock feed. We sell wheat to exporters and to local mills that produce flour for the food industry.

We grow wheat in Argentina and Uruguay. In the 2008/2009 harvest year, our total wheat production was 41,556 tons, representing 13% of our total crop production and 14% of our total planted area. In the 2009/2010 harvest year, we planted a total area of approximately 21,728 hectares of wheat, producing a total of 49,592 tons of wheat representing 13% of our total planted area that year, and 10% of our total crop production. In the 2010/2011 harvest year, we planted a total area of approximately 26,361 hectares of wheat, producing a total of 87,445 tons of wheat representing 16% of our total planted area that year, and 18% of our total crop production.

Wheat comprised 6% of our total sales in 2008, 3% of our total sales in 2009, 2% of our total sales in 2010 and 4% of our total sales in 2011.

Sunflower

There are two types of sunflower, the most important in terms of volume being the oilseed sunflower, which is primarily grown for the oil extracted from the seed. Sunflower oil is considered one of the top three oils for human consumption, due to its high oil content (39-49%) and its oil composition (90% of oleic and linoleic oil). The other type of sunflower is the confectionary sunflower, which is used for direct human consumption. Sunflower seeds are an exceptional source of vitamin E, omega-6 fatty acids, dietary fiber and minerals. We grow both types of sunflower.

We grow sunflower in Argentina and Uruguay. In the 2008/2009 harvest year, our total sunflower production was 22,128 tons, representing 7% of our total crop production and 7% of our total planted area. In the 2009/2010 harvest year, we planted a total area of approximately 14,784 hectares of sunflower, producing a total of 17,193 tons of sunflower, representing 9% of our total planted area that year, and 3% of our total crop production. In the 2010/2011 harvest year, we planted a total area of approximately 9,943 hectares of sunflower producing a total of 20,916 tons of sunflower representing 6% of our total planted area that year, and 4% of our total crop production. Sunflower comprised 2% of our total sales in 2008, 2% of our total sales in 2009,1% of our total sales in 2010 and 1% in 2011.

Cotton

Cotton is the world’s most popular natural fiber. The cotton fiber is made primarily into yarns and threads for use in the textile and apparel sectors. Clothing accounts for approximately 60% of cotton consumption. Cotton is also used to make home furnishings, such as draperies (the third major end use), or professional garments (about 5% of cotton fiber demand). The cottonseed is used in animal feeding or crushed in order to separate its three products — oil, meal and hulls. Cottonseed oil is used primarily for cooking oil and salad dressing. In recent years, there has been a growing demand for cotton oil for biodiesel production.

We plant upland cotton, the most common type of cotton planted and processed around the world. We produce and sell cotton lint and cotton seed.

We grow cotton in northern Argentina and in the western part of Bahia, Brazil. In the 2008/2009 harvest year, our total cotton production was 9,218 tons, representing 3% of our total crop production and 2% of our total planted area. In the 2009/2010 harvest year, we planted a total area of approximately 425 hectares of cotton, including the second harvest, producing a total of 1,068 tons of cotton, representing 1% of our total planted area that year, and 1% of our total crop production. In the 2010/2011 harvest year, we planted a total area of approximately 3,242 hectares of cotton producing a total of 8,746 tons of cotton, representing 2% of our total planted area that year, and 2% of our total crop production. Cotton comprised 2% of our total sales in 2008, 4% of our total sales in 2009, 0.6% of our total sales in 2010 and 2% of our sales in 2011.

Other Crops

In addition to wheat, sunflower, corn, soybeans, and cotton, we produce barley and sorghum on approximately 3,111 hectares in certain farms located in Argentina and Uruguay. In addition, we also provide farming services.

In the 2008/2009 harvest year, our total production from these crops was 31,799 tons, representing 10% of our total crop production and 8% of our total planted area. In the 2009/2010 harvest year, we planted a total area of approximately 11,501 hectares of other crops, producing a total of 34,576 tons, representing 7% of our total planted area that year, and 7% of our total crop production. In the 2010/2011 harvest year, we planted a total area of approximately 3,111 hectares of other crops producing a total of 9,495 tons, representing 2% of our total planted area that year, and 2% of our total crop production. Other crops comprised 3% of our total sales in 2008, 2% of our total sales in 2009,1.0% of our total sales in 2010 and 0.3% of our sales in 2011.

Forages

In addition to the above mentioned crops, we are engaged in the production of forage in Argentina, including corn silage, wheat silage, soybean silage and alfalfa silage. We use forage as cow feed in our dairy operation. During the 2009/2010 harvest year, we planted 4,561 hectares and produced 52,482 tons of forage. During the 2010/2011 harvest year, we planted 3,841 hectares of forage and produced 44,158 tons of forage.

Crop Production Process

Our crop production process is directly linked to the geo-climatic conditions of our farms and our crop cycles, which define the periods for planting and harvesting our various products. Our crop diversification and the location of our farms in various regions of South America enable us to implement an efficient planting and harvesting system throughout the year, which includes second harvests in many cases. Our production process begins with the planting of each crop. After harvesting, crops may go through a processing phase where the grain or seeds are cleaned and dried to reach the required market standards.

For additional discussion of our harvest years and the presentation of production and product area information in this annual report, see “Presentation of Financial and Other Information—Fiscal Year and Harvest Year.”

Rice Business

Rice is the main food staple for about half of the world’s population. Although it is cultivated in over 100 countries and on almost every continent, 90% of the world’s rice is grown and consumed in Asia. Globally, rice is the most important crop in terms of its contribution to human diets and production value. There are three main types of rice: short grain, medium grain and long grain rice. Each one has a different taste and texture. We produce long grain rice and Carolina double rice, a variety of medium grain rice.

We conduct our rice operation in the northeast of Argentina, which is one of the most efficient locations in the world for producing rice at a low cost. This is a result of optimum natural agronomic conditions, including plentiful sunlight, abundant availability of water for low cost irrigation and large quantities of land. The use of public water for artificial irrigation is governed by provincial regulations and is subject to the granting of governmental permits. We have current permits for our use of water in our production of rice in the provinces of Corrientes and Santa Fe. Maintenance of our permits is subject to our compliance with applicable laws and regulations, which is supervised by the corresponding governmental authority ( e.g. , the Ministry of Water, Public Services and Environment ( Ministerio de Agua , Servicios Publicos y Medio Ambiente ), in the province of Santa Fe, and the Water Institute of the Province of Corrientes ( Instituto Correntino del Agua ).

The following table sets forth, for the harvest years indicated, the total number of planted rice hectares we owned and leased as well as the overall rough rice we produced:


	Harvest Year
Rice Product Area & Production	2011/2012		2010/2011		2009/2010		2008/2009
Owned planted area (hectares)		27,242		22,973		10,831		13,417
Leased planted area (hectares)		4,255		4,568		7,311		3,840
Total rice planted (hectares)		31,497		27,542		18,142		17,258
Rough rice production (thousands of tons) (1)		NA		172,542		91,723		94,968

(1)	As of the date of this annual report, the harvest of rice pertaining to the 2011/2012 is ongoing.

We grow rice on 5 farms we own and 4 farms we lease, all located in Argentina. In the 2008/2009 harvest year, our total rice production was 94,968 tons, representing 23% of our total farming production and 11% of our total planted area. In the 2009/2010 harvest year, our total rice production was 94,968 tons, representing 23% of our total farming production and 11% of our total planted area. In the 2009/2010 harvest year, we planted a total area of approximately 18,142 hectares of rice, producing a total of 91,723 tons, representing 10% of our total planted area that year, and 15% of our total farming production. In the 2010/2011 harvest year, we planted a total area of approximately 27,542 hectares of rice, producing a total of 172,542 tons, representing 14% of our total planted area that year, and 26% of our total farming production.

During mid 2010, we began the construction of our fourth rice mill. The new mill is located in Franck, Santa Fe province, Argentina. The mill has already began operating and has a current processing capacity of 72,000 tons. We expect the facility to reach its full processing capacity of 110,000 tons during the second half of 2012.

Production Process

The rice production year lasts approximately five to six months, beginning in September of each year and ending in April of the following year. Rice planting continues until November, followed by treatment of the rice, which lasts approximately three months, until January. In February we begin harvesting, which lasts until April. After harvesting, the rice is ready for processing.

We process rice in our 4 rice mills in Argentina, where we are able to process our entire rice crop and utilize our excess milling capacity to process rough rice we purchase from third party growers.

At the mill, we clean the rice to remove all impurities. We then put it through a dryer to remove excess moisture from the grains. Proper drying results in increased storage life, prevents deterioration in quality and leads to optimum milling. Once dried, the rice grain, now known as rough rice or paddy rice, is ready for storage. We store rice in elevators or in silo bags until milling. During the milling process, the rough rice goes through a de-husking machine that removes the husk from the kernel. The rice that is obtained after this process is known as brown rice and is ready for human consumption. Brown rice is then polished to remove the excess bran, thereby creating white rice.

The main objective of the milling process is to remove the husk and the bran, preserving the quality of the whole grain. Although the process is highly automated and uses advanced technology, some rice grains are broken in the process. The percentage of broken rice depends on a number of factors such as the crop development cycle at the farm, the variety of the grain, the handling and the industrial process. Average processing of rough rice results in 58% white rice, 11% broken rice and 31% rice husk and bran which is sold for use as cattle feed or floor bedding in the poultry business.


	Year Ended December 31,
	2011		2010		2009
Processed Rice Production	(In thousands of tons)
Rough rice processed — own		163,033		75,752		94,968
Rough rice processed — third party		58,720		52,957		62,083
Total rough rice processed		221,753		128,709		157,051
White rice		91,176		66,035		77,440
Brown rice		33,166		6,699		11,559

Broken rice		23,880		14,792		19,859
Total processed rice		148,223		87,526		108,858

Year Ended December 31,

2011

2010

2009

Processed Rice Sales

(In thousand of $)

Total Sales

83,244

61,585

69,350

Rice comprised 19% of our total sales in 2007, 23% of our total sales in 2008, 22% of our total sales in 2009, 14% of our total sales 2010 and 15% of our sales in 2011.

Rice Seed Production

In our rice seed facility in Argentina, we are involved in the genetic development of new rice varieties adapted to local conditions to increase rice productivity and quality to improve both farm production as well as the manufacturing process. In connection with these efforts, we have entered into agreements with selected research and development institutions such as the National Institute of Agriculture Technology ( Institute Nacional de Tecnología

Agropecuaria , or “INTA”) in Argentina, the Latin American Fund for Irrigated Rice ( Fondo Latinoamericano para Arroz de Riego , or “FLAR”) in Colombia, the Santa Catarina State Agricultural Research and Rural Extension Agency ( Empresa de pesquisa Agropecuária e Extensão Rural de Santa Catarina , or “EPAGRI”) in Brazil and Badische Anilin- und Soda-Fabrik (“Basf”) in Germany. Our own technical team is continuously testing and developing new rice varieties. Our first rice seed variety was released to the market in 2008, and we are currently in the final stages of releasing three new varieties. These seeds are both used at our farms and sold to rice farmers in Argentina, Brazil, Uruguay and Paraguay. We are also developing, alongside Basf, a herbicide-tolerant rice variety to assist in the control of harmful weeds.

Coffee Business

The coffee plant is a woody perennial evergreen. Brazil is the biggest coffee producing country in the world, followed by Vietnam and Colombia. Coffee is exported as a green bean and is then processed depending on the market. While there are several different coffee species, two main species of coffee are cultivated today. Arabica coffee accounts for approximately 60% of the world’s production, and Robusta coffee accounts for about 40% and differs from the Arabica coffees in terms of quality and taste. We produce Arabica coffee, distinguished by its high quality, that is considered to be an “estate coffee,” which, according to international markets standards, is coffee produced and processed on a specific farm and thus not mixed with coffee from other farms or farmers.

Our Mimoso farm produces world renowned “specialty coffee,” which is sold to the best roasters in Europe, the U.S. and Japan. Coffee quality experts consistently select our coffee as a top quality estate coffee. It is certified according to the rigorous sustainability standards of the Rainforest Alliance, Utz and the Brazil Specialty Coffee Association — BSCA. We are equally concerned with the quality of our coffee and with bridging the gap between the consumer and the producer to assure the sustainable quality demanded in the specialty market. We strive to develop long-term relationships with our clients to guarantee consistent supply.

We grow mainly high quality coffee varieties, using center pivot and drip irrigation, adopting a stress period to induce flowering, which guarantees a gradual and uniform maturation.

The following table sets forth, for the harvest years indicated, the production and sales volumes for our coffee business:


	Harvest Year
Coffee Production & Sales	2011/2012		2010/2011		2009/2010		2008/2009
Coffee plantation (hectares)		1,632		1,632		1,632		1,632
Coffee pruning area (hectares)		62		227		406		241
Coffee production (thousands of tons) (1)		NA		2,742		2,220		2,412

•

As the date of this annual report, the 2011/2012 harvest year coffee were not harvested

Year Ended December 31,

2011

2010

2009

(In thousands of $)

Coffee sales

14,170

7,572

14,265

We grow coffee in western Bahia, Brazil, where agro-ecological conditions are well-suited for producing “specialty coffee” due to the availability of water for irrigation, the absence of frosts, and the possibility of having a fully mechanized harvest due to flat topography. These conditions allow us to obtain a stable bean quality and to reduce yield volatility. We grow coffee on 3 farms and have 1,632 hectares of planted coffee trees and have available land and water to expand our operations to 2,700 hectares. . In the 2008/2009 harvest year, our total coffee production was 2,412 tons. In the 2009/2010 harvest year, we produced 2,412 tons of coffee. In the 2010/11 harvest year, we produced 2,742 tons of coffee. Coffee comprised 7% of our total sales in 2008, 5% of our total sales in 2009, 2% of our total sales 2010 and 3% of our sales in 2011.

Coffee Production Process

Coffee seeds are initially planted in nursery beds where they are raised and nurtured in a protected environment until they reach a height of approximately 50 to 60 cm, which takes between 8 to 12 months. Coffee plants are then transplanted to the coffee fields where they grow for about two years, after which the coffee tree is harvested for the first time and begins its productive cycle. Productive maturity is achieved during the fifth year, and coffee trees remain productive until the tree reaches 15 to 20 years of age, at which point the tree must be replaced. Coffee trees require annual maintenance consisting of fertilization, pest and disease control and irrigation if necessary. Additionally, coffee trees must undergo a pruning program every 4 to 5 years to maintain the shape of the tree adequate for mechanized harvesting, which usually results in higher yields.

The coffee harvest year lasts from August of each year to August of the following year. The plantation is treated for approximately nine months, from August of each year until May of the following year. In late May or early June, the harvest begins, which lasts until September. After harvesting, we begin the processing process, which lasts until the end of October.

We process coffee at our facilities. The three processing stages coffee undergoes prior to commercialization are pulping, drying and sorting into various types according to world market demand.

Dairy Business

We conduct our dairy operation in two of our farms located in the Argentine humid pampas region. This region is one of the best places in the world for producing raw milk at a low cost, due to the availability of grains, forage and grass produced efficiently and at low cost, and the favorable weather for cow comfort.

The following table sets forth, for the periods indicated below, the total number of our dairy cows, average daily liter production per cow and our total milk production:


	Year Ended December 31,
Dairy Herd & Production	2011		2010		2009		2008
Total dairy herd (head)		10,803		9,178		9,743		9,587
Average milking cows		4,603		4,225		4,594		4,377
Average daily production (liters per cow)		30.5		27.0		28.3		26.9
Total production (thousands of liters)		51,239		41,597		47,479		43,110

Year Ended December 31,

2011

2010

2009

(In thousands of $)

Sales (thousands of $)

19,697

14,297

11,894

As of December 31, 2010, we owned a dairy herd of 9,178 head, including 4,225 cows and heifers in milk. In 2010, our cows produced an average of 27.0 liters of milk per cow per day compared to approximately 28.3 liters per cow per day in 2009. Our facilities allow us to milk 5,000 cows per day. As of December 31, 2011, we owned a dairy herd of 10,803 head, including 4,603 milking cows with an average production of 32.52 liters per cow per day. Our dairy operation consists of three dairy facilities — two traditional grazing dairies and one advanced “free-stall” dairy. About the end of 2011, we began the construction of a new free stall which will have a final capacity of 3,500 milking cows. This operation will start in July 2012 with the gradual incorporation of cows. It is expected to finish in December 2012 with 1,500 milking cows, December 2013 with 3,200 and go on filling the barns to reach full capacity in March 2014.

Dairy comprised 3% of our total sales in 2007, 6% of our total sales in 2008, 4% of our total sales in 2009, 3% of our total sales 2010 and 4% of our sales in 2011.

Production Process

We have genetically improved our Holando Argentine Holstein dairy herd through the use of imported semen from North American Holstein bulls. We wean calves during the 24 hours subsequent to birth and during the next 60 days raise them on pasteurized milk and high protein meal. Male calves are fed concentrates and hay for an

additional 30 days in the farm before they are sent to our feedlot to be fattened for sale. Young heifers remain in open corrals during the next 13 months where they are fed with concentrates and forage until they are ready for breeding. Calving occurs nine months later. Heifers are subsequently milked for an average of 320 days. Dairy cows are once again inseminated during the 60- to 90-day period following calving. This process is repeated once a year for a period of six or seven years. The pregnancy rate for our herd is between 85% and 90% per year.

Each cow in our dairy herd is mechanically milked two or three times a day depending on the production system. The milk obtained is cooled to less than four degrees centigrade in order to preserve its quality and is then stored in a tank. Milk is delivered to our joint venture, “La Lácteo,” on a daily basis by tank trucks. We feed our dairy cows mainly with corn and alfalfa silages, some grass and corn grain, supplemented as needed with soybean by-products, hay, vitamins and minerals.

We have invested in technology to improve the genetics of our cows, animal health and feeding in order to enhance our milk production. These investments include top quality semen from genetically improved North American Holstein bulls, agricultural machinery and devices, use of dietary supplements and modern equipment to control individual milk production and cooling. Our feeding program is focused on high conversion of feed into milk, while maintaining cows in good health and comfort. We have also invested in technology and know-how so as to increase our forage production and utilization.

In 2007, we began the construction of an advanced “free-stall” dairy in Argentina, which we believe was the first of its kind in South America, and started operating in March 2008. This new technology allows large- scale milk production at increased efficiency levels. Our free-stall dairy model consists of 3,000 cows confined inside a large barn where they are free to move within the indoor corrals. We feed our cows specific protein rich diets composed of corn grain and silage and milk them three times a day, using a milking mechanism consisting of an 80-cow rotary platform, which milks an average of 400 cows per hour. In 2011, we started the construction of the first phase of the second free stall, which will start operating during 2012. It will reach its full capacity (of 3,500 milking cows) by March 2014.

Implementation of the free-stall system allows us to position ourselves as a key player in the dairy industry and will boost our agricultural and industrial integration presence in the South American agricultural sector. By eliminating cow grazing, we reduce the amount of land utilized for milk production and free up more land for our agricultural and land development activities. Cow productivity (measured in liters of milk produced per day) using the free-stall system increases by up to 40% compared to traditional grazing systems. These productivity gains are because the free-stall system significantly improves the conversion rate of animal feed to milk, resulting in an approximate 40% increase in the conversion ratio, or the production of 1.4 liters of milk for each 1 kg of animal feed as compared to the average of 1 liter of milk for each 1 kg of feed associated with the usual grazing model.

This increased productivity and conversion rate are mainly due to improved cow comfort and an enhanced diet quality. We assess cow comfort through the engagement of expert consultants, who recommended designing beds covered with sand. The sand plays a significant role in helping cows to rest comfortably. Additionally, we installed a cooling system to increase cow comfort as well. This system relies on water sprinklers and ventilation fans located all over the facility to create a controlled, cool atmosphere, which improves cow comfort since the Holstein herd is originally adapted to cold regions. Additionally, we manage diet quality by adapting our feeding regimen based on the various feeding stages in the lifetime of each cow. The actual feeding is fully mechanized, and we carefully control the harvesting and storage of feed. The control of all productivity variables, such as reproduction, health and operations, supports efficiency gains through standardized processes. Finally, the physical concentration of the animals facilitates efficient overall management of the dairy business as a whole. In terms of the environment, the free-stall model allows for a better effluent treatment, which includes a sand-manure separator stage, a decantation pool and an anaerobic lagoon. All these processes help to decrease the organic matter content of the effluent and deliver a cleaner output. The final treated effluent is used to fert-irrigate crops adjacent to the dairy operation. Accordingly, we transform dairy waste into a high value-added by-product, which reduces fertilizer usage.

The free-stall dairy is expected to allow us to become an efficient large-scale milk producer and optimize the use of our resources (land, cattle and capital) through the standardization of processes. Process standardization provides high operational control and allows us to scale-up our production efficiently and quickly.

La Lácteo Joint Venture

In 2007, Adecoagro entered into an agreement with Agropur Cooperative, a Canadian-based dairy cooperative, to form a joint venture named Grupo La Lácteo. In this transaction, we contributed our wholly owned subsidiary La Lácteo S.A., an entity engaged in the processing and sale of milk and milk-related products (previously acquired in August 2007), while Agropur Cooperative contributed cash. Each of us and Agropur Cooperative owns 50% of the joint venture, and the joint venture agreement in place creates joint control over Grupo La Lácteo. The formation of this joint venture was completed in December 2007. As of December 31, 2011, La Lácteo manages approximately 214,000 liters of milk per day, producing a broad variety of dairy products including fluid milk, yogurt, butter, cheese, and others.

On November 7, 2007, Adeco Agropecuaria S.A. entered into a Milk Supply Offer Agreement with La Lácteo S.A. (as amended on February 1, 2010), pursuant to which we committed to sell and La Lácteo S.A. committed to purchase, approximately 80,000 liters of Adeco Agropecuaria S.A.’s milk production per day. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Milk Supply Agreement.” All of our production for the domestic market is industrialized at La Lácteo S.A., while our export volumes of powdered milk are industrialized in plants operated by third parties.

Cattle Business

Until December 2009, we owned approximately 58,348 head of cattle — other than our cows used for the production of raw milk — which we fattened for sale to meat processors and in local livestock auction markets. Our cattle business primarily consisted of beef breeding and fattening activities during the years ended December 31, 2009, 2008 and 2007. In December 2009, we strategically decided to sell almost all of our cattle herd — other than our dairy cows — to Quickfood S.A. (“Quickfood”), an Argentine company listed on the Buenos Aires Stock Exchange and a subsidiary of the Brazilian company Marfrig Alimentos S.A. (“Marfrig”), for a purchase price of $14.2 million. Additionally, we entered into a lease agreement under which Quickfood leases grazing land from us to raise and fatten the purchased cattle. As required by antitrust law, we reported this transaction to Argentina’s National Commission for the Defence of Competition ( Comision Nacional de Defensa de de la Competencia , or “CNDC”). The CNDC’s administrative approval of the transaction is pending. We do not believe that the CNDC will object to the form and substance of the transaction. See “—Material Agreements—Argentina—Agreement with Quickfood S.A.”

After this sale, our cattle business primarily consists of leasing (i) approximately 72,800 hectares of grazing land located in the Argentine provinces of Corrientes, Formosa, Santa Fe and Santiago del Estero, for an annual price equal to the equivalent in Argentine Pesos of 30 kilograms of meat per hectare, calculated in accordance with the Steer Index of the Liniers Market (INML), for a period of 10 years, renewable by the parties and (ii) two feed lots located in the Argentine provinces of Corrientes and Santa Fe, for an annual price of $25,000 each. Additionally, as of December 31, 2011, we owned approximately 2,039 head of cattle. We may purchase additional cattle in the future.

The following table indicates, for the periods set forth below, the number of cattle (other than dairy cows) for each activity we pursued:


	Year Ended December 31,
	2011		2010		2009
	(Head of cattle)
Breeding(l)		2,039		—		79,784
Fattening		—		1,254		2,804
Total		2,039		1,254		2,804

(1)	For classification purposes, upon birth, all calves are considered to be in the breeding process.

The cattle business comprised 4% of our total sales in 2008, 9% of our total sales in 2009, 1% of our total sales 2010 and 1% of our sales in 2011.

Storage and Conditioning

Our storage and conditioning facilities for our farming line of business allow us to condition, store and deliver our products with no third-party involvement. All our crop storage facilities are located close to our farms, allowing us to (i) reduce storage and conditioning costs; (ii) reduce freight costs since we only commence moving the product once the final destination is determined, whether locally or to a port, (iii) capitalize on fluctuations in the prices of commodities; and (iv) improve commercial performance by mixing grains to avoid discounts due to sub-standard quality.

We own five conditioning and storage facilities for grains and oilseeds, with a total built storage capacity of 28,800 tons. Our largest storage facility, with a capacity of 18,700 tons, is located in the province of Santa Fe, Argentina, in the town of Christophersen. It has a railway loading terminal, providing logistical flexibility and savings. We also own in Argentina four rice mills, which account for over 135,919 tons of total storage capacity, and two additional storage and conditioning facilities for rice handling, with a total storage capacity of 5,700 tons.

Set forth below is our storage capacity as of December 31, 2011:


Storage Capacity	Nominal
Crops (tons)		28,800
Rice (tons)		135,919

In addition, we use silo bags to increase our storage capacity at low cost. Silo bags are a revolutionary and efficient low-cost method for grain storage. As crops are harvested, they are placed inside large polyethylene bags that can be left in the fields for approximately 12 months without damaging the grain. Each silo bag can hold up to 180 to 200 tons of product, depending on the type of grain. During the 2010/2011 harvest year, we stored approximately 40% of our grain production through silo bags.

Silo bags offer important operational and logistic advantages, such as (i) low cost storage; (ii) flexible and scalable capacity that is adapted based on production and commercial strategy; (iii) harvest efficiencies since the bags are filled on the field allowing for a non-stop harvest operation regardless of any logistical setbacks; (iv) logistic efficiencies leading to lower freight since grains are transported during the off-season when truck fares are lower; (v) increased ability to monitor quality and identify different grain qualities, since grains are stored in relatively small amounts (200 tons) and easily monitored, maximizing our commercial performance; and (vi) better use of our drying capacity throughout the year. Silo bags are commercially accepted. Grains stored in silo bags can be sold in the market, and if such grains are to be delivered post harvest, we charge storage costs. Additionally, we can store grains to be used as seed during the following season (soybeans, rice and wheat), achieving quality seed management. We have expanded the use of silo bags from Argentina to our operations in Brazil and Uruguay. Currently, we are extending the usage of silo bags to store fertilizers and are developing their use with respect to coffee beans.

Grain conditioning facilities at our farms allow our trade desk to optimize commercialization costs and to achieve commercial quality standards and avoid price discounts. These facilities are operated to dry, clean, mix and separate different qualities of each grain in order to achieve commercial standards. By mixing different batches of a same grain type, differentiated by quality parameters such as moisture, percentage broken, and percentage damaged, among others, we can achieve commercial standards without having to discount a lower-quality stand-alone batch. Efficient management of these facilities results in a lower cost for grain conditioning and a better achievable price. In order to maximize this situation, our conditioning facilities trend to process as much grain as possible, which is roughly more than four times their storage capacity.

Set forth below is our drying capacity as of December 31, 2011:


Drying Capacity	Nominal
Crops (tons/day)		2,400
Rice (tons/day)		6,600

Some grains such as soybeans, wheat and rice, can be used for seed during the next planting season. We produce almost 97% of the seed used for planting these crops in our fields. The seed is stored in silo bags and/or grain facilities, where it can be processed, classified, and prepared for planting during next crop season. A deep survey and monitoring process is carried out in order to evaluate, control and deliver high quality seed to our farms.

The rest of our seed requirements are purchased from seed suppliers in order to incorporate new enhanced varieties into our planting plan.

Additionally, as of December 31, 2011, we owned two coffee processing facilities in Brazil, where we clean, dry and classify different types of commercial coffee beans. Apart from processing, those facilities have a storage capacity of 30,400 bags, or 1,800 tons of processed coffee.

Marketing, Sales and Distribution

Crops

In Argentina, grain prices are based on the market prices quoted on Argentine grain exchanges, such as the Bolsa de Cereales de Buenos Aires and the Bolsa de Cereales de Rosario , which use as a reference the prevailing prices in international grain exchanges (including CBOT and ICE-NY). In Uruguay, local prices are based on an export parity (during harvest) or import parity in the case of post-harvest sales, which, in each case, take into account the prices and costs associated with each market. In Brazil, the grain market includes the Bolsa de Mercadorias e Futuros (Brazilian Grain Exchange), which, as in Argentina, uses as a price reference the international grain exchanges (including CBOT and ICE-NY). Prices are quoted in relation to the month of delivery and the port in which the product is to be delivered. Different conditions in price, such as terms of storage and shipment, are negotiated between us and the end buyer. We negotiate sales with the top traders and industrial companies in our markets. We also engage in hedging positions by buying and selling futures and options in commodities exchanges, including the Chicago Board of Trade, the New York Board of Trade, BM&FBOVESPA and the Mercado a Término de Buenos Aires (MATBA).

Soybeans: Our soybean crop is sold to local companies and is ultimately exported or diverted to the crushing industry. Approximately 72% of the soybean crop is hedged pre-harvest, by forward sales, sales in the futures markets, and production agreements. Post-harvest sales are a function of the export market versus local premiums paid by crushers (oil, meal and biodiesel). Our largest customers are Bunge International Commerce Ltd. (“Bunge”), Molinos Rio de la Plata S.A, Noble Americas Corp. (“Noble”), , and Alfred C. Toepfer International, comprising approximately 64% of our sales in the year ended December 31, 2011. In Argentina, the applicable export tax rate on soybeans is 35%.

Corn: Approximately 84% and 52% of our Argentine and Uruguayan production, respectively, is exported, with the remainder destined for domestic use in feedlots, the poultry industry and in our dairy operations. All of our Brazilian production is sold domestically for regional consumption. We typically sell about 55% of our corn pre-harvest due to logistical issues. We sell approximately 5% of our corn production for special products such as corn seed. Our largest customers are Louis Dreyfus Commodities Suisse S.A. (“LDC”), Noble, Alfred C. Toepfer International, Crossland Marketing Pte. Ltd. and Leiva Chavés María Luz (poultry industry), comprising approximately 62% of our sales in the year ended December 31, 2011. In Argentina, the applicable export tax rate on corn is 20%.

Wheat: Approximately 84% and 77% of our Argentine and Uruguayan production is exported with the remainder destined for domestic use. Brazil is the main importer of Argentine wheat. Due to logistics, we sell to the export market during harvest time and store the higher quality wheat to sell later in the year to local millers. We typically sell half of our wheat production pre-harvest. Our largest customers are LDC, Nidera S.A. and Asociación de Cooperativas Argentinas Coop. Ltda. , comprising approximately 63% of our sales in the year ended December 31, 2011. In Argentina, the applicable export tax rate on wheat is 23%.

Sunflower: Our sunflower production from Argentina and Uruguay is sold to local companies. Sales are made pursuant to forward sales, spot sales and production agreements (as sunflower for confectionary, high oil content sunflower and seed). Our largest customers are Dow Agrosciencies Argentina S.A., Argensun S.A. and Molinos Río de la Plata S.A., comprising approximately 85% of our sales in the year ended December 31, 2011. In Argentina, the applicable export tax rate is 32%.

Cotton: We typically make pre-harvest sales of cotton fiber produced in Brazil into the export market. Sales for the textile industry are based on domestic demand and premiums. During 2011 we started producing in Argentina, and due the small amounts, we sold 100% to local textile industry. Our largest customers are LDC, Noble and Coopernorpi Cooperativa Agricola do Norte Pioneiro and Algodonera Avellaneda SA, comprising approximately 68% of our sales in the year ended December 31, 2011. Cottonseed is sold in the domestic market to meet feed demand.

Rice: Rough rice is available for sale commencing after the harvest of each year. White rice availability is based on our milling capacity. 73% of our total rice production is sold into the export market, with the remainder sold in Argentina in the retail market. Europe is the largest importer of our rice with 31% of our exported volume, followed by Brazil with 25%, Angola with 21%, Irak with 17% and the remainder sold to the Brazilian retail market, promoted by our Monte Alegre brand of sugar. Argentina’s retail market is comprised of four types of rice and four brands that have a 16.8% market share. Rice prices are based on regional supply demand and exchange rate in Brazil.

Our largest customers for rice are Webcor S.A., Companhia de Distribuicao Araguaia, LDC Argentina S.A., Josapar Joaquim Oliveira S.A. Participacoes, Euricom S.P.A. and Ameropa AG, comprising approximately 41% of our sales in the year ended December 31, 2011. In Argentina, the applicable export tax rate is 10% for rough rice and 5% for white rice.

Coffee : Coffee is available for sale commencing after it is harvested and processed since July of each year. We export our own high quality coffee to the European, U.S. and Japanese markets, where our “specialty coffee” grade product is received by the gourmet segment. Our coffee is certified by the most respected organizations in the sector such as UTZ and Rainforest Alliance. Our largest importer is the is the European Union with 49%, followed by Japan with 38% and the United States with 13% of our sales. 73% of our coffee production is sold in the domestic Brazilian market. Coffee prices are based on international grain exchanges (ICE-NY) and have a local reference in BM&FBOVESPA. We negotiate quality premiums or discounts and delivery conditions to the end buyer. Our largest customers for coffee are Outspan Brasil Importacao e Exportacao LTDA (“Olam”), Mitsui Foods Inc., Paragon Coffee Trading Company L.P. and Empresa Interagricola S.A. (Eisa), comprising approximately 63% of our net sales in the year ended December 31, 2011.

Dairy

During most of 2007, we sold our entire raw milk production to top Argentine dairy companies such as Groupe Danone, Nestlé Dairy Partners Americas and Mastellone Hermanos S.A. These companies manufacture a range of consumer products sold in Argentina and abroad. On November 7, 2007, we entered into a Milk Supply Agreement with La Lácteo S.A., pursuant to which we committed to sell to La Lácteo S.A. approximately 80,000 liters of our milk production per day subject to certain conditions. See “Material Agreements—Argentina—Milk Supply Agreement” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.” We negotiate the price of raw milk on a monthly basis in accordance with domestic supply and demand with these companies, including La Lácteo S.A. The price of the milk we sell is mainly based on the percentage of fat and protein that it contains and the temperature at which it is cooled. The price we obtain for our milk also rises or falls based on the content of bacteria and somatic cells.

Sugar, Ethanol and Energy

Sugarcane

Sugarcane is the most efficient agricultural raw material used in the production of sugar and ethanol. Ethanol produced from sugarcane is highly regarded as an environmentally friendly biofuel with the following characteristics.

•

Renewable: Sugarcane ethanol, unlike coal or oil, which can be depleted, is produced from sugarcane plants that grow back year after year, provided that they are replanted every six to eight years.

•

Sustainable: Sugarcane only needs to be replanted every five to seven years, as a semi-perennial crop. It can be harvested without uprooting the plant, and therefore its cultivation has less of an impact on the soil and the surrounding environment. The mechanization of the harvesting and planting process further improves sustainable agricultural management.

•

Energy Efficient: Sugarcane is highly efficient in converting sunlight, water and carbon dioxide into stored energy. The energy output of sugarcane is equal to nine times the energy input used in the production process, whereas the energy output of corn ethanol is only about 1.9 to 2.3 times the energy input used in its production process. Sugarcane produces seven times more energy compared to corn in ethanol production.

•

Low Carbon Emissions: Compared to gasoline, sugarcane ethanol reduces greenhouse gases by more than 61%, which is the greatest reduction of any other liquid biofuel produced today in large quantities. Ethanol made from sugarcane is deemed an advanced biofuel by the United States EPA.

•

Synergies: The main raw material used in the production of electricity in sugar mills is bagasse, which is a by-product of the sugarcane milling process, allowing for a renewable source of co- generated electricity.

Sugarcane is a tropical grass that grows best in locations with stable, warm temperatures and high humidity, although cold and dry winters are an important factor for the sucrose concentration of sugarcane. The climate and topography of the center-south region of Brazil is ideal for the cultivation of sugarcane and accounts for approximately 85% of Brazil’s sugarcane production.

We grow sugarcane in the center-south region of Brazil on 9,145 hectares of our own land and 56,163 hectares of land leased through agriculture partnerships. Under these agreements, our partners lease land to us for periods of between one and two sugarcane cycles, equivalent to periods of between 10 to 12 years, on which we cultivate sugarcane. Lease payments are based on the market value of the sugarcane set forth by the regulations of the State of Sao Paulo Sugarcane, Sugar and Alcohol Growers Counsel ( Conselho dos Produtores de Cana-de-Açúcar, Açúcar e Álcool do Estado de Sao Paulo , or “Consecana”). We planted and harvested approximately 93% of the total sugarcane we milled during 2011, with the remaining 7% purchased directly from third parties at prices set forth by the Consecana system, based on the sucrose content of the cane and the prices of sugar and ethanol. The following table sets forth a breakdown during the time periods indicated of the amount of sugarcane we milled that was grown on our owned and leased land or purchased from third parties:


	Year Ended December 31,
	2011		2010		2009
Grown on our owned and leased land (tons)		3,891,125		3,869,283		2,075,531
Purchased from third parties (tons)		276,957		196,833		139,498

Total (tons)		4,168,081		4,066,115		2,215,029

Sugarcane Harvesting Cycle

The annual sugarcane harvesting period in the center-south region of Brazil begins in April and ends in November/December of each year. We plant several sugarcane varieties, depending on the quality of the soil, the local microclimate and the estimated date of harvest of such area. Once planted, sugarcane can be harvested, once a year, up to six to eight consecutive years. With each subsequent harvest, agricultural yields decrease. The plantations must be carefully managed and treated during the year in order to continue to attain sugar yields similar to a newly-planted crop.

We believe we own one of the most mechanized harvesting operations in Brazil. Our sugarcane harvesting process is currently 87% mechanized (100% at Angélica mill and 49% at UMA mill) and the remaining 13% is harvested manually. Mechanized harvesting does not require burning prior to harvesting, significantly reducing environmental impact when compared to manual harvesting. In addition, the leaves that remain on the fields after the sugarcane has been harvested mechanically create a protective cover for the soil, reducing evaporation and protecting it from sunlight and erosion. This protective cover of leaves decomposes into organic material over time, which increases the fertility of the soil. Mechanized harvesting is more time efficient and has lower costs when compared to manual harvesting. Sugarcane is ready for harvesting when the crop’s sucrose content is at its highest

level. Sucrose content and sugarcane yield (tons of cane per hectare) are important measures of productivity for our harvesting operations. Geographical factors, such as soil quality, topography and climate, as well as agricultural techniques that we implement, affect our productivity. Since most sugar mills produce both sugar and ethanol in variable mixes, the industry has adopted a conversion index for measuring sugar and ethanol production capacity, the Total Recoverable Sugar (“TRS”) index, which measures the amount of kilograms of sugar per ton of sugarcane.

During the 2011 harvest, UMA harvested sugarcane with a TRS of 139, compared to an average of 138 in the center-south region of Brazil generally. Angélica’s TRS for the same period reached 125, due to the effect of a frost in January 2011. In addition, during the 2011 harvest, we harvested an average of 75.6 tons of sugarcane per hectare of our own and leased land.

Once the sugarcane is harvested, it is transported to our mills for inspection and weighing. We utilize our own trucks and trailers for transportation purposes. The average transportation distance from the sugarcane fields to the mills is approximately 26 kilometers at UMA and 35 kilometers at Angélica. The construction of our new mill at Ivinhema is expected to halve the average transportation distance for Angélica, significantly reducing our transportation costs, as 42% of the cane currently processed at Angélica has been planted closer to the site where the Ivinhema mill is being built.

Our Mills

We currently own and operate two sugar mills in Brazil, Angélica and UMA, and are in the process of construction of our third sugar mill, Ivinhema, to complete our sugarcane crushing cluster in Mato Grosso do Sul. Our mills produce sugar, ethanol and energy, and accordingly, we have some flexibility to adjust our production between sugar and ethanol, to take advantage of more favorable market demand and prices at given points in time. As of December 31, 2011, our sugar mills had a total installed crushing capacity of 5.2 million tons of sugarcane. As of the date of this annual report, we have concluded the 2011 harvest at both mills, crushing an aggregate volume of 4.16 million tons of sugarcane.

The Usina Monte Alegre mill (“UMA”) is located in the state of Minas Gerais, Brazil, and has a sugarcane crushing capacity of 1.2 million tons per year, full cogeneration capacity and an associated sugar brand with strong presence in the regional retail market ( Açúcar Monte Alegre ). We plant and harvest 99.7% of the sugarcane milled at UMA, with the remaining 0.3% acquired from third parties. On December 31, 2011, UMA concluded its harvest operations for the 2011 season, crushing 1.01 million tons of sugarcane.

Angélica is a new, advanced mill, which we built in the state of Mato Grosso do Sul, Brazil, with a total sugarcane crushing capacity of 4.0 million tons per year. Angélica has been equipped with two modern high pressure boilers and three turbo-generators with the capacity to use all the sugarcane bagasse by-product to generate approximately 96 MW of electricity that is used to power the mill with an excess of 64MW available for sale to the power grid. During the first half of 2010, we concluded the construction of the sugar factory commencing the production of sugar in July 2010. Angélica now has the flexibility to vary the product slate between 60% to 40% for either product. During the 2010/2011 harvest, we grew and harvested over 91% of the sugarcane milled at Angélica, allowing us to have a stable supply and superior quality control of our raw material. On December 31, 2011, Angélica concluded its harvest operations for the 2011/2012 season, crushing a total of 3.15 million tons of sugarcane. Although construction of the mill and industrial equipment has been concluded, Angélica will not mill at full capacity until 2013, when the size of our sugarcane plantations are expected to support the capacity of the mill.

As of December 31, 2011, accumulated capital expenditures in Angélica, including cost expensed in cane planting and excluding investments in land and working capital, reached R$1,013 million, or approximately $134.7 per ton of crushing capacity. The table below shows our investment breakdown:


Capital Expenditures	R$ millions		US$ per ton(l)
Industrial equipment		541		72
Agricultural equipment		144		19
Sugarcane planting cost		327		44
Total		1,013		135

(1)	Considers an average R$/US$ exchange rate of 1.876.

During mid 2011, we started the construction of our third mill, Ivinhema, located in the state of Mato Grosso do Sul, approximately 45 kilometers south of our existing Angelica mill, in order to complete our planned sugarcane cluster in that region. The Ivinhema mill is expected to have a crushing capacity of 6.3 million tons of sugarcane per year when it reaches full capacity in 2017, increasing our total sugarcane crushing capacity to 11.5 million tons per year. We expect Angelica and Ivinhema mills to form a cluster of 10.3 million tons of crushing capacity, which we expect will generate operational synergies and economies of scale that will result from a large-scale sugarcane production and industrial operation, including centralized management of both mills, harvesting efficiencies due to the ability to conduct non-stop harvesting and a reduction in sugarcane transportation costs. Ivinhema mill will be equipped with state-of-the-art technology including full cogeneration capacity, flexibility to produce sugar and ethanol and fully mechanized agricultural operations. We expect to source a majority of sugarcane for the Invinhema mill from our own supply and expand our cluster’s plantation to over 120,000 hectares.

As of the date of this report, the construction of Ivinhema mill is well advanced and on schedule. The boiler has already been delivered on-site and is currently being assembled. The foundations and buildings of the sugarcane reception and milling processes have been completed and we expect to begin their assembly in May 2012. Construction of the powerhouse and the foundations for the first generator, as well as the assembly of other parts of the sugar and ethanol processes are also progressing according to plan. We expect the Ivinhema mill to begin operating during the first half of 2013, reaching 2.0 million tons of sugarcane nominal crushing capacity during that year, and increasing its milling capacity to 4.0 million tons in 2015 and finally reaching full capacity of 6.3 million tons by 2017.

We plan to fund part of the construction costs of the Ivinhema mill using $230 million from the proceeds of our IPO. As of December 31, 2011, we have incurred $49.2 million in the acquisition and assembly of equipment, manufacturing costs and sugarcane planting expenses (45% of the first phase). Furthermore, as of the date of this report, we have contracted the manufacturing of certain key equipment for an additional $27.0 million, including juice evaporator, substations, sugar warehouse, pipes metallic structures, steel plates, among other equipment. We estimate that we will need to invest an additional $711 million to complete the construction of the Ivinhema mill. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industries—Adverse conditions may create delays in or the suspension of the construction of our Ivinhema mill and/or significantly increase the amount of our expected investments.”

The construction and operation of the Ivinhema mill is subject to environmental licensing. Generally, the environmental agencies of each state are responsible for issuing environmental permits. The criteria for environmental licensing is defined and regulated by the National Council of the Environment (CONAMA), under Resolution No. 237 of December 19, 1997. On June 27, 2011, we obtained the installation license ( licença de instalaçâo) from Instituto de Meio Ambiente de Mato Grosso do Sul (“IMASUL”) for the commencement of the construction and assembly of the first and second phase of the Ivinhema mill, for a nominal crushing capacity of up to 3.6 million tons of sugarcane.

In addition to the installation license, the Ivinhema mill must obtain operational licenses and other permits including licenses for water capture and use of controlled products, among others. Failure to obtain the necessary environmental licenses may prevent us from operating the Ivinhema mill or may subject us to sanctions.

Our Main Products

The following table sets forth a breakdown of our production volumes by product for the years indicated:


	Year Ended December 31,
	2011		2010		2009
Sugar		247,805		235,690		52,968
Ethanol		161,385		174,303		132,492
Energy		245,389		168,644		128,291

Note: Sugar volumes are measured in thousands of tons (raw value), ethanol volumes are measured in thousand cubic meters and electricity is measured in MWh.

The following table sets forth our sales for each of the sugarcane by-products we produce for the years indicated:


	Year Ended December 31,
	2011		2010		2009
	(In thousands of $)
Sugar		130,348		98,385		26,143
Ethanol		116,599		114,793		62,811
Energy		24,393		15,040		8,216
Other(1)		5,978		308		417
Total		277,318		228,526		97,587

(1)	Includes sales of sugarcane and other miscellaneous items to third parties.

Sugar

Our current maximum sugar production capacity is 2,400 tons per day which, in a normal year of 4,400 hours of milling, results in an annual sugar maximum production capacity of over 455,000 tons of sugar. Angélica’s sugar factory started operations during 2010 and has a production capacity of 1,800 tons per day. UMA’s capacity was increased last year to 600 tons per day when cogeneration was installed. In 2009, we produced 52,968 tons of sugar at the UMA mill compared to 87,388 tons of sugar in 2010 and 77,793 tons of sugar in 2011.

We produce two types of sugar: very high polarization (“VHP”) standard draw sugar and white crystal sugar. VHP sugar, a raw sugar with a 99.3% or higher sucrose content, is similar to the type of sugar traded in major commodities exchanges, including the standard NY11 contract. The main difference between VHP sugar and NY11 raw sugar is the sugar content of VHP sugar, and it therefore commands a price premium over NY11 raw sugar. Crystal sugar is a non-refined white sugar (color 150 ICUMSA) produced directly from sugarcane juice.

Sugar sales comprised 8% of our total sales in 2008, 8% of our total sales in 2009 , 23% of our total sales in 2010 and 24% of our total sales in 2011.

Ethanol

Our current maximum ethanol production capacity is of 1,400 cubic meters per day which, in a normal year of 4,400 hours of milling, results in an annual ethanol maximum production capacity of over 263,000 cubic meters of ethanol. In 2010, we produced 174,303 cubic meters of ethanol compared to 161,385 cubic meters of ethanol in 2011.

We produce and sell two different types of ethanol: hydrous ethanol and anhydrous ethanol (as further described in “—Production Process—Ethanol”). Ethanol sales comprised 5% of our total sales in 2007, 12% of our total sales in 2008, 20% of our total sales in 2009 and 23% of our total sales in 2010 and 21% or our total sales un 2011.

Cogeneration

We generate electricity from sugarcane bagasse (the fiber portion of sugarcane that remains after the extraction of sugarcane juice) in our two mills located in Brazil. Our total installed cogeneration capacity is approximately 112 MW, and 75 MW are available for resale to third parties after supplying our mills’ energy requirements. Having this ability to generate electricity from the by-product of the sugarcane crushing process on a large enough scale to fully power a mill with excess electricity being available is referred to as having full cogeneration capacity. Our two mills are duly licensed by ANEEL to generate and sell electricity. During the year ended December 31, 2011 we sold 245,389 MWh to the local electricity market, comprising 4% of our total sales in 2011. During the year ended December 31, 2010 we sold 178,914 MWh to the local electricity market, comprising 3.1% of our total sales in 2010. During the year ended December 31, 2009, we sold 128,291 MWh to the local electricity market, comprising 3% of our total sales in 2009. We did not sell electricity in 2008.

Production Process

Sugar. There are essentially five steps in the sugar manufacturing process. First, we crush the sugarcane to extract the sugarcane juice. We then treat the juice to remove impurities. The residue is used to make an organic compost used as fertilizer in our sugarcane fields. The juice is then boiled until the sugar crystallizes, and sugar is then separated from the molasses (glucose which does not crystallize) by centrifugation. The resulting sugar is dried and sent to storage and/or packaging. We use the molasses in our production of ethanol.

Ethanol. Ethanol is produced through the fermentation of sugarcane juice or diluted molasses. Initially, we process the sugarcane used in ethanol production the same way that we process it for sugar production. The molasses resulting from this process is mixed with clear juice and then with yeast in fermentation vats, and the resulting wine has an ethanol content of approximately 8% to 10%. After the fermentation is complete, the yeast is separated for recycling in the ethanol production process. We distill the wine to obtain hydrous ethanol. In order to produce anhydrous ethanol, hydrous ethanol undergoes a dehydration process in a molecular sieve. The liquid remaining after these processes is called vinasse, which we further process to make liquid organic fertilizer that we use in our sugarcane plantations.

Cogeneration. Sugarcane is composed of water, fibers, sucrose and other sugars and minerals. When the sugarcane goes through the milling process, we separate the water, sugar and minerals from the fibers or sugarcane bagasse. Bagasse is an important sub-product of sugarcane, and it is used as fuel for the boilers in our mills. Sugarcane bagasse is burned in our state-of-the-art boilers to produce high pressure steam (67 atm) which is used in our high-efficiency turbo-generators to generate electricity to power our mills. The excess electricity, about 67% of production, is sold to the national power grid.

The following flow chart demonstrates the sugar, ethanol and cogeneration production process:

LOGO

Historically, the energy produced by Brazilian mills has not been price competitive when compared to the low-cost Brazilian hydro-electricity, which accounts for almost 90% of the country’s electricity matrix. Consequently, the majority of the groups in the sugar and ethanol sector have not invested in expanding their energy generation for sale, and the majority of the mills were constructed with less efficient, low-pressure boilers. Since 2000, the Brazilian economy has experienced significant growth, which in turn has resulted in increased demand for energy.

However, hydro- and thermo-electricity have not been able to keep pace for the following reasons: (1) new hydro-electric plants are located in regions (such as the Amazon) distant from consumption centers; (2) significant lead-time is required to construct new hydro- and thermo-electric plants; (3) significant investments are required for transmission lines, pipelines (for natural gas used in thermo-electric plants) and barges; (4) significant environmental costs are associated with both types of electricity generation; and (5) prices for fuel (natural gas) used in the generation of thermo-electricity have increased resulting in greater dependence on Bolivia (Brazil’s principal natural gas supplier). As a result, energy prices in Brazil have been increasing, and alternative sources, such as the

electricity from the cogeneration of sugarcane bagasse, have become increasingly competitive and viable options to satisfy the increasing energy demands. Sugarcane bagasse cogeneration is particularly competitive since sugarcane-based electricity is generated following the sugarcane harvest and milling which occurs during the dry season in Brazil, when hydroelectric generation is at its lowest levels.

The main advantages of energy generated by sugarcane bagasse are:

•

It is a clean and renewable energy;

•

It complements hydropower, the main source of Brazilian energy, as it is generated during the sugarcane harvest period (April to December) when water reservoirs are at their lowest level;

•

It requires a short period of time to start operations; and

•

It requires only a small investment in transmission lines when plants are located close to consumer centers.

Our total installed cogeneration capacity at the Angélica and UMA mills together is 112 MW, of which 75 MW are available for sale to the market. The Ivinhema mill is planned to have full cogeneration capacity as well and is expected to generate 184 MW by 2017, of which 131 MW are expected to be available for sale to the market.

We believe that there is a high potential for growth in the generation of electricity, and we are prepared to make investments to the extent that prices of Brazilian energy justify making such investments. We are currently investing $7.2 million in a “trash separation” system at Angélica, which will allow us to increase our energy output by over 50%.

Storage and Conditioning

Our sugar and ethanol storage and conditioning facilities are located at our mill sites and allow us to deliver our products when they are ready to be commercialized with no third-party involvement. Having such facilities at mill sites allows us to (i) reduce storage and conditioning costs; (ii) reduce freight costs since we only commence moving the product once the final destination is determined, whether locally or to a port; and (iii) capitalize on fluctuations in the prices of sugar and ethanol.


Nominal Storage Capacity	Angélica		UMA		Total
Ethanol (cubic meters)		120,800		27,000		147,800
Sugar (tons)		90,000		36,400		126,400

Marketing, Sales and Distribution

Sugar: We sell sugar both in the domestic and the international markets at prices that depend on our price parity calculation, which considers each market’s price and the associated costs. Prices for the sugar we sell in Brazil are set, using an index calculated by the Agriculture College of the University of São Paulo ( Escola Superior de Agricultura Luiz de Queiroz , or “ESALQ”), with a premium in the state of Minas Gerais due to the use of our regional brand, “Monte Alegre,” the market leader in the southern part of that state. Prices for the sugar we export are set in accordance with international market prices. International prices for raw sugar are established in accordance with the NY11 futures contracts. Our largest customers for sugar are Dreyfus., Bunge, Noble and Copersucar Trading AVV, comprising approximately 96% of our sales in the period ended December 31, 2011.

Ethanol: Almost all of our ethanol sales are in the domestic Brazilian market given the increasing demand generated from the increase in flex-fuel vehicles in Brazil. Our ethanol sales are not made through the execution of formal agreements. Instead, sales are made through daily sale orders intermediated by specialized brokerage firms that act in the ethanol domestic market, whose role is to intermediate the sale of ethanol between the ethanol producers and the domestic ethanol distribution companies, and prices are set using the ESALQ and the futures and commodity exchange of the BM&FBOVESPA indices for ethanol as a reference. Our largest customers by volume were Petrobras Distribuidora S/A, Raizen Combustives, GavilonShipping and Trading LLC, Ipiranga Produtos de Petróleo S/A and Shell Brasil Ltda., comprising approximately 76% of our sales in the period ended December 31, 2011.

Cogeneration: We also sell electricity co-generated at our sugar and ethanol mills to local electricity commercialization companies and directly to the spot market. Sales are made in the spot market with brokers, through government auctions, to distributors and through long-term contracts. Our largest customers are Cemig Geração e Transmissão S/A, Câmara de Comercialização de Energia Elétrica and Nova Energia Comercializadora Ltda., comprising approximately 92% of our sales in the period ended December 31, 2011.

The Brazilian energy agency, ANEEL, has organized yearly auctions for alternative energy and for renewable sources at favored rates. As a hedging strategy, we sell the electricity production of our mills through long-term contracts adjusted for inflation by reference to the national index of consumer prices (“IPCA”)

In 2009, UMA entered into a 10-year agreement with CEMIG, a state distribution company, for the sale of 9 MW (approximately 52,704 MWh) during the harvest periods each year (May to November of each year) at a rate of R$184,15 per megawatt hour. In 2009, Angélica sold energy in a public auction carried out by Camara de Comercialização de Energia Elétrica (“CCEE”), whereupon Angélica entered into a 15-year agreement with CCEE for the sale of 87,600 MWh per year at a rate of R$180,26 per megawatt hour. In August 2010, Angélica participated in a public auction, whereupon Angélica entered into a second 15-year agreement with CCEE starting in 2011, for the sale of 131,400 MWh per year at a rate of R$154.25/MWh. The delivery period for both agreements starts in May and ends in November of each year. The rates under both agreements are adjusted annually for inflation by reference to the National Index of Consumer Prices (“IPCA”).

Land Transformation

Land transformation is an important element of our business model and a driver of value creation. Through land transformation, we optimize land use and increase the productive potential and value of our farmland. Our land transformation model consists of changing the use of underutilized or undermanaged agricultural land to more profitable cash generating agricultural activities, such as turning low cash-yielding cattle pasture land into high cash-yielding croppable land, allowing profitable agricultural activities, such as crop, rice and sugarcane production.

Since our inception, we have successfully identified multiple opportunities for the acquisition of undeveloped or undermanaged farmland with high potential for transformation. During the ten-year period since our inception, we have effectively put into production over 154,248 and that were previously undeveloped or inefficiently managed and are undergoing the transformation process.

The land transformation process begins by determining the productive potential of each plot of land. This will vary according to soil properties, climate, productive risks, and the available technology in each specific region. Before commencing the transformation process, we perform environmental impact studies to evaluate the potential impact on the local ecosystem, with the goal of promoting environmentally responsible agricultural production and ecosystem preservation, thereby supporting sustainable land use. We do not operate in heavily wooded areas or primarily wetland areas.

The transformation process for underdeveloped and undermanaged land requires us to make initial investments during a period of one to up to three years, and the land reaches stable productive capability the third to seventh year following commencement of the land transformation activities.

We are engaged in three different categories of the land transformation process, which are defined by the previous use of the land:

(i) Undeveloped land (savannahs and natural grasslands): This is the most drastic transformation phase since it demands both physical and chemical transformation of the soil. First, the land is mechanically cleared to remove native vegetation. The soil is then mechanically leveled for agricultural operations: in the case of land being transformed for rice production, this process involves heavy land movements and systematization required for irrigation and drainage channels, roads and bridges. In the case of land destined for sugarcane plantations, land movements will also be necessary for the construction of terraces to prevent the excess of water runoff.

Certain soils must be chemically treated and corrected by incorporating nutrients such as limestone, gypsum and phosphorous, as is the case of the Brazilian ‘Cerrado’. Soil correction is not required in Argentina or Uruguay due to the natural fertility of the soil. Pesticides and fertilizers are then applied to the soil in preparation for planting. In the case of land destined for crop production (grains and oilseeds), soybean, which is sometimes referred to as a colonizing crop, is usually planted during the first years due to its resistance to pests, weeds and extreme weather and soil conditions. Thereafter, the land will enter into a crop rotation scheme to reduce the incidence of plague and disease and to balance soil nutrients. In the case of rice and sugar cane, which are produced in a monoculture system, there is no colonizing crop or rotation involved. Intensive plague and weed controls and additional soil correction will take place during these first three to five years. Land productivity or yields, measured in tons of soybean or other crops per hectare, will be initially low and will gradually increase year by year. During the first five to seven years, the yields will increase at high and sustained rates. After the seventh year we consider the land developed as yield volatility is reduced and growth is only achievable at marginal rates. Since our inception we have put into production 57,341 hectares of undeveloped land into productive croppable land.

(ii) Undermanaged or underutilized farmland (cultivated pastures and poorly managed agriculture): This transformation process is lighter than the one described above since it does not require the initial mechanical clearing of vegetation or land leveling. Only in the case of land being prepared for rice production will leveling be required for efficient flood-irrigation. The transformation of cattle pastures or poor agriculture in the Brazilian ‘Cerrado’ will begin with soil correction and soil tillage in preparation for planting of the first soybean or sugarcane crop. The process will then continue as described in the case above. Land productivity or crop yields will grow at high rates during the first three to five years of the transformation process and will then commence to stabilize and grow at marginal rates, at which point we consider the land developed. Since our inception we have put into production 96,906 hectares of undermanaged or underutilized farmland into croppable land.

(iii) Ongoing transformation of croppable land: The application of efficient and sustainable crop production technologies and best practices such as “no-till”, crop rotations, integrated pest and weed management and balanced fertilization, among others, incrementally increases soil quality and land productivity over time, maximizing return on invested capital and increasing the land value of our properties. Our entire farmland portfolio is constantly undergoing this phase of land transformation. During the 2010/2011 harvest year, we operated 120,460 hectares of developed farmland which were enhanced by the use of best productive practices and technology.

In each of these categories of transformation, the metric the company uses to track the level and analyze the progress of the transformation process is the level and tendency of crop yields and the number of years the land has been under crop production. Consequently, the process of land transformation is evidenced by the results of the activities within our other business segments, primarily our crops, rice and sugarcane segments. Accordingly the costs associated to the transformation process described above are allocated within these other business segments. As a result, there may be variations in our results from one season to the next according to the amount of farmland undergoing transformation and the amount of land sold and our ability to identify and acquire new farmland.

Our land transformation segment seeks not only to profit from crop and rice cultivation, but also from the opportunistic disposition of successfully transformed farmland. We strategically sell farms that have reached productive maturity with marginal potential for further productivity increases (years three to seven after commencing the land transformation process) to realize and monetize the capital gains arising from the land transformation process. Land transformation proceeds are in turn reinvested in the purchase of strategic farmland with potential for transformation and appreciation. The rotation of our land portfolio allows us to allocate capital efficiently. Since 2006 we have had a solid track record of selling farmland for highly profitable returns. During the last six years, we have sold 29,608 hectares of farm land, generating capital gains of approximately $104 million.

These capital gains are generated by three main factors:

(i) the acquisition of land at opportunistic prices below the market value or fair value of the land;

(ii) the land transformation and ongoing land transformation process described above enhances the productivity and profitability of land, ultimately increasing the value of the land; and

(iii) general market appreciation of land driven by increase in commodity prices and supply and demand dynamics in the land market. In this regard, during the last 30 years, since 1982, farmland prices in Argentina’s core production region have increased an average of 9.1% per year according to data published by Margenes Agropecuarios . The value of the farms we sold between 2006 and 2011, as well as our overall land portfolio, has been positively impacted by this external factor.

We believe we are one of the most active players in the land business in South America. During the last nine years, we have executed transactions for the purchase and sale of land for over $521 million. Our business development team is responsible for analyzing, selecting, acquiring and selling land. The team has gained extensive expertise in evaluating and acquiring farmland throughout South America, and has a solid understanding of the productivity potential of each region and of the potential for land transformation and appreciation. To date, the team has analyzed over 9.7 million hectares of farmland with a total value of approximately $13 billion. We have developed a methodology to analyze investment opportunities, taking into account price, transformation potential, productive model, financial projections, and investment requirements, among others. Our analysis also employs advanced information technology, including the use of satellite images, rain and temperature records, soil analyses, and topography and drainage maps. From time to time, we may leverage our favorable position in and knowledge of the land market to engage in opportunistic buying and selling transactions.

The following table sets forth our acquisitions and divestitures since our inception:


	Acquisition		Divestitures		Total Land Holdings
Year Ended December 31,	(In hectares)
2002		74,924		—		74,924
2003		—		—		74,924
2004		34,659		—		109,583
2005		22,103		—		131,686
2006		5,759		3,507		133,938
2007		113,893		8,714		239,117
2008		43,940		4,857		278,200
2009		—		5,005		273,195
2010		14,749		5,086		282,858
2011		13,003		2,439		293,423

Our Farms

Appraisal of Farms. In September 2011, in order to assess the market value of rural properties in Brazil, Argentina and Uruguay, we requested an appraisal by Cushman & Wakefield Argentina S.A., independent real estate valuation firm knowledgeable about the agriculture industry and the local real estate market. As part of these appraisals, the value of each of our properties was determined using the sales comparison approach taking into account current offerings and analyzed prices buyers had recently paid for comparable sites, adjusted for the differences between comparable properties and the subject property to arrive at an estimate of the value of the subject property. The major elements of comparison used to value the properties included the property rights conveyed, the financial terms incorporated into the transaction, the conditions or motivations surrounding the sale, changes in market conditions since the sale, the location of the real estate and the physical characteristics of the property.

The abovementioned valuations assumed good and marketable title to subject properties, which were assumed to be free and clear of all liens and encumbrances. The valuation did not include site measurements and no survey of the subject properties were undertaken. In addition, the valuations also assumed (a) responsible ownership and competent management of the subject properties; (b) there were no hidden or unapparent conditions of the subject properties, subsoil or structures that render the subject properties more or less valuable; (c) full compliance with all applicable federal, state and local zoning and environmental regulations and laws and (d) all required licenses, certificates of occupancy and other governmental consents were or can be obtained and renewed for any use on which the value opinion contained in the appraisals is based. Unless otherwise stated in the appraisals, the existence of potentially hazardous or toxic materials that may have been used in the construction or maintenance of the improvements or may be located at or about the subject properties was not considered in arriving at the opinion of value. These materials (such as formaldehyde foam insulation, asbestos insulation and other potentially hazardous materials) may adversely affect the value of the subject properties.

Cushman & Wakefield has informed us their assessment of the market value of our farmland as of September 30, 2011. According to Cushman & Wakefield, the market value of our farmland totaled $899.1 million, out of which $764.9 million correspond to the market value of our farmland in Argentina and Uruguay, and the remaining $134.2 million correspond to the market value of our farmland in Brazil. These valuations are only intended to provide an indicative approximation of the market value of our farmland property as of September 30, 2011 based on then current market conditions. This information is subject to change based on a host of variables and market conditions.


Farm	State, Country	Gross Si (Hectares)		Current Use
El Meridiano	Buenos Aires, Argentina		6,302	Grains
Las Horquetas	Buenos Aires, Argentina		2,089	Grains & Cattle
San Carlos	Buenos Aires, Argentina		4,239	Grains
Santa Regina	Buenos Aires, Argentina		3,618	Grains
Huelen	La Pampa, Argentina		4,633	Grains

La Carolina	Santa Fe, Argentina		8,297	Grains & Cattle
El Orden	Santa Fe, Argentina		6,860	Grains & Cattle
La Rosa	Santa Fe, Argentina		4,087	Grains & Cattle
San Jose	Santa Fe, Argentina		7,630	Grains
San Joaquín	Santa Fe, Argentina		37,082	Rice, Grains & Cattle
Carmen	Santa Fe, Argentina		10,020	Grains
Abolengo	Santa Fe, Argentina		7,476	Grains
La Cañada (1)	San Luis, Argentina		3,400	Grains
Santa Lucia	Santiago del Estero, Argentina		17,495	Grains & Cattle
El Colorado	Santiago del Estero, Argentina		4,970	Grains
La Guarida	Santiago del Estero, Argentina		15,451	Grains & Cattle
La Garrucha	Salta, Argentina		3,607	Grains
Los Guayacanes	Salta, Argentina		7,241	Grains
Ombú	Formosa, Argentina		18,320	Grains & Cattle
Oscuro	Corrientes, Argentina		33,429	Rice, Grains & Cattle
Itá Caabó	Corrientes, Argentina		26,650	Rice, Grains & Cattle
San Agustín	Corrientes, Argentina		5,067	Rice, Grains & Cattle
Alto Alegre	Tocantins, Brazil		6,082	Grains & Cotton
Conquista	Tocantins, Brazil		4,325	Grains & Cotton
Lagoa de Oeste	Bahia, Brazil		1,132	Coffee
Palmeira	Bahia, Brazil		1,000	Coffee
Heloisa	Bahia, Brazil		800	Coffee
Mimoso	Bahia, Brazil		902	Coffee
Rio de Janeiro	Bahia, Brazil		10,012	Grains & Coffee
Bela Manhã	Mato Grosso do Sul, Brazil		381	Sugarcane
Ouro Verde	Mato Grosso do Sul, Brazil		683	Sugarcane
Don Fabrício	Mato Grosso do Sul, Brazil		3,304	Sugarcane
Takuarê	Mato Grosso do Sul, Brazil		490	Sugarcane
Agua Branca	Mato Grosso do Sul, Brazil		1,675	Sugarcane
Nossa Senhora Aparecida	Mato Grosso do Sul, Brazil		540	Sugarcane
Sapálio	Mato Grosso do Sul, Brazil		6,062	Sugarcane
Carmen (Agua Santa)	Mato Grosso do Sul, Brazil		146	Sugarcane
La Pecuaria	Duranzo, Uruguay		3,177	Grains
Doña Marina	Corrientes, Argentina		14,749	Rice

Total			293,423

(1)	Acquired in November 2011, not included in Cushman Report

A substantial portion of our assets consists of rural real estate. The agricultural real estate market in Brazil, Argentina and Uruguay is particularly characterized by volatility and illiquidity. As a result, we may experience difficulties in immediately adjusting our portfolio of rural properties in response to any alterations in the economic or business environments. The volatility of the local market could affect our ability to sell and receive the proceeds from such sales, which could give rise to a material adverse effect on our business, results of operations and financial condition. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industries—A substantial portion of our assets is farmland that is highly illiquid.”

Land Leasing and Agriculture Partnerships. We enter into operating lease agreements based on criteria regarding the quality and projected profitability of the property, as well as our production and yield objectives in the short or medium term. Generally, we become aware of farms available for lease directly through the owners of farms near our farms and in some cases through regional brokers.

We tend to be more open to leasing farmland for sugarcane production than for our farming businesses, where we own the majority of the land that we farm. We lease land for our sugarcane production primarily because leases in this sector are long term, lasting between one or two sugarcane cycles (with each cycle lasting generally 6 years), which allows us to implement and reap the productivity benefits of our land transformation strategies. Sugarcane lease payments are established in terms of tons of sugarcane per hectare, depending on the productivity of the land in terms of tons per hectare and sucrose content per hectare and also on the distance from the land to the mill. Sugarcane prices are based on the market value of the sugarcane set forth by the regulations of the State of Sao Paulo Sugarcane, Sugar and Alcohol Growers Counsel ( Conselho dos Produtores de Cana-de-Açúcar, Açúcar e Álcool do Estado de Sao Paulo , or “Consecana”). Given the strategic location of our mills in the region and the inherent inefficiency of growing crops other than sugarcane in this region, we expect to be able to renew our leases for the sugarcane farmland with minimal issues.

With respect to our farming business, the initial duration of lease agreements is generally one harvest year. Leases of farmland for production of grains include agreements with both fixed and variable lease payments in local currency or U.S. dollars per hectare.

Land Management. We manage our land through an executive committee composed of a country manager, regional manager, farm manager and members of the Technology Adecoagro Group (“TAG”) that meet on a monthly basis. We delegate individual farm management to farm managers, who are responsible for farm operations and receive advisory support from TAG to analyze and determine the most suitable and efficient technologies to be applied. Our executive committee establishes commercial and production rules based on sales, market expectations and risk allocation, and fulfilling production procedures and protocols.

Following an acquisition of property, we make investments in technology in order to improve productivity and to increase its value. Occasionally when we purchase property, a parcel of the property is sub-utilized or the infrastructure may be in need of improvement, including traditional fencing and electrical fencing, irrigation equipment and machinery, among other things.

Property, Plant and Equipment

In addition to our farmland, we also own the following principal industrial facilities:


Facility	Province, Country	Relevant Operational Data	Current Use
“Christophersen”	Santa Fe, Argentina	18,700 tons of storage capacity. 2,400 tons per day of drying capacity	Seedbed and stockpiling plant (1)

“La Lácteo”(2)	Cordoba, Argentina	250,000 liters per day processing capacity	Dairy processing facilities

“Semillero Itá Caabó”	Corrientes, Argentina		Rice genetic improvement program


“Molino San Agustín”	Corrientes, Argentina	Processing capacity of 3,500 tons of brown rice monthly, and husk rice drying capacity of 450 tons per day	Brown rice processing and drying plant

“Molino Ala — Mercedes”	Corrientes, Argentina	Installed capacity of 5,000 tons of white rice monthly, and husk rice drying capacity of 2,400 tons per day	Rice processing and drying plant

“Molino Ala — San Salvador”	Entre Ríos, Argentina	Installed capacity of 5,000 tons of white rice monthly, and husk rice drying capacity of 1,100 tons per day	Rice processing and drying plant

Molino Franck	Santa Fe, Argentina	Processing capacity of 5,300 tons of brown rice monthly, and husk rice drying capacity if 1,800 tons per day	Rice processing and drying plant

“Angélica Agroenergía”	Mato Grosso do Sul, Brazil	Installed milling capacity of 4.0 million tons of sugarcane annually, 330,000 tons of VHP sugar and over 220,000 cubic meters of ethanol, and over 250,000 MWh	Sugar and ethanol mill producing hydrated ethanol, anhydrous ethanol and VHP sugar. Sells energy to local network

“Usina Monte Alegre”	Monte Belo, Brazil	Present milling capacity of 1.2 million tons of sugarcane annually, 120,000 tons of VHP and white sugar and over 40,000 cubic meters of ethanol and 50,000 MWh	Sugar mill producing VHP and white sugar and hydrated ethanol. Sells energy to local network

(1)	Classification of wheat and soybean seeds.

(2)	Joint venture of which we own 50%.

For additional information regarding our property, plant and equipment, see Note 6 of the consolidated financial statements.

Customers

In 2011, our sales amounted to approximately $548.1 million. Sales to our ten largest customers represented approximately 53% of our net sales in the year ended December 31, 2011. Of these customers, our biggest three customers represented, in the aggregate, approximately 29% of our sales for the year ended December 31, 2011, and the remaining seven customers, in the aggregate, represented approximately 22% of our net sales in the course of that year.

Competition

The farming sector is highly fragmented. Although we are one of South America’s leading producers, due to the atomized nature of the farming sector, our overall market share in some of the industries in which we participate is insubstantial. Our production volume, however, improves our ability to negotiate favorable supply, transportation and delivery logistics with our suppliers, third-party transporters, ports and other facilities, and customers. Although competition in agriculture varies considerably by product and sector, in general, there are a large number of producers, and each one of them controls only a small portion of the total production. Therefore individual

producers often have little influence on the market and cause little or no effect on market prices as a result of their individual strategies, explaining why producers are price takers and not price makers. In many cases, the price is established in international market exchanges. As the majority of agricultural products are commodities, which stifles product differentiation, the principal competition factors are cost of production and volume efficiency gains. In addition, agricultural producers face strong foreign competition, and with this competition the factors are often more difficult to identify.

The majority of farming producers in developed countries can rely on specific protectionist policies and subsidies from their governments in order to maintain their position in the market. In general, we have been able to obtain discounts for the acquisition of supplies and excess prices for our production in the farming sector. In this sector, we view SLC Agrícola S.A., BrasilAgro — Companhia Brasileira de Propriedades Agrícolas, Sollus Agrícola, Radar Propriedades Agrícolas, El Tejar S.A., Cresud SACIF y A, MSU S.A. and Los Grobo Agropecuaria, among others, as our competitors. We also compete in Argentina with retailers of agricultural products, including other branded rice products, such as Molinos Río de la Plata S.A., Dos Hermanos S.H., Sagemüller S.A. and Cooperativa Arroceros Villa Elisa Ltda.

The sugar and ethanol industries are highly competitive. In Brazil, we compete with numerous small-and medium-sized sugar and ethanol producers. Despite increased consolidation, the Brazilian sugar and ethanol industries remain highly fragmented, with more than 436 sugar mills. Some of the largest industry players with whom we compete are Cosan Ltd., Grupo São Martinho S.A., Açúcar Guarani S.A., Louis Dreyfus Commodities Brasil S.A., ETH Bioenergia S.A., Bunge, Grupo Zillo Lorenzetti, Grupo Carlos Lyra S.A. and Grupo Irmãos Biaggi. We also face competition from international sugar producers, such as those in the U.S. and the European Union, where local regulators have historically implemented tariffs, agriculture subsidies and/or other governmental incentive programs, of which some remain, to protect local sugar producers from foreign competition. The following table describes the Brazilian competitive landscape:


2011/2012 Harvest Year		Brazil
Number of Mills(l)		440
Sugarcane crushed		568.8 million tons
Ethanol Production		22.9 billion liters
Sugar Production		36.9 million tons

Source: Ministry of Agriculture & CONAB

(1)	Based on Center-South region only.

With respect to farmland, there have historically been few companies competing to acquire and lease farmland for the purpose of benefiting from land appreciation and optimization of yields in different commercial activities. However, we believe that new companies, may become active players in the acquisition of farmland and the leasing of sown land, which would add competitors to the market in coming years.

Supplies and Suppliers

Our principal supplies for our farming business are seeds, fertilizers, pesticides and fuel, which represented, respectively, 12%, 15%, 14% and 4% of our total direct expenditures (including leasing cost) for supplies and services and were collectively 45% of our total expenditure for supplies in the farming business during 2011. Further, these supplies represented 17% of our total production cost in 2011. As we use direct sowing in 99% of our planted area, without requiring soil preparation, fuel represents only 12% of the direct cost of production.

Our principal supplies for our sugar, ethanol and energy business are diesel lubricants and fertilizers, which collectively represented 24% of our total expenditures incurred in the sugar, ethanol and energy business in 2011. Further, these supplies represented 24% of our total production cost in 2010. We have an extensive network of suppliers for each of our business segments and for each required input within each segment, resulting in lower reliance on any particular supplier. Our ten largest suppliers account for 21% of our total expenditures for supplies in 2011. While we value the relationships we have developed with each of our suppliers given the quality we have come to expect, we do not consider any single supplier to be key to our production.

We have been able to obtain lower prices particularly due to the volume that derives from our large-scale operations.

Seasonality

Our business activities are inherently seasonal. We generally harvest and sell our grains (corn, soybean, rice and sunflower) between February and August, with the exception of wheat, which is harvested from December to January.- Coffee and cotton are unique in that while both are typically harvested from June to August, they require processing which takes about two to three months. Sales in our dairy business segment tend to be more stable. However, milk production is generally higher during the fourth quarter, when the weather is more suitable for production. The sugarcane harvesting period typically begins in April/May and ends in November/December. This creates fluctuations in our sugarcane inventory, usually peaking in December to cover sales between crop harvests ( i.e. , January through April). As a result of the above factors, there may be significant variations in our financial results from one quarter to another. In addition our quarterly results may vary as a result of the effects of fluctuations in commodities prices, production yields and costs on the determination of changes in fair value of biological assets and agricultural produce. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Policies and Estimates—Biological Assets and Agricultural Produce.”

Sustainability

Our production model is based on sustainability standards that seek to produce food and renewable energy on a long-term basis by preserving the natural resources involved in the production process. The sustainable approach to farming requires taking into account economic, social and environmental factors adapted to local circumstances. Natural resources are the main foundation of our activities, with land being the most relevant natural resource in our operations. We have developed a sustainable land use strategy that considers factors beyond the requirements of local law and regulations. There are ecosystems that we do not consider appropriate for the use of agricultural development, such as heavy forest and key wetlands, and there are others that we evaluate using (savannahs, natural grasses, bush land, lowlands) only after carrying out an environmental impact assessment. In addition to such evaluations, we analyze the agricultural potential of the land in respect of the soil, the climate, crop productivity and available technology, among other factors. We then consolidate our analysis into a land transformation plan, which includes the best land use option and implements best practices such as the “no-till” technology, crop rotations, integrated pest and weed management, balanced fertilization, responsible pesticide usage and water management. All these best practices aim to increase resource efficiency and to decrease the risk of contamination and waste production and are consolidated into an environmental management plan, which includes biodiversity management when applicable. We aim to properly implement our sustainable production model to enhance land productivity and therefore increase land value.

Standardized and Scalable Agribusiness Model

We are developing an agribusiness model that allows us to engage in large-scale farming activities in an efficient and sustainable manner. Our agribusiness model consists of developing a specialized workforce and defining standard protocols to track crop development and control production variables, thereby enhancing efficient decision making and facilitating continuous improvement. This approach allows us to grow in scale and execute our expansion plan and efficiently manage various production units spread across different regions by effectively replicating our productive model. Process standardization also helps us assure compliance with local law and regulations and reduce social and environmental risks.

We continue to develop and implement crop protocols. The purpose of these protocols is to coordinate and consolidate the knowledge on crop management for each area in order to standardize the implementation of these protocols. The protocols contain all the technical information for managing crops. This information is constantly reviewed by agricultural teams and their advisors, making it possible to preserve the technical knowledge of the company and at the same time improve agricultural production and make decisions pursuant to the company’s guidelines. Based on the results of the application of these protocols, we conduct an annual review of the techniques used and their results. This evaluation is done by means of crop campaign analysis, in which all teams review and discuss the last harvest year’s productive performance and the technological package for the new harvest year.

When processes and protocols are defined they can be audited and certified by qualified third parties. Adecoagro is currently in the process of certifying its crop production in Argentina under ISO 9001. We are also working to implement ISO 14001 and OHSAS 18001 in some operating units.

In order to achieve efficient scales of production, we have redesigned our field sizes by removing useless cattle infrastructure such as fencing. Larger fields reduce the overlapping of farmworks, enhancing operating efficiency, reducing the use of inputs and achieving agronomic timing (planting or harvesting on time). The goal is to reduce operative time and to improve efficiency in the use of inputs. Large-scale production also requires the implementation of advanced technology such as GPS (Global Positioning System), GIS (Geographic Information System) and modern machinery as well.

Contractors

Contractors play a significant role in our farming business model. We seek to outsource most of the typical farmwork, such as planting, spraying and harvesting. Outsourcing allows us to reduce our investments in heavy machinery and equipments such as tractors or harvesters, enhancing the efficient allocation of our capital in our core productive activities.

The contractor model in the Argentine humid pampas region has existed for over fifty years and has developed into a highly competitive market. Contractors have gained extensive expertise and skill in the management of agricultural machinery and have access to modern advanced technology. We seek to develop win-win relationships with our contractors by considering them as partners in our production and providing constant technical training and support through our TAG (as defined below) activities. We strive to have a number of contractors associated with each farm to generate competition and allow benchmarking to enhance operational efficiency and ensure high-quality service.

In regions where this model is not fully developed, we use a mixed system where we hire the most experienced contractors in the region and we also operate our own machinery. We promote the development of new contractors by providing training and selling them our used machinery. We also promote the movement of selected contractors from developed regions into new marginal regions by offering them an opportunity to grow their businesses. In other regions where there is no established contractor system or there is specific farmwork (rice land leveling for instance), we own 100% of the machinery. In our Sugar, Ethanol and Energy business, we own or lease and operate all the agricultural equipment and machinery needed for sugarcane planting and harvesting operations. Our main goal is to achieve high-quality farmwork, both when selecting any contractor or when using our own machinery. In Brazil we partially employ the contractor model only for specific tasks such as grain harvesting, land leveling, and aerial spraying among others.

Technical Adecoagro Group (TAG)

The TAG is an internal group formed by agronomists, farm managers, external advisors, contractors, trainees and suppliers, whose main goal is to excel in production management by providing constant technical education and analysis regarding production technologies. Although the TAG is focused on developing such knowledge under a common criteria for the whole company, it also considers different production systems, such as crops, rice and dairy in Argentina and Uruguay, crops in western Bahia, Brazil and sugarcane in Minas Gerais and Mato Grosso do Sul, Brazil. In order to achieve their goals, the group meets every 20 days to analyze and discuss technical aspects of the farming production processes.

The TAG participates in the definition of the optimal crop production mix for each farm and region, and supervises and evaluates the implementation of the most profitable and sustainable technologies to be adapted and applied in each region. Additionally, the TAG promotes specific external training courses, facilitates participation in external technical groups, organizes technical farm tours, offers support in establishing the crop planting plan and delivers a full-season analysis for each crop annually. The crop analysis is essential in order to allow technical improvements to be implemented for the following crop season.

Our TAG analyzes our land assets and meets on a monthly basis to design the most efficient and productive land use strategies for such land assets.

Since the TAG is involved in different regions, it plays a relevant role in spreading best practices among productive regions, including “no-till” in western Bahia. In order to evaluate and adapt the proper technologies locally, a vast network of test plots in agrochemicals, seeds, and farm-works are being carried out under specific technical guidelines. Such development is performed to make the necessary technological adjustments in respect of fertilizer levels, choice of the best product varieties for each crop, determination of the best planting periods and improvement in crop management and agricultural mechanization, resulting in higher yields coupled with reduced costs.

In order to continually improve our technical development, we participate in specialized industry groups, such as CREA and AAPRESID, with which we share values and goals. “CREA” is a 50-year-old farmers’ association focused on developing and supporting technical excellence with local farmers. “AAPRESID” is a technical association of highly innovative farmers specializing in no-till development. We participate in certain CREA and AAPRESID discussion groups in which we share and evaluate common technical matters. We take advantage of their vast network of test plots and we constantly exchange technological knowledge for implementation in our farms.

In addition, the TAG is focusing its resources on pursuing improvements in inputs usage by type of soil based on precision agriculture technology, intensification techniques relating to soil occupation times and diversified crop rotations, adjusting “no-till” in rice production, developing sugarcane production technologies involving agricultural mechanization and minimum tillage, and developing cotton production technologies involving “no-till” and crop rotation among others.

Technology and Best Practices

We have consistently used innovative production techniques to ensure that we are at the forefront of technological improvements and standards in our industry. For example, we use the “no-till” technology and “crop rotation” to improve our crop yields. We also practice the use of “second harvests” where conditions permit, allowing us to plant and harvest a second crop from the same farmland in the same harvest year. Our crop production model is based on balanced fertilization, integrated pest and weed management and crop intensification. In our coffee business, our ability to perform wet and dry grain treatment in the same productive facility contributes to obtaining the “specialty coffee” grade, opening up the gourmet coffee market to our products. We use the innovative silo bag storage method in our rice and crop businesses allowing us to time the entry of our rice production into the market at optimal price points. Additionally, we believe we were the first company in South America to implement the innovative “free-stall” infrastructure in dairy operations resulting in increased raw milk production compared to our peers. The free-stall method is a model that provides for better control over production variables by confining dairy cows to a large barn that is equipped with indoor corrals and a mechanical advanced milking system on a rotary platform, allowing us to utilize production efficiencies and thereby increase milk production volumes while maximizing our land use and resulting in significantly higher conversion rates of animal feed into milk.

Our sugarcane harvesting is 87% mechanized, which has significantly improved productivity while simultaneously reducing operating costs. We have modern facilities in the sugar and ethanol business including advanced sugar and ethanol mills with high-pressure boilers and that achieve one of the highest ratios of energy produced per ton of cane milled, according to the Cane Technology Center Benchmark program. Our Angélica sugar plant was the first continuously operative facility in Brazil, requiring no production stoppages between sugar batches.

No-Till

“No-till” is the cornerstone of our crop production technology and the key to maintaining and even increasing the value and productivity of our land assets. “No-till” — often called zero tillage or direct sowing — is a technology developed 25 years ago to grow crops from year to year without disturbing the soil through tillage.

Conventional farming consists of using plows to turn and till the soil to remove weeds, mix in soil additives such as fertilizers, and prepare the surface for seeding. Soil tillage leads to unfavorable effects such as soil compaction, loss of organic matter, degradation of soil components, death or disruption of microorganisms, evaporation of soil humidity and soil erosion where topsoil is blown or washed away by wind or rain.

“No-till” farming avoids these negative effects by excluding the use of tillage. The “no-till” technology consists of leaving crop plant residues on the surface of the soil after harvesting a crop. These residues form a mulch or permanent cover protecting the soil from erosion risks caused by heavy rains and strong winds. This protective cover also helps natural precipitation and irrigation water infiltrate the soil effectively and decreases water loss from evaporation. Fewer tillage passes help prevent soil compaction, allowing the soil to absorb more water and roots to grow deeper into the soil. Furthermore, “no-till” reduces the emergence of weeds and enhances biological processes that positively impact soil properties, conserving and even improving the presence of organic matter and microorganisms and associated nutrients (nitrogen, phosphorous, etc).

The combination of these advantages results in important cost reductions due to a lower use of inputs, mainly diesel, fertilizers and pesticides, and higher crop yields, thus increasing the profitability of our business. These benefits are achieved in the medium to long term, resulting in a continuous increase of land productivity and value. From an operational standpoint, “no-till” reduces the period required for land preparation and planting, which enhances the development of large-scale operations and improves the probability of planting each crop at the optimum moment.

Crop Rotation

Crop rotation is the practice of growing a series of dissimilar types of crops in the same area in sequential seasons. Crop rotation allows us to better control the buildup of harmful weeds and reduces the incidence of plagues and diseases that often occur when the same commodity is continuously cropped. Crop rotation also allows us to balance the fertility demands of various crops to avoid the excessive depletion of soil nutrients, contributing to a more efficient use of fertilizers and a sustainable use of herbicides and pesticides. Crop rotation results in increased yields and reduced production costs, providing a high rate of return. Our crop rotation model is tailored to each of our farming regions based on climatic and soil conditions. For example, in Argentina’s Humid Pampas, our three-year crop rotation cycle involves the planting of a wheat crop followed by a soybean double-crop in the first year, a corn crop in the second year, and a soybean crop in the third year. In Brazil, we pursue a six-year crop rotation cycle whereby we plant the following crop sequence: corn, cotton, soybeans, cotton, soybeans and cotton.

Second Harvest — Double Cropping

Second harvest, also known as “double cropping”, is the practice of consecutively producing two crops on the same land within the same growing year. Double cropping is possible only in regions with long growing seasons, which is determined mainly by climate conditions such as rain and temperature. Double cropping allows us to increase the profitability of our land, diversify our production and commercial risk and enhance operational efficiencies through a better utilization of machinery, freight, labor and other resources, resulting in a dilution of our fixed costs. Double cropping has important agronomical advantages as well, such as having crops on the land for a longer period of time, which, enhanced by “no-till” and crop rotation practices results in the improvement of the physical and chemical properties of the soil in the long term. We implement and adapt different double cropping systems for each of our productive regions in Argentina and Uruguay, with the most frequent being wheat/soybean, wheat/corn, sunflower/soybean, corn/soybean and sunflower/corn.

Integrated Pest Management (IPM)

Integrated pest management (“IPM”) involves a deep analysis of agronomical, economical and environmental aspects with the goal of determining the most efficient use of pesticides. It simultaneously achieves two main goals: (i) enhancing crop productivity and (ii) decreasing the risk of agrochemical contamination. The first stage of IPM is to train the people who will be involved in pesticide usage. The pesticide to be applied is selected considering local regulations (only locally approved pesticides are used) and the minimum resulting environmental risks due to its chemical classification. Additionally, when selecting biotechnologically developed crops, we evaluate the potential

reduction of pesticide uses that may be achieved. The doses of pesticides are defined by vendor recommendations and adjusted through agronomical expertise (specific to a crop and a pest). The timing of pesticide application is based on economic threshold that takes into account the crop situation (growing stage, climate conditions), the potential damage of the pest (type, population, growing stage), the presence of “beneficial” pests, and finally, the price relationship between grains and pesticides. We also use biological pest controls by breeding and releasing natural enemies of the relevant pest, as is the case with the borer plague in sugarcane. The relevance of the pest is measured by implementing specific scouting methodologies, which are adapted to large-scale farming. Scouting is carried out by trained employees who supervise all the fields on a weekly basis. The pesticide doses are applied by high-tech machinery, the majority of which is outsourced. IPM machinery is accurately calibrated to increase its application efficiency and to reduce any potential contamination risk. Climate conditions are taken into account, as well, in determining the optimal timing for spraying, to avoid drifting, evaporation and leakage risks.

Balanced Fertilization

Balanced fertilization consists of determining an optimum use of fertilizers at the proper grades and in the proper amounts to supply the correct ratio of nutrients and to ensure that the soil will sustain high crop yields over time, consequently decreasing contamination risks. At the beginning of each crop season, we perform extensive soil studies in each of our farms to control the amount of organic matter, nitrogen, phosphorus and potassium levels in each field. Based on this analysis and considering the potential yield for each field, the crop rotation, and relative prices between fertilizers and agricultural products, we determine the optimum amount of fertilizer to be applied in order to maximize the economic response of the crop.

Water management

Since crops need sufficient water to achieve their potential yields, we are engaged in techniques aimed to increase the efficiency of water usage and at the same time decrease soil erosion risks. In that regard, “no-till” presents strong advantages since it improves rainfall infiltration and increases the soil’s water storage capacity. In areas that may be subject to excess water, we are developing terraces, soil leveling and other techniques intended to decrease runoff and erosion risks. In some of the jurisdictions in which we operate, the use of water for irrigation requires obtaining special permits. For certain irrigated crops such as rice, we focus on the design and operation of rainwater harvesting, collecting water from rain in semi-natural reservoirs destined for future irrigation. Channels to conduct the water and drain the fields are developed by experts in order to deliver water in the most efficient manner. We are also developing the zero grade level system in some of our farms to increase productivity and reduce production costs. This technique involves a precise leveling of the land based on GPS and Laser technology. When fields are accurately leveled, water irrigation requirements are reduced, thus lowering the cost of labor and energy. Efficient management of irrigation results in a positive impact on yields. Additionally, as the fields can be larger, there are some operational benefits that can be achieved by reducing machinery working times. Other crops such corn seed, sunflower seed and coffee are irrigated by highly efficient pivot spraying systems. This type of irrigation system allows us to distribute water uniformly throughout the field, improving the use of water in terms of total millimeters per year. We conduct soil moisture sampling to define the best moment and amount of water to be used for irrigation in each plot.

Mechanization

We incorporate all available mechanization technology into our business that is cost-effective. We believe that by employing mechanization technology we improve our operating efficiency and are better able to reach desired economies of scale in our operations. Mechanization also enables us to adopt new associated technologies faster and hastens our development efforts. In our farming business, we are using cutting-edge mechanized technology for planting, spraying, harvesting and irrigating and for soil preparation and management. We also employ advanced mechanization technology in our logistics and product processing operations, including transportation, drying operations and grain sorting and storage. We are in the process of developing mechanization technology to benefit our other businesses, such as coffee and sugarcane planting, which traditionally have not benefitted from such mechanization.

Synergies

The technologies we employ are very closely linked, and the joint implementation of a number of them will result in positive synergies for our entire production system. For example, implementation of the “no-till” technology can be enhanced by crop rotations, due to the positive biological effects generated by the different types of roots from each crop in the soil. Benefits of integrated pest management are improved when combined with the “no-till” and crop rotation strategies, since the crop stubble that remains on the soil can be a barrier to some plagues, and because some other pests are specific to a particular crop and the crop rotation can be sufficient to control them. We consider these synergies when we develop our crop seeding schedule.

Information Technology

We employ the World Class ERP Oracle eBusiness Suite to standardize and integrate our processes throughout the company and improve controls and information accuracy and consolidation. The Oracle eBusiness Suite allows us to fulfill our local accounting and fiscal needs while facilitating operational coordination across our geographic areas and lines of business, reducing our operational costs and minimizing duplication and inefficiencies. It also provides our management with consolidated results in a timely manner. In addition, our integrated security plan includes an offsite safeguarded system that guarantees business continuity.

Environmental Responsibility

We are developing a production model that reflects a strong commitment to the environment. Our responsibility to the environment begins with complying with local regulations. Natural resources such as land, water and biodiversity are taken into account when we evaluate both the development of a new production project and the operation of an on-going one. In that regard, we are constantly evaluating best practices to be implemented our operations. See “—Technology and Best Practices.” In order to be better stewards of the environment, we are in the process of developing and implementing environmental management plans for our operations. Those plans involve different stages, which are mainly educating our own and outsourced staff, monitoring ecological parameters, preventing negative effects, and correcting deviations. With respect to pesticide contamination risks, we are implementing a responsible pesticide use program, which includes personnel training, personnel protection elements, application recommendations, pesticide selection criteria, pesticide handling and storage and after-use pesticide packages management (which are specifically cleaned, collected and stored for recycling purposes under third parties’ programs such as AgroLimpio of Argentina) .

Additionally, in some regions where biodiversity matters are relevant, we are implementing biodiversity management plans, which mainly consists of periodically monitoring flora and fauna, detecting significant variations of their populations, and proposing measures to reduce any potential threats to local species. As a result of this, we are implementing some practices such as prohibiting hunting on our farms in Argentina, developing environmental private protection areas (where natural vegetation is protected by implementing sustainable production practices). As environmental matters require specific expertise and an understanding of complex relationships, we are entering into cooperative arrangements and agreements with educational institutions, such as the Faculty of Natural and Exact Sciences of the University of Buenos Aires ( Facultad de Ciencias Exactas y Naturales de la Universidad de Buenos Aires , Argentina ) . We are also developing relationships with well recognized environmental non-governmental organizations, such as The Nature Conservancy.

In Brazil, one of our main environmental focuses is compliance with the applicable provisions of the Brazilian Forestry Code ( Código Florestal ) . Accordingly, we analyze and identify all natural areas inside our own farms and inside leased areas, and make a development plan that defines actions for their preservation. Some examples of these activities are the reforestation of Permanent Preservation Areas ( Áreas de Preservación Permanente ) and Legal Reserve Areas ( Áreas de Reserva Legal ), for which we are producing seedlings of more than 70 native species to reforest those areas. We are strongly committed to the preservation of forests, and we only develop areas for farming if they were previously used for agricultural purposes or for pasture. We do not engage in deforestation. We concern ourselves with the protection of riverbanks and surrounding areas of streams and springs, as they are important for soil conservation and as refuges for native fauna. In that regard, we are implementing periodic monitoring of wildlife and native flora as well. We have a partnership with The Nature Conservancy (“TNC”), an international environmental non-governmental organization, to organize the environmental preservation of areas of ecological

importance by acquiring such areas to replace reserve areas on our own land and land we lease, through a reserve compensation scheme developed by TNC and adopted by the regional environmental authorities. This program will allow us to protect larger blocks of critical ecosystems instead of having smaller reserve areas in each farm, while allowing us to use areas in our farms that were previously developed and would have lesser environmental value as reserve areas.

As part of our best practices programs, we are in the process of developing a certification process to achieve carbon credits from bagasse cogeneration at our Angélica and UMA sugarcane mills in Brazil. The pre-feasibility assessment was carried out using the methodologies of Clean Development Mechanism (“CDM”) of the United Nations, and delivered a potential reduction of approximately 300 thousands tons of CO2 during seven years. We are also evaluating bio-gas production from manure in our free-stall dairy operation in Argentina as another emissions reduction program. In that regard, we received a grant from Sustainable Energy and Climate Change Initiative from Inter-American Development Bank (SECCI) in order to carry out a pre-feasibility assessment. This project is currently under development and it plans to consider the potential of capturing methane gas from adequately managed manure of dairy cows, which could be used to co-generate electricity. This emission reduction could also generate extra income from carbon credits under the CDM program. At UMA, we have implemented a pilot plant that produces biogas from vinasse, developed in partnership with Efficiencia, a subsidiary of Companhia Energética de Minas Gerais (“CEMIG”). The technology developed during this project will allow us to generate additional energy from vinasse while maintaining the fertilizer recycling potential of UMA.

Social Programs

Apart from complying with local labor regulations, we seek to promote the personal and professional development of our employees by offering them an adequate working environment with proper health and safety protections. We aim to develop a transparent relationship with local authorities. Finally, one of our main goals is to contribute positively to the social development of the communities in which we operate, creating new jobs, preserving the environment, providing training opportunities through our internship program and assisting with social development. In order to implement our social development programs, we analyze the areas in which we operate with the highest impact, education and poverty rates, possible alliances with other social actors, and potential synergies with local government programs. In addition to social development programs, we contribute to community organizations in each area where we operate, such as hospitals, schools, daycare centers and fire stations, among others. We also have a voluntary matching program where each donation from our employees is matched two times by Adecoagro.

Education

Our sugarcane and rice operations have a very important economic impact in the communities where we are located, and we have developed a Social Action Program in the various municipalities. In 2005, we commenced a partnership with Cimientos in Corrientes and Santa Fe in Argentina, through which we have awarded 26 educational programs in 36 urban and rural schools located close to our rice operations. Cimientos is a non-profit organization that promotes equal educational opportunities for children and youth from low income families in Argentina.

Additionally, we have partnered with Fundação Bradesco in Mato Grosso do Sul, Brazil, working with the local municipalities of Angélica and Ivinhema to re-train teachers at their schools, aiming to improve the performance of public schools to a level of regional excellence. In addition, our technical teams, such as our Sugar & Ethanol Environmental Team, hold regular seminars at local schools where they promote the participation of students in environmental related projects, such as the reforestation efforts at the Angélica mill site. In addition, our employees perform educational volunteer work at several local institutions and non-governmental organizations.

Nutrition

In Argentina, we work in partnership with Conin Foundation, which fights malnourishment in children, dealing with malnutrition in an integral way and focusing its actions in three main aspects: education, assistance and research. In 2011, we donated nearly 12 tons of powdered milk and one ton of processed rice. We also work in partnership with the Argentine Food Bank Network, to whom we are currently donating approximately 100 tons of

processed rice. This network operates in 15 cities and is a nonprofit distribution enterprise that serves the community by acquiring donated food and making it available to people who are hungry through a network of community agencies. These agencies include school feeding programs, food pantries, soup kitchens, hospices, substance abuse clinics, after-school programs and other nonprofit organizations. Additionally, we have been contributing food to Solidagro, an alliance between rural corporate institutions and civic organizations that seek to solve famine and malnutrition problems, since 2007. We are also collaborating with selected soup kitchen initiatives such as Caritas Christophersen, San Gregorio Foundation and Mercedes City Soup Kitchen.

In Brazil, we support various local schools, daycare centers, homes for the elderly, and APAEs (local associations supporting the seriously handicapped in the community) through sugar donations. Due to these initiatives, UMA was certified by the ABRINQ Foundation as a Child Friendly Enterprise.

Internship Program

The purpose of our internship program is to promote the development of highly qualified professionals for the community by providing first-time work experience, good quality training and access to highly technology-oriented operations. We seek to facilitate interns’ future access to the job market while detecting potential key employees. The interns actively participate in the TAG training program which includes monthly technical meetings, external training and farm tours. In order to accomplish these goals we promote institutional relationships with local and international universities and high schools. Over 250 interns have participated in our program during the last 9 years, of which 55 were subsequently incorporated into our teams.

Material Agreements

For a description of the material agreements relating to our indebtedness, please see “Item 5.—Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness and Financial Instruments.”

Argentina

Agreement with Quickfood S.A.

Until December 2009, we owned approximately 58,348 head of cattle — other than our cattle used for the production of raw milk — which we fattened for sale to meat processors and in local livestock auction markets. Our cattle business primarily consisted of beef fattening activities during the year ended December 31, 2009. In December 2009, we strategically decided to sell substantially all of our cattle herd — other than our cattle used for the production of raw milk — to Quickfood, an Argentine company listed on the Buenos Aires Stock Exchange that is a subsidiary of the Brazilian company Marfrig, for a purchase price of $14.2 million. The transaction contemplated the sale of 55,543 head of cattle, certain equipment related thereto and the trademark “Pilagá” for certain international classes. In addition, we agreed to lease Quickfood (i) approximately 74,000 hectares of grazing land located in the Argentine provinces of Corrientes, Formosa, Santa Fe and Santiago del Estero, under an operating lease agreement for an annual price equal to the equivalent in Argentine Pesos of 30 kilograms of meat per hectare, calculated in accordance with the Steer Index of the Liniers Market (INML), for a period of 10 years, renewable by the parties; and (ii) two feed lots located in the provinces of Corrientes and Santa Fe, Argentina, for an annual price of $25,000 each. As required by antitrust law, we reported this transaction to the CNDC. The CNDC’s administrative approval of the transaction is pending. We do not believe that the CNDC will object to the form and substance of the transaction. In March, 2011, we authorized Quickfood to sublease approximately 27,000 hectares to Equity Trust Company Argentina S.A. as trustee for the trust Fideicomiso Financiero Ganadero Cría I . Notwithstanding such sublease, the duties and obligations of Quickfood under the original lease agreement remain unchanged.

Milk Supply Agreement

In November 2007, Adeco Agropecuaria S.A. entered into a milk supply offer agreement with La Lácteo S.A., which was later amended on February 1, 2010, and pursuant to which Adeco Agropecuaria S.A. committed to sell to La Lácteo, and La Lácteo committed to purchase, approximately 80,000 liters of our milk production per day, subject to certain conditions. Notwithstanding the above, Adeco Agropecuaria S.A. is not obligated to sell to La Lácteo and La Lácteo is not obligated to purchase from Adeco Agropecuaria S.A. more than 50% of its milk requirements for a four-month period, provided however, that our milk production in excess of such volume is managed by La Lácteo S.A. in order to take advantage of the best valuation opportunities as industry sales in the raw milk spot market. The milk supply offer agreement fixes the price of milk that La Lácteo pays to Adeco Agropecuaria S.A. at the average milk price for each month plus a 3% premium. The milk supply agreement terminates in November 2017. In addition, if Adeco Agropecuaria S.A. receives a proposal from a third party for the supply of milk that is more favorable to Adeco Agropecuaria S.A. than the terms set forth in the milk supply agreement with La Lácteo, Adeco Agropecuaria S.A. may sell milk to such third party. However, La Lácteo has a right of first refusal upon Adeco Agropecuaria S.A.’s receipt of such third-party offer to purchase milk from Adeco Agropecuaria S.A. at the specified higher price.

Consignment Contract with Establecimiento Las Marías

Pursuant to a consignment contract dated February 19, 2000, entered into by Establecimiento Las Marias S.A.C.I.F.A. (“Las Marias”) and Molinos Ala S.A. (currently Pilagá S.A.), Las Marias has an exclusive license to sell the products or imports of Pilagá S.A. in Argentina. For its services, Las Marias collects a commission of 11.56%, calculated over the gross amounts of the sales made by Las Marias on behalf of Pilagá S.A., net of 10% of commercial discounts, before VAT and any other applicable tax that is applied in any invoicing. The term of the agreement is one year as from March 1, 2000, automatically renewable for additional one-year periods.

Acquisition of Assets from Galicia Warrants S.A.

On July 8, 2009, Pilagá S.A. acquired from Galicia Warrants S.A. the following assets: (i) real property consisting of a silo plant facility located in San Salvador, Province of Entre Ríos, Argentina for a purchase price of $1,823,226, to be paid in 10 annual installments of $192,500 each, plus interest at a rate of 1% per annum over any unpaid amount; and (ii) certain equipment including (a) 22 silos; (b) four grain dryers; (c) four grain pre-cleaning machines; and (d) plant control equipment, for the amount of $3,385,991 plus VAT at a rate of 10.5%, to be paid in 10 annual installments of $357,500 each, plus interest at a rate of 1% per annum over any unpaid amount. As collateral for its payment obligations, Pilagá S.A. granted a first priority mortgage over the acquired real property in favor of Galicia Warrants S.A. in the amount of $5.5 million.

Brazil

Sugar Sale Agreement

On March 23, 2010, Angélica entered into a Sugar Sales Agreement with Bunge that was later amended on June 17, 2010. Under this agreement, Angélica would sell Bunge a total amount of 230,000 metric tons of Brazilian VHP (very high polarization) raw sugar which was delivered throughout 2010 and 2011. The term of the agreement is for two crop years, beginning in 2010/2011 and ending in 2011/2012. For each crop year, the price shall be fixed by Angélica or as agreed to by the parties in reference to the NY11 futures contract prices for any specific month and the degree of polarization, less certain defined delivery. Deliveries are to take place between July and January of each crop year.

On January 11, 2011, Angélica entered into a Sugar Sales Agreement with Louis Dreyfus Commodities Suisse S.A. Under this agreement, Angélica sold to Dreyfus a total amount of 35,000 metric tons of Brazilian VHP (very high polarization) raw sugar which was delivered between May and July of 2011 in the port of Paranagua. The price was fixed by Angélica and agreed to by the parties in reference to the NY11 futures contract price for any specific month and degree of polarization, less certain defined delivery costs. These sales totaled $26.4 million in 2011

Electric Energy Agreements

In the beginning of 2009, UMA entered into a 10-year agreement for the sale of energy to CEMIG, under which UMA sells to CEMIG 9 MW of energy (approximately 52,704 MWh) during the harvest periods each year (May to November of each year) at a rate of R$184.15 per megawatt hour. As of December 31, 2010, UMA had received R$8 million under this agreement corresponding to the full contractual supply. The above-mentioned rate is adjusted annually to account for inflation and tariff discounts .

Angélica entered into an agreement under which Angélica supplies energy to CCEE. This agreement is a result of a public auction promoted by the Brazilian federal government, carries a term of 15 years, and involves Angélica supplying CCEE with 87,600 MWh annually during the harvest periods each year (May to November), at a rate of R$180.26 per megawatt hour. The agreement sets forth annual fixed revenues for Angélica of R$13.8 million, adjusted annually to account for inflation. As of December 31, 2010 Angélica had received R$9.8 million under this agreement.

In addition, in June 2008, Angélica entered into an agreement for connection to the electricity distribution grid with Enersul — Empresa Energética do Mato Grosso do Sul (“Enersul”), through which Angélica would connect to Enersul’s electric distribution grid in order to effect the transportation of Angélica’s produced energy within Enersul’s concession area. The agreement is effective until the termination of Angélica’s authorization to generate electricity or the termination of the concession of Enersul, whichever occurs first.

In August 2010, Angélica participated in a public auction promoted by the Brazilian federal government. As a result of this auction, Angélica entered into second 15-year agreement with CCEE starting in 2011, for the sale of 131,400 MWh per year at a rate of R$154.25/MWh. The delivery period for both agreements starts in May and ends in November of each year. The rates under both agreements are adjusted annually for inflation by reference to the IPCA

Intellectual Property

As of December 31, 2011, our corporate group owned 49 trademarks registered with the Argentine National Intellectual Property Institute and had 8 trademarks in the process of registration. Also, Adeco Brasil and UMA owned 7 trademarks registered with the Brazilian National Industrial Property Institute (“INPI”), and had submitted 17 trademark registration requests, all of which are currently being challenged by third parties or were initially denied by INPI. In addition, Adeco Agropecuária Brasil S.A. had submitted one trademark registration request for rice.

In Argentina, we are required to renew our trademark registrations when they expire at the end of their respective terms. Under the Argentine Trade and Service Marks Law No. 22,362, the term of duration of a registered trademark is 10 years from its issue date, and a trademark may be indefinitely renewed for equal periods thereafter if, within the five-year period prior to each expiration, the trademark was used in the marketing of a product, in the rendering of a service or as the designation of an activity.

In Brazil, title to a trademark is acquired only once its valid registration has been issued by the INPI. During the registration process, the person requesting the trademark merely has an expectation of the right to use the trademark to identify its products or services. Under Law No. 9,279, of May 14, 1996 (the Brazilian Industrial Property Law), the holder of a trademark has the right to its exclusive use throughout Brazil. The term of duration of a registered trademark is 10 years from its issue date, and a trademark may be indefinitely renewed for equal periods thereafter. Within a five-year period from the issue date, the owner has an obligation to use the trademark in the marketing of a product, in the rendering of a service or as the designation of an activity. If the owner does not use the trademark within such five-year period, it may be subject to a forfeiture process, upon request of any third party with legitimate interest in the trademark. The same forfeiture process may occur if the owner fails to use the trademark for any five-year period, continuously. If the trademark is declared forfeited, the trademark rights are terminated.

We do not own any registered patents, industrial models or designs.

Insurance

The type and level of insurance coverage we obtain is determined based on consultation with leading insurance brokers. We carry policies with leading U.S., European, and local insurance companies, and we are currently insured against a variety of risks, including losses and damages relating to our plants, equipment and buildings. We believe our level of insurance coverage is customary and appropriate for a company of our size and with respect to our activities. Our insurance currently covers only part of the losses we may incur and does not cover losses on crops due to hail storms, fires or similar risks.

Legal and Administrative Proceedings

In the ordinary course of business, we are subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, social security, labor lawsuits and other matters. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings.”

Environmental Regulations and Compliance

Our businesses in the various emerging market countries in which we operate are subject to comprehensive national, state and municipal laws and regulations relating to the preservation and protection of the environment to which those businesses must adhere. These laws and regulations require some of our businesses to obtain permits or licenses that have to be renewed periodically in order to allow us to continue to operate. If such permits or licenses lapse or are not renewed or if we fail to obtain any required environmental licenses and permits, or if we do not comply with any other requirements or obligations established under the applicable environmental laws and regulations, we may be subject to fines or criminal sanctions and might face partial or total suspension of our operations and suspension or cancellation of our environmental licenses and permits. In addition, our businesses which hold debt from banks, and multilateral lenders in particular, are typically required to adhere to environmental standards that exceed those of the country in which the business operates ( e.g. , World Bank standards).

We are currently either in compliance with or are in the process of applying for permits that would put us in compliance with all applicable environmental laws and material environmental licenses and permits. Specifically, the operational license of UMA is currently being renewed. In December 2008 we requested operational licenses for our Lagoa do Oeste, Heloísa, Palmeira and Mimoso farms in Brazil, which as of December 31, 2010 are still pending. We are currently finalizing the process of “geo-referencing” our Conquista and Alto Alegre farms in Brazil in order to apply for the relevant operational licenses. On May 25, 2010, we applied for the operational license for the Angélica mill to mill up to 4 million tons of sugarcane per year, and the license was granted by IMASUL on November 11, 2010. On November 26, 2010, we obtained a preliminary license ( licença prévia ) for the Ivinhema mill, and on June 27, 2011, we obtained the installation license ( licença de instalação ) from IMASUL for the commencement of the construction and assembly of the first and second phase of the Invinhema mill, for a nominal crushing capacity of up to 3.6 million tons of sugarcane.

Our operating businesses have the required environmental monitoring, equipment and procedures, and we utilize third-party contractors to conduct regular environmental audits. Our environmental expenses relate to consultants we use to perform environmental impact studies for our development projects and control and monitoring procedures. However, as environmental regulations are expected to become more stringent in some of the countries where we operate, our environmental compliance costs are likely to increase due to the cost of compliance with any future environmental regulations. While we are not aware of any material environmental liabilities related to our ongoing operations, we may be subject to cleanup costs, which we do not expect to be material.

Regulation and Control of Agri-Food Production in Argentina

The National Office of Agricultural Commerce Control ( Oficina Nacional de Control Comercial Agropecuario , or “ONCCA”) created on November 27, 1996, as a decentralized entity of the Ministry of Agriculture was the agency responsible for controlling the commercialization and manufacturing of agricultural livestock, meat and dairy products in Argentina.

As of February 25th, 2011 the ONCCA was dissolved pursuant to Decree No. 192/2011. The faculties previously held by the ONCCA have been transferred to the Ministry of Agriculture and to a new entity incorporated ( Unidad de Coordinacion y Evaluacion de Subsidios al Consumo Interno ) by means of Decree No. 193/2011, intended exclusively for the protection and promotion of activities and granting subsidies. As a result, the Ministry of Agriculture is the enforcement authority of the decrees issued by the ONCCA and is in charge of monitoring the agricultural compliance with the commercialization regulations. Furthermore, the new entity integrated by Ministers and officials from the Ministry of Economy, Ministry Agriculture and Industry and the AFIP will be responsible for the administration, allocation and payment of subsidies to wheat, corn and soybean, and will be in charge of the registry for the export of cattle.

Under applicable regulations, all persons involved in the commercialization and manufacturing of grains and dairy products must be registered with the National Registry of Operators of the Commercial Agri-Food Chain ( Registro Único de Operadores de la Cadena Comercial Agropecuaria Alimentaria , or “RUO”), which provides for registration of any individual or company involved in the trade and industrialization of agri-food products in the markets for grains, livestock and dairy products and their by-products and/or derivatives. This registration must be renewed each year. Grain producers must stock grains at facilities and must keep a record of the grain stock stored at such facilities. Failure to register with the RUO, or cancellation of such registration, will lead to requirements that the operator cease its operating activities and closure its facilities.

In the event of a violation of any of the applicable regulations, sanctions may be imposed, including fines and suspension or cancellation of the registration, which would result in the immediate cessation of activities and closure of facilities.

C. ORGANIZATIONAL STRUCTURE

Corporate Structure

As of December 31, 2011, we hold approximately 98.6% of the interests in IFH, which, directly and indirectly, owns approximately 100% of the outstanding interests in Adecoagro LP, a holding company with operating subsidiaries owning farmland and facilities throughout Argentina, Brazil and Uruguay. A few of the existing shareholders prior to our IPO own a 1.4% stake in IFH, with a de minimis remaining interest owned by Ona Ltd., our substantially wholly-owned subsidiary. We are a corporation organized under the laws of the Grand Duchy of Luxembourg under the form of a société anonyme and were formed as a holding company for the purpose, among others, of facilitating an IPO of common shares. Prior to the IPO, IFH completed certain reorganization transactions, which we refer to as the “Reorganization”, and became our majority-owned subsidiary.

As of December 31, 2011, our principal shareholders were Quantum Partners LP (Soros Fund Management LLC serves as principal investment adviser to Quantum Partners LP), HBK Master Fund LP, Al Gharrafa Investment Company, and Stichting Pensioenfonds Zorg en Welzijn. See “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”

For a diagrame of our Organizational structure as of December 31, 2011, please see “ Item 4. Information of the Company – A.HISTORY AND DEVELOPMENT OF THE COMPANY. History”

During 2011, Adecoagro contributed the IPO net proceeds in IFH LP, increasing its interest to 98.64%.

During March, 2012, we issued 696,618 shares to certain limited partners of IFH in exchange for their residual interest in IFH, totaling 0.57230%, thereby increasing our interest in IFH to 99.2%.

D. PROPERTY, PLANTS AND EQUIPMENT

See “—B. Business Overview—Land Transformation—Our Farms”; “—Property, Plant and Equipment.”

Item 4A. Unresolved Staff Comments

Not applicable.

Item 5. Operating and Financial Review and Prospects

Overview

We are engaged in agricultural, manufacturing and land transformation activities. Our agricultural activities consist of harvesting certain agricultural products, including crops (soybeans, corn, wheat, etc.), rough rice, coffee and sugarcane, for sale to third parties and for internal use as inputs in our various manufacturing processes, and producing raw milk. Our manufacturing activities consist of (i) selling manufactured products, including processed rice, sugar, ethanol and energy, among others, and (ii) providing services, such as grain warehousing and conditioning and handling and drying services, among others. Our land transformation activities consist of the acquisition of farmlands or businesses with underdeveloped or underutilized agricultural land and implementing production technology and agricultural best practices to enhance yields and increase the value of the land. Please see also “—Risks Related to Argentina—Argentina law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “—Risks Related to Brazil— Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.”

As further described below, we are organized into three main lines of business: farming; sugar, ethanol and energy; and land transformation. These lines of business consist of seven reportable operating segments, which are evaluated by the chief operating decision-maker based upon their economic characteristics, the nature of the products they offer, their production processes and their type and class of customers and distribution methods. Our farming business is comprised of five reportable operating segments: Crops, Rice, Dairy, Coffee and Cattle. Each of our Sugar, Ethanol and Energy and Land Transformation lines of business is also a reportable operating segment.

There are significant economic differences between our agricultural and manufacturing activities. Some of our agricultural activities generally do not involve further manufacturing processes, including those within the crops, dairy, coffee and cattle segments. These activities are also included within the crops segment. Our other agricultural activities in the rice and sugar, ethanol and energy segments generally involve further manufacturing processes, comprising our manufacturing activities. The table below sets forth our agricultural and manufacturing activities by segment.


Segment	Agricultural Product	Manufactured Product & Services Rendered
Crops	Soybean Corn Wheat Sunflower Cotton	Grain drying & conditioning

Rice	Rough rice	White rice & brown rice

Dairy	Raw milk	Processed milk, and dairy products

Coffee	Coffee	—

Cattle	Head or kilograms of cattle	Land leasing

Sugar, Ethanol and Energy	Sugarcane	Sugar, Ethanol and Energy

We structure the revenue and cost section of our statement of income to separate our “Gross Profit from Manufacturing Activities” from our “Gross Profit from Agricultural Activities” as further described below:

Manufacturing Activities

The gross profit of our manufacturing activities is a function of our sales of manufactured products and services rendered and the related costs of manufacturing those products or delivering those services. We recognize an amount of revenue representing the actual dollar amount collected or to be collected from our customers. Our principal costs

consist of raw materials, labor and social security expenses, maintenance and repairs, depreciation, lubricants and other fuels, among others. We obtain our raw materials principally from our own agricultural activities and, to a lesser extent, from third parties.

Agricultural Activities

Our agricultural activities involve the management of the biological transformation of biological assets into agricultural produce for sale to third parties, or into agricultural products that we use in our manufacturing activities. We measure our biological assets and agricultural produce in accordance with IAS 41 “Agriculture.” IAS 41 requires biological assets to be measured on initial recognition and at each balance sheet date at their fair value less costs to sell, with changes in fair value recognized in the statement of income as they occur. As market determined prices are generally not available for biological assets while they are growing, we use the present value of expected net cash flows as a valuation technique to determine fair value, as further discussed below in “—Critical Accounting Policies and Estimates.” In addition, agricultural produce at the point of harvest is measured at fair value less costs to sell, which is generally determined by reference to the quoted market price in the relevant market. Consequently, the gains and losses arising on initial recognition and changes in fair value of our biological assets and the initial recognition of our agricultural produce at the point of harvest are accounted for in the statement of income in the line item “Initial recognition and changes in fair value of biological assets and agricultural produce.”

After agricultural produce is harvested, we may hold it in inventory at net realizable value up to the point of sale, which includes market selling price less direct selling expenses, with changes in net realizable value recognized in the statement of income when they occur. When we sell our inventory, we sell at the prevailing market price and we incur direct selling expenses.

We generally recognize the agricultural produce held in inventory at net realizable value with changes recognized in the statement of income as they occur. Therefore, changes in net realizable value represent the difference in value from the last measurement through the date of sale on an aggregated basis.

We consider gains and losses recorded in the line items of the statement of income “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest” to be realized only when the related produce or manufactured product is sold to third parties and, therefore, converted into cash or other financial assets. Therefore, “realized” gains or losses mean that the related produce or product has been sold and the proceeds are included in revenues for the year.

The sale of agricultural produce is revenue as defined in IAS 18. However, IAS 41 does not provide guidance on the presentation of revenues and costs arising from the selling of biological assets and agricultural produce. Due to the lack of guidance in IAS 41 and based on IAS 1, “Presentation of financial statements,” we present, as a matter of accounting policy, our sales of biological assets and agricultural produce and their respective costs of sale separately in two line items in the statement of income. The line item “Sales of agricultural produce and biological assets” represents the consideration received or receivable for the sale to third parties based generally on the applicable quoted market prices of the respective produce or biological asset in the relevant markets at the point of sale. At the point of sale, our agricultural produce is measured at net realizable value, which reflects the sale price less the direct cost to sell, and our biological assets are measured at fair value less cost to sell, in each case, using the applicable quoted market prices in the relevant markets.

The line item “Cost of agricultural produce sold and direct agricultural selling expenses” consists of two components: (i) the cost of our sold agricultural produce and/or biological assets as appropriate plus (ii) in the case of agricultural produce, the direct costs of selling, including but not limited to, transportation costs, export taxes and other levies. The cost of our agricultural produce sold represents the recognition as an expense of our agricultural produce held in inventory valued at net realizable value. The cost of our biological assets and/or agricultural produce sold at the point of harvest represents the recognition as an expense of our biological assets and/or agricultural produce measured at fair value less costs to sell, generally representing the applicable quoted market price at the time of sale. Accordingly, the line item “Sales of agricultural produce and biological assets” is equal to the line item “Cost of agricultural produce plus direct agricultural selling expenses.”

Accordingly, we receive cash or consideration upon the sale of our inventory of agricultural produce to third parties but we do not record any additional profit related to that sale, as that gain or loss had already been recognized under the line items “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest,” as described above.

Land Transformation

The Land Transformation segment includes two types of operations. The first relates to the acquisition of farmlands or businesses with underdeveloped or underutilized agricultural land (land which we have identified as capable of being transformed into more productive farmland by enhancing yields and increasing its future value). When we acquire a farmland business for an acquisition price below its estimated fair value, we recognize an immediate gain (a “purchase bargain gain”). The land acquired is recognized at its fair value at the acquisition date and is subsequently carried at cost under the cost model in IAS 16.

The second type of operation undertaken within this segment relates to the realization of value through the strategic disposition of assets (i.e. farmland) that may have reached full development potential. Once we believe certain land has reached full growth potential, we may decide to realize such incremental value through the disposition of the land.

The results of these two activities (purchase bargain gains as a result of opportunistic acquisitions of businesses with underdeveloped or underutilized land below fair market value, and gains on dispositions reflecting the ultimate realization of cash value on dispositions of transformed farmlands) are included separately in the Land Transformation segment.

Land transformation activities themselves are not reflected in this segment; rather, they are reflected in all of our other agricultural activities in other segments. The results of our land transformation strategy are realized as a separate activity upon disposition of transformed farmlands and other rural properties.

OPERATING RESULTS

Trends and Factors Affecting Our Results of Operations

Our results of operations have been influenced and will continue to be influenced by the following factors:

(i) Effects of Yield Fluctuations

The occurrence of severe adverse weather conditions, especially droughts, hail, floods or frost, are unpredictable and may have a potentially devastating impact on agricultural production and may otherwise adversely affect the supply and prices of the agricultural commodities that we sell and use in our business. The effects of severe adverse weather conditions may also reduce yields at our farms. Yields may also be affected by plague, disease or weed infection and execution problems. Commencing during the middle of 2008 and lasting until the middle of 2009, the countries in which we operate suffered one of the worst droughts of the last 50 to 70 years, which resulted in a reduction of approximately 15.0% to 40.0% in our yields, depending on the affected commodity, compared with our historical averages. These yield reductions directly impacted the yields of our Crops segment, which is reflected in the line item “Initial recognition and changes in fair value of biological assets and agricultural produce” of the statement of income. The average expected yields for the 2008/2009 harvest for crops before the drought were 2.5 tons per hectare for soybean and 7.7 tons per hectare for corn. The actual yields following the drought were 1.5 tons per hectare for soybean and 5.5 tons per hectare for corn, which generated a decrease in initial recognition and changes in fair value of biological assets and agricultural produce in respect of soybeans, corn and the remaining crops of $13.0 million, $3.1 million and $0.3 million, respectively, for the year ended December 31, 2009.

The average expected yield for the 2008/2009 harvest for rice before the drought was 6.7 tons per hectare. The actual yield for the 2008/2009 harvest following the drought was 5.5 tons per hectare, which generated a decrease in initial recognition and changes in fair value of biological assets and agricultural produce of $4.2 million for the year ended December 31, 2009.

The following table sets forth our average crop, rice and sugarcane yields for the periods indicated:


							% Change
	2010/2011 Harvest Year		2009/2010 Harvest Year		2008/2009 Harvest Year		2009/2010 - 2010/2011			2008/2009 - 2009/2010
Corn		5.4		5.9		5.5		(8.9	%)		7.2	%
Soybean		2.6		3.1		1.5		(17.3	%)		112.5	%
Soybean (second harvest)		1.6		1.9		1.6		(17.8	%)		21.3	%
Cotton		2.7		2.5		2.9		7.4	%		(13.9	%)
Wheat		3.3		2.3		2.4		42.6	%		(4.5	%)
Rice		6.2		5.1		5.5		23.5	%		(8.1	%)
Coffee		2.0		1.8		1.5		7.7	%		20.0	%
Sugarcane		75.6		96.1		93.4		(21.4	%)		3.3	%

Rain levels have normalized, in general, for the 2009/2010 and 2010/2011 harvest, generating a recovery of yields. The low level of rains between September and December 2011, mainly in the Humid Pampas region, affected our expected yields for corn for the 2011/2012 season.

(ii) Effects of Fluctuations in Production Costs

During the last three years, we have experienced fluctuations in our production costs. The primary reason is the fluctuation in the costs of (i) fertilizers, (ii) agrochemicals, (iii) seeds, (iv) fuel and (v) farm leases. The use of advanced technology, however, allowed us to increase our efficiency, in large part mitigating the fluctuations in production costs. Some examples of how the implementation of production technology has allowed us to increase our efficiency and reduce our costs include using no-till (also known as “direct sowing”, which involves farming without the use of tillage, leaving plant residues on the soil to form a protective cover which positively impacts costs, yields and the soil (see “Item 4. Information on the Company—B. Business Overview—Technology and Best Practices—No-Till”)), crop rotation, second harvest in one year, integrated pest management, and balanced fertilization techniques to increase the productive efficiency in our farmland. Increased mechanization of harvesting and planting operations in our sugarcane plantations and utilization of modern, high pressure boilers in our sugar and ethanol mills has also yielded higher rates of energy production per ton of sugarcane.

(iii) Effects of Fluctuations in Commodities Prices

Commodity prices have historically experienced substantial fluctuations. For example, based on Chicago Board of Trade (“CBOT”) data, from January 3, 2011 to December 31, 2011, corn prices increased by approximately 4.2%, wheat prices decreased by approximately 19.0% and soybean prices decreased nearly 12.5%. Also, between January 3, 2011 and March 25, 2011, ethanol prices increased by 49.0% and between March 25, 2011 and December 30, 2011 decreased by 32.1%, according to ESALQ data. Sugar prices decreased by 27.5% during 2011, 2011 but 2011 average price increased 22.2% when compared to 2010 average price according to Intercontinental Exchange of New York (“ICE-NY”) data. Commodity price fluctuations impact our statement of income as follows:

•

Initial recognition and changes in the fair value of biological assets and agricultural produce in respect of unharvested biological assets undergoing biological transformation;

•

Changes in net realizable value of agricultural produce for inventory carried at its net realizable value; and

•

Sales of manufactured products and sales of agricultural produce and biological assets sold to third parties.

The following graphs show the spot market price of some of our products for the periods indicated:


Soybean in U.S. cents per bushel (CBOT)		Coffee in U.S. cents per pound (ICE-NY)


Sugar in U.S. cents per pound (ICE-NY)		Ethanol in Reais per cubic meter (ESALQ)

(iv) Fiscal Year and Harvest Year

Our fiscal year begins on January 1 and ends on December 31 of each year. However, our production is based on the harvest year for each of our crops and rice. A harvest year varies according to the crop or rice plant and to the climate in which it is grown. Due to the geographic diversity of our farms, the planting period for a given crop or rice may start earlier on one farm than on another, causing differences for their respective harvesting periods. The presentation of production volume (tons) and production area (hectares) in this annual report in respect of the harvest years for each of our crops and rice starts with the first day of the planting period at the first farm to start planting in that harvest year to the last day of the harvesting period of the crop, rice or coffee planting on the last farm to finish harvesting that harvest year.

Production area for cattle is presented on a harvest year basis, as land used for cattle operations is linked to our farming operations and use of farmland during a harvest year, while production volumes for dairy and cattle are presented on a fiscal year basis. On the other hand, production volume and production area in our sugar, ethanol and energy business are presented on a fiscal year basis.

The financial results in respect of all of our products are presented on a fiscal year basis. See “Item 4. Information on the Company—B. Business Overview.”

(v) Effects of Fluctuations of the Production Area

Our results of operations also depend on the size of the production area. The size of our own and leased area devoted to crop, rice, coffee and sugarcane production fluctuates from period to period in connection with the purchase and development of new farmland, the sale of developed farmland, the lease of new farmland and the termination of existing farmland lease agreements. Lease agreements are usually settled following the harvest season, from July to June in crops and rice, and from May to April in sugarcane. The length of the lease agreements are usually one year for crops, one to five years for rice and five to six years for sugarcane. Regarding crops, the production area can be planted and harvested one or two times per year. As an example, wheat can be planted in July and harvested in December. Right after its harvest, soybean can be planted in the same area and harvested in April. As a result, planted and harvested area can exceed the production area during one year. Regarding sugarcane and coffee, the production area can exceed the harvested area in one year. Grown sugarcane can be left in the fields and

then harvested the following year. Coffee trees are pruned from time to time, in which case they do not produce beans and accordingly, are not harvested the following year. The increase in rice production area of 2011 is mainly driven by the transformation of undeveloped/undermanaged own land that was put into production. The decrease in crop production area in 2011 is mainly driven by a reduction of leased land during this year. The increase in sugar, ethanol and energy production area in 2011 is explained by an increase in leased hectares during this year.

The following table sets forth the fluctuations in the production area for the periods indicated:


	Year ended December 31,
	2011		2010		2009
			Hectares
Crops		127,436		134,562		104,986
Rice		27,542		18,142		17,258
Coffee		1,632		1,632		1,632
Sugar, Ethanol and Energy		65,308		53,799		49,470

(vi) Effect of Acquisitions and Dispositions

The comparability of our results of operations is also affected by the completion of significant acquisitions and dispositions. Our results of operations for earlier periods that do not include a recently completed acquisition or do include farming operations subsequently disposed of may not be comparable to the results of a more recent period that reflects the results of such acquisition or disposition.

(vii) Macroeconomic Developments in Emerging Markets

We generate nearly all of our revenue from the production of food and renewable energy in emerging markets. Therefore, our operating results and financial condition are directly impacted by macroeconomic and fiscal developments, including fluctuations in currency exchange rates, inflation and interest rate fluctuations, in those markets. In recent years, the emerging markets where we conduct our business (including Argentina, Brazil and Uruguay) have generally experienced significant macroeconomic improvements but remain subject to such fluctuations.

(viii) Effects of Export Taxes on Our Products

Following the economic and financial crisis experienced by Argentina in 2002, the Argentine government increased export taxes on agricultural products, mainly on soybean and its derivatives, wheat, rice and corn. Soybean is subject to an export tax of 35.0%; wheat is subject to an export tax of 23.0%, rough rice is subject to an export tax of 10.0%, processed rice is subject to an export tax of 5.0%, corn is subject to an export tax of 20.0% and sunflower is subject to an export tax of 32.0%.

As local prices are determined taking into consideration the export parity reference, any increase in export taxes would affect our financial results.

(ix) Effects of Foreign Currency Fluctuations

Each of our Argentine, Brazilian and Uruguayan subsidiaries uses local currency as its functional currency. A significant portion of our operating costs in Argentina are denominated in Argentine Pesos and most of our operating costs in Brazil are denominated in Brazilian Reais. For each of our subsidiaries’ statements of income, foreign currency transactions are translated into the local currency, as such subsidiaries’ functional currency, using the exchange rates prevailing as of the dates of the relevant specific transactions. Exchange differences resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income under “finance income” or “finance costs,” as applicable. Our consolidated financial statements are presented in U.S. dollars, and foreign exchange differences that arise in the translation process are disclosed in the consolidated statement of comprehensive income.

As of December 30, 2011, the Peso-U.S. dollar exchange rate was Ps.4.30 per U.S. dollar as compared to Ps. 3.97 and Ps.3.80 per U.S. dollar as of December 31, 2010 and 2009, respectively. As of December 30, 2011, the Real-U.S. dollar exchange rate was R$1.86 per U.S. dollar as compared to R$1.65 and R$1.74 per U.S. dollar as of December 31, 2010 and 2009, respectively.

The following graph shows the Real-U.S. dollar rate of exchange for the periods indicated:

LOGO

Our principal foreign currency fluctuation risk involves changes in the value of the Real relative to the U.S. dollar. Periodically, we evaluate our exposure and consider opportunities to mitigate the effects of currency fluctuations by entering into currency forward contracts and other hedging instruments. As of December 31, 2011, the Company was committed to sell approximately $74.0 million Dollars during 2012 at R$1.81 per U.S. dollar.

(x) Seasonality

Our business activities are inherently seasonal. We generally harvest and sell corn, soybean, rice and sunflower between February and August, and wheat from December to January. Coffee and cotton are unique in that while both are typically harvested from May to August, they require a conditioning process that takes about two to three months before being ready to be sold. Sales in other business segments, such as in our Cattle and Dairy segments, tend to be more stable. However, milk sales are generally higher during the fourth quarter, when weather conditions are more favorable for production. The sugarcane harvesting period typically begins between April and May and ends between November and December. As a result of the above factors, there may be significant variations in our results of operations from one quarter to another, since planting activities may be more concentrated in one quarter whereas harvesting activities may be more concentrated in another quarter. In addition our quarterly results may vary as a result of the effects of fluctuations in commodity prices and production yields and costs related to the “Initial recognition and changes in fair value of biological assets and agricultural produce” line item. See “—Critical Accounting Policies and Estimates—Biological Assets and Agricultural Produce.”

(xi) Land Transformation

Our business model includes the transformation of pasture and unproductive land into land suitable for growing various crops and the transformation of inefficient farms into farms suitable for more efficient uses through the implementation of advanced and sustainable agricultural practices, such as “no-till” technology and crop rotation. During approximately the first three to five years of the land transformation process of any given parcel, we must invest heavily in transforming the land, and, accordingly, crop yields during such period tend to be lower than crop yields once the land is completely transformed. After the transformation process has been completed, the land requires less investment, and crop yields gradually increase. As a result, there may be variations in our results from one season to the next according to the amount of land in the process of transformation.

Our business model also includes the identification, acquisition, development and selective disposition of farmlands or other rural properties that after implementing agricultural best practices and increasing crop yields we believe have the potential to appreciate in terms of their market value. As a part of this strategy, we purchase and sell farms and other rural properties from time to time.

The results included in the Land Transformation segment are related to the acquisition and disposition of farmland businesses and not to the physical transformation of the land. The decision to acquire and/or dispose of a

farmland business depends on several market factors that vary from period to period, rendering the results of these activities in one financial period when an acquisition of disposition occurs not directly comparable to the results in other financial periods when no acquisitions or dispositions occurred.

(xii) Capital Expenditures and Other Investments

Our capital expenditures during the last three years consisted mainly of expenses related to (i) acquiring land, (ii) transforming and increasing the productivity of our land, (iii) planting non-current sugarcane and coffee and (iv) expanding and upgrading our production facilities. Our capital expenditures incurred in connection with such activities were $138.6 million for the year ended December 31, 2009, $130.6 million for the year ended December 31, 2010 and $165.3 million for the year ended December 2011. See also “—Capital Expenditure Commitments.”

(xiii) Effects of Corporate Taxes on Our Income

We are subject to a variety of taxes on our results of operations. The following table shows the income tax rates in effect for 2011 in each of the countries in which we operate:


	Tax Rate (%)

Argentina		35
Brazil(1)		34
Uruguay		25

(1)	Including the Social Contribution on Net Profit (CSLL)

Critical Accounting Policies and Estimates

We prepared our consolidated financial statements in accordance with IFRS as issued by the IASB and the interpretations of the IFRIC. The critical accounting policies are policies important to the portrayal of a company’s financial condition and operating results, and which require management to make difficult and subjective judgments that are inherently uncertain. Based on this definition, we have identified the following significant accounting policies as critical to the understanding of our consolidated financial statements. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. The principal area where our management is required to make significant judgments about estimates where actual results could differ materially from such estimates is in the carrying amount of our biological assets. These estimates and judgments are subject to an inherent degree of uncertainty. We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us at the time that these estimates and judgments are made. We continually evaluate our judgments, estimates and assumptions. To the extent there are material differences between these estimates and actual results, our consolidated financial statements will be affected.

We believe the following to be our more significant critical accounting policies and estimates used in the preparation of the consolidated financial statements:

Biological Assets and Agricultural Produce

Before harvest, our crops are biological assets. Subsequent to harvest, biological transformation ceases and the harvested crops meet the definition of agricultural produce under IAS 41 “Biological Assets.” As prescribed by IAS 41, we measure growing crops which have not attained significant biological growth at cost less any impairment losses, which approximates fair value. Capitalized expenses for growing crops include land preparation expenses and other direct production expenses incurred during the sowing period including costs of labor, fuel, seeds, agrochemical and fertilizer, among others. We measure biological assets (at initial recognition, when the biological asset has attained significant biological growth, and at each subsequent measurement reporting date) and agricultural produce at the point of harvest at fair value less selling costs. The objective of the fair value model under IAS 41 is to recognize gains and losses arising from such measurements gradually over the asset’s life rather than only on sale or realization. IAS 41 prescribes, among other things, the accounting treatment for biological assets during the period of growth, degeneration, production and procreation, and for the initial measurement of agricultural produce at the point of harvest.

We account for agricultural produce after harvest as inventory, as further described below.

The following table sets forth the way in which we value biological assets and agricultural produce for each of our principal products:


	Biological Asset
	No significant biological growth	Significant biological growth	Agricultural Produce	Manufactured Product
Crops	Crop from planting through approximately 60 days	Crop, approximately 60 days after planting up to the moment of harvest (total period of approximately 3 to 5 months).	Harvested crop (soybean, corn, wheat, etc.)	N/A

Rice	Rice plant from planting through approximately 60 days	Rice plant, approximately 60 days after planting up to the moment of harvest (total period of approximately 3 to 4 months).	Harvested rough rice	Processed Rice

Coffee	Coffee tree from planting through approximately 18 months	Coffee tree, approximately 18 months after planting until exhausted in 15-20 harvests (total period of approximately 16 years).	Harvested coffee	Coffee

Dairy	Dairy cow is considered a biological asset from birth/purchase to death or sale.		Raw milk	Processed milk and dairy products

Cattle	Beef cattle are considered a biological asset from birth/purchase to death or sale.		N/A	N/A

Sugar, ethanol and energy	Sugarcane from planting through approximately 30 days	Sugarcane, approximately 30 days after planting until exhausted in 5-6 harvests (total period of approximately 5.5 years).	Sugarcane	Sugar, ethanol and energy

VALUATION CRITERIA	Cost, which approximates fair value less accumulated impairment losses, if any. For dairy and cattle, fair value less estimated cost to sell.	Fair value (using discounted cash flow valuation) less cost to sell.	Net realizable value, except for rough rice and milk which are valued at cost.	Cost

Gains and losses that arise from measuring biological assets at fair value less selling costs and measuring agricultural produce at the point of harvest at fair value less selling costs are recognized in the statement of income in the period in which they arise as “Initial recognition and changes in fair value of biological assets and agricultural produce.” We value our inventories of agricultural produce after harvest at net realizable value, except for rough rice, which is valued at cost.

When an active market exists for biological assets, we use the quoted market price in the most relevant market as a basis to determine the fair value of our biological assets, as in the case of cattle. For other biological assets where there is neither an active market nor market-determined prices during the growth cycle, we determine their fair value

through the use of DCF valuation techniques. Therefore, we generally derive the fair value of our growing biological assets from the expected cash flows of the related agricultural produce. The DCF method requires the input of highly subjective assumptions, including observable and unobservable data. Generally, the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market, and the use of unobservable inputs is significant to the overall valuation of the assets. Various factors influence the availability of observable inputs, including, but not limited to, the type of asset and its location, climate changes and the technology used, among others.

Unobservable inputs are determined based on the best information available, for example, by reference to historical information regarding past practices and results, statistical and agronomical information and other analytical techniques. Changes in the assumptions underlying such subjective inputs can materially affect the fair value estimate and impact our results of operations and financial condition from period to period.

The DCF method requires the following significant inputs to project revenues and costs:

•

Production cycles or number of harvests;

•

Production area in hectares;

•

Estimated crop and rice yields;

•

Estimated sucrose content (Total Recoverable Sugar or TRS) for sugarcane;

•

Estimated costs of harvesting and other costs to be incurred until the crops and rice reach maturity (mainly costs of pesticides, herbicides and spraying);

•

Estimated transportation costs;

•

Market prices; and

•

Discount rates.

In contrast to biological assets whose fair value is generally determined using the DCF method, we typically determine the fair value of our agricultural produce at the point of harvest using market prices.

Market prices used in the DCF model are determined by reference to observable data in the relevant market (e.g. for crops, sugar and coffee). Harvesting costs and other costs are estimated based on historical and statistical data. Yields are estimated by our agronomic engineers based on several factors, including the location of the farmland, soil type, environmental conditions, infrastructure and other restrictions and growth at the time of measurement. Yields are subject to a high degree of uncertainty and may be affected by several factors out of our control, including but not limited to extreme or unusual weather conditions, plagues and other diseases. Discount rates reflect current market assessments of the assets involved and the time value of money.

As of December 31, 2011, the impact of a reasonable 10% increase (decrease) in estimated market prices, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of $43.7 million for sugarcane, $15.7 million for coffee, $1.8 million for crops and $3.1 million for rice. As of December 31, 2011, the impact of a reasonable 10% increase (decrease) in estimated costs, with all other variables held constant, would result in a increase (decrease) in the fair value of our plantations less cost to sell of $30.7 million for sugarcane, $8.8 million for coffee, $1.9 million for crops and $2.4 million for rice. As of December 31, 2011, the impact of a reasonable 5% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of $15.9 million for sugarcane and $4.9 million for coffee. As of December 31, 2011, the impact of a reasonable 20% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of $3.0 million for crops and $5.7 million for rice. As of December 31, 2011, the impact of a reasonable 100 basic points increase (decrease) in discount rates, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of $2.8 million for sugarcane and $1.5 million for coffee.

All of the key assumptions discussed above are highly sensitive. Reasonable shifts in assumptions, including but not limited to increases or decreases in prices and discount rates used would result in a significant increase or decrease of the fair value of biological assets and significantly impact our statement of income. In addition, cash flows are projected over the following year or a number of years (depending on the type of biological asset) and based on estimated production. Estimates of production in and of themselves depend on various assumptions, in

addition to those described above, including but not limited to several factors such as location, environmental conditions and other restrictions. Changes in these estimates could materially impact estimated production and could, therefore, affect estimates of future cash flows used in the assessment of fair value.

The valuation models and their assumptions are reviewed annually, or quarterly if warranted, and, if necessary, adjusted. During the year ended December 31, 2009, we made no changes to the methodology of the models. During the year ended December 31, 2010, new information has been gained and accordingly we introduced an adjustment to the valuation model for sugarcane. Projected revenues are now calculated based on the average of daily prices for sugar future contracts (Sugar # 11 ICE-NY contract) during the six-month period ended at period end rather than the single price for sugar future contracts at year end used during 2009. We determined that the use of 6-month average of daily prices of future contracts was a more appropriate estimate for price inputs in the valuation model than the single price for sugar future contracts at period-end, as it would mitigate any additional variability that a single-day price may have on the sugarcane valuation model and was necessary to properly measure the fair value of the related biological assets given changes in market conditions in 2010. The effect of this change in the valuation model recognized in the line item “Initial recognition and changes in fair value of biological assets and agricultural produce” was an increase in the loss before income tax for $90.9 million for the year ended December 31, 2010. During the year ended December 31, 2011, we made no changes to the models and assumptions.

The aggregate gains and losses arising during a period on initial recognition and from the changes in fair value less costs to sell of biological assets is affected by the way we treat our harvesting and production costs for accounting purposes. Since IAS 41 does not provide guidance on the treatment of these costs, we generally capitalize all costs directly involved with the management of biological assets. These costs may include labor, planting, fertilizers, agrochemicals, harvesting, irrigation and feeding, among others. Then, the cost of the biological asset is adjusted periodically by the re-measurement of the biological asset at fair value less cost to sell. For example, before significant biological growth is attained, costs and expenses are capitalized as biological assets, and once biological assets reach significant biological growth we adjust biological assets to fair value less cost to sell. Accordingly, capitalized biological assets are adjusted periodically at fair value less cost to sell. At the point of harvest, we recognize the agricultural produce at fair value less cost to sell. The periodic adjustments in fair value less cost to sell reflect period to period gains or losses. After agricultural produce is harvested, we may hold it in inventory at net realizable value up to the point of sale, which includes market selling price less direct selling expenses, with changes in net realizable value recognized in the statement of income as incurred. When we sell our inventory, we sell at the prevailing market price and we incur direct selling expenses.

We consider gains and losses recorded in the line items of the statement of income “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest” to be realized only when the related produce or manufactured product is sold to third parties and, therefore, converted into cash or other financial assets. Therefore, “realized” gains or losses means that the related produce or product has been sold and the proceeds are included in revenues for the year.

of agricultural produce, the direct costs of selling, including but not limited to, transportation costs, export taxes and other levies. The cost of our agricultural produce sold represents the recognition as an expense of our agricultural produce held in inventory valued at net realizable value. The cost of our biological assets and/or agricultural produce sold at the point of harvest represents the recognition as an expense of our biological assets and/or agricultural produce measured at fair value less costs to sell, generally representing the applicable quoted market price at the time of sale. Accordingly, the line item “Sales of agricultural produce and biological assets” is equal to the line item “Cost of agricultural produce plus direct agricultural selling expenses.”

Based on the foregoing, the gross profit of our agricultural activities is solely a function of the “Initial recognition and changes in fair value of biological assets and agricultural produce” and of the “Changes in net realizable value of agricultural produce after harvest.”

Business Combinations—Purchase Price Allocation

Accounting for business combinations requires the allocation of our purchase price to the various assets and liabilities of the acquired business at their respective fair values. We use all available information to make these fair value determinations. In some instances, assumptions with respect to the timing and amount of future revenues and expenses associated with an asset might have to be used in determining its fair value. Actual timing and amount of net cash flows from revenues and expenses related to that asset over time may differ materially from those initial estimates, and if the timing is delayed significantly or if the net cash flows decline significantly, the asset could become impaired.

Impairment Testing

We review the carrying amounts of our property, plant and equipment and intangible assets of finite life at the date of each statement of financial position to determine whether there is any indication that such assets have suffered an impairment loss. Based on the circumstances prevailing in each location, we use either a fair value less costs-to-sell model or a value-in-use model. An impairment loss, if any exists, is recognized immediately in the statement of income.

Due to the characteristics of our investments in Argentina and Uruguay, we tested all of our cash generating units (“CGUs”) based on a fair value less costs-to-sell model. In using this model, we applied the “sales comparison approach” as the method of valuing most properties. This approach is based on the theory that the fair value of a property is directly related to the selling prices of similar properties. The fair value of farmland property is the amount of money we would realize if it were sold at arm’s length by a willing seller to a willing buyer. We base the values of our farmland on the lands’ productive capability (the ability of the land to produce crops and/or maintain livestock) and other factors such as climate and location. Farmland ratings are established by considering such factors as soil texture and quality, yields, topography, drainage and rain levels. Farmland may contain farm outbuildings, which include any improvement or structure that is used for farming operations, and are valued based on their size, age and design. Based on the factors described above, we assign each farm property a different soil classification for the purposes of establishing a value. Soil classifications quantify the factors that contribute to the agricultural capability of the soil. Soil classifications range from the most productive to the least productive. We refer to Note 4 to the consolidated financial statements for a detailed description of amounts tested. Based on the testing performed, we determined that none of the CGUs, with or without allocated goodwill, were impaired as of December 31, 2011, 2010 and 2009. For our investments in Brazil, we tested all CGUs based on a value-in-use model. In performing the value-in-use calculation, we applied pre-tax rates to discount the future pre-tax cash flows. We made key assumptions based on our past experience and we believe they are consistent with relevant external sources of information, such as appropriate market data. See Note 4 to our consolidated financial statements for further details.

We based our discount rates on the risk-free rate for U.S. government bonds, adjusted for a risk premium to reflect the increased risk of investing in South America and Brazil in particular. As of December 31, 2011, the discount rate used for Brazil was 8.9%. We refer to Note 4 to the consolidated financial statements for a detailed description of amounts tested. Based on the testing performed we determined that none of the CGUs, with and without allocated goodwill, were impaired as of December 31 2011, 2010 and 2009. A reasonably possible change of 10% in the key assumptions used to determine the projections (excluding discount rates) would have had no effect on the goodwill impairment testing results for any of the years presented. The base case was then stress-tested using a zero growth assumption and continued to show no impairment. A reasonably possible change of 1% in the perpetuity growth rates would have had no effect on the goodwill impairment testing results. A reasonably possible change of 1% in the discount rates would have had no effect on the goodwill impairment testing results.

Fair Value of Derivatives and Other Financial Instruments

Fair values of derivative financial instruments are computed with reference to quoted market prices on trade exchanges, when available. The fair values of commodity options are calculated using year-end market value together with common option pricing models. The fair value of interest rate swaps has been calculated using a DCF analysis.

Income Taxes

Adecoagro is a société anonyme (public company limited by shares) organized under the laws of the Grand Duchy of Luxembourg. We believe that Adecoagro’s corporate structure is organized in a form that will meet substantially all of the requirements provided for by Luxembourg law to benefit from the participation exemption regime, and we have not received an objection, nor any indication to the contrary, from the relevant Luxembourg tax authorities, to whom the proposed structure has been disclosed. Accordingly, Adecoagro believes that it can rely on the participation exemption from tax on income pursuant to the laws of Luxembourg. Our operating subsidiaries in Argentina, Brazil and Uruguay are subject to income taxes. We do not prepare or file a consolidated income tax return. Each operating subsidiary prepares and files its respective income tax returns based on the applicable tax legislation in the country in which the subsidiary operates. There are many transactions and calculations for which the ultimate tax determination is uncertain. We recognize liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact our current and deferred income tax assets and liabilities in the period in which such determination is made.

Income taxes of each subsidiary are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are not discounted. In certain jurisdictions, the annual effect of available tax losses is limited to a percentage of taxable income. In assessing the realizability of deferred tax assets, we consider whether it is probable that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Allowance for Trade Receivables

We maintain an allowance for trade receivables to account for estimated losses resulting from the inability of customers to make required payments. When evaluating the adequacy of an allowance for trade receivables, we base our estimates on the aging of accounts receivable balances and historical write-off experience, customer credit worthiness and changes in customer payment terms. If the financial condition of customers were to deteriorate, actual write-offs might be higher than expected.

Operating Segments

IFRS 8, “Operating Segments,” requires an entity to report financial and descriptive information about its reportable segments, which are operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The amount reported for each segment item is the measure reported to the chief operating decision maker for these purposes.

We are organized into three main lines of business, which are farming; sugar, ethanol and energy; and land transformation, comprising seven reportable operating segments, which are organized based upon their similar economic characteristics, the nature of the products they offer, their production processes, the type and class of their customers and their distribution methods.

Our farming business is comprised of five reportable operating segments as follows:

•

Our Crops segment includes the planting, harvesting and sale to grain traders of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing and conditioning and handling and drying services to third parties. Production activities in our Crop segment reflect the most productive use of the land to maximize economic return and not the performance of any one underlying crop. Accordingly, the relative mix of underlying crops may change from harvest year to harvest year. A single manager is responsible for the management of operating activity of all crops rather than a manager for each individual crop.

•

Our Rice segment consists of planting, harvesting, processing and marketing of rice.

•

Our Dairy segment consists of the production and sale of raw milk, which is processed into manufactured products and marketed through our joint venture with Grupo La Lácteo.

•

Our Coffee segment consists of cultivating coffee and marketing our own coffee production.

•

Our Cattle segment consists of purchasing and fattening beef cattle for sale to meat processors and in local livestock auction markets and leasing land.

Our Sugar, Ethanol and Energy business is its own reporting operating segment and consists of cultivating sugarcane, which we process in our own sugar mills, transform into sugar, ethanol and electricity and market and sell.

Our Land Transformation business is its own reporting operating segment and includes (i) the ultimate cash realization through sales to third parties of the increase in value of land which is generated through the transformation of its productive capabilities and (ii) bargain gains arising from business combinations, which represent the excess of the fair value of the land acquired over the actual price paid, typically in connection with purchases of undeveloped or undermanaged farmland businesses. See Note 4 to our consolidated financial statements for a description of the basis used to determine fair values.

The following table presents selected historical financial and operating data solely for the periods indicated below as it is used for our discussion of results of operations.


	Year Ended December 31,
	2011		2010		2009
Sales	( In thousands of $)
Farming Business		270,766		197,741		216,016
Crops		147,946		108,162		92,029
Soybean(l)		61,385		64,890		44,116
Corn		42,959		23,968		14,654
Wheat		24,232		7,939		10,218
Sunflower		7,413		4,880		5,517
Cotton		9,101		2,395		11,905
Other crops(2)		2,856		4,090		5,619
Rice (3)		83,244		61,585		69,350
Coffee		14,170		7,572		14,265
Dairy		19,697		14,297		11,894
Cattle(4)		5,719		6,125		28,478
Sugar, Ethanol and Energy Business		277,318		228,526		97,587
Sugar		130,348		98,385		26,143
Ethanol		116,599		114,793		62,811
Energy		24,393		15,040		8,216
Other (5)		5,978		308		417
Total		548,084		426,267		313,603
Land Transformation Business(6)		8,832		20,837		18,839


Production	2011/2012 Harvest Year (7)		2010/2011 Harvest Year		2009/2010 Harvest Year		2008/2009 Harvest Year
Farming Business
Crops (tons)(7)		98,403		491,813		524,890		317,582
Soybean (tons)		N/A		199,533		241,848		96,982
Corn (tons)		120		165,679		180,613		115,900
Wheat (tons)		98,403		87,445		49,592		41,556
Sunflower (tons)		N/A		20,916		17,193		22,128
Cotton (tons)		N/A		8,746		1,068		9,218
Other crops (tons)(2)		N/A		9,495		34,576		31,799
Rice(8) (tons)		N/A		172,034		91,723		94,968
Coffee (tons)		N/A		2,742		2,221		2,412


	Year Ended December 31,
	2011		2010		2009
Processed rice(9) (tons)		148,223		87,526		108,858
Dairy(10) (liters)		51,239		41,597		47,479
Cattle (tons)(4)(11)		118		359		4,149
Sugar, Ethanol and Energy Business
Sugar (tons)		247,805		235,690		52,968	(12)
Ethanol (cubic meters)		161,385		174,303		132,492	(12)
Energy (MWh exported)		245,474		168,644		128,291	(12)
Land Transformation Business (hectares traded)		2,439		5,086		5,005


Planted Area	2011/2012 Harvest Year (16)		2010/2011 Harvest Year		2009/2010 Harvest Year		2008/2009 Harvest Year
	(Hectares)
Farming Business(12)
Crops(13)		203,306		167,104		168,241		139,518
Soybean		92,922		90,120		87,522		63,973
Corn		45,263		30,480		27,720		20,200
Wheat		39,640		26,361		21,728		18,917
Sunflower		9,598		9,943		14,784		16,539
Cotton		6,372		3,242		425		3,159
Other crops(2)		5,670		3,111		11,501		11,348
Forage		4,889		3,653		4,561		5,382
Rice		31,497		27,542		18,142		17,258
Coffee(14)		1,632		1,632		1,632		1,632


Total Planted Area	237,483	196,278	188,015	158,468
Second Harvest Area	46,153	36,351	29,119	29,150
Leased Area	61,368	37,694	47,709	13,645
Owned Croppable Area(15)	129,961	122,223	111,187	115,613


	Year Ended December 31,
	2011		2010		2009
Sugar, Ethanol and Energy Business
Sugarcane plantation		65,308		53,799		49,470
Owned land		9,145		9,907		9,085
Leased land		56,163		43,892		40,385
Land Transformation Business
Undeveloped/Undermanaged land put into production (hectares)		13,676		6,490		11,255

(1)	Includes soybean, soybean oil and soybean meal.

(2)	Includes barley, rapeseed and sorghum and farming services.

(3)	Sales of processed rice including rough rice purchased from third parties and processed in our own facilities, rice seeds and services.

(4)	In December 2009, we sold 55,543 head of cattle to a third party. See “Item 4. Information on the Company—B. Business Overview—Cattle Business.”

(5)	Includes sales of sugarcane and other miscellaneous items to third parties

(6)	Represents capital gains from the sale of land.

(7)	Crop production does not include 46,749 tons, 52,482 tons and 52,960 tons of forage produced in the 2010/2011, 2009/2010 and 2008/2009 harvest years, respectively.

(8)	Expressed in tons of rough rice produced on owned and leased farms. The rough rice we produce, along with additional rough rice we purchase from third parties, is ultimately processed and constitutes the product sold in respect of the rice business.

(9)	Includes rough rice purchased from third parties and processed in our own facilities. Expressed in tons of processed rice (1 ton of processed rice is approximately equivalent to 1.6 tons of rough rice).

(10)	Raw milk produced at our dairy farms.

(11)	Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in live weight of each head of beef cattle we own.

(12)	Includes hectares planted in the second harvest.

(13)	Includes 3,841 hectares, 4,561 hectares and 5,382 hectares used for the production of forage during the 2011/2012; 2010/2011, 2009/2010 and 2008/2009 harvest years, respectively.

(14)	Reflects the size of our coffee plantations, which are planted only once every 18 to 20 years.

(15)	Does not include potential croppable areas being evaluated for transformation.

(16)	As of the date of this annual report, we had not yet completed the 2011/2012 harvest year crops. Harvested tons corresponds to wheat.

Year ended December 31, 2011 as compared to year ended December 31, 2010

The following table sets forth certain financial information with respect to our consolidated results of operations for the periods indicated.


	2011			2010
	(In thousands of $)
Sales of manufactured products and services rendered		365,857			294,529
Cost of manufactured products sold and services rendered		(237,404	)		(219,201	)

Gross Profit from Manufacturing Activities		128,453			75,328

Sales of agricultural produce and biological assets		182,227			131,738
Cost of agricultural produce sold and direct agricultural selling expenses		(182,227	)		(131,738	)
Initial recognition and changes in fair value of biological assets and agricultural produce		86,811			(30,528	)
Changes in net realizable value of agricultural produce after harvest		10,523			7,999

Gross Profit / (Loss) from Agricultural Activities		97,334			(22,529	)

Margin on Manufacturing and Agricultural Activities Before Operating Expenses		225,787			52,799

General and administrative expenses		(65,142	)		(56,562	)
Selling expenses		(59,404	)		(52,528	)
Other operating income, net		24,581			18,224
Share of loss of joint ventures		(1,034	)		(50	)

Profit / (Loss) from Operations Before Financing and Taxation		124,788			(38,117	)

Finance income		9,132			16,559
Finance costs		(62,341	)		(39,496	)

Financial results, net		(53,209	)		(22,937	)

Profit / (Loss)Before Income Tax		71,579			(61,054	)

Income Tax (expense) / benefit		(14,662	)		16,263

Profit / (Loss) for the Year		56,917			(44,791	)

Sales of Manufactured Products and Services Rendered


	Crops		Rice		Dairy		Coffee		Cattle		Sugar, Ethanol and Energy		Total
	(In thousands of $)
2011		557		82,523		—		713		4,746		277,318		365,857
2010		344		59,280		—		2,709		3,718		228,478		294,529

Sales of manufactured products and services rendered increased 24.2%, from $294.5 million in 2010 to $365.9 million in 2011, primarily as a result of:

•

a $48.8 million increase in our Sugar, Ethanol and Energy segment due to: (i) a 51.4% increase in the average sales price of ethanol, from $607.5 per cubic meter in 2010 to $920.0 per cubic meter in 2011; (ii) a 31.5% increase in the average market price of sugar, from $421.1 per ton in 2010 to $553.6 per ton in 2011; (iii) a 36.9% increase in the volume of energy sold, from 178.9 thousand MWh in 2010 to 245.0 thousand MWh in 2011, mainly due to: (a) gained efficiencies due to the completion of Angelica facility, with its boilers and generators working at full cogeneration capacity during 2011; and (b) a 31,541 tons of bagasse purchased to third parties in 2011. This was partially offset by (iv) a 17.5% decrease in the volume of sugar and ethanol sold, measured in TRS. On average, one metric ton of sugarcane is equivalent to 140 kilograms of TRS equivalent. While a mill can produce either sugar or ethanol, the TRS input requirements differ between these two products. On average, 1.045 kilogram of TRS equivalent is required to produce 1.0 kilogram of sugar, while 1.691 kilograms of TRS equivalent is required to produce a liter of ethanol. The decrease in the volume of TRS equivalent sold in 2011 was mainly due to: (a) a decrease of 5.8% in the TRS content of the milled cane, from kg/ton 135.8 in 2010 to kg/ton 128.0 in 2011, caused by the frost in Mato Grosso do Sul on the first semester of 2011; and (b) an increase in inventory levels, from 11,211 tons and 4,943 m3 of sugar and ethanol respectively in 2010 to 21,283 tons and 38,551 m3 of sugar and ethanol

respectively in 2011. This was partially offset by (c) a 2.5% increase in milled cane, due to: (ci) a 27.9% increase in harvested area, from 40,263 hectares in 2010 to 51,500 hectares in 2011; (cii) a 40.7% increase in the amount of cane purchased to third parties, from 196,833 tons in 2010 to 276,957 tons in 2011; partially offset by (ciii) a 21.4% decrease in the average yields, from 96.1 tons per hectare in 2010 to 75.6 tons per hectare in 2011, due to the drought occurred in the 2nd semester of 2010 and the frost occurred during the first semester of 2011, which affected most of rural areas in center-south Brazil. The following table sets forth the breakdown of sales of manufactured products for the periods indicated.


	Period Ended December 31,							Period Ended December 31,							Period Ended December 31,
	2011		2010					2011		2010					2011		2010
	(In millions of $)				% Change			(In thousands units)				% Change			(In dollars per unit)				% Change

Ethanol(M3)		116.6		114.8		1.6	%		126.7		189.0		(32.9	%)		920.0		607.5		51.4	%
Sugar(Tons)		130.3		98.4		32.5	%		235.5		233.6		0.8	%		553.6		421.1		31.5	%
Energy(MWh)		24.4		15.0		62.2	%		245.0		178.9		36.9	%		99.6		84.1		18.4	%
Others		6.0		0.3		1,840.9	%

Total		277.3		228.5		21.4	%

During 2011, the production mix was more inclined towards sugar, which resulted in a reduction of ethanol sales and a slight increase in sugar sales. The production mix changed from 45.5% sugar and 54.5% ethanol in 2010 to 51.0% sugar and 49.0% ethanol in 2011.

•

a $23.2 million increase in our Rice segment, mainly due to: (i) a 44.8% increase in the volume of white and brown rice sold, mainly as a result of a 64.9% increase in the volume of rough rice processed in our mills, due to (a) a 51.8% increase in planted hectares, from 18,142 hectares in 2010 to 27,542 hectares in 2011; (b) a 23.5% increase in average yields, from 5.1 tons per hectare in 2010 to 6.2 tons per hectare in 2011, due to the gradual stabilization of land under transformation coupled with an improvement in weather conditions. As a result, our rough rice production increased 87.6%, from 91,723 tons in 2010 to 172,034 tons in 2011; and (c) beginning of operations of our Mill located in Franck, Santa Fe, Argentina, during the second semester of 2011; partially offset by (ii) a 6.6% decrease in price, from $412.5 per ton of rough rice equivalent in 2010 to $385.1 per ton of rough rice equivalent in 2011; and

•

a $1.0 million increase in our Cattle segment due to a 35.6% increase in the average beef cattle price which impacts the leasing agreement of our cattle land (settled in kilograms of beef per hectare), from an average of $1.46 per kilogram in 2010 to an average of $1.98 per kilogram in 2011. For a detailed description of the leasing agreement, please see “Item 4.— Information on the Company— B. Business Overview—Material Agreements—Argentina—Agreement with Quickfood S.A.”

partially offset by:

•

a $2.0 million decrease in our Coffee segment resulting from the cessation of coffee trading activities related to third-party production. We continue to commercialize our own coffee production, which is reflected in the “Sales and Cost of Agricultural Produce and Biological Assets” line item.

Cost of Manufactured Products Sold and Services Rendered


	Crops		Rice			Dairy		Coffee			Cattle			Sugar, Ethanol and Energy			Total
	(In thousands of $)
2011		—		(68,721	)		—		(629	)		(408	)		(167,646	)		(237,404	)
2010		—		(52,017	)		—		(2,546	)		—			(164,638	)		(219,201	)

100

Cost of manufactured products sold and services rendered increased 8.3%, from $219.2 million in 2010, to $237.4 million in 2011. This increase was primarily due to:

•

a $16.7 million increase in our Rice segment due to: (i) a 44.8% increase in the volume of white and brown rice sold, partially offset by (ii) a 8.7% decrease in the cost per unit sold, mainly as a result of a 10.9% decrease in the market price of rough rice (which is the main component of the cost of the processed rice) and cost efficiency gains resulting from the scale increase;

•

a $3.0 million increase in our Sugar, Ethanol and Energy segment mainly due to: (i) a 34.2% increase in the price of sugarcane, from $30.3 in 2010 to $40.6 in 2011; and (ii) a 8.9% increase in industry expenses; partially offset by (iii) a 17.5% decrease in the volume of sugar and ethanol sold measured in TRS; and

•

a $0.4 million increase in our Cattle segment, due to maintenance expenses incurred in 2011 related to our cattle land leased.

Partially offset by:

•

a $1.9 million decrease in our Coffee segment mainly due to a decrease in the volume of coffee traded, as a result of the cessation of coffee trading activities related to third party production.

Sales and Cost of Agricultural Produce and Biological Assets


	Crops		Rice		Dairy		Coffee		Cattle		Sugar, Ethanol and Energy		Total
	(In thousands of $)
2011		147,389		721		19,697		13,457		963		—		182,227
2010		107,818		2,305		14,297		4,863		2,407		48		131,738

Sales of agricultural produce and biological assets increased 38.3%, from $131.7 million in 2010, to $182.2 million in 2011, primarily as a result of:

•

a $39.6 million increase in our Crops segment mainly due to (i) an increase in the average sales prices, partially offset by (ii) a decrease in the average yields obtained in 2010/2011 harvest season as a result of worse weather conditions, compared to the 2009/2010 harvest. Corn yields decreased from an average of 5.9 tons per hectare in 2009/2010 harvest to 5.4 tons per hectare in 2010/2011, and first soybean yields decreased from an average of 3.1 in 2009/2010 harvest to 2.6 in 2010/2011 harvest. For a full list of crops yield fluctuations, please see “Trends and Factors Affecting Our Results of Operations—Effect of Yields Fluctuations”.

The following table sets forth the breakdown of sales for the periods indicated.


	Year Ended December 31,							Year Ended December 31,							Year Ended December 31,
	2011		2010					2011		2010					2011		2010
	(In millions of $)				% Change			(In thousands of tons)				% Change			(In $per ton)				% Change

Soybean		61.4		64.9		(5.4	%)		208.1		250.3		(16.9	%)		295.0		2,59.3		13.8	%
Corn		44.2		25.9		70.8	%		201.2		201.7		(0.2	%)		219.6		128.3		71.2	%
Cotton		9.1		2.4		280.0	%		6.7		1.8		269.6	%		1,351.7		1,314.7		2.8	%
Wheat		24.2		7.9		205.2	%		96.8		51.7		87.2	%		250.2		153.5		63.1	%
Sunflower		7.4		4.9		51.9	%		23.1		16.7		37.9	%		321.5		291.8		10.2	%
Barley		0.8		1.2		(29.3	%)		4.4		8.6		(48.5	%)		186.3		135.8		37.3	%
Others		0.2		0.7		(69.6	%)

Total		147.4		107.8		36.7	%		540.4		530.9		1.8	%

•

a $8.6 million increase in our Coffee segment, mainly due to (i) a 62.9% increase in coffee sales price in 2011; (ii) a 69.8% increase in the volume sold, from 1,989 tons in 2010 to 3,378 tons in 2011, as a result of (a) a 23.5% increase in production from 2,221 tons in 2010 to 2,742 tons in 2011, mainly due to (ai) a 7.7% increase in the average yields and (aii) a 14.6% increase in harvested area, from 1,226 hectares in 2010 to 1,405 hectares in 2011, due to a reduction in coffee pruning area, from 406 hectares in 2010 to 227 hectares in 2011; and (b) a 86.3% decrease of inventories at the end of period, from 890 tons in 2010 to 122 tons in 2011; and

101

•

a $5.4 million increase in our Dairy segment due to: (i) a 11.8% increase in the sales average price of raw milk, from 34.4 cents per liter in 2010 to 38.4 cents per liter in 2011; and (ii) a 23.2% increase in the volume of liters produced, from 41.6 million liters in 2010 to 51.2 million liters in 2011, due to (a) a 8.9% increase in the amount of milking cows, from 4,225 heads in 2010 to 4,603 heads in 2011, and (b) a 13.1% increase in the average individual daily production, from 27.0 liters/Milking Cow/day in 2010 to 30.5 liters/ Milking Cow/day in 2011. The increase in the average individual daily production is mainly due to the stabilization of our free stall dairy production unit.

partially offset by:

•

a $1.6 million decrease in our Rice segment mainly attributable to a reduction in the amount of sales of rice seed; and

•

a $1.4 million decrease in our Cattle segment due to a 60.9% decrease in the number of head of beef cattle sold, from 3.7 thousand heads in 2010 to 1.5 thousand heads in 2011, as a result of the disposal of feedlot livestock in 2010.

While we receive cash or consideration upon the sale of our inventory of agricultural produce to third parties, we do not record any additional profit related to that sale, as that gain or loss had already been recognized under the line items “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest.” Please see “—Critical Accounting Policies and Estimates—Biological Assets and Agricultural Produce” above for a discussion of the accounting treatment, financial statement presentation and disclosure related to our agricultural activity.

Initial Recognition and Changes in Fair Value of Biological Assets and Agricultural Produce


	Crops		Rice		Dairy		Coffee			Cattle		Sugar, Ethanol and Energy			Total
	(In thousands of $)
2011		38,014		10,139		6,939		(697	)		468		31,948			86,811
2010		38,879		9,360		9,129		(2,630	)		737		(86,003	)		(30,528	)

Initial recognition and changes in fair value of biological assets and agricultural produce generated a gain of $86.8 million in 2011, compared to a loss of $30.5 million in 2010, primarily due to:

•

a $118.0 million increase in our Sugar, Ethanol and Energy segment due to:

•

a $105.6 million increase, from a loss of $96.8 million in 2010 to a gain of $8.8 million in 2011, mainly generated by an increase in price estimates used in the DCF model to determine the fair value of our sugarcane plantations. In the DCF model, the price of future harvested sugarcane is calculated based on estimates of sugar price derived from the NY11 futures contract. Sugar price estimates as of December 31, 2011, which are calculated based on the average of daily prices for sugar future contracts for the period July 1 to December 31 (i.e. 6-month moving average), increased 14.7% compared to sugar price estimates as of December 31, 2010, for the same period.

•

a $12.4 million increase, from a gain of $10.8 million in 2010 to a gain of $23.2 million in 2011, generated by the recognition at fair value less cost to sell of sugarcane at the point of harvest due to: (i) a 27.9% increase in harvested area from 40,263 hectares in 2010 to 51,500 hectares in 2011, (ii) a 34.2% increase in the price of sugarcane from $30.3 per ton in 2010 to $40.6 per ton in 2011, as a result of higher sugar and ethanol market prices, which was partially offset by: (iii) a 26.9% increase in actual production costs, mainly as a result of higher costs of inputs and salaries; and (iv) a 21.4% decrease in yields obtained, from 96.1 tons per hectare in 2010 to 75.6 tons per hectare in 2011.

•

Of the $31.9 million gain of initial recognition and changes in fair value of biological assets and agricultural produce for 2011, $8.8 million gain represents the unrealized portion, as compared to the $96.4 million loss unrealized portion of the $86.0 million loss of initial recognition and changes in fair value of biological assets and agricultural produce in 2010.

102

•

a $0.8 million increase in our Rice segment, as a result of:

•

a $5.1 million increase in the recognition at fair value less cost to sell of rice at the point of harvest, mainly due to (i) a 51.8% increase in harvested area, from 18,142 hectares in 2010 to 27,542 hectares in 2011, due to (a) a 112.1% increase in owned planted hectares, from 10,831 hectares in 2010 to 22,973 hectares in 2011, as a result of the purchase of “Dinaluca” farm, which was put into production in the 2010/2011 harvest season, and (b) the transformation of cattle pastures into rice area; and (ii) a 23.5% increase in average yields, from 5.1 tons per hectare in 2010 to 6.2 tons per hectare in 2011; partially offset by (iii) a 10.9% decrease in the market price of rough rice, from $243.9 per ton in 2010 to $220.0 per ton in 2011; and (iv) a 12.6% increase in actual production costs (i.e. fuel and fertilizer expenses). Partially offset by:

•

a $4.4 million decrease in the recognition at fair value less cost to sell of non-harvested rice, mainly due to (i) a lower rough rice price estimate and higher costs for 2011/2012 harvest; partially offset by (ii) a 10.9% increase in the rice plantation area at fair value as of December 31, from 23,934 hectares (out of 27,542 planted hectares) to 26,546 hectares (out of 31,497 planted hectares) for the 2010/2011 and the 2011/2012 harvest season respectively.

•

Of the $10.1 million of initial recognition and changes in fair value of biological assets and agricultural produce for 2011, $1.9 million represents the unrealized portion, as compared to the $6.3 million unrealized portion of the $9.4 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2010;

•

a $1.9 million increase in our Coffee segment mainly due to:

•

a $1.1 million increase in the recognition at fair value less cost to sell of non-harvested coffee, from a loss of $2.5 million in 2010 to a loss of $1.4 million in 2011, mainly due to: (i) a 31% increase in the coffee price estimates used in the DCF model to determine the fair value of our coffee plantations as of December 31, 2011; partially offset by: (ii) a 25.5% increase in production costs; and (iii) increase in the average aging of our coffee plantations;

•

a $0.8 million increase in the recognition at fair value less cost to sell of coffee at the point of harvest, from a loss of $0.2 million in 2010 to a gain of $0.7 million in 2011, mainly due to: (i) a 54.7% increase in the average price of coffee at the point of harvest, based on Intercontinental Exchange of New York (“ICE-NY”) data.; (ii) a 7.7% increase in average yields, from 1.8 tons per hectare in 2010 to 2.0 tons per hectare in 2011, mainly due to efficiencies gained in the use of inputs and machinery; and (iii) a 14.6% increase in harvested area, from 1,226 hectares in 2010 to 1,405 hectares in 2011; partially offset by (iv) a 5.7% increase in production costs per hectare due to an increase in fertilizers prices.

•

Of the $0.7 million loss of initial recognition and changes in fair value of biological assets and agricultural produce for 2011, $1.4 million loss represents the unrealized portion, as compared to the $2.5 million loss unrealized portion of the $2.6 million loss of initial recognition and changes in fair value of biological assets and agricultural produce in 2010;

partially offset by:

•

a $2.2 million decrease in our Dairy segment mainly due to:

•

a $1.0 million decrease in the recognition at fair value less cost to sell of raw milk, from $5.9 million in 2010 to $4.9 million in 2011, mainly due to (i) an increase in direct expenses, partially offset by (ii) a 8.9% increase in the amount of milking cows; (iii) a 13.1% increase in the average individual daily production; and (iii) a 11.8% increase in milk sales average prices; and

103

•

a $1.2 million decrease in the revaluation of the dairy herd, from a $3.2 million increase in value in 2010 to a $2.0 million increase in value in 2011, as a result of a 32.2% increase in the market prices of dairy cows in 2011 compared to a 78.1% increase in 2010.

•

Of the $6.9 million gain in initial recognition and changes in fair value of biological assets and agricultural produce for 2011, $1.5 million gain represents the unrealized portion, as compared to the $3.6 million unrealized gain portion of the $9.1 million gain in initial recognition and changes in fair value of biological assets and agricultural produce in 2010.

•

a $0.9 million decrease in our Crops segment mainly due to:

•

a $10.3 million decrease in the recognition at fair value less cost to sell for non-harvested crops as of year-end, from a gain of $8.7 million in 2010 to a loss of $1.6 million in 2011, primarily due to: (i) lower commodity prices estimates for 2012; (ii) low level of rains in the Humid Pampas region during September, which delayed the sowing of Corn; and (iii) lack of rains during November and December, which affected expected yields for the 2011/2012 season, mainly in the Humid Pampas region, measured as of December 31, 2011.

•

a $9.4 million increase in the recognition at fair value less cost to sell of crops at the point of harvest, from $30.2 million in 2010 to $39.7 million in 2011, mainly due to: (i) higher crop sales prices (see “Trends and Factors Affecting Our Results of Operations—Effects of Fluctuations in Commodities Prices”); partially offset by (ii) an increase of 34.7% in fertilizer prices. The resulting actual average margin per hectare for our summer crops (i.e. soybean, corn, sunflower and cotton) increased from $198.9 per hectare in 2010 to $300.6 per hectare in 2011.

The following table sets forth actual production costs by crop for the periods indicated:


	Year Ended December 31,
	2011		2010
	(In $per hectare)				% Change
Corn		423.6		337.9		25.4	%
Soybean		379.9		374.6		1.4	%
Soybean (second harvest)		210.4		219.7		(4.2	)%
Cotton		2,377.8		1,628.5		46.0	%
Wheat		331.5		219.1		51.3	%

•

a $0.3 million decrease in our Cattle segment as a result of a 54.0% decrease in the average amount of head of cattle, from 1.3 thousand in 2010 to 0.6 thousand in 2011.

Changes in Net Realizable Value of Agricultural Produce after Harvest

Crops

Rice

Dairy

Coffee

Cattle

Sugar,
Ethanol and
Energy

Corporate

Total

(In thousands of $)

2011

10,953

N/A

(430

)

N/A

10,523

2010

7,482

N/A

517

N/A

7,999

Changes in net realizable value of agricultural produce after harvest is mainly composed by: (i) profit or loss from commodity price fluctuations during the period of time the agricultural produce is in inventory which impacts its fair value, (ii) profit or loss from the valuation of forward contracts related to agricultural produce in inventory and (iii) profit from direct exports. Changes in net realizable value of agricultural produce after harvest increased 31.3% from $8.0 million in 2010 to $10.5 million in 2011.

The change in net realizable value of $11.0 million gain in our Crops segment in 2011 was mainly generated by (i) profits from the valuation of forward contracts, mainly due to a decrease of soybean and wheat market prices during this year. Based on Chicago Board of Trade (“CBOT”) data, from January 3, 2011 to December 31, 2011, soybean and wheat prices decreased 12.5% and 19.0% respectively ; and (ii) profit from direct exports; partially

104

offset by (iii) losses from inventory valuation as a result of fluctuations in market prices. The change in net realizable value of $0.4 million loss in our Coffee segment in 2011was mainly generated by a 14.2% decrease in coffee prices from the point of harvest to the end of December 2011, based on Intercontinental Exchange of New York (“ICE-NY”) data.

The changes in net realizable value of $8.0 million in 2010 was mainly generated by increases of crop prices (i.e. soybean, corn and sunflower) of between 2.9% to 57.5%, depending on the crop, and a 48.1% increase, from the point of harvest to the end of December 2011, based on Chicago Board of Trade (“CBOT”) and Intercontinental Exchange of New York (“ICE-NY”) data.

General and Administrative Expenses


	Crops			Rice			Dairy			Coffee			Cattle			Sugar, Ethanol and Energy			Corporate			Total
	(In thousands of $)
2011		(8,003	)		(6,278	)		(1,173	)		(1,153	)		(269	)		(21,082	)		(27,184	)		(65,142	)
2010		(7,087	)		(3,773	)		(2,910	)		(983	)		(350	)		(19,080	)		(22,379	)		(56,562	)

Our general and administrative expenses increased 15.2% from $56.6 million in 2010 to $65.1 million in 2011. General and administrative expenses for our Crops, Rice, Coffee and Sugar, Ethanol and Energy segments increased mainly due to (i) hiring additional personnel and paying higher salaries; (ii) the higher related fuel and maintenance expenses resulting from the larger scale of operations; (iii) an increase in professional fees, reflecting our effort to improve and enhance controls and management efficiency according to best corporate governance practices, and (iv) higher depreciations and amortizations mainly as a result of an increase in property, plant and equipment assets and intangible assets in year ended December 31, 2011 compared to year ended December 31, 2010. This increase was partially offset by (v) a decrease of $1.7 million in our Dairy segment, due to additional expenses incurred in 2010 related to the start up of our advanced free-stall dairy unit.

General and administrative expenses for our Corporate segment increased 21.5%, from $22.4 million in 2010 to $27.2 million in 2011, mainly due to: (i) higher labor costs in Argentina and Brazil due to salary inflation; (ii) higher general and professional fees (including auditor fees, listing fees, directors compensations, restricted shares plans and legal fees, among others), related to being a public company; and (iii) higher travel expenses, partly associated to being a public company.

Selling Expenses


	Crops			Rice			Dairy			Coffee			Cattle			Sugar, Ethanol and Energy			Total
	(In thousands of $)
2011		(2,270	)		(14,488	)		(401	)		(463	)		(74	)		(41,708	)		(59,404	)
2010		(1,522	)		(8,154	)		(333	)		(655	)		(175	)		(41,689	)		(52,528	)

Selling expenses increased 13.1%, from $52.5 million in 2010 to $59.4 million in 2011, mainly driven by (i) an increase of $6.3 million for our Rice segment, from $8.2 million in 2010 to $14.5 million in 2011, mainly due to an increase in sales volume; and (ii) an increase of $0.7 million for our Crops segment, mainly due to an increase in commissions and expenses related to direct exports.

Selling expenses of our Dairy, Coffee, Cattle and Sugar, Ethanol and Energy segments remained essentially unchanged.

105

Other Operating Income, Net


	Crops			Rice		Dairy			Coffee			Cattle			Sugar, Ethanol and Energy		Land Transformation		Corporate		Total
	(In thousands of $)
2011		1,843			372		(2	)		2,020			(3	)		11,220		8,832		299		24,581
2010		(6,194	)		345		—			(2,165	)		70			5,305		20,837		26		18,224

Other operating income, net increased 34.9%, from $18.2 million in 2010 to $24.6 million in 2011, primarily due to:

•

a $8.0 million increase in our Crops segment due to the mark-to-market effect of outstanding hedge positions, which had a positive impact during 2011;

•

a $5.9 million increase in our Sugar, Ethanol and Energy segment due to the mark-to-market effect of future sales contracts for sugar; and

•

a $4.2 million increase in our Coffee segment due to the mark-to-market effect of outstanding hedge positions.

partially offset by:

•

a $12.0 million decrease in our Land Transformation segment due to the sale of a farm of 2,439 hectares in December 2011, which resulted in a $8.8 million gain, compared to the sale of a farm of 5,086 hectares in December 2010, which generated a $20.8 million gain;

Other operating income, net of our Rice, Dairy, Cattle and Corporate segments remained essentially unchanged.

Share of Loss of Joint Ventures

Share of loss of joint ventures decreased $0.95 million, from a loss of $0.05 million in 2010 to a loss of $1.0 million in 2011, driven by the negative results of Grupo La Lácteo S.A. The loss of 2011 is mainly explained by a downward trend on prices of processed dairy products in the domestic market coupled with an increase in production costs. Our industrial capacity is only suitable for products for the domestic market.

Financial Results, Net

Our net financial results increased 132.0%, from a loss of $22.9 million in 2010 to to a loss of $53.2 million in 2011, primarily due to: (i) a 13.4% and a 8.3% depreciation of the Brazilian Real and Argentine Peso respectively in 2011, generating a $12.7 million non-cash loss during this year, compared to a $7.3 million non-cash gain in 2010 caused by an appreciation of 4.0% of Brazilian Real and partially offset by a 4.8% depreciation of the Argentina Peso during this period, since a portion of our net liability position in Brazil and Argentina is nominated in foreign currency; and (ii) a $2.2 million mostly non-cash loss due to the mark-to-market of our currency derivatives, compared to a $5.0 million mostly non-cash gain in 2010.

The following table sets forth the breakdown of financial results for the periods indicate.


	Year Ended December 31,
	2011			2010
	(In $thousand)						% Change
Interest income		8,019			1,341			658.5	%
Interest costs		(34,017	)		(34,369	)		5.2	%
FX Gain/(Loss)		(12,683	)		7,324			N/A
Gain/(Loss) from derivative financial Instruments		(2,247	)		5,018			N/A
Taxes		(5,273	)		(2,104	)		150.6	%
Other Income/(Expenses)		(7,008	)		(147	)		4,509.9	%
Total Financial Results		(53,209	)		(22,937	)		131.0	%

106

Income Tax

Current income tax expense totaled $14.7 million in fiscal year 2011, which equates to a consolidated effective tax rate of 20.5%. Our consolidated income tax benefit for 2010 totaled $16.3 million, which equates to a consolidated effective tax rate of 26.6%.

On a consolidated basis, the change in our annual effective tax rate from 26.6% for the year ended December 31, 2010 to 20.5% for the year ended December 31, 2011, reflects, among other items, a change in our mix of pretax income from our various jurisdictions. On a disaggregated basis, our effective tax rate in Brazil for 2010 was a benefit of 24.6% as compared to an expense of 14% in 2011. The main reason for the lower effective tax rate for the year ended December 31,2011, as compared to the same period in 2010, is attributable to the recognition of deferred tax assets not previously recognized , (mainly tax loss carryforward), as a result of an improvement in the projections of our Brazilian operations mainly due to better results in Sugar, Ethanol and Energy segment. Our effective tax rate in Argentina remain stable in both periods. Our income taxes in Uruguay are not significant to our consolidated taxes.

Profit for the Year

As a result of the foregoing, our net income for the year increased from a loss of 44.8 million in 2010 to a profit of $56.9 million in 2011.

Year ended December 31, 2010 as compared to year ended December 31, 2009

The following table sets forth certain financial information with respect to our consolidated results of operations for the periods indicated.


	2010			2009
	(In thousands of $)
Sales of manufactured products and services rendered		294,529			183,386
Cost of manufactured products sold and services rendered		(219,201	)		(180,083	)

Gross Profit from Manufacturing Activities		75,328			3,303

Sales of agricultural produce and biological assets		131,738			130,217
Cost of agricultural produce sold and direct agricultural selling expenses		(131,738	)		(130,217	)
Initial recognition and changes in fair value of biological assets and agricultural produce		(30,528	)		71,668
Changes in net realizable value of agricultural produce after harvest		7,999			12,787

Gross (Loss) / Profit from Agricultural Activities		(22,529	)		84,455

Margin on Manufacturing and Agricultural Activities Before Operating Expenses		52,799			87,758

General and administrative expenses		(56,562	)		(52,393	)
Selling expenses		(52,528	)		(31,169	)
Other operating income, net		18,224			13,071
Share of loss of joint ventures		(50	)		(294	)

(Loss)/ Profit from Operations Before Financing and Taxation		(38,117	)		16,973

Finance income		16,559			11,553
Finance costs		(39,496	)		(34,216	)

Financial results, net		(22,937	)		(22,663	)

(Loss) Before Income Tax		(61,054	)		(5,690	)

Income tax benefit		16,263			5,415

(Loss) for the Year		(44,791	)		(275	)

Sales of Manufactured Products and Services Rendered


	Crops		Rice		Dairy		Coffee		Cattle		Sugar, Ethanol and Energy		Total
	(In thousands of $)
2010		344		59,280		—		2,709		3,718		228,478		294,529
2009		9,667		67,317		752		7,984		172		97,494		183,386

107

Sales of manufactured products and services rendered increased 60.6%, from $183.4 million in 2009, to $294.5 million in 2010, primarily as a result of:

•

a $131.0 million increase in our Sugar, Ethanol and Energy segment due to: (i) a 73.5% increase in the volume of sugar and ethanol sold, measured in TRS, from 325 thousand tons of TRS equivalent in 2009 to 564 thousand tons of TRS equivalent in 2010. On average, one metric ton of sugarcane is equivalent to 140 kilograms of TRS equivalent. While a mill can produce either sugar or ethanol, the TRS input requirements differ between the two products. On average, 1.045 kilogram of TRS equivalent is required to produce 1.0 kilogram of sugar, while 1.691 kilograms of TRS equivalent is required to produce a liter of ethanol. The increase in the volume of TRS equivalent sold in 2010 was due to an increase of 84% in the volume of sugarcane crushed in our mills, from 2.2 million tons in 2009 to 4.1 million tons in 2010 due to the expansion of the crushing capacity at our Angélica mill; (ii) a 41.1% increase in the average market price of ethanol, from $430.5 per cubic meter in 2009 to $607.5 per cubic meter in 2010; (iii) a 20.9% increase in the average market price of sugar, from $348.2 per ton in 2009 to $421.1 per ton in 2010; (iv) a 39.4% increase in the volume of energy sold, from 128.3 thousand MWh in 2009 to 178.9 thousand MWh in 2010. The following table sets forth the breakdown of sales by product for the periods indicated.


	Period Ended December 31,							Period Ended December 31,							Period Ended December 31,
	2010		2009					2010		2009					2010		2009
	(In millions of $)				% Change			(In thousands units)				% Change			(In dollars per unit)				% Change

Ethanol(M3)		114.8		62.8		82.8	%		189.0		145.9		29.5	%		607.5		430.5		41.1	%
Sugar(Tons)		98.4		26.1		276.3	%		233.6		75.1		211.2	%		421.1		348.2		20.9	%
Energy(MWh)		15.0		8.2		76.1	%		178.9		128.3		39.4	%		84.1		66.6		26.3	%
Others		0.3		0.4		0.0	%

Total		228.5		97.5		134.4	%

During 2010, the sugar facility at the Angélica mill was completed which increased sugar production proportionally, therefore increasing sugar sales more than ethanol sales.

•

a $3.5 million increase in our Cattle segment due to the revenues from the lease of most of our cattle land to a third party in December 2009 for beef cattle grazing;

partially offset by:

•

a $8.0 million decrease in our Rice segment due to a 17.9% decrease in the volume of white and brown rice sold, mainly as a result of a 18.0% decrease in the volume of rough rice processed in our mills, as a result of a lower volume of rough rice purchased from third parties due to increases in the price of rough rice. The decrease in volume was partially offset by a 12.7% increase in price, from $358.4 per ton of rough rice equivalent, which reflects the sale price of white and brown rice, in 2009 to $412.5 per ton of rough rice equivalent in 2010;

•

a $9.3 million decrease in our Crops segment mainly due to a one-time production and sale of 18.9 thousand tons of soybean meal and oil in a leased industrial facility during 2009;

•

a $5.3 million decrease in our Coffee segment resulting from our cessation of coffee trading activities related to third-party production (we continue to commercialize of our own coffee production); and

•

a $0.8 million decrease in our Dairy segment due to the cessation of whole milk powder selling activities following our entry into the Grupo La Lácteo joint venture.

Cost of Manufactured Products Sold and Services Rendered


	Crops			Rice			Dairy			Coffee			Cattle		Sugar, Ethanol and Energy			Total
	(In thousands of $)
2010		—			(52,017	)		—			(2,546	)		—		(164,638	)		(219,201	)
2009		(5,447	)		(56,576	)		(613	)		(7,120	)		—		(110,327	)		(180,083	)

108

•

Cost of manufactured products sold and services rendered increased 21.7%, from $180.1 million in 2009, to $219,2 million in 2010. This increase was primarily due to:

•

a $54.3 million increase in our Sugar, Ethanol and Energy segment as a result of a 73.5% increase in the volume of sugar and ethanol sold coupled with a 34.1% increase in the actual price of sugarcane, which was partially offset by decreases in the operating costs per unit of TRS produced at the Angélica mill as compared to the prior year, which had resulted from the unusual, sporadic rainfall pattern observed during the 2009/2010 harvest year that led to interruptions in harvesting activities, disruptions to milling operations and less stable production rates during 2009;

Partially offset by:

•

a $4.6 million decrease in our Rice segment due to a 17.9% decrease in the volume of white and brown rice sold which was partially offset by a 12.0% increase in the cost per unit sold, mainly as a result of an increase in the market price of rough rice, which is the main component of the cost of the processed rice;

•

a $5.4 million decrease in our Crops segment mainly due to the cost of raw materials (soybeans) associated with the one-time sale of soybean meal and oil during 2009;

•

a $4.6 million decrease in our Coffee segment due to a decrease in the volume of coffee traded as a result of the cessation of coffee trading activities since May 2010; and

•

a $0.6 million decrease in our Dairy segment due to the cessation of whole milk powder selling activities following our entry into the Grupo La Lácteo joint venture.

Sales and Cost of Agricultural Produce and Biological Assets


	Crops		Rice		Dairy		Coffee		Cattle		Sugar, Ethanol and Energy		Total
	(In thousands of $)
2010		107,818		2,305		14,297		4,863		2,407		48		131,738
2009		82,362		2,033		11,142		6,281		28,306		93		130,217

Sales of agricultural produce and biological assets increased 1.1%, from $130.2 million in 2009, to $131.7 million in 2010, primarily as a result of:

•

A $25.5 million increase in our Crops segment mainly due to: (i) a 28.2% increase in the production area, from 104,986 hectares in 2009 to 134,562 hectares in 2010, and (ii) an increase in the average yields obtained in the 2009/2010 harvest as a result of better weather conditions. The following table sets forth the breakdown of sales for the periods indicated.


	Year Ended December 31,							Year Ended December 31,							Year Ended December 31,
	2010		2009					2010		2009					2010		2009
	(In millions of $)				% Change			(In thousands of tons)				% Change			(In $ per ton)				% Change
Soybean		64.9		35.7		81.8	%		250.3		120.3		108,0	%		259.3		296.7		(12.6	%)
Corn		25.9		14.7		76.6	%		201.7		100.5		100.6	%		128.3		145.8		(12.0	%)
Cotton		2.4		11.9		(79.9	%)		1.8		14.9		(87.7	%)		1,314.7		801.5		64.0	%
Wheat		7.9		10.2		(22.3	%)		51.7		62.7		(17.4	%)		153.5		163.1		(5.9	%)
Sunflower		4.9		5.5		(11.6	%)		16.7		27.8		(39.9	%)		291.8		198.1		47.3	%
Barley		1.2		3.1		(62.3	%)		8.6		21.4		(59.7	%)		135.8		145.1		(6.5	%)
Others		0.7		1.3		47.6	%		—		—		905.9	%

Total		107.8		82.4		30.9	%		530.9		347.6		52.7	%

109

•

a $3.1 million increase in our Dairy segment due to a 46.4% increase in the market price of raw milk, from 23.5 cents per liter in 2009 to 34.4 cents per liter in 2010, partially offset by a 12.4% decrease in the volume of liters produced, from 47.5 million liters in 2009 to 41.6 million liters in 2010 due to a new production system for cows (from the grazing dairy system to the free-stall dairy system); and

•

a $0.3 million increase in our Rice segment mainly attributable to higher sales of rice seeds to third parties as a result of an increase of the planting area in Argentina, primarily due to better weather conditions;

partially offset by:

•

a $25.8 million decrease in our Cattle segment due to a 96.6% decrease in the number of head of beef cattle sold, from 107.4 thousand head in 2009 to 3.7 thousand head in 2010, as a result of the reduced herd size following the sale of most of our beef cattle herd in December 2009; and

•

a $1.4 million decrease in our Coffee segment primarily due to a 29.2% decrease in the volume sold, from 2,808 tons in 2009 to 1,989 tons in 2010 as a result of a 7.9% decrease in production from 2,412 tons in 2009 to 2,221 tons in 2010 and a 531.2% increase of inventories at end of period from 141 tons in 2009 to 890 tons in 2010. The decrease in production was mainly driven by a decrease in harvested area generated by an increase in the area under pruning, from 276 hectares in 2009 to 406 hectares 2010.

Initial Recognition and Changes in Fair Value of Biological Assets and Agricultural Produce


	Crops		Rice		Dairy		Coffee			Cattle		Sugar, Ethanol and Energy			Total
	(In thousands of $)
2010		38,879		9,360		9,129		(2,630	)		737		(86,003	)		(30,528	)
2009		6,563		12,170		3,374		(16,207	)		4,704		61,064			71,668

Initial recognition and changes in fair value of biological assets and agricultural produce generated a loss of $30.5 million in 2010, as compared to a gain of $71.6 million in 2009, primarily due to:

•

a $147.1 million decrease in our Sugar, Ethanol and Energy segment due to:

•

a $154.1 million decrease, from a gain of $57.3 million in 2009 to a loss of $96.8 million in 2010 generated by a decrease in price estimates used in the DCF model to determine the fair value of our sugarcane plantations. In the DCF model, the price of future harvested sugarcane is calculated based on estimates of sugar price derived from the NY11 futures contract. Sugar price estimates decreased due to lower sugar market prices and also as a result of an adjustment to this valuation model for sugarcane, which increased the loss to $59.9 million at December 31, 2010. Sugar price estimates as of December 31, 2010 are calculated based on the average of daily prices for sugar future contracts for the period July 1 to December 31, 2010 (i.e. 6-month moving average) rather than the single price for future contracts as of year end. The change is expected to mitigate the impact of volatility and seasonality that arises with a single pricing date; and

•

a $7.2 million increase, from a gain of $3.7 million in 2009 to a gain of $10.9 million in 2010, generated by the recognition at fair value less cost to sell of sugarcane at the point of harvest due to: (i) a 81.2% increase in harvested area from 22,222 hectares in 2009 to 40,263 hectares in 2010, (ii) a 2.9% increase in yields obtained, from 93.4 tons per hectare in 2009 to 96.1 tons per hectare in 2010, and (iii) a 34.1% increase in the price of sugarcane from $22.6 per ton in 2009 to $30.3 per ton in 2010, as a result of higher sugar and ethanol

110

market prices and higher TRS content in sugarcane, which was partially offset by (iv) a 35.9% increase in actual production costs, from $1,944 per hectare in 2009 to $2,643 per hectare in 2010, mainly as a result of an increase in transportation costs generated by the new sugarcane plantation in the Ivinhema region, which increased the average distance from our total sugarcane plots to the Angélica mill.

•

Of the $86.0 million loss (which results from the $96.8 million loss plus $10.9 million gain) of initial recognition and changes in fair value of biological assets and agricultural produce for 2010, $96.4 million represents the unrealized portion, as compared to the $58.7 million gain unrealized portion of the $61.1 million gain of initial recognition and changes in fair value of biological assets and agricultural produce in 2009;

•

a $2.8 million decrease in our Rice segment as a result of (i) an 9.1% decrease in yields from 5.5 tons per hectare in 2009 to 5.1 tons per hectare in 2010, and (ii) favorable weather conditions during the end of 2009, which resulted in the recognition at fair value less cost to sell of non-harvested rice of a larger proportion of the planted rice at the end of 2009, reduced the recognition at fair value less cost to sell of rice at the point of harvest by $6.3 million. These effects were partially offset by a 5.1% increase in the production area and a 2.1% decrease in actual production costs (i.e. agrochemical and fertilizer expenses).

•

Of the $9.4 million of initial recognition and changes in fair value of biological assets and agricultural produce for 2010, $6.3 million represents the unrealized portion, as compared to the $6.8 million unrealized portion of the $12.2 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2009;

•

a $4.0 million decrease in our Cattle segment as a result of the reduced herd size following the sale of most of our beef cattle herd in December 2009

partially offset by:

•

a $32.3 million increase in our Crops segment mainly due to:

•

a $28.0 million increase in the recognition at fair value less cost to sell of crops at the point of harvest, from $2.1 million in 2009 to $30.2 million in 2010, mainly due to: (i) higher crop yields (see “Trends and Factors Affecting Our Results of Operations—Effects of Yield Fluctuations”), (ii) a 28.2% increase in the production area, from 104,986 hectares in 2009 to 134,562 hectares in 2010 and (iii) a decrease in agrochemical and fertilizer prices, which was partially offset by the favorable weather conditions by the end of 2009, resulting in the recognition at fair value less cost to sell of non-harvested crops of a larger proportion of the planted crops at the end of 2009, which reduced the recognition at fair value less cost to sell of crops at the point of harvest for 2010 by $4.4 million compared to a reduction of $0.3 million for 2009. The resulting actual average margin per hectare for our summer crops (i.e. soybean, corn, sunflower and cotton) increased from $10.9 per hectare in 2009 (which is reflective of the impact of the drought) to $198.9 per hectare in 2010; and

•

a $4.3 million increase in the recognition at fair value less cost to sell for non-harvested crops as of year-end, from $4.4 million in 2009 to $8.7 million in 2010, primarily due to higher commodity prices, which resulted in an increase on average margin per hectare from $193.0 per hectare in 2009 to $265.9 per hectare in 2010

•

The following table sets forth actual production costs by crop for the periods indicated:


	Year Ended December 31,
	2010		2009
	(In $ per hectare)				% Change
Corn		337.9		363.9		(7.1	%)
Soybean		374.6		295.6		26.7	%
Soybean (second harvest)		219.7		202.7		8.4	%
Cotton		1,628.5		1,768.1		(7.9	%)
Wheat		219.1		254.8		(14.0	%)

111

•

a $13.6 million improvement in our Coffee segment due to:

•

a $3.4 million increase in the recognition at fair value less cost to sell of coffee at the point of harvest, from a loss of $3.5 million in 2009 to a loss of $0.2 million in 2010, due to a 70.0% increase in the actual price of coffee at the point of harvest; and

•

a $10.2 million increase in the recognition at fair value less cost to sell of non-harvested coffee, from a loss of $12.7 million in 2009 to a loss of $2.4 million in 2010. The $12.7 million loss of 2009 was mainly generated by a reduction of the area to be harvested in the next five years as a result of the adoption of a pruning plan to correct the growth pattern of our coffee trees, which impacted the production estimates used in the DCF model used to determine the fair value of our coffee plantations as of December 31, 2009.

•

Of the $16.2 million loss in initial recognition and changes in fair value of biological assets and agricultural produce for 2009, $15.7 million represents the unrealized portion of the loss, as compared to the $2.5 million unrealized portion of the loss of $2.6 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2010;

•

a $5.7 million increase in our Dairy segment mainly due to:

•

a $2.8 million increase in the recognition at fair value less cost to sell of raw milk, from $3.1 million in 2009 to $5.9 million in 2010 due to a 46.4% increase in raw milk market price partially offset by a 12.4% decrease in the volume of liters produced; and

•

a $2.9 million increase in the recognition at fair value less cost to sell of the dairy herd, from $0.3 million in 2009 to $3.2 million 2010 as a result of a 78% increase in the market prices of dairy cows.

•

Of the $9.1 million in initial recognition and changes in fair value of biological assets and agricultural produce for 2010, $3.6 million gain represents the unrealized portion, as compared to the $0.03 million unrealized portion of the $3.4 million in initial recognition and changes in fair value of biological assets and agricultural produce in 2009.

Changes in Net Realizable Value of Agricultural Produce after Harvest

Crops

Rice

Dairy

Coffee

Cattle

Sugar,
Ethanol and
Energy

Total

(In thousands of $)

2010

7,482

N/A

517

N/A

7,999

2009

11,362

191

N/A

1,234

N/A

12,787

Changes in net realizable value of agricultural produce after harvest are mainly generated by commodity price fluctuations during the period of time the agricultural produce is in inventory. Changes in net realizable value of agricultural produce after harvest decreased 37.4% from $12.8 million in 2009 to $8.0 million in 2010. The changes in net realizable value of $8.0 million in 2010 was mainly generated by increases of crop prices (i.e. soybean, corn and sunflower) of between 2.9% to 57.5%, depending on the crop, and a 48.1% increase, from the point of harvest to the end of December 2011, based on Chicago Board of Trade (“CBOT”) and Intercontinental Exchange of New York (“ICE-NY”) data.

The $12.8 million of changes in net realizable value of agricultural produce after harvest generated in 2009 was mainly generated by an increase in crop prices of between 13.7% to 54.2%, depending on the crop, and an increase in coffee prices of 21.3% during the period.

Of the $8.0 million of changes in net realizable value of agricultural produce after harvest for 2010, $1.5 million represents the unrealized portion, as compared to the $0.1 million unrealized portion of the $12.8 million of changes in net realizable value of agricultural produce after harvest in 2009.

112

General and Administrative Expenses


	Crops			Rice			Dairy			Coffee			Cattle			Sugar, Ethanol and Energy			Corporate			Total
	(In thousands of $)
2010		(7,087	)		(3,773	)		(2,910	)		(983	)		(350	)		(19,080	)		(22,379	)		(56,562	)
2009		(6,280	)		(2,883	)		(2,221	)		(2,126	)		(2,909	)		(13,922	)		(22,052	)		(52,393	)

Our general and administrative expenses increased 8% from $52.4 million in 2009 to $56.6 million in 2010. General and administrative expenses for our Crops, Rice, Dairy and Sugar, Ethanol and Energy segments increased due to an increase in technical management expenses as a result of (i) hiring additional personnel and paying higher salaries and (ii) the higher related fuel and maintenance expenses resulting from the increase in the number of hectares planted and the larger scale of operations. This increase was partially offset by (i) a decrease in our Cattle segment, due to a reduction of overhead and administrative expenses following the sale of most of our cattle herd during 2009, and (ii) a decrease in our Coffee segment, mainly as a result of a reduction of overhead and administrative expenses in relation to the cessation of coffee trading activities in May 2010.

Selling Expenses


	Crops			Rice			Dairy			Coffee			Cattle			Sugar, Ethanol and Energy			Total
	(In thousands of $)
2010		(1,522	)		(8,154	)		(333	)		(655	)		(175	)		(41,689	)		(52,528	)
2009		(1,587	)		(7,485	)		(777	)		(1,353	)		(1,045	)		(18,922	)		(31,169	)

Selling expenses increased 68.5%, from $31.2 million in 2009 to $52.5 million in 2010, due to an increase in commercial taxes, trade commissions and freight expenses relating to our Sugar, Ethanol and Energy segment due to increased sales volumes, and the higher proportion of sugar in our sales mix (freight expenses are higher for sugar sales as sugar is generally delivered to the port for exporting while ethanol is delivered at the mill). This increase was partially offset by a decrease in taxes, commissions and freight expenses relating to our Cattle and Coffee segments due to lower volumes sold. Selling expenses of our Crops, Dairy and Rice segments remained essentially unchanged.

Other Operating Income, Net


	Crops			Rice			Dairy			Coffee			Cattle		Sugar, Ethanol and Energy			Land Transformation		Corporate			Total
	(In thousands of $)
2010		(6,194	)		345			—			(2,165	)		70		5,305			20,837		26			18,224
2009		4,776			(942	)		(108	)		806			377		(10,467	)		18,839		(210	)		13,071

Other operating income, net increased 39.4%, from $13.0 million in 2009 to $18.2 million in 2010, primarily due to:

•

a $15.6 million increase in our Sugar, Ethanol and Energy segment due to the mark-to-market effect of future sales contracts for sugar; and

•

a $2.0 million increase in our Land Transformation segment due to the sale of a farmland in December 2010, which resulted in a $20.8 million gain, compared to the sale of a farmland in December 2009, which generated a $18.8 million gain;

partially offset by:

•

a $11.0 million decrease in our Crops segment due to the mark-to-market effect of outstanding hedge positions, which had a positive impact during 2009; and

•

a $2.9 million decrease in our Coffee segment due to the mark-to-market effect of outstanding coffee derivative positions.

113

Other operating income, net of our Rice, Dairy, Cattle and Corporate segments remained essentially unchanged.

Share of Loss of Joint Ventures

Share of loss of joint ventures remained essentially unchanged, from a loss of $0.3 million in 2009 to a loss of $0.05 million in 2010, driven by the negative results of Grupo La Lácteo S.A.

Financial Results, Net

Financial results (net) decreased by $0.2 million, from a loss of $22,7 million in 2009 to a loss of $22.9 million in 2010, primarily due to a 22.0% increase in interest expense, from $28.2 million in 2009 to $34.4 million in 2010, resulting from larger amounts of debt outstanding during the year. This increase in finance costs was partially offset by a 43.3% increase in finance income, mainly generated by foreign exchange derivative financial instruments.

Income Tax Benefit

Our consolidated income tax benefit for 2009 totaled $5.4 million, which equates to a consolidated effective tax rate of 23.4%. Our consolidated income tax benefit for 2010 totaled $16.3 million, which equates to a consolidated effective tax rate of 26.6%.

On a consolidated basis, the change in our annual effective tax rate from 23.4% for the year ended December 31, 2009 to 26.6% for the year ended December 31, 2010, reflects, among other items, a change in our mix of pretax income from our various jurisdictions. On a disaggregated basis, our effective tax rate in Brazil for 2009 was a benefit of 17.1% as compared to a benefit of 24.6% in 2010. The primary reason for the higher effective tax rate for the year ended December 31, 2010, as compared to the same period in 2009, is attributable to updated business projections mainly driven by higher estimated prices which enabled us to recognize a higher proportion of tax loss carry-forwards in 2010 as compared to 2009. Our effective tax rate in Argentina for 2009 was a loss of 31.8% as compared to a loss of 36.0% for 2010. Our effective tax rate in 2010 was higher due to higher non-deductible items and other charges as compared to those amounts in 2009. Our income taxes in Uruguay are not significant to our consolidated taxes.

Loss for the Year

As a result of the foregoing, our loss for the year increased from $0.3 million in 2009 to $44.8 million in 2010.

B. LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are and will be influenced by a variety of factors, including:

•

our ability to generate cash flows from our operations;

•

the level of our outstanding indebtedness and the interest that we are obligated to pay on such outstanding indebtedness;

•

our capital expenditure requirements, which consist primarily of investments in new farmland, in our operations, in equipment and plant facilities and maintenance costs; and

•

our working capital requirements.

Our principal sources of liquidity have traditionally consisted of shareholders’ contributions, short and long term borrowings and proceeds received from the disposition of transformed farmland or subsidiaries.

114

We believe that our working capital will be sufficient during the next 12 months to meet our liquidity requirements.

Years ended December 31, 2011, 2010 and 2009

The table below reflects our statements of Cash Flow for the fiscal years ended December 31, 2011, 2010 and 2009.


	Year ended December 31,
	2011			2010			2009
Cash and cash equivalent at the beginning of the year		70,269			74,806			93,360
Cash generated from (used in) operating activities		56,586			60,221			(20,010	)
Net cash used in investing activities		(140,493	)		(111,725	)		(114,386	)
Cash generated by Financial activities		360,792			46,545			130,250
Effect of exchange rate changes on cash		(16,608	)		423			(14,408	)
Cash and cash equivalent at the end of the year		330,546			70,269			74,806

Operating Activities

Year ended December 31, 2011

Net cash generated by operating activities was $56.5 million in the year ended December 31, 2011. During 2011, we generated a net profit of $56.9 million that included non-cash charges relating primarily to depreciation and amortization of $34.1 million, interest expense, net of $33.0 million and income tax expense of $14.7 million, partially offset by $17.1 million of unrealized portion of the “Initial recognition and changes in fair value of biological assets and agricultural produce,” and by a gain of $8.8 million related to the sale of farmland.

In addition, other changes in operating asset and liability balances resulted in a net decrease in cash of $39.5 million, primarily due to an increase of $49.8 million in inventories (mainly due to an increase of Sugar and Ethanol stocks as a result of a commercial strategic decision to sell most of these inventories at the end of 2010) and 15.9 million in trade and other receivables (in line with increase of operations), partially compensated by an increase in trade and other payables of $19.8 million (also in line with increase of operations), and a decrease of $6.7 million in biological assets.

Our operating cash was affected by the payment of $16.7 million in taxes related to our subsidiaries.

Year ended December 31, 2010

Net cash generated by operating activities was $60.2 million in the year ended December 31, 2010. During 2010, we generated a net loss of $44.8 million that included non-cash charges relating primarily to depreciation and amortization of $37.6 million (reflecting the impact in depreciation of a higher asset base due to the development of our operations in Brazil), interest expense of $33.0 million (due to the higher indebtedness incurred to fund operations and capital investment), $72.3 million of unrealized portion of the “Initial recognition and changes in fair value of biological assets and agricultural produce,” offset in part by a non-cash gain of $20.8 million related to the sale of farmland, and other non-cash gains, net of $19.1 million. In addition, other changes in operating asset and liability balances resulted in a net increase in cash of $11.0 million, primarily due to a reduction of $7.1 million in biological assets, $3.6 million in trade and other receivables, $2.2 million in inventories and an increase of $5.4 in payroll and social security liabilities, offset in part by an decrease of $3.5 million in liabilities related to derivative financial instruments and $4.2 million in trade and other payables.

Our operating cash was affected by the payment of $7.8 million in taxes related to our subsidiaries.

115

Year ended December 31, 2009

Net cash used in operating activities was $20.1 million in the year ended December 31, 2009. During 2009, we generated a net loss of $0.3 million that included non-cash charges relating primarily to depreciation and amortization of $30.3 million (reflecting the impact in depreciation of a higher asset base due to the development of our operations in Brazil as a result of acquisitions in previous years), interest expense of $27.8 million (due to the higher indebtedness incurred to fund operations and capital investment), foreign exchange gains of $10.9 million (due to the appreciation of the Brazilian Real against the U.S. dollar), the gain from the sale of farmland businesses of $18.8 million (representing the gain from the sale of La Paz Agropecuaria S.R.L. in December 2009 for an aggregate sale price of $21.9 million), the $55.8 million of unrealized portion of the “Initial recognition and changes in fair value of biological assets and agricultural produce” and other non-cash charges.

In 2009, our results of operations continued to be significantly affected by increased costs associated with the expansion of the operations of our main subsidiaries in Brazil as they expand to reach full productive potential, which contributed net losses of $9.0 million to our consolidated net loss for the year. Also, our operations were affected by unusual climatic conditions, in our main areas of operations in Argentina and Brazil, which significantly affected our yields and production levels. Our net loss for the year ended December 31, 2009 was partially offset by a significant foreign exchange gain of $10.9 million during 2009 arising from the appreciation of the Brazilian Real against the U.S. dollar, our presentation currency.

Partially compensating these effects, other changes in operating asset and liability balances resulted in a net increase in cash of $12.3 million during 2009 primarily due to (i) decreases in short term biological assets of $20.3 million mainly due to the sale of a major portion of our livestock assets; and (ii) an increase in trade payables of $11.5 million and payroll and social security liabilities of $4.3 million, reflecting our growing operations. These effects were partially offset by an increase of $30.4 million in trade receivables mainly related to higher sales, mostly in Brazil, and the sale of a major portion of our livestock assets near the end of the year. In addition, our operating cash was affected by the payment of $13.3 million in income taxes.

Investing Activities

Year ended December 31, 2011

Net cash used in investing activities totaled $140.5 million in the year ended December 31, 2011, primarily due to the purchases of property, plant and equipment (mainly acquisitions of machinery, buildings and facilities for our Brazilian operations) totaling $90.4 million and $63.1 million in biological assets related to the expansion of our sugarcane plantation area in Mato Grosso do Sul. Net inflows from investing activities were primarily related to proceeds of $23.1 million from the sale of farmlands and $8.0 million of interest received.

Year ended December 31, 2010

Net cash used in investing activities was $111.7 million in the year ended December 31, 2010, primarily due to the purchases of property, plant and equipment (mainly acquisitions of machinery, buildings and facilities for our Brazilian operations) totaling $87.7 million and $35.1 million in biological assets related to the expansion of our sugarcane plantation area in Mato Grosso do Sul. Net inflows from investing activities were primarily related to proceeds of $12.1 million from the sale of Macarena and $5.5 million received for the disposal of La Paz Agropecuaria in December 2009, a farmland business in Argentina.

Year ended December 31, 2009

Net cash used in investing activities was $114.4 million in the year ended December 31, 2009, primarily due to the purchases of property, plant and equipment (mainly acquisitions of machinery, buildings and facilities primarily focused on our Brazilian operations) totaling $97.8 million and $40.5 million in biological assets related to the expansion of our sugarcane plantation area in Mato Grosso do Sul. Net inflows from investing activities were primarily related to proceeds of $7.3 million from the sale of ancillary property and $16.4 million received for the disposal of La Paz Agropecuaria in December 2009, a farmland business in Argentina.

116

Financing Activities

Year ended December 31, 2011

Net cash provided by financing activities was $360.8 million in the year ended December 31, 2011, primarily derived from the IPO net proceeds, which total 421.8 million, partially compensated by a reduction of our long term borrowings, as a consequence of the advanced payment of the Loan Facility with Deutsche bank totaling $47 million. During 2011, the payment of interest totaled $33.5 million.

Year ended December 31, 2010

Net cash provided by financing activities was $46.5 million in the year ended December 31, 2010, primarily derived from additional long term indebtedness from Banco do Brasil S.A. and Deutsche Bank AG London Branch, partially compensated by the payment of $33.2 million in interest due on our indebtedness.

Year ended December 31, 2009

Net cash provided by financing activities was $130.3 million in the year ended December 31, 2009, primarily derived from $86.9 million in net proceeds from short-term and long-term indebtedness and $69.1 million in net cash proceeds from capital contributions received. In 2009, we incurred additional long-term indebtedness of $80.0 million. During 2009, the payment of in interest totaled $25.8 million.

Cash and Cash Equivalents

Historically since our cash flows from operations were insufficient to fund our working capital needs and investment plans, we funded our operations with proceeds from short-term and long-term indebtedness and capital contributions from existing and new private investors. In 2011 we obtained $421.8 millions from the IPO and the Private placement (See “Item 4. Information on the Company—A. History and Development of the Company.”). As of December 31, 2011, our cash and cash equivalents amounted to $ 330.5 million.

However, we may need additional cash resources in the future to continue our investment plans. Also, we may need additional cash if we experience a change in business conditions or other developments. We also might need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisitions, strategic alliances or other similar investments. If we ever determine that our cash requirements exceed our amounts of cash and cash equivalents on hand, we might seek to issue debt or additional equity securities or obtain additional credit facilities or realize the disposition of transformed farmland and/or subsidiaries. Any issuance of equity securities could cause dilution for our shareholders. Any incurrence of additional indebtedness could increase our debt service obligations and cause us to become subject to additional restrictive operating and financial covenants, and could require that we pledge collateral to secure those borrowings, if permitted to do so. It is possible that, when we need additional cash resources, financing will not be available to us in amounts or on terms that would be acceptable to us or at all.

Projected Sources and Uses of Cash

We anticipate that we will generate cash from the following sources:

•

operating cash flow;

•

debt financing;

•

the dispositions of transformed farmland and/or subsidiaries; and

•

debt or equity offerings.

We anticipate that we will use our cash:

•

for other working capital purposes;

•

to meet our budgeted capital expenditures;

•

to make investment in new projects related to our business; and

•

to refinance our current debts.

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Indebtedness and Financial Instruments

The table below illustrates the maturity of our indebtedness (excluding obligations under finance leases) and our exposure to fixed and variable interest rates:


	As of December 31,
	2011		2010		2009
	(In thousands is of $)
Fixed rate:
Less than 1 year(l)		70,007		52,326		30,579
Between 1 and 2 years		25,554		22,425		5,724
Between 2 and 3 years		12,426		7,661		5,173
Between 3 and 4 years		8,902		7,394		5,167
Between 4 and 5 years		7,551		5,920		5,167
More than 5 years		22,866		22,555		5,167

Total fixed rate:		147,306		118,281		56,977

Variable rate:
Less than 1 year(l)		87,170		86,107		72,391
Between 1 and 2 years		40,353		70,905		68,667
Between 2 and 3 years		24,756		54,436		55,907
Between 3 and 4 years		23,507		17,506		49,511
Between 4 and 5 years		26,369		15,619		787
More than 5 years		14,016		26,170		1,621

Total variable rate:		213,201		270,743		248,884

Total:		360,507		389,024		305,861

(1)	The Company plans to partially rollover its short term debt using new available lines of credit, or on using operating cash flow to cancel such debt.

Borrowings incurred by our subsidiaries in Brazil are repayable at various dates between January 2012 and March 2020 and bear either fixed interest rates ranging from 4.50% to 17.60% per annum or variable rates based on LIBOR or other specific base-rates plus spreads ranging from 3.42% to 16.55% per annum. At December 31, 2011 LIBOR (six months) was 0.81% (2010: 0.46%).

Borrowings incurred by our subsidiaries in Argentina are repayable at various dates between January 2012 and November 2018 and bear either fixed interest rates ranging from 1.25% and 7.75% per annum and variable rates based on LIBOR + 4.45% per annum.

As of December 31, 2011, total borrowings include (i) a US$ denominated 20.1 million loan (principal plus accrued interest) with a syndicated of banks, led by Rabobank International Brasil S.A. (“Rabobank”) (2010: US$ 30.2 million) due in 2013 (the “Syndicated Loan”); (ii) a Reais-denominated 118.2 million loan (principal plus accrued interest) (equivalent to US$ 63 million as of December 31, 2011) with BNDES-FINEM (the “BNDES Loan Facility”) due in 2018; (iii) a U.S. dollar-denominated 80 million loan with the Interamerican Development Bank (IDB) (the “IDB Facility”); (iv) a Reais-denominated 70.0 million facility (of which, as of December 31, 2010, we have received R$ 70.0 million, equivalent to US$ 37.0 million) from Banco do Brasil S.A. (BDB) (“the BDB Facility”) due between 2012 and 2020.

Syndicated Loan and BNDES Loan Facility

The amended Syndicated Loan bears interest at LIBOR plus 2.65 % per annum and the BNDES Loan Facility bears interest at a country-specific variable rate (“TJLP rate”) plus 4.05% per annum (TJLP at December 31, 2011 was 6.00%). The Syndicated Loan and the BNDES Loan Facility contain certain customary financial covenants, events of default and restrictions which require us to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends, except as would not result in a breach of the financial covenants. These financial covenants are measured on an annual basis as of the end of each fiscal year. Certain covenants are measured on a combined basis aggregating the borrowing subsidiaries and others are measured on an individual basis. Under the Syndicated Loan, defaults by either Adecoagro Vale do Ivinhema, UMA, Adeco Agropecuária Brasil S.A. or Adeco Brasil Participações S.A. (some of our subsidiaries in Brazil) on any indebtedness with an aggregate principal amount over US$ 500,000 can result in acceleration of the full outstanding loan amount due to the syndicate of banks. The obligations under this facility are secured by (i) a mortgage of the Takuare farm; (ii) a pledge on the capital stock (“quotas”) of Adecoagro Vale do Ivinhema; and (iii) liens over the Angélica mill and equipment, all of which are property of Adecoagro Vale do Ivinhema.

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The financial covenants are defined as follows:

2011

2012 to 2013

2014 to 2018

Financial ratios:

Debt Service Coverage Ratio (individual)

> 1.00

> 1.30

Liquidity Ratio (individual)

> 1.00

Liquidity Ratio (aggregate)

> 1,00

> 1.20

Interest Coverage Ratio (aggregate)

> 2.00

> 4.00

Net Bank Debt / EBITDA (aggregate)

< 3.00

During 2011 and 2010 we were in compliance with all financial covenants.

IDB Facility

The amended IDB Facility is divided into a seven-year US$20 million tranche (“Tranche A”) and a five-year $60 million tranche (“Tranche B”). Tranche A originally bore interest at 180-day LIBOR plus 5% per annum although subsequently revised to a fixed rate of 6.11125% per annum. Tranche B bears interest at 180-day LIBOR plus 4.45% per annum, we entered into a floating to fix interest rate forward swap, fixing LIBOR at 1.25%, effective May 2012. Pursuant to this amendment we got a new disbursement of $ 30.8 million.

Payment of principal plus interest of both tranches are made on a bi-annual basis. The proceeds of this loan were used to make capital investments and refinance short-term debt. The IDB Facility is collateralized by property, plant and equipment with a net book value of US$41.5 million, by a mortgage over (i) Carmen and La Rosa farms which are property of Adeco Agropecuaria S.A.; and (ii) El Meridiano farm which is the property of Pilagá S.A.

Under the IDB Facility, defaults by either Adeco Agropecuaria S.A. or Pilagá S.A. on any indebtedness with an aggregate principal amount over $ 3.0 million can result in acceleration of the full outstanding loan amount due to the IDB. The IDB Facility also contains certain customary financial covenants and restrictions which require us to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends. The financial covenants are measured in accordance with generally accepted accounting principles in Argentina and measured both on quarterly or annually basis.

During 2011, Adeco Agropecuaria S.A. and Pilagá S.A. were in compliance with all financial covenants.

The amendment signed on November 9, 2011, modified the terms of the existing financial ratio covenants, pursuant to these amended financial ratios Adeco Agropecuaria S.A. and Pilagá S.A. are now required to meet yearly the following financial ratios (measured on a combined basis):

2011

2012

2013

2014

2015

2016

2017

2018

Total Debt (>; in millions)(i)

150

155

160

Current Ratio (>)

1,10x

1,15x

1,20x

Interest Coverage Ratio (>)

2,10x

2,15x

2,20x

2,25x

2,30x

2,40x

2,50x

2,60x

Liabilities to Equity (<)

1,60x

1,70x

(i)	Measured on a quarterly basis.

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BDB Facility

In July 2010, Adecoagro Vale do Ivinhema, a Brazilian subsidiary , entered into a Reais-denominated 70.0 million loan (equivalent to $ 37.3 million as of December 31, 2011) with Banco do Brasil S.A. due in 2020. The BDB Facility bears a fixed interest rate of 10% per annum with a bonus performance of 15% and is repayable on a monthly basis starting in August 2012 and ending in July 2020 (until August 2012, interest will be pay be quarterly). Under this facility, defaults by either Adecoagro Vale do Ivinhema or any of the Brazilian subsidiaries on any indebtedness can result in acceleration of the full outstanding loan amount due to BDB. It contains customary covenants and restrictions. Adecoagro Vale do Ivinhema’s obligations under the BDB Facility is secured by (i) a first mortgage of the Sapálio farm, which is owned by Adecoagro Vale do Ivinhema. and (ii) a first pledge on the equipment acquired or to be acquired by Adecoagro Vale do Ivinhema with the proceeds of such facility. Adecoagro Vale do Ivinhema is currently not, and has not been, in violation of any of the financial ratio covenants for the BDB Facility. The following table lists the financial ratios covenants Adecoagro Vale do Ivinhema subsidiary is currently required to meet under the BDB Facility:


Financial Ratios	2011 to 2013		2014 to 2020
Debt Service Coverage Ratio (individual)		>1.00		>1.30
Liquidity Ratio (individual)		>1.00		>1.00

Deutsche Bank Facility (“DB Facility”)

On July 28, 2010, Adecoagro Vale do Ivinhema entered into a U.S. dollar-denominated 50.0 million facility with Deutsche Bank AG London Branch, due in 2013. It bore an annual interest at a variable rate equal to LIBOR plus 8.5%. On August 3, 2011 we prepaid outstanding amounts under the DB Facility.

Short-term Debt. As of December 31, 2011, our short term debt totaled $157.2 million.

We maintain lines of credit with several banks in order to finance our working capital requirements. We believe that we will continue to be able to obtain additional credit to finance our working capital needs in the future based on our past track record and current market conditions.

Capital Expenditure Commitments

Capital expenditures totaled 165.3, $130.6 million and $138.6 million for the years ended December 31, 2011, 2010 and 2009, respectively. See “Item 4. Information on the Company—A. History and Development of the Company—Principal Capital Expenditures”.

We expect continuous capital expenditures for the foreseeable future as we expand and consolidate each of our business segments.

We expect to finance our future capital expenditures with (i) the net proceeds of our IPO and the sale of common shares to Al Gharrafa, (ii) future indebtedness in the form of bank loans and/or offerings of debt, and (iii) operating cash flow as a supplemental source of funding. We expect our operating cash flow to be positive in the foreseeable future as we reach full production capacity for our sugar operations in Brazil.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

With regards to our rice seed production, in our rice seed facility in Argentina, we are involved in the genetic development of new rice varieties adapted to local conditions to increase rice productivity and quality to improve both farm production as well as the manufacturing process. In connection with these efforts, we have entered into agreements with selected research and development institutions such as INTA in Argentina, FLAR in Colombia, EPAGRI in Brazil and Basf in Germany. In addition, our own technical team is continuously testing and developing new rice varieties. Our first rice seed variety was released to the market in 2008, and we are currently in the final stages of releasing three new rice seed varieties to the market. We both use these seeds at our farms and sell them to rice farmers in Argentina, Brazil, Uruguay and Paraguay. We are also developing, in collaboration with Basf, a herbicide-tolerant rice variety to assist in the control of harmful weeds.

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Also, we have registered two rice seed varieties with the corresponding Argentine authorities; the National Institute of Seeds ( Instituto Nacional de Semillas ) (INASE) and National Registry of Property of Seed Varieties ( Registro Nacional de la Propiedad de Cultivares ) (RNPC).

With regards to our dairy business in Argentina, we have invested in technology to improve the genetics, health and feeding techniques of our cows in order to enhance our milk production. These investments include top quality semen from genetically improved North American Holstein bulls, agricultural machinery and devices, use of dietary supplements and modern equipment to control individual milk production and cooling. Our feeding program is focused on high conversion of feed into milk, while maintaining cows in good health and comfort. We have also invested in technology and know-how so as to increase our forage production and utilization.

In connection with our Sugar, Ethanol and Energy business in Brazil, we have entered into an agreement with Syngenta Proteção de Cultivos Ltda. (“Syngenta”) for the supply and development of new sugarcane planting technology, known as Plene. Syngenta has developed this new innovative technology based on a novel approach for planting sugarcane from smaller cane segments using proprietary treatments that aims to reduce planting costs. This technology, which was launched in 2010, has never been tested in several different regions to be commercially applied in 2012.

We do not own any registered patents, industrial models or designs.

D. TREND INFORMATION

See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Trends and Factors Affecting Our Results of Operations.”

E. OFF-BALANCE SHEET ARRANGEMENTS

For any of the periods presented, we did not have any off-balance sheet transactions, arrangements or obligations with unconsolidated entities or otherwise that are reasonably likely to have a material effect on our financial condition, results of operations or liquidity.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations and commitments as of December 31, 2011:


	Less Than One Year		One to Three Years		Three to Five Years		Thereafter		Total
	(In millions of $)
Bank loans(l)		166.7		104.8		118.5		26.4		416.4
Leases		74.5		15.3		24.0		15.3		129.1
Acquisition of subsidiaries		35.7		—		—		—		35.7

Total		241.2		120.1		142.5		41.7		545.5

(1)	Includes interest.

G. SAFE HARBOR

See section entitled “Forward-Looking Statements” in this annual report for forward-looking statement safe harbor provisions.

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Item 6. Directors, Senior Management and Employees

A. DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

The following table sets forth information for our directors as of the date of this annual report:

Name

Position

Date of
Appointment

Age

Initial Term

Abbas Farouq Zuaiter

Chairman

2012

3 year

Alan Leland Boyce

Director

2011

2 years

Guillaume van der Linden

Director

2012

3 year

Paulo Albert Weyland Vieira

Director

2011

2 years

Mariano Bosch

Director

2011

3 years

Plínio Musetti

Director

2011

3 years

Mark Schachter

Director

2012

3 year

Julio Moura Neto

Director

2011

3 years

Andrés Velasco Brañes

Director

2011

2 years

Plínio Musetti; Mark Schachter and Julio Moura Neto qualify as independent directors, and the other directors are not independent in accordance with the SEC rules.

A description of the main tasks currently performed by each director as well as a description of each director’s employment history and education follows:

Abbas (“Eddy”) Farouq Zuaiter. Mr. Zuaiter has been a member of the Company’s board of directors since 2003. Mr. Zuaiter is the Chief Operating Officer and member of the Management committee of Soros Fund Management LLC. Prior to his joining Soros Fund Management LLC in October 2002, Mr. Zuaiter was an Assurance and Business Advisory Partner at PricewaterhouseCoopers LLP where he was employed from April 1994 to September 2002, and Chief Financial Officer and Head of Fixed Income, Currency and Commodity Trading at AFN Associates, Inc in David, California from September 1991 until March 1994. Mr. Zuaiter currently serves on the boards of Gavilon Holdings LLC, an Omaha, Nebraska based private company providing physical distribution, merchandising and trading across grains, feed ingredients, fertilizers and energy products. He is also currently a member of the board of directors of several charitable organizations or non-profit entities. Mr. Zuaiter received his BSBA in Accounting and Finance from Georgetown University in May 1989. Mr. Zuaiter is an American citizen.

Alan Leland Boyce. Mr. Boyce is a co-founder of Adecoagro and has been a member of IFH’s and the Company’s board of directors since 2002. Since 2005, Mr. Boyce has been the Chief Executive Officer of Absalon, a joint venture between Soros and VP Securities, where he works to implement the beneficial aspects of the Danish mortgage system in the U.S and other countries. Mr. Boyce is a founder and Vice-President of Boyce Land Co. Inc., a farmland management company formed in 1986 that runs farmland limited partnerships in the U.S. , with a concentration in Indiana and California. Mr. Boyce is also the founder and CEO of Westlands Solar Farms, LLC, a California renewable energy company formed in 2009. Mr. Boyce is Chairman and co-founder of Materra, LLC, a California agricultural production company. Materra was formed in 2010 and is currently the owner and operator of over 10,000 acres of highly productive farmland. Mr. Boyce is also a co-founder and Director of Agrica Ltd, which was started in 2006 to develop sustainable agribusiness in Africa. Agrica is Tanzania’s largest rice grower. Mr. Boyce formerly served as the director of special situations at Soros from 1999 to 2007, where he managed an asset portfolio of the Quantum Fund and had principal operational responsibilities for the bulk of the fund’s investments in South America. Mr. Boyce also served as managing director in charge of fixed-income arbitrage at Bankers Trust from 1986 to 1999, as senior managing director for investment strategy at Countrywide Financial from 2007 to 2008, and worked at the U.S. Federal Reserve Board from 1982 to 1984. He graduated with a degree in Economics from Pomona College, and has a Masters in Business Administration from Stanford University. Mr. Boyce is an American citizen.

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Guillaume van der Linden Mr. van der Linden has been a member of the Company’s board of directors since 2009. Since 2007, Mr. van der Linden has been Head of Investment Management at PGGM Vermogensbeheer B.V., responsible for investments in emerging markets credit. From 1993 to 2007, Mr. van der Linden worked for ING Bank in various roles, including in risk management and derivatives trading. From 1988 to 1993, Mr. van der Linden was employed as a management consultant for KPMG and from 1985 to 1988 as a corporate finance analyst for Bank Mees & Hope. Mr. van der Linden graduated with Masters degrees in Economics from Erasmus University Rotterdam and Business Administration from the University of Rochester. Mr. van der Linden is a Dutch citizen.

Paulo Albert Weyland Vieira. Mr. Vieira has been a member of the Company’s board of directors since 2005. Since 1995, Mr. Vieira has been the founding partner of Vieira, Rezende, Barbosa e Guerreiro Advogados, a law firm in Brazil. Mr. Vieira’s family has been in the sugar and ethanol business for over 50 years, and Mr. Vieira served as a Director of UMA, a sugar and ethanol mill in Brazil, from 1990 to 2006, when UMA was acquired by us. From 1995 to 2006, Mr. Vieira served as a professor of banking and commercial law at the Faculdade de Direito da Pontificia Universidade Católica do Rio de Janeiro. He graduated with a degree in law from the Faculdade de Direito da Pontificia Universidade Católica do Rio de Janeiro and has a Masters in Law from Cambridge University Law School. Mr. Vieira is a Brazilian citizen.

Mariano Bosch. Mr. Bosch is a co-founder of Adecoagro and has been the Chief Executive Officer for all operations in Argentina, Brazil and Uruguay since inception and a member of the Company’s board of directors. From 1995 to 2002, Mr. Bosch served as the founder and Chief Executive Officer of BLS Agribusiness, an agricultural consulting, technical management and administration company. Mr. Bosch is also currently a member of the advisory board of Teays River Investments LLC, a farmland investment management firm in North America. Mr. Bosch has over 18 years of experience in agribusiness development and agricultural production. He actively participates in organizations focused on promoting the use of best practices in the sector, such as the Argentine Association of Regional Consortiums for Agricultural Experimentation (AACREA) and the Conservational Production Foundation ( Producir Conservando ). He graduated with a degree in Agricultural Engineering from the University of Buenos Aires. Mr. Bosch is an Argentine citizen.

Plínio Musetti. Mr. Musetti has been a member of the Company’s board of directors since 2011 and an observer since 2010. Mr. Musetti is a partner responsible for the private equity investments at Pragma Patrimonio, a Brazilian family office, since June 2010. From 2008 to 2009, Mr. Musetti served as the Chief Executive Officer of Satipel Industrial S.A., leading the company’s initial public offering process and aiding its expansion plan and merger with Duratex S.A. From 1992 to 2002, Mr. Musetti served as the Chief Executive Officer of Elevadores Atlas, during which time he led the company’s operational restructuring, initial public offering process and the sale to the Schindler Group. From 2002 to 2008, Mr. Musetti served as a partner at JP Morgan Partners and Chief Executive Officer of Vitopel S.A. (JP Morgan Partners’ portfolio company), where he led its private equity investments in Latin America. Mr. Musetti has also served as a Director of Diagnósticos de America S.A. from 2002 to 2009. In addition, Mr. Musetti is currently serving as a Board member of Elevadores Atlas S.A., Portobello S.A. and RaiaDrogasil S.A. Mr. Musetti graduated with degrees in Civil Engineering and Business Administration from Mackenzie University and attended the Program for Management Development at Harvard Business School in 1989. Mr. Musetti is a Brazilian citizen.

Mark Schachter. Mr. Schachter has been a member of the Company’s board of directors since 2009. Mr. Schachter has been a Managing Partner of Elm Park Capital Management since 2010. From 2004 to 2010, he was a Portfolio Manager with HBK Capital Management where he was responsible for the firm’s North American private credit activities. His responsibilities included corporate credit investments with a primary focus on middle-market lending and other special situation investment opportunities. From 2003 to 2004, Mr. Schachter worked for American Capital, a middle-market private equity and mezzanine firm and worked in the investment banking division of Credit Suisse Group from 2001 to 2003. Mr. Schachter received a degree in Business Administration from the Ivey Business School at the University of Western Ontario and completed the Program for Leadership Development at Harvard Business School. Mr. Schachter is a Canadian citizen and has permanent American residence.

Julio Moura Neto. Mr. Moura has been a member of the Company’s board of directors since 2011. Mr. Moura has been a board member and chairman of the strategy committee of Natura Cosméticos, a leading public Brazilian cosmetics since 2007. Mr Moura is also a board member of Cencosud S.A. and Brinox Metalúrgica S.A. since 2011.

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From 2006 to 2011 he was also a member of the Executive Committee of the World Business Council for Sustainable Development (WBCSD) in Geneva. From 1997 to 2007, he was Chairman of the board of directors and CEO of Nueva Group, a Swiss holding company with leading positions in planted, certified forests, agricultural products and building materials sectors. From 2002 to 2007, Mr. Moura served as chairman of the board of Terranova, a public Chilean forestry company and as chairman of the board of Masisa S.A., a public Chilean forestry and wooden boards company. He also served as chairman and CEO of Amanco, the leading Latin American plastic pipes producer, from 1997 to 2007; as a member of the executive board of Schindler, the Swiss Elevator Company from 1992 to 1997; as a member of the executive board and head of the Latin American Division of Sika, a Swiss specialty chemicals company, from 1984 to 1992; and as a member of the board of directors of Swiss companies Messerli AG and of Aliva AG from 1988 to 1992. From 1980 to 1983, Mr. Moura worked for Booz, Allen & Hamilton, participating and leading several assignments in Europe in strategy and supply chain management. Mr. Moura graduated with a degree in Mechanical Engineering from the Swiss Federal Institute of Technology (ETH) in Zurich, Switzerland and holds a Masters degree in Management from MIT Sloan School of Management. Mr. Moura is dual Brazilian and Swiss citizen.

Andres Velasco Brañes. Mr. Velasco has been a member of the Company’s board of directors since 2011. Mr. Velasco was the Minister of Finance of Chile between March 2006 and March 2010, and was also the president of the Latin American and Caribbean Economic Association from 2005 to 2007. Prior to entering the government sector, Mr. Velasco was Sumitomo-FASID Professor of Development and International Finance at Harvard University’s John F. Kennedy School of Government, an appointment he had held since 2000. From 1993 to 2000, he was Assistant and then Associate Professor of Economics and the director of the Center for Latin American and Caribbean Studies at New York University. During 1988 to 1989, he was Assistant Professor at Columbia University. Currently Mr. Velasco serves as Adjunct Professor of Public Policy at Harvard University, and a Tinker Visiting Professor at Columbia University. He also performs consulting services on various economic matters rendering economic advice to an array of clients, including certain of our shareholders. Mr. Velasco holds a Ph.D. in economics from Columbia University and was a postdoctoral fellow in political economy at Harvard University and the Massachusetts Institute of Technology. He received an B.A. in economics and philosophy and an M.A. in international relations from Yale University. Mr. Velasco is a Chilean citizen.

Executive Officers

The following table shows certain information with respect to our senior management as of the date of this annual report:


Name	Position	Year Designated		Age

Mariano Bosch	Chief Executive Officer		2002		42
Carlos A. Boero Hughes	Chief Financial Officer		2008		46
Emilio F. Gnecco	Chief Legal Officer		2005		36
Walter Marcelo Sanchez	Chief Commercial Officer		2002		50
Mario José Ramón Imbrosciano	Director of Business Development		2003		42
Leonardo Berridi	Country Manager for Brazil		2004		52
Marcelo Vieira	Director of Sugar and Ethanol Operations		2005		60
Ezequiel Garbers	Country Manager for Argentina and Uruguay		2003		46

Mariano Bosch. See “—Board of Directors.”

Carlos A. Boero Hughes. Mr. Boero Hughes is our Chief Financial Officer, covering the company’s operations in Argentina, Brazil and Uruguay, and a member of Adecoagro’s Senior Management since 2008. He began working at Adecoagro in August 2008 overseeing our finance and administrative departments. Mr. Boero Hughes has over 20 years of experience in agricultural business and financial markets. Prior to joining us, he was Chief Financial Officer for South America and Co-Chief Executive Officer for Noble Group LTD operations in Argentina, Uruguay and Paraguay from October 2006 to July 2008. From 2003 to 2006, he worked at Noble Group LTD as Financial Director for Argentina and Structure Finance Manager for South America. He worked at Citibank N.A. from 1997 to 2003 as Relationship and Product Manager, focused in the agribusiness industry, and at Banco Privado de Inversiones S.A. as Relationship Manager. He also worked for six years at Carlos Romano Boero S.A.I.C., a flour and dairy cow feed mill family company, as Commercial Manager, Local Grain Elevator and Nursery Manager and finally as General Manager. Mr. Boero Hughes holds a degree in Business Administration from the University of Buenos Aires and a Masters in Business Administration from the Argentine Catholic University. He also graduated from INSEAD’s Executive Program in 2007.

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Emilio Federico Gnecco. Mr. Gnecco is our Chief Legal Officer for all operations in Argentina, Brazil and Uruguay and a member of Adecoagro’s Senior Management since 2005. He is responsible for all legal and corporate matters. Before joining us, he was a corporate law associate at the law firm of Marval, O’Farrell & Mairal for more than 8 years, where he was in charge of Adecoagro’s corporate matters and mergers and acquisitions since our inception in 2002. Prior to that, he worked at the National Civil Court of Appeals of the City of Buenos Aires for four years. Mr. Gnecco has a law degree from the University of Buenos Aires, where he graduated with honors.

Walter Marcelo Sanchez. Mr. Sanchez is a co-founder of Adecoagro and our Chief Commercial Officer for all operations in Argentina, Brazil and Uruguay and a member of Adecoagro’s Senior Management since 2002. He coordinates the Commercial Committee and is responsible for the trading of all commodities produced by Adecoagro. Mr. Sanchez has over 22 years of experience in agricultural business trading and market development. Before joining us, he was the head of the business development department at Agroexpress.com S.A., an agriculture e-business marketplace. He has extensive international commercial expertise. He worked with South American Meat Products Company (SAMPCO) in Chicago, Illinois and traveled through Western Europe marketing beef products to restaurant chains such as MAREDO. Mr. Sanchez also worked as the commercial director of various agricultural companies, such as Distribuidora Chinquihue S.A. (a Chilean fish and shellfish trading company), Frigolomas S.A. (a beef processing company) and Fleimar S.A. (a marketer of meat products). Mr. Sanchez also had commercial responsibilities at Nutryte S.A. and Estancias y Cabana Las Lilas S.A. (formerly COMEGA S.A.), an Argentine farmland agribusiness company. Mr. Sanchez graduated from Universidad Nacional de Mar del Plata with a degree in Agricultural Engineering.

Mario José Ramón Imbrosciano. Mr. Imbrosciano is the head of our Business Development Department for all operations in Argentina, Brazil and Uruguay where he oversees all new business initiatives, and a member of Adecoagro’s Senior Management since 2003. He has over 17 years of experience in farm management and agriculture production. Prior to joining Adecoagro, Mr. Imbrosciano was the Chief Operating Officer of Beraza Hnos. S.C., a farming company that owns farms in the humid pampas region of Argentina. He was in charge of production, commercialization and logistics for a 60,000 hectare operation. Mr. Imbrosciano has also worked as a private consultant for various clients. Mr. Imbrosciano received a degree in Agricultural Production Engineering from the Argentine Catholic University and holds a Masters in Business Administration from the Instituto de Altos Estudios of the Austral University.

Leonardo Raúl Berridi. Mr. Berridi is our Country Manager for Brazil and, prior to the Reorganization, had been Adecoagro’s Country Manager for Brazil since the beginning of its operations in Brazil and a member of Adecoagro’s Senior Management since 2004. He coordinates all of our operations and human resources development activities in Brazil. Mr. Berridi has over 27 years of international experience in agricultural business. Prior to joining us, Mr. Berridi was Vice President of Pago Viejo S.A., a company dedicated to agriculture production and dairy farming in the western part of the province of Buenos Aires, Argentina. He also worked for Trans-Continental Tobacco Corporation as Chief Operating Officer of Epasa (Exportadora de Productos Agrarios S.A.), a company dedicated to producing, processing and exporting tobacco in the north east and north west of Argentina, and Production Manager of World Wide Tobacco España S.A. in the Caceres and Zamora provinces in Spain. Mr. Berridi holds a degree in Forestry Engineering from the Universidad Nacional de La Plata.

Marcelo Vieira. Mr. Vieira is the head of Adecoagro’s sugar, ethanol and energy operations and a member of Adecoagro’s Senior Management since 2005. He was the Chief Executive Officer and owner of Usina Monte Alegre Ltda. at the time of our purchase of the company. He is currently a member of the Board of Directors of Uniäo da Industria de Cana-de-Acucar (ÚNICA). He has managed agricultural and agribusiness companies for over 34 years, including at Usina Monte Alegre Ltda., Alfenas Agrícola Ltda., Alfenas Café Ltda. and Fazenda Mimoso S.A., and has been President or Director of various industry associations, such as the Brazil Specialty Coffee Association, the Specialty Coffee Association of Europe, Sociedade Rural Brasileira and the Sindicato do Acucar de Minas Gerais. Mr. Vieira holds a degree in Mechanical Engineering from PUC University in Rio de Janeiro and graduate degree in Food Industry Management and Marketing from the University of London’s Imperial College.

Ezequiel Garbers. Mr. Garbers is the Country Manager for Argentina and Uruguay and a member of Adecoagro’s Senior Management and the Country Manager since 2003. He coordinates all of our production and human resources development activities in Argentina and Uruguay. Mr. Garbers has over 20 years of experience in

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agriculture production. Prior to joining Adecoagro, he was the Chief Operating Officer of an agricultural consulting and investment company he co-founded, developing projects both within and outside of Argentina, related to crop production and the cattle and dairy business. Mr. Garbers holds a degree in Agronomic Engineering from the University of Buenos Aires and a Masters in Business Administration from the Instituto de Altos Estudios of the Austral University.

Our managers supervise our day-to-day transactions so as to ensure that all of our general strategic objectives are carried out, and they report to our board of directors.

B. COMPENSATION

Compensation of Directors and Executive Officers

The compensation of the Company’s directors is approved annually at the ordinary general shareholders’ meeting. The aggregate compensation earned by our directors amounted to $ 530 thousands in cash and a grant of up to a total of 97,158 restricted shares.

The aggregate compensation of our executive officers during 2011 amounted to approximately $5.1 million in cash and 316,435 restricted stock units granted to our officers and directors. These grants were made under the 2010 Adecoagro Restricted Share and Restricted Stock Unit Plan. See “—E. Share Ownership—Share Options and Restricted Share and Restricted Stock Unit Plan.”

Annual cash bonuses are designed to incentivize our named executive officers at a variable level of compensation based on such individual’s performance. Annual executive cash bonuses and option awards are impacted by seniority and individual executive performance based on the achievement of individual objectives and by evaluating each executive’s level of proficiency in the following competencies: general characteristics, teamwork, professional competencies, problem solving and thinking skills and managerial skills. In the past, actual bonus amounts have been determined shortly after fiscal year end. Our Chief Executive Officer presents the final calculation of the annual cash bonuses for our named executives to the Compensation Committee of the board of directors. The Compensation Committee then reviews actual Company and individual performance, and determines the amount payable consistent with the attainment of such individual’s performance based on the above criteria.

We do not pay or set aside any amounts for pension, retirement or other similar benefits for our officers and directors.

C. BOARD PRACTICES

Pursuant to our articles of incorporation, the board of directors must be composed of between three and eleven members. The number of directors is determined and the directors are appointed at the general meeting of shareholders (except in case of a vacancy in the office of a director because of death, retirement, resignation, dismissal, removal or otherwise, the remaining directors may fill such vacancy and appoint a successor in accordance with applicable Luxembourg law).

Currently, the board of directors has nine members. The directors are appointed by the general meeting of shareholders for a period of up to three years; provided, however, the directors shall be elected on a staggered basis, with one-third of the directors being elected each year and provided further that such three year term may be exceeded by a period up to the annual general meeting held following the third anniversary of the appointment. Directors may be removed with or without cause ( ad nutum ) by the general meeting of shareholders by a simple majority of votes cast at a general meeting of shareholders. The directors are eligible for re-election indefinitely.

There are no agreements with majority shareholders, customers, suppliers or others governing the selection of any of the directors or members of senior management. None of our non-executive directors has a service contract with us that provides for benefits upon termination of employment.

The board of directors is empowered to manage Adecoagro and carry out our operations. The board of directors is vested with the broadest powers to manage the business of the Company and to authorize and/or perform all acts

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of disposal, management and administration falling within the purposes of Adecoagro and all powers not expressly reserved by Luxembourg law or by our articles of incorporation to the general meeting of shareholders is within the competence of the board of directors.

Accordingly, within the limitations established by Luxembourg law and in particular the Luxembourg law of August 10, 1915 on commercial companies (as amended) and our articles of incorporation, the board of directors can take any action (by resolution or otherwise) it deems necessary, appropriate, convenient or fit to implement the purpose of the Company, including without limitation:

execute any acts or contracts on our behalf aimed at fulfilling our corporate purpose, including those for which a special power of attorney is required;

carry out any transactions;

agree, establish, authorize and regulate our operations, services and expenses;

delegate special tasks to directors, regulate the formation and operation of committees and fix the remuneration and compensation of expenses of advisors and/or staff with special duties, with a charge to overhead;

appoint, suspend or remove agents or employees, establish their duties, remuneration, and bonuses and grant them the powers that it deems advisable;

grant signature authorization to directors and officers, grant general or special powers of attorney, including those to prosecute;

call regular and special shareholders’ meetings and establish agendas, submit for the shareholders’ approval our inventory, annual report, balance sheet, statement of income and exhibits, propose depreciation, amortization and reserves that it deems advisable, establish the amount of gains and losses, propose the distribution of earnings and submit all this to the shareholders’ meeting for consideration and resolution;

fix the date for the payment of dividends established by the shareholders’ meeting and make their payment; and

make decisions relating to the issuance, subscription or payment of shares pursuant to our articles of incorporation and decision of the regular or special shareholders’ meetings.

As of the date of this annual report, the board of directors has the following four committees: Audit Committee, Compensation Committee, Risk and Commercial Committee and Strategy Committee. On May 13, 2011, the former Risk and Strategy Committee split into the current Risk and Commercial Committee and the Strategy Committee.

Audit Committee

The Company’s articles of incorporation provide that the board of directors may set up an audit committee. The board of directors has set up an Audit Committee composed by independent directors and has appointed, pursuant to board resolutions dated January 10, 2011, Mr. Plínio Musetti (Chairman) , Mr. Mark Schachter and Mr. Julio Moura Neto, as members of its audit committee.

The Company’s articles of incorporation provide that the audit committee shall (a) assist the board of directors in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, including periodically reporting to the board of directors on its activity and the adequacy of the Company’s systems of internal controls over financial reporting; (b) make recommendations for the appointment, compensation, retention and oversight of, and consider the independence of, the Company’s external auditors; (c) review material transactions (as defined in the articles) between the Company or its subsidiaries with related parties (other than transactions that were reviewed and approved by the independent members of the board of directors (as defined in the articles of the

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Company) or other governing body of any subsidiary of the Company or through any other procedures as the board of directors may deem substantially equivalent to the foregoing) to determine whether their terms are consistent with market conditions or are otherwise fair to the Company and its subsidiaries; and (d) perform such other duties imposed on it by the laws and regulations of the regulated market(s) on which the shares of the Company are listed, applicable to the Company, as well as any other duties entrusted to it by the board of directors.

In addition, the charter of the audit committee sets forth, among other things, the audit committee’s purpose and responsibilities.

Compensation Committee

The Company has a Compensation Committee that reviews and approves the compensation and benefits of the executive officers and other key employees, and makes recommendations to the board of directors regarding principles for compensation, performance evaluation, and retention strategies. It is responsible for administering our share option plans and our restricted share and restricted stock unit plan for executive officers and other key employees. See “—E. Share Ownership—Share Options and Restricted Share and Restricted Stock Unit Plan.” The committee has the discretion to interpret and amend the Plan, and delegate to the Chief Executive Officer the right to award equity-based compensation to executive officers and other key employees. The committee meets at least once a year and as needed on the initiative of the Chief Executive Officer or at the request of one of its members. The members of the Compensation Committee, appointed pursuant to board resolutions dated January 10, 2011 and November 11, 2011, are Mr. Julio Moura Neto (Chairman), Abbas Farouq Zuaiter and Mr. Paulo Albert Weyland Vieira.

Risk and Commercial Committee

The Company has a Risk and Commercial Committee that has the duty to (i) make such inquiries as are necessary or advisable to understand and evaluate material business risks and risk management processes as they evolve from time to time; (ii) review with the board of directors and management the guidelines and policies to govern the process for assessing and managing risks; (iii) discuss and review with the board of directors management’s efforts to evaluate and manage the Company’s business from a risk perspective; (iv) request input from the board of directors, management and operating staff, as well as from outside resources, as it may deem necessary; (v) discuss with the board of directors and management which elements of enterprise risk are most significant, the prioritization of business risks, and make recommendations as to resource allocation for risk management and risk mitigation strategies and activities; and (vi) oversee the development of plans for risk mitigation in any area which it deems to be a material risk to the Company; and monitor management’s implementation of such plans, and the effectiveness generally of its risk mitigation strategies and activities.

The committee meets at least four times a year and as often as deemed necessary or appropriate in its judgment. The members of the Risk and Commercial Committee appointed by the board meeting held on May 13, 2011 are Mr. Alan Leland Boyce (Chairman), Mr. Abbas Farouq Zuaiter and Mr. Andrés Velasco Brañes.

Strategy Committee

The Company’s Strategy Committee has the duty to: (i) discuss and review with the board management’s identification and setting of strategic goals; including potential acquisitions, joint ventures and strategic alliances and dispositions; (ii) make recommendations to the board of directors as to the means of pursuing strategic goals; and (iii) review with the board management’s progress in implementing its strategic decisions and suggest appropriate modifications to reflect changes in market and business conditions.

The committee meets at least four times a year and as often as deemed necessary or appropriate in its judgment. The members of Strategy Committee appointed by the board meetings held on May 13, 2011 and November 11, 2011 are Mr. Abbas Farouq Zuaiter (Chairman), Guillaume van der Linden and Mr. Plinio Mussetti.

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D. EMPLOYEES

Employees

On December 31, 2011, we had 5,560 employees, of whom 95% were unionized. Approximately 9% of our workforce is comprised of temporary workers. We comply with all labor laws. Historically, we have had a positive relationship with the trade unions.

The following table sets forth our number of employees by each of our business segments:


	As of December 31,
	2011		2010		2009		2008
Farming and Land Transformation		1,534		1,425		1,231		1,235
Sugar and Ethanol		3,383		3,276		3,567		2,848

Administrative		643		562		492		461

Total		5,560		5,263		5,290		4,544

We do not have any severance agreements with our senior executive directors and managers.

Benefits

The benefits granted to our employees follow the market standard, including meals, health plans, Spanish and English language lessons, financial aid for junior employees who are still in college, transportation and parking. For senior management, we also provide vehicles.

E. SHARE OWNERSHIP

Share Ownership

The total number of shares of the Company beneficially owned by our directors and executive officers, as of the date of this annual report, was 6,017,081, which represents 4.99% of the total shares of the company. See table in “Item 7. Major Shareholders and Related Party Transactions” for information regarding share ownership by our directors and executive officers.

Share Options and Restricted Share and Restricted Stock Unit Plan

Adecoagro/IFH 2004 Stock Incentive Option Plan and Adecoagro/IFH 2007/2008 Equity Incentive Plan

The Company maintains the Adecoagro/IFH 2004 Incentive Option Plan (formerly, the International Farmland Holdings, LLC 2004 Incentive Option Plan, and referred to herein as the “2004 Plan”) and the Adecoagro/IFH 2007/2008 Equity Incentive Plan (formerly, the International Farmland Holdings, LLC 2007/2008 Equity Incentive Plan, and referred to herein as the “2007/2008 Plan”). The 2004 Plan and the 2007/2008 Plan are collectively referred to herein as the “Option Plans.” Initially, the Option Plans provided for the grant of options to purchase ordinary units of IFH. In connection with the Reorganization, the Option Plans were amended and restated to provide for the grant of options to purchase ordinary shares of the Company, and all then-outstanding options to purchase IFH ordinary units were converted into options to purchase the Company’s ordinary shares.

The number of ordinary shares reserved and available for issuance under the 2004 Plan and the 2007/2008 Plan are 2,401,228 and 2,355,743, respectively. Shares subject to awards that become forfeited, cancelled, expired, withheld upon exercise, reacquired by the Company prior to vesting or otherwise terminated will again be available for future awards under the Option Plans.

Administration and Eligibility

The Option Plans are administered by the Compensation Committee of the Company’s board of directors (the “Committee”). The Committee has general authority to, among other things, select individuals for participation, determine the time and amount of grants, and interpret the plans and awards. The Committee determines the vesting

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requirements of the awards. The Option Plans require that the exercise price of any future grants shall be no less than the greater of the fair market value of our ordinary shares on the date of grant and the par value per ordinary share.

Individuals eligible to receive options under the 2004 Plan include officers and employees, and under the 2007/2008 Plan include officers, employees, directors, prospective employees and consultants.

Amendment and Termination

The board of directors may amend or terminate the Option Plans in its discretion, and the Committee may amend any outstanding options in its discretion, except participant consent will be needed if a participant’s rights are adversely affected. If not previously terminated by the board of directors, the Option Plans will terminate on the 10th anniversary of its adoption.

Granted Options

Under the 2004 Plan, as of the date of this annual report, options to purchase 2,133,797 ordinary shares were granted and the weighted average exercise price of all granted options was $6.68. Under the 2007/2008 Plan, as of the same date, options to purchase 2,037,509 ordinary shares were granted, and the weighted average exercise price of all granted options was $13.06.

Outstanding options under the 2004 Plan generally vest in three equal installments on the first three anniversaries of the date of grant, and options under the 2007/2008 Plan generally vest in four equal installments on the first four anniversaries of the date of grant. Vesting under each of the Option Plans is generally subject to the participant’s continued service as of each applicable vesting date, and all options terminate 10 years from the date of grant.

Adecoagro S.A. Amended and Restated Restricted Share and Restricted Stock Unit Plan

On November 11, 2011, the Board of Directors of the Company approved the amendment and restatement of the Adecoagro S.A. Restricted Share Plan, now known as the Amended and Restated Restricted Share and Restricted Stock Unit Plan (the “Plan”).

The Plan provides for awards of restricted shares or restricted stock units to employees, officers, members of the board of directors and other service providers of the Company. The purpose of the Plan is to further align the interests of participants with those of the shareholders by providing participants with long-term incentive compensation opportunities tied to the performance of the Company’s ordinary shares.

The maximum number of ordinary shares with respect to which awards may be made under the Plan is 1,801,038 ordinary shares. The Committee anticipates that such number of shares will be sufficient for grants of awards under the Plan for a period of five years. To the extent any award under the Plan is canceled, expired, forfeited, surrendered settled in cash, or otherwise terminated without delivery of shares the shares retained by or returned to the Company will again be available for future awards under the Plan. The shares available for issuance as well as outstanding awards under the Plan are subject to adjustment in the event of a reorganization, stock split, merger or similar change. Under the Plan, as of the date of this annual report, only 743,728 restricted shares were granted to directors, senior management and employees.

Administration and Eligibility

The Plan is administered by the Committee. The Committee has general authority to grant awards, determine the recipients of awards and prescribe the terms of awards, as well as authority to interpret and apply the terms of the Plan and individual awards. The Committee determines the amount and the vesting requirements of the awards.

Terms of Awards

A grant of restricted shares represents ordinary shares that are issued subject to vesting requirements and transfer restrictions, as determined by the Committee in its discretion. The vesting requirements may be based on the continued employment or service of the participant for a specified time period or on the attainment of specified

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business performance goals established by the Committee. Subject to the transfer restrictions and vesting requirements of the award, the participant will have the rights of a stockholder of the Company, including voting rights and the right to receive dividends.

The number of restricted shares or restricted stock units awarded to individuals each year will be based on Company performance. Once awarded, the restricted shares or restricted stock units are subject to a service-based vesting schedule and vest in three equal annual installments on the first three anniversaries of the date of grant, subject only to the participant’s continued service to the Company as of each applicable vesting date. Restricted stock units are payable following the vesting of an award in shares.

Amendment and Termination

The board of directors may amend, modify, suspend or terminate the Plan in its discretion, except participant consent will be needed if participants’ rights are adversely affected. If not previously terminated by the board of directors, the Plan will terminate on the 10th anniversary of its adoption.

Share Options and Restricted Shares

The following table sets forth the total number of ordinary and restricted shares to be issued upon exercise of the options to directors and executives officers, the exercise price of the options awarded, the date of grant and the date of expiration, as of the date of this annual report.


	Plan under which awards were granted		Number of restricted shares		Number of ordinary shares to be issued upon exercise of options		Exercise price per ordinary share ($)		Date of Grant		Expiration date
Directors and Executive Officers
Abbas Farouq Zuaiter		2010		*		—		—		5/13/2011
Alan Leland Boyce		2010		4,937		—		—		5/13/2011
Guillaume van der Linden		2010		*		—		—		5/13/2011
Paulo Albert Weyland Vieira		2010		*		—		—		5/13/2011
Plínio Musetti		2010		*		—		—		5/13/2011
Mark Schachter		2010		*		—		—		5/13/2011
Julio Moura Neto		2010		*		—		—		5/13/2011
Andrés Velasco Brañes		2010		*		—		—		5/13/2011
Mariano Bosch		2004		—		173,236	$	5.82674		1/05/2004		1/05/2014
		2004		—		135,314	$	5.82674		1/08/2005		1/08/2015
		2004		—		28,038	$	5.82674		1/06/2006		1/06/2016
		2004		—		29,504	$	7.10862		1/06/2006		1/06/2016
		2004		—		112,740	$	8.62358		1/07/2006		1/07/2016
		2007		—		112,833	$	12.81883		11/13/2007		11/13/2017
		2007		—		86,306	$	13.40150		1/30/2009		1/30/2019
		2010		47,512		—		—		4/01/2011
		2010		4,937		—		—		5/13/2011
		2010		75,978		—		—		4/01/2012
Carlos A. Boero Hughes		2004		—		*	$	5.82674		8/25/2008		8/25/2018
		2004		—		*	$	7.10862		8/25/2008		8/25/2018
		2007		—		*	$	12.81883		8/25/2008		8/25/2018
		2007		—		*	$	13.40150		1/30/2009		1/30/2019
		2010		*		—		—		4/01/2011
		2010		*		—		—		4/01/2012
Emilio F. Gnecco		2004		—		*	$	5.82674		1/6/2007		1/6/2017
		2004		—		*	$	8.62358		1/6/2007		1/6/2017
		2007		—		*	$	12.81883		11/13/2007		11/13/2017
		2007		—		*	$	13.40150		1/30/2009		1/30/2019
		2010		*		—		—		4/01/2011
		2010		*		—		—		4/01/2012

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Walter Marcelo Sanchez	2004	—		*		$	5.82674	1/5/2004	1/5/2014
	2004	—		*		$	5.82674	1/8/2005	1/8/2015
	2004	—		*		$	5.82674	1/6/2006	1/6/2016
	2004	—		*		$	7.10862	1/6/2006	1/6/2016
	2004	—		*		$	8.62358	1/7/2006	1/7/2016
	2007	—		*		$	12.81883	11/13/2007	11/13/2017
	2007	—		*		$	13.40150	1/30/2009	1/30/2019
	2010	*		—			—	4/01/2011
	2010	*		—			—	4/01/2012
Mario José Ramón Imbrosciano	2004	—		*		$	5.82674	1/5/2004	1/5/2014
	2004	—		*		$	5.82674	1/8/2005	1/8/2015
	2004	—		*		$	5.82674	1/6/2006	1/6/2016
	2004	—		*		$	7.10862	1/6/2006	1/6/2016
	2004	—		*		$	8.62358	1/7/2006	1/7/2016
	2007	—		*		$	12.81883	11/13/2007	11/13/2017
	2007	—		*		$	13.40150	1/30/2009	1/30/2019
	2010	*		—			—	4/01/2011
	2010	*		—			—	4/01/2012
Leonardo Berridi	2004	—		*		$	5.82674	1/5/2004	1/5/2014
	2004	—		*		$	5.82674	1/8/2005	1/8/2015
	2004	—		*		$	5.82674	1/6/2006	1/6/2016
	2004	—		*		$	7.10862	1/6/2006	1/6/2016
	2004	—		*		$	8.62358	1/7/2006	1/7/2016
	2007	—		*		$	12.81883	11/13/2007	11/13/2017
	2007	—		*		$	13.40150	1/30/2009	1/30/2019
	2010	*		—			—	4/01/2011
	2010	*		—			—	4/01/2012
Marcelo Vieira	2004	—		51,487		$	5.82674	1/2/2006	1/2/2016
	2004	—		56,370		$	8.62358	1/7/2007	1/7/2017
	2007	—		102,576		$	12.81883	11/13/2007	11/13/2017
	2007	—		62,818		$	13.40150	1/30/2009	1/30/2019
	2010	23,223		—			—	4/01/2011
	2010	*		—			—	4/01/2012
Ezequiel Garbers	2004	—		*		$	5.82674	1/5/2004	1/5/2014
	2004	—		*		$	5.82674	1/8/2005	1/8/2015
	2004	—		*		$	5.82674	1/6/2006	1/6/2016
	2004	—		*		$	7.10862	1/6/2006	1/6/2016
	2004	—		*		$	8.62358	1/7/2006	1/7/2016
	2007	—		*		$	12.81883	11/13/2007	11/13/2017
	2007	—		*		$	13.40150	1/30/2009	1/30/2019
	2010	*		—			—	4/01/2011
	2010	*		—			—	4/01/2012
Directors and Executive Officers as a group		625,245	(1)	2,996,971	(2)

*	Upon the exercise of all options, would beneficially own less than 1% of total number of outstanding shares.

(1)	Consists of 165,791 vested restricted shares as of April 20, 2012 and 459,454 unvested restricted shares.

(2)	Consists of 2,829,983 options exercisable as of April 20, 2012 and 166,988 unvested options.

Item 7. Major Shareholders and Related Party Transactions

A. MAJOR SHAREHOLDERS

The following table sets forth the beneficial ownership of our shares for (1) each person known to us to own beneficially at least 5% of our common shares and (2) our directors and executive officers, based on the information most recently available to the Company, as of December 31, 2011.

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As of December 31, 2011, we had 120,531,045 outstanding shares. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days from December 31, 2011, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.


	Number		Percent
Principal Shareholders:
Quantum Partners LP (l)		25,384,049		21.06
HBK Master Fund LP(2)		20,471,770		16.98
Stichting Pensioenfonds Zorg en Welzijn(3)		15,307,824		12.70
Al Gharrafa Investment Company(4)		12,562,906		10.42

Directors and Executive Officers
Abbas Farouq Zuaiter		*		*
Alan Leland Boyce		1,393,169		1.14
Guillaume van der Linden		*		*
Paulo Albert Weyland Vieira (5)		*		*

Mariano Bosch(6)		838,901		0.69
Plínio Musetti		*		*
Mark Schachter		*		*
Julio Moura Neto		*		*
Andrés Velasco Brañes		*		*
Carlos A. Boero Hughes		*		*
Emilio F. Gnecco		*		*
Walter Marcelo Sanchez		*		*
Mario José Ramón Imbrosciano		*		*
Leonardo Berridi		*		*
Marcelo Vieira(7)		1,105,331		0.91
Ezequiel Garbers		*		*
		6,017,081		4.99

*	Beneficially owns less than 1% based on the total number of outstanding shares.

(1)	Soros Fund Management LLC serves as principal investment adviser to Quantum Partners LP.

(2)	The address of HBK Master Fund LP is Maples Corporate Services Ltd.: PO BOX 309, Ugland House, George Town, Grand Cayman KY1-1104, Cayman Islands / Notice Address: HBK Master Fund L.P. %HBK Services LLC, Attn: Legal department, 2101 Cedar Spring Road, Suite 700, Dallas TX 75201, USA.

(3)	Includes the purchase of 4,500,000 shares by Stichting, Pensioenfonds Zorg en Welzijn in our IPO. The address of Stichting Pensioenfonds Zorg en Welzijn is P.O. BOX 4001 NL-3700 KA Zeist The Netherlands.

(4)

The address of Al Gharrafa Investment Company is Walker House, 87 Main Street, George Town, Grand Cayman, KY1-9005, Cayman Islands. Includes 7,377,598 common shares we issued and sold to Al Gharrafa at a purchase price of $10.65 per share, pursuant to an agreement entered into on January 6, 2011. See exhibit 4.28.

(5)	Mr. Vieira filed a motion of Proposed Sale on Form 144 with the SEC dated April 10, 2012 with respect to 96,827 shares of the Company.

(6)	Includes 656,394 shares issuable upon exercise of options held by Mr. Bosch that are exercisable within 60 days of December 31, 2011. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership—Share Options and Restricted Share and Restricted Stock Unit Plan.”

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(7)

Includes 257,546 shares issuable upon exercise of options held by Mr. Vieira that are exercisable within 60 days of December 31, 2011. Mr. Vieira is the owner of Liuede Holdings Ltd. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership—Share Options and Restricted Share and Restricted Stock Unit Plan.”

As of March 7, 2012, 93,900,221 shares, representing 77.89% of our outstanding common shares are held by United States record holders.

B. RELATED PARTY TRANSACTIONS

Share Purchase and Sale Agreement and UMA Right of First Offer Agreement

In connection with the Share Purchase and Sale Agreement, the IFH Parties also entered into a Right of First Offer Agreement with Marcelo Weyland Barbosa Vieira, Paulo Albert Weyland Vieira, Mario Jorge de Lemos Vieira, and Corina de Almeida Leite, each of which is a current indirect shareholder in IFH, (together the “UMA Members”), dated February 16, 2006, whereby the IFH Parties agreed to grant the UMA Members a right of first offer to acquire the shares of UMA, or all or substantially all of the assets of UMA, or the real property or plot of land where the commercial offices of UMA is currently located and which is currently subject to a right-of-way and easement agreement granted to Mario Corina, AlFenas Agrícola Ltda. The rights granted to each of the UMA Members, their permitted affiliates, assignees, successors or heirs under such agreement are only in effect for as long as such entities hold such an equity interest in IFH or any of its affiliates.

Milk Supply Agreement

In November 2007, Adeco Agropecuaria S.A. entered into a milk supply offer agreement with La Lácteo S.A., which was later amended on February 1, 2010, and pursuant to which Adeco Agropecuaria S.A. committed to sell to La Lácteo, and La Lácteo committed to purchase, approximately 80,000 liters of our milk production per day, subject to certain conditions. Notwithstanding the above, Adeco Agropecuaria S.A. is not obligated to sell to La Lácteo and La Lácteo is not obligated to purchase from Adeco Agropecuaria S.A., more than 50% of its milk requirements for a four-month period, provided, however, that our milk production in excess of such volume is managed by La Lácteo S.A. in order to take advantage of the best valuation opportunities as industry sales in the raw milk spot market. The milk supply offer agreement fixes the price of milk that La Lácteo pays to Adeco Agropecuaria S.A. at the average milk price for each month plus a 3% premium. The milk supply agreement terminates in November 2017. If Adeco Agropecuaria S.A. receives a proposal from a third party to purchase milk that is more favorable to Adeco Agropecuaria S.A. than the terms set forth in the milk supply agreement with La Lácteo, Adeco Agropecuaria S.A. may sell milk to such third party. However, La Lácteo has a right of first refusal on Adeco Agropecuaria S.A.’s receipt of such third-party offer to purchase milk from Adeco Agropecuaria S.A. at the specified higher price. For the years ended December 31, 2011, 2010 and 2009, we recognized sales of goods net of related expenses, amounting to $ 16.5 million, $13.4 million and $10.8 million respectively, in connection with this agreement.

Agriculture Partnership Agreements

Some of our agriculture partnership agreements are entered into with certain minority shareholders of the Company, for a total of 8,418 hectares. For the years ended December 31, 2011, 2010 and 2009, we recorded other net receivables for payments in advance amounting to nil, $0.3 million and $0.8 million, respectively, and recognized expenses amounting to $3.1 million, $3.3 million and $2.2 million, respectively, in connection with these agreements.

Registration Rights Agreement

In connection with the Reorganization, we entered into a registration rights agreement providing holders of our issued and outstanding common shares on January 28, 2011 (such holders being hereinafter referred to as the “Existing Investors” and such common shares subject to the agreement being hereinafter referred to as the “Registrable Securities”) with certain rights to require us to register their shares for resale under the Securities Act

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of 1933, as amended (“Securities Act”). Pursuant to the agreement, if holders of a majority of the Registrable Securities notify us, no earlier than 180 days after the effective date of the registration statement previously filed by us on Form F-1, we are required, subject to certain limitations, to file a registration statement under the Securities Act in order to register the resale of the amount of ordinary shares requested by such holders. The underwriters in such an offering will have the right, subject to certain limitations, to limit the number of shares included in such registration. The Existing Investors have the right to require us to file one such registration. In addition, if we propose to register any of our securities under the Securities Act, Existing Investors are entitled to notice of such registration and are entitled to certain “piggyback” registration rights allowing such holders to include their common shares in such registration, subject to certain restrictions. Furthermore, Existing Investors may require us to register the resale of all or a portion of their shares on a registration statement on Form F-3 once we are eligible to use Form F-3. In an underwritten offering, the underwriters have the right, subject to certain restrictions, to limit the number of Registrable Securities Existing Investors may include.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

Item 8. Financial Information

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.

See Item 18. Financial Statements and page F-1 through F-90 for our consolidated financial statements.

Legal and Administrative Proceedings

We are subject to several laws, regulations and business practices of the countries in which we operate. In the ordinary course of business, we are subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, social security, labor lawsuits and other matters. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Currently, we are not engaged in any material litigation or arbitration and no material litigation or claims are known to us to be pending or threatened against us which, either alone or on a combined basis, may result in an adverse effect on our business, results of operations, or cash flows.

As of December 31, 2011, the total amounts accrued in respect of legal and administrative proceedings was $ 4.3 million.

Dividend Policy

We currently intend to retain any future earnings to finance operations and the expansion of our business and do not intend to declare or pay any cash dividends on our common shares in the foreseeable future. The amount and payment of dividends will be determined by a simple majority vote at a general shareholders’ meeting, typically but not necessarily, based on the recommendation of our board of directors. All shares of our capital stock rank pari passu with respect to the payment of dividends. Pursuant to our articles of incorporation, the board of directors has the power to distribute interim dividends in accordance with applicable Luxembourg law. Dividends may be lawfully declared and paid if our net profits and distributable reserves are sufficient under Luxembourg law.

Under Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. If the legal reserve subsequently falls below the 10% threshold, at least 5% of net profits again must be allocated toward the reserve. The legal reserve is not available for distribution.

Adecoagro is a holding company and has no material assets other than its ownership of partnership interests in IFH. IFH, in turn, is a holding entity with no material assets other than its indirect ownership of shares in operating subsidiaries in foreign countries. If we were to distribute a dividend at some point in the future, we would cause the operating subsidiaries to make distributions to IFH, which in turn would make distributions to Adecoagro in an amount sufficient to cover any such dividends.

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Our subsidiaries are subject to certain restrictions on their ability to declare or pay dividends. For example, the loan agreement with the Inter-American Development Bank prohibits Adeco Agropecuaria S.A. and Pilagá S.A. from paying dividends or other restricted payments if such payments would cause these two subsidiaries to exceed certain financial ratios or in the case of an event of default. The Adecoagro Vale do Ivinhema Prepayment Export Facility also imposes similar limitations on the ability of our Brazilian subsidiaries to pay dividends. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness and Financial Instruments.”

B. SIGNIFICANT CHANGES

Except as otherwise disclosed in this annual report, there has been no undisclosed significant change since the date of the annual Consolidated Financial Statements.

Item 9. The Offer and Listing

A. OFFER AND LISTING DETAILS

Our common shares have been listed on the NYSE under the symbol “AGRO” since January 28, 2011. Our issued share capital amounts to $180,800,123, represented by 120,533, 415 (of which 2,370 were treasury shares) shares with a nominal value of $1.50 each. All issued shares are fully paid up.

The table below sets forth, for the period indicated, the reported high and low closing prices for our common shares listed on the NYSE.


	Price per Share
Full financial Quarters Since Listing	High		Low
First quarter		13.50		11.99
Second quarter		13.47		10.27
Third quarter		11.97		8.62
Fourth Quarter		9.72		7.42

	Price per Share
Last Six Months	High		Low
November 2011		9.35		7.54
December 2011		9.53		7.91
January 2012		9.40		8.03
February 2012		9,76		9.07
March 2012		11.05		8.60
April 1 to April 20 2012		12.70		11.49

B. PLAN OF DISTRIBUTION

Not applicable.

C. MARKETS

Our common shares have been listed on the NYSE under the symbol “AGRO” since January 28, 2011. See “—A. Offer and Listing Details.”

D. SELLING SHAREHOLDERS

Not applicable.

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E. DILUTION

Not applicable.

F. EXPENSES OF THE ISSUE

Not applicable.

Item 10. Additional Information

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

The following is a summary of some of the terms of our common shares, based in particular on our articles of incorporation and the Luxembourg law of August 10, 1915 on commercial companies.

Adecoagro’s shares are governed by Luxembourg law and its articles of incorporation. More information concerning shareholders’ rights can be found in the Luxembourg law on commercial companies dated August 10, 1915, as amended from time to time, and the articles of incorporation.

The following is a summary of the rights of the holders of our shares that are material to an investment in our common shares. These rights are set out in our articles of association or are provided by applicable Luxembourg law, and may differ from those typically provided to shareholders of U.S. companies under the corporation laws of some states of the United States. This summary does not contain all information that may be important to you. For more complete information, you should read our updated articles of association, which are attached as an exhibit to this annual report.

General

Adecoagro is a Luxembourg société anonyme (public company limited by shares) ). The Company’s legal name is “Adecoagro S.A.” Adecoagro was incorporated on June 11, 2010 and on October 26, 2010 all the shares in issue in Adecoagro were acquired by IFH LP.

On October 30, 2010, the members of IFH LP transferred pro rata approximately 98% of their membership interests in IFH LP to Adecoagro in exchange for common shares of Adecoagro.

On January 28, 2011, Adecoagro completed the IPO of its shares on the NYSE. The shares are traded under the symbol “AGRO.”

The corporate purpose of Adecoagro, as stated in Article 4 of our articles of incorporation (Corporate Purpose), is the following: The object of Adecoagro is the holding of participations, in any form whatsoever, in Luxembourg and foreign companies, or other entities or enterprises, the acquisition by purchase, subscription, or in any other manner as well as the transfer by sale, exchange or otherwise of stock, bonds, debentures, notes and other securities or rights of any kind including interests in partnerships, and the holding, acquisition, disposal, investment in any manner (in), development, licensing or sub licensing of, any patents or other intellectual property rights of any nature or origin as well as the ownership, administration, development and management of its portfolio. Adecoagro may carry out its business through branches in Luxembourg or abroad.

Adecoagro may borrow in any form and proceed to the issuance by private or public means of bonds, convertible bonds and debentures or any other securities or instruments it deems fit.

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In a general fashion it may grant assistance (by way of loans, advances, guarantees or securities or otherwise) to companies or other enterprises in which Adecoagro has an interest or which form part of the group of companies to which Adecoagro S.A. belongs or any entity as Adecoagro may deem fit (including up stream or cross stream), take any controlling, management, administrative and/or supervisory measures and carry out any operation which it may deem useful in the accomplishment and development of its purposes.

Finally, Adecoagro can perform all commercial, technical and financial or other operations, connected directly or indirectly in all areas in order to facilitate the accomplishment of its purpose.

Share Capital

As of December 31, 2011 our issued share capital amounted to $180,800,123, represented by 120,533,415 shares in issue (of which 2,370 were treasury shares) with a nominal value of $1.50 each. All issued shares are fully paid up.

There were 120,531,045 common shares outstanding.

We have an authorized unissued share capital of $3,000,000,000, including the issued share capital as of December 31, 2011 of $180,800,123 and are authorized to issue up to 2,000,000,000 shares of a nominal value of $1.50 each (taking into account the shares issued as of December 31, 2011) out of such authorized share capital. Our authorized unissued share capital as of December 31, 2011 is $2,819,199,877.

Our articles of incorporation authorize the board of directors to issue shares within the limits of the authorized un-issued share capital at such times and on such terms as the board or its delegates may decide for a period commencing on January 10, 2011 and ending on the date five years after the date that the minutes of the shareholders’ meeting approving such authorization have been published in the Luxembourg official gazette (unless it is extended, amended or renewed and we currently intend to seek renewals and/or extensions as required from time to time). Such publication occurred on April 22, 2011. Accordingly, the board may issue shares up to the number of authorized un-issued shares pursuant to the above until the latter date against contributions in cash, contributions in kind or by way of incorporation of available reserves at such times and on such terms and conditions, including the issue price, as the board of directors or its delegate(s) may in its or their discretion resolve and the general meeting of shareholders dated January 10, 2011 has waived and has authorized the board of directors to waive, suppress or limit, any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital.

Our authorized share capital is determined (and may be increased, reduced or extended) by our articles of incorporation, as amended from time to time, by the decision of our shareholders at an extraordinary general shareholders’ meeting with the necessary quorum and majority provided for the amendment of our articles of incorporation. See “—Amendment to the Articles of Incorporation” and “—General Meeting of Shareholders”.

Under Luxembourg law, existing shareholders benefit from a preemptive subscription right on the issuance of shares for cash consideration. However, our shareholders have, in accordance with Luxembourg law, authorized the board to suppress, waive or limit any preemptive subscription rights of shareholders provided by law to the extent the board deems such suppression, waiver or limitation advisable for any issuance or issuances of shares within the scope of our authorized unissued share capital. Such shares may be issued above, at or below market value (down to zero) as well as by way of incorporation of available reserves and premium for a period ending on the fifth anniversary of the date of the publication of the notarial deed recording the minutes of the extraordinary general shareholders’ meeting of January 10, 2011 in the Luxembourg official gazette (which occurred on April 22, 2011).

Form and Transfer of shares

Our shares are issued in registered form only and are freely transferable. Luxembourg law does not impose any limitations on the rights of Luxembourg or non-Luxembourg residents to hold or vote our shares.

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Under Luxembourg law, the ownership of registered shares is evidenced by the inscription of the name of the shareholder, the number of shares held by him or her in the register of shares held at the registered office of the Company. Each transfer of shares in the share register shall be effected by written declaration of transfer to be recorded in the register of shares, such declaration to be dated and signed by the transferor and the transferee, or by their duly appointed agents. We may accept and enter into its share register any transfer effected pursuant to an agreement or agreements between the transferor and the transferee, true and complete copies of which have been delivered to us.

We may appoint registrars in different jurisdictions, each of whom may maintain a separate register for the shares entered in such register. We have appointed Bank of New York Mellon (operating with the service name BNY Mellon Shareowner Services) as our New York registrar and transfer agent, and all shares and shareholders have been transferred from the register held at our registered office to the register held on our behalf by Bank of New York Mellon (operating with the service name BNY Mellon Shareowner Services) as our registrar and transfer agent. The holders of our shares may elect to be entered in one of the registers and to be transferred from time to time from one register to another register provided that our board of directors may however impose transfer restrictions for shares that are registered, listed, quoted, dealt in, or have been placed in certain jurisdictions in compliance with the requirements applicable therein. The transfer to the register kept at the Company’s registered office may always be requested by a shareholder.

In addition, our articles of incorporation provide that our shares may be held through a securities settlement system or a professional depository of securities. Shares held in such manner have the same rights and obligations as shares recorded in our shareholder register(s) (subject to complying with certain formalities). Shares held through a securities settlement system or a professional depository of securities may be transferred in accordance with customary procedures for the transfer of securities in book-entry form.

Issuance of Shares

Pursuant to Luxembourg law of August 10, 1915 on commercial companies, the issuance of shares in Adecoagro requires the approval by the general meeting of shareholders at the quorum and majority provided for the amendment of our articles of incorporation. See “—Amendment to the Articles of Incorporation” and “—General Meeting of Shareholders”. The general meeting of shareholders may however approve an authorized unissued share capital and authorize the board of directors to issue shares up to the maximum amount of such authorized unissued share capital for a maximum period of five years from the date of publication in the Luxembourg official gazette of the minutes of the relevant general meeting. The general meeting may amend, renew or extend such authorized share capital and authorization to the board of directors to issue shares.

We have currently an authorized share capital of $3,000,000,000, including the issued share capital as of December 31, 2011 of $180,800,123, and are authorized to issue up to 2,000,000,000 shares of a nominal value of $1.50 each (taking into account the shares already issued) out of such authorized share capital. As of December 31, 2011 the authorized un-issued share capital was $2,819,199,877. Our board has been authorized to issue shares within the limits of the authorized un-issued share capital at such times and on such terms as the board or its delegates may decide for a period commencing on January 10, 2011 and ending on the date five years after the date that the minutes of the shareholders’ meeting approving such authorization have been published in the Luxembourg official gazette (unless it is extended, amended or renewed). The publication occurred on April 22, 2011. Accordingly, the board may issue shares up to 1,879,466,585 shares until the latter date against contributions in cash, contributions in kind or by way of incorporation of available reserves at such times and on such terms and conditions, including the issue price, as the board of directors or its delegate(s) may in its or their discretion resolve while waiving, suppressing or limiting, any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital.

Our articles provide that no fractional shares may be issued.

Our shares have no conversion rights and there are no redemption or sinking fund provisions applicable to our common shares.

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Preemptive Rights

Unless limited or cancelled by the board of directors as described above, holders of our shares have a pro rata preemptive right to subscribe for any new shares issued for cash consideration. Our articles, provide that preemptive rights can be waived, suppressed or limited by the board of directors for a period ending on April 22, 2016, in the event of an increase of the issued share capital by the board of directors within the limits of the authorized un-issued share capital

Repurchase of Shares

We cannot subscribe for our own shares.

We may, however, repurchase issued shares or have another person repurchase issued shares for our account, subject to the following conditions:

•

the prior authorization of the general meeting of shareholders (at the quorum and majority for ordinary resolutions), which authorization sets forth the terms and conditions of the proposed repurchase and in particular the maximum number of shares to be repurchased, the duration of the period for which the authorization is given (which may not exceed five years) and, in the case of repurchase for consideration, the minimum and maximum consideration per share, must have been obtained;

•

the repurchase may not reduce our net assets on a non-consolidated basis to a level below the aggregate of the issued share capital and the reserves that we must maintain pursuant to Luxembourg law or its articles of incorporation; and

•

only fully paid up shares may be repurchased.

The general meeting of shareholders has authorized that the Company, and/or any wholly-owned subsidiary (and/or any person acting on their behalf), may purchase, acquire, receive or hold shares in the Company under article 49-2 of the Luxembourg law of August 10, 1915, from time to time up to 20% of the issued share capital, on the following terms and on such terms as referred to below and as shall further be determined by the board of directors of the Company, such authorization to be valid (subject to renewal) for a period of five years from January 10, 2011.

Acquisitions may be made in any manner including without limitation, by tender or other offer(s), buy back program(s), over the stock exchange or in privately negotiated transactions or in any other manner as determined by the board of directors (including derivative transactions or transactions having the same or similar economic effect than an acquisition).

In the case of acquisitions for value:

(i) in the case of acquisitions other than in the circumstances set forth under (ii), for a net purchase price being (x) no less than fifty per cent of the lowest stock price and (y) no more than fifty per cent above the highest stock price, in each case being the closing price, as reported by the New York City edition of the Wall Street Journal, or, if not reported therein, any other authoritative source to be selected by the board of directors of the Company (hereafter, the closing price), over the ten (10) trading days preceding the date of the purchase (or as the case may be the date of the commitment to the transaction);

(ii) in case of a tender offer (or if deemed appropriate by the board of directors, a buy back program),

a. in case of a formal offer being published, for a set net purchase price or a purchase price range, each time within the following parameters: no less than fifty per cent of the lowest stock price and (y) no more than fifty per cent above the highest stock price, in each case being the closing price over the ten (10) trading days preceding the publication date, provided however that if the stock exchange price during the offer period fluctuates by more than 10%, the board of directors may adjust the offer price or range to such fluctuations;

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b. in case a public request for sell offers is made, a price range may be set (and revised by the board of directors as deemed appropriate) provided that acquisitions may be made at a price which is no less than fifty per cent of the lowest stock price and (y) no more than fifty per cent above the highest stock price, in each case being the closing price over a period determined by the board of directors provided that such period may not start more than five (5) trading days before the sell offer start date of the relevant offer and may not end after the last day of the relevant sell offer period.

In addition, pursuant to Luxembourg law the board of directors may repurchase shares without the prior approval of the general meeting of shareholders if necessary to prevent serious and imminent harm to us or if the acquisition of shares has been made in view of the distribution thereof to the employees.

Capital Reduction

The articles of incorporation provide that the issued share capital may be reduced, subject to the approval by the general meeting of shareholders at the quorum and majority provided for the amendment of our articles of incorporation. See “—Amendment to the Articles of Incorporation” and “—General Meeting of Shareholders”.

General Meeting of Shareholders

In accordance with Luxembourg law and our articles of incorporation, any regularly constituted general meeting of shareholders of Adecoagro represents the entire body of shareholders of the Company. It shall have the broadest powers to order, carry out or ratify acts relating to the operations of the Company.

The annual general meeting of shareholders of Adecoagro is held at 4:00 pm (Luxembourg time) on the third Wednesday of April of each year in Luxembourg. If that day is a legal or banking holiday, the meeting will be held on the immediately preceding banking day. Other general meetings of shareholders may be convened at any time.

Each of our shares entitles the holder thereof to attend our general meeting of shareholders, either in person or by proxy, to address the general meeting of shareholders, and to exercise voting rights, subject to the provisions of our articles of incorporation. Each share entitles the holder to one vote at a general meeting of shareholders. There is no minimum shareholding required to be able to attend or vote at a general meeting of shareholders.

A shareholder may act at any general meeting of shareholders by appointing another person (who need not be a shareholder) as his proxy, which proxy shall be in writing and comply with such requirements as determined by our board with respect to the attendance to the general meeting, and proxy forms in order to enable shareholders to exercise their right to vote. All proxies must be received by us (or our agents) no later than the day preceding the fifth (5th) working day before the date of the general meeting except if our board of directors decides to change such time frame.

Our articles of incorporation provide that in the case of shares held through the operator of a securities settlement system or depository, a holder of such shares wishing to attend a general meeting of shareholders must receive from such operator or depository a certificate certifying the number of shares recorded in the relevant account on the blocking date and certifying that the shares in the account shall be blocked until the close of the general meeting. Such certificates should be submitted to us no later than the day preceding the fifth working day before the date of the general meeting unless our board fixes a different period.

Our board of directors may determine a date preceding a general meeting as the record date for admission to such general meeting. When convening a general meeting of shareholders, we will publish two notices (which must be published at least eight days apart and in the case of the second notice, eight days before the meeting) in the Mémorial, Recueil des Sociétés et Association, and in a Luxembourg newspaper and in the case the shares of the Company are listed on a regulated market, in accordance with the publicity requirements of such regulated market applicable to the Company. If all of the shareholders are present or represented at a general meeting of shareholders, the general meeting may be held without prior notice or publication. These convening notices must contain the agenda of the meeting and set out the conditions for attendance and representation at the meeting.

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All materials relating to a general meeting of shareholders (including the notice) will be available at the website of Adecoagro at www.adecoagro.com and will be filed with the SEC on Form 6-K. The information on our website is not incorporated by reference in, and does not constitute a part of, this annual report.

Luxembourg law provides that the board of directors is obliged to convene a general meeting of shareholders if shareholders representing, in the aggregate, 10% of the issued share capital so require in writing with an indication of the agenda. In such case, the general meeting of shareholders must be held within one month of the request. If the requested general meeting of shareholders is not held within one month, shareholders representing, in the aggregate, 10% of the issued share capital, may petition the competent president of the district court in Luxembourg to have a court appointee convene the meeting. Luxembourg law provides that shareholders representing, in the aggregate, 10% of the issued share capital may request that additional items be added to the agenda of a general meeting of shareholders. That request must be made by registered mail sent to the registered office at least five days before the holding of the general meeting of shareholders.

Voting Rights

Each share of our shares entitles the holder thereof to one vote at a general meeting of shareholders.

Luxembourg law distinguishes between “ordinary” general meetings of shareholders and “extraordinary” general meetings of shareholders.

Extraordinary general meetings of shareholders are convened to resolve in particular upon an amendment to the articles of incorporation and certain other limited matters described below and are subject to the quorum and majority requirements described below. All other general meetings of shareholders are ordinary general meetings of shareholders.

Ordinary General Meetings of Shareholders . At an ordinary general meeting of shareholders there is no quorum requirement, and resolutions are adopted by a simple majority of the votes validly cast, irrespective of the number of shares present or represented. Abstentions are not considered “votes”.

Extraordinary General Meetings of Shareholders . An extraordinary general meeting of shareholders convened for the purpose of in particular (a) an increase or decrease of the authorized or issued share capital, (b) a limitation or exclusion of preemptive rights, (c) approving a legal merger or de-merger of Adecoagro, (d) dissolution of the Company or (e) an amendment of the articles of incorporation must generally have a quorum of at least 50% of our issued share capital except in limited circumstances provided for by Luxembourg law. If such quorum is not reached, the extraordinary general meeting of shareholders may be reconvened, pursuant to appropriate notification procedures, at a later date with no quorum requirement applying Irrespective of whether the proposed actions described in the preceding paragraph will be subject to a vote at the first or a subsequent extraordinary general meeting of shareholders, such actions are subject to the approval of at least two-thirds of the votes validly cast at such extraordinary general meeting of shareholders (except in limited circumstances provided for by Luxembourg law). Abstentions are not considered “votes”.

Appointment and Removal of Directors . Members of the board of directors may be elected by simple majority of the votes validly cast at any general meeting of shareholders. Under the articles of incorporation, all directors are elected for a period of up to three years with such possible extension as provided therein provided however the directors shall be elected on a staggered basis, with one third (1/3) of the directors being elected each year and provided further that such three year term may be exceeded by a period up to the annual general meeting held following the third anniversary of the appointment. Any director may be removed with or without cause by a simple majority vote at any general meeting of shareholders. The articles of incorporation provide that in case of a vacancy the board of directors may co-opt a director.

Neither Luxembourg law nor our articles of incorporation contain any restrictions as to the voting of our shares by non-Luxembourg residents.

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Amendment to the Articles of Incorporation

Luxembourg law requires an extraordinary general meeting of shareholders to resolve upon an amendment to the articles of incorporation. The agenda of the extraordinary general meeting of shareholders must indicate the proposed amendments to the articles of incorporation.

An extraordinary general meeting of shareholders convened for the purpose of amending the articles of incorporation must generally have a quorum of at least 50% of our issued share capital. If such quorum is not reached, the extraordinary general meeting of shareholders may be reconvened at a later date with no quorum according to the appropriate notification procedures. Irrespective of whether the proposed amendment will be subject to a vote at the first or a subsequent extraordinary general meeting of shareholders, the amendment is generally subject to the approval of at least two-thirds of the votes cast at such extraordinary general meeting of shareholders.

Any resolutions to amend the articles of incorporation must be taken before a Luxembourg notary and such amendments must be published in accordance with Luxembourg law.

Merger and Division

A merger by absorption whereby a Luxembourg company, after its dissolution without liquidation transfers to another company all of its assets and liabilities in exchange for the issuance to the shareholders of the company being acquired of shares in the acquiring company, or a merger effected by transfer of assets to a newly incorporated company, must, in principle, be approved by an extraordinary general meeting of shareholders of the Luxembourg company to be held before a notary. Similarly the de-merger of a Luxembourg company is generally subject to the approval by an extraordinary general meeting of shareholders.

Liquidation

In the event of the liquidation, dissolution or winding-up of Adecoagro, the assets remaining after allowing for the payment of all liabilities will be paid out to the shareholders pro rata to their respective shareholdings. The decision to voluntarily liquidate, dissolve or wind-up require the approval by an extraordinary general meeting of shareholders of the Company to be held before a notary.

No Appraisal Rights

Neither Luxembourg law nor our articles of incorporation provide for any appraisal rights of dissenting shareholders.

Distributions

Subject to Luxembourg law, each share is entitled to participate equally in distributions if and when if declared by the general meeting of shareholders out of funds legally available for such purposes. Pursuant to the articles of incorporation, the general meeting of shareholders may approve distributions and the board of directors may declare interim distribution, to the extent permitted by Luxembourg law.

Declared and unpaid distributions held by us for the account of the shareholders shall not bear interest. Under Luxembourg law, claims for unpaid distributions will lapse in our favor five years after the date such distribution has been declared.

Annual Accounts

Each year the board of directors must prepare annual accounts, that is, an inventory of the assets and liabilities of Adecoagro together with a balance sheet and a profit and loss account. The board of directors must also prepare, each year, consolidated accounts and management reports on the annual accounts and consolidated accounts. The annual accounts, the consolidated accounts, the management report and the auditor’s reports must be available for inspection by shareholders at the registered office of Adecoagro at least 15 calendar days prior to the date of the annual general meeting of shareholders.

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The annual accounts and the consolidated accounts, after approval by the annual general meeting of shareholders, will need to be filed with the Luxembourg registry of trade and companies within seven months of the close of the financial year.

Information Rights

Luxembourg law gives shareholders limited rights to inspect certain corporate records 15 calendar days prior to the date of the annual general meeting of shareholders, including the annual accounts with the list of directors and auditors, the consolidated accounts, the notes to the annual accounts and the consolidated accounts, a list of shareholders whose shares are not fully paid-up, the management reports and the auditor’s report.

The annual accounts, the consolidated accounts, the auditor’s reports and the management reports are made available to registered shareholders at the same time as the convening notice for the annual general meeting of shareholders is sent. In addition, any registered shareholder is entitled to receive a copy of these documents free of charge 15 calendar days prior to the date of the annual general meeting of shareholders upon request.

Under Luxembourg law, it is generally accepted that a shareholder has the right to receive responses to questions concerning items on the agenda for a general meeting of shareholders, if such responses are necessary or useful for a shareholder to make an informed decision concerning such agenda item, unless a response to such questions could be detrimental to our interests.

Board of Directors

The management of Adecoagro is vested in a board of directors. Our articles of incorporation provide that the board must comprise at least three members and no more than eleven members. The number of directors is determined and the directors are appointed at the general meeting of shareholders (except in case of a vacancy in the office of a director because of death, retirement, resignation, dismissal, removal or otherwise, the remaining directors may fill such vacancy and appoint a successor in accordance with applicable Luxembourg law).

The directors are appointed for a period of up to three years; provided however the directors shall be elected on a staggered basis, with one-third of the directors being elected each year and provided further that such three year term may be exceeded by a period up to the annual general meeting held following the third anniversary of the appointment. Directors may be removed with or without cause ( ad nutum ) by the general meeting of shareholders by a simple majority of votes cast at a general meeting of shareholders. The directors shall be eligible for re-election indefinitely. The general shareholders’ meeting may dismiss one or more directors at any time, with or without cause by a resolution passed by simple majority vote, irrespective of the number of shares present at such general shareholders’ meeting.

Currently our board has 9 members (see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Board of Directors”). The board meets as often as required by our interests.

A majority of the members of the board in office (and able to vote) present or represented at a board meeting constitutes a quorum, and resolutions are adopted by the simple majority vote of the board members present or represented (and able to vote). The board may also take decisions by means of resolutions in writing signed by all directors.

Our board may delegate the daily management of the business of Adecoagro, as well as the power to represent Adecoagro in its day to day business, to individual directors or other officers or agents of the Company (with power to sub-delegate). In addition the board of directors may delegate the daily management of the business of Adecoagro, as well as the power to represent Adecoagro in its day to day business to an executive or other committee as it deems fit. The board of directors shall determine the conditions of appointment and dismissal as well as the remuneration and powers of any person or persons so appointed.

Currently the board of directors has appointed the officers listed under “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”

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The board of directors may (but shall not be obliged to unless required by law) establish one or more committees (including without limitation an audit committee, a risk and commercial committee, a strategy committee and a compensation committee) and for which it shall, if one or more of such committees are set up, appoint the members (who may be but do not need to be board members), determine the purpose, powers and authorities as well as the procedures and such other rules as may be applicable thereto (subject as to the audit committee as set forth therein).

Currently our board has set up an audit committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.” Our board has set up a compensation committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.” Our board has set up a risk and commercial committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.” Our board has set up a strategy committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.”

No director shall, solely as a result of being a director, be prevented from contracting with us, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any contract in which any director is in any way interested be liable to be avoided, in account of his position as director nor shall any director who is so interested be liable to account for us or the shareholders for any remuneration, profit or other benefit realized by the contract by reason of the director holding that office or of the fiduciary relationship thereby established.

Any director having an interest in a transaction submitted for approval to the board conflicting with our interest shall be obliged to advise the board thereof and to cause a record of his statement to be included in the minutes of the meeting. He may not take part in these deliberations nor in the vote of the resolution. At the next following general meeting, before any other resolution is put to vote, a special report shall be made on any transactions in which any of the directors may have had an interest conflicting with our interest.

No shareholding qualification for directors is required.

Directors and other officers, past and present, are entitled to indemnification from us to the fullest extent permitted by law against liability and all expenses reasonably incurred by him in connection with any claim, action, suit or proceeding in which he is involved by virtue of his being or having been a director. We may purchase and maintain for any director or other officer insurance against any such liability.

No indemnification shall be provided against any liability to us or our shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. No indemnification will be provided in the event of a settlement (unless approved by a court or the board), nor will indemnification be provided in defending proceedings (criminal) in which that director or officer is convicted of an offense.

Transfer Agent and Registrar

The transfer agent and registrar for our common shares is Bank of New York Mellon (operating with the service name BNY Mellon Shareowner Services) and all shares and shareholders have been transferred from the register held in Luxembourg to the register held on our behalf by Bank of New York Mellon (operating with the service name BNY Mellon Shareowner Services) as our registrar and transfer agent. The holders of our shares may elect to be entered in one of the registers and to be transferred from time to time from one register to another register provided that our board of directors may however impose transfer restrictions for shares that are registered, listed, quoted, dealt in, or have been placed in certain jurisdictions in compliance with the requirements applicable therein. The transfer to the register kept in Luxembourg may always be requested by a shareholder.

The transfer agency services business of The Bank of New York Mellon Corporation was acquired by Computershare Limited.

C. MATERIAL CONTRACTS

See “Item 4. Information on the Company—B. Business Overview.”

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D. EXCHANGE CONTROLS

Foreign Exchange Controls

In 1991, the Argentine Convertibility Law established a fixed exchange rate according to which the Argentine Central Bank was statutorily obliged to sell U.S. dollars to any individual at a fixed exchange rate of Ps.1.00 per $1.00. In 2001 Argentina experienced a period of severe political, economic and social crisis, and on January 6, 2002, the Argentine congress enacted the Public Emergency Law abandoning more than ten years of fixed Peso-U.S. dollar parity. After devaluing the Peso and setting the official exchange rate at Ps.1.40 per $1.00, on February 11, 2002, the Argentine government allowed the Peso to float. The shortage of U.S. dollars and their heightened demand caused the Peso to further devaluate significantly in the first half of 2002. The Argentine Central Bank may indirectly affect this market through its active participation. Due to the deterioration of the economic and financial situation in Argentina during 2001 and 2002, in addition to the abandonment of the Peso-U.S. dollar parity, the Argentine government established a number of monetary and currency exchange control measures, including a partial freeze on bank deposits, the suspension on payments of its sovereign foreign debt, restrictions on the transfer of funds out of, or into, Argentina, and the creation of the Single Free Foreign Exchange Market (“ Mercado Único y Libre de Cambios ”, or the “FX Market”) through which all purchases and sales of foreign currency must be made. Since 2003, these restrictions have been progressively eased to some extent until 2011. However due to the increase of the capital flow out of Argentina during 2011, the Argentine government recently imposed some additional restrictions on the transfer of funds from Argentina. Accordingly, the following restrictions that could affect our Argentine operations are in effect:

(1) Argentine entities have access to the FX Market for the purchase of foreign currency and its transfer abroad for, among other things:

(a) Making portfolio investments (“ atesoramiento ”) of up to $2.0 million per calendar month, provided that the Argentine entity is in compliance with the foreign debt information regime set forth in Communication “A” 3,602 of the Argentine Central Bank (the “Foreign Debt Information Regime”), an information regime where by debtors must inform the Argentine Central Bank of any foreign indebtedness incurred. Recent regulations, however, have restricted the possibility of certain financial trusts, among others, to access the FX Market without prior authorization from the Argentine Central Bank;

(b) Making payments of principal on foreign financial indebtedness at maturity or less than 30 days in advance of the stated maturity to the extent that the proceeds of the foreign indebtedness have remained in Argentina at least during the Waiting Period (as defined below) or to make partial or full payments more than 30 days in advance of the stated maturity, provided that (i) if the payment is not made as part of a debt restructuring process, the amount in foreign currency to be prepaid shall not exceed the present value of the portion of the debt being prepaid or the prepayment shall be fully offset with new external financing, the present value of which shall not exceed the value of the debt being prepaid, and (ii) if the prepayment is made as part of a restructuring process with foreign creditors, the terms and conditions of the new financing and the corresponding prepayment must not result in an increase in the present value of the debt so refinanced. In all cases, the foreign debt to be repaid must have been disclosed under the Foreign Debt Information Regime;

(c) Making payments of interest on foreign indebtedness on the stated interest payment date or less than 5 days prior to such stated interest payment date, provided that the foreign debt has been disclosed under the Foreign Debt Information Regime and that the interest to be paid accrued starting either (i) on the date the proceeds received from foreign indebtedness were sold in the FX Market or (ii) on the date of disbursement of funds, provided that the foreign debt has been disclosed under the Foreign Debt Information Regime and that those funds were credited in accounts of correspondent banks that are authorized to sell foreign exchange proceeds in the FX Market within 2 days of disbursement thereof;

(d) Making payments for services rendered by foreign residents;

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(e) Making payments for imported goods, on demand or in advance, provided that certain requirements are met ( e.g. , nationalization of the imported goods within certain specific terms and filing of the import documentation with the financial entity); and

(f) Making payments of corporate profits and dividends to non-Argentine-resident shareholders, provided that the distribution of dividends is approved on the basis of audited financial statements issued by the Argentine entity and certified by external auditors;

However, recently the Argentine government imposed additional requirements through the issuance of Resolution No. 3210/2011 of the AFIP and Communication “A” 5239 of the Argentine Central Bank, as amended, by which in order to sell foreign currency or make any transfer of funds out of Argentina for investment purposes (atesoramiento) banks and financial institutions must first request the “validation” of the transaction by the AFIP through a computerized system. The AFIP will determine on a case by case basis if the transaction is validated or not based on the patrimonial capacity of the person making the purchase or transfer as per the records of the AFIP. Some banks and financial institutions are also applying this validation system to authorize the purchase or foreign currency or the transfer of funds abroad for other purposes.

(2) Argentine entities are required to transfer into Argentina and sell for Pesos through the FX Market, among others, the proceeds from foreign financial indebtedness and from foreign indebtedness qualifying as pre-export financing under the rules of the Argentine Central Bank (the “Pre-Export Financings”). ”) within the following 30 days after disbursement;

(3) Argentine entities are required to transfer into Argentina and sell for Pesos in the FX Market all foreign currency proceeds from exports of goods (except those that are applied to the repayment of Pre-Export Financings) and services within the certain times established by the Argentine Central Bank;

(4) No payments on new foreign financial indebtedness (other than debt securities issued under a primary public offering and listed in self-regulated markets, Pre-Export Financings, and indebtedness with multilateral and bilateral credit institutions and official credit agencies granted to Argentine residents directly through related agencies) or their renewals or extensions can be made by any means before a 365-day term has elapsed from the date on which the proceeds of the new foreign indebtedness have been transferred into Argentina and converted into Pesos through the FX Market, or from the date of their renewal or extension (the “Waiting Period”) unless the transaction qualifies for an exemption;

(5) Upon their transfer into Argentina and sale for Pesos through the FX Market, the proceeds of foreign financial indebtedness are subject to the placement of a mandatory, non-interest bearing and non- transferrable bank deposit in U.S. dollars with an Argentine financial entity in an amount equal to 30% of the aggregate amount of such proceeds so transferred for a term of 365 days (the “Mandatory Deposit”). The Mandatory Deposit shall be applicable to the following transactions, among others: (i) incurrence of foreign indebtedness; (ii) offerings involving primary or secondary offerings of capital stock or debt securities issued by companies domiciled in Argentina which are not listed on self-regulated markets, to the extent they do not constitute direct investments ( i.e. , less than 10% of capital stock); (iii) non- residents’ portfolio investments made for the purpose of holding Argentine currency and assets and liabilities in the financial and non-financial private sector in excess of $5,000 per calendar month, to the extent that such investments are not the result of primary subscriptions of debt securities issued pursuant to a public offering and listed in self-regulated markets and/or primary subscriptions of capital stock of companies domiciled in Argentina issued pursuant to a public offering and listed in self regulated markets; (iv) non-residents’ portfolio investments made for the purpose of purchasing any right in securities in the secondary market issued by the public sector; (v) non-residents’ portfolio investments made for the purpose of purchasing primary offers of Central Bank securities issued in primary offerings; (vi) inflows of funds to the Argentine foreign exchange market derived from the sale of foreign portfolio investments of Argentine residents within the private sector in an amount in excess of $2.0 million per calendar month; and (vii) any inflow of funds to the Argentine foreign exchange market made for the purpose of primary offers of bonds and other securities issued by a trust, whether or not issued pursuant to a public offering and whether or not they are listed in self-regulated markets, to the extent that the funds to be used for the purchase of any of the underlying assets would be subject to the non-interest bearing deposit requirement.

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The following transactions are exempted from the application of the Mandatory Deposit, among others: (i) primary or secondary offerings of debt securities or stock issued pursuant to a public offering and listed on a self-regulated market; (ii) foreign currency denominated loans granted by a local financial entity under certain conditions; (iii) indebtedness with multilateral and bilateral credit institutions and official credit agencies; (iv) the proceeds of foreign financial indebtedness; provided that (a) the proceeds from the exchange settlement, net of taxes and expenses, are used to purchase foreign currency in order to pay principal on foreign debt and/or to invest in long term foreign assets; or (b) the loan has a minimum average life of not less than two years, including payments of principal and interest, and to the extent the proceeds of such loan are applied to make investments which are then registered among other capitalized cost categories as “property, plant and equipment” ( bienes de uso ), “research/exploration costs” ( gastos de investigation , prospección y exploration ) or “intangible assets” ( activos intangibles ) as part of the relevant debtor’s balance sheet or “inventory” ( bienes de cambio ); and (v) foreign trade financings; and

(6) Transfer into Argentina and sale for Pesos through the FX Market of foreign investments of Argentine entities is subject to the Mandatory Deposit on the amounts exceeding $2.0 million per calendar month.

(7) Non-Argentine residents require prior Argentine Central Bank approval to purchase foreign currency in the FX Market, unless the transaction qualifies for an exemption. The Argentine Central Bank has established the following exemptions: (a) without limitation on the amount: for the total amounts collected in Argentina under the sale and liquidation of a “direct investment” in Argentina (i.e. sale of real property, sale of equity holdings, capital reduction and reimbursement of capital contributions in an Argentine company where the investor holds more than 10% of the aggregate equity); and (b) up to the amount of US$ 500,000 per calendar month: for the amounts collected under portfolio investments (including interest) and/or resulting from the sale of such portfolio investments (i.e. stock portfolio and stockholdings in local companies, investment in mutual investment funds and local trusts, purchases of bank credit portfolios, investments in local bonds issued in Argentine Pesos and purchases of other local credits).

The above exemptions are subject to compliance with certain requirements, including: (a) in the case of sale of portfolio investment, the non-Argentine resident must file a certificate issued by a financial entity or exchange agency stating the amount of the investment and the date in which the funds paid for such investment were transferred to Argentina and, if applicable, sold in the FX Market; and (b) in the case of the re-patriation of “direct investments”, among other requirements, the non-Argentine investor was not obliged to demonstrate that the funds paid for its investment or disbursement for its capital contribution were transferred and sold in the FX Market (i.e. brought to Argentina and sold for Argentine pesos) in order to be allowed to repatriate (i.e. have access to the FX Market to purchase foreign currency with Argentine pesos and transfer it abroad) the funds collected in Argentina as a consequence of a subsequent sale or liquidation of such investment, or capital reduction or reimbursement.

In both cases, 365 days period shall be elapsed since the investment has been made.

On October 28, 2011, the Argentine Central Bank issued the Communication “A” 5237 that added new requirements for non-Argentine investors to repatriate funds collected in Argentina as a consequence of a sale or liquidation of a “direct investment”.

Pursuant to this Communication, in order for a non-Argentine investor to be allowed to have access to the FX Market to purchase foreign currency with Argentine pesos collected in Argentina and transfer it abroad as a result of a subsequent sale or liquidation of a “direct investment”, the non-Argentine investor must evidence that the funds originally paid for such investment, were transferred into Argentina and sold for pesos in the FX Market (the “Transfer Requirement”). All “direct investments” made before October 28, 2011 are exempted from the Transfer Requirement. The Communication sets a “burden” to be met by any non-Argentine resident who eventually needs to purchase foreign currency in the FX Market to repatriate Argentine-Peso denominated funds collected as a result of the sale or liquidation of an investment. Conversely, if the foreign investor believes that it will not need to repatriate, it is not required to comply with the Transfer Requirement, and therefore, the purchase price of such investment and any capital contribution may be kept abroad. The Communication does not restrict the purchase of foreign currency to pay dividends to non-Argentine residents.

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The Communication additionally sets forth that in case of a transfer of rights of a foreign direct investment between non-Argentine residents, the Transfer Requirement will be deemed complied with by the transferor if the investor (the “Prior Investor”) who sold the investment to the transferor complied with the Transfer Requirement, as long as the Transfer Requirement were complied with by the Prior Investor because its investment had been made as from the Effective Date. Therefore, the Communication allows repatriation to the selling investor if the investor who originally sold the investment had already complied with the Transfer Requirement.

E. TAXATION

Material Luxembourg Tax Considerations for Holders of Shares

The following is a summary discussion of certain Luxembourg tax considerations of the acquisition, ownership and disposition of your shares that may be applicable to you if you acquire our shares. This does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any of the Company’s common shares, and does not purport to include tax considerations that arise from rules of general application or that are generally assumed to be known to holders. This discussion is not a complete analysis or listing of all of the possible tax consequences of such transactions and does not address all tax considerations that might be relevant to particular holders in light of their personal circumstances or to persons that are subject to special tax rules.

It is not intended to be, nor should it be construed to be, legal or tax advice. This discussion is based on Luxembourg laws and regulations as they stand on the date of this annual report and is subject to any change in law or regulations or changes in interpretation or application thereof (and which may possibly have a retroactive effect). Prospective investors should therefore consult their own professional advisers as to the effects of state, local or foreign laws and regulations, including Luxembourg tax law and regulations, to which they may be subject.

As used herein, a “Luxembourg individual” means an individual resident in Luxembourg who is subject to personal income tax ( impôt sur le evenue ) on his or her worldwide income from Luxembourg or foreign sources, and a “Luxembourg corporate holder” means a company (that is, a fully taxable entity within the meaning of Article 159 of the Luxembourg Income Tax Law) resident in Luxembourg subject to corporate income tax ( impôt sur le evenue des collectivités ) on its worldwide income from Luxembourg or foreign sources. For purposes of this summary, Luxembourg individuals and Luxembourg corporate holders are collectively referred to as “Luxembourg Holders”. A “non-Luxembourg Holder” means any investor in shares of Adecoagro other than a Luxembourg Holder.

Tax regime applicable to realized capital gains

Luxembourg Holders

Luxembourg resident individual holders

Capital gains realized by Luxembourg resident individuals who do not hold their shares as part of a commercial or industrial business and who hold no more than 10% of the share capital of the Company will only be taxable if they are realized on a sale of shares that takes place before their acquisition or within the first six months following their acquisition.

If such shares are held as part of a commercial or industrial business, capital gains would be taxable in the same manner as income from such business.

For Luxembourg resident individuals holding (together with his/her spouse or civil partner and underage children) directly or indirectly more than 10% of the capital of Adecoagro, capital gains will be taxable, regardless of the holding period. In case of a sale of shares after six months following their acquisition, a more favorable tax rate will apply.

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Luxembourg resident corporate holders

Capital gains realized upon the disposal of shares by a fully taxable resident corporate holder will in principle be subject to corporate income tax and municipal business tax. The combined applicable rate (including an unemployment fund contribution) is 28.59% for the fiscal year ending 2010 for a corporate holder established in Luxembourg-City. An exemption from such taxes may be available to the holder pursuant to article 166 of the Luxembourg Income Tax Law subject to the fulfillment of the conditions set forth therein. The scope of the capital gains exemption can be limited in the cases provided by the Grand Ducal Decree of December 21,2001.

Non-Luxembourg Holders

An individual who is a non-Luxembourg Holder of shares (and who does not have a permanent establishment, a permanent representative or a fixed place of business in Luxembourg) will only be subject to Luxembourg taxation on capital gains arising upon disposal of such shares if such holder has (together with his or her spouse and underage children) directly or indirectly held more than 10% of the capital of Adecoagro at any time during the past five years, and either (i) such holder has been a resident of Luxembourg for tax purposes for at least 15 years and has become a non-resident within the last five years preceding the realization of the gain, subject to any applicable tax treaty, or (ii) the disposal of shares occurs within six months from their acquisition (or prior to their actual acquisition), subject to any applicable tax treaty.

A corporate non-Luxembourg Holder (that is, an entity within the meaning of Article 159 of the Luxembourg Income Tax Law), which has a permanent establishment, a permanent representative or a fixed place of business in Luxembourg to which shares are attributable, will bear corporate income tax and municipal business tax on a gain realized on a disposal of such shares as set forth above for a Luxembourg corporate holder. However, gains realized on the sale of the shares may benefit from the full exemption provided for by Article 166 of the Luxembourg Income Tax Law and by the Grand Ducal Decree of December 21, 2001 subject in each case to fulfillment of the conditions set out therein.

A corporate non-Luxembourg Holder, which has no permanent establishment in Luxembourg to which the shares are attributable, will bear corporate income tax on a gain realized on a disposal of such shares under the same conditions applicable to an individual non-Luxembourg Holder, as set out above.

Tax regime applicable to distributions

Withholding tax

Distributions imputed for tax purposes on newly accumulated profits are subject to a withholding tax of 15%. The rate of the withholding tax may be reduced pursuant to double tax avoidance treaty existing between Luxembourg and the country of residence of the relevant holder, subject to the fulfillment of the conditions set forth therein.

No withholding tax applies if the distribution is made to (i) a Luxembourg resident corporate holder (that is, a fully taxable entity within the meaning of Article 159 of the Luxembourg Income Tax Law), (ii) an undertaking of collective character which is resident of a Member State of the European Union and is referred to by article 2 of the Council Directive of 23rd July, 1990 concerning the common fiscal regime applicable to parent and subsidiary companies of different member states (90/435/EEC), (iii) a corporation or a cooperative company resident in Norway, Iceland or Liechtenstein and subject to a tax comparable to corporate income tax as provided by the Luxembourg Income Tax Law, (iv) an undertaking with a collective character subject to a tax comparable to corporate income tax as provided by the Luxembourg Income Tax Law which is resident in a country that has concluded a tax treaty with Luxembourg, (v) a Luxembourg permanent establishment of one of the afore-mentioned categories and (vi) a corporation company resident in Switzerland which is subject to corporate income tax in Switzerland without benefiting from an exemption, provided that at the date of payment, the holder holds or commits to hold directly or through a tax transparent vehicle, during an uninterrupted period of at least twelve months, shares representing at least 10% of the share capital of Adecoagro or acquired for an acquisition price of at least EUR 1,200,000.

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Luxembourg Holders

With the exception of a Luxembourg corporate holders benefitting from the exemption referred to above, Luxembourg individual holders, and Luxembourg corporate holders subject to Luxembourg corporation taxes, must include the distributions paid on the shares in their taxable income, 50% of the amount of such dividends being exempted from tax. The applicable withholding tax can, under certain conditions, entitle the relevant Luxembourg Holder to a tax credit.

Net wealth tax

Luxembourg Holders

Luxembourg net wealth tax will not be levied on a Luxembourg Holder with respect to the shares held unless (i) the Luxembourg Holder is a legal entity subject to net wealth tax in Luxembourg; or (ii) the shares are attributable to an enterprise or part thereof which is carried on through a permanent establishment, a fixed place of business or a permanent representative in Luxembourg.

Net wealth tax is levied annually at the rate of 0.5% on the net wealth of enterprises resident in Luxembourg, as determined for net wealth tax purposes. The shares may be exempt from net wealth tax subject to the conditions set forth by Paragraph 60 of the Law of October 16, 1934 on the valuation of assets ( Bewertungsgesetz ), as amended.

Non-Luxembourg Holders

Luxembourg net wealth tax will not be levied on a non-Luxembourg Holder with respect to the shares held unless the shares are attributable to an enterprise or part thereof which is carried on through a permanent establishment or a permanent representative in Luxembourg.

Stamp and registration taxes

No registration tax or stamp duty will be payable by a holder of shares in Luxembourg solely upon the disposal of shares by sale or exchange.

Estate and gift taxes

No estate or inheritance tax is levied on the transfer of shares upon the death of a holder of shares in cases where the deceased was not a resident of Luxembourg for inheritance tax purposes and no gift tax is levied upon a gift of shares if the gift is not passed before a Luxembourg notary or recorded in a deed registered in Luxembourg. Where a holder of shares is a resident of Luxembourg for tax purposes at the time of his death, the shares are included in its taxable estate for inheritance tax or estate tax purposes.

United States Federal Income Taxation of the Company

Our business assets and properties are located, and all of our employees and executives are based outside the United States. Our business is directly conducted through operating companies organized under the laws of countries other than the United States. These non-U.S. operating companies are indirectly owned by IFH, a holding company which is a partnership for U.S. federal income tax purposes organized under the laws of Delaware. As a partnership that is not engaged in a trade or business within the United States within the meaning of section 864 of the Internal Revenue Code, IFH is not itself subject to U.S. federal net income taxes. We acquired approximately 98 percent of IFH prior to undertaking the IPO in exchange for our stock.

Under rules to prevent expatriation of and by U.S. corporations and certain U.S. partnerships under Code section 7874(b), we would be treated as a U.S. domestic corporation if for this purpose (i) we were deemed to have acquired substantially all of the assets constituting the trade or business of a U.S. domestic partnership and (ii) former members of IFH were deemed to own at least 80% of our stock by reason of the transfer of those trade or business assets (ignoring stock issued in the IPO for purposes of the 80% threshold) and (iii) we were found not to conduct substantial business activities in Luxembourg. In that event, we would be subject to U.S. federal net income tax on

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our worldwide income and dividends we pay would be subject to U.S. federal withholding tax at a 30% rate (subject to reduction, to the extent the beneficial owner of the dividend is entitled to claim a reduced rate of withholding under an applicable income tax treaty).

We believe that the restructuring transactions executed prior to or in connection with the IPO should not be subject to section 7874(b). Accordingly, we do not believe that we will be subject to U.S. taxation on a net income basis nor do we anticipate paying dividends subject to U.S. federal withholding tax. However, the relevant rules are unclear in certain respects and there is limited guidance on the application of the rules to acquisitions of partnerships or partnership assets constituting a trade or business. Accordingly, we cannot assure you that the IRS will not seek to assert that we are a U.S. domestic corporation, which assertion if successful could materially increase our U.S. federal income tax liability. Prospective holders who are non-United States persons should also note that, in that event, we would be required to withhold tax from any dividends we pay to non-U.S. Holders (subject to any applicable income tax treaties applicable to those non-U.S. Holders).

Shareholders are urged to consult their own tax advisors about the possible application of section 7874. The remainder of this discussion assumes that we are not treated as a U.S. corporation for U.S. federal income tax purposes.

Material U.S. Federal Income Tax Considerations for U.S. Holders

The following is a discussion of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of our common shares. This discussion applies only to beneficial owners of common shares that are “U.S. Holders” (as defined below) and that hold our common shares as “capital assets” (generally, property held for investment). This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, (the “Code”), final, temporary and proposed Treasury regulations, administrative pronouncements and judicial decisions, all as currently in effect and all of which are subject to change (possibly with retroactive effect) and to differing interpretations.

This discussion does not address all U.S. federal income tax considerations that may be relevant to a particular holder based on its particular circumstances, and you are urged to consult your own independent tax advisor regarding your specific tax situation. For example, the discussion does not address the tax considerations that may be relevant to U.S. Holders in special tax situations, such as:

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insurance companies;

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tax-exempt organizations;

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brokers or dealers in securities or currencies and traders in securities that elect to mark to market;

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certain financial institutions;

•

partnerships or other pass-through entities;

•

holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

•

U.S. expatriates;

•

holders that hold our common shares as part of a hedge, straddle or conversion or other integrated transaction; or

•

holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting power of our common shares.

This discussion does not address the alternative minimum tax consequences of holding common shares or the indirect consequences to holders of equity interests in partnerships or other entities that own our common shares. Moreover, this discussion does not address the state, local and foreign tax consequences of holding our common shares, or any aspect of U.S. federal tax law (such as the estate and gift tax or the Medicare tax on net investment income) other than U.S. federal income taxation.

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You are a “U.S. Holder” if you are a beneficial owner of our common shares and you are, for U.S. federal income tax purposes:

•

an individual who is a citizen or resident of the United States;

•

a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States or any State thereof, including the District of Columbia;

•

an estate, the income of which is subject to U.S. federal income taxation regardless of its source;

•

a trust (a) if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (b) that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

If a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A partner of a partnership considering the purchase of our common shares should consult its own independent tax advisor.

You should consult your own independent tax advisor regarding the U.S. federal, state, local and non-U.S. income and other tax consequences of purchasing, owning and disposing of our common shares in your particular circumstances.

Passive Foreign Investment Company (“PFIC”) Rules

U.S. Holders generally will be subject to a special, adverse tax regime that would differ in certain respects from the tax treatment described below if we are, or were to become, a PFIC for U.S. federal income tax purposes.

In general, we will be a PFIC with respect to a U.S. Holder if, for any taxable year in which the U.S. Holder held our common shares, either (i) at least 75% of our gross income for the taxable year is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. For this purpose, passive income generally includes, among other things, dividends, interest, royalties, rents, annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation’s income.

Although the determination of whether a corporation is a PFIC is made annually, and thus may be subject to change, we do not believe that we were a PFIC for U.S. federal income tax purposes for our most recently completed taxable year, nor that we will be one for our current taxable year and we do not currently expect to become one in the foreseeable future. The remainder of this discussion assumes that we are not a PFIC for U.S. federal income tax purposes.

Dividends

Distributions with respect to our common shares will, to the extent made from our current or accumulated earnings and profits as determined under U.S. federal income tax principles, constitute dividends for U.S. federal income tax purposes. To the extent that any distribution exceeds the amount of our earnings and profits, it will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted tax basis in the common shares, and thereafter as capital gain.

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We do not currently maintain calculations of our earnings and profits under U.S. federal income tax principles. Unless and until these calculations are made, distributions should be presumed to be taxable dividends for U.S. federal income tax purposes. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes.

Cash dividends (including amounts withheld on account of foreign taxes) paid with respect to our common shares generally will be includible in the gross income of a U.S. Holder as ordinary income on the day on which the dividends are received by the U.S. Holder. Dividends with respect to our common shares will not be eligible for the dividends received deduction allowed to corporations.

Certain non-corporate U.S. Holders, including individuals, may be entitled to preferential rates of taxation with respect to dividends received in taxable years beginning before January 1, 2013. Such preferential rates of taxation are available for dividends paid by qualified foreign corporations. A foreign corporation will be treated as a qualified foreign corporation with respect to dividends received from that corporation on common shares that are readily tradable on an established securities market in the United States. As our shares will be listed on the New York Stock Exchange, we believe dividends paid by us will be eligible for these preferential rates. There can, however, be no assurance that our common shares will be considered readily tradable on an established securities market in the future. A qualified foreign corporation also includes foreign corporations eligible for the benefits of certain income tax treaties with the United States. If, as we anticipate, we are eligible for the benefits of the income tax treaty between Luxembourg and the United States, dividends paid on our common shares would be eligible for preferential rates of taxation without regard to the trading status of our common shares.

The amount of any cash dividend paid in foreign currency will equal the U.S. dollar value of the distribution, calculated by reference to the exchange rate in effect on the date the distribution is received, regardless of whether the payment is in fact converted to U.S. dollars at that time. A U.S. Holder should not recognize any foreign currency gain or loss in respect of such distribution if such foreign currency is converted into U.S. dollars on the date received. If the foreign currency is not converted into U.S. dollars on the date received, however, gain or loss may be recognized upon a subsequent sale or other disposition of the foreign currency. Such foreign currency gain or loss, if any, will be U.S.-source ordinary income or loss.

Dividends received by most U.S. Holders will constitute foreign-source “passive category” income (“general category income” for certain U.S. Holders) for U.S. foreign tax credit purposes. Subject to limitations under U.S. federal income tax law concerning credits or deductions for foreign taxes and certain exceptions for short-term and hedged positions, a Luxembourg withholding tax imposed on dividends described above under “Material Luxembourg Tax Considerations for Holders of Shares—Tax regime applicable to distributions—Withholding tax” would be treated as a foreign income tax eligible for credit against a U.S. Holder’s U.S. federal income tax liability (or at a U.S. Holder’s election, may be deducted in computing taxable income if the U.S. Holder has elected to deduct all foreign income taxes for the taxable year). Special limitations on foreign tax credits apply to dividends subject to the preferential rate of taxation for qualified dividends. The rules with respect to foreign tax credits are complex and U.S. Holders are urged to consult their independent tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Taxation of Capital Gains

Gain or loss realized by a U.S. Holder on the sale, exchange or other taxable disposition of common shares will be subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the amount realized (including the gross amount of the proceeds before the deduction of any foreign tax) on the sale or other taxable disposition and such U.S. Holder’s adjusted tax basis in the common shares. Capital gains of certain non-corporate U.S. Holders, including individuals, derived with respect to capital assets held for more than one year generally are eligible for various reduced rates of taxation. The deductibility of capital losses is subject to limitations under the Code.

Capital gain or loss, if any, realized by a U.S. Holder on the sale, exchange or other taxable disposition of a common share generally will be treated as U.S. source income or loss for U.S. foreign tax credit purposes. Consequently, in the case of a disposition of a share that is subject to Luxembourg or other foreign income tax imposed on the gain, the U.S. Holder may not be able to benefit from the foreign tax credit for that foreign income

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tax ( i.e. , because the income or loss on the disposition would be U.S. source). Alternatively, the U.S. Holder may take a deduction for the foreign income tax if such holder does not take a credit for any foreign income tax during the taxable year.

Backup Withholding and Information Reporting

In general, dividends on common shares, and payments of the proceeds of a sale, exchange or other taxable disposition of common shares, paid within the U.S. or through certain U.S. related financial intermediaries to a U.S. Holder are subject to information reporting and may be subject to backup withholding unless the holder is an exempt recipient or, in the case of backup withholding, provides an accurate taxpayer identification number and certifies under penalty of perjury that the holder is a U.S. person and is not subject to backup withholding.

Backup withholding is not an additional tax. Generally, you may obtain a refund of any amounts withheld under the backup withholding rules that exceed your U.S. federal income tax liability by timely filing a refund claim with the IRS. The amount of any backup withholding withheld from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Recently enacted legislation requires certain U.S. Holders to report to the IRS information with respect to their investment in certain “foreign financial assets,” including our common shares, not held through a custodial account with a U.S. financial institution. Investors who fail to report this required information could become subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors regarding the possible implications of this new legislation on their investment in our common shares.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

We are required to file annual and special reports and other information with the SEC. You may read and copy any documents filed by the Company at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website at http://www.sec.gov which contains reports and other information regarding registrants that file electronically with the SEC.

I. SUBSIDIARY INFORMATION

Not applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to commodity price and interest rate risks, primarily related to our crop production activities and changes in exchange rates and interest rates. We manage our exposure to these risks through the use of various financial instruments, none of which are entered into for trading purposes. We have established policies and procedures governing the use of financial instruments, specifically as they relate to the type and volume of such financial instruments. Our use of financial derivative instruments is associated with our core business and is regulated by internal control policies. For further information on our market risks, please see Note 3 to our consolidated financial statements.

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Item 12. Description of Securities Other than Equity Securities

A. DEBT SECURITIES

Not applicable.

B. WARRANTS AND RIGHTS

Not applicable.

C. OTHER SECURITIES

Not applicable.

D. AMERICAN DEPOSITORY SHARES

Not applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15. Controls and Procedures

a) Disclosure Controls and Procedures

Our company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, of the effectiveness of our disclosure controls and procedures as of December 31, 2011. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on this evaluation, our company’s Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of December 31, 2011.

b) Management’s Annual Report on Internal Control over Financial Reporting

The Company’s Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer that: (i) pertains to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements for external reporting in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of the Company’s management and directors; and (iii) provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedure may deteriorate. The Company, with the participation of its Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011.

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We assessed the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2011. In making this assessment, management used the criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, the Company’s management has determined that the Company’s internal control over financial reporting was effective as of December 31, 2011.

c) Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting as the Company has not been subject to the requirements of section 13(a) or 15(d) of the Exchange Act for a period of at least twelve calendar months as of December 31, 2011.

d) Changes in internal control over financial reporting

As required by Rule 13a-15(d), under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the period covered since the last report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on this evaluation, it has been determined that there has been no change during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16A. Audit Committee Financial Expert

Our audit committee consists of three independent directors: Mr. Plínio Musetti, Mr. Mark Schachter and Mr. Julio Moura Neto. Our board of directors has determined that Mr. Mark Schachter has the attributes of an “audit committee financial expert” and is independent within the meaning of this Item 16A and satisfies the financial literacy requirements of the NYSE.

Item 16B. Code of Ethics

We have adopted a code of ethics and business conduct that applies to our directors, executive officers and all employees. The text of our code of ethics is posted on our web site at: www.adecoagro.com .

Item 16C. Principal Accountant Fees and Services

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by PriceWaterhouse & Co. S.R.L. (“PwC Argentina”), Buenos Aires, Argentina, a member firm of PricewaterhouseCoopers International Limited Network, an independent registered accounting firm and our principal external auditors, for the periods indicated. Except as set forth below, we did not pay any other fees to our auditors during the periods indicated below.


	For the year ended December 31,
	(in thousands of $)
	2011		2010
Audit Fees (1)		1,381		705
Audit- Related Fees (2)		—		1,444
Total		1,381		2,149

(1)	“Audit fees” means the aggregate fees billed for professional services rendered by our principal auditors for the audit of our annual financial statements.

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(2)	“Audit-related fees” represents aggregate fees billed for professional services rendered by our principal auditors for the assurance and related services, as well as in connection with audit related services for SEC or other regulatory filings, including the IPO.

Audit Committee Approval Policies and Procedures

The Audit Committee has adopted pre-approval policies and procedures requiring that all audit and non-audit services performed by our independent auditors must be pre-approved by the Audit Committee. The Audit Committee annually reviews and pre-approves the services that may be provided by the independent auditors without obtaining specific pre-approval from the Audit Committee. Any service proposals submitted by external auditors that are not pre-approved services need to be discussed and approved by the Audit Committee during its meetings. Once the proposed service is approved, we or our subsidiaries formalize the engagement of services.

The Audit Committee or its Chairman, or any member of the Audit Committee to whom such authority is delegated, may approve in advance any permitted audit or permited non-audit services and fees up to a predetermined amount. The Audit Committee is authorized to establish other policies and procedures for the pre-approval of such services and fees. The Audit Committee approved all of the non-audit services described above and determined that the provision of such services is compatible with maintaining the independence of PwC Argentina.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

Item 16F. Change in Registrant’s Certifying Accountant

During the years ended December 31, 2010 and 2011 and through the date of this annual report, the principal independent accountant engaged to audit our financial statements, PwC Argentina, has not resigned, indicated that it has declined to stand for re-election after the completion of its current audit or been dismissed. For each of the years ended December 31, 2010 and 2011, PwC Argentina has not expressed reliance on another accountant or accounting firm in its report on our audited annual financial statements for such periods.

During the years ended December 31, 2010 and 2011 and through the date of this annual report, we have not engaged a new independent accountant as either the principal accountant to audit our consolidated financial statements, or as an independent accountant to audit a significant subsidiary and on whom the principal accountant is expected to express reliance in its report.

Item 16G. Corporate Governance

Our corporate governance practices are governed by Luxembourg law (particularly the law of August 10th, 1915 on commercial companies) and our Articles of Association. As a Luxembourg company listed on the NYSE, we are not required to comply with all of the corporate governance listing standards of the NYSE. We, however, believe that our corporate governance practices meet or exceed, in all material respects, the corporate governance standards that are generally required for controlled companies by the NYSE. The following is a summary of the significant ways that our corporate governance practices differ from the corporate governance standards required for controlled companies by the NYSE (provided that our corporate governance practices may differ in non-material ways from the standards required by the NYSE that are not detailed here):

Non-management Directors’ Meetings

Under NYSE standards, non-management directors must meet at regularly scheduled executive sessions without management present and, if such group includes directors who are not independent, a meeting should be scheduled once per year including only independent directors. Luxembourg law does not require holding of such meetings. For additional information, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”

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Communication with Non-Management Directors

NYSE-listed companies are required to provide a method for interested parties to communicate directly with the non-management directors as a group. Shareholders may send communications to the Company’s non-management directors by writing to Mr. Plínio Musetti at Rua Amauri, 255 - 17th Floor, Jardim Europa, São Paulo, SP 01448-000, Brazil, telephone: (5511) 3035-1588. Communications will be referred to the Presiding Director for appropriate action. The status of all outstanding concerns addressed to the Presiding Director will be reported to the board of directors as appropriate.

Audit Committee

Under NYSE standards, listed U.S. companies are required to have an audit committee composed of independent directors that satisfies the requirements of Rule 10A-3 promulgated under the Exchange Act of 1934. Our Articles of Association provide that the board of directors may set up an audit committee. The board of directors has set up an Audit Committee and has appointed Mr. Plínio Musetti, Mr. Mark Schachter and Mr. Julio Moura Neto as members of its audit committee. In accordance with NYSE standards, we have an audit committee entirely composed of independent directors. For additional information, see “Item 6. Directors, Senior Management and Employees—C. Board Practices”.

Under NYSE standards, all audit committee members of listed U.S. companies are required to be financially literate or must acquire such financial knowledge within a reasonable period and at least one of its members shall have experience in accounting or financial administration. In addition, if a member of the audit committee is simultaneously a member of the audit committee of more than three public companies, and the listed company does not limit the number of audit committees on which its members may serve, then in each case the board must determine whether the simultaneous service would prevent such member from effectively serving on the listed company’s audit committee and shall publicly disclose its decision. No comparable provisions on audit committee membership exist under Luxembourg law or our articles of association.

Standards for Evaluating Director Independence

Under NYSE standards, the board is required, on a case by case basis, to express an opinion with regard to the independence or lack of independence of each individual director. Neither Luxembourg law nor our Articles of Association require the board to express such an opinion. In addition, the definition of “independent” under the rules of the NYSE differs in some non-material respects from the definition contained in our Articles of Association.

Audit Committee Responsibilities

Pursuant to our Articles of Association, the audit committee shall assist the board of directors in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, including periodically reporting to the board of directors on its activity and the adequacy of the Company’s system of internal controls over financial reporting. As per the audit committee charter, as amended, the audit committee shall make recommendations for the appointment, compensation, retention and oversight of, and consider the independence of, the company’s external auditors. The audit committee is required to review material transactions (as defined by the Articles of Association) between us or our subsidiaries with related parties and also perform the other duties entrusted to it by the board.

The NYSE requires certain matters to be set forth in the audit committee charter of U.S. listed companies. Our audit committee charter provides for many of the responsibilities that are expected from such bodies under the NYSE standard; however, due to our equity structure and holding company nature, the charter does not contain all such responsibilities, including provisions related to setting hiring policies for employees or former employees of independent auditors.

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Shareholder Voting on Equity Compensation Plans

Under NYSE standards, shareholders of U.S. listed companies must be given the opportunity to vote on equity compensation plans and material revisions thereto, except for employment inducement awards, certain grants, plans and amendments in the context of mergers and acquisitions, and certain specific types of plans. Neither Luxembourg corporate law nor our articles of incorporation require shareholder approval of equity based compensation plans. Luxembourg law only requires approval of the board of directors for the adoption of equity based compensation plans.

Disclosure of Corporate Governance Guidelines

NYSE-listed companies must adopt and disclose corporate governance guidelines. Neither Luxembourg law nor our Articles of Association require the adoption or disclosure of corporate governance guidelines. Our board of directors follows corporate governance guidelines consistent with our equity structure and holding company nature, but we have not codified them and therefore do not disclose them on our website.

Code of Business Conduct and Ethics

Under NYSE standards, listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. Neither Luxembourg law nor our Articles of Association require the adoption or disclosure of such a code of conduct.

Chief Executive Officer Certification

A chief executive officer of a U.S. company listed on NYSE must annually certify that he or she is not aware of any violation by the company of NYSE corporate governance standards. In accordance with NYSE rules applicable to foreign private issuers, our chief executive officer is not required to provide NYSE with this annual compliance certification. However, in accordance with NYSE rules applicable to all listed companies, our chief executive officer must promptly notify NYSE in writing after any of our executive officers becomes aware of any noncompliance with any applicable provision of NYSE’s corporate governance standards. In addition, we must submit an executed written affirmation annually and an interim written affirmation each time a change occurs to the board or the audit committee.

Item 16H. Mine Safety Disclosure

Not applicable.

PART III

Item 17. Financial Statements

We have responded to Item 18 in lieu of responding to this item.

Item 18. Financial Statements.

See pages F-1 through F-90 of this annual report.

Item 19. Exhibits


Exhibit Number		Description

1.1		Amended and Restated Articles of Association of Adecoagro S.A. dated January 17, 2012, previously filed as exhibit 4.1 to the Company’s registration statement on Form S-8, filed with the Securities and Exchange Commission on January 23, 2012 and incorporated by reference herein.

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4.1		Loan Agreement, dated December 19, 2008, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.1 to the Company’s registration statement on Form F-1 (File No. 333-171683) filed with the Securities and Exchange Commission on January 13, 2011 (“Form F-1”) and incorporated by reference herein.

4.2		First Amendment Offer to Loan Agreement, dated February 20, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.2 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.3		Second Amendment Offer to Loan Agreement, dated December 29, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.3 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.4		Third Waiver Request to Loan Agreement, dated March 30, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.4 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.5		Fourth Amendment Offer to Loan Agreement, dated May 14, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.5 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.6		Fifth Amendment Offer to Loan Agreement, dated November 8, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.37 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.7		Amendment Offer to Loan Agreement, dated March 24, 2011, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank.

4.8		Amendment Offer 02/2011 to Loan Agreement, dated November 9, 2011, between Adeco Agropecuaria S.A., Pilagá S.A. and Inter-American Development Bank.

4.9		Senior Secured Loan Facility, dated July 28, 2010, between Angélica Agroenergia Ltda. and Deutsche Bank AG, London Branch, previously filed as exhibit 10.6 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.10		Export Prepayment Financing Agreement, dated July 13, 2007, between Angélica Agroenergia Ltda. and a syndicate of banks, previously filed as exhibit 10.7 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.11		First Amendment to Export Prepayment Financing Agreement, dated March 4, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks, previously filed as exhibit 10.8 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.12		English translation of Financing Agreement through BNDES Repasse, dated February 1, 2008, between Adeco Brasil Participações S.A. and a syndicate of banks, previously filed as exhibit 10.9 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.13		English translation of First Amendment to Financing Agreement BNDES Repasse, dated July 1, 2008, between Angélica Agroenergia Ltda. and a syndicate of banks, previously filed as exhibit 10.10 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.14		English translation of Second Amendment to Financing Agreement BNDES Repasse, dated March 4, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks, previously filed as exhibit 10.11 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

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4.15		English translation of Credit Facility, dated July 30, 2010, between Angélica Agroenergia Ltda. and Banco do Brasil S.A., previously filed as exhibit 10.12 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.16		Unit Issuance Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A., previously filed as exhibit 10.13 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.17		Share Purchase and Sale Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A., previously filed as exhibit 10.14 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.18		Right of First Offer Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A., previously filed as exhibit 10.15 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.19		Supply Offer Letter for milk, dated November 7, 2007, between La Lácteo S.A. and Adeco Agropecuaria S.R.L., previously filed as exhibit 10.16 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.20		Amendment to Supply Offer Letter for milk, dated February 1, 2010, between La Lácteo S.A. and Adeco Agropecuaria S.R.L., previously filed as exhibit 10.17 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.21		Commercial Contract for sugar, dated March 23, 2010, between Angélica Agroenergia Ltda. and Bunge International Commerce Ltd., previously filed as exhibit 10.18 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.22		Amendment to Commercial Contract for sugar, dated June 17, 2010, between Angélica Agroenergia Ltda. and Bunge International Commerce Ltd., previously filed as exhibit 10.19 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.23		English translation of Consignment Contract, dated February 19, 2000, between Molinos Ala S.A. (currently Pilagá S.R.L.) and Establecimiento Las Marías S.A.C.I.F.A., previously filed as exhibit 10.20 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.24		English translation of Sale Agreement, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A., previously filed as exhibit 10.21 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.25		English translation of Mortgage, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A., previously filed as exhibit 10.22 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.26		English translation of Reserve Power Agreement, dated February 6, 2009, between Angélica Agroenergia Ltda. and Câmara de Comercialização de Energia Elétrica, previously filed as exhibit 10.23 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.27		English translation of Energy Purchase Contract, dated January 19, 2009, between Usina Monte Alegre Ltda. and Cemig Geração e Transmissão S.A., previously filed as exhibit 10.24 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.28		English translation of Energy Distribution Contract, dated June 3, 2008 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul., previously filed as exhibit 10.25 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

162



4.29		English translation of First Amendment to Energy Distribution Contract, dated April 6, 2009 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul., previously filed as exhibit 10.26 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.30		English translation of Second Amendment to Energy Distribution Contract, dated May 1, 2010 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul., previously filed as exhibit 10.27 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.31		English translation of Sale Agreement for cattle, dated December 14, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A., previously filed as exhibit 10.29 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.32		English translation of First Amendment to Sale Agreement for cattle, dated December 16, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A., previously filed as exhibit 10.30 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.33		English translation of Second Amendment to Sale Agreement for cattle, dated December 17, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A., previously filed as exhibit 10.31 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.34		English translation of Stock Purchase Agreement, dated August 23, 2010, between Kadesh Hispania, S.L., Leterton España, S.L. and Dinaluca S.A., previously filed as exhibit 10.32 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.35		Form of Registration Rights Agreement between Adecoagro S.A. and certain shareholders, previously filed as exhibit 10.33 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.36		Second Amendment to Export Prepayment Financing Agreement, dated December 14, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks, previously filed as exhibit 10.38 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.37		English translation of Third Amendment to Financing Agreement BNDES Repasse, dated December 14, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks, previously filed as exhibit 10.39 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.38		English translation of First Amendment to Credit Facility, dated December 18, 2010, between Angélica Agroenergia Ltda. and Banco do Brasil S.A., previously filed as exhibit 10.40 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.39		Stock Subscription Agreement, dated January 6, 2011, between Adecoagro S.A. and Al Gharrafa Investment Company, previously filed as exhibit 10.41 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.40		English translation of Promise to Sell, dated December 21, 2010, between Kelizer S.C.A. and Las Mesetas S.A., previously filed as exhibit 4.40 to the Company’s Annual Report on Form 20- for fiscal year-end 2010 and incorporated by reference herein.

4.41		English translation of Stock Purchase Agreement, dated August 18, 2011, between Kadesh Hispania, S.L., Leterton España, S.L. and Compañía Agroforestal de Servicios y Mandatos S.A.

4.42		English translation of Stock Purchase Agreement, dated August 19, 2011, between Kadesh Hispania, S.L., Leterton España, S.L. and Simoneta S.A.

8.1		Subsidiaries of Adecoagro S.A. as of December 31, 2011.

163



12.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

12.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

13.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

15.1		Consent of Cushman & Wakefield Argentina S.A.

15.2		Consent of Price Waterhouse & Co. S.R.L.

164

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Adecoagro S.A.

By /s/ Mariano Bosch

Name: Mariano Bosch

Title: Chief Executive Officer

Date: April 27, 2012

165

Adecoagro S.A.

Consolidated Financial Statements as of and for the years ended December 31, 2011, 2010 and 2009

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders of

Adecoagro S.A.

We have audited the accompanying consolidated statements of financial position of Adecoagro S.A. and its subsidiaries as of December 31, 2011, 2010 and 2009, and the related consolidated statements of income and comprehensive income, of changes in shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Adecoagro S.A. and its subsidiaries at December 31, 2011, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

As discussed in Note 2.3 to the consolidated financial statements, the Company changed the manner in which presents interest paid in the statement of cash flows in 2011.

Buenos Aires, Argentina

March 27, 2012


PRICE WATERHOUSE & CO. S.R.L.

by		/s/ Mariano C. Tomatis
		Mariano C. Tomatis (Partner)

F-2

Legal information

Denomination: Adecoagro S.A.

Legal address: 13-15 Avenue de la Liberté, L-1931, Luxembourg

RCS Luxembourg : B153681

Company activity: Agricultural and agro-industrial

Date of registration: June 11, 2011

Expiration of company charter: No term defined

Number of register: B153.681

Capital stock: 120,533,415 common shares (of which 2,370 are treasury shares)

Majority shareholder: Morgan Stanley & Co. LLC FBO Quantum Partners LP

Legal address: 1300 Thames St. 5 ^th FL, Baltimore MD 21231-3495, United States of America

Parent company activity: Investing

Capital stock: 25,384,049 common shares

F - 3

Adecoagro S.A.

Consolidated Statements of Financial Position

as of December 31, 2011, 2010 and 2009

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)


	Note	2011			2010		2009
					(as revised)		(as revised)
					(Note 2.3)		(Note 2.3)
ASSETS
Non-Current Assets
Property, plant and equipment, net	6		759,696			751,992		682,878
Investment property	7		27,883			21,417		21,246
Intangible assets, net	8		36,755			28,653		21,859
Biological assets	9		187,973			133,593		190,714
Investments in joint ventures	10		4,299			6,271		6,506
Deferred income tax assets	21		37,081			47,056		15,656
Trade and other receivables, net	11,12		15,746			30,752		22,065
Other assets			1,408			26		34

Total Non-Current Assets			1,070,841			1,019,760		960,958

Current Assets
Biological assets	9		51,627			53,164		39,740
Inventories	13		96,147			57,170		57,902
Trade and other receivables, net	11,12		141,181			119,205		106,212
Derivative financial instruments	11		10,353			876		99
Cash and cash equivalents	11,14		330,546			70,269		74,806

Total Current Assets			629,854			300,684		278,759

TOTAL ASSETS			1,700,695			1,320,444		1,239,717

SHAREHOLDERS EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital	16		180,800			120,000		120,000
Share premium	16		926,005			563,343		563,343
Cumulative translation adjustment			(99,202	)		11,273		2,516
Equity-settled compensation			15,306			13,659		11,914
Other reserves			(526	)		—		—
Treasury shares			(4	)		—		—
Retained earnings			57,497			257		44,161

Equity attributable to equity holders of the parent			1,079,876			708,532		741,934

Non controlling interest			14,993			14,570		15,222

TOTAL SHAREHOLDERS EQUITY			1,094,869			723,102		757,156

LIABILITIES
Non-Current Liabilities
Trade and other payables	11,19		8,418			11,785		6,822
Borrowings	11,20		203,409			250,672		203,134
Derivative financial instruments			—			—		280
Deferred income tax liabilities	21		92,989			91,088		77,588
Payroll and social liabilities	22		1,431			1,178		1,106
Provisions for other liabilities	23		3,358			4,606		3,326

Total Non-Current Liabilities			309,605			359,329		292,256

Current Liabilities
Trade and other payables	11,19		114,020			69,236		62,098
Current income tax liabilities			872			978		222
Payroll and social liabilities	22		17,010			15,478		10,079
Borrowings	11,20		157,296			138,800		103,647
Derivative financial instruments	11		6,054			8,920		12,607
Provisions for other liabilities	23		969			4,601		1,652

Total Current Liabilities			296,221			238,013		190,305

TOTAL LIABILITIES			605,826			597,342		482,561

TOTAL SHAREHOLDERS EQUITY AND LIABILITIES			1,700,695			1,320,444		1,239,717

The accompanying notes are an integral part of these consolidated financial statements.

F - 4

Adecoagro S.A.

Consolidated Statements of Income

for the years ended December 31, 2011, 2010 and 2009

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)


	Note	2011			2010			2009
Sales of manufactured products and services rendered	24		365,857			294,529			183,386
Cost of manufactured products sold and services rendered	25		(237,404	)		(219,201	)		(180,083	)

Gross Profit from Manufacturing Activities			128,453			75,328			3,303

Sales of agricultural produce and biological assets	24		182,227			131,738			130,217
Cost of agricultural produce sold and direct agricultural selling expenses	25		(182,227	)		(131,738	)		(130,217	)
Initial recognition and changes in fair value of biological assets and agricultural produce			86,811			(30,528	)		71,668
Changes in net realizable value of agricultural produce after harvest			10,523			7,999			12,787

Gross Profit / (Loss) from Agricultural Activities			97,334			(22,529	)		84,455

Margin on Manufacturing and Agricultural Activities Before Operating Expenses			225,787			52,799			87,758

General and administrative expenses	25		(65,142	)		(56,562	)		(52,393	)
Selling expenses	25		(59,404	)		(52,528	)		(31,169	)
Other operating income, net	27		24,581			18,224			13,071
Share of loss of joint venture	10		(1,034	)		(50	)		(294	)

Profit / (Loss) from Operations Before Financing and Taxation			124,788			(38,117	)		16,973

Finance income	28		9,132			16,559			11,553
Finance costs	28		(62,341	)		(39,496	)		(34,216	)

Financial results, net	28		(53,209	)		(22,937	)		(22,663	)

Profit / (Loss) Before Income Tax			71,579			(61,054	)		(5,690	)

Income tax (expense)/ benefit	21		(14,662	)		16,263			5,415

Profit / (Loss) for the Year			56,917			(44,791	)		(275	)

Attributable to:
Equity holders of the parent			56,018			(43,904	)		(260	)
Non controlling interest			899			(887	)		(15	)
Earnings / (loss) per share attributable to the equity holders of the parent during the year:
Basic	29		0.4787			(0.5488	)		(0.0033	)
Diluted	29		0.4753			(0.5488	)		(0.0033	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 5

Adecoagro S.A.

Consolidated Statements of Comprehensive Income

for the years ended December 31, 2011, 2010 and 2009

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)


	2011			2010			2009
Profit/ (loss) for the year		56,917			(44,791	)		(275	)
Other comprehensive income:
Exchange differences on translating foreign operations		(112,071	)		8,956			91,293

Other comprehensive (loss) / income for the year		(112,071	)		8,956			91,293

Total comprehensive (loss) / income for the year		(55,154	)		(35,835	)		91,018

Attributable to:
Equity holders of the parent		(54,592	)		(35,147	)		89,215
Non controlling interest		(562	)		(688	)		1,803

The accompanying notes are an integral part of these consolidated financial statements.

F - 6

Adecoagro S.A.

Consolidated Statements of Changes in Shareholders’ Equity

for the years ended December 31, 2011, 2010 and 2009

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)


	Attributable to equity holders of the parent																			Non Controlling Interest			Total Shareholders’ Equity
	Share Capital () (Note 16)*		Share Premium (Note 16)		Cumulative Translation Adjustment			Equity-settled Compensation		Other reserves		Treasury shares (Note 17)		Retained Earnings			Subtotal			Non Controlling Interest			Total Shareholders’ Equity
Balance at January 1, 2009		108,108		507,516		(87,978	)		9,092		—		—		44,421			581,159			57,269			638,428

Loss the year		—		—		—			—		—		—		(260	)		(260	)		(15	)		(275	)
Other comprehensive income for the year		—		—		89,475			—		—		—		—			89,475			1,818			91,293

Total comprehensive income for the year		—		—		89,475			—		—		—		(260	)		89,215			1,803			91,018
Employee share options granted (Note 17)		—		—		—			2,822		—		—		—			2,822			58			2,880
Capital contribution		11,892		55,827		—			—		—		—		—			67,719			1,382			69,101
Disposal of subsidiary		—		—		1,019			—		—		—		—			1,019			21			1,040
Subsidiaries spin-off		—		—		—			—		—		—		—			—			(45,311	)		(45,311	)

Balance at December 31, 2009		120,000		563,343		2,516			11,914		—		—		44,161			741,934			15,222			757,156

Loss the year		—		—		—			—		—		—		(43,904	)		(43,904	)		(887	)		(44,791	)
Other comprehensive income for the year		—		—		8,757			—		—		—		—			8,757			199			8,956

Total comprehensive loss for the year		—		—		8,757			—		—		—		(43,904	)		(35,147	)		(688	)		(35,835	)
Employee share options granted (Note 17)		—		—		—			1,745		—		—		—			1,745			36			1,781

Balance at December 31, 2010		120,000		563,343		11,273			13,659		—		—		257			708,532			14,570			723,102

The accompanying notes are an integral part of these consolidated financial statements.

F - 7

Adecoagro S.A.

Consolidated Statements of Changes in Shareholders’ Equity

for the years ended December 31, 2011, 2010 and 2009

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)


	Attributable to equity holders of the parent																						Non Controlling Interest			Total Shareholders’ Equity
	Share Capital () (Note 16)*		Share Premium (Note 16)			Cumulative Translation Adjustment			Equity-settled Compensation			Other reserves			Treasury shares (Note 17)			Retained Earnings		Subtotal			Non Controlling Interest			Total Shareholders’ Equity
Balance at December 31, 2010		120,000		563,343			11,273			13,659			—			—			257		708,532			14,570			723,102

Profit the year		—		—			—			—			—			—			56,018		56,018			899			56,917
Other comprehensive loss for the year		—		—			(110,610	)		—			—			—			—		(110,610	)		(1,461	)		(112,071	)

Total comprehensive loss for the year		—		—			(110,610	)		—			—			—			56,018		(54,592	)		(562	)		(55,154	)
Net proceeds from IPO and Private placement (Note 16)		60,104		362,926			—			—			—			—			—		423,030			—			423,030
Employee share options (Note 17):
- Granted		—		—			—			874			—			—			—		874			14			888
- Exercised		55		271			—			(110	)		—			—			—		216			(2	)		214
- Forfeited		—		—			—			(1,122	)		—			—			1,122		—			—			—
Restricted shares (Note 17):
- Issued		641		—			—			—			(632	)		—			—		9			(9	)		—
- Granted		—		—			—			2,751			—			—			—		2,751			38			2,789
- Exercised		—		746			—			(838	)		102			—			—		10			(10	)		—
- Forfeited		—		—			—			—			4			(4	)		—		—			—			—
Acquisition of non controlling interest (**)		—		(1,281	)		135			92			—			—			100		(954	)		954			—

Balance at December 31, 2011		180,800		926,005			(99,202	)		15,306			(526	)		(4	)		57,497		1,079,876			14,993			1,094,869

(*)

On January 24, 2011 shareholders approved a reverse stock split whereby every three shares of capital stock were converted into two shares, changing the nominal value of common shares from US$ 1 to US$ 1.5. Consequently, share capital as from January 24, 2011 totaled 80 million shares that represent US$ 120 million (see Note 1).

(**)	As consequence of new contributions made in International Farmland Holdings LP fully attributable to the Group, non controlling interest was reduced from 2% to 1.36% (Note 16).

The accompanying notes are an integral part of these consolidated financial statements.

F - 8

Adecoagro S.A.

Consolidated Statements of Cash Flows

for the years ended December 31, 2011, 2010 and 2009

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)


	Note		2011			2010			2009
						(as revised) (Note 2.3)			(as revised) (Note 2.3)
Cash flows from operating activities:
Profit / (loss) for the year				56,917			(44,791	)		(275	)
Adjustments for :
Income tax expense / (benefit)		21		14,662			(16,263	)		(5,415	)
Depreciation		6		33,847			37,217			30,059
Amortization		8		337			346			297
Gain from the disposal of other property items		27		(394	)		(847	)		(337	)
Gain from disposal of farmlands		27		(8,832	)		(20,837	)		—
Gain from the sale of subsidiaries		27		—			—			(18,839	)
Equity settled shared-based compensation granted		26		3,677			1,781			2,880
(Gain) / loss from derivative financial instruments and forwards		27,28		(12,084	)		(1,189	)		7,486
Interest expense, net		28		33,006			33,028			27,750
Initial recognition and changes in fair value of non harvested biological assets (unrealized)		5		(17,136	)		72,374			(55,841	)
Changes in net realizable value of agricultural produce after harvest (unrealized)		5		(1,816	)		(1,527	)		(127	)
Provision and allowances				(3,147	)		4,980			4,013
Share of loss from joint venture		10		1,034			50			294
Foreign exchange losses / (gains), net		28		12,683			(7,324	)		(10,903	)
Changes in operating assets and liabilities:
(Increase) / decrease in trade and other receivables				(15,850	)		3,584			(30,388	)
(Increase) / decrease in inventories				(49,776	)		2,259			3,442
Decrease in biological assets				6,745			7,171			20,389
(Increase) / decrease in other assets				(1,382	)		8			(5	)
(Decrease) / increase in derivative financial instruments				(248	)		(3,554	)		3,162
Increase/ (decrease) in trade and other payables				19,855			(4,221	)		11,508
Increase in payroll and social security liabilities				1,785			5,470			4,327
(Decrease) / increase in provisions for other liabilities				(641	)		319			(165	)

Net cash generated from/ (used in) operating activities before interest and taxes paid				73,242			68,034			(6,688	)
Income tax paid				(16,656	)		(7,813	)		(13,322	)

Net cash generated from / (used in) operating activities				56,586			60,221			(20,010	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 9

Adecoagro S.A.

Consolidated Statements of Cash Flows (Continued)

for the years ended December 31, 2011, 2010 and 2009

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)


	Note		2011			2010			2009
						(as revised) (Note 2.3)			(as revised) (Note 2.3)
Cash flows from investing activities:
Acquisition of subsidiaries, net of cash acquired		31		(11,617	)		(7,872	)		—
Purchases of property, plant and equipment		6		(90,422	)		(87,679	)		(97,817	)
Purchases of intangible assets		8		(195	)		(33	)		(315	)
Purchase of cattle and planting cost of non current biological assets				(63,074	)		(35,060	)		(40,492	)
Interest received		28		8,019			1,341			472
Proceeds from sale of property, plant and equipment				2,611			2,103			7,341
Proceeds from sale of farmlands		15		20,532			10,000			—
Proceeds from disposal of subsidiaries		15		—			5,475			16,425
Payment of escrows arising on subsidiaries acquired				(6,347	)		—			—

Net cash used in investing activities				(140,493	)		(111,725	)		(114,386	)

Cash flows from financing activities:
Net proceeds from IPO and Private placement		16		421,778			—			—
Capital contributions from shareholders				—			—			69,101
Proceeds from equity settled shared-based compensation exercised				214			—			—
Proceeds from long-term borrowings		20		34,980			98,581			80,000
Payments of long-term borrowings		20		(82,244	)		(31,202	)		—
Interest paid		2.3		(33,481	)		(33,283	)		(25,797	)
Net increase in short-term borrowings		20		19,545			12,449			6,946

Net cash generated from financing activities				360,792			46,545			130,250

Net increase / (decrease) in cash and cash equivalents				276,885			(4,960	)		(4,146	)

Cash and cash equivalents at beginning of year				70,269			74,806			93,360
Effect of exchange rate changes on cash and cash equivalents				(16,608	)		423			(14,408	)

Cash and cash equivalents at end of year				330,546			70,269			74,806

The accompanying notes are an integral part of these consolidated financial statements.

F - 10

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

1.	General information and Reorganization

Adecoagro S.A. (the “Company” or “Adecoagro”) is a holding company primarily engaged through its operating subsidiaries in agricultural and agro-industrial activities. The Company and its operating subsidiaries are collectively referred to hereinafter as the “Group”. These activities are carried out through three major lines of business, namely, Farming; Sugar, Ethanol and Energy; and Land Transformation. Farming is further comprised of five reportable segments, which are described in detail in Note 5 to these consolidated financial statements.

The Group was established in 2002 and has subsequently grown significantly both organically and through acquisitions. The Group currently has operations in Argentina, Brazil and Uruguay. See Note 32 for a description of the Group companies.

The Company is the Group’s ultimate parent company and is a Societe Anonyme corporation incorporated and domiciled in the Grand Duchy of Luxembourg. The address of its registered office is 13-15 Avenue de la Liberté, L-1931, Luxembourg.

These consolidated financial statements have been approved for issue by the Board of Directors on March 27, 2012.

Reorganization

On October 30, 2010, the members of International Farmland Holdings LLC (“IFH”) completed the contribution of 98% of their respective interests in IFH on a pro rata basis to a newly formed entity, Adecoagro, as contribution in kind in exchange for 100% of the common shares of Adecoagro outstanding as of that date (hereinafter referred to as the “Reorganization”).

This Reorganization was done, among other things, to facilitate the initial public offering of the Group, which occurred on January 28, 2011. Adecoagro had no prior assets, holdings or operations.

The Reorganization did not qualify as a business combination under common control; rather, it was a simple Reorganization of the capital of IFH, the existing entity. Consequently, it has been retroactively reflected in the consolidated financial statements of Adecoagro in the period in which the Reorganization occurred. Therefore, the consolidated financial statements of Adecoagro as of and for the years ended December 31, 2010 and 2009 have been presented using the historical values stemming from the consolidated financial statements of IFH, although the issued share capital reflects that of Adecoagro as of those dates.

On January 28, 2011 the Company successfully completed an initial public offering and a private placement (see Note 16).

2.	Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1.

Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC). All IFRS issued by the IASB, effective at the time of preparing these consolidated financial statements have been applied.

The accompanying notes are an integral part of these consolidated financial statements.

F - 11

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.1.

Basis of preparation (continued)

The financial year corresponds to the calendar year. The consolidated statements of income, of changes in shareholders´ equity, of comprehensive income and of cash flows include two comparative years.

Presentation in the consolidated statement of financial position differentiates between current and non-current assets and liabilities. Assets and liabilities are regarded as current if they mature within one year or are held for sale. The consolidated financial statements are presented in United States Dollars.

The consolidated financial statements have been prepared under the historical cost convention as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and biological assets and agricultural produce at the point of harvest measured at fair value.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

(a) Standards, amendments and interpretations to existing standards effective in 2011 and adopted by the Group in 2011

There are no new standards, amendments and interpretations to existing standards that are effective for the first time for the year beginning on January 1, 2011 that would be expected to have a material impact on the Group.

(b) Standards, amendments and interpretations to existing standards that are effective in 2011 but not relevant to the Group’s operations

An amendment to IAS 32 “Financial Instruments: Presentation” was issued in October 2009. The amendment clarifies that rights issues, options and warrants denominated in a currency other than the issuer’s functional currency and offered on a pro-rata basis to all owners of the same class of equity must be classified as equity. Such rights issues have so far been accounted for as liabilities. The change relates only to issues of a fixed number of shares at a fixed foreign-currency exercise price. The amendment is to be applied for annual periods beginning on or after February 1, 2010. Earlier application is permitted. The amendment was effective for the Group’s year ended December 31, 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share.

The IASB issued IAS 24 (revised) “Related Party Disclosures” in November 2009. The revisions provide a partial exemption from the disclosure requirements for government-related entities and simplify the definition of a related party. The revisions are applicable for accounting periods beginning on or after 1 January 2011. Earlier application is permitted. The revised standard was effective for the Group’s year ended December 31, 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share.

In November 2009, the IFRIC issued IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”. The interpretation addresses the accounting treatment in cases where a company settles all or part of a financial liability by issuing equity instruments to the creditor. It is to be applied for annual periods beginning on or after July 1, 2010. Earlier application is permitted. The amendment was effective for the Group’s year ended December 31, 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share.

The accompanying notes are an integral part of these consolidated financial statements.

F - 12

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.1.

Basis of preparation (continued)

In November 2009 amendments were issued to IFRIC 14 “IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”, an interpretation of IAS 19 “Employee Benefits”. The amendments apply when a company is subject to minimum pension plan funding requirements. They enable prepayments of the respective contributions to be recognized as an asset. The amendments are to be applied for annual periods beginning on or after January 1, 2011. Earlier application is permitted. The amendment was effective for the Group’s year ended December 31, 2011, and did not have an impact on the presentation of the Group’s financial position, results of operations or earnings per share.

On 6 May 2010, the IASB issued Improvements to IFRSs – a collection of amendments to seven IFRSs – as part of its program of annual improvements to its standards. The amendments are effective for annual periods beginning on or after July 1, 2010 and January 1, 2011 (thus effective for the Group’s year ended December 31, 2011), although entities are permitted to adopt them earlier. These amendments relate to IFRS 1 “First Time Adoption of IFRS”, IFRS 3 “Business Combination”, IFRS 7 “Financial Instruments: Disclosures”, IAS 1 “Presentation of Financial Statements”, IAS 27 “Consolidated and separate financial statements”, IAS 34 “Interim Financial Reporting” and IFRIC 13 “Customer Loyalty Programmes”. The amendments did not have a material impact on the presentation of the Group’s financial position, results of operations or earnings per share.

(c) Standards, amendments and interpretations to existing standards that are not yet effective

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after January 1, 2012 or later periods and the Group has not early adopted them:

In November 2009, the IASB issued IFRS 9 “Financial Instruments”. The standard incorporates the first part of a three-phase project to replace IAS 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 prescribes the classification and measurement of financial assets. IFRS 9 requires that financial assets are subsequently measured either “at amortized cost” or “at fair value”, depending on whether certain conditions are met. In addition, IFRS 9 permits an entity to designate an instrument, that would otherwise have been classified in the “at amortized cost” category, to be “at fair value” if that designation eliminates or significantly reduces measurement or recognition inconsistencies. The prescribed category for equity instruments is at fair value through profit or loss, however, an entity may irrevocably opt for presenting all fair value changes of equity instruments not held for trading in other comprehensive income. Only dividends received from these investments are reported in profit or loss. In October 2010, the IASB issued further additions to IFRS 9. These bring forth the guidance for derecognizing financial instruments and most of the requirements for the classification and measurement of financial liabilities currently included within IAS 39. The additions include amortized cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the statement of income, unless this creates an accounting mismatch. The remaining phases of the project, dealing with impairment of financial instruments and hedge accounting, have not yet been finalized. IFRS 9, as well as its additions, shall be applied retrospectively for annual periods beginning on or after January 1, 2013. Earlier adoption is permitted. The Group is currently analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows.

In October 2010, the IASB issued an amendment to IFRS 7 “Financial Instruments: Disclosures”. The amendment requires additional disclosures in respect of risk exposures arising from transferred financial assets. The amendment includes a requirement to disclose by class of asset the nature, carrying amount and a description of the risks and rewards of financial assets that have been transferred to another party yet remain on the entity’s statement of financial position. Disclosures are also required to enable a user to understand the amount of any associated liabilities, and the relationship between the financial assets and associated liabilities. The amendment to IFRS 7 shall be applied for annual periods beginning on or after July 1, 2011, with earlier application permitted. The amendment is not expected to have a material impact on the presentation of the Group’s results of operations, financial position or cash flows.

The accompanying notes are an integral part of these consolidated financial statements.

F - 13

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.1.

Basis of preparation (continued)

In December 2010, the IASB amended IAS 12 “Income taxes”, to introduce an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. The IASB has added another exception to the principles in IAS 12: the rebuttable presumption that investment property measured at fair value is recovered entirely by sale. This presumption is rebutted if the investment property is depreciable (for example, buildings and land held under a lease) and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale before the end of its economic life. The presumption cannot be rebutted for freehold land that is an investment property, because land can only be recovered through sale. The amendments are effective for annual periods beginning on or after January 1, 2012. The amendment is not expected to result in a change to the Group’s results to the extent it will not have investment properties measured at fair value.

On May 2011, the IASB issued IFRS 10 “Consolidated Financial Statements” which establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 replaces the consolidation requirements in SIC 12 “Consolidation - Special Purpose Entities” and IAS 27 “Consolidated and Separate Financial Statements” and is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group is the process of analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows.

On May 2011, the IASB issued IFRS 11 “Joint Arrangements” which provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. IFRS 11 is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. The Group is in the process of analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows.

On May 2011, the IASB issued IFRS 12 “Disclosure of Interests in Other Entities”. IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. The application of IFRS 12 is likely to increase the disclosures required about subsidiaries and joint arrangements.

On May 2011, the IASB issued IFRS 13 “Fair Value Measurement” which replaces the fair value measurement guidance currently dispersed across different IFRS standards with a single definition of fair value and extensive application guidance. IFRS 13 provides guidance on how to measure fair value and does not introduce new requirements for when fair value is required or permitted. It also establishes disclosure requirements to provide users of financial statements with more information about fair value measurements. IFRS 13 was developed in a joint project with the US Financial Accounting Standards Board (FASB) and the guidance in IFRS 13 is largely converged with FASB’s ASC Topic 820 Fair Value Measurement and Disclosures. IFRS 13 is effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted. The Group is in the process of analyzing this standard although it expects it will not have a material impact on the Group’s results of operations, financial position and cash flows. However, the application of IFRS 13 is likely to increase the disclosures required about fair value measurements.

The accompanying notes are an integral part of these consolidated financial statements.

F - 14

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.1.

Basis of preparation (continued)

In June 2011, the IASB issued an amendment to IAS 1 “Presentation of financial statements”. The amendment improves the consistency and clarity of the presentation of items of other comprehensive income (“OCI”). The main change is a requirement for entities to group items presented in OCI on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendment to IAS 1 shall be applied for annual periods beginning on or after 1 July 2012, with earlier application permitted. The Group is in the process of analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows.

There are no other standards, amendments or interpretations that are not yet effective that would be expected to have an impact on the Group.

2.2.

Scope of consolidation

The consolidated financial statements include the results of the Company and all of its subsidiaries from the date that control commences to the date that control ceases. They also include the Group’s share of the after-tax results of its jointly-controlled entities on an equity-accounted basis from the point at which joint control commences, to the date that it ceases.

(a) Subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The Group accounts for acquisitions using the purchase method of accounting as prescribed by IFRS 3R. Consideration is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of consideration over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of income under the line item “Excess of fair value of net assets acquired over cost” (negative goodwill). (See Note 31 for details).

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Transactions and non controlling interest

Non controlling interest is shown as a component of equity in the statement of financial position and the share of profit attributable to non controlling interest is shown as a component of profit or loss for the year in the consolidated statement of income.

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

The accompanying notes are an integral part of these consolidated financial statements.

F - 15

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.2.

Scope of consolidation (continued)

(c) Joint ventures

An entity is regarded as a joint venture if the Group has joint control over its operating and financial policies. Joint ventures are accounted for under the equity method where the Group’s statement of income includes its share of their profits and losses and the Group’s statement of financial position includes its share of their net assets.

2.3.

Revision of previously issued financial statements

In June 2011, the Group changed its policy for presenting certain biological assets, mainly sugarcane and coffee plantations, from current assets to non-current assets. The Group effected this reclassification in its statement of financial position as of June 30, 2011. Current and non-current assets were retroactively restated as a result of this change. The Group considers that classification of these biological assets as non-current is more appropriate based on their nature, as capable of sustaining regular harvests in the long-term. Classification as non-current is also consistent with comparable from peer companies in the industry. This reclassification has not affected the total equity, statements of income, statements of cash flows and related notes other than Note 9 of the Group for any of the periods presented.

Additionally, during the year ended December 31, 2011, the Group revised its consolidated statements of financial position for the years ended December 31, 2010 and 2009, to properly reflect the classification of deferred tax assets and deferred tax liabilities on a net basis, which were originally presented without offsetting of balances within the same tax jurisdiction. The impact of this revision was a reduction of total assets and total liabilities for an amount of US$ 20.4 million and US$ 29.5 million, respectively; which represents approximately 1.5% and 2.3% of total assets and 3.3% and 5.8% of total liabilities as of those dates. This revision has not affected equity, statements of income and statements of cash flows. Also, Note 21 has not been affected since it is presented on a gross basis for all periods presented. The Group concluded that this was not material to the consolidated statements of financial position for the years ended December 31, 2010 and 2009.

The consolidated statements of financial position as of December 31, 2010 and 2009 have been revised as a result of the foregoing as follows:

2010

2009

As
revised

As
previously
reported

As
revised

As
previously
reported

Biological assets

133,593

104,216

190,714

170,347

Deferred income tax assets

47,056

67,463

15,656

45,113

Other non-currents assets

839,111

754,588

Total Non-Current Assets

1,019,760

1,010,790

960,958

970,048

Biological assets

53,164

82,541

39,740

60,107

Other currents assets

247,520

239,019

Total Current Assets

300,684

330,061

278,759

299,126

Total Assets

1,320,444

1,340,851

1,239,717

1,269,174

Deferred income tax liabilities

91,088

111,495

77,588

107,045

Other non-currents liabilities

268,241

214,668

Total Non-Current Liabilities

359,329

379,736

292,256

321,713

Total Current Liabilities

238,013

190,305

Total Liabilities

597,342

617,749

482,561

512,018

The accompanying notes are an integral part of these consolidated financial statements.

F - 16

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.3.

Revision of previously issued financial statements (continued)

In addition, in December 2011, as permitted under IAS 7, the Group changed its policy for presenting interest paid in the statement of cash flows, classifying them under financing activities instead of operating activities. The Group effected this reclassification in its statement of cash flows for the year ended December 31, 2011. Cash flows from financing and operating activities were retroactively changed. The Group considers that this presentation is more appropriate on the grounds that interest paid reflect the cost of obtaining sources of finance, which in turn are consistent with internal analysis purposes and comparable from peer companies in the industry. This change has not affected the statement of financial position, total equity, statement of income and related notes for any of the periods presented.

The consolidated statements of cash flows as of December 31, 2010 and 2009 have been modified as a result of such change as follows:


	2010						2009
	As modified			As previously reported			As modified			As previously reported
Net cash generated from / (used in) operating activities		60,221			26,938			(20,010	)		(45,807	)
Net cash used in investing activities		(111,725	)		(111,725	)		(114,386	)		(114,386	)
Net cash generated from financing activities		46,545			79,828			130,250			156,047

2.4.

Segment reporting

According to IFRS 8, operating segments are identified based on the ‘management approach’. This approach stipulates external segment reporting based on the Group’s internal organizational and management structure and on internal financial reporting to the chief operating decision maker. The Management Committee of the Group is responsible for measuring and steering the business success of the segments and is considered the chief operating decision maker within the meaning of IFRS 8.

2.5.

Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in US dollars, which is the Group’s presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income.

Foreign exchange gains and losses are presented in the statement of income within “Finance income” or “Finance cost”, as appropriate.

The accompanying notes are an integral part of these consolidated financial statements.

F - 17

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.5.

Foreign currency translation (continued)

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

•

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

•

income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

•

all resulting exchange differences are recognized as a separate component of equity.

When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognized in the statement of income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.6.

Property, plant and equipment

Property, plant and equipment is recorded at cost, less accumulated depreciation and impairment losses, if any. Historical cost comprises the purchase price and any costs directly attributable to the acquisition.

Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of income during the period in which they are incurred.

Farmland is not depreciated. Depreciation on other assets is calculated using the straight-line method, to allocate their cost to their residual values over their estimated useful lives, as follows:


Farmland improvements			5-25 years
Buildings and facilities			20 years
Furniture and fittings			10 years
Computer equipment			3-5 years
Machinery and equipment			4-10 years
Vehicles			4-5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (See Note 2.11).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within “Other operating income, net” in the statement of income.

The accompanying notes are an integral part of these consolidated financial statements.

F - 18

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.7.

Investment property

Investment property consists of farmland held to earn rentals or for capital appreciation and not used in production or for administrative purposes or for sale in the ordinary course of business. Investment property is measured at cost less accumulated depreciation and any impairment losses. Rental income from investment property “lease act under an operating lease” is recognized in the income statement on a straight line basis over the lease term.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment at the commencement of owner occupation. An item of owner-occupied property is reclassified to investment property when its use has changed and owner-occupation ceases.

Transfers in and out of the respective categories as described above do not change the carrying amount of the properties transferred, and they do not change the cost of the properties for measurement or disclosure purposes.

2.8.

Leases

The Group classifies its leases at the inception as finance or operating leases. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Finance leases are capitalized at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included as “Borrowings” in the statement of financial position. The interest element of the finance cost is charged to the statement of income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of income on a straight-line basis over the period of the lease.

2.9.

Goodwill

Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognized by the Group on an acquisition. Goodwill is computed as the excess of the consideration over the fair value of the Group’s share of net assets of the acquired subsidiary undertaking at the acquisition date and is allocated to those cash generating units expected to benefit from the acquisition for the purpose of impairment testing. Goodwill arising on the acquisition of subsidiaries is included within “Intangible assets” on the statement of financial position, whilst goodwill arising on the acquisition on joint ventures forms part of the carrying amount of the investments and tested for impairment as part of the overall balance.

Goodwill arising on the acquisition of foreign entities is treated as an asset of the foreign entity denominated in the local currency and translated at the closing rate.

Goodwill is not amortized but tested for impairment on an annual basis, or more frequently if there is an indication of impairment. Gains and losses on the disposal of a Group entity include any goodwill relating to the entity sold (See Note 2.11).

The accompanying notes are an integral part of these consolidated financial statements.

F - 19

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.10.

Other intangible assets

Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and impairment losses, if any. These intangible assets comprise trademarks and computer software and are amortized in the statement of income on a straight-line basis over their estimated useful lives estimated to be 10 to 20 years and 3 to 5 years, respectively.

2.11.

Impairment of assets

Goodwill

For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Impairment losses recognized for goodwill cannot be reversed in a subsequent period. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. See Note 4 (b) for details.

Property, plant and equipment and finite lived intangible assets

At each statement of financial position date, the Group reviews the carrying amounts of its property, plant and equipment and finite lived intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of income.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in the statement of income.

2.12.

Biological assets

Biological assets comprise growing crops (mainly corn, wheat, soybeans, sunflower and rice), sugarcane and coffee and livestock (growing herd and cattle for dairy production).

The Group distinguishes between consumable and bearer biological assets, and between mature and immature biological assets. “Consumable” biological assets are those assets that may be harvested as agriculture produce or sold as biological assets, for example livestock intended for dairy production. “Bearer” biological assets are those assets capable of producing more than one harvest, for example sugarcane or livestock from which raw milk is produced. “Mature” biological assets are those that have attained harvestable specifications (for consumable biological assets) or are able to sustain regular harvests (for bearer biological assets). “Immature” biological assets are those assets other than mature biological assets.

The accompanying notes are an integral part of these consolidated financial statements.

F - 20

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.12.

Biological assets (continued)

The Group presents long-term biological assets (sugarcane and coffee plantations) as non-current assets based on their nature, as capable of sustaining regular harvests in the long-term.

Costs are capitalized as biological assets if, and only if, (a) it is probable that future economic benefits will flow to the entity, and (b) the cost can be measured reliably. The Group capitalizes costs such as: planting, harvesting, weeding, seedlings, irrigation, agrochemicals, fertilizers and a systematic allocation of fixed and variable production overheads that are directly attributable to the management of biological assets, among others. Costs that are expensed as incurred include administration and other general overhead and unallocated production overhead, among others.

Biological assets, both at initial recognition and at each subsequent reporting date, are measured at fair value less costs to sell, except where fair value cannot be reliably measured. Cost approximates fair value when little biological transformation has taken place since the costs were originally incurred or the impact of biological transformation on price is not expected to be material.

Gains and losses that arise on measuring biological assets at fair value less costs to sell and measuring agricultural produce at the point of harvest at fair value less costs to sell are recognized in the statement of income in the period in which they arise in the line item “Initial recognition and changes in fair value of biological assets and agricultural produce”.

Where there is an active market for a biological asset or agricultural produce, quoted market prices in the most relevant market are used as a basis to determine the fair value. Otherwise, when there is no active market or market-determined prices are not available, fair value of biological assets is determined through the use of valuation techniques. Therefore, the fair value of biological assets is generally derived from the expected discounted cash flows of the related agricultural produce. The fair value of our agricultural produce at the point of harvest is generally derived from market determined prices. A general description of the determination of fair values based on the Company’s business segments follow:

•

Growing crops:

Growing crops, for which biological transformation is not significant, are measured at cost, which approximates fair value. Expenditure on growing crops includes land preparation expenses and other direct expenses incurred during the sowing period including labor, seedlings, agrochemicals and fertilizers among others.

Otherwise, biological assets are measured at fair value less estimated point-of-sale costs at initial recognition and at any subsequent period. Point-of-sale costs include all costs that would be necessary to sell the assets. Gains and losses arising from such measurements are included in the statement of income in the period in which they arise under the line item “Initial recognition and changes in fair value of biological assets and agricultural produce”.

The fair value of growing crops excluding sugarcane and coffee is measured based on a formula, which takes into consideration the estimated crop yields, estimated market prices and costs, and discount rates. Yields are determined based on several factors including location of farmland, environmental conditions and other restrictions and growth at the time of measurement. Yields are multiplied by sown hectares to determine the estimated tons of crops to be obtained. The tons are then multiplied by a net cash flow determined at the future crop prices less the direct costs to be incurred. This amount is discounted at a discount rate, which reflects current market assessments of the assets involved and the time value of money.

The accompanying notes are an integral part of these consolidated financial statements.

F - 21

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.12.

Biological assets (continued)

•

Growing herd and cattle:

Livestock are measured at fair value less estimated point-of-sale costs, with any changes therein recognized in the statement of income, on initial recognition as well as subsequently at each reporting period. Gains and losses arising from animal growth and changes in livestock numbers are included in the statement of income in the period in which they arise, under the line item “Initial recognition and changes in fair value of biological assets and agricultural produce”. The fair value of livestock is determined based on the actual selling prices less estimated point-of-sale costs in the markets where the Group operates.

•

Coffee:

The coffee trees are accounted for as plantations and are generally felled after their optimum economic age for use has expired, generally 18 years.

Coffee trees, for which biological growth is not significant, are valued at cost, which approximates fair value. Expenditure on coffee trees planting includes land preparation expenses and other direct expenses incurred during the sowing period including labor, seedlings, agrochemicals and fertilizers among others.

Coffee trees which have attained significant biological growth are valued through a discounted cash flow model. Revenues are based on yearly coffee production volumes and the price is calculated as the average of daily prices for coffee future contracts (Coffee ICE-NY contracts) for a six months period. Projected costs include maintenance, pruning, land leasing, harvesting and coffee treatment.

These projections generate cash flows for each productive year, which, after being adjusted to present value at an appropriate discount rate, are the basis to determine the fair value of coffee.

•

Sugarcane:

The fair value of sugarcane depends on the variety, location and maturity of the plantation. The sugarcanes are accounted for as plantations and are felled after their optimum economic age for use has expired, generally five years.

Sugarcane, for which biological growth is not significant, is valued at cost, which approximates fair value. Expenditure on sugarcane consists mainly of land preparation expenses and other direct expenses incurred during the sowing period including labor, seedlings, agrochemicals and fertilizers among others. When it has attained significant biological growth, it is measured at fair value. The fair value considers estimated revenues based on yearly production volume (which will be destined to sugar, ethanol, energy and raw cane production) and the price is calculated as the average of daily prices for sugar future contracts (Sugar #11 ICE-NY contracts) for a six months period. Projected costs include maintenance, land leasing, harvesting and transportation.

The operating cash flows are discounted at a discount rate, which reflects current market assessment of the time value of money and risks involved.

The accompanying notes are an integral part of these consolidated financial statements.

F - 22

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.13.

Inventories

Inventories comprise of raw materials, finished goods (including harvested agricultural produce and manufactured goods) and others.

Harvested agricultural produce (except for rice and milk) are perpetually measured at net realizable value until the point of sale because there is an active market in the produce, there is a negligible risk that the produce will not be sold and there is a well-established practice in the industry carrying the inventories at net realizable value. Changes in net realizable value are recognized in the statement of income in the period in which they arise under the line item “Changes in net realizable value of agricultural produce after harvest”.

All other inventories (including rice and milk) are measured at the lower of cost and net realizable value. Cost is determined using the weighted average method.

2.14.

Financial assets

Financial assets are classified in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. Financial assets are classified as current if realization within 12 months is expected. Otherwise, they are classified as non-current. For all years presented, the Group’s financial assets at fair value through profit or loss comprise mainly derivative financial instruments.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the date of the statement of financial position. Loans and receivables comprise “trade and other receivables” and “cash and cash equivalents” in the statement of financial position.

(c) Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets not carried at fair value through profit or loss are initially recognized at fair value plus transaction costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the statement of income. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest method.

Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the statement of income within “Other operating income, net” in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the statement of income as part of “Other operating income, net” when the Group’s right to receive payments is established.

If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

The accompanying notes are an integral part of these consolidated financial statements.

F - 23

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.14.

Financial assets (continued)

The Group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in Note 2.16.

(d) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

2.15.

Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Commodity future contract fair values are computed with reference to quoted market prices on future exchanges marktes. The fair values of commodity options are calculated using year-end market rates together with common option pricing models. The fair value of interest rate swaps has been calculated using a discounted cash flow analysis.

The Group manages exposures to financial and commodity risks using hedging instruments that provide the appropriate economic outcome. The principal hedging instruments used may include commodity future contracts, put and call options, foreign exchange forward contracts and interest rate swaps. The Group does not use derivative financial instruments for speculative purposes.

The Group’s policy is to apply hedge accounting to hedging relationships where it is both permissible under IAS 39, practical to do so and its application reduces volatility, but transactions that may be effective hedges in economic terms may not always qualify for hedge accounting under IAS 39. Any derivatives that the Group holds to hedge these exposures are classified as “held for trading” and are shown in a separate line on the face of the statement of financial position. Gains and losses on commodity derivatives are classified within “Other operating income, net”. Gains and losses on interest rate and foreign exchange rate derivatives are classified within ‘Financial results, net’.

2.16.

Trade receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less allowance for trade receivables. An allowance for trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the statement of income within selling expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against selling expenses in the statement of income.

2.17.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. In the statements of cash flows, interest paid is presented within financing cash flows and interest received is presented within investing activities. Long term biological assets planting costs and purchase of cattle outflows are disclosed as cash flows from investing activities because this classification better reflects the Group’s business activities and it is comparable with other agribusiness companies.

The accompanying notes are an integral part of these consolidated financial statements.

F - 24

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.18.

Trade payables

Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method.

2.19.

Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the date of the statement of financial position. Borrowing costs are capitalized during the period of time that is required to complete and prepare the asset for its intended use.

2.20.

Provisions

Provisions are recognized when (i) the Group has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

2.21.

Onerous contracts

The Group enters into contracts which require the Group to sell commodities in accordance with the Group’s expected sales. These contracts do not qualify as derivatives. These contracts are not recognized until at least one of the parties has performed under the agreement. However, when the contracts are onerous, the Group recognizes the present obligation under the contracts as a provision included within “Provision and other liabilities” in the statement of financial position. Losses under these onerous contracts are recognized within “Other operating income, net” in the statement of income.

2.22.

Current and deferred income tax

The Group’s tax loss for the year comprises the charge for current tax payable and deferred taxation attributable to the Group’s operating subsidiaries. Tax is recognized in the statement of income, except to the extent that it relates to items recognized directly in equity. In this case, the tax is also recognized in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Group’s subsidiaries and joint ventures operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

The accompanying notes are an integral part of these consolidated financial statements.

F - 25

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.22.

Current and deferred income tax (continued)

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

The Group is able to control the timing of dividends from its subsidiaries and hence does not expect to remit overseas earnings in the foreseeable future in a way that would result in a charge to taxable profit. Hence deferred tax is recognized in respect of the retained earnings of overseas subsidiaries only to the extent that, at the date of the statement of financial position, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary.

2.23.

Revenue recognition

The Group’s primary activities comprise agricultural and agro-industrial activities.

The Group’s agricultural activities comprise growing and selling agricultural produce. In accordance with IAS 41 “Agriculture”, cattle are measured at fair value with changes therein recognized in the statement of income as they arise. Agricultural produce is measured at net realizable value with changes therein recognized in the statement of income as they arise. Therefore, sales of agricultural produce and cattle generally do not generate any separate gains or losses in the statement of income. See Notes 2.12 and 2.13 for additional details.

The Group’s agro-industrial activities comprise the selling of manufactured products (i.e. industrialized rice, milk-related products, coffee, ethanol, sugar, energy, among others). Sales of manufacturing products are measured at the fair value of the consideration received or receivable, net of returns and allowances, trade and other discounts, net of sales taxes, as applicable. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Transfers of risks and rewards vary depending on the individual terms of the contract of sale. For export shipments, transfer occurs upon loading of the goods onto the relevant carrier.

The Group also provides certain agricultural-related services such as grain warehousing/conditioning and other services, e.g. handling and drying services. Revenue from services is recognized as services are provided.

In December 2009, the Group began leasing owned farmland property to third parties under operating lease agreements. The leased assets are included within investment property on the Group’s statement of financial position. Rental income is recognized on a straight-line basis over the period of the lease.

As from 2009, the Group is a party to a 10-year power agreement for the sale of electricity. The delivery period starts in May and ends in November of each year. In addition, as from 2010, the Group is a party to a 15-year power agreement which delivery period starts in April and ends in November of each year. Prices under both agreements are adjusted annually for inflation. Revenue related to the sale of electricity under these two agreements is recorded based upon output delivered.

The accompanying notes are an integral part of these consolidated financial statements.

F - 26

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2.24.

Farmlands sales

The Group’s strategy is to profit from land appreciation value generated through the transformation of its productive capabilities. Therefore, the Group may seek to realize value from the sale of farmland assets and businesses.

Farmland sales are not recognized until (i) the sale is completed, (ii) the Group has determined that it is probable the buyer will pay, (iii) the amount of revenue can be measured reliably, and (iv) the Group has transferred to the buyer the risk of ownership, and does not have a continuing involvement. Gains from “farmland sales” are included in the statement of income under the line item “Other operating income, net”.

2.25.

Earnings per share

Basic earnings per share is calculated by dividing the net income for the period attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted net earnings per share is computed by dividing the net income for the period by the weighted average number of ordinary shares outstanding, and when dilutive, adjusted for the effect of all potentially dilutive shares, including share options, on an as-if converted basis.

2.26.

Equity-settled share-based payments

The Group issues equity settled share-based payments to certain directors, senior management and employees. Options under the awards are measured at fair value at the date of grant. Management measures the fair value using the valuation technique that they consider to be the most appropriate to value each class of award. Methods used may include Black-Scholes calculations or other models as appropriate. The valuations take into account factors such as non-transferability, exercise restrictions and behavioral considerations. An expense is recognized to spread the fair value of each award over the vesting period on a straight-line basis, after allowing for an estimate of the awards that will eventually vest. The estimate of the level of vesting is reviewed at least annually, with any impact on the cumulative charge being recognized immediately.

2.27.

Research and development

Research phase expenditure is expensed as incurred. Development expenditure is capitalized as an internally generated intangible asset only if it meets strict criteria, relating in particular to technical feasibility and generation of future economic benefits. Research expenses have been immaterial to date. The Group has not capitalized any development expenses to date.

3.	Financial risk management

Risk management principles and processes

The Group’s activities are exposed to a variety of financial risks. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize the Group’s capital costs by using suitable means of financing and to manage and control the Group’s financial risks effectively. The Group uses financial instruments to hedge certain risk exposures.

The Group’s approach to the identification, assessment and mitigation of risk is carried out by a Risk and Commercial Committee, which focuses on timely and appropriate management of risk. This Risk and Commercial Committee has overall accountability for the identification and management of risk across the Group.

The accompanying notes are an integral part of these consolidated financial statements.

F - 27

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

The principal financial risks arising from financial instruments are raw material price risk, end-product price risk, exchange rate risk, interest rate risk, liquidity risk and credit risk. This section provides a description of the principal risks and uncertainties that could have a material adverse effect on the Group’s strategy, performance, results of operations and financial condition. The principal risks and uncertainties facing the business, set out below, do not appear in any particular order of potential materiality or probability of occurrence.

•

Exchange rate risk

The Group’s cash flows, statement of income and statement of financial position are presented in US dollars and may be affected by fluctuations in exchange rates. Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency.

A significant majority of the Group’s business activities is conducted in the respective functional currencies of the subsidiaries (primarily the Brazilian Reais and the Argentine Peso). However, it transacts in currencies other than the respective functional currencies of the subsidiaries. To date, transactions denominated in currencies other than the respective functional currencies are denominated in US dollars. There are monetary balances held by the Group companies at each year-end that are denominated in US dollars (non-functional currency).

The Group’s net financial position exposure to the US dollar is managed on a case-by-case basis, partly by hedging certain expected cash flows with foreign exchange derivative contracts.

The following tables show the Group’s net monetary position broken down by various currencies for each functional currency in which the Group operates for all the periods presented. All amounts are shown in US dollars.


	2011
	Functional currency
Net monetary position (Liability)/ Asset	Argentine Peso			Brazilian Reais			Uruguayan Peso			US Dollar		Total
Argentine Peso		(17,090	)		—			—			—		(17,090	)
Brazilian Reais		—			(56,147	)		—			—		(56,147	)
US Dollar		(98,674	)		(55,038	)		21,964			138,107		6,359
Uruguayan Peso		—			—			(1,780	)		—		(1,780	)

Total		(115,764	)		(111,185	)		20,184			138,107		(68,658	)


	2010
	Functional currency
Net monetary position (Liability)/ Asset	Argentine Peso			Brazilian Reais			Uruguayan Peso		US Dollar		Total
Argentine Peso		(37,748	)		—			—		—		(37,748	)
Brazilian Reais		—			(214,015	)		—		—		(214,015	)
US Dollar		(73,435	)		(37,103	)		17,411		15,469		(77,658	)
Uruguayan Peso		—			—			126		—		126

Total		(111,183	)		(251,118	)		17,537		15,469		(329,295	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 28

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

The Group’s analysis is carried out based on the exposure of each functional currency subsidiary against the US dollar. The Group estimates that, other factors being constant, a 10% devaluation (revaluation) of the respective functional currencies against the US dollar at year-end would decrease or (increase) Profit (Loss) Before Income Tax for the years ended December 31, 2011, 2010 and 2009, as described in the tables below:


	2011
	Functional currency
Net monetary position	Argentine Peso		Brazilian Reais		Uruguayan Peso			US Dollar		Total
Argentine Peso		n/a		—		—			—		—
Brazilian Reais		—		n/a		n/a			—		—
US Dollar		9,867		5,504		(2,196	)		n/a		13,175
Uruguayan Peso		—		—		—			—		—

(Increase) or decrease in (Loss) Before Income Tax		9,867		5,504		(2,196	)		—		13,175


	2010
	Functional currency
Net monetary position	Argentine Peso			Brazilian Reais			Uruguayan Peso		US Dollar		Total
Argentine Peso		n/a			—			—		—		—
Brazilian Reais		—			n/a			—		—		—
US Dollar		(7,344	)		(3,710	)		1,741		n/a		(9,313	)
Uruguayan Peso		—			—			n/a		—		—

(Increase) or decrease in (Loss) Profit Before Income Tax		(7,344	)		(3,710	)		1,741		—		(9,313	)


	2009
	Functional currency
Net monetary position	Argentine Peso			Brazilian Reais			Uruguayan Peso			US Dollar		Total
Argentine Peso		n/a			—			—			—		—
Brazilian Reais		—			n/a			—			—		—
US Dollar		(8,683	)		(16,072	)		(248	)		n/a		(25,003	)
Uruguayan Peso		—			—			n/a			—		—

(Increase) or decrease in (Loss) Before Income Tax		(8,683	)		(16,072	)		(248	)		—		(25,003	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 29

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

•

Raw material price risk

Inflation in raw materials costs and in the costs of goods and services from industry suppliers and manufacturers presents risks to project economics. A significant portion of the Group’s cost structure includes the cost of raw materials primarily seeds, fertilizers and agrochemicals, among others. Prices for these raw materials may vary significantly.

The Group estimates that, for the years ended December 31, 2011, 2010 and 2009, other factors being constant, a 20% increase (or decrease) in prices of raw materials would (increase) or decrease Profit ( Loss) Before Income Tax by approximately (US$ 29,468), (US$ 27,240) and (US$ 22,916), respectively.

•

End-product price risk

Prices for commodities products have historically been cyclical, reflecting overall economic conditions and changes in capacity within the industry, which affect the profitability of entities engaged in the agribusiness industry. The Group’s commercial team combines different actions to minimize price risk. A percentage of crops are to be sold during and post harvest period. The Group manages minimum and maximum prices for each commodity as well as gross margin per each crop as to decide when and how to sell. End-product price risks are hedged if economically viable and possible by entering into forward contracts with major trading houses or by using derivative financial instruments, consisting mainly of crops, sugar and coffee future contracts, but also includes occasionally put and call options. A movement in end-product futures prices would result in a change in the fair value of the end product hedging contracts. These fair value changes, after taxes, are recorded in the statement of income.

Contract positions are designed to ensure that the Group would receive a defined minimum price for certain quantities of its production. The counterparties to these instruments generally are major financial institutions. In entering into these contracts, the Group has assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The Group does not expect any material losses as a result of counterparty defaults. The Group is also obliged to pay margin deposits and premiums for these instruments. These estimates represent only the sensitivity of the financial instruments to market risk and not the Group exposure to end product price risks as a whole, since the crops and cattle products sales are not financial instruments within the scope of IFRS 7 disclosure requirements.

The Group estimates that, for the years ended December 31, 2011, 2010 and 2009, other factors being constant, and a 5% increase (or decrease) in prices of the Group’s end products would (increase) or decrease Profit (Loss) Before Income Tax by approximately (US$ 1,675), (US$ 1,280) and (US$ 1,507), respectively.

•

Liquidity risk

The Group is exposed to liquidity risks, including risks associated with refinancing borrowings as they mature, the risk that borrowing facilities are not available to meet cash requirements and the risk that financial assets cannot readily be converted to cash without loss of value. Failure to manage financing risks could have a material impact on the Group’s cash flow and statement of financial position.

Prudent liquidity risk management includes managing the profile of debt maturities and funding sources close oversight of cash flows projections, maintaining sufficient cash, and ensuring the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. The Group’s ability to fund its existing and prospective debt requirements is managed by maintaining diversified funding sources with adequate available funding lines from high quality lenders; and reaching to have long term financial facilities.

The accompanying notes are an integral part of these consolidated financial statements.

F - 30

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

As of December 31, 2011, cash and cash equivalent of the Company totaled U$S 330.5, which could be used for managing liquidity risk.

The table below analyses the Group’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and as a result they do not reconcile to the amounts disclosed on the statement of financial position except for short-term payables when discounting is not applied.


At 31 December 2011	Less than 1 year		Between 1 and 2 years		Between 2 and 5 years		Over 5 Years		Total
Trade and other payables		106,991		3,780		1,598		1,812		114,181
Borrowings (excluding finance lease liabilities)		166,708		104,760		118,541		26,366		416,375
Finance leases		119		79		—		—		198
Derivative financial instruments		6,054		—		—		—		6,054

Total		279,872		108,619		120,139		28,178		536,808


At 31 December 2010	Less than 1 year		Between 1 and 2 years		Between 2 and 5 years		Over 5 Years		Total
Trade and other payables		66,106		606		1,883		3,568		72,163
Borrowings (excluding finance lease liabilities)		168,373		189,664		60,255		56,998		475,290
Finance leases		367		81		—		—		448
Derivative financial instruments		8,920		—		—		—		8,920

Total		243,766		190,351		62,138		60,566		556,821

•

Interest rate risk

The Group’s financing costs may be significantly affected by interest rate volatility. Borrowings under the Group’s interest rate management policy may be fixed or floating rate. The Group maintains adequate committed borrowing facilities and holds most of its financial assets primarily in short-term, highly liquid investments that are readily convertible to known amounts of cash.

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The interest rate profile of the Group’s borrowings is set out in Note 20.

The Group occasionally manages its cash flow interest rate risk exposure by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.

The following table shows a breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination and functional currency of the subsidiary issuing the loans (excluding finance leases). This analysis is performed after giving effect to interest rate swaps.

The accompanying notes are an integral part of these consolidated financial statements.

F - 31

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

The analysis for the year ended December 31, 2011 is as follows (all amounts are shown in US dollars):


	2011
	Functional currency
Rate per currency denomination	Argentine Peso		Brazilian Reais		Uruguayan Peso		Total
Fixed rate:
Argentine Peso		6,739		—		—		6,739
Brazilian Reais		—		66,497		—		66,497
US Dollar		72,136		—		1,934		74,070

Subtotal Fixed-rate borrowings		78,875		66,497		1,934		147,306

Variable rate:
Brazilian Reais		—		87,614		—		87,614
US Dollar		59,977		65,610		—		125,587

Subtotal Variable-rate borrowings		59,977		153,224		—		213,201

Total borrowings as per analysis		138,852		219,721		1,934		360,507

Finance leases		66		132		—		198

Total borrowings as per statement of financial position		138,918		219,853		1,934		360,705

The analysis for the year ended December 31, 2010 is as follows (all amounts are shown in US dollars):


	2010
	Functional currency
Rate per currency denomination	Argentine Peso		Brazilian Reais		Uruguayan Peso		Total
Fixed rate:
Argentine Peso		13		—		—		13
Brazilian Reais		—		76,253		—		76,253
US Dollar		34,465		7,013		475		41,953
Uruguayan Peso		—		—		62		62

Subtotal Fixed-rate borrowings		34,478		83,266		537		118,281

Variable rate:
Brazilian Reais		—		113,514		—		113,514
US Dollar		64,053		93,176		—		157,229

Subtotal Variable-rate borrowings		64,053		206,690		—		270,743

Total borrowings as per analysis		98,531		289,956		537		389,024

Finance leases		171		277		—		448

Total borrowings as per statement of financial position		98,702		290,233		537		389,472

The accompanying notes are an integral part of these consolidated financial statements.

F - 32

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

At December 31, 2011, 2010 and 2009, if interest rates on floating-rate borrowings had been 1% higher (or lower) with all other variables held constant, Profit (Loss) Before Income Tax for the year would (increase) or decrease as follows:


	2011
	Functional currency
Rate per currency denomination	Argentine Peso			Brazilian Reais			Uruguayan Peso		Total
Variable rate:
Brazilian Reais		—			(876	)		—		(876	)
US Dollar		(600	)		(656	)		—		(1,256	)

Total effects on Profit (Loss) Before Income Tax		(600	)		(1,532	)		—		(2,132	)


	2010
	Functional currency
Rate per currency denomination	Argentine Peso			Brazilian Reais			Uruguayan Peso		Total
Variable rate:
Brazilian Reais		—			(1,134	)		—		(1,134	)
US Dollar		(641	)		(932	)		—		(1,573	)

Total effects on Profit (Loss) Before Income Tax		(641	)		(2,066	)		—		(2,707	)


	2009
	Functional currency
Rate per currency denomination	Argentine Peso			Brazilian Reais			Uruguayan Peso		Total
Variable rate:
Brazilian Reais		—			(1,397	)		—		(1,397	)
US Dollar		(500	)		(592	)		—		(1,092	)

Total effects on (Loss) Before Income Tax		(500	)		(1,989	)		—		(2,489	)

The sensitivity analysis has been determined assuming that the change in interest rates had occurred at the date of the statement of financial position and had been applied to the exposure to interest rate risk for financial instruments in existence at that date. The 100 basis point increase or decrease represents management’s assessment of a reasonable possible change in those interest rates, which have the most impact on the Group, specifically the United States and Brazilian rates over the period until the next annual statement of financial position date.

The accompanying notes are an integral part of these consolidated financial statements.

F - 33

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

•

Credit risk

The Group’s exposure to credit risk takes the form of a loss that would be recognized if counterparties failed to, or were unable to, meet their payment obligations. These risks may arise in certain agreements in relation to amounts owed for physical product sales, the use of derivative instruments, and the investment of surplus cash balances. The Group is also exposed to political and economic risk events, which may cause non-payment of foreign currency obligations to the Group. The current credit crisis could also lead to the failure of companies in the sector, potentially including customers, partners, contractors and suppliers.

The Group is subject to credit risk arising from outstanding receivables, cash and cash equivalents and deposits with banks and financial institutions, and from the use of derivative financial instruments. The Group’s policy is to manage credit exposure to trading counterparties within defined trading limits. All of the Group’s significant counterparties are assigned internal credit limits.

The Group sells manufactured products, agricultural products and offers services to a large base of customers. Type and class of customers may differ depending on the Group´s business segments. More than 67 % of the Group’s sales of crops are sold to 10 well-known clients (both multinational or local) with good credit history with the Company. In the Sugar, Ethanol and Energy segment, sales of ethanol are concentrated in 9 clients which represent the 61% of total sales of Ethanol during the year. Approximately 70% of the Group’s sales of sugar relate to 3 well known traders, and the outstanding. The remaining 30%, which mainly relates to “cristal sugar”, is dispersed among several customers. Energy sales are 91% concentrated in 3 major clients. In the dairy segment, 86% of the sales are concentrated to La Lacteo, the Joint Venture the Groups participates in 50% (See Note 10).

No credit limits were exceeded during the reporting periods and management does not expect any losses from non-performance by these counterparties. If any of the Group’s customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, the Group assesses the credit quality of the customer taking into account its financial position, past experience and other factors (see Note 12 for details). The Group may seek cash collateral, letter of credit or parent company guarantees, as considered appropriate. Sales to customers are primarily made by credit with customary payment terms. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance. The Group’s exposure of credit risk arising from trade receivables is set out in Note 12.

The Group is exposed to counterparty credit risk on cash and cash equivalent balances. The Group holds cash on deposit with a number of financial institutions. The Group manages its credit risk exposure by limiting individual deposits to clearly defined limits. The Group only deposits with high quality banks and financial institutions. The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents in the statement of financial position. As of December 31, 2011 and 2010, the total amount of cash and cash equivalents mainly comprise cash in banks and short-term bank deposits. The Group is authorized to work with banks rated “BBB+” or higher. At December 31, 2011, two banks (HSBC and Rabobank) accounted for more than 60% of the total cash deposited. The remaining amount of cash and cash equivalents relates to cash in hand. Additionally, during the year ended December 31, 2011, the Group invested in fixed-term bank deposits with one bank (HSBC) and entered into a derivative contract (currency forward). The Group does not have investment in securities or other financial instruments for which risk may have increased due to the financial credit crisis. The Group’s exposure of credit risk arising from cash and cash equivalents is set out in Note 14.

The Group’s primary objective for holding derivative financial instruments is to manage currency exchange rate risk, interest rate risk and commodity price risk. The Group generally enters into derivative transactions with high-credit-quality counterparties and, by policy, limit the amount of credit exposure to any one counterparty based on an analysis of that counterparty’s relative credit standing. The amounts subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which a counterparty’s obligations exceed the obligations with that counterparty.

The accompanying notes are an integral part of these consolidated financial statements.

F - 34

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

Similarly, transactions involving derivative financial instruments are with counterparties with high credit ratings (See Note 11 for details). The Group arranged interest rate swaps with HSBC S.A. (Brazil). The Group also entered into crop commodity futures traded in the established trading markets of Argentina and Brazil through well rated brokers. Management does not expect any counterparty to fail to meet its obligations.

•

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for members and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, it may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total debt (including current and non-current borrowings as shown in the consolidated statement of financial position, if applicable) divided by total capital. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus total debt. During the year ended December 31, 2011, the strategy, which was unchanged from 2010, was to maintain the gearing ratio within 0.18 to 0.40, as follows:


	2011		2010
Total Debt		360,705		389,472
Total Equity		1,094,869		723,102

Total Capital		1,455,574		1,112,574

Gearing Ratio		0.25		0.35

•

Derivative financial instruments

As part of its business operations, the Group uses a variety of derivative financial instruments to manage its exposure to the financial risks discussed above. The primary objective for holding derivative financial instruments is to manage currency exchange rate risk, interest rate risk and commodity price risk. As part of this strategy, the Group may enter into (i) interest rate derivatives to manage the composition of floating and fixed rate debt; (ii) currency derivatives to manage the currency composition of its cash and cash equivalents; and (iii) crop future contracts and put and call options to manage its exposure to price volatility stemming from its integrated crop production activities. The Group’s policy is not to use derivatives for speculative purposes.

Derivative financial instruments involve, to a varying degree, elements of market and credit risk not recognized in the financial statements. The market risk associated with these instruments resulting from price movements is expected to offset the market risk of the underlying transactions, assets and liabilities, being hedged. The counterparties to the agreements relating to the Group’s contracts generally are large institutions with credit ratings equal to or higher than BBB+. The Group continually monitors the credit rating of such counterparties and seeks to limit its financial exposure to any one financial institution. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Group’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Group’s obligations to the counterparties.

The accompanying notes are an integral part of these consolidated financial statements.

F - 35

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

The following tables show the outstanding positions for each type of derivative contract as of the date of each statement of financial position:

•

Futures/ options

As of December 31, 2011:


	2011
Type of derivative contract	Tons (thousands)		Notional amount			Market Value Asset/ (Liability)			(Loss)/Gain
Futures:
*Sale*
Soybean		63		19			256			256
Wheat		1		—			7			7
Sugar		180		87,382			8,409			8,409
Ethanol		2		2,719			44			44
Coffee		2		10,533			238			256
Options:
*Buy put*
Corn		189		2,172			1,256			(620	)
Soybean		20		127			293			164
Wheat		27		596			457			(143	)
Sugar		39		109,600			845			845
*Sell call*
Soybean		21		130			137			7
Sugar		44		98,000			(1,519	)		(1,519	)
Wheat		27		(566	)		(763	)		(193	)

Total		615		310,710			9,660			7,513

As of December 31, 2010:


	2010
Type of derivative contract	Tons (thousands)		Notional amount		Market Value Asset/ (Liability)			(Loss)/Gain
Futures:
Sale
Corn		6.9		149		141			141
Soybean		24.6		5,939		(2,789	)		(2,789	)
Sugar		34.3		15,955		(3,287	)		(3,287	)
Coffee		0.8		3,213		(2,231	)		(2,231	)
Wheat		0.6		111		(4	)		(4	)

Total		67.2		25,367		(8,170	)		(8,170	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 36

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

As of December 31, 2009:


	2009
Type of derivative contract	Tons		Notional amount		Market Value Asset/ (Liability)			(Loss)/Gain
Futures:
Sale
Corn		26.8		3,835		(19	)		(19	)
Soybean		20.1		4,740		(184	)		(184	)
Sugar		92.2		42,283		(11,712	)		(11,712	)
Coffee		0.5		16		99			99

Total		139.6		50,874		(11,816	)		(11,816	)

Commodity future contract fair values are computed with reference to quoted market prices on future exchanges.

•

Floating-to-fixed interest rate swaps

In January 2009, the Group entered into a floating-to-fixed interest rate swap to hedge against the variability of the cash flows of the Tranche B facility entered into with the IDB. Tranche B of the IDB facility comprises a five-year US$ 48.2 million loan bearing interest at 180-day LIBOR plus 4.75% per annum. (See Note 20 for additional details). The Group’s exposure to interest rate changes through the Tranche B loan has been fully hedged through the use of an amortizing interest rate swap. This hedging arrangement will fully offset any additional interest rate expense incurred as a result of increases in interest rates. The notional amount of the agreement was US$ 48.2 million. This swap agreement expires on November 15, 2013. In December 2011, as the company redefined the terms of IDB outstanding loan and received additional funds, the Group cancelled the original swap and entered into a new floating-to-fixed interest rate forward swap that will start on May 2012 to hedge against the variability of the cash flows of the new Tranche B facility. The redefined facility comprises a five-year US$ 60 million loan bearing interest at 180-day LIBOR plus 4.45% per annum. The Group’s exposure to interest rate changes through the Tranche B loan has been fully hedged through the use of an amortizing interest rate swap. This hedging arrangement will fully offset any additional interest rate expense incurred as a result of increases in interest rates. The notional amount of the agreement was US$ 60.0 million. This swap agreement expires on November 15, 2016. The Group did not apply hedge accounting to these agreements. As of December 31, 2011, 2010 and 2009, the Group recorded a liability of US$ nil, US$ 0.6 million and US$ 1 million, respectively, the estimated fair value of the swap at those dates.

UMAś facility with HSBC Bank comprises a two-year US$ denominated 7.0 million loan bearing exchange variation plus 7.30% per annum. Interest payments are hedged against 99.80% of CDI floating rate. These swap agreements expire in August 2012. The Group did not apply hedge accounting to these agreements. As of December 31, 2011, the Group recorded liabilities of US$ 0.3 million (2010: US$ 0.02 million) respectively, the estimated fair value at that date of the swap of Adecoagro Vale do Ivinhema and UMA.

The Group evaluated the impact on interest expense for the year considering an immediate 100 basis point change in interest rates. For the years ended December 31, 2011, 2010 and 2009, a 100 basis point increase/decrease in interest rates would result in an increase/decrease in interest expense of US$ 0.1 million, US$ 0.7 million and US$ nil, respectively.

The Group evaluated the impact on the interest rate swaps’ fair value considering an immediate 100 basis point change in interest rates. As of December 31, 2011 and 2010, a 100 basis point increase/decrease in interest rates would result in an approximate US$ nil and US$ 0.5 million increase/decrease in the fair value of interest rate swap, respectively. The fair value of the swap has been calculated using a discounted cash flow analysis.

The accompanying notes are an integral part of these consolidated financial statements.

F - 37

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3.	Financial risk management (continued)

•

Currency forward

Between July and September 2011, the Group entered into several currency forward contracts with Brazilian banks in order to hedge the fluctuation of the Brazilian Reais against US Dollar for a total notional amount of US$ 74.0 million, with maturity dates between February and December 2012. The outstanding contracts resulted in the recognition of a loss amounting to US$ 9.1 million included within “Financial results, net.”

4.	Critical accounting estimates and judgments

Critical accounting policies are those that are most important to the portrayal of the Group’s financial condition, results of operations and cash flows, and require management to make difficult, subjective or complex judgments and estimates about matters that are inherently uncertain. Management bases its estimates on historical experience and other assumptions that it believes are reasonable. The Group’s critical accounting policies are discussed below.

Actual results could differ from estimates used in employing the critical accounting policies and these could have a material impact on the Group’s results of operations. The Group also has other policies that are considered key accounting policies, such as the policy for revenue recognition. However, these other policies, which are discussed in the notes to the Group’s financial statements, do not meet the definition of critical accounting estimates, because they do not generally require estimates to be made or judgments that are difficult or subjective.

(a) Business combinations – purchase price allocation

Accounting for business combinations requires the allocation of the Group’s purchase price to the various assets and liabilities of the acquired business at their respective fair values. The Group uses all available information to make these fair value determinations, and for major acquisitions, may hire an independent appraisal firm to assist in making fair value estimates. In some instances, assumptions with respect to the timing and amount of future revenues and expenses associated with an asset might have to be used in determining its fair value. Actual timing and amount of net cash flows from revenues and expenses related to that asset over time may differ materially from those initial estimates, and if the timing is delayed significantly or if the net cash flows decline significantly, the asset could become impaired.

(b) Impairment testing

At the date of each statement of financial position, the Group reviews the carrying amounts of its property, plant and equipment and finite lived intangible assets to determine whether there is any indication that those assets could have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The Group’s property, plant and equipment items generally do not generate independent cash flows.

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. As of the acquisition date, any goodwill acquired is allocated to the cash-generating unit (‘CGU’) expected to benefit from the business combination.

The accompanying notes are an integral part of these consolidated financial statements.

F - 38

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

4.	Critical accounting estimates and judgments (continued)

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. The impairment review requires management to undertake certain judgments, including estimating the recoverable value of the CGU to which the goodwill relates, based on either fair value less costs-to-sell or the value-in-use, as appropriate, in order to reach a conclusion on whether it deems the goodwill is impaired or not.

For purposes of the impairment testing, each CGU represents the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets.

Farmland businesses may be used for different activities that may generate independent cash flows. When farmland businesses are used for single activities (i.e. crops), these are considered as one CGU. Generally, each separate farmland business within Argentina and Uruguay are treated as single CGUs. Otherwise, when farmland businesses are used for more than one segment activity (i.e. crops and cattle or rental income), the farmland is further subdivided into two or more CGUs, as appropriate, for purposes of impairment testing. For its properties in Brazil, management identified a farmland together with its related mill as separate CGUs.

Based on these criteria, management identified a total amount of forty-six CGUs.

For the year ended December 31, 2010, in Argentina and Uruguay the Group only tested for impairment CGUs with allocated goodwill, due to the lack of indicators that evidenced the assets may be impaired. Additionally, the Group tested all CGUs in Brazil due mainly to the operating losses from continuing operations suffered during that period in the Coffee and Sugar, Ethanol and Energy segments.

As from September 30, 2011, in order to facilitate the year-end process and for administrative purposes, the Group decided to change the date of their annual impairment test from December 31 to September 30. Additionally, for the nine-month period ended September 30, 2011, due to the increase volatility in the international markets which lead to the fact that during certain periods of the year enterprise market price was lower than the Company’s net assets value, the Group tested for impairment all CGUs regardless of which CGUs have allocated any goodwill.

Estimating the fair value less costs-to-sell is based on the best information available, and refers to the amount at which the CGU could be bought or sold in a current transaction between willing parties. In calculating the fair value less costs-to-sell and value-in-use of its CGUs, management may be assisted by the work of external advisors.

CGUs tested based on a fair-value-less-costs-to-sell model for the period ended September 30, 2011 and years ended December 31, 2010:

The Group identified 37 CGUs in Argentina and Uruguay and 2 CGUs in Brazil. The Group tested all of these CGUs based on a fair value less costs-to-sell model as of September 30, 2011 and December 31, 2010. When using this model, the Group applies the “sales comparison approach” as its method of valuing most properties. This method relies on results of sales of similar agricultural properties to estimate the value of the CGU. This approach is based on the theory that the fair value of a property is directly related to the selling prices of similar properties. The fair value of farmland property is the amount of money the Group would realize if sold at arm’s length by a willing seller to a willing buyer.

Fair values are determined by extensive analysis. Farmland values are based on the land’s productive capability and other factors such as climate and location. Farmland is assessed according to its productivity value, that is, the ability of the land to produce crops and/or maintain livestock. Farmland ratings are established by considering such factors as soil texture and quality, yields, topography, drainage and rain levels. Farmland may contain farm outbuildings. A farm outbuilding is any improvement or structure that is used for farming operations. Outbuildings are valued based on their size, age and design.

The accompanying notes are an integral part of these consolidated financial statements.

F - 39

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

4.	Critical accounting estimates and judgments (continued)

Based on the factors described above, each farm property is assigned different soil classifications for the purposes of establishing a value. Soil classifications quantify the factors that contribute to the agricultural capability of the soil. Soil classifications range from the most productive to the least productive.

The first step to establishing an assessment for a farm property is a sales investigation that identifies the valid farm sales in the area where the farm is located.

A price per hectare is assigned for each soil class within each farm property. This price per hectare is determined based on the quantitative and qualitative analysis described above considering parameters such as:

•

Current soil productivity and yields;

•

Potential soil productivity based on market participant best use of soil property;

•

Projected gross margin derived from soil use;

•

Rental value obtained for soil use, if applicable;

•

Similar comparable farmland property within the topographic area.

The results are then tested against actual sales, if any, and current market conditions to ensure the values produced are accurate, consistent and fair.

The following table shows only the 11 CGUs where goodwill was allocated as of September 2011 and December 31, 2010 and the corresponding amount of goodwill allocated to each one:


CGU / Operating segment / Country	September 30, 2011		December 31, 2010
La Carolina / Crops / Argentina		166		176
La Carolina / Cattle / Argentina		27		29
El Orden / Crops / Argentina		203		215
El Orden / Cattle / Argentina		33		35
La Guarida / Crops / Argentina		2,434		2,574
La Guarida / Cattle / Argentina		241		255
Los Guayacanes / Crops / Argentina		1,859		1,966
Doña Marina / Rice / Argentina		6,565		7,023
Huelen / Crops / Argentina (Note 27)		7,403		—
El Colorado / Crops / Argentina (Note 27)		2,802		—
El Colorado / Cattle / Argentina (Note 27)		934		—

Closing net book amount of goodwill allocated to CGUs (Note 8)		22,667		12,273

Closing net book amount of PPE items and other assets		89,079		80,451

Total assets allocated to 8 CGUs		111746		92,724

The remaining 26 CGUs in Argentina and Uruguay and the 2 CGUs in Brazil without allocated goodwill are not detailed here for simplicity purposes. Property, plant and equipment, investment property, and finite-life intangible assets allocated to these 28 CGUs have an aggregated net book value of US$ 252,252 and US$ 230,512 as of September 30, 2011 and December 31, 2010, respectively.

Based on the testing above, the Group determined that none of the CGUs, with and without allocated goodwill, were impaired as of September 30, 2011 and December 31, 2010.

The accompanying notes are an integral part of these consolidated financial statements.

F - 40

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

4.	Critical accounting estimates and judgments (continued)

As of December 31, 2011, analysis of the events occurred since the last impairment review indicated that the likelihood that the current recoverable amount of the CGUs tested would be less that their carrying amounts was remote. Additionally, the most recent impairment test performed in September 30, 2011 resulted in an amount that exceeded the CGUs’ book value by a substantial margin. Consequently, the Group considered that no additional impairment test was necessary at year-end.

CGUs tested based on a value-in-use model for the period ended September 30, 2011 and years ended December 31, 2010:

The Group identified 3 CGUs in Argentina and 4 CGUs in Brazil. The Group tested all CGUs in Brazil based on a value-in-use model. In performing the value-in-use calculation, the Group applied pre-tax rates to discount the future pre-tax cash flows. In each case, these key assumptions have been made by management reflecting past experience and are consistent with relevant external sources of information, such as appropriate market data.

The key assumptions used by management in the value-in-use calculations which are considered to be most sensitive to the calculation are:


Key Assumptions	September 30, 2011	December 31, 2010
Financial projections	Covers 4 years	Covers 4 years
Yield average growth rates	1-3%	1-3%
Future pricing increases	Between 3% and 5%	2% per annum
Future cost increases	Expected US Inflation	2% per annum
Discount rates	8.91%	8.67%
Perpetuity rate	4.5%	2.5%

Discount rates are based on the risk-free rate for U.S. government bonds, adjusted for a risk premium to reflect the increased risk of investing in South America and Brazil in particular. The risk premium adjustment is assessed for factors specific to the respective CGUs and reflects the countries that the CGUs operate in.

The following table shows only the 3 CGUs where goodwill was allocated as of September 30, 2011 and December 31,2010 and the corresponding amount of goodwill allocated to each one:


CGU/ Operating segment	September 30, 2011		December 31, 2010
Ivinhema / Sugar, Ethanol and Energy		8,741		9,531
UMA / Sugar, Ethanol and Energy		3,212		3,575
UMA (f.k.a. Alfenas Café Ltda) / Coffee		1,002		1,115

Closing net book amount of goodwill allocated to CGUs (Note 8)		12,955		14,221

Closing net book amount of PPE items and other assets		90,278		89,312

Total assets allocated to 3 CGUs		103,233		103,533

The 3 CGUs in Argentina and the remaining CGU in Brazil without allocated goodwill are not detailed here for simplicity purposes. Property, plant and equipment and finite-life intangible assets allocated to these 4 CGUs have an aggregated net book value of US$ 329,317 and US$ 375,293 of September 30, 2011 and December 31, 2010, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

F - 41

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

4.	Critical accounting estimates and judgments (continued)

Based on the testing above, the Group determined that none of the CGUs where value-in-use was applied were impaired as of September 30, 2011 and December 31, 2010.

Management views these assumptions as conservative and does not believe that any reasonable change in the assumptions would cause the carrying value of these CGU’s to exceed the recoverable amount.

(c) Biological assets

The nature of the Group’s biological assets and the basis of determination of their fair value are explained under Note 2.12. The discounted cash flow model requires the input of highly subjective assumptions including observable and unobservable data. Generally the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market and the use of unobservable inputs is significant to the overall valuation of the assets. Unobservable inputs are determined based on the best information available, for example by reference to historical information of past practices and results, statistical and agronomical information, and other analytical techniques. Key assumptions include future market prices, estimated yields at the point of harvest, estimated production cycle, future cash flows, future costs of harvesting and other costs, and estimated discount rate.

Market prices are generally determined by reference to observable data in the principal market for the agricultural produce. Harvesting costs and other costs are estimated based on historical and statistical data. Yields are estimated based on several factors including the location of the farmland and soil type, environmental conditions, infrastructure and other restrictions and growth at the time of measurement. Yields are subject to a high degree of uncertainty and may be affected by several factors out of the Group’s control including but not limited to extreme or unusual weather conditions, plagues and other crop diseases, among other factors.

The key assumptions discussed above are highly sensitive. Reasonable shifts in assumptions including but not limited to increases or decreases in prices, costs and discount factors used would result in a significant increase or decrease to the fair value of biological assets. In addition, cash flows are projected over a number of years and based on estimated production. Estimates of production in themselves are dependent on various assumptions, in addition to those described above, including but not limited to several factors such as location, environmental conditions and other restrictions. Changes in these estimates could materially impact on estimated production, and could therefore affect estimates of future cash flows used in the assessment of fair value.

The valuation models and their assumptions are reviewed annually, or quarterly if warranted, and, if necessary, adjusted. During the year ended December 31, 2009, the Group made no changes to the models and assumptions. During the year ended December 31, 2010, new information has been gained and accordingly the Group introduced an adjustment to the valuation model for sugarcane. Projected revenues are calculated since then based on the average of daily prices for sugar future contracts (Sugar # 11 ICE- NY contract) during the six-month period ended at period end rather than the spot price for sugar future contracts at year end used during 2009. The Group determined that the use of 6-month average of daily prices of future contracts was a more appropriate estimate for price inputs in the valuation model, as it would mitigate any additional variability that a single-day price may have on the sugarcane valuation model and was necessary to properly measure the fair value of the related biological assets given changes in market conditions in 2010. The effect of this change in the valuation model recognized in the line item “Initial recognition and changes in fair value of biological assets and agricultural produce” was an increase in the loss before income tax for US$ 47.5 million for the year ended December 31, 2010.

The accompanying notes are an integral part of these consolidated financial statements.

F - 42

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

4.	Critical accounting estimates and judgments (continued)

(d) Fair value of derivatives and other financial instruments

Fair values of derivative financial instruments are computed with reference to quoted market prices on trade exchanges, when available. The fair values of commodity options are calculated using year-end market rates together with common option pricing models. The fair value of interest rate swaps has been calculated using a discounted cash flow analysis.

(e) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Deferred tax assets are reviewed each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are not discounted. In assessing the recoverability of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. (See Note 21 for details).

(f) Allowance for trade receivables

Management maintains an allowance for trade receivables to account for estimated losses resulting from the inability of customers to make required payments. When evaluating the adequacy of an allowance for trade receivables, management bases its estimates on the aging of accounts receivable balances and historical write-off experience, customer credit worthiness and changes in customer payment terms. If the financial condition of customers were to deteriorate, actual write-offs might be higher than expected.

5.	Segment information

IFRS 8 “Operating Segments” requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM evaluates the business based on the differences in the nature of its operations, products and services. The amount reported for each segment item is the measure reported to the CODM for these purposes.

The Group operates in three major lines of business, namely, Farming; Sugar, Ethanol and Energy; and Land Transformation.

The accompanying notes are an integral part of these consolidated financial statements.

F - 43

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5.	Segment information (continued)

•

The Group’s ‘Farming’ is further comprised of five reportable segments:

•

The Group’s ‘Crops’ Segment consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/conditioning and handling and drying services to third parties. Each underlying crop in the Crops segment does not represent a separate operating segment. Management seeks to maximize the use of the land through the cultivation of one or more type of crops. Types and surface amount of crops cultivated may vary from harvest year to harvest year depending on several factors, some of them out of the Group´s control. Management is focused on the long-term performance of the productive land, and to that extent, the performance is assessed considering the aggregated combination, if any, of crops planted in the land. A single manager is responsible for the management of operating activity of all crops rather than for each individual crop.

•

The Group’s ‘Rice’ Segment consists of planting, harvesting, processing and marketing of rice;

•

The Group’s ‘Dairy’ Segment consists of the production of raw milk, which is processed into manufactured products and marketed through the Group’s joint venture La Lácteo;

•

The Group’s ‘Coffee’ Segment consists of cultivating coffee beans and marketing own and third party’s coffee production;

•

The Group’s ‘Cattle’ Segment consists of purchasing and fattening of beef cattle for sale to meat processors and local livestock auction markets. In December 2009, the Group strategically decided to sell a significant amount of heads of cattle from owned farmlands to Quickfood S.A., an international third party meat processor. Additionally, the contract provides for the third party to lease the Group’s farmland under an operating lease agreement to raise and fatten the purchased cattle. As required by the Antitrust Law, the Group reported this transaction to the Argentine Antitrust Commission for formal approval. As of the date of these consolidated financial statements, the authorization is still pending. The Group does not have any evidence which may indicate this transaction will not be formally approved.

•

The Group’s ‘Sugar, Ethanol and Energy’ Segment consists of cultivating sugarcane which is processed in owned sugar mills, transformed into ethanol, sugar and electricity and marketed;

•

The Group’s ‘Land Transformation’ Segment comprises the (i) identification and acquisition of underdeveloped and undermanaged farmland businesses; and (ii) realization of value through the strategic disposition of assets (generating profits).

The measurement principles for the Group’s segment reporting structure are based on the IFRS principles adopted in the consolidated financial statements. Revenue generated and goods and services exchanged between segments are calculated on the basis of market prices.

The following table presents information with respect to the Group’s reportable segments. Certain other activities of a holding function nature not allocable to the segments are disclosed in the column ‘Corporate’.

The accompanying notes are an integral part of these consolidated financial statements.

F - 44

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5.	Segment information (continued)

Segment analysis for the year ended December 31, 2011


	*Farming*																		Sugar, Ethanol and Energy			Land Transformation		*Corporate*			*Total*
	Crops			Rice			Dairy			Coffee			Cattle			Farming subtotal			Sugar, Ethanol and Energy			Land Transformation		*Corporate*			*Total*
Sales of manufactured products and services rendered		557			82,523			—			713			4,746			88,539			277,318			—		—			365,857
Cost of manufactured products sold and services rendered		—			(68,721	)		—			(629	)		(408	)		(69,758	)		(167,646	)		—		—			(237,404	)

Gross Profit from Manufacturing Activities		557			13,802			—			84			4,338			18,781			109,672			—		—			128,453

Sales of agricultural produce and biological assets		147,389			721			19,697			13,457			963			182,227			—			—		—			182,227
Cost of agricultural produce sold and direct agricultural selling expenses		(147,389	)		(721	)		(19,697	)		(13,457	)		(963	)		(182,227	)		—			—		—			(182,227	)
Initial recognition and changes in fair value of biological assets and agricultural produce		38,014			10,139			6,939			(697	)		468			54,863			31,948			—		—			86,811
Gain from changes in net realizable value of agricultural produce after harvest		10,953			—			—			(430	)		—			10,523			—			—		—			10,523

Gross Profit / loss from Agricultural Activities		48,967			10,139			6,939			(1,127	)		468			65,386			31,948			—		—			97,334

Margin on Manufacturing and Agricultural Activities Before Operating Expenses		49,524			23,941			6,939			(1,043	)		4,806			84,167			141,620			—		—			225,787

General and administrative expenses		(8,003	)		(6,278	)		(1,173	)		(1,153	)		(269	)		(16,876	)		(21,082	)		—		(27,184	)		(65,142	)
Selling expenses		(2,270	)		(14,488	)		(401	)		(463	)		(74	)		(17,696	)		(41,708	)		—		—			(59,404	)
Other operating income, net		1,843			372			(2	)		2,020			(3	)		4,230			11,220			8,832		299			24,581
Share of loss of joint ventures		—			—			(1,034	)		—			—			(1,034	)		—			—		—			(1,034	)

Profit / (loss) from Operations Before Financing and Taxation		41,094			3,547			4,329			(639	)		4,460			52,791			90,050			8,832		(26,885	)		124,788

Depreciation and amortization		1,469			3,105			600			530			226			5,930			28,254			—		—			34,184
Initial recognition and changes in fair value of biological assets (unrealized)		—			—			1,503			(1,394	)		—			109			8,797			—		—			8,906
Initial recognition and changes in fair value of agricultural produce (unrealized)		1,474			2,234			—			697			—			4,405			3,825			—		—			8,230
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)		36,540			7,905			5,436			—			468			50,349			19,326			—		—			69,675
Gain from changes in net realizable value of agricultural produce after harvest (unrealized)		1,944			—			—			(128	)		—			1,816			—			—		—			1,816
Gain from changes in net realizable value of agricultural produce after harvest (realized)		9,009			—			—			(302	)		—			8,707			—			—		—			8,707
Property, plant and equipment, net		236,031			45,134			9,437			22,558			21,030			334,190			425,506			—		—			759,696
Investment property		9,828			—			—			—			18,055			27,883			—			—		—			27,883
Goodwill		14,656			6,414			—			990			1,193			23,253			11,633			—		—			34,886
Biological assets		28,300			23,167			9,338			18,369			1,501			80,675			158,925			—		—			239,600
Investment in joint ventures		—			—			4,299			—			—			4,299			—			—		—			4,299
Inventories		37,343			12,667			1,070			2,509			45			53,634			42,513			—		—			96,147

Total segment assets		326,158			87,382			24,144			44,426			41,824			523,934			638,577			—		—			1,162,511

Borrowings		83,019			55,567			13,892			11,937			—			164,415			196,290			—		—			360,705

Total segment liabilities		83,019			55,567			13,892			11,937			—			164,415			196,290			—		—			360,705

The accompanying notes are an integral part of these consolidated financial statements.

F - 45

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5.	Segment information (continued)

Segment analysis for the year ended December 31, 2010


	*Farming*																		Sugar, Ethanol and Energy			Land Transformation		*Corporate*			*Total*
	Crops			Rice			Dairy			Coffee			Cattle			Farming subtotal			Sugar, Ethanol and Energy			Land Transformation		*Corporate*			*Total*
Sales of manufactured products and services rendered		344			59,280			—			2,709			3,718			66,051			228,478			—		—			294,529
Cost of manufactured products sold and services rendered		—			(52,017	)		—			(2,546	)		—			(54,563	)		(164,638	)		—		—			(219,201	)

Gross Profit from Manufacturing Activities		344			7,263			—			163			3,718			11,488			63,840			—		—			75,328

Sales of agricultural produce and biological assets		107,818			2,305			14,297			4,863			2,407			131,690			48			—		—			131,738
Cost of agricultural produce sold and direct agricultural selling expenses		(107,818	)		(2,305	)		(14,297	)		(4,863	)		(2,407	)		(131,690	)		(48	)		—		—			(131,738	)
Initial recognition and changes in fair value of biological assets and agricultural produce		38,879			9,360			9,129			(2,630	)		737			55,475			(86,003	)		—		—			(30,528	)
Gain from changes in net realizable value of agricultural produce after harvest		7,482			—			—			517			—			7,999			—			—		—			7,999

Gross Profit / (loss) from Agricultural Activities		46,361			9,360			9,129			(2,113	)		737			63,474			(86,003	)		—		—			(22,529	)

Margin on Manufacturing and Agricultural Activities Before Operating Expenses		46,705			16,623			9,129			(1,950	)		4,455			74,962			(22,163	)		—		—			52,799

General and administrative expenses		(7,087	)		(3,773	)		(2,910	)		(983	)		(350	)		(15,103	)		(19,080	)		—		(22,379	)		(56,562	)
Selling expenses		(1,522	)		(8,154	)		(333	)		(655	)		(175	)		(10,839	)		(41,689	)		—		—			(52,528	)
Other operating income, net		(6,194	)		345			—			(2,165	)		70			(7,944	)		5,305			20,837		26			18,224
Share of loss of joint ventures		—			—			(50	)		—			—			(50	)		—			—		—			(50	)

Profit / (loss) from Operations Before Financing and Taxation		31,902			5,041			5,836			(5,753	)		4,000			41,026			(77,627	)		20,837		(22,353	)		(38,117	)

Depreciation and amortization		1,711			2,080			423			449			333			4,996			32,567			—		—			37,563
Initial recognition and changes in fair value of biological assets (unrealized)		8,719			6,273			3,610			(2,450	)		(36	)		16,116			(96,795	)		—		—			(80,679	)
Initial recognition and changes in fair value of agricultural produce (unrealized)		7,229			742			—			(71	)		—			7,900			405			—		—			8,305
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)		22,931			2,345			5,519			(109	)		773			31,459			10,387			—		—			41,846
Gain from changes in net realizable value of agricultural produce after harvest (unrealized)		2,050			—			—			(523	)		—			1,527			—			—		—			1,527
Gain from changes in net realizable value of agricultural produce after harvest (realized)		5,432			—			—			1,040			—			6,472			—			—		—			6,472
																							—		—
Property, plant and equipment, net		204.454			50,899			4,202			25,265			18,830			303,650			448,342			—		—			751,992
Investment property		—			1,168			—			—			20,249			21,417			—			—		—			21,417
Goodwill		4,931			7,023			—			1,115			319			13,388			13,106			—		—			26,494
Biological assets		31,247			21,555			7,130			21,577			401			81,910			104,847			—		—			186,757
Investment in joint ventures		—			—			6,271			—			—			6,271			—			—		—			6,271
Inventories		22,926			8,422			883			7,023			61			39,315			17,855			—		—			57,170

Total segment assets		263,299			89,066			19,063			54,980			39,542			465,950			584,151			—		—			1,051,101

Borrowings		59,339			41,050			10,262			13,651			—			124,302			265,170			—		—			389,472

Total segment liabilities		59,339			41,050			10,262			13,651			—			124,302			265,170			—		—			389,472

The accompanying notes are an integral part of these consolidated financial statements.

F - 46

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5.	Segment information (continued)

Segment analysis for the year ended December 31, 2009


	*Farming*																		Sugar, Ethanol and Energy			Land Transformation		*Corporate*			*Total*
	Crops			Rice			Dairy			Coffee			Cattle			Farming subtotal			Sugar, Ethanol and Energy			Land Transformation		*Corporate*			*Total*
Sales of manufactured products and services rendered		9,667			67,317			752			7,984			172			85,892			97,494			—		—			183,386
Cost of manufactured products sold and services rendered		(5,447	)		(56,576	)		(613	)		(7,120	)		—			(69,756	)		(110,327	)		—		—			(180,083	)

Gross Profit / (loss) from Manufacturing Activities		4,220			10,741			139			864			172			16,136			(12,833	)		—		—			3,303

Sales of agricultural produce and biological assets		82,362			2,033			11,142			6,281			28,306			130,124			93			—		—			130,217
Cost of agricultural produce sold and direct agricultural selling expenses		(82,362	)		(2,033	)		(11,142	)		(6,281	)		(28,306	)		(130,124	)		(93	)		—		—			(130,217	)
Initial recognition and changes in fair value of biological assets and agricultural produce		6,563			12,170			3,374			(16,207	)		4,704			10,604			61,064			—		—			71,668
Gain from changes in net realizable value of agricultural produce after harvest		11,362			191			—			1,234			—			12,787			—			—		—			12,787

Gross Profit / (loss) from Agricultural Activities		17,925			12,361			3,374			(14,973	)		4,704			23,391			61,064			—		—			84,455

Margin on Manufacturing and Agricultural Activities Before Operating Expenses		22,145			23,102			3,513			(14,109	)		4,876			39,527			48,231			—		—			87,758

General and administrative expenses		(6,280	)		(2,883	)		(2,221	)		(2,126	)		(2,909	)		(16,419	)		(13,922	)		—		(22,052	)		(52,393	)
Selling expenses		(1,587	)		(7,485	)		(777	)		(1,353	)		(1,045	)		(12,247	)		(18,922	)		—		—			(31,169	)
Other operating income, net		4,776			(942	)		(108	)		806			377			4,909			(10,467	)		18,839		(210	)		13,071
Share of loss of joint ventures		—			—			(294	)		—			—			(294	)		—			—		—			(294	)

Profit / (loss) from Operations Before Financing and Taxation		19,054			11,792			113			(16,782	)		1,299			15,476			4,920			18,839		(22,262	)		16,973

Depreciation and amortization		2,066			1,452			403			570			353			4,844			25,512			—		—			30,356
Initial recognition and changes in fair value of biological assets (unrealized)		4,433			6,759			32			(12,662	)		127			(1,311	)		57,335			—		—			56,024
Initial recognition and changes in fair value of agricultural produce (unrealized)		1,485			—			—			(3,043	)		—			(1,558	)		1,375			—		—			(183	)
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)		645			5,411			3,342			(502	)		4,577			13,473			2,354			—		—			15,827
Gain from changes in net realizable value of agricultural produce after harvest (unrealized)		134			—			—			(7	)		—			127			—			—		—			127
Gain from changes in net realizable value of agricultural produce after harvest (realized)		11,228			191			—			1,241			—			12,660			—			—		—			12,660
Property, plant and equipment, net		248,594			31,282			10,652			2,680			767			293,975			388,903			—		—			682,878
Investment property		—			—			—			—			21,246			21,246			—			—		—			21,246
Goodwill		6,110			—			—			1,067			237			7,414			12,539			—		—			19,953
Biological assets		27,467			11,524			4,313			21,634			815			65,753			164,701			—		—			230,454
Investment in joint ventures		—			—			6,506			—			—			6,506			—			—		—			6,506
Inventories		23,832			9,460			1,086			1,992			716			37,086			20,816			—		—			57,902

Total segment assets		306,003			52,266			22,557			27,373			23,781			431,980			586,959			—		—			1,018,939

Borrowings		63,893			39,850			9,963			3,493			—			117,199			189,582			—		—			306,781

Total segment liabilities		63,893			39,850			9,963			3,493			—			117,199			189,582			—		—			306,781

The accompanying notes are an integral part of these consolidated financial statements.

F - 47

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5.	Segment information (continued)

Total segment assets are measured in a manner consistent with that of the consolidated financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. The Group’s investment in the joint venture Grupo La Lácteo is allocated to the ‘Dairy’ segment. Therefore, the Group’s share of profit or loss after income taxes and its carrying amount are reported in this segment.

Total reportable segments’ assets are reconciled to total assets as per the statement of financial position as follows:


	2011		2010
Total reportable assets as per Segment Information		1,162,511		1,050,101
Intangible assets (excluding goodwill)		1,869		2,159
Deferred income tax assets		37,081		47,056
Trade and other receivables		156,927		149,957
Other assets		1,408		26
Derivative financial instruments		10,353		876
Cash and cash equivalents		330,546		70,269

Total assets as per the Statement of Financial Position		1,700,695		1,239,717

Total segment liabilities are measured in a manner consistent with that of the consolidated financial statements. These liabilities are allocated based on the operations of the segment.

Total reportable segments’ liabilities are reconciled to total liabilities as per the statement of financial position as follows:


	2011		2010
Total reportable liabilities as per Segment Information		360,705		389,472
Trade and other payables		122,438		81,021
Deferred income tax liabilities		92,989		91,088
Payroll and social liabilities		18,441		16,656
Provisions for other liabilities		4,327		9,207
Current income tax liabilities		872		978
Derivative financial instruments		6,054		8,920

Total liabilities as per the Statement of Financial Position		605,826		597,342

Non-current assets and net revenue and fair value gains and losses are shown by geographic region. These are the regions in which the Group is active: Argentina, Brazil and Uruguay. Non-current assets are allocated to the regions according to the location of the assets in question. Non-current assets encompass intangible assets; property, plant and equipment; investments accounted for using the equity method as well as other non-current assets. Net revenue and fair value gains and losses are allocated according to the location of the respective operations.

The accompanying notes are an integral part of these consolidated financial statements.

F - 48

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5.	Segment information (continued)

As of and for the year ended December 31, 2011:


	Argentina		Brazil		Uruguay			Total
Property, plant and equipment		281,696		467,509		10,491			759,696
Investment property		27,883		—		—			27,883
Intangible assets		1,129		740		—			1,869
Goodwill		22,263		12,623		—			34,886
Investment in joint ventures		4,299		—		—			4,299
Non-current portion of biological assets		10,679		177,294		—			187,973
Initial recognition and changes in fair value of biological assets and agricultural produce		47,196		37,617		1,998			86,811
Gain from changes in net realizable value of agricultural produce after harvest		10,539		651		(667	)		10,523
Sales of manufactured products sold and services rendered		86,606		279,251		—			365,857
Sales of agricultural produce and biological assets		143,505		29,864		8,858			182,227

As of and for the year ended December 31, 2010:


	Argentina		Brazil			Uruguay			Total
Property, plant and equipment		246,602		495,075			10,315			751,992
Investment property		21,417		—			—			21,417
Intangible assets		1,115		1,044			—			2,159
Goodwill		12,272		14,222			—			26,494
Investment in joint ventures		6,271		—			—			6,271
Non-current portion of biological assets		7,169		97,047			—			104,216
Initial recognition and changes in fair value of biological assets and agricultural produce		54,226		(86,557	)		1,803			(30,528	)
Gain from changes in net realizable value of agricultural produce after harvest		8,157		(123	)		(35	)		7,999
Sales of manufactured products sold and services rendered		62,455		232,074			—			294,529
Sales of agricultural produce and biological assets		109,387		17,158			5,193			131,738

The accompanying notes are an integral part of these consolidated financial statements.

F - 49

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5.	Segment information (continued)

As of and for the year ended December 31, 2009:


	Argentina		Brazil		Uruguay		Total
Property, plant and equipment		228,723		430,175		23,980		682,878
Investment property		21,246		—		—		21,246
Intangible assets		243		1,663		—		1,906
Goodwill		6,347		13,606		—		19,953
Investment in joint ventures		6,506		—		—		6,506
Non-current portion of biological assets		4,379		165,968		—		170,347
Initial recognition and changes in fair value of biological assets and agricultural produce		26,995		42,348		2,325		71,668
Gain from changes in net realizable value of agricultural produce after harvest		10,001		1,794		992		12,787
Sales of manufactured products sold and services rendered		68,020		115,366		—		183,386
Sales of agricultural produce and biological assets		99,661		25,304		5,252		130,217

The accompanying notes are an integral part of these consolidated financial statements.

F - 50

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

6.	Property, plant and equipment

Changes in the Group’s property, plant and equipment in 2011 and 2010 were as follows:


	Farmlands			Farmland improvements			Buildings and facilities			Machinery, equipment, furniture and fittings			Computer equipment			Vehicles			Work in progress			Total
At January 1, 2010
Cost		299,872			3,086			122,644			233,170			2,205			2,560			106,826			770,363
Accumulated depreciation		—			(2,652	)		(19,990	)		(62,522	)		(823	)		(1,498	)		—			(87,485	)

Net book amount		299,872			434			102,654			170,648			1,382			1,062			106,826			682,878

Year ended December 31, 2010
Opening net book amount		299,872			434			102,654			170,648			1,382			1,062			106,826			682,878
Exchange differences		(4,919	)		(27	)		2,337			7,272			45			(33	)		4,173			8,848
Additions		974			10			4,964			22,337			592			455			67,654			96,986
Acquisition of subsidiary (Note 31)		13,666			—			375			33			—			2			—			14,076
Transfers		—			153			65,398			68,291			68			—			(133,910	)		—
Transfers from investment property (Note 7)		6,767			—			—			—			—			—			—			6,767
Disposals		(10,948	)		(153	)		(2,360	)		(456	)		(36	)		(122	)		—			(14,075	)
Reclassification to non-income tax credits (*)		—			—			—			—			—			—			(6,271	)		(6,271	)
Disposals of subsidiary
Depreciation charge (Note 25)		—			(172	)		(8,120	)		(28,215	)		(449	)		(261	)		—			(37,217	)

Closing net book amount		305,412			245			165,248			239,910			1,602			1,103			38,472			751,992

The accompanying notes are an integral part of these consolidated financial statements.

F - 51

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

6.	Property, plant and equipment (continued)


	Farmlands			Farmland improvements			Buildings and facilities			Machinery, equipment, furniture and fittings			Computer equipment			Vehicles			Work in progress			Total
At December 31, 2010
Cost		305,412			3,069			193,358			330,647			2,874			2,862			38,472			876,694
Accumulated depreciation		—			(2,824	)		(28,110	)		(90,737	)		(1,272	)		(1,759	)		—			(124,702	)

Net book amount		305,412			245			165,248			239,910			1,602			1,103			38,472			751,992

Year ended December 31, 2011
Opening net book amount		305,412			245			165,248			239,910			1,602			1,103			38,472			751,992
Exchange differences		(26,619	)		(24	)		(16,958	)		(24,265	)		(130	)		(60	)		(3,344	)		(71,400	)
Additions		7,272			145			1,522			10,599			510			304			70,591			90,943
Acquisition of subsidiary (Note 31)		30,863			241			76			161			—			56			—			31,397
Transfers		—			639			14,336			6,074			114			—			(21,163	)		—
Transfers from investment property (Note 7)		1,145			—			—			—			—			—			—			1.145
Disposals		(4,388	)		(2	)		(1,630	)		(534	)		(13	)		(40	)		—			(6,607	)
Reclassification to non-income tax credits (*)		—			—			—			(3,021	)		—			—			—			(3,021	)
Depreciation charge (Note 25)		—			(314	)		(8,977	)		(24,483	)		(609	)		(370	)		—			(34,753	)

Closing net book amount		313,685			930			153,617			204,441			1,474			993			84,556			759,696

At December 31, 2011
Cost		313,685			4,068			190,704			319,661			3,355			3.122			84,556			919,151
Accumulated depreciation		—			(3,138	)		(37,087	)		(115,220	)		(1,881	)		(2,129	)		—			(159,455	)

Net book amount		313,685			930			153,617			204,441			1,474			993			84,556			759,696

(*)

Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. The procedure adopted initially was to recognize such credits proportionally to the depreciation of these fixed assets on a monthly basis. During 2009, the Group elected to change the procedure to recognize these federal tax credits separately when the assets is purchased and, as permitted, the tax credits already “embedded” within the cost of the assets were reclassified to tax credit (See Note 12).

The accompanying notes are an integral part of these consolidated financial statements.

F - 52

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

6.	Property, plant and equipment (continued)

An amount of US$ 28,407; US$ 29,603 and US$ 16,895 of depreciation charges are included in “Cost of manufactured products sold and services rendered” for the years ended December 31, 2011, 2010 and 2009, respectively. An amount of US$ 4,424; US$ 7,614 and US$ 13,164 of depreciation charges are included in “General and administrative expenses” for the years ended December 31, 2011, 2010 and 2009, respectively. An amount of US$ 1,016, US$ nil and US$ nil of depreciation charges are included in “Selling expenses” for the years ended December 31, 2011, 2010 and 2009, respectively. An amount of US$ 906, US$ nil and US$ nil of depreciation charges were not charged to the statement of income and were capitalized in “Inventories” for the years ended December 31, 2011, 2010 and 2009, respectively.

During the year ended December 31, 2011, borrowing costs of US$ 1,918 (2010: US$5,453) were capitalized as components of the cost of acquisition or construction for qualifying assets.

Certain of the Group’s assets have been pledged as collateral to secure the Group’s borrowings and other payables. The net book value of the pledged assets amounts to US$ 319,392 as of December 31, 2011 (2010: US$ 334,743).

Where assets are financed by leasing agreements and substantially all the risks and rewards of ownership are substantially transferred to the Group (“finance leases”) the assets are treated as if they had been purchased outright and the corresponding liability to the leasing company is included as an obligation under finance leases. Depreciation on assets held under finance leases is charged to the income statement on the same basis as owned assets. Leasing payments are treated as consisting of capital and interest elements and the interest is charged to the statement of income as a financing charge. Assets under finance leases comprise vehicles, machinery and equipment. All other leases are treated as operating leases and the relevant annual rentals are charged to the statement of income as incurred (See Note 30).

7.	Investment property

Changes in the Group’s investment property in 2011 and 2010 were as follows:


	2011			2010
Beginning of the year		21,417			21,246
Acquisition of subsidiary (Note 31)		9,670			7,935
Transfers (i)		(1,145	)		(6,767	)
Exchange difference		(2,059	)		(997	)

End of the year		27,883			21,417

Cost		27,883			21,417
Accumulated depreciation		—			—

Net book amount		27,883			21,417

The following amounts have been recognized in the statement of income in the line “Sales of manufactured products and services rendered”:


	2011		2010		2009
Rental income		4,980		3,718		172

(i)	Transferred to property, plant and equipment in 2011 and 2010. Relates to finalization of contracts with third parties.

As of December 31, 2011, the fair value of investment property was US$ 86.6 million (2010: US$ 96.4 million).

The accompanying notes are an integral part of these consolidated financial statements.

F - 53

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

8.	Intangible assets

Changes in the Group’s intangible assets in 2011 and 2010 were as follows:


	Goodwill			Trademarks			Software			Total
At January 1, 2010
Cost		19,953			2,232			609			22,794
Accumulated amortization		—			(676	)		(259	)		(935	)

Net book amount		19,953			1,556			350			21,859

Year ended December 31, 2010
Opening net book amount		19,953			1,556			350			21,859
Exchange differences		(482	)		742			31			291
Additions		—			6			27			33
Acquisition of subsidiary (Note 31)		7,023			—			—			7,023
Disposals		—			(207	)		—			(207	)
Amortization charge (i) (Note 25)		—			(213	)		(133	)		(346	)

Closing net book amount		26,494			1,884			275			28,653

At December 31, 2010
Cost		26,494			2,773			667			29.934
Accumulated amortization		—			(889	)		(392	)		(1,281	)

Net book amount		26,494			1,884			275			28,653

Year ended December 31, 2011
Opening net book amount		26,494			1,884			275			28,653
Exchange differences		(2,747	)		(105	)		(43	)		(2,895	)
Additions		—			—			195			195
Acquisition of subsidiaries (Note 31)		11,139			—			—			11,139
Amortization charge (i) (Note 25)		—			(187	)		(150	)		(337	)

Closing net book amount		34,886			1,592			277			36,755

At December 31, 2011
Cost		34,886			2,667			818			38,371
Accumulated amortization		—			(1,075	)		(541	)		(1,616	)

Net book amount		34,886			1,592			277			36,755

(i)

An amount of US$ 149 and US$ 133 of amortization charges are included in “General and administrative expenses” for the years ended December 31, 2011 and 2010, respectively. An amount of US$186 and US$ 213 of amortization charges are included in “Selling expenses” for the years ended December 31, 2011 and 2010, respectively. There were no impairment charges for any of the years presented (see Note 4 (b)).

The accompanying notes are an integral part of these consolidated financial statements.

F - 54

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

9.	Biological assets

Changes in the Group’s biological assets in 2011, 2010 and 2009 were as follows:


	2011			2010			2009
Beginning of the year		186,757			230,454			125,948
Increase due to purchases		1,683			681			296
Disposal of subsidiary (Note 15)		—			—			(86	)
Acquisition of subsidiary (Note 31)		1,495			—			—
Initial recognition and changes in fair value of biological assets (i)		86,811			(30,528	)		71,668
Decrease due to harvest		(331,278	)		(237,465	)		(84,990	)
Decrease due to sales		(2,842	)		(2,138	)		(37,014	)
Costs incurred during the year		319,089			224,969			136,625
Exchange differences		(22,115	)		784			18,007

End of the year year		239,600			186,757			230,454

(i)

Biological asset with a production cycle of more than one year (that is, sugarcane, coffee, dairy and cattle) generated “Initial recognition and changes in fair value of biological assets” amounting to US$ 38,658 for the year ended December 31, 2011 (2010: US$ (78,767); 2009: US$ 52,935). In 2011, an amount of US$ 101,671 (2010: US$ (60,146); 2009: US$ 29,834) was attributable to price changes, and an amount of US$ (63,013) (2010: US$ (18,621); 2009: US$ 23,101) was attributable to physical changes.

Biological assets in 2011, 2010 and 2009 were as follows:


	2011		2010		2009
Non-current
Cattle for dairy production (i)		9,338		7,130		4,313
Breeding cattle (i)		—		—		—
Other cattle (ii)		1,341		39		66
Sown land – coffee (iii)		18,369		21,577		21,634
Sown land – sugarcane (iii)		158,925		104,847		164,701

		187,973		133,593		190,714

Current
Breeding cattle (i)		—		—		—
Other cattle (iv)		160		362		749
Sown land – crops (ii)		28,300		31,247		27,467
Sown land – rice (ii)		23,167		21,555		11,524

		51,627		53,164		39,740

Total biological assets		239,600		186,757		230,454

(i)	Classified as bearer and mature biological assets.

(ii)	Classified as consumable and immature biological assets.

(iii)

Classified as bearer and immature biological assets.

(iv)	As of December 31, 2011, and amount of US$ 124 (2010: 186; 2009: 493) was classified as consumable and mature biological assets, and an amount of US$ 36 (2010: 176; 2009: 256) was classified as consumable and immature biological assets.

The fair value less estimated point of sale costs of agricultural produce at the point of harvest amounted to US$ 325,843 for the year ended December 31, 2011 (2010: US$ 241,762; 2009: US$ 88,113).

The accompanying notes are an integral part of these consolidated financial statements.

F - 55

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

9.	Biological assets (continued)

A drought occurred during December 2011 affecting some of our farms in Argentina and Uruguay. As a result, the expected yield consider in the Biological Asset model was reduced generating a negative impact in “Initial recognition and changes in fair value of biological assets and agricultural produce” of US$ 4.5 million. Rain levels normalized during the beginning of 2012. The final effect of the drought will be known at harvest.

10.

Investments in joint ventures

The investment in joint ventures represents the Group’s share of 50% in Grupo La Lacteo.

In November 2007, the Group’s subsidiary, Adeco Agropecuaria S.A. entered into a milk supply offer agreement (the “Milk Supply Agreement”) with La Lacteo (amended in February 2010). Pursuant to the Milk Supply Agreement, Adeco Agropecuaria S.A. is committed to sell to La Lacteo and La Lacteo is obligated to purchase certain amount of the daily milk production subject to certain conditions. However, Adeco Agropecuaria S.A. is not obligated to sell to La Lacteo and La Lacteo is not obligated to purchase more than 50% of its milk requirements for a four-month period subject to certain conditions. The Milk Supply Agreement fixes the price of milk that La Lacteo pays to Adeco Agropecuaria S.A. at the monthly market price of milk plus 3%. The Milk Supply Agreement terminates in November 2017. In addition, if Adeco Agropecuaria S.A. receives a more favorable proposal from a third party compared to the agreement, Adeco Agropecuaria S.A. is free to sell the production to such party. However, La Lacteo has a right of first refusal.

The following amounts represent the Group’s 50% share of the assets and liabilities, and income and expenses of the joint venture:


	2011		2010
Assets:
Non-current assets		5,633		4,944
Current assets		5,883		5,697

		11,516		10,641

Liabilities:
Non-current liabilities		1,138		735
Current liabilities		6,079		3,635

		7,217		4,370

Net assets of joint venture		4,299		6,271


	2011			2010			2009
Income		2,040			1,989			2,268
Expenses		(3,074	)		(2,039	)		(2,562	)

Loss after income tax		(1,034	)		(50	)		(294	)

There are no contingent liabilities relating to the group’s interest in the joint venture, and no contingent liabilities of the venture itself.

In addition, on November 23, 1999, the Group’s subsidiary Pilagá S.A. entered into a joint venture with a third party, Copra S.A., for the purpose of obtaining rights to use public waters and construct a dam for irrigated rice production. On September 2011, Pilagá S.A. exited the UTE and such exit was registered with the Public Registry of Commerce of the city of Buenos Aires.

The accompanying notes are an integral part of these consolidated financial statements.

F - 56

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

11.

Financial instruments by category

The following table shows the carrying amounts of financial assets and financial liabilities by category of financial instrument and a reconciliation to the corresponding line item in the statements of financial position, as appropriate. Since the line items “Trade and other receivables, net” and “Trade and other payables” contain both financial instruments and non-financial assets or liabilities (such as other tax receivables or advance payments for services to be received in the future), the reconciliation is shown in the columns headed “Non-financial assets” and “Non-financial liabilities.”


	Loans and receivables		Assets at fair value through profit and loss		Subtotal financial assets		Non-financial assets		Total
December 31, 2011
Assets as per statement of financial position
Trade and other receivables		71,383		—		71,383		85,544		156,927
Derivative financial instruments		—		10,353		10,353		—		10,353
Cash and cash equivalents		330,546		—		330,546		—		330,546

Total		401,929		10,353		412,282		85,544		497,826


	Liabilities at fair value through profit and loss		Other financial liabilities at amortized cost		Subtotal financial liabilities		Non-financial liabilities		Total
Liabilities as per statement of financial position
Trade and other payables		—		114,181		114,181		8,257		122,438
Borrowings (excluding finance lease liabilities)		—		360,507		360,507		—		360,507
Finance leases		—		198		198		—		198
Derivative financial instruments		6,054		—		6,054		—		6,054

Total		6,054		474,886		480,940		8,257		489,197

The accompanying notes are an integral part of these consolidated financial statements.

F - 57

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

11.

Financial instruments by category (continued)


	Loans and receivables		Assets at fair value through profit and loss		Subtotal financial assets		Non-financial assets		Total
December 31, 2010
Assets as per statement of financial position
Trade and other receivables		70,115		—		70,115		79,842		149,957
Derivative financial instruments		—		876		876		—		876
Cash and cash equivalents		70,269		—		70,269		—		70,269

Total		140,384		876		141,260		79,842		221,102


	Liabilities at fair value through profit and loss		Other financial liabilities at amortized cost		Subtotal financial liabilities		Non-financial liabilities		Total
Liabilities as per statement of financial position
Trade and other payables		—		72,163		72,163		8,858		81,021
Borrowings (excluding finance lease liabilities)		—		389,024		389,024		—		389,024
Finance leases		—		448		448		—		448
Derivative financial instruments		8,920		—		8,920		—		8,920

Total		8,920		461,635		470,555		8,858		479,413

Liabilities carried at amortized cost also included liabilities under finance leases where the Group is the lessee and which therefore have to be measured in accordance with IAS 17. The categories disclosed are determined by reference to IAS 39. Finance leases are excluded from the scope of IFRS 7. Therefore, finance leases have been shown separately.

Because of the short maturities of most trade accounts receivable and payable, other receivables and liabilities, and cash and cash equivalents, their carrying amounts at the closing date do not differ significantly from their respective fair values. The fair value of long-term borrowings is disclosed in Note 20.

The accompanying notes are an integral part of these consolidated financial statements.

F - 58

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

11.

Financial instruments by category (continued)

Income, expense, gains and losses on financial instruments can be assigned to the following categories:


	Loans and receivables		Assets/liabilities at fair value through profit and loss		Other financial liabilities at amortized cost			Total
December 31, 2011
Interest income (i)		8,019		—		—			8,019
Interest expense (i)		—		—		(34,017	)		(34,017	)
Foreign exchange gains/ (losses) (ii)		9,899		1,405		(23,987	)		(12,683	)
Gain from derivative financial instruments(iii)		—		17,417		—			17,417

Net result		17,918		18,822		(58,004	)		(21,264	)


	Loans and receivables		Assets/liabilities at fair value through profit and loss		Other financial liabilities at amortized cost			Total
December 31, 2010
Interest income (i)		1,341		—		—			1,341
Interest expense (i)		—		—		(34,369	)		(34,369	)
Foreign exchange gains/ (losses) (ii)		372		—		(11,029	)		(10,657	)
Gain from derivative financial instruments(iii)		—		5,124		—			5,124

Net result		1,713		5,124		(45,398	)		(38,561	)


	Loans and receivables		Assets/liabilities at fair value through profit and loss			Other financial liabilities at amortized cost			Total
December 31, 2009
Interest income (i)		472		—			—			472
Interest expense (i)		—		—			(28,222	)		(28,222	)
Foreign exchange gains/ (losses) (ii)		11,939		—			(13,936	)		(1,997	)
Loss from derivative financial instruments(iii)		—		(7,800	)		—			(7,800	)

Net result		12,411		(7,800	)		(42,158	)		(37,547	)

(i)	Included in “Financial results, net” in the statement of income.

(ii)	Included in “Financial results, net” in the statement of income.

(iii)

Included in “Other operating income, net” and “Financial results, net” in the statement of income.

The accompanying notes are an integral part of these consolidated financial statements.

F - 59

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

11.

Financial instruments by category (continued)

Determining fair values

IAS 39 defines the fair value of a financial instrument as the amount for which a financial asset could be exchanged, or a financial liability settled, between knowledgeable, willing parties in an arm’s length transaction. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 7. This valuation hierarchy provides for three levels. The initial basis for the allocation is the “economic investment class”. Only if this does not result in an appropriate allocation the Group deviates from such an approach in individual cases. The allocation reflects which of the fair values derive from transactions in the market and where valuation is based on models because market transactions are lacking.

For the years ended December 31, 2011, 2010 and 2009, the financial instruments recognized at fair value on the statement of financial position comprise derivative financial instruments.

In the case of Level 1, valuation is based on unadjusted quoted prices in active markets for identical financial assets that the Group can refer to at the date of the statement of financial position. A market is deemed active if transactions take place with sufficient frequency and in sufficient quantity for price information to be available on an ongoing basis. Since a quoted price in an active market is the most reliable indicator of fair value, this should always be used if available. The financial instruments the Group has allocated to this level mainly comprise crop futures and options traded on the stock market. In the case of securities, the Group allocates them to this level when either a stock market price is available or prices are provided by a price quotation on the basis of actual market transactions.

Derivatives not traded on the stock market allocated to Level 2 are valued using models based on observable market data. For this, the Group uses inputs directly or indirectly observable in the market, other than quoted prices. If the financial instrument concerned has a fixed contract period, the inputs used for valuation must be observable for the whole of this period. The financial instruments the Group has allocated to this level mainly comprise interest-rate swaps and foreign-currency interest-rate swaps.

In the case of Level 3, the Group uses valuation techniques not based on inputs observable in the market. This is only permissible insofar as no observable market data are available. The inputs used reflect the Group’s assumptions regarding the factors which market players would consider in their pricing. The Group uses the best available information for this, including internal company data. The Group does not have financial instruments allocated to this level for any of the years presented.

The following tables present the Group’s financial assets and financial liabilities that are measured at fair value as of December 31, 2011 and 2010 and their allocation to the fair value hierarchy:


	2011
	Level 1		Level 2		Level 3		Total
Assets
Derivative financial instruments		10,353		—		—		10,353

Total assets		10,353		—		—		10,353

Liabilities
Derivative financial instruments		671		5,383		—		6,054

Total liabilities		671		5,383		—		6,054

The accompanying notes are an integral part of these consolidated financial statements.

F - 60

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

11.

Financial instruments by category (continued)


	2010
	Level 1		Level 2		Level 3		Total
Assets
Derivative financial instruments		876		—		—		876

Total assets		876		—		—		876

Liabilities
Derivative financial instruments		2,197		6,723		—		8,920

Total liabilities		2,197		6,723		—		8,920

When no quoted prices in an active market are available, fair values (particularly with derivatives) are based on recognized valuation methods. The Group uses a range of valuation models for this purpose, details of which may be obtained from the following table:


Concept	Pricing Method	Parameters	Pricing Model
Futures	Quoted price	—	—
Options	Quoted price	—	—
Options/ OTC	Quoted price	—	Montecarlo
Foreign-currency interest-rate swaps	Theoretical price	Swap curve; Money market interest-rate curve; Foreign-exchange curve.	Present value method
Interest-rate swaps	Theoretical price	Swap curve; Money market interest-rate curve	Present value method

The accompanying notes are an integral part of these consolidated financial statements.

F - 61

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

12.

Trade and other receivables, net


	2011			2010
Non current
Receivables from related parties (Note 33)		63			—

Trade receivables – net		63			—

Prepaid expenses		—			—
Advances to suppliers		2,719			—
Income tax credits		3,682			3,628
Non-income tax credits (i)		6,988			8,681
Receivable from disposal of farmland (iii) (Note 15)		—			13,656
Cash collateral		1,469			3,079
Other receivables		824			1,708

Non current portion		15,746			30,752

Current
Trade receivables		38,178			32,702
Receivables from related parties (Note 33)		4,846			1,662
Less: Allowance for trade receivables		(1,622	)		(1,323	)

Trade receivables – net		41,402			33,041

Prepaid expenses		12,102			8,299
Advances to suppliers		11,872			14,274
Income tax credits		2,522			6,954
Non-income tax credits (i)		45,659			38,006
Escrow deposits (ii)		—			—
Cash collateral		1,792			2,342
Receivable from disposal of farmland (iii) (Note 15)		18,090			10,432
Receivable with related parties (Note 33)		—			291
Other receivables		7,743			5,566

Subtotal		99,779			86,164

Current portion		141,181			119,205

Total trade and other receivables, net		156,927			149,957

(i)	Includes US$ 3,021 reclassified from property, plant and equipment.

(ii)	In connection with certain acquisitions, the Group deposited a portion of the consideration that would otherwise have been delivered to the sellers into an escrow account with a third party escrow agent to secure specified indemnification obligations of the sellers under the respective agreements.

(iii)

Relates to the sale of a farmland (See Note 15).

The fair values of current trade and other receivables approximate their respective carrying amounts due to their short-term nature. The fair values of non-current trade and other receivables approximate their carrying amount, as the impact of discounting is not significant.

The accompanying notes are an integral part of these consolidated financial statements.

F - 62

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

12.

Trade and other receivables, net (continued)

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies (expressed in US dollars):


	2011		2010
Currency
US Dollar		51,338		53,561
Argentine Peso		42,163		38,977
Uruguayan Peso		803		697
Brazilian Reais		62,622		56,722

		156,927		149,957

As of December 31, 2011 trade receivables of US$ 18,938 (2010: US$ 9,379) were past due but not impaired. The ageing analysis of these receivables is as follows:


	2011		2010
Up to 3 months		17,996		7,929
3 to 6 months		914		542
Over 6 months		28		908

		18,938		9,379

The Group recognizes an allowance for trade receivables when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Delinquency in payments is considered an indicator that the trade receivable is impaired.

Delinquency in payments is an indicator that a receivable may be impaired. However, management considers all available evidence in determining when a receivable is impaired. Generally, trade receivables, which are more than 180 days past due are fully provided for. However, certain receivables 180+ days overdue are not provided for based on a case-by-case analysis of credit quality analysis. Furthermore, receivables, which are not 180+ days overdue, may be provided for if specific analysis indicates a potential impairment.

Movements on the Group’s allowance for trade receivables are as follows:


	2011			2010
At January 1		1,323			906
Charge of the year		740			632
Acquisition of subsidiary		—			14
Unused amounts reversed		(385	)		(189	)
Used during the year		—			—
Exchange differences		(64	)		(40	)

At December 31		1,622			1,323

The creation and release of allowance for trade receivables have been included in “Selling expenses” in the statement of income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.

The other classes within other receivables do not contain impaired assets.

The accompanying notes are an integral part of these consolidated financial statements.

F - 63

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

12.

Trade and other receivables, net (continued)

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group holds mortgages as collateral for the sale of La Macarena and La Alegría farmlands.

As of December 31, 2011, approximately 36 % (2010: 23%) of the outstanding unimpaired trade receivables (neither past due nor impaired) relate to sales to 5 well-known multinational companies with good credit quality standing, including but not limited to Bunge, Raizen Combustivies S.A., Webcor S.A., or its affiliates, among others. Most of these entities or their parent companies are externally credit-rated. The Group reviews these external ratings from credit agencies.

The remaining percentage as of December 31, 2011 and 2010 of the outstanding unimpaired trade receivables (neither past due nor impaired) relate to sales to a dispersed large quantity of customers for which external credit ratings may not be available. However, the total base of customers without an external credit rating is relatively stable. New customers with less than six months of history with the Group are closely monitored. The Group has not experienced credit problems with these new customers to date. The majority of the customers for which an external credit rating is not available are existing customers with more than six months of history with the Group and with no defaults in the past. A minor percentage of customers may have experienced some non-significant defaults in the past but fully recovered.

13.

Inventories


	2011		2010
Raw materials		31,539		25,292
Finished goods		60,067		25,601
Stocks held by third parties		4,528		6,267
Others		13		10

		96,147		57,170

The cost of inventories recognized as expense and included in “Cost of manufactured products sold and services rendered” amounted to US$ 226,413 for the year ended December 31, 2011 (2010: US$ 208,485 and 2009: US$ 83,120). The cost of inventories recognized as expense and included in “Cost of agricultural produce sold and direct agricultural selling expenses” amounted to US$ 148,177 for the year ended December 31, 2011 (2010: US$101,288 and 2009: US$77,280).

14.

Cash and cash equivalents


	2011		2010
Cash at bank and on hand		238,902		31,768
Short-term bank deposits		91,644		38,501

		330,546		70,269

The accompanying notes are an integral part of these consolidated financial statements.

F - 64

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

15.

Disposals

As part of the Group´s strategy to profit from farmland value appreciation opportunities, from time to time, the Group completes sales of farmlands.

On November 30, 2011 the Group completed the sale of “La Alegría”, a 2,438 hectare farm located in General Villegas, province of Buenos Aires, Argentina, for a total consideration of US$13.7 million. This transaction resulted in a gain of US$ 8.8 million included within “Other operating income, net”. Cash collected totaled US$ 9.7 million. The remaining US$ 4.0 million receivable will be collected in July 2012 (see Note 12).

On December 21, 2010 the Group completed the sale of La Macarena, a farm located in Río Negro, Uruguay for cash consideration of US$ 34 million. This transaction resulted in a gain of US$ 20.8 million included within “Other operating income, net” in the statement of income as of December 31, 2010. Cash collected at December 31, 2011 totaled US$ 20.8 million. Remaining receivable will be collected during 2012 (see Note 12).

16.

Shareholders’ contributions

The share capital of the Group is represented by common shares with a nominal value of US$ 1.5 per share and one vote each.


	Number of shares		Share capital and share premium
At 1 January 2009		112,420		615,624
Contributed capital		7,580		67,719

At 31 December 2009		120,000		683,343
Contributed capital		—		—

At 31 December 2010		120,000		683,343
At January 24, 2011, after reverse stock split (1)		80,000		683,343
Issue of shares on January 28, 2011 (2)		40,069		423,030
Employee share options exercised (Note 17)		37		326
Restricted shares issued (Note 17)		427		641
Restricted shares exercised (Note 17)		—		746
Non controlling interest acquired (3)		—		(1,281	)

At 31 December 2011		120,533		1,106,805

(1)

The Extraordinary General Meeting of Adecoagro’s shareholders held on January 24, 2011 approved a reverse stock split of Adecoagro’s common shares, changing the nominal value of Adecoagro’s common shares from US$ 1 to US$ 1.5. Therefore, Adecoagro reduced total shares outstanding as of that date from 119,999,997 shares to 79,999,985 shares.

(2)	Initial Public Offering and private placement.

(3)	As a consequence of new contributions made in International Farmland Holdings LP fully attributable to the Group, non controlling interest was reduced from 2% to 1.36%.

On January 28, 2011 the Company successfully completed an initial public offering (IPO) of its shares in the New York Stock Exchange. The Company issued 28,405,925 shares, at a price of US$ 11 per share. In addition, on February 11, 2011, the Company issued 4,285,714 shares, at a price of US$ 11 per share, as a consequence of the over-alloment option exercised by the underwriters of the initial public offering, raising an overall amount of approximately US$ 359 million.

The accompanying notes are an integral part of these consolidated financial statements.

F - 65

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

16.

Shareholders’ contributions (continued)

On January 28, 2011, Adecoagro’s also issued and sold to Al Gharrafa Investment Company 7,377,598 common shares at a purchase price per share of US$ 10.65, which is equal to the price per common share paid by the underwriters acting in the initial public offering of the Company. This transaction was conditioned upon, and closed immediately after, the closing of the initial public offering of the Company. Consequently the Company raised US$ 79 million.

The Company intends to use these funds to finance part of the construction costs of Ivinhema (sugar and ethanol mill in Brazil) and for potential investments in the acquisition of farmland and capital expenditures required in the expansion of the farming business.

Related transaction costs totaling US$ 15 million net of tax have been netted off with the deemed proceeds, on the Share premium issued.

During 2011, the Company agreed to contribute the full proceed from the IPO to International Farmland Holdings LP, increasing its interest to 98.64%.

17.

Equity-settled share-based payments

The Group has set a “2004 Incentive Option Plan” and a “2007/2008 Equity Incentive Plan” (collectively referred to as “Option Schemes”) under which the Group grants equity-settled options to senior managers and selected employees of the Group´s subsidiaries. Additionally, in 2010 the Group has set a “Adecoagro Restricted Share and Restricted Stock Unit Plan” (referred to as “Restricted Share Plan”) under which the Group grants restricted shares to senior and medium management and key employees of the Group’s subsidiaries.

(a) Option Schemes

The Group recognized aggregate compensation expense of US$ 0.9 million for the year ended December 31, 2011 (2010: US$ 1.7 million; 2009: US$2.8 million) related to the options granted under the Option Schemes.

The fair value of the options under the Option Schemes was measured at the date of grant using the Black-Scholes valuation technique. This valuation model takes into account factors such as non transferability, expected volatility, exercise restrictions and behavioral considerations.

Key grant-date fair value and other assumptions under the Option Schemes are detailed below:


Grant Date	Jan 2009			Nov 2009			Jan 2010			Jan 2010			Jun 2010			Sep 2010			Sep 2010
Expected volatility		21	%		22	%		22	%		22	%		22	%		22	%		22	%
Expected life		6.50			6.50			6.5			6.5			6.5			6.5			6.5
Risk free rate		1,85	%		2,31	%		2.34	%		2.34	%		1.79	%		1.41	%		1.41	%
Expected dividend yield		0	%		0	%		0	%		0	%		0	%		0	%		0	%
Fair value per option	$	3.52		$	3.78		$	3.62		$	3.38		$	3.17		$	3.05		$	3.28
Possibility of ceasing employment before vesting		0.22	%		0.48	%		0.53	%		0.55	%		0.80	%		0.88	%		0.88	%
Exercise price	$	13.40		$	13.40		$	12.82		$	13.40		$	13.40		$	13.40		$	12.82

The accompanying notes are an integral part of these consolidated financial statements.

F - 66

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

17.

Equity-settled unit-based payments (continued)

Since the Group’s shares were not publicly traded at the time the options were granted, expected volatility was determined by calculating the historical volatility of share prices of comparable entities in representative stock markets. The expected life used in the model was adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations. On January 28, 2011 the Company completed its initial public offering in the New York Stock Exchange (see Note 16).

Details of each plan are as follow:

The Adecoagro/ IFH 2004 Stock Incentive Option Plan

This scheme was effectively established in 2004 and is administered by the Compensation Committee of the Company. Options under the Adecoagro/ IFH 2004 Stock Incentive Option Plan vest over a 3-year period from the date of grant at 33% on each anniversary of the grant date. Options are exercisable over a ten-year period. The exercise price of the options is determined by the Compensation Committee but under no circumstances the price may be less than 100% of the fair market value of the shares at the date of grant. For this scheme, there are no performance requirements for the exercising of options, except that a participant’s employment with the Group must not have been terminate prior to the date of exercise of the relevant option. If the participant ceases to be employee for cause any unvested option shall automatically expired and shall not be exercisable. In addition, if the participant ceases to be an employee for reason of death, any portion of the share option held by he or she that has vested on that date may be exercised by his or her legal representative for the period of one year. Finally if the participant ceases to be an employee for any reason other than cause or death any portion of any vested option held may be exercisable for a period of three months.

Movements in the number of equity-settled options outstanding and their related weighted average exercise prices under the Adecoagro/ IFH 2004 Stock Incentive Option Plan are as follows:


	2011					2010				2009
	Average exercise price per share		Options (thousands)			Average exercise price per share		Options (thousands)		Average exercise price per share		Options (thousands)
At January 1		6.67		2,176			6.74		2,401		6.74		2,401
Forfeited		7.31		(230	)		—		—		—		—
Exercised		5.83		(37	)		—		—		—		—

At December 31		6.68		1,909			6.74		2,401		6.74		2,401

The accompanying notes are an integral part of these consolidated financial statements.

F - 67

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

17.

Equity-settled unit-based payments (continued)

Options outstanding at year end under the Adecoagro/ IFH 2004 Incentive Option Plan have the following expiry date and exercise prices:


	Exercise price per share
			Shares (in thousands)
Expiry date:			2011		2010		2009
May 1, 2014		5.83		674		674		674
May 1, 2015		5.83		556		556		572
May 1, 2016		5.83		192		228		320
February 16, 2016		7.11		110		110		110
October 1, 2016		8,62		602		608		725

The Adecoagro/ IFH 2007/ 2008 Equity Incentive Plan

This scheme was effectively established in late 2007 and is administered by the Compensation Committee of the Company. Options under the Adecoagro/ IFH 2007/2008 Equity Incentive Plan vest over a 4-year period from the date of grant at 25% on each anniversary of the grant date. Options are exercisable over a ten-year period. The exercise price of the options is determined by the Compensation Committee but under no circumstances the price may be less than 100% of the fair market value of the shares at the date of grant. For this scheme, there are no performance requirements for the exercising of options, except that a participant’s employment with the Group must not have been terminated prior to the date of exercise of the relevant option. If the participant ceases to be employee for cause any unvested option shall automatically expired and shall not be exercisable. In addition, if the participant ceases to be an employee for reason of death, any portion of the share option held by he or she that has vested on that date may be exercised by his or her legal representative for the period of one year. Finally if the participant ceases to be an employee for any reason other than cause or death any portion of any vested option held may be exercisable for a period of three months.

Movements in the number of equity-settled options outstanding and their related weighted average exercise prices under the Adecoagro/ IFH 2007/2008 Equity Incentive Plan are as follows:


	2011					2010				2009
	Average exercise price per share		Options (thousands)			Average exercise price per share		Options (thousands)		Average exercise price per share		Options (thousands)
At January 1		13.06		2,113			13.02		2,030		12.83		1,312
Granted		—		—			13.25		198		13.40		718
Forfeited		12.89		(191	)		—		—		—		—

At December 31		13.06		1,922			13.06		2,228		13.02		2,030

The accompanying notes are an integral part of these consolidated financial statements.

F - 68

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

17.

Equity-settled unit-based payments (continued)

Options outstanding at year-end under the Adecoagro/ IFH 2007/2008 Equity Incentive Plan have the following expiry date and exercise prices:


	Exercise price per share
			Shares (in thousands)
Expiry date:			2011		2010		2009
Dec 1, 2017		12.82		1,149		1,198		1,312
Jan 30, 2019		13.40		687		700		700
Nov 1, 2019		13.40		18		18		18
Jan 30, 2020		12.82		31		35		—
Jan 30, 2020		13.40		71		81		—
Jun 30, 2020		13.40		22		22		—
Sep 1, 2020		13.40		44		44		—
Sep 1, 2020		12.82		15		15		—

The following table shows the exercisable shares at year end under both the Adecoagro/ IFH 2004 Incentive Option Plan and the Adecoagro/ IFH 2007/ 2008 Equity Incentive Plan:


	Exercisable shares in thousands
2011		3,681
2010		3,318
2009		2,038

During 2011, 36,900 options were exercised under the 2004 Incentive Option Plan. Accordingly, the Group issued and registered these shares with a nominal value of US$ 1.5.

(b) Restricted Share and Restricted Stock Unit Plan

The Restricted Share and Restricted Stock Unit Plan was effectively established in 2010 and amended in November 2011 is administered by the Compensation Committee of the Company. Restricted shares under the Restricted Share or Restricted Sotck Units Plan vest over a 3-year period from the date of grant at 33% on each anniversary of the grant date. Participants are entitled to receive one common share of the Company for each restricted share or restricted unit issued. For the Restricted Share Plan there are no performance requirements for the delivery of common shares, except that a participant’s employment with the Group must not have been terminated prior to the relevant vesting date. If the participant ceases to be an employee for any reason, any unvested restricted share shall not be converted into common shares and the participant shall cease for all purposes to be a shareholder with respect to such shares.

On July 18, 2011, the Group issued and registered 427,293 restricted shares with a nominal value of US$ 1.5 which were granted under the Restricted Share Plan. While the restricted shares are not vested, they are recognized in “Other reserves”. Once they are vested, the reserve is reversed and a share premium is recognized.

During 2011, 68,718 restricted shares were vested.

At December 31, 2011, the Group recognized compensation expense US$ 2.8 million related to the restricted shares granted under the Restricted Share Plan.

The accompanying notes are an integral part of these consolidated financial statements.

F - 69

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

17.

Equity-settled unit-based payments (continued)

The restricted shares under the Restricted Share Plan were measured at fair value at the date of grant.

Key grant-date fair value and other assumptions under the Restricted Share Plan are detailed below:


Grant Date	Apr 1, 2011			Apr 1, 2011			May 13, 2011
Fair value		12.69			12.69			12.36
Possibility of ceasing employment before vesting		5	%		10	%		0	%

Movements in the number of restricted shares outstanding under the Restricted Share Plan are as follows:


	Restricted shares (thousands)
	2011
At January 1, 2011		—
Granted		427
Forfeited		(2	)
Exercised		(69	)

At December 31, 2011		356

No restricted stock unit was awarded during 2011.

In December 2011, 2,370 restricted shares became forfeited and were returned to the Group. These restricted shares are held by the Group as treasury shares and presented within “Treasury shares” in the statement of changes in shareholders’ equity.

18.

Legal and other reserves

According to the laws of certain of the countries in which the Group operates, a portion of the profit of the year (5%) is separated to constitute legal reserves until they reach legal capped amounts. These legal reserves are not available for dividend distribution and can only be released to absorb losses. The legal limit of these reserves has not been met.

In addition, from time to time, the subsidiaries of the Group may separate portions of their profits of the year to constitute voluntary reserves according to company law and practice. These voluntary reserves may be released for dividend distribution.

Legal and other reserves amount to US$ 14,592 as of December 31, 2011 (2010: US$ 6,536; 2009: US$ 7,855) and are included within the balance of retained earnings in the statement of changes in shareholders’ equity.

The Company may make distributions in the form of dividends or otherwise to the extent that it has distributable retained earnings or available distributable reserves (including share premium) that result from the Stand Alone Financial Statements prepared in accordance with Luxembourg GAAP. No distributable retained earning result from the Stand Alone Financial Statements of the Company as of December 31, 2011, but the Company has distributable reserves in excess of US$ 904,157.

The accompanying notes are an integral part of these consolidated financial statements.

F - 70

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

19.

Trade and other payables


	2011		2010
Non-current
Payable from acquisition of property, plant and equipment (i)		3,646		4,239
Payable from acquisition of subsidiary (Note 31)		—		5,802
Taxes payable		1,547		1,331
Other payables		885		413
Escrows arising on business combinations (Note 31)		2,340		—

		8,418		11,785

Current
Trade payables		68,672		49,597
Payable from acquisition of subsidiary (Note 31)		35,730		5,802
Advances from customers		1,721		2,560
Amounts due to related parties (Note 33)		318		4,892
Taxes payable		4,989		4,967
Escrows arising on business combinations (Note 31)		—		—
Other payables		2,590		1,418

		114,020		69,236

Total trade and other payables		122,438		81,021

(i)	These trades payable are mainly collateralized by property, plant and equipment of the Group.

The fair values of current trade and other payables approximate their respective carrying amounts due to their short-term nature. The fair values of non-current trade and other payables approximate their carrying amounts, as the impact of discounting is not significant.

20.

Borrowings


	2011		2010
Non-current
Bank borrowings		203,330		250,591
Obligations under finance leases		79		81

		203,409		250,672

Current
Bank overdrafts		6,735		209
Bank borrowings		150,442		138,224
Obligations under finance leases		119		367

		157,296		138,800

Total borrowings		360,705		389,472

As of December 31, 2011, total bank borrowings include collateralized liabilities of US$ 297,472 (2010: US$ 350,654). These loans are mainly collateralized by property, plant and equipment and shares of certain subsidiaries of the Group.

The accompanying notes are an integral part of these consolidated financial statements.

F - 71

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

20.

Borrowings (continued)

The maturity of the Group’s borrowings (excluding obligations under finance leases) and the Group’s exposure to fixed and variable interest rates is as follows:


	2011		2010
Fixed rate:
Less than 1 year		70,007		52,326
Between 1 and 2 years		25,554		22,425
Between 2 and 3 years		12,426		7,661
Between 3 and 4 years		8,902		7,394
Between 4 and 5 years		7,551		5,920
More than 5 years		22,866		22,555

		147,306		118,281

Variable rate:
Less than 1 year		87,170		86,107
Between 1 and 2 years		40,353		70,905
Between 2 and 3 years		24,756		54,436
Between 3 and 4 years		23,507		17,506
Between 4 and 5 years		23,369		15,619
More than 5 years		14,046		26,170

		213,201		270,743

		360,507		389,024

Borrowings incurred by the Group’s subsidiaries in Brazil are repayable at various dates between January 2012 and March 2020 and bear either fixed interest rates ranging from 4.50% to 17.60% per annum or variable rates based on LIBOR or other specific base-rates plus spreads ranging from 3.42% to 16.55% per annum. At December 31, 2011 LIBOR (six months) was 0.81% (2010: 0.46%).

Borrowings incurred by the Group´s subsidiaries in Argentina are repayable at various dates between January 2012 and November 2018 and bear either fixed interest rates ranging from 1.25% and 7.75% per annum and variable rates based on LIBOR + 4.45% per annum.

As of December 31, 2011, total borrowings include (i) a US$ denominated 20.1 million loan (principal plus accrued interest) with a syndicated of banks, led by Rabobank International Brasil S.A. (“Rabobank”) (2010: US$ 30.2 million) due in 2013 (the “Syndicated Loan”); (ii) a Reais-denominated 118.2 million loan (principal plus accrued interest) (equivalent to US$ 63 million as of December 31, 2011) with BNDES-FINEM (the “BNDES Loan Facility”) due in 2018; (iii) a U.S. dollar-denominated 80 million loan with the Interamerican Development Bank (IDB) (the “IDB Facility”); (iv) a Reais-denominated 70.0 million facility (of which, as of December 31, 2010, the Group have received R$ 70.0 million, equivalent to US$ 37.0 million) from Banco do Brasil S.A. (BDB) (“The BDB Facility”) due between 2012 and 2020.

The accompanying notes are an integral part of these consolidated financial statements.

F - 72

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

20.

Borrowings (continued)

•

Syndicated Loan and BNDES Loan Facility

The amended Syndicated Loan bears interest at LIBOR plus 2.65 % per annum and the BNDES Loan Facility bears interest at a country-specific variable rate (“TJLP rate”) plus 4.05% per annum (TJLP at December 31, 2011 was 6.00%). The Syndicated Loan and the BNDES Loan Facility contain certain customary financial covenants, events of default and restrictions which require the Group to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends, except as would not result in a breach of the financial covenants. These financial covenants are measured on an annual basis as of the end of each fiscal year. Certain covenants are measured on a combined basis aggregating the borrowing subsidiaries and others are measured on an individual basis. Under the Syndicated Loan, defaults by either Adecoagro Vale do Ivinhema , UMA, Adeco Agropecuária Brasil S.A. or Adeco Brasil Participações S.A. on any indebtedness with an aggregate principal amount over US$ 500,000 can result in acceleration of the full outstanding loan amount due to the syndicate of banks. The obligations under this facility are secured by (i) a mortgage of the Takuare farm; (ii) a pledge on the capital stock (“quotas”) of Adecoagro Vale do Ivinhema; and (iii) liens over the Angélica mill and equipment, all of which are property of Adecoagro Vale do Ivinhema.

The financial covenants are defined as follows:

2011

2012 to 2013

2014 to 2018

Financial ratios:

Debt Service Coverage Ratio (individual)

> 1.00

> 1.30

Liquidity Ratio (individual)

> 1.00

Liquidity Ratio (aggregate)

> 1,00

> 1.20

Interest Coverage Ratio (aggregate)

> 2.00

> 4.00

Net Bank Debt / EBITDA (aggregate)

< 3.00

During 2011 and 2010 the Group was in compliance with all financial covenants.

•

IDB Facility

The amended IDB Facility is divided into a seven-year US$ 20.0 million tranche (“Tranche A”) and a five-year US$ 60.0 million tranche (“Tranche B”). Tranche A originally bore interest at 180-day LIBOR plus 5% per annum although subsequently revised to a fixed rate of 6.11% per annum. Tranche B bears interest at 180-day LIBOR plus 4.45% per annum, the Group entered into a floating to fix interest rate forward swap, fixing LIBOR at 1.25%, effective May 2012. Pursuant to this amendment the group got a new disbursement of USD 30,833,520.

Under the IDB Facility, defaults by either Adeco Agropecuaria S.A. or Pilagá S.A. on any indebtedness with an aggregate principal amount over US$ 3.0 million can result in acceleration of the full outstanding loan amount due to the IDB. The IDB Facility also contains certain customary financial covenants and restrictions which require us to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends. The financial covenants are measured in accordance with generally accepted accounting principles in Argentina and measured both on quarterly or annually basis.

The accompanying notes are an integral part of these consolidated financial statements.

F - 73

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

20.

Borrowings (continued)

During 2011, Adeco Agropecuaria S.A. and Pilagá S.A. were in compliance with all financial covenants.

2011

2012

2013

2014

2015

2016

2017

2018

Total Debt (i)

150,000

155,000

160,000

Current Ratio

1.10x

1.15x

1.20x

Interest Coverage Ratio

2.10x

2.15x

2.20x

2.25x

2.30x

2.40x

2.50x

2.60x

Liabilities to Equity

1.60x

1.70x

(i)	Measured on a quarterly basis.

In addition, the IDB Facility contains a change of control provision requiring acceleration of amounts due under the facility.

•

BDB Facility

In July 2010, Adecoagro Vale do Ivinhema, a Brazilian subsidiary, entered into a Reais-denominated 70.0 million loan (equivalent to US$ 37.3 million as of December 31, 2011) with Banco do Brasil S.A. due in 2020. The BDB Facility bears a fixed interest rate of 10% per annum with a bonus performance of 15% and is repayable on a monthly basis starting in August 2012 and ending in July 2020 (until August 2012, interest will be pay be quarterly). Under this facility, defaults by either Adecoagro Vale do Ivinhema or any of the Brazilian subsidiaries on any indebtedness can result in acceleration of the full outstanding loan amount due to BDB. It contains customary covenants and restrictions. Adecoagro Vale do Ivinhema’s obligations under the BDB Facility is secured by (i) a first mortgage of the Sapálio farm, which is owned by Adecoagro Vale do Ivinhema. and (ii) a first pledge on the equipment acquired or to be acquired by Adecoagro Vale do Ivinhema with the proceeds of such facility. Adecoagro Vale do Ivinhema is currently not, and has not been, in violation of any of the financial ratio covenants for the BDB Facility. The following table lists the financial ratios covenants Adecoagro Vale do Ivinhema subsidiary is currently required to meet under the BDB Facility:


Financial Ratios	2011 to 2013		2014 to 2020
Debt Service Coverage Ratio (individual)		>1.00		>1.30
Liquidity Ratio (individual)		>1.00		>1.00

•

DB Facility

On July 28, 2010, Adecoagro Vale do Ivinhema entered into a U.S. dollar-denominated 50.0 million facility with Deutsche Bank AG London Branch, which was due in 2013. It bore an annual interest at a variable rate equal to LIBOR plus 8.5%. As regard this Loan facility, on August 3, 2011 the Group fully prepaid the outstanding capital. This optional prepayment amounts to US$ 47.7 million including interest accrued until the prepayment date. Additionally, the Company paid the premium fee of 2.5% of the principal outstanding amount to be able to make the prepayment, equivalent to US$ 1.1 million.

The Group estimates that the carrying amount of short-term loans approximates fair value due to their short-term nature. The Group estimates that the fair values of the long-term bank loans are estimated based on the current rates offered to the Group for debt of similar terms and maturities. The Group’s fair value of long-term bank loans was not significantly different from the carrying value at December 31, 2011 and 2010.

The accompanying notes are an integral part of these consolidated financial statements.

F - 74

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

20.

Borrowings (continued)

The carrying amounts of the Group’s borrowings are denominated in the following currencies (expressed in US dollars):


	2011		2010
Currency
Argentine Peso		6,739		13
US Dollar		199,657		199,182
Uruguayan Peso		—		62
Brazilian Reais		154,309		190,215

		360,705		389,472

Obligations under finance leases

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

Gross finance lease liabilities – minimum lease payments:


	2011			2010
Not later than one year		119			396
Later than one year and not later than five years		79			81

		198			477
Future finance charges on finance leases		(17	)		(29	)

Present value of finance lease liabilities		181			448

The present value of finance lease liabilities is as follows:


	2011		2010
Not later than one year		119		367
Later than one year and not later than five years		79		81

		198		448

Under the terms of the lease agreements, no contingent rents are payable. The interest rate inherent in these finance leases is fixed at the contract date for all of the lease term. The average interest rate on finance lease payables at December 31, 2011 was 8.52% (2010: 10.67%).

21.

Taxation

Adecoagro is subject in Luxembourg to the applicable general tax regulations.

The Group’s income tax has been calculated on the estimated assessable taxable profit for the year at the rates prevailing in the respective foreign tax jurisdictions. The subsidiaries of the Group in the jurisdictions where the Group operates are required to calculate their income taxes on a separate basis; thus, they are not permitted to compensate subsidiaries´ losses against subsidiaries income. The details of the provision for the Group’s income tax are as follows:


	2011			2010			2009
Current income tax		(13,520	)		(3,956	)		(1,034	)
Deferred income tax		(1,142	)		20,219			6,449

Income tax (expense) benefit		(14,662	)		16,263			5,415

The accompanying notes are an integral part of these consolidated financial statements.

F - 75

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

21.

Taxation (continued)

The statutory tax rate in the countries where the Group operates for all of the years presented are:


Tax Jurisdiction	Income Tax Rate
Argentina		35	%
Brazil		34	%
Uruguay		25	%

Deferred tax assets of the Group as of December 31, 2011, 2010 and 2009, without taking into consideration the offsetting of balances within the same tax jurisdiction, will be recovered as follows:

2011

2010

2009

Deferred income tax asset to be recovered after more than 12 months

55,951

66,756

44,139

Deferred income tax asset to be recovered within 12 months

2,161

707

974

Deferred income tax assets

58,112

67,463

45,113

Deferred income tax liability to be recovered after more than 12 months

110,752

108,644

100,585

Deferred income tax liability to be recovered within 12 months

3,268

2,851

6,460

Deferred income tax liability

114,020

111,495

107,045

Deferred income tax liabilities, net

55,908

44,032

61,932

The gross movement on the deferred income tax account is as follows:


	2011			2010			2009
Beginning of year		44,032			61,932			75,914
Exchange differences		(4,282	)		(4,961	)		(7,000	)
Acquisition of subsidiary		15,016			7,280			—
Disposal of subsidiary (Note 15)		—			—			(533	)
Income tax benefit		1,142			(20,219	)		(6,449	)

End of year		55,908			44,032			61,932

The accompanying notes are an integral part of these consolidated financial statements.

F - 76

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

21.

Taxation (continued)

The movement in the deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:


Deferred income tax liabilities	Property, plant and equipment			Biological assets			Others			Total
At January 1, 2009		86,198			8,189			240			94,627
Charged/(credited) to the statement of income		(5,065	)		20,384			670			15,989
Disposal of subsidiary		(510	)		(14	)		(9	)		(533	)
Exchange differences		(1,771	)		(1,555	)		288			(3,038	)

At December 31, 2009		78,852			27,004			1,189			107,045

Charged/(credited) to the statement of income		(1,992	)		2,051			(376	)		(317	)
Disposal of subsidiary
Acquisition of subsidiary		7,280			—			—			7,280
Exchange differences		(2,546	)		(263	)		296			(2,513	)

At December 31, 2010		81,594			28,792			1,109			111,495

Charged/(credited) to the statement of income		6,943			(8,189	)		(764	)		(2,010	)
Acquisition of subsidiary		15,016			—			—			15,016
Exchange differences		(7,502	)		(4,117	)		1,138			(10,481	)

At December 31, 2011		96,051			16,486			1,483			114,020


Deferred income tax assets	Provisions			Tax loss carryforwards			Equity-settled share-based compensation		Biological Assets			Others			Total
At January 1, 2009		440			13,725			3,226		—			1,322			18,713
Charged/(credited) to the statement of income		675			19,201			999		—			1,563			22,438
Exchange differences		150			3,479			—		—			333			3,962

At December 31, 2009		1,265			36,405			4,225		—			3,218			45,113

Charged/(credited) to the statement of income		1,980			(2,655	)		617		19,525			435			19,902
Exchange differences		63			2,961			—		(1,632	)		1,056			2,448

At December 31, 2010		3,308			36,711			4,842		17,893			4,709			67,463

Charged/(credited) to the statement of income		2,364			7,455			1,117		(15,357	)		1,268			(3,152	)
Exchange differences		(604	)		(3,521	)		—		503			(2,577	)		(6,199	)

At December 31, 2011		5,068			40,645			5,959		3,039			3,401			58,112

Tax loss carry forwards may have expiration dates or may be permanently available for use by the Group depending on the tax jurisdiction where the tax loss carry forward is generated. Tax loss carry forwards in Argentina and Uruguay generally expire within 5 years. Tax loss carry forwards in Brazil do not expire. However, in Brazil, the taxable profit for each year can only be reduced by tax losses up to a maximum of 30%.

In order to fully realize the deferred tax asset, the Group will need to generate future taxable income in the countries where the net operating losses were incurred. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes that as at December 31, 2011, it is probable that the Group will realize all of the deferred tax assets in Argentina and some portion of the deferred tax assets in Brazil.

The accompanying notes are an integral part of these consolidated financial statements.

F - 77

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

21.

Taxation (continued)

As of December 31, 2011, the Group’s tax loss carry forwards and the jurisdictions, which generated them are as follows:


Jurisdiction	Tax loss carry forward		Expiration Period
Argentina		2,925	5 years
Uruguay		4,150	5 years
Brazil		122,192	No expiration date

Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through future taxable profits is probable. The Group did not recognized deferred income tax assets of US$ 3.1 million at December 31, 2011 in respect of losses amounting to US$ 9.1 million than can be carried forward against future taxable income.

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:


	2011			2010			2009
Tax calculated at the tax rates applicable to profits in the respective countries		30,947			(23,004	)		(8,100	)
Non-deductible items		2,075			3,210			702
Unused tax losses, net		(14,617	)		7,642			688
Non-taxable income		(4,056	)		(4,234	)		—
Others		313			123			1,295

Income tax benefit		14,662			(16,263	)		(5,415	)

22.

Payroll and social security liabilities


	2011		2010
Non-current
Social security payable		1,431		1,178

		1,431		1,178

Current
Salaries payable		3,174		3,471
Social security payable		2,758		2,223
Provision for vacations		7,100		6,155
Provision for bonuses		3,978		3,629

		17,010		15,478

Total payroll and social security liabilities		18,441		16,656

The accompanying notes are an integral part of these consolidated financial statements.

F - 78

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

23.

Provisions for other liabilities

The Group is subject to several laws, regulations and business practices of the countries where it operates. In the ordinary course of business, the Group is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, labor and social security, administrative and civil and other matters. The Group accrues liabilities when it is probable that future costs will be incurred and it can reasonably estimate them. The Group bases its accruals on up-to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity.

The table below shows the movements in the Group’s provisions for other liabilities categorized by type of provision:


	Labor, legal and other claims			Tax and social security			Onerous contracts			Total
At January 31, 2010		3,370			1,608			—			4,978
Additions		1,770			552			3,947			6,269
Used during year		(1,379	)		(705	)		—			(2,084	)
Exchange differences		(27	)		71			—			44

At December 31, 2010		3,734			1,526			3,947			9,207

Additions		1,274			430			222			1,926
Acquisition of subsidiaries		155			—			—			155
Used during year		(2,447	)		(79	)		(3,947	)		(6,473	)
Exchange differences		(256	)		(208	)		(24	)		(488	)

At December 31, 2011		2,460			1,669			198			4,327

Analysis of total provisions:


	2011		2010
Non current		3,358		4,606
Current		969		4,601

		4,327		9,207

The Group is engaged in several legal proceedings, including tax, labor, civil, administrative and other proceedings in Brazil, which qualified as contingent liabilities for an aggregate amount of US$ 5.2 million as of December 31, 2011.

The accompanying notes are an integral part of these consolidated financial statements.

F - 79

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

24.

Sales


	2011		2010		2009
Sales of manufactured products and services rendered:
Rice		82,079		58,876		65,521
Ethanol		116,599		114,793		62,811
Sugar		130,348		98,385		26,143
Soybean oil and meal		—		—		8,420
Energy		24,393		15,040		8,216
Coffee		713		2,709		7,984
Services		767		749		2,848
Rental income		4,980		3,717		172
Powder milk		—		—		720
Others		5,978		260		551

		365,857		294,529		183,386

Sales of agricultural produce and biological assets:
Soybean		61,385		64,890		35,696
Cattle for dairy		1,896		2,096		333
Other cattle		957		882		28,306
Corn		42,959		23,968		14,654
Cotton		9,101		2,395		11,905
Milk		17,801		13,415		10,809
Wheat		24,232		7,939		10,218
Coffee		13,457		4,862		6,281
Sunflower		7,413		4,880		5,517
Barley		828		1,171		3,106
Seeds		784		2,537		2,352
Others		1,414		2,703		1,040

		182,227		131,738		130,217

Total sales		548,084		426,267		313,603

Commitments to sell commodities at a future date

The Group entered into contracts to sell non financial instruments, mainly, sugar, soybean and corn through sales forward contracts. Those contracts are held for purposes of delivery the non financial instrument in accordance with the Group’s expected sales. Accordingly, as the own use exception criteria are met, those contracts are not recorded as derivatives.

The notional amount of these contracts is US$ 65.9 million as of December 31, 2011 (2010: US$ 77.2 million; 2009: US$ 29.1 million ) comprised primarily of 17,070 tons of sugar (US$ 9.2 million), 70,037 tons of soybean (U$S 24.1 million) and 92,359 tons of corn (US$ 16.0 million), which expire between January 2012 and September 2012.

25.

Expenses by nature

The Group presented the statement of income under the function of expense method. Under this method, expenses are classified according to their function as part of the line items “cost of manufactured products sold and services rendered”, “cost of agricultural produce sold and direct agricultural selling expenses”, “general and administrative expenses” and “selling expenses”.

The accompanying notes are an integral part of these consolidated financial statements.

F - 80

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

25.

Expenses by nature (continued)

The following table provides the additional disclosure required on the nature of expenses and their relationship to the function within the Group:


	2011		2010		2009
Cost of agricultural produce and biological assets sold		168,837		117,992		116,728
Raw materials and consumables used in manufacturing activities		147,339		136,208		95,959
Services		20,437		14,727		39,374
Salaries and social security expenses (Note 26)		57,259		52,728		37,099
Depreciation and amortization		34,184		37,563		30,356
Taxes (*)		2,159		3,462		4,307
Maintenance and repairs		16,032		14,299		17,046
Freights		31,956		24,198		11,322
Export taxes / selling taxes		31,006		30,205		21,779
Fuel and lubricants		8,522		9,336		5,507
Lease expense and similar arrangements (**)		2,592		3,262		2,764
Others		23,854		16,049		11,621

Total expenses by nature		544,177		460,029		393,862

(*)	Excludes export taxes and selling taxes.

(**)	Relates to various cancellable operating lease agreements for office and machinery equipment.

For the year ended December 31, 2011, an amount of US$ 237,404 is included as “cost of manufactured products sold and services rendered” (2010: US$ 219,201; 2009: US$ 180,083); an amount of US$ 182,227 is included as “cost of agricultural produce sold and direct agricultural selling expenses” (2010: US$ 131,738; 2009: US$ 130,217); an amount of US$ 65,142 is included in “general and administrative expenses” (2010: US$ 56,562; 2009: US$ 52,393); and an amount of US$ 59,404 is included in “selling expenses” as described above (2010: US$ 52,528; 2009: US$ 31,169).

26.

Salaries and social security expenses


	2011		2010		2009
Wages and salaries		40,596		40,090		27,777
Social security costs		12,986		10,857		6,442
Equity-settled share-based compensation		3,677		1,781		2,880

		57,259		52,728		37,099

Number of employees		5,560		5,263		5,290

The accompanying notes are an integral part of these consolidated financial statements.

F - 81

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

27.

Other operating income, net


	2011			2010			2009
Gain from the sale of subsidiaries (Note 15)		—			—			18,839
Gain / (loss) from commodity derivative financial instruments		19,664			106			(7,486	)
Loss from onerous contracts – forwards		(5,333	)		(3,935	)		—
Gain from disposal of farmland (Note 15)		8,832			20,837			—
Gain from disposal of other property items		394			847			337
Others		1,024			369			1,381

		24,581			18,224			13,071

28.

Financial results, net


	2011			2010			2009
Finance income:
- Interest income		8,019			1,341			472
- Foreign exchange gains, net		—			7,324			10,903
- Gain from interest rate/foreign exchange rate derivative financial instruments		—			5,018			—
- Other income		1,113			2,876			178

Finance income		9,132			16,559			11,553

Finance costs:
- Interest expense		(34,017	)		(34,369	)		(28,222	)
- Foreign exchange losses, net		(12,683	)		—			—
- Taxes		(5,273	)		(2,104	)		(2,060	)
- Loss from interest rate/foreign exchange rate derivative financial instruments		(2,247	)		—			(314	)
- Other expenses		(8,121	)		(3,023	)		(3,620	)

Finance costs		(62,341	)		(39,496	)		(34,216	)

Total financial results, net		(53,209	)		(22,937	)		(22,663	)

29.

Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of shares in issue during the period excluding ordinary shares held as treasury shares (Note 16).


	2011		2010			2009
Earnings/(losses) attributable to equity holders of the Group		56,018		(43,904	)		(260	)
Weighted average number of shares in issue (thousands)		117,028		80,000			80,000

Basic earnings/(losses) per share		0.4787		(0.5488	)		(0.0033	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 82

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

29.

Earnings per share (continued)

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all dilutive potential shares. The Group has one category of dilutive potential shares: equity-settled share options. For these instruments, a calculation is done to determine the number of shares that could have been acquired at fair value, based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the equity-settled share options. As of December 31, 2011, there were 2,038 thousands (2010: 4,629 thousands; 2009: 4,432 thousands) share options outstanding that could potentially have a dilutive impact in the future but were antidilutive for the periods presented.


	2011		2010			2009
Gain / (loss) attributable to equity holders of the Group		56,018		(43,904	)		(260	)

Weighted average number of shares in issue (thousands)		117,028		80,000			80,000
Adjustments for:
- Employee share options (thousands)		822		(	*)		(	*)

Weighted average number of shares for diluted earnings per share (thousands)		117,850		80,000			80,000

Diluted earnings per share		0.4753		(0.5488	)		(0.0033	)

(*)	The effects of anti-dilutive potential shares are ignored in the earnings per share calculation at December 31, 2010 and 2009. All shares are anti-dilutive in a loss period because they would decrease a loss per share.

As explained in Note 16, on January 24, 2011 the Extraordinary General Meeting of Adecoagro’s shareholders held on January 24, 2011 approved the reverse split of Adecoagro’s common shares, changing the nominal value of Adecoagro’s common shares from US$ 1 to US$ 1.5. Accordingly, the calculation of basic and diluted earnings per share for all periods presented had been adjusted retrospectively.

30.

Disclosure of leases and similar arrangements

The Group as lessee

Operating leases:

The Group leases various offices and machinery under cancellable operating lease agreements. Lease expense was US$ 4.77 million for the year ended December 31, 2011 (2010: US$ 4.41 million; 2009: US$ 2.2 million). Lease expense is included in “General and administrative expenses” in the consolidated statement of income.

The Group leases land for crop cultivation in Argentina. The leases have an average term of a crop year and are renewable at the option of the lessee for additional periods. Under the lease agreements, rent accrues generally at the time of harvest. Rent is payable at several times during the crop year. Lease expense was US$ 10.52 million for the year ended December 31, 2011 (2010: US$ 8.01 million; 2009: 4.3 million). Lease expense is capitalized as part of biological assets, affecting the periodically re-measurement of the biological assets at fair value. Based on this accounting policy, the line item ‘Initial recognition and changes in fair value of biological assets and agricultural produce’ in the consolidated income statement is directly affected by the lease expense that has been capitalized.

The accompanying notes are an integral part of these consolidated financial statements.

F - 83

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

30.

Disclosure of leases and similar arrangements (continued)

The future aggregate minimum lease payments under cancellable operating leases are as follows:


	2011		2010
No later than 1 year		6,910		3,246
Later than 1 year and no later than 5 years		3,256		2,110
Thereafter		467		478

		10,634		5,834

Agriculture “partnerships” ( parceria by its exact term in Portuguese) :

The Group enters into contracts with landowners to cultivate sugarcane on their land. These contracts have an average term of 5 years.

Under these contracts, the Group makes payments based on the market value of sugarcane per hectare (in tons) used by the Group in each harvest, with the market value based on the price of sugarcane published by CONSECANA and a fixed amount of total recoverable sugar per ton. Lease expense was US$ 17.1 million for the year ended December 31, 2011 (2010: US$ 15.8 million; 2009: US$ 9.9 million). Lease expense is included in “Initial recognition and changes in fair value of biological assets and agricultural produce” in the statement of income.

Finance leases:

When a lease transfers substantially all risks and rewards to the Group as lessee, the Group initially recognizes the leased assets in the consolidated statement of financial position at the lower of fair value or present value of the future minimum lease payments. Most of the leased assets carried in the consolidated statement of financial position as part of a finance lease relate to long-term rental and lease agreements for vehicles, machinery and equipment. The net book value of assets under finance leases amounts to US$ 275 and US$ 448 as of December 31, 2011 and 2010, respectively.

At the commencement of the lease term, the Group recognizes a lease liability equal to the carrying amount of the leased asset. In subsequent periods, the liability decreases by the amount of lease payments made to the lessors using the effective interest method. The interest component of the lease payments is recognized in the statement of income.

Information on the breakdown of the present value of finance leases and its components is disclosed in Note 20.

The Group as lessor

Operating leases:

The Group acts as a lessor in connection with an operating lease related to leased farmland. The lease payments received are recognized in profit or loss. The lease has a term of ten years.

The following amounts have been recognized in the statement of income in the line “Sales of manufactured products and services rendered”:


	2011		2010		2009
Rental income		4,980		3,718		172

The accompanying notes are an integral part of these consolidated financial statements.

F - 84

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

30.

Disclosure of leases and similar arrangements (continued)

The future minimum rental payments receivable under cancellable leases are as follows:


	2011		2010
No later than 1 year		4,397		4,520
Later than 1 year and no later than 5 years		17,437		18,081
Thereafter		12,714		17,704

		34,548		40,305

Finance leases:

The Group does not act as a lessor in connection with finance leases.

31.

Business combinations

Acquisitions completed during the year ended December 31, 2011

Acquisition of Compañía Agroforestal Sociedad Anónima (Agroforestal)

On August 18, 2011, the Group acquired 100% of the issued share capital of Agroforestal, an Argentine-based company mainly involved in agricultural and beef cattle industry, for a total consideration of US$ 18.0 million. The purchase price includes a cash payment of US$ 1.4 million and a seller financing of US$ 15.1 million plus accrued interest at a fixed stepped interest rate payable at the time the Argentine Antitrust Commission approves this transaction. The acquisition also involved an escrow in an amount of US$ 1.5 million, which was retained in escrow by the Group to secure certain obligations of the seller. The escrowed amount is to be released within a three-year period as from the date of acquisition. As of the date of these consolidated financial statements, the authorization of the Argentine Antitrust Commission is still pending but the Group expects to receive it by August 2012. The Group does not have any evidence which may indicate this transaction will not be formally approved.

In the period from acquisition to December 31, 2011, Agroforestal contributed revenues of US$ 0.5 million and net loss of US$ 0.1 million to the Group’s consolidated results. If Agroforestal had been acquired on January 1, 2011, combined revenues of the Group would have been US$ 4.2 million (unaudited) and Profit Before Income Tax would have been US$ 1.4 million (unaudited) for the year ended December 31, 2011. For purposes of this note the term revenues comprises the line items “sales of manufactured products and services rendered”, “sales of agricultural produce and biological assets”, “initial recognition and changes in fair value of biological assets and agricultural produce” and “changes in net realizable value of agricultural produce after harvest”. These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortization, as appropriate, that would have been charged assuming the fair value adjustments to net assets acquired had been applied from January 1, 2011, together with its consequential tax effects.

Results, assets and liabilities of Agroforestal as from the acquisition date are included within the ‘Crops’ and ‘Cattle’ segments.

Details of the net assets acquired and goodwill are as follows:


Purchase consideration:
Cash paid			1,350
Present value of seller financing (*)			15,056
Escrow (*)			1,379

Total purchase consideration			17,785

Fair value of net assets acquired			14,049

Goodwill			3,736

The accompanying notes are an integral part of these consolidated financial statements.

F - 85

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

31.

Business combinations (continued)

(*)	Discounted at present value as of the date of acquisition.

The goodwill generated on the acquisition was attributable mainly to the Group’s expected benefits from diversification and expansion into high-yield potential farmland properties.

The assets and liabilities at the date of acquisition are as follows:


	Fair value
Cash and cash equivalents		76
Property, plant and equipment		15,291
Investment property		3,709
Biological assets		1,495
Deferred tax liabilities		(6,858	)
Provisions for other liabilities		(39	)
Other current assets		1,219
Other current liabilities		(844	)

Net assets acquired		14,049

The outflow of cash and cash equivalents on the acquisition can be calculated as follows:


Cash paid	1,350
Cash and cash equivalents in subsidiary acquired	(76	)

Cash outflow on acquisition	1,274

Acquisition of Simoneta Sociedad Anónima (Simoneta)

On August 19, 2011, the Group acquired 100% of the issued share capital of Simoneta, an Argentine-based company mainly involved in agricultural industry, for a total consideration of US$ 26.4 million. The purchase price includes a cash payment of US$ 11.0 million and a seller financing of US$ 14.4.million payable in two installments in February and August 2012. The acquisition also involved contingent consideration to the seller in an amount of US$ 1.0 million, which was retained in escrow by the Group to secure certain obligations of the seller. The escrowed amount is to be released within a three-year period as from the date of acquisition.

In the period from acquisition to December 31, 2011, Simoneta contributed revenues of US$ 1 million and net loss of US$ 0.1 million to the Group’s consolidated results. If Simoneta had been acquired on January 1, 2011, combined revenues of the Group would have been US$ 6 million (unaudited) and Profit Before Income Tax would have been US$ 3 million (unaudited) for the year ended December 31, 2011. For purposes of this note the term revenues comprises the line items “sales of manufactured products and services rendered”, “sales of agricultural produce and biological assets”, “initial recognition and changes in fair value of biological assets and agricultural produce” and “changes in net realizable value of agricultural produce after harvest”. These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortization, as appropriate, that would have been charged assuming the fair value adjustments to net assets acquired had been applied from January 1, 2011, together with its consequential tax effects. Results, assets and liabilities of Simoneta as from the acquisition date are included within the ‘Crops’ segment.

The accompanying notes are an integral part of these consolidated financial statements.

F - 86

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

31.

Business combinations (continued)

Details of the net assets acquired and goodwill are as follows:


Purchase consideration:
Cash paid			11,000
Present value of seller financing (*)			14,124
Escrow (*)			923

Total purchase consideration			26,047

Fair value of net assets acquired			18,644

Goodwill			7,403

(*)	Discounted at present value as of the date of acquisition.

The goodwill generated on the acquisition was attributable mainly to the Group’s expected benefits from diversification and expansion into high-yield potential farmland properties.

The assets and liabilities at the date of acquisition are as follows:


	Fair value
Cash and cash equivalents		657
Property, plant and equipment		15,701
Investment property		5,961
Deferred tax liabilities		(7,705	)
Provisions for other liabilities		(116	)
Other current and non current assets		5,385
Other current liabilities		(1,239	)

Net assets acquired		18,644

The outflow of cash and cash equivalents on the acquisition can be calculated as follows:


Cash paid	11,000
Cash and cash equivalents in subsidiary acquired	(657	)

Cash outflow on acquisition	10,343

Acquisitions completed during the year ended December 31, 2010

Acquisition of Dinaluca Sociedad Anónima (Dinaluca)

On August 23, 2010, the Group acquired 100% of the issued share capital of Dinaluca, an Argentina-based company mainly involved in the lease of farmlands, for a total consideration of US$ 20.1 million. The purchase price includes a cash payment of US$ 7.9 million and seller financing of US$ 12.2 million plus accrued interest at LIBOR plus 2% on outstanding amounts payable in two equal installments on the first anniversary and second anniversary of the transaction. These payment obligations are guaranteed by a pledge of the acquired shares in favor of the former shareholders of Dinaluca.

The accompanying notes are an integral part of these consolidated financial statements.

F - 87

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

31.

Business combinations (continued)

In the period from acquisition to December 31, 2010, Dinaluca contributed revenues of US$ 0,06 million and gain of US$ 0.07 million to the Group’s consolidated results. If Dinaluca had been acquired on January 1, 2010, combined revenues of the Group would have been US$ 403.7 million (unaudited) and Loss Before Income Tax would have been US$ 60.8 million (unaudited) for the year ended December 31, 2010. For purposes of this note the term revenues comprises the line items “sales of manufactured products and services rendered”, “sales of agricultural produce and biological assets”, “initial recognition and changes in fair value of biological assets and agricultural produce” and “changes in net realizable value of agricultural produce after harvest”. These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortization, as appropriate, that would have been charged assuming the fair value adjustments to net assets acquired had been applied from January 1, 2010, together with its consequential tax effects. Results, assets and liabilities of Dinaluca as from the acquisition date are included within the ‘Rice’ and ‘Cattle’ segments.

Details of the net assets acquired and goodwill are as follows:


Purchase consideration:
Cash paid			7,900
Present value of seller financing (*)			11,604

Total purchase consideration			19,504

Fair value of net assets acquired			12,481

Goodwill			7,023

(*)	Discounted at present value as of the date of acquisition.

The goodwill generated on the acquisition was attributable mainly to the Group’s expected benefits from diversification and expansion into high-yield potential farmland properties.

The assets and liabilities at the date of acquisition are as follows:


	Fair value
Cash and cash equivalents		28
Property, plant and equipment		14,076
Investment property		7,935
Deferred income tax		(6,930	)
Other current assets		1,330
Other current liabilities		(3,958	)

Net assets acquired		12,481

The outflow of cash and cash equivalents on the acquisition can be calculated as follows:


Cash paid	7,900
Cash and cash equivalents in subsidiary acquired	(28	)

Cash outflow on acquisition	7,872

The accompanying notes are an integral part of these consolidated financial statements.

F - 88

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

32.

Group companies

The following table details the companies making up the Group as of December 31, 2011 and 2010:


					2011			2010
	Activities			Country of incorporation and operation	Ownership percentage held if not 100%			Ownership percentage held if not 100%
Details of principal subsidiary undertakings:
Operating companies (unless otherwise stated):
Americas
Adeco Agropecuaria S.A.		(a	)	Argentina		—			—
Pilagá S.A.		(a	)	Argentina		99.84	%		99.84	%
Cavok S.A.		(a	)	Argentina		—			—
Establecimientos El Orden S.A.		(a	)	Argentina		—			—
Bañado del Salado S.A.		(a	)	Argentina		—			—
Agrícola Ganadera San José S.R.L.		(a	)	Argentina		—			—
Santa Regina Agropecuaria S.R.L.		(a	)	Argentina		—			—
Agro Invest S.A.		(a	)	Argentina		—			—
Forsalta S.A.		(a	)	Argentina		—			—
Dinaluca S.A.		(a	)	Argentina		—			—
Simoneta S.A.		(a	)	Argentina		(iii	)		—
Compañía Agroforestal S.A.		(a	)	Argentina		(iii	)		—
Adeco Agropecuaria Brazil S.A.		(b	)	Brazil		—			—
Adecoagro Comercio Exportação e importação Ltda (f.k.a. Alfenas Café Ltda).		(c	)	Brazil		(ii	)		(ii	)
Adecoagro Vale do Ivinhema Ltda.		(b	)	Brazil		(iv	)
Angélica Agroenergia Ltda.		(b	)	Brazil		(iv	)		—
Usina Monte Alegre Ltda.		(b	)	Brazil		—			—
Fazenda Mimoso Ltda.		(c	)	Brazil		—			—
Ivinhema Agronergia S.A. (f.k.a. Amandina Agroenergía Ltda.)		(b	)	Brazil		(iv	)		—
Kelizer S.A.		(a	)	Uruguay		—			—
Adecoagro Uruguay S.A.		(a	)	Uruguay		—			—
Holdings companies:
Americas
Adeco Brazil Participacoes S.A.		—		Brazil		—			—
International Farmland Holdings LP		—		United States		98.64	%		98.00	%
Adecoagro LP		—		United States		—			—
Ladelux S.C.A.		—		Uruguay		—			—
Asia
AFI (L) LTD		—		Malaysia		(i	)		(i	)
Europe
Kadesh Hispania S.L.		—		Spain		—			—
Leterton España S.L.		—		Spain		—			—
Ona Ltd.		—		Malta		—			—
Toba Ltd.		—		Malta		—			—
Details of principal joint venture undertakings:
Americas
Grupo La Lácteo		(d	)	Canada		50.00	%		50.00	%

The accompanying notes are an integral part of these consolidated financial statements.

F - 89

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

32.

Group companies (continued)

(a)	Mainly crops, rice, cattle and others

(b)	Mainly sugarcane, ethanol and energy

(c)	Mainly coffee

(d)	Mainly dairy

(i)	In process of liquidation

(ii)	Merged with Usina Monte Alegre Ltda

(iii)

Acquired in August 2011 (Note 31)

(iv)	Angélica Agroenergia Ltda. merged with Ivinhema Agronergia S.A. (f.k.a. Amandina Agroenergía Ltda.). Its new name is Adecoagro Vale do Ivinhema Ltda.

The percentage voting right for each principal subsidiary is the same as the percentage of capital stock held. Issued share capital represents only ordinary shares/ quotas, units or their equivalent. There are no preference shares or units issued in any subsidiary undertaking.

33.

Related-party transactions

The following is a summary of the balances and transactions with related parties:


Related party	Relationship	Description of transaction	Income (loss) included in the statement of income									Balance receivable (payable)
Related party	Relationship	Description of transaction	2011			2010			2009			2011			2010
Grupo La Lácteo	Joint venture	Sales of goods		16,459			13,397			10,849						—
Grupo La Lácteo		Purchases of goods		—			—			(748	)					—
		Receivables from related parties (Note 12)		—			—			—			4,909			1,662
		Payables (Note 19)		—			—			—			—			—
Mario Jorge de Lemos Vieira/ Cia Agropecuaria Monte Alegre/ Alfenas Agricola Ltda/ Marcelo Weyland Barbosa Vieira/ Paulo Albert Weyland Vieira	(i)	Cost of manufactured products sold and services rendered (ii)		(3,136	)		(3,334	)		(2,155	)					—
		Receivables from related parties (Note 12)		—			—			—			—			291
		Payables (Note 19)		—			—			—			(318	)		(4,892	)
UMA members	(i)	Tax charge		—			4,138			—			—			—
Ospraie	(i)	Consent fee (iii)		(3,000	)		—			—			—			—
Directors and senior management	Employment	Compensation selected employess		(6,594	)		(6,593	)		(8,330	)		(15,306	)		(13,659	)

The accompanying notes are an integral part of these consolidated financial statements.

F - 90

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

33.

Related-party transactions (continued)

(i)	Shareholders of the Company.

(ii)	Relates to agriculture partnership agreements (“parceria”).

(iii)

One-time cost related to the agreement entered into with Ospraie to waive certain rights following the completion of initial public offering.

Ospraie Consent Agreement

On December 14, 2010, the Group entered into a consent agreement with Ospraie Special Opportunities Master Holdings Ltd, or Ospraie, one of the Groups shareholders, pursuant to which the Company should pay to Ospraie an aggregate amount of US$ 3 million, subject to certain conditions, promptly following the completion of the initial public offering in consideration for their agreement to waive certain of their rights under the Groups’ shareholders agreement, which terminates upon the initial public offering. The payment was made in February 2011.

The accompanying notes are an integral part of these consolidated financial statements.

F - 91

Exhibit 4.7

LOGO

March 24, 2011

Adeco Agropecuaria S.A.

Catamarca 3454

B1640FWB | Martinez

Buenos Aires, Argentina

Pilaga S.A.

Catamarca 3454

B1640FWB | Martinez

Buenos Aires, Argentina

Re: Loan No. 2028A/OC - AR —Amendment Offer No. 1/2011

Ladies and Gentlemen:

We make reference to the Loan Agreement, dated as of December 19, 2008 (as amended from time to time, the “ Loan Agreement ”), among Adeco Agropecuaria S.A., Pilaga S.A. (the “ Borrowers ”) and Inter-American Development Bank (“ IDB ”). Capitalized terms used but not defined in this offer letter have the meanings assigned to them in the Loan Agreement. The rules of interpretation set forth in Section 1.2 ( Interpretation ) of the Loan Agreement shall apply to this offer letter.

We hereby offer to you the option to accept certain new terms to the Loan Agreement pursuant to the terms set forth in Schedule 1 hereto (the “ Offer No . 1/2011 ”). The Offer No. 1/2011 can only be accepted by delivering a written copy of your acceptance to IDB not later than March 31, 2011.

3.	If you accept this Offer 01/2011 as stated in paragraph 2 above any such acceptance delivered pursuant to paragraph 2 above shall be irrevocable and such acceptance and the terms set forth in this Offer No. 1/2011 shall remain in force until the Loan has been repaid in full.

4.	The terms and conditions of the Loan Agreement in effect as of the date of this Offer 01/2011 shall continue in full force and effect unchanged, except as amended by this Offer 01/2011 upon its acceptance by each of the Borrowers.

5.	THIS OFFER 01/2011 IS GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.

6.	The provisions of Section 8.1 ( Notices ), Section 8.5 ( Counterparts ), Section 8.7 ( Amendment ), Section 8.10 ( Applicable Law and Jurisdiction ), Section 8.11

( Term of Agreement ), Section 8,13 ( Entire Agreement ), Section 8.14 ( No Third Party Beneficiaries ) and Section 8.15 ( Waiver and Estoppel ) of the Loan Agreement are incorporated herein and shall apply to this Offer 01/2011, mutatis mutandis .

This is an offer and, if not accepted in writing as provided in Section 2 herein, shall expire.

Yours truly,


INTER-AMERICAN DEVELOPMENT BANK


Name:		JOHN CAHILLANE CHIEF, PORTFOLIO MANAGEMENT UNIT STRUCTURED AND CORPORATE FINANCE DEPARTMENT
Title:

SCHEDULE 1:

TERMS OF THE OFFER 1/2011

I.	DEFINITIONS

The following definitions shall apply to the Offer 01/2011 and where the same term is contained in the Loan Agreement, the following terms shall prevail:

Debt means, with respect to any Person, the aggregate (as of the relevant date of calculation) of ail such Person’s obligations (whether actual or contingent) to pay or repay money, including:

(a) all indebtedness for Money Borrowed;

(b) any credit to such Person from a supplier of goods or under any installment purchase or other similar arrangement in respect of goods or services (except trade accounts payable within one hundred and eighty (180) days in the ordinary course of business);

(c) the aggregate amount then outstanding of all liabilities of any other Person to the extent that such Person provides a guarantee of, or indemnity for, such liabilities or otherwise obligates itself to pay such liabilities; and

(d) all liabilities of such Person (actual or contingent) under any conditional sale or a transfer with recourse or obligation to repurchase, including by way of discount or factoring of book debts or receivables,

but provided that:

the calculation of Debt on a Combined Basis shall exclude loans between Adeco and Pilaga, and

ii.

the calculation of Debt on an individual or Combined Basis shall exclude Deferred Lease Payments under the Lease Agreements

Equity Contribution means, the subscription and payment in cash by a Shareholder of Share Capital of the Borrowers,

II.

GENERAL PROVISIONS

The following provisions shall apply to the Offer 01/2011 and the applicable section or sub-section of the Loan Agreement referred to below shall be deemed deleted in its entirety and replaced with the following:

Section 6.2.4 ( Financial Ratios on an Individual Basis ) of Section 6.2 ( Negative Covenants )

6.2.4

Financial Ratios on An Individual Basis . Permit at any time (tested on a quarterly and yearly basis) with respect to either Borrower:

6.2.4.1

the Debt to EBITDA Ratio to exceed 4.0:1.0 in 2008 and 3.75:1.0 in 2009;

6.2.4.2

the Total Liabilities to Equity Ratio to exceed 1.4:1.0 in 2008 and 2009; and

6.2.4.3

the Debt to Equity Ratio for each individual Borrower beginning on and including December 31, 2010, to exceed:


December 31, 2010		1.7:1.0
March 31, 2011		1.65:1.0
June 30, 2011		1.6:1.0
September 30, 2011		1.55:1.0
December 31, 2011		1.5:1.0
March 31, 2012		1.425:1.0
June 30, 2032		1.35:1.0
September 30, 2011		1.275:1.0
December 31, 2012 and thereafter		1.2:1.0

Section 6.2.9 ( Purchase of Assets ) of Section 6.2 ( Negative Covenants )

6 . 2 . 9 Purchase of Assets . Purchase any assets or business or make any capital expenditure exceeding the equivalent of fifteen million Dollars ($15,000,000) on a Combined Basis in respect of both Borrowers in any given twelve (12) month period,

but provided that:

purchases of assets or capita! expenditures to complete the Free Stall Project II (as defined in Part A of Schedule A ( Capital Expenditures )) in an amount of up to ten million Dollars ($10,000,000) in any given twelve (12) month period and up to a cumulative amount of eighteen million Dollars ($18,000,000), shall not be computed towards the above-mentioned fifteen million Dollars ($15,000,000) limit,

ii.	the above-mentioned fifteen million Dollars ($15,000,000) limit may be exceeded to the extent that the additional purchases or capital expenditures are financed with Equity Contributions received during the same twelve (12) month period, and

iii.	any amount corresponding to Equity Contributions made in any twelve (12) month period in excess of such additional purchases or capital expenditures may be used in future twelve (12) month periods.

Exhibit 4.8

EXECUTION VERSION

November 9, 2011

Adeco Agropecuaria S.A.

Fondo de la Legua 936

B1640EDO | Martínez

Buenos Aires, Argentina

Pilagá S.A.

Fondo de la Legua 936

B1640EDO | Martínez

Buenos Aires, Argentina

Re: Loan No. 2028A/OC-AR—Offer No. 2/2011

Ladies and Gentlemen:

We make reference to the Loan Agreement, dated as of December 19, 2008 (as amended from time to time, the “ Loan Agreement ”), among Adeco Agropecuaria S.A., (“ Adeco ”), Pilagá S.A. (formerly, Pilagá S.R.L.) (“ Pilagá ”, and jointly with Adeco, the “ Borrowers ”) and the Inter-American Development Bank (“ IDB ”). Capitalized terms used but not defined in this offer letter have the meanings assigned to them in the Loan Agreement. The rules of interpretation set forth in Section 1.2 ( Interpretation ) of the Loan Agreement shall apply to this offer letter.

We hereby offer to you the option to accept certain new terms to the Loan Agreement pursuant to the terms set forth in Schedule 1 hereto (the “ Offer No. 2/2011 ”). The Offer No. 2/2011 can only be accepted by delivery of a written copy of your acceptance to IDB not later than close of business in Washington, DC on November 9th, 2011.

3.	If you accept this Offer No. 2/2011 as stated in paragraph 2 above any such acceptance delivered pursuant to paragraph 2 above shall be irrevocable and such acceptance and the terms set forth in this Offer No. 2/2011 shall remain in force until the Loan has been repaid in full.

4.	The terms and conditions of the Loan Agreement in effect as of the date of this Offer No. 2/2011 shall continue in full force and effect unchanged, except as amended by this Offer No. 2/2011 upon its acceptance by each of the Borrowers.

5.	THIS OFFER NO. 2/2011 IS GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.

The provisions of Section 8.1 ( Notices ), Section 8.5 ( Counterparts ), Section 8.7 ( Amendment ), Section 8.10 ( Applicable Law and Jurisdiction ), Section 8.11 ( Term of Agreement ), Section 8.13 ( Entire Agreement ), Section 8.14 ( No Third Party Beneficiaries ) and Section 8.15 ( Waiver and Estoppel ) of the Loan Agreement are incorporated herein and shall apply to this Offer No. 2/2011, mutatis mutandis .

This is an offer and, if not accepted in writing as provided in Section 2 herein by November 9, 2011, shall expire.

Yours truly,

INTER-AMERICAN DEVELOPMENT BANK

Name:

Title:

LOGO

November 9 ^th , 2011

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attention: Structured and Corporate Finance Department, Portfolio Management Unit

Ladies and Gentlemen:

We hereby accept the Offer No. 2/2011, dated as of November 9 ^th , 2011.


Yours truly,

ADECO AGROPECUARIA S.A.		PILAGÁ S.A.

By:		By:
Name:		Name:
Title:	Authorized Representative	Title:	Authorized Representative

EXECUTION VERSION

Schedule 1:

Terms of the Offer No. 2/2011

RECITALS

WHEREAS , pursuant to a loan agreement dated as of December 19, 2008, between Adeco Agropecuaria S.A. and Pilagá S.A. (each a “ Borrower ” and collectively the “ Borrowers ”) on the one hand, and the Inter-American Development Bank (“ IDB ”) on the other hand, as amended by: the Offer 01/2009, dated February 20, 2009, the Waiver Request No. 2, dated December 24, 2009, the Amendment Offer No. 2/2009, dated December 29, 2009, the Waiver Request No. 3/2010, dated March 30, 2010, the Offer No. 4/2010, dated May 14, 2010, the Amendment Offer No. 5/2010, dated November 8, 2010, the Offer No. 6/2010, dated December 28, 2010, the Offer No. 1/2011, dated January 25, 2011 and the Amendment Offer No. 1/2011, dated March 24, 2011 (the “ Original Loan Agreement ”, and as amended and restated hereby, this “ Agreement ”), IDB agreed to make a loan to the Borrowers in an aggregate original principal amount of up to eighty million Dollars ($ 80,000,000);

WHEREAS , IDB has agreed to lend to the Borrowers a third B Loan tranche (the “ Third B Loan Tranche ”) in the principal amount of thirty million eight hundred thirty-three thousand five hundred twenty Dollars (U.S $30,833,520);

WHEREAS , the parties acknowledge and agreed that the A Loan, the First B Loan Tranche and the Second B Loan Tranche have been disbursed in full and partially repaid (and provisions relating to the Disbursement thereof are included for historical reasons only)

WHEREAS , in connection with the foregoing, the Borrowers and IDB desire to amend and restate the Original Loan Agreement pursuant to the terms contained herein.

NOW , THEREFORE , in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1.

Definitions; Interpretation

Section 1.1 Definitions.

In this Agreement the following terms shall have the following meanings:

A Loan means the loan specified in Section 3.1.1(i) ( The Loan Amount ) or, as the context may require, the principal amount thereof from time to time outstanding.

A Loan Disbursement means any amount of the A Loan that is disbursed pursuant to Section 3.2 ( Disbursement Procedure ).

A Loan Final Maturity Date means November 15, 2018.

A Loan Fixed Interest Rate means, if the Borrowers make the A Loan Fixed Interest Rate Election, the fixed rate of interest payable on the outstanding principal amount of the A Loan from time to time determined in accordance with Section 3.21 (A Loan Fixed Rate Option ).

A Loan Fixed Interest Rate Election means a notice delivered by the Borrowers to IDB stating that they elect for the A Loan to bear interest at the A Loan Fixed Interest Rate in accordance with Section 3.21 (A Loan Fixed Rate Option ) and, as a result thereof and of the application of the provisions of Section 3.21 (A Loan Fixed Rate Option ), the A Loan accrues interest at the A Loan Fixed Interest Rate as from the date stated in such notice and accepted by IDB.

A Loan Interest Rate means the A Loan Fixed Interest Rate or the A Loan Variable Interest Rate, as relevant, determined in accordance with Sections 3.21 ( A Loan Fixed Rate Option ) and Section 3.22 (A Loan Variable Rate Option ) and, if applicable, and Section 3.24 ( Change in Interest Period ) of this Agreement; provided that as of the Acceptance Date and until the A Loan Fixed Rate Election is made, and therefore, if the Borrowers subsequently make the A Loan Variable Rate Election, this shall mean the A Loan Variable Interest Rate.

A Loan Repayment Date has the meaning assigned to that term in Section 3.3.1 ( Repayment ).

A Loan Spread means four point seventy percent (4.70%) per annum.

A Loan Variable Interest Rate means, if the Borrowers made the A Loan Variable Interest Rate Election, the variable rate of interest payable on the outstanding principal amount of the A Loan from time to time determined in accordance with Section 3.22 (A Loan Variable Rate Option ).

A Loan Variable Interest Rate Election means a notice delivered by the Borrowers to IDB stating that they elect for the A Loan to bear interest at the A Loan Variable Interest Rate in accordance with Section 3.22 ( A Loan Variable Rate Option ) as from the date of the notice.

Acceptable Financial Institution means a commercial bank or insurance company organized under the laws of the United States of America, or any State thereof, having total assets in excess of one billion Dollars ($1,000,000,000) and having an Acceptable Rating.

Acceptable Rating means, with respect to a financial institution, an international credit rating from Standard & Poor’s Ratings Group (a division of McGraw Hill Companies) ( S&P ) of “A” or better, or from Moody’s Investor Services, Inc. ( Moody’s ) of A2 or better in respect of its long-term debt.

Acceptance Date means the date when this Offer No. 2/2011 is accepted by the Borrowers.

Accounting Principles means the generally accepted accounting principles (GAAP) of Argentina, together with its pronouncements thereon from time to time, and applied on a consistent basis.

Adeco means Adeco Agropecuaria S.A.

Affiliate means, with respect to any Person, any other Person (including directors and officers of such Person) directly or indirectly Controlling, Controlled by, or under direct or indirect common Control with such Person and, with respect to each Borrower, such term shall include any Sponsor and any Affiliate thereof.

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Affiliate Transaction has the meaning assigned to that term in Section 6.2.12 ( Affiliate Transactions ).

Agreement means the Offer 02/2011 sent by IBD to the Borrowers, including all Schedules and Exhibits attached hereto when and as duly accepted by the Borrowers.

Alternate Base Rate means, for any Interest Period, an interest rate per annum equal to LIBOR for such Interest Period, plus the TED Spread Margin for such Interest Period.

Annual Budget means the annual combined budget of the Borrowers prepared and approved by the Borrowers, respectively, for each Financial Year.

Applicable LIBOR means the interest rate corresponding to:

(a)

the prevailing one-month LIBOR if the period from and including the relevant Interest Rate Determination Date to but excluding the next Interest Rate Determination Date is between one (1) and forty-five (45) days;

(b)

the prevailing two-month LIBOR if the period from and including the relevant Interest Rate Determination Date to but excluding the next Interest Rate Determination Date is between forty-six (46) and seventy-five (75) days;

(c)

the prevailing three-month LIBOR if the period from and including the relevant Interest Rate Determination Date to but excluding the next Interest Rate Determination Date is between seventy-six (76) and one hundred and five (105) days;

(d)

the prevailing four-month LIBOR if the period from and including the relevant Interest Rate Determination Date to but excluding the next Interest Rate Determination Date is between one hundred and six (106) and one hundred and thirty-five (135) days;

(e)

the prevailing five-month LIBOR if the period from and including the relevant Interest Rate Determination Date to but excluding the next Interest Rate Determination Date is between one hundred and thirty-six (136) and one hundred and sixty-five (165) days; and

(f)

the prevailing six-month LIBOR if the period from and including the relevant Interest Rate Determination Date to but excluding the next Interest Rate Determination Date is more then one hundred and sixty-five (165) days.

Applicable Spread means, as the context requires,

(a)

with respect to the A Loan, the A Loan Spread; and

(b)

with respect to the B Loan, the B Loan Spread.

Argentina means the Republic of Argentina.

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Auditors means PricewaterhouseCoopers, or such other firm of internationally recognized independent public accountants as the Borrowers may, from time to time, appoint as auditors of the Borrowers.

Authority means any supranational body, or any national, regional or local government or any other political subdivision thereof, any governmental, administrative, arbitral, regulatory, fiscal, judicial or government-owned body, department, commission, authority, tribunal, agency, central bank (or any Person, whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank) or other entity of any kind exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, in each case having jurisdiction over the matter or matters in question.

Authorization means any consent, registration, filing, agreement, enrollment, recording, notarization, certificate, license, approval, permit, authorization or exemption from, by or with any Authority, whether given or withheld by express action or deemed given or withheld by failure to act within any specified time period and all corporate, shareholders’ creditors’ and any other third party approvals or consents.

Authorized Representative means, as to any Person, any natural person who is duly authorized by such Person to act for such Person, or with respect to financial matters, the chief financial officer or treasurer of such Person and, in the case of the Borrowers, in addition to complying with the foregoing requirements, any person whose name and specimen signature appear on the Certificate of Incumbency and Authority most recently delivered to IDB.

B Loan means the loan specified in Section 3.1.1(ii) ( The Loan Amount ) (for the avoidance of doubt, consisting of the First B Loan Tranche, the Second B Loan Tranche and the Third B Loan Tranche) or, as the context may require, the principal amount thereof from time to time outstanding.

B Loan Commitment means (a) up to thirty five million Dollars ($35,000,000) provided by the Participants pursuant to the relevant Participation Agreements, for the First B Loan Tranche, (b) up to fourteen million Dollars ($14,000,000) provided by the Participants pursuant to the relevant Participation Agreements, for the Second B Loan Tranche, and (c) up to thirty million eight hundred and thirty three thousand five hundred and twenty Dollars ($30,833,520) provided by the Participants pursuant to the relevant Participation Agreements, for the Third B Loan Tranche and provided, for the avoidance of doubt, that the commitments referred to in (a) and (b) have been utilized in full and partially repaid prior to the Acceptance Date.

B Loan Disbursement means any amount of the B Loan that is disbursed pursuant to Section 3.2 ( Disbursement Procedure ).

B Loan Fee Letter means the fee letter dated as of the date hereof between the Borrowers and IDB with respect to certain fees with respect to the B Loan.

B Loan Final Maturity Date means November 15, 2016.

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B Loan Interest Rate means the rate of interest payable on the outstanding principal amount of the B Loan from time to time, determined in accordance with Section 3.23.3 ( B Loan Interest ) and, if applicable, Section 3.24 ( Change in Interest Period ).

B Loan Repayment Date has the meaning assigned to that term in Section 3.3.2 ( Repayment ).

B Loan Spread means four point forty-five percent (4.45%) per annum.

Base Case means the Borrowers’ financial projections in relation to the implementation of the Financial Plan (as defined in the Original Loan Agreement) and the compliance by the Borrowers with the Financial Covenants during the life of the Loan, prepared by an Authorized Representative of the Borrowers, and delivered in electronic form with its corresponding computer model and attached as Schedule 1(A) ( Base Case ) (as defined in the Original Loan Agreement).

BCRA means the Banco Central de la República Argentina.

Biodiversity Management Plans (BMP) means a plan based on a biodiversity study, and reasonably satisfactory to the IDB, for the construction and operation of each of the following Capital Expenditures: Ita Caboo, San Joaquin, Carmen, Ombu, Meridiano and Doña Marina, and any other Capital Expenditure as applicable under the ESHSP or the EMS, setting out the necessary steps to safeguard and enhance the ecosystem of which the respective Capital Expenditure is part. Each BMP shall (i) identify the main types of vegetation and landscape units; (ii) set goals, objectives and targets; (iii) determine species and habitat priorities for management, conservation and monitoring; (iv) generate information for the follow-up and annual evaluation of the conservation areas of the Borrowers; and (v) be integrated with the Environmental and Social Management Plan for the respective Capital Expenditure.

Borrower and Borrowers has the meaning assigned to that term in the introductory paragraph.

Borrower’s Information has the meaning assigned to that term in Section 8.6.1 ( Confidential Information ).

Business Day means a day when banks are open for business in the City of New York, New York, and, for the purpose of determining the Disbursement Swap Market Fixed Rate or LIBOR (other than pursuant to subclause (b) of the definition of LIBOR), in London, England as well.

Capital Expenditures means the expenditures set out in Schedule 8 ( Capital Expenditures ).

Capitalized Lease Obligation means, with respect of any Person, any obligation of such Person under a lease or license of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease or financial lease obligation under the Accounting Principles and, for the purpose hereof, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with the Accounting Principles.

Certificate of Incumbency and Authority means a certificate provided to IDB by each Borrower in the form of Exhibit 3 ( Form of Certificate of Incumbency and Authority ).

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Code means the Internal Revenue Code of the United States of America and the regulations promulgated thereunder.

Combined Basis means the notional consolidation of the accounts of the Borrowers, but excluding any intercompany transaction between them.

Commitment Fee has the meaning assigned to that term in Section 3.8.1 ( Charges and Fees ). Commitment Termination Date means the earliest of:

(a)

February 15, 2012;

(b)

the date specified in a notice issued by either Borrower to IDB pursuant to Section 3.16 ( Cancellation by the Borrowers ), provided that the terms of Section 3.16.2 ( Cancellation by the Borrowers ) are fully satisfied; and

(c)

any other date on which the obligation of IDB to make Disbursements of the Loan is terminated in accordance with the terms of this Agreement. For the avoidance of doubt, it is acknowledged that the obligation to make Disbursements of the A Loan, First B Loan Tranche and Second B Loan Tranche has been terminated by the full Disbursements of such portions of the Loan.

Complementary ESHS Action Plan means the action plan to be agreed upon between IDB and the Borrowers in accordance with the scope delineated in the Preliminary Complementary ESHS Action Plan set forth in Schedule 13 and to be integrated in the Environmental, Social, Health and Safety Action Plan (ESHSP) and implemented as part of the Environmental and Social Requirements.

Consultants means the Economic Consultant, the Environmental and Social Consultant and the Real Estate Consultant and any other independent expert retained at IDB’s discretion for services performed or to be performed pursuant to any of the Financing Documents or related to the transactions contemplated thereby.

Consultant Services Agreement means the agreement among IDB, the Borrowers and the Real Estate Consultant dated June 5, 2008.

Control means, with respect to any Person, any other Person having the power, directly or indirectly, (a) to vote fifty one percent (51%) or more of the securities having ordinary voting power for the election of directors of such Person; or (b) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise ( Controlling and Controlled have corresponding meanings).

Corrective Action Plan means a plan, in form and substance acceptable to IDB, to correct, and to remedy all damage and adverse consequences caused by, any failure by either Borrower to substantially comply with any Environmental and Social Requirement, which plan shall include:

(a)

a brief description of such non-compliance, including the extent, magnitude, impact and cause thereof;

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(b)

the proposed actions to correct, and to remedy all damage and adverse consequences caused by, the non-compliance;

(c)

the assignment of responsibility for implementing such proposed actions;

(d)

a time schedule for implementing such proposed actions, including the start date, the end date and key milestones;

(e)

an estimated cost of such proposed actions; and

(f)

the proposed actions to prevent similar such non-compliance from occurring in the future.

Current Assets means, as of any relevant determination date, the aggregate of the relevant Borrower’s cash, inventories, investments classified as “held for trading”, investments classified as “available for sale”, trade and other receivables realizable within one year, and prepaid expenses which are to be charged to income within one year.

Current Liabilities means, as of any relevant determination date, the aggregate amount of the applicable Borrower’s liabilities falling due on demand or within one (1) year (including the portion of Long-term Debt falling due within one (1) year).

Current Ratio means, as of any relevant determination date, for either Borrower the result obtained by dividing Current Assets as of such date by Current Liabilities as of that same date.

Debt means, with respect to any Person, the aggregate (as of the relevant date of calculation) of all such Person’s obligations (whether actual or contingent) to pay or repay money, including:

(a)

all Indebtedness for Money Borrowed;

(b)

any credit to such Person from a supplier of goods or under any installment purchase or other similar arrangement in respect of goods or services (except trade accounts payable within one hundred and eighty (180) days in the ordinary course of business);

(c)

the aggregate amount then outstanding of all liabilities of any other Person to the extent that such Person provides a guarantee of, or indemnity for, such liabilities or otherwise obligates itself to pay such liabilities; and

(d)

all liabilities of such Person (actual or contingent) under any conditional sale or a transfer with recourse or obligation to repurchase, including by way of discount or factoring of book debts or receivables,

provided, however, that Deferred Lease Payments or any intercompany Debt between the Borrowers and any member of the Group that are subordinated to the Loan according to the terms contained Schedule 11 shall not be considered Debt; provided further that the calculation of Debt on a Combined Basis shall exclude loans between Adeco and Pilagá.

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Debt Service means, for any period, the sum of:

(a)

finance charges (including all interest, commission, fees, prepayment penalties or premiums and other finance payments in respect of the Debt whether paid or payable by either of the Borrowers which has accrued or is projected to accrue in respect of such period);

(b)

the aggregate of all scheduled and mandatory repayments and prepayments of principal of any Debt payable or projected to be payable by the Borrowers during such period, but excluding any amounts falling due under any overdraft or revolving facility and which were available for simultaneous redrawing according to the terms of such facility; and

(c)

the amount of the capital element of any payments payable or projected to be payable under any finance lease or capital lease entered into by the Borrowers.

Debt to EBITDA Ratio means, as of any determination date and in relation to either (a) a Borrower or (b) both Borrowers on a Combined Basis, as applicable, the ratio of (i) Debt of such Borrower(s) as of such date; to (ii) EBITDA of such Borrower(s) for the four financial quarters most recently ended on such date.

Default means any event or condition that constitutes an Event of Default or which, upon notice, lapse of time, the making of a determination or any combination thereof, may become an Event of Default.

Deferred Lease Payments means any payments under the Lease Agreements (but not including, any overhead expenses, provided that such overhead expenses do not exceed (a) one million six hundred thousand Dollars ($1,600,000) in the aggregate in 2010, (b) two million Dollars ($2,000,000) in the aggregate in 2011, or (c) three million Dollars ($3,000,000) or any higher maximum amount agreed to by IDB in writing in the aggregate for any Financial Year thereafter), whether such payments are lease payments, interest, penalties or otherwise, to be made by either or both Borrowers to the applicable lessor under any Lease Agreement.

Derivatives Transaction means any swap agreement, cap agreement, collar agreement, futures contract, forward contract or similar arrangement with respect to interest rates, currencies, commodities or indices or otherwise relating to the hedging of assets or liabilities.

Disbursement means an A Loan Disbursement or a B Loan Disbursement, or both, as the context requires.

Disbursement Date means the date the proceeds of a Disbursement are released to the Borrowers by the Paying Agent directly by IDB or through an agent.

Disbursement Request means a request for Disbursement substantially in the form of Exhibit 1 ( Form of Disbursement Request ).

Disbursement Swap Market Fixed Rate means, in respect of each A Loan Disbursement, the fixed rate quoted in the Dollar swap market on the A Loan Fixed Interest Rate Determination

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Date for such A Loan Disbursement as being payable in respect of interest at LIBOR for the amount of such A Loan Disbursement, as determined by IDB on the basis of the most favorable rate to the Borrower out of three (3) firm quotations from dealers in the Dollar swap market selected by IDB in good faith, taking into consideration the repayment schedule set forth in Section 3.3.1 ( Repayment ).

Dollars and the sign $ mean the lawful currency of the United States of America.

EBITDA means the profits from ordinary activities before taxation:

(a)

before deducting any amount attributable to the amortisation of intangible assets or the depreciation of tangible assets;

(b)

before deducting the aggregate amount of the finance charges (accrued interest, commission, fees, discounts, prepayment penalties or premiums and other finance payments in respect of Debt whether paid or payable by the Borrowers);

(c)

before taking into account any accrued interest owing to the Borrowers;

(d)

before taking into account any items treated as exceptional or extraordinary items;

(e)

before taking into account any realized and unrealized exchange gains and losses including those arising on translation of currency debt;

(f)

before taking into account any gain or loss over book value arising on the disposal of any business or asset, and any gain or loss arising from an upward or downward revaluation of any asset at any time;

(g)

before taking into account any unrealized mark to market adjustments to carrying value of the inventory, and

(h)

before taking into account any Deferred Lease Payments

in each case, to the extent added, deducted or taken into account, as the case may be, for the purposes of determining profits of the Borrowers from ordinary activities before taxation.

Economic Consultant means Deloitte & Touche Corporate Finance S.A., or any other Person from time to time appointed by IDB to act as advisor to IDB with respect to economic matters relating to the Financing Documents.

Effective Date has the meaning set forth in Section 1.7.

Emergency and Contingency Plans means the plans required in accordance with the ESHSP and EMS covering the construction and operation of each Capital Expenditure or the operations of either Borrower that address the measures necessary to prevent and control unplanned (but foreseeable) events associated with each Capital Expenditure or operations, the Borrowers and any of their contractors, including, without limitation, fires, explosions, earthquakes, and the

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Release of Hazardous Substances, that could reasonably be expected to lead to violations of Environmental and Social Requirements, Environmental Claims or significant adverse risks or impacts with respect to Environmental or Social Matters and each such plan shall:

(a)

comply with all requirements set out in any Environmental Impact Assessment or Environmental Assessment, as applicable, relating to the project and any Environmental and Social Requirement;

(b)

include a description of the potential risks, hazards and emergency scenarios including fires, explosions, earthquakes, and Releases to the environment, and the measures, procedures, equipment, training, responsibilities, schedules and resources (including monetary and manpower resources) required to adequately prevent, control, respond to, and remedy such potential risks, hazards and emergencies;

(c)

include a description of the warning and reporting procedures to be implemented upon the occurrence of any such event; and

(d)

include a statement of the estimated cost, time schedule and assignment of responsibility for implementing each component of the plan.

EMS means the Environmental, Social, Health and Safety Management Systems that enable the Borrowers to identify, assess, mitigate, manage and monitor their social, environmental, occupational, health and safety, or labor impacts and risks, in accordance with the Environmental and Social Requirements and that are consistent with the principles of ISO 14001 and OHSAS 18001 and shall include, but not be limited to: (a) policies and organization structure, (b) procedures for evaluating both potential environmental, social, occupational health and safety and labor risks and impacts associated with the operations of the Borrowers or any Capital Expenditure, (c) performance indicators, (d) responsibilities, (e) training, (f) periodic audits and inspections, (g) associated budget acceptable to IDB, (h) time schedule for implementing such proposed actions, programs and plans, including due dates, and (i) a communication strategy for internal and external stakeholders, including international non-profit organizations.

EMS Manager means a senior officer of each Borrower responsible for the administration and oversight of the EMS.

Environmental and Social Compliance Report means a written report prepared by the Borrowers, providing the necessary information required to:

(a)

verify the satisfactory implementation and operation of the EMS;

(b)

assess the environmental and social performance of the Capital Expenditures with respect to compliance with the Environmental and Social Requirements, and

(c)

propose any corrective actions, if and to the extent necessary.

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Environmental and Social Consultant means any Person from time to time appointed by IDB to act as advisor to IDB with respect to Environmental or Social Matters for purposes of this Agreement pursuant to an Environmental and Social Monitoring Agreement.

Environmental and Social Management Plan (ESMP) means a plan or set of plans, in form and content satisfactory to the IDB, setting forth for each Capital Expenditure (except for the ERP Project), or any additional or substitute project approved by the IDB for financing with the proceeds of the Loan, the environmental and social aspects to be addressed, the objectives, targets and actions proposed to address them, the indicators to be used in monitoring performance under such plan, and the procedures, human resources and budget allocated for their implementation in accordance with the Environmental and Social Requirements.

Environmental and Social Monitoring Agreement means any agreements as entered into from time to time among the Borrowers, IDB and an Environmental and Social Consultant for monitoring of Environmental or Social Matters and compliance with Environmental and Social Requirements under this Agreement.

Environmental and Social Provisions means Sections 4.1.20 ( Environmental and Social ), 6.5 ( Environmental and Social ) and any other provision of this Agreement relating to Environmental or Social Matters.

Environmental and Social Requirements means all requirements, conditions, standards, protections, obligations or performance with respect to Environmental or Social Matters required by:

(a)

any Environmental Law and all applicable IDB Environmental and Safeguards compliance requirements as described in Policies OP-703, OP-704, OP-710, OP-765 and OP-102 as amended from time to time and as set out in (Exhibit 2) (IDB’s Environmental and Social Safeguards);

(b)

any Authorization issued by any Authority or otherwise under any Environmental Law;

(c)

any Environmental Plan;

(d)

the EMS;

(e)

the Fundamental Principles and Rights at Work;

(f)

all applicable aspects of the World Bank Monitoring Guidelines (Pollution Prevention and Abatement Handbook, 1998);

(g)

all applicable aspects of the International Finance Corporation, Animal Welfare in Livestock Operations, Plantation Crop Production, Annual Crop Production and Dairy Processing; and

(h)

all applicable aspects of the International Finance Corporation Health and Safety Guidelines (2008).

- 11 -

Environmental Assessment shall mean any environmental assessment conducted by or on behalf of the Borrowers, including but not limited to any socio-cultural analysis, environmental analysis and environmental audit.

Environmental Claim means, any written notice, claim, administrative, regulatory or judicial or equitable action, suit, Lien, judgment or demand by any Person or any written communication by any Authority, in either case, alleging or asserting the Borrowers’ liability for investigatory costs, cleanup costs, consultants’ fees, governmental response costs, damage to natural resources (including wetlands, wildlife, aquatic and terrestrial species and vegetation) or other Property, personal injuries, fines or penalties or any other damages arising out of, based on or resulting from:

(a)

the presence or Release of any Hazardous Substance at any location, whether or not owned by such Person,

(b)

circumstances forming the basis of any violation, or alleged violation, of any Environmental Law or any Authorization issued by any Authority or otherwise under any Environmental Law, or

(c)

any other Environmental or Social Matter.

Environmental Impact Assessment shall mean a systematic and comprehensive study that fully complies with the applicable policies, safeguards, guidelines and standards of IDB and all Environmental Laws, relating to the analysis and evaluation of the operations of either of the Borrowers or any Required Capital Expenditure’s potential environmental and social impacts (both positive and negative) taking into account overall cumulative primary and secondary consequences likely to alter the quality of the natural and human environment.

Environmental Laws means all applicable statutes, laws (including multilateral environmental agreements (MEA) ratified by Argentina), ordinances, rules and regulations, codes, policies, including but not limited to any license, permit or other governmental authorization imposing liability or setting standards of conduct concerning any environmental, social, labor, health and safety or security risks relating to any Environmental or Social Matter, having the force of law now or hereafter in effect and in each case as amended, and any applicable judicial or administrative interpretation thereof, including any then applicable judicial or administrative order, decree or judgment.

Environmental or Social Matter means any:

(a)

Release into the air including the air within buildings and other natural or man-made structures above ground;

(b)

Release into water including into any river, watercourse, lake, or pond (whether natural or artificial, above ground or that joins or flows into any such water outlet above ground) or reservoir, or onto the surface of the riverbed or of other land supporting such waters, or into ground waters, sewer or the sea;

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(c)

deposit, disposal, keeping, storage, treatment, importation, exportation, production, transportation, handling, processing, carrying, manufacture, collection, sorting or presence of any Hazardous Substance or any waste or substance that constitutes a scrap material or an effluent or other unwanted surplus substance arising from the application of any process or activity (including making it reusable or reclaiming substances from it) and any substance or article that is required to be disposed of as being broken, worn out, contaminated or otherwise spoiled;

(d)

soil or ground water contaminations;

(e)

nuisance, noise, defective premises, health and safety at work, industrial illness, industrial injury due to environmental factors, environmental health problems (including asbestosis or any other illness or injury caused by exposure to asbestos) or genetically modified organisms;

(f)

conservation, preservation or protection of the natural or man-made environment or any living organisms supported by the natural or man-made environment;

(g)

conservation of archaeological and historical sites, rights-of-way, resettlement, expropriation and indemnification, indigenous groups, traffic, or any other matters whatsoever affecting social conditions;

(h)

labor rights, worker rights, or human rights; or

(i)

any other matter whatsoever relating to human health, environment, social issues or health and safety.

Environmental Plans means:

(a)

the Emergency and Contingency Plan;

(b)

each Corrective Action Plan, if any;

(c)

each Environmental and Social Management Plan;

(d)

each Biodiversity Management Plan;

(e)

the Environmental, Heath and Safety Action Plan; and

(f)

any other plan presented by the Borrowers and approved by IDB with respect to any Environmental or Social Matter.

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Environmental , Social , Health and Safety Action Plan (ESHSP) , means a plan, in form and substance acceptable to the IDB that addresses the environmental, social, health and safety improvement recommendations, as well as any pending non-compliance and/or liability associated with a Capital Expenditure, including the Complementary ESHSP Action Plan and that includes (but is not limited to) a set of chronograms, milestones, actions and key indicators to develop and implement the following:

(a)

the EMS;

(b)

the Biodiversity Management Plans for each of the farms in Ita Caabo, San Joaquin, Carmen, Ombu, Meridiano and Doña Marina;

(c)

the Emergency and Contingency Plan for the industrial rice mills of either of the Borrowers and any other Capital Expenditure requiring such a plan in accordance with its ESMP and/or the EMS;

(d)

Environmental and Social Management Plans for such Capital Expenditure and, as applicable in accordance with the ESHSP and/or EMS, any additional or substitute project approved by the IDB for financing with the proceeds of the Loan;

(e)

the development and implementation of an integrated social responsibility plan for such Capital Expenditures.

Equity means as at the date of calculation, the aggregate, with respect to a person, of the net worth of such person in accordance with the Accounting Principles after deducting from that aggregate (a) (to the extent included) intangible assets and goodwill, and (b) (to the extent included) any amounts arising from an upward revaluation of assets.

Equity Rights means, in respect of a Person (other than a natural person) any subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any shareholders’ or voting trust agreements) for the issuance, sale, registration or voting of, or securities convertible into, any Share Capital of such Person.

ERISA means the Employee Retirement Income Security Act of 1974 and the regulations promulgated and rulings issued thereunder.

ERISA Affiliate means, with respect to any Person, any corporation or trade or business that is a member of any group of organizations that would be deemed to be a single employer with any Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

ERISA Plan means, with respect to any Person, any “employee benefit plan” (as defined in Section 3(3) of ERISA) or any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) of which contributions are or, within the preceding five (5) years have been, established or maintained, or to which contributions are or, within the preceding five (5) years have been, made or required to be made, by such Person or any ERISA Affiliate of such Person or with respect to which such Person or any ERISA Affiliate of such Person may have liability.

ERP Project means an investment in an information technology enterprise resource planning system to standardize and integrate the information technology platform among the operations of the Borrowers.

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Event of Default means any one of the events specified in Section 7.2 ( Events of Default ).

Exclusion List means the IDB Exclusion List found at www.iadb.org/pri/documents/excludedsectors.pdf.

Federal Funds Rate means, for any day, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Paying Agent from three Federal funds brokers of recognized standing selected by it.

Fee Letters means, collectively, the IDB Fee Letter and the B Loan Fee Letter.

Feedlot Projects has the meaning assigned to that term in Part A of Schedule 8 ( Capital Expenditures ).

Financial Quarter means each period commencing on the day after a Financial Quarter Date and ending on the next succeeding Financial Quarter Date.

Financial Quarter Date means each March 31, June 30, September 30 and December 31.

Financial Ratios means the financial ratios set out in Section 6.2.3 ( Financial Ratios ).

Financial Statements means, with respect to any Person, as of any relevant date and for the relevant period, as applicable, such Person’s balance sheet, income statement, cash flow statement, statement of sources and uses of funds and statement showing changes in equity and any exhibits and notes thereto, which shall be prepared in Pesos, all prepared on a consistent basis in accordance with the Accounting Principles.

Financial Year means the accounting year of each Borrower commencing each year on January 1 ^st and ending on the following December 31st or such other period as each Borrower, with IDB’s consent, from time to time may designate as its accounting year.

Financing Document Amendments means this Agreement and/or any amendments or agreements which have been entered into with respect to any other Financing Document in connection with the amendments and restatements envisaged by this Agreement, including the amendments to the Security Documents described in subsections (ii)(a) and (ii)(b) in the definition of Security Documents.

Financing Documents means:

(a)

this Agreement;

(b)

the Paying Agency Agreement;

(c)

the Required Hedge Agreements;

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(d)

the Security Documents;

(e)

the Consultant Services Agreement;

(f)

the Fee Letters;

(g)

the Notes;

(h)

all other documents evidencing or securing the Obligations, which are entered into after the Effective Date; and

(i)

all other documents and certificates required to be delivered from time to time

First B Loan Tranche has the meaning assigned to that term in Section 3.1.1(ii)(A) ( The Loan Amount ).

First Disbursement Date means the Disbursement Date on which IDB makes its first Disbursement.

First Principal Payment Date means the first Interest Payment Date to occur after the date that is twelve (12) months after the Acceptance Date.

Fixed Rate Breakage Costs means an amount equal to: (a) in the case of a prepayment of the outstanding A Loan in full at any time when the A Loan is accruing interest at the A Loan Fixed Interest Rate, an amount in Dollars equal to the cost of breakage of funds, termination costs and other unwinding costs incurred by IDB, if positive, as determined by IDB on the basis of the most favorable costs to the Borrower out of at least three (3) firm quotations from dealers in the Dollar swap market selected by IDB in good faith, taking into account the principal repayment schedule, the Term Date and the final maturity date for the Loan (with any necessary determinations being made by IDB); or (b) in the case of a partial prepayment of the A Loan at any time when the A Loan is accruing interest at the A Loan Fixed Interest Rate, a proportion of such costs determined in accordance with subclause (a) above equal to the proportion that the amount of the A Loan being prepaid bears to the amount of the A Loan then outstanding; or (c) in the case of the unwinding of the Existing A Loan Swap or the New A Loan Swap pursuant to Section 1.9, an amount in Dollars equal to the cost of breakage of funds, termination costs and other unwinding costs incurred by IDB in cancelling the relevant A Loan Fixed Interest Rate Election, if positive, as determined by IDB on the basis of the most favorable costs to the Borrower out of at least three (3) firm quotations from dealers in the Dollar swap market selected by IDB in good faith, taking into account the principal repayment schedule, the Term Date and the final maturity date for the Loan (with any necessary determinations being made by IDB);

In each case, IDB’s determination of the Fixed Rate Breakage Costs shall be final and conclusive and bind the Borrower unless the Borrower proves to IDB’s satisfaction that the determination involved manifest error.

Foreign Asset Control and Anti - money Laundering Regulations means, collectively, the following: (a) the regulations of the Office of Foreign Assets Control ( OFAC ) of the United

- 16 -

States of America Department of Treasury; (b) the U.S.A. Patriot Act of the United States of America; and (c) each of the lists of persons suspected of involvement in terrorist activities maintained by OFAC, the United Kingdom of Great Britain and Northern Ireland and the United Nations.

Foreign Benefit Plan shall mean any plan, fund (including any superannuation fund) or other similar program established or maintained outside the United States of America by either Borrower or a Subsidiary thereof, with respect to which such Borrower or such Subsidiary has an obligation to contribute for the benefit of employees of such Borrower or such Subsidiary.

Free Stall Project has the meaning assigned to that term in Part A of Schedule 8 ( Capital Expenditures ).

Fundamental Principles and Rights at Work means:

(a)

freedom of association and the effective recognition of the right to collective bargaining;

(b)

prohibition of all forms of forced or compulsory labor;

(c)

prohibition of child labor, including the prohibition of persons under eighteen (18) years of age from working in hazardous conditions (which includes construction activities), persons under eighteen (18) years of age from working at night, and that persons under eighteen (18) years of age be found fit to work via medical examinations;

(d)

elimination of discrimination in respect of employment and occupation, where discrimination is defined as any distinction, exclusion or preference based on race, color, sex, religion, political opinion, national extraction or social origin;

(e)

compliance with all applicable laws relating to labor; and

(f)

compliance with all International Labor Organization conventions and treaties that have been ratified by Argentina as applicable in Argentina.

Group means, together, the Borrowers and their subsidiaries, the Shareholders, Sponsors and any affiliated or related companies of any of the foregoing.

Hazardous Substance means any hazardous or toxic substances, materials or wastes defined, listed, classified or regulated as such in or under any applicable Environmental Law, including:

(a)

any petroleum or petroleum products (including gasoline or crude or any fraction thereof, but excluding small quantities of lubricating greases), flammable explosives, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and polychlorinated biphenyl;

(b)

any chemicals, materials or substances defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely

- 17 -

hazardous wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants,” “contaminants” or “pollutants”, or words of similar import, under any applicable Environmental Law; or

(c)

any other chemical, material or substance, exposure to or Release of which is prohibited, limited or regulated by any Authority.

HBK means HBK Master Fund, L.P., a limited partnership organized and existing under the laws of the Cayman Islands.

Historical Debt Service Coverage Ratio means, as of any calculation date, the ratio obtained by dividing (a) Net Cash Flow from Operations for the twelve (12) month period ending on the most recent Financial Quarter Date, by (b) Debt Service for such period.

IDB has the meaning assigned to that term in the introductory paragraph hereto.

IDB Fee Letter means the fee letter dated as of the date hereof among the Borrowers and IDB.

IDB Members means the member countries of IDB listed in Schedule 3 ( Member Countries of IDB ).

Immediate Family Member means spouse, parents, siblings, children, and spouse’s parents or siblings.

Increased Costs means the amount certified in an Increased Costs Certificate to be the net incremental costs of, or reduction of return to, IDB or, as the case may be, any Participant in connection with making or maintaining the Loan or its Participation, as applicable, that result from:

(a)

any change in applicable law or in the interpretation thereof by any Authority charged with the administration or interpretation thereof, whether or not having the force of law; or

(b)

any compliance with any request from, or requirement of, any central bank or other monetary or other Authority,

which in either case, subsequent to the Effective Date:

(i)

imposes, modifies or makes applicable any reserve, special deposit or similar requirements against Property held by, or deposits with or for the account of, or loans made by, IDB or that Participant;

(ii)

imposes a cost on IDB or that Participant as a result of its having made or committed to make the Loan (or in the case of a Participant, acquired or committed to acquire its Participation) or reduces the rate of return on the overall capital of IDB or that Participant that it would have been able to achieve had IDB not made or committed to make the Loan (or in the case of a Participant, had the Participant not acquired or committed to acquire its Participation);

- 18 -

(iii)

changes the basis of taxation on payments received by IDB in respect of the Loan or by that Participant with respect to its Participation (other than a change in taxation of the overall net income of IDB or that Participant imposed by the jurisdiction of its incorporation or in which it books its Participation or in any political subdivision of any such jurisdiction); or

(iv)

imposes on IDB or any Participant any other condition regarding the making or maintaining of the Loan or, as the case may be, its Participation;

but excluding any incremental costs of a Participant having or maintaining a permanent office or establishment in Argentina, if and to the extent that permanent office or establishment acquires that Participation.

Increased Costs Certificate means a certificate furnished from time to time by IDB certifying:

(a)

the circumstances giving rise to the Increased Costs;

(b)

that the costs of IDB or, as the case may be, a Participant, have increased or the rate of return of either of them has been reduced;

(c)

the Increased Costs; and

(d)

that IDB or the Participant has exercised reasonable efforts to minimize or eliminate the relevant increase or reduction, as the case may be;

provided that IDB shall not be obliged to disclose any information that it or the Participant considers to be confidential in providing such certificate.

Indebtedness for Money Borrowed means all payment obligations of either Borrower in respect of:

(a)

borrowed money, including the Loan (including borrowed money from any member of the Group);

(b)

the outstanding principal amount of any bonds, notes, loan stock, commercial paper, acceptance credits, debentures and bills or promissory notes drawn, accepted, endorsed or issued by such Borrower;

(c)

the deferred purchase price of assets or services (other than trade accounts incurred and payable in the ordinary course of business to trade creditors within one hundred eighty (180) days of the date that they are incurred and which are not overdue);

(d)

non-contingent obligations of such Borrower to reimburse any other Person in respect of amounts paid under a letter of credit or similar instrument (excluding any such letter of credit or similar instrument issued for the account of such Borrower in respect of trade accounts incurred and payable in the ordinary course of business to trade creditors within one hundred eighty (180) days of the date that they are incurred and which are not overdue);

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(e)

any Capitalized Lease Obligation;

(f)

any Derivatives Transactions;

(g)

any premium payable on a redemption or replacement of any of the foregoing items; and

(h)

the amount of any obligation in respect of any guarantee or indemnity for any of the foregoing items incurred by any other Person.

Indemnified Liabilities has the meaning assigned to that term in Section 8.3 ( Indemnity ).

Indemnified Persons has the meaning assigned to that term in Section 8.3 ( Indemnity ).

Insurance Policies means the policies of insurance and reinsurance required to be maintained by either Borrower from time to time in compliance with Section 6.6 ( Insurance ).

Integrated Social Responsibility Plan means the plan presented by the Borrowers in form and content acceptable to the IDB, which includes: (i) the Borrowers’ social responsibility policies; (ii) the processes and resources the Borrowers will employ to implement such policy; (iii) annual social responsibility action plans with the corresponding monitoring indicators; and (iv) a reporting and communication strategy to communicate the results of such policy to IDB and other shareholders.

Interest Coverage Ratio means the ratio obtained by dividing (a) Net Cash Flow from Operations for the four financial quarters most recently ended for which financial statements have been delivered by (b) the portion of Debt Service that relates to interest payments for such period.

Interest Payment Date means May 15 and November 15 of each year or, in the case of any Interest Period of less than six (6) months as provided under Section 3.24 ( Change in Interest Period ), the fifteenth (15th) day of the month in which the relevant Interest Period ends.

Interest Period means (i) each six (6) month period beginning on an Interest Payment Date and ending on the next following Interest Payment Date, except in the case of the first period applicable to each Disbursement, when it shall mean the period beginning on the date on which such Disbursement is made and ending on the next following Interest Payment Date; or (ii) in the circumstances referred to in Section 3.24 ( Change in Interest Period ), such period as determined in accordance with Section 3.24 ( Change in Interest Period .

Interest Rate Determination Date means the second (2 ^nd ) Business Day prior to a Disbursement Date or Interest Payment Date, as applicable.

Investment means, with respect to any Person, any direct or indirect advance, loan, account receivable (other than an account receivable arising in the ordinary course of business), deposit

- 20 -

or other extension of credit (including by means of any guarantee, indemnity or similar arrangement) or any capital contribution to (by means of transfers of Property to others, payments for Property or services for the account or use of others, or otherwise), or any purchase or ownership of any stocks, bonds, notes, debentures or other securities of, any other Person or any Equity Rights in respect of such Person.

Land Transformation means a land development process aiming at (a) turning a natural area or a non-productive area into croppable land; (b) significantly increasing yields in land originally devoted to crop production; (c) placing land under irrigation; and/or (d) expanding croppable areas. Such process usually involves the implementation of non-till production and crop rotation.

Lease Agreement means the lease agreements listed on Schedule 12.

LIBOR means the British Bankers’ Association interbank offered rates as of 11:00 a.m. London time on the applicable Interest Rate Determination Date for deposits in Dollars that appear on the relevant page of the Reuters Service (currently Reuters Screen LIBOR01 page) or, if not available, on the relevant pages of any other service (such as Bloomberg Financial Markets Service) that displays such British Bankers’ Association rates; provided that if, for any Interest Period, IDB concludes in its discretion that it cannot determine LIBOR by reference to any service that displays British Bankers’ Association interbank offered rates for deposits in Dollars, IDB shall notify the Borrowers and shall instead determine LIBOR:

(a)

on the Interest Rate Determination Date by calculating the arithmetic mean of the offered rates advised to IDB on or around 11:00 a.m. London time, for deposits in Dollars by any three (3) major banks active in Dollars in the London interbank market, selected by IDB; provided that if fewer than three (3) quotations are received, IDB may rely on the quotations so received if not less than two (2); or

(b)

if fewer than two (2) quotations are received from the banks in London in accordance with subclause (a) above, on the first day of the relevant Interest Period, by calculating the arithmetic mean of the offered rates advised to IDB on or around 11:00 a.m. New York time, for loans in Dollars, by a major bank or banks in New York, New York selected by IDB.

Lien means any mortgage, pledge, charge, assignment, hypothecation, lien, security interest, title retention, preferential right (arising by operation of law or otherwise), trust arrangement, right of set-off, counterclaim or banker’s lien, privilege or priority of any kind having the effect of security, including any designation of loss payees or beneficiaries or any similar arrangement under or with respect to any insurance policy.

Liquidation Value means the likely price of a property when it is required to be sold in a period of six (6) months or less, taking into account the likelihood of a smaller market of prospective buyers.

Loan means, collectively, the A Loan and the B Loan or, as the context requires, the principal amount of the A Loan and the B Loan outstanding from time to time.

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Loan Coverage Ratio means, on a Combined Basis, the ratio obtained by dividing:

(a)

the most recent Liquidation Value of the Secured Property of the Borrowers as certified by the Real Estate Consultant; by

(b)

the amounts outstanding in respect of the Loan.

Loan Repayment Date means any A Loan Repayment Date or B Loan Repayment Date.

Local Business Day means a day when banks are open for Business in the City of Buenos Aires, Argentina and Washington, DC.

Long - term Debt means, as of any relevant determination date, all Debt other than Short-term Debt.

Material Adverse Effect means a material adverse effect on:

(a)

the business, Property, liabilities, operations, prospects or condition, financial or otherwise, of the Borrowers taken as a whole;

(b)

the implementation of the Project;

(c)

the ability of the Borrowers to perform their obligations or enforce their rights under any Financing Document to which they are parties;

(d)

the rights or remedies of IDB under the Financing Documents;

(e)

the validity or enforceability of any material provision of any Financing Document; or

(f)

the perfection, priority, enforceability or value of the Security.

Net Cash Flow from Operations means, for any period and for any Person, the result obtained from deducting from the EBITDA of such Person for such period (a) any amount actually paid or due and payable in respect of taxes on the Profits of such Person and (b) the amount of all Restricted Payments made during such period.

New Eligible Capital Expenditures means the Capital Expenditures other than the Original Capital Expenditures.

North Dry Plant means a Capital Expenditure for a grain drying and handling mill (with planned drying capacity of 100/ tons/hour, and estimated total storage capacity of 5,200 tons to be constructed by the Borrowers in a location yet to be determined in the North of the Province of Santiago del Estero.

Notes has the meaning assigned to that term in Section 3.25 (Notes).

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Obligations means the collective reference to:

(a)

the unpaid amount of principal of and interest on the Loan (including interest accruing at the then applicable rate provided in this Agreement after the maturity of the Loan and interest accruing at the then applicable rate after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to either Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding); and

(b)

all other obligations and liabilities of either Borrower to IDB or the Paying Agent under this Agreement or any other Financing Document, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement or the other Financing Documents or any other document made, delivered or given in connection herewith or therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, charges, expenses or otherwise (including all fees and expenses that are required to be paid by either Borrower pursuant to the terms of this Agreement or any other Financing Document).

Obstructive Practice means, in connection with any investigation by IDB or any Authority into allegations of Prohibited Practices committed or engaged in by either Borrower, or any of its Affiliates or any other Person acting on behalf of such Borrower or any of its Affiliates: (a) deliberately destroying, falsifying, altering or concealing evidence material to such investigation or making false statements to investigators in order to materially impede such investigation; (b) threatening, harassing or intimidating any Person to prevent such Person from disclosing knowledge of matters relevant to such investigation or from pursuing such investigation; or (c) taking any action intended to materially impede the exercise of the rights to access, information and inspection provided to IDB under this Agreement.

Organizational Documents means, with respect to any Person (other than a natural person), the memorandum and articles of incorporation, charter or other constitutive documents, however called, of such Person.

Original Capital Expenditures means the capital expenditures which were listed on Schedule 8 to the Original Loan Agreement.

Original Loan Agreement means the loan agreement dated December 19, 2008, between the Borrowers and IDB, as amended prior to the Effective Date.

Ospraie Special Opportunities means Ospraie Special Opportunities Master Holdings Ltd., a Cayman Islands limited liability company established under the laws of Cayman Islands.

Other Taxes has the meaning assigned to that term in Section 3.13.4 ( Taxes ).

Outstanding Debt means the financial indebtedness of the Borrowers listed in Schedule 9 ( Outstanding Debt ) of the Original Loan Agreement.

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Pampas means Pampas Humedas, LLC, a limited liability company organized and existing under the laws of Delaware.

Partial Current A Loan Payment means a payment made by the Borrowers on the A Loan in the amount of two million four hundred sixteen thousand one hundred seventy-nine Dollars ($2,416,179.00), such that the outstanding amount of the A Loan is equal to twenty million Dollars ($20,000,000).

Participant means any Person that acquires a Participation.

Participation means the investment of a Participant in the B Loan or, as the context may require, the B Loan Disbursements.

Participation Agreement means the Participation Agreement, in IDB’s customary form, entered into between IDB and a Participant from time to time pursuant to which each Participant acquires a Participation.

Paying Agency Agreement means an agreement entered into, or to be entered into, in the agreed form, among the Borrowers, IDB and the Paying Agent relating to the paying agency arrangements regarding the Loan.

Paying Agent means The Bank of New York Mellon, in its capacity as agent under the Paying Agency Agreement, or any successor agent appointed pursuant to the terms of the Paying Agency Agreement.

Permitted 2008 Dividend means the dividend made by the Borrowers in September 2008 in the amount of 34,363,324.6 Pesos.

Permitted Capital Expenditures means those expenditures set out in Schedule 8 (Capital Expenditures).

Permitted Credit Line means a line of credit made to any of the Borrowers by Programa de Financiamiento productivo del Bicentenario.

Permitted Investments means (i) short-term marketable securities, deposits or cash equivalents acquired solely to give temporary employment to idle funds and (ii) any Investment resulting from Affiliate Transactions permitted under the Financing Documents.

Permitted Liens means:

(a)

Liens existing as of the Effective Date (as listed in Schedule 10 ( Existing Liens ));

(b)

Liens created under or pursuant to any of the Security Documents;

(c)

any Lien arising from any tax, assessment or other governmental charge or other Lien arising by operation of law or arising in the ordinary course of either of the Borrowers’ business and securing indebtedness not yet due or indebtedness which is being contested in good faith by appropriate proceedings and for the

- 24 -

payment of which reserves, bonds, insurance or other security has been provided in an amount sufficient to promptly pay in full any amounts that the Borrowers may be ordered to pay on final determination of any such proceedings;

(d)

any Lien created on any fixed asset securing Debt incurred or assumed solely for the purpose of financing all or any part of the cost of developing, constructing or acquiring such fixed asset, which Lien attaches to such fixed asset concurrently with, or within one hundred eighty (180) days after, the acquisition thereof provided, that the principal amount of the Debt secured by such Lien does not exceed the cost of developing, constructing or acquiring such fixed asset;

(e)

any Lien created on any real estate asset with a value of up to twenty-five million Dollars ($25,000,000) to secure the Permitted Credit Line;

(f)

any Lien created on any asset securing an extension, renewal or refinancing of Debt secured in accordance with (a) or (f) of this paragraph provided that (i) such Lien is created over the assets which secured such original documents and (ii) the principal amount of Debt secured by such Lien prior to such extension, renewal or refinancing is not increased, other than with respect to reasonable costs, fees and expenses incidental to such extension, renewal, or refinancing;

(g)

any Lien on stocks and inventories to secure indebtedness incurred in the ordinary course of business and maturing less than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of those stocks and inventories or products produced from them;

(h)

any banker’s right of set off arising in respect of Short term Debt permitted by the Financing Documents; and

(i)

Capitalized Lease Obligations;

provided that the aggregate amount of the assets subject to the above mentioned Liens (other than those referred to in (a), (b), (c), (d) and (e) above) shall not exceed thirteen million Dollars ($13,000,000) in aggregate on a Combined Basis at any time and provided further that the total value of all assets subject to Liens (including those referred to in (e) above) shall not exceed thirty million Dollars ($30,000,000) in aggregate on a Combined Basis at any time.

Person means any natural person or any company, partnership, joint venture, firm, corporation, voluntary association, trust, enterprise, unincorporated organization or other body corporate or any Authority or any other entity whether acting in an individual, fiduciary or other capacity.

Pesos means the lawful currency of Argentina.

Pilagá means Pilagá S.A. (and formerly Pilagá S.R.L.).

Politically Exposed Person means: (i) a current or former senior official in the executive, legislative, administrative, military, or judicial branch of government (elected or not); (ii) a

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senior official of a political party; (iii) a senior executive of a government owned commercial enterprise; (iii) an Immediate Family Member of individuals described in (i) or (ii) above; (iv) any individual publicly known (or actually known by the relevant Person) to be a close personal or professional associate of individuals described in (i), (ii) or (iii) above.

Preliminary Complementary ESHS Action Plan means the plan set forth in Schedule 13.

Prime Rate means the arithmetic mean of the offered rates advised to IDB on or around 11:00 a.m. New York time, for loans in Dollars, by a major U.S. money center bank or banks in New York, New York selected by IDB.

Prohibited Practice means any of the following:

(a)

impairing or harming, or threatening to impair or harm, directly or indirectly, any Person or the property of such Person to influence improperly the actions of such Person or any other Person including, without limitation, bid-rigging or any such other actions undertaken with respect to the granting of contracts or government concessions or otherwise in furtherance of a Corrupt Practice or a Fraudulent Practice, as such terms are defined below (a Coercive Practice );

(b)

an arrangement between two or more Persons designed to influence improperly the actions of another Person or to otherwise achieve an improper purpose including, without limitation, bid-rigging or any such other actions undertaken with respect to the granting of contracts or government concessions or otherwise in furtherance of a Corrupt Practice or a Fraudulent Practice, as such terms are defined below (a Collusive Practice );

(c)

offering, giving, receiving or soliciting, directly or indirectly, anything of value to influence improperly the actions of any official of any Authority or any other Person including, without limitation, bribery and practices commonly referred to as “kickbacks” (a Corrupt Practice );

(d)

any action, misrepresentation or omission that knowingly or recklessly misleads or attempts to mislead any other Person in order to obtain a financial benefit or avoid an obligation (a Fraudulent Practice ); or

(e)

an Obstructive Practice.

Project has the meaning assigned to that term in Section 2.1 ( Purpose ).

Projected Debt Service Coverage Ratio means the ratio obtained by dividing:

(a)

Net Cash Flow from Operations for the four (4) financial quarters most recently commenced after the relevant determination date; by

(b)

the Debt Service projected to be payable during such period.

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Property means any right or interest in or to assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

Real Estate Consultant means Bullrich Campos, S.A., or any other reputable Person from time to time appointed by IDB to act as advisor to IDB with respect to real estate matters relating to the Financing Documents.

Release means with respect to any chemical, material or substance any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or other introduction into the environment of such chemical, material or substance, including the abandonment or discarding of barrels, containers, and other closed receptacles containing any Hazardous Substance.

Relevant Change has the meaning assigned to that term in Section 3.19 ( Illegality ).

Relevant Permit means each Authorization that is necessary under applicable law:

(a)

for the Loan and the implementation of the Project;

(b)

for each Borrower to conduct its business as it is presently carried on and is contemplated to be carried on;

(c)

in connection with the execution, delivery, validity and enforceability of the Financing Documents and the performance by each party thereto of its obligations thereunder;

(d)

for the enforcement by IDB of its rights and remedies under the Financing Documents;

(e)

for the remittance to IDB or its assigns in Dollars of all monies payable under or with respect to the Financing Documents; and

(f)

for each of the Borrowers to comply with applicable law and the Environmental and Social Requirements.

Required Capital Expenditures means those expenditures set out in Part A of Schedule 8 ( Capital Expenditures ).

Required Hedge means interest rate protection extending through the maturity of the A Loan and/or the B Loan, as relevant, with respect to twenty-five percent (25%) of such Loan outstanding, from time to time, in form and substance satisfactory to IDB and otherwise meeting the following requirements:

(a)

any counterparty to such Derivatives Transaction shall be an Acceptable Financial Institution;

(b)

the Borrowers’ obligation to make payments under such Derivatives Transaction shall be unsecured; and

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(c)

such Derivatives Transaction shall be in the form of swap agreements only, and with respect to interest rates only.

Required Hedge Agreements means the agreement or agreements, each in form and substance satisfactory to IDB, entered into, or to be entered into, between the Borrower and a counterparty to document the Required Hedge.

Required Participants means Participants holding Participations, which in the aggregate represent fifty percent (50%) or more of the aggregate outstanding principal amount of the B Loan.

Restricted Payment means:

(a)

any dividends; or

(b)

return of any capital to its stockholders;

(c)

any other distribution, payment or delivery of assets or cash to its stockholders as such;

(d)

redemption, retirement, purchase or otherwise acquisition, directly or indirectly, for a consideration, of any shares of any class of its capital stock now or hereafter outstanding (or any options or warrants issued by either Borrower with respect to their capital stock); or

(e)

the setting aside of any funds for any of the foregoing purposes.

Restricted Payment Conditions means each of the following conditions:

(a)

such Restricted Payment is made on a Restricted Payment Date;

(b)

no Default or Potential Event of Default has occurred and is continuing or would exist after the making of such Restricted Payment;

(c)

the Historical Debt Service Coverage Ratio and the Projected Debt Service Coverage Ratio as of the date of such proposed Restricted Payment Date are equal to or higher than 1.3:1.0 on a Combined Basis;

(d)

the Total Liabilities to Equity Ratio as at the end of the most recent Financial Quarter Date is less than or equal to 0.9:1.0 on a Combined Basis;

(e)

the Debt to EBITDA Ratio, as of the last date of the most recent Financial Quarter, does not exceed 2.75:1.0; such calculation to be confirmed by a certificate of the Auditors setting forth in reasonable detail all information necessary to calculate (and providing the calculations necessary to determine) the Debt to EBITDA Ratio during the applicable period and as at the last day of the period covered, as relevant, by the most recent Financial Statements;

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(f)

the Loan Coverage Ratio is equal to or higher than 1.5:1.0 on a Combined Basis;

(g)

the first scheduled principal repayment of the Loan has been made; and

(h)

each of the Borrowers, no later than thirty (30) days prior to making the proposed Restricted Payment, provides IDB with a certificate regarding compliance with the above requirements in the form of Exhibit 6 (Form of Borrower’s Certificate on Distribution of Restricted Payments).

Restricted Payment Date means each date that is fifteen (15) Business Days following an Interest Payment Date.

SECCI Projects has the meaning assigned to such terms in Part A of Schedule 8 ( Capital Expenditures ).

Second B Loan Tranche has the meaning assigned to that term in Section 3.1.1(ii)(B) ( The Loan Amount ).

Second Currency has the meaning assigned to that term in Section 3.10.1 ( Judgment Currency ).

Secured Property means all Property, and the products and proceeds thereof, from time to time subject, or purported to be subject, to the Security.

Security means the Liens created, or purported to be created, under the Security Documents to secure, among other things, all Obligations.

Security Documents means (i) each of the following mortgage agreements (a) the mortgage agreement executed on February 11, 2009 between IDB and Pilagà evidenced by means of public deed number 56 before the notary public of the City of Buenos Aires, Mr. Bernardo Mihura de Estrada; and (b) the mortgage agreement executed on February 11, 2009 between IDB and Adeco evidenced by means of public deed number 55 before the notary public of the City of Buenos Aires, Mr. Bernardo Mihura de Estrada; (ii) each of the following amendments to the mortgage agreements described in (i) above: (a) the amendment agreement to the mortgage described in (i)(a) above to be executed between IDB and Pilagà and evidenced by means of a public deed before the notary public of the City of Buenos Aires, Mr. Bernardo Mihura de Estrada, to reflect the new terms of the A Loan, the First B Loan Tranche and the Second B Loan Tranche pursuant to this Agreement; and (b) the amendment agreement to the mortgage described in (i)(b) above to be executed between IDB and Adeco and evidenced by means of a public deed before the notary public of the City of Buenos Aires, Mr. Bernardo Mihura de Estrada, to reflect the new terms of the A Loan, the First B Loan Tranche and the Second B Loan Tranche pursuant to this Agreement and to create a perfected first priority security interest over the corresponding Secured Property to guarantee payment of the amounts to be disbursed under the Third B Loan Tranche; and (iii) each mortgage agreement executed between IDB and either Borrower as of the date hereof providing for the creation of a first priority security interest in such Borrower’s immoveable property and chattel as provided for therein, or in the case of the mortgages described in sub-section (iii) hereto, as IDB requires and as necessary to maintain the Loan Coverage Ratio in accordance with Section 6.1.12.3.

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Senior Indebtedness has the meaning assigned to that term in Schedule 11.

Senior Security has the meaning assigned to that term in Schedule 11.

Share Capital means, as to any Person (other than a natural Person), all shares of capital stock of any class or other ownership interests of any kind, however called, in such Person.

Shareholders means with respect to Adeco, Letterton España SL and Kadesh Hispania SL and, with respect to Pilagá, Adecoagro LP, and such other Persons who from time to time own Share Capital of the Borrowers.

Short - term Debt means, as of any relevant determination date, the aggregate of all Debt that falls due, or the final payment of which is due, within one (1) year after the date of the respective agreements providing for such Debt.

Social Responsibility Plan means a plan presented by the Borrowers, in form and content acceptable to IDB, which includes: (i) the Borrowers’ social responsibility policies; (ii) the processes and resources the Borrowers will employ to implement said policy; (iii) annual social responsibility action plans with the corresponding monitoring indicators; and (iv) a reporting and communication strategy to communicate the results of such plan to IDB and other stakeholders.

Sponsor means any of Ospraie Special Opportunities, HBK and Pampas.

Sponsors means, collectively, HBK, Pampas, and Ospraie Special Opportunities.

Subordinator has the meaning assigned to that term in Schedule 11.

Subordinator Indebtedness has the meaning assigned to that term in Schedule 11.

Subsidiary means with respect to any Person, any entity over fifty percent (50%) of whose Share Capital is owned, directly or indirectly, by that Person.

Tax Returns means all returns, declarations, reports, estimates, information returns, statements and other documents of, relating to, or required to be filed with any Authority in respect of Taxes.

Taxes means all present and future taxes, charges, fees, duties, withholding obligations or other assessments of whatsoever nature levied by any Authority, together with any interest, penalties, additions to tax or other liabilities imposed thereon by any Authority.

TED Spread means, on any day, the spread between the 3-month British Bankers’ Association LIBOR Rate and the 3-month U.S. Treasury bill rate (rounded upwards, if necessary, to the nearest 1/100 of 1%), as published on the Bloomberg website at the address http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing such a quotation comparable to that which is currently provided on such page of such service, as determined by IDB for purposes of providing an equivalent quotation under this definition) as of such time.

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TED Spread Margin means, with respect to any Interest Period, if the TED Spread on the applicable Interest Rate Determination Date (i) is less than 1.50, zero percent (0.00%); (ii) is 1.50 or greater but less than 3.00, one percent (1.00%); and (iii) is 3.00 or greater, one and one-half percent (1.50%).

Term Date means the date that is the first scheduled A Loan Repayment Date.

Third B Loan Tranche has the meaning assigned to that term in Section 3.1.1(ii)(c) ( The Loan Amount ).

Total Liabilities means the items which are or should be classified as liabilities at such date on a balance sheet of either Borrower or both Borrowers, as applicable, in accordance with the Accounting Principles (Pasivos), including any present or future obligation (actual or contingent, as such latter term is determined in accordance with the Accounting Principles) for the payment or repayment of money which has been borrowed or raised, including obligations which may arise under a guarantee or indemnity or similar obligation; provided, however, that Deferred Lease Payments or intercompany Debt between the Borrowers and any member of the Group that are subordinated to the Loan according to the terms contained in Schedule 11 shall not be considered as part of Total Liabilities; provided further that the total calculation of Total Liabilities on a Combined Basis shall exclude loans between Adeco and Pilagá.

Total Liabilities to Equity Ratio means, as of any relevant determination date, the result obtained by dividing:

(a)

Total Liabilities of either Borrower or both Borrowers, as applicable, as of such date; by

(b)

Equity of either Borrower or both Borrowers, as applicable, as of that same date.

Transaction Taxes has the meaning assigned to that term in Section 3.13.2 ( Taxes ).

Section 1.2 Interpretation.

In this Agreement, unless the context otherwise requires:

1.2.1 headings and the rendering of text in bold and italics are for convenience only and do not affect the interpretation of this Agreement;

1.2.2 words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders;

1.2.3 the words “hereof’, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

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1.2.4 a reference to a Section, paragraph, party, Exhibit or Schedule is a reference to that Section or paragraph of, or that party, Exhibit or Schedule to, this Agreement unless otherwise specified;

1.2.5 a reference to this Agreement or any other Financing Document shall mean such document including any amendment or supplement to, or replacement, novation or modification of, that document but disregarding any amendment, supplement, replacement, novation or modification made in breach of this Agreement or such Financing Document;

1.2.6 a reference to a Person includes that Person’s successors and permitted assigns;

1.2.7 all terms defined in this Agreement shall have the meanings ascribed thereto in Section 1.1 ( Definitions ) when used in any certificate or other document made or delivered pursuant hereto;

1.2.8 the term “including” means “including without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided;

1.2.9 phrases such as “satisfactory to IDB”, “approved by IDB”, “acceptable to IDB”, “as determined by IDB”, “in IDB’s discretion”, and phrases of similar import authorize and permit IDB to approve, disapprove, determine, act or decline to act in its sole discretion;

1.2.10 references to any statute, code or statutory provision are to be construed as a reference to the same as it may from time to time be amended, modified or re-enacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires;

1.2.11 for purposes of this Agreement, any term that is used in this Agreement and is defined by reference to any Financing Document shall continue to have the original definition notwithstanding any termination, expiration or modification of any such Financing Document, except to the extent the parties hereto may otherwise agree;

1.2.12 all determinations as to whether a Material Adverse Effect has occurred, or could be expected to occur, shall be made by IDB, except that in respect of a representation or warranty of the Borrowers regarding a Material Adverse Effect, the determination as to whether a Material Adverse Effect has occurred or could be expected to occur shall be made by the Borrowers; and

1.2.13 references to “knowledge”, “know” and “known” shall mean knowledge after due inquiry.

Section 1.3 Business Day Adjustment.

Except as otherwise expressly provided herein, where the day on or by which a payment is due to be made is not a Business Day, that payment shall be made on or by the next succeeding Business Day. Interest, fees and charges (if any) thereon shall continue to accrue for the period from the due date that is not a Business Day to that next succeeding Business Day.

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Section 1.4 Conflicts.

In the case of any conflict between the terms and conditions of this Agreement and the terms and conditions of any other Financing Document, the terms and conditions of this Agreement shall prevail.

Section 1.5 Financial Calculations.

1.5.1 All financial calculations to be made under, or for the purposes of, this Agreement and any other Financing Document or in any certificate or other document made or delivered pursuant hereto or thereto shall be determined in accordance with the Accounting Principles.

1.5.2 Except as otherwise required to conform to any provision of this Agreement, all financial calculations shall be made from the then most recently issued quarterly Financial Statements or, with respect to the last Financial Quarter, the audited Financial Statements for the relevant Financial Year, which the Borrowers are obligated to furnish to IDB under Section 6.3.1 ( Audited Annual Financial Statements ) or Section 6.3.2 ( Unaudited Quarterly Financial Statements ).

1.5.3 If a financial calculation is to be made under or for the purposes of this Agreement or any other Financing Document on a Combined Basis, that calculation shall be made by reference to the sum of all amounts of similar nature reported in the relevant financial statements of each of the entities whose accounts are to be combined with the accounts of the Borrowers plus or minus the combination adjustments customarily applied to avoid double counting of transactions among any of those entities, including each Borrower.

Section 1.6 Joint and Several Liability.

All of the obligations of the Borrowers to: (a) pay any amount under any of the Financing Documents or (b) comply with any other term or condition shall be joint and several obligations except to the extent that any obligation is expressly stated herein or in any other Financing Document to be the obligation of one of the Borrowers only.

Section 1.7 Conditions of Effectiveness

1.7.1 Subject to Section 1.8, this Agreement shall be effective to amend and restate the Original Loan Agreement as of the date (the Effective Date ) when IDB confirms that:

1.7.1.1

the conditions set forth in Sections 5.3.2, 5.3.3, 5.3.4, 5.3.5 (other than the execution, filing and registration before the relevant real estate registries of each jurisdiction of the amendments to the mortgage agreements as public deeds as referred to in sub-sections (ii)(a) and (ii)(b) of the definition of Security Documents contained in Section 1.1 ( Definitions ) and subject to Section 1.8 and 5.3.6 have been duly met or waived; and

1.7.1.2

2 The Borrowers have made the Partial Current A Loan Payment on November 15, 2011.

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Section 1.8 Conditions Subsequent

1.8.1 The amendment and restatement of the Original Loan Agreement as of the Effective Date shall be subject to the following conditions subsequent (the Conditions Subsequent ):

1.8.1.1

(a) the Security, including the amendments to the mortgages described in (ii)(a) and (ii)(b) under the definition of Security Documents, has been duly executed and filed in each of the relevant real estate registries of each jurisdiction in which such filings, registrations, notarizations or recordings are required in respect of all interests or rights of the kind the relevant Security Documents purport to create over all of the Secured Property by December 15, 2011 and (b) IDB has received a report (“ Informe sobre Hipotecas , Inhibiciones , Embargos y otras medidas ”) from each relevant real estate registry showing that (x) such amendments to the mortgages have been filed with such real estate registry; and (y) no other Lien has been filed other than the Liens created under the Security Documents, by February 15, 2012.

1.8.1.2

IDB has received a legal opinion from Bruchou, Fernandez Madero & Lombardi, Argentine counsel to IDB that such amendments, upon registration with the relevant real estate registries of each jurisdiction, will be effective to reflect the new terms of the A Loan, the First B Loan Tranche and the Second B Loan Tranche pursuant to this Agreement and will create a perfected first priority security interest over the corresponding Secured Property to guarantee payment of the amounts to be disbursed under the Third B Loan Tranche.

1.8.2 In the event that either:

1.8.2.1

an Event of Default occurs prior to the date when the Conditions Subsequent are met; or

1.8.2.2

the Conditions Subsequent are not met in accordance with Section 1.8.1:

then, by written notice to the Borrower, at IDB’s sole election, the amendment and restatement of the Original Loan Agreement as of the Effective Date pursuant to Section 1.7 shall be deemed to be null and void and of no further effect, and the Borrower shall immediately (a) pay all amounts which have been due and payable on November 15, 2011, but for the amendment and restatement of the Original Loan Agreement as of the Effective Date, including default interest thereon pursuant to Section 3.12 and (b) all Fixed Rate Loan Breakage Costs.

Section 1.9 A Loan Fixed Rate Election prior to the Effective Date

1.9.1 The Borrower shall deliver, not later than the Business Day following the Acceptance Date, an A Loan Fixed Interest Rate Election in the event that it elects for the A Loan, taking into account the Partial Current A Loan Payment to be made on November 15, 2011 and the amendments to the terms of the A Loan to be effected by the amendment and restatement of the Original Loan Agreement pursuant to this Agreement as of the Effective Date, to bear interest at the A Loan Fixed Interest Rate. In relation thereto the Borrowers irrevocably acknowledge and agree that:

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1.9.1.1

the A Loan, as of the Acceptance Date, bears interest at the A Loan Fixed Interest Rate and in giving an A Loan Fixed Interest Rate Election, the Borrowers irrevocably (a) request that IDB unwinds the swap (the Existing A Loan Swap ) which it has previously entered into to enable the A Loan, as of the Acceptance Date, to bear interest at the A Loan Fixed Interest Rate, effective as of November 15 and (b) agree to pay the Fixed Interest Rate Breakage Costs associated with such unwinding;

1.9.1.2

that IDB will enter into a new swap with respect to any A Loan Fixed Interest Rate Election given pursuant to this Section 1.9.1. (the New A Loan Swap ); and

1.9.1.3

In the event that:

1.9.1.3.1

the Effective Date does not occur on or prior to November 15, 2011; or

1.9.1.3.2

the amendment and restatement the Original Loan Agreement as of the Effective Date pursuant to Section 1.7 are deemed to be null and void and of no further effect pursuant to Section 1.8.2,

the New A Loan Swap will be required to be unwound as of November 16, 2011, in the case of Section 1.9.1.3.1, and as of the date of the notice given by IDB under Section 1.8.2, in the case of Section 1.9.1.3.2, and the Borrowers shall pay to IDB the Fixed Interest Rate Breakage Costs associated with the unwinding of the New A Loan Swap within 5 Business Days of such date.

1.9.2 The provisions of this Section 1.9 shall become fully effective as of the Acceptance Date.

ARTICLE 2.

Purpose

Section 2.1 Purpose.

The purpose of the Loan is refinancing the Borrowers’ Outstanding Debt and financing the Required Capital Expenditures and the Permitted Capital Expenditures, along with related working capital requirements for 2009, 2010, 2011 and 2012, relating to the Borrowers’ agribusiness activities in Argentina (the Project ).

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ARTICLE 3.

Agreement for the Loan

Part 1: The Loan

Section 3.1 The Loan Amount.

3.1.1 Subject to the terms and conditions of this Agreement, IDB shall lend to the Borrowers, and the Borrowers shall borrow from IDB, an aggregate principal amount of up to one hundred ten million Dollars ($110,000,000), of which a maximum amount of eighty million Dollars ($80,000,000) may be outstanding at any time from and including the Acceptance Date. The Loan shall consist of:

(i)

the A Loan, in an aggregate principal amount of up to thirty one million Dollars ($31,000,000), of which twenty two million one hundred thirty six thousand one hundred seventy eight Dollars ($22,416,179) remains outstanding under the Original Loan Agreement (subject to Section 1.7.1.2);

(ii)

the B Loan consisting of:

(A)

an initial aggregate principal amount of up to thirty five million Dollars ($35,000,000), of which twenty million eight hundred thirty three thousand two hundred Dollars ($20,833,200) remains outstanding under the Original Loan Agreement (the First B Loan Tranche );

(B)

an aggregate principal amount of up to fourteen million Dollars ($14,000,000), (the Second B Loan Tranche ) of which eight million three hundred thousand two hundred eighty Dollars ($8,333,280) remains outstanding under the Original Loan Agreement; and

(C)

an aggregate principal amount of up to thirty million eight hundred thirty-three thousand five hundred twenty Dollars ($30,833,520) (the Third B Loan Tranche ),

each such amount funded by the Participants pursuant to the relevant Participation Agreements.

3.1.2 The parties hereby acknowledge that the A Loan, the First B Loan Tranche, and the Second B Loan Tranche have been fully disbursed and are not available for borrowing.

Section 3.2 Disbursement Procedure.

3.2.1 Subject to the satisfaction of the conditions set forth in Article 5, the Borrowers may request Disbursements by delivering to IDB, at (a) least fifteen (15) Business Days prior to the proposed First Disbursement Date, (b) at least ten (10) Business Days prior to each subsequent proposed Disbursement Date (other than a Disbursement of the Third B Loan Tranche), and (c) with respect to a Disbursement of the Third B Loan Tranche at least seven (7) Business Days prior to each subsequent proposed Disbursement Date, a Disbursement Request and a receipt substantially in the form of Exhibit 2 ( Form of Disbursement Receipt ), each signed by both Borrowers.

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3.2.2 IDB is not obligated to make:

3.2.2.1

any B Loan Disbursement unless and until all Participants shall have made available to IDB, in immediately available funds, their proportionate share of such Disbursement in accordance with the Participation Agreements; or

3.2.2.2

any Disbursement (other than with respect to the Second B Loan Tranche) except pro rata from the A Loan and the B Loan provided, however, that the Third B Loan Tranche will be disbursed on a non pro rata basis.

3.2.3 Each Disbursement of the Loan shall be made in Dollars at an account registered in a bank located in the United States, as specified in the Disbursement Request. With respect to (i) any Disbursement other than the Disbursement of the Third B Loan Tranche, eighty five percent (85%) of the total amount of each Disbursement, and (ii) with respect to a Disbursement of the Third B Loan Tranche, one hundred percent (100%) of that Disbursement, shall be promptly transferred to Argentina by the Borrowers and exchanged for Pesos through the Argentine free foreign exchange market (Mercado Unico y Libre de Cambios) in accordance with the applicable laws and foreign exchange regulations no later than (x) thirty (30) days after any Disbursement other than the Disbursement of the Third B Loan Tranche, and (y) three hundred and sixty five (365) days after the Disbursement of the Third B Loan Tranche. In the case of any Disbursement other than the Disbursement of the Third B Loan Tranche, the balance of the total amount disbursed under each Disbursement shall be transferred to Argentina by the Borrowers and exchanged for Pesos through the Argentine free foreign exchange market (Mercado Unico y Libre de Cambios) in accordance with the applicable laws and foreign exchange regulations.

3.2.4 The Borrowers shall not request more than two (2) Disbursements of the A Loan and First B Loan Tranche and Second B Loan Tranche, or only one (1) Disbursement of the Third B Loan Tranche.

3.2.5 A Disbursement Request shall be irrevocable.

3.2.6 The Borrowers shall not be entitled to make any Disbursement Requests after the Commitment Termination Date.

Section 3.3 Repayment.

3.3.1 Each of the Borrowers shall repay the A Loan in thirteen (13) installments of principal (for the avoidance of doubt, not counting the payment of the Partial Current A Loan Payment), on each Interest Payment Date commencing on the First Principal Payment Date and ending on the A Loan Final Maturity Date (each an A Loan Repayment Date ), in accordance with the amounts set forth in the repayment schedule (the Repayment Schedule ) attached as Schedule 14 hereto, provided, that the entire outstanding principal amount of the A Loan shall be due and payable on the A Loan Final Maturity Date.

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3.3.2 Each of the Borrowers shall repay the B Loan in nine (9) installments of principal on each Interest Payment Date commencing on the First Principal Payment Date and ending on the B Loan Final Maturity Date (each a B Loan Repayment Date ) in accordance with the amounts set forth in the Repayment Schedule provided, that the entire outstanding principal amount of the B Loan shall be due and payable on the B Loan Final Maturity Date.

3.3.3 Principal amounts repaid pursuant to this Section 3.3 ( Repayment ) may not be reborrowed.

Section 3.4 IDB’s Determination Final.

IDB’s internal records regarding payments made on account of the Obligations shall be final and conclusive and bind each Borrower unless such Borrower proves to IDB’s satisfaction that the determination involved manifest error; provided, that the failure of IDB to maintain such accounts or any error therein shall not in any manner reduce or limit the obligation of the Borrowers to repay the Loan in accordance with the terms of this Agreement.

Section 3.5 Voluntary Prepayments.

The Borrowers may prepay all or any portion of the Loan, on any Interest Payment Date (subject to Section 3.5.4 below), on not less than twenty (20) days’ prior notice to IDB, but only if:

3.5.1.1

the prepayment is made not less than 365 days (or such shorter period as may be required or permitted under applicable law) after the Last Disbursement Date (as defined in Section 3.5.2(a)) and in compliance with Argentine foreign exchange regulations;

3.5.1.2

each of the Borrowers concurrently pays (a) all accrued and unpaid interest on the Loan; (b) all accrued and unpaid Increased Costs (if any) on the Loan; (c) the amount payable (if any) in respect of such prepayment pursuant to Section 3.14.1.2 ( Costs , Expenses and Losses ); (d) the amount payable (if any) in respect of such prepayment pursuant to Section 3.5.2 below; (e) any Fixed Rate Breakage Costs resulting if the Borrowers make the A Loan Fixed Interest Rate Election and all or any portion of the A Loan is prepaid under Section 3.5 ( Voluntary Prepayments ); and (d) all other Obligations then due and payable;

3.5.1.3

for a partial prepayment of the Loan, the principal amount of the Loan prepaid is an amount not less than five million Dollars ($5,000,000) or a whole multiple of one million Dollars ($1,000,000) in excess thereof; and

3.5.1.4

upon request by IDB, each of the Borrowers delivers to IDB, prior to the date of prepayment, evidence satisfactory to IDB that any Authorizations necessary with respect to the prepayment have been obtained,

provided, however, that for the avoidance of doubt, this Section 3.5.1 shall not apply to the Partial Current A Loan Payment made pursuant to Section 1.7.1.2.

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3.5.2 On the date of such prepayment, the Borrowers shall pay a prepayment premium consisting of an amount in Dollars equal to:

(a)

two percent (2%) of the amount prepaid if the prepayment is made (i) at any time after the first anniversary of the day of the last disbursement of the Third B Loan Tranche (the “ Last Disbursement Date ”) but on or prior to the second anniversary of the Last Disbursement Date;

(b)

one point seventy-five percent (1.75%) of the amount prepaid if the prepayment is made at any time after the second anniversary of the Last Disbursement Date but on or prior to the third anniversary of the Last Disbursement Date;

(c)

one point fifty percent (1.50%) of the amount prepaid if the prepayment is made at any time after the third anniversary of the Last Disbursement Date but on or prior to the fourth anniversary of the Last Disbursement Date;

(d)

one point twenty-five percent (1.25%) of the amount prepaid if the prepayment is made at any time after the fourth anniversary of the Last Disbursement Date but on or prior to the fifth anniversary of the Last Disbursement Date, and

(e)

one percent (1%) of the amount prepaid, if the prepayment is made at any time after the fifth anniversary of the Last Disbursement Date,

provided, however, that for the avoidance of doubt, this Section 3.5.2 shall not apply to the Partial Current A Loan Payment made pursuant to Section 1.7.1.2.

3.5.3 A prepayment notice is irrevocable. Upon delivery of a prepayment notice in accordance with Section 3.5.1, the Borrowers shall be obligated to make the prepayment in accordance with the terms of that notice and the amount stated to be prepaid shall become due and payable on the Interest Payment Date specified for such prepayment.

3.5.4 If required by IDB in accordance with Section 6.2.15.2 ( Prepayment ), the Borrowers shall, simultaneously with the prepayment of any Long-term Debt other than the Loan, prepay a proportionate amount of the Loan along with all other amounts payable in respect thereof under Sections 3.5.1.2 and 3.5.2 (calculated as if such prepayment were voluntarily made by the Borrowers hereunder).

Section 3.6 Mandatory Prepayments.

3.6.1 The Borrowers shall, promptly upon receipt of any of the amounts described in Sections 3.6.1.1 through 3.6.1.3 ( Mandatory Prepayments ) notify IDB of such receipt (and obtain any Authorizations necessary with respect to such prepayment), and shall apply all such amounts at the respective times set forth below to prepay the Loan and concurrently with such payment pay (i) all accrued and unpaid interest on the Loan; (ii) the accrued and unpaid Increased Costs (if any) on the Loan; (iii) the amount payable (if any) in respect of such prepayment pursuant to Section 3.14.1.2 ( Costs , Expenses and Losses ); (iv) any Fixed Rate Breakage Costs due from the Borrowers if the Borrowers make an A Loan Fixed Interest Rate Election and all or any portion of the A Loan is prepaid under Section 3.6 ( Mandatory Prepayments ); and (v) all other Obligations then due and payable:

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3.6.1.1

any payment received by either Borrower in respect of the confiscation, expropriation, nationalization of any assets of either Borrower when received by such Borrower to the extent that (i) such payment exceeds one million Dollars ($1,000,000) on a Combined Basis in any twelve (12) month period and (ii) the relevant Borrower (a) does not use such payment to purchase new assets of a similar nature within twelve (12) months from the date such payment is received or (b) did not purchase new assets of a similar nature in the twelve (12) month period before such payment is received, in which case the required prepayment shall be made on the next Interest Payment Date following the end of such twelve (12) month period mentioned in (ii)(a) of this subsection;

3.6.1.2

any insurance proceeds in excess of five million Dollars ($5,000,000) on a Combined Basis for both Borrowers in any twelve (12) month period and paid with respect to loss or damage to Property of the Borrowers except to the extent that the IDB determines that the Borrowers’ program for remediation of such loss or damage is acceptable (including time for repair and adequacy of funds) and such insurance proceeds are applied (a) toward such remediation program within the following twelve (12) month period or (b) to compensate the advance payments made by the Borrowers toward the remediation of the loss or damage before collecting the insurance proceeds, in which case the required prepayment shall be made on the next Interest Payment Date following the end of such twelve (12) month period; and

3.6.1.3

the aggregate remaining proceeds which are in excess of ten million Dollars ($10,000,000) on a Combined Basis for both Borrowers in any twelve (12) month period from the sale or disposition of any Property, after applying sub-sections (a) to (c) of this Section 3.6.1.3, (such excess proceeds being the “ Relevant Proceeds ”) to the extent that (i) the relevant Borrower (a) does not use such Relevant Proceeds to purchase new assets of a similar nature within the following twelve (12) month period, (b) does not use such Relevant Proceeds for activities or investments related to the Borrower’s agribusiness within the following twelve (12) month period, or (c) did not purchase new assets of a similar nature in the twelve (12) month period before such Relevant Proceeds are received, in which case the required prepayment shall be made on the next Interest Payment Date following the end of such twelve (12) month period mentioned in (ii)(a) of this subsection;

3.6.2 In the event that any Sponsor transfers its beneficial ownership in the share capital of either of the Borrowers without the consent of the IDB (not to be unreasonably withheld) to a Person (other than to a wholly owned subsidiary of such Sponsor or to another Sponsor) who, as a result of such transfer or issuance, would hold more than ten percent (10%) in aggregate of the outstanding shares of the Borrowers, then the Borrowers shall prepay the Loan and concurrently with such payment pay (i) all accrued and unpaid interest on the Loan; (ii) all accrued and

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unpaid Increased Costs (if any) on the Loan; (iii) the amount payable (if any) in respect of such prepayment pursuant to Section 3.14.1.2 ( Costs , Expenses and Losses ); and (iv) all other Obligations then due and payable; provided that the foregoing shall not apply to any such transfer by a Sponsor if such transfer:

3.6.2.1

is to a private equity fund or other investment fund whose primary purpose is to make equity investments in other entities (a Fund) and such Sponsor has provided to IDB:

3.6.2.1.1

a certificate from a senior officer of such Sponsor certifying that it has completed in respect of such Fund all customary “know your customer” due diligence that the Sponsor would have conducted for any entity that was to become a shareholder in such Sponsor and the Sponsor certifies that no issues have been identified with respect to such due diligence; and

3.6.2.1.2

a certificate from a senior officer of such Fund certifying it has written policies, procedures and internal controls designed to prevent and detect money laundering and terrorist financing, which policies, procedures and internal controls are designed to adhere to the requirements of applicable law, including the USA Patriot Act of 2001 and the laws of the various jurisdictions in which it does business, including customer identification procedures and enhanced due diligence for higher risk clients, including Politically Exposed Persons.

3.6.2.2

is not to a Fund and such Sponsor has provided to IDB evidence that they have completed in respect of such transferee all customary “know your customer” due diligence that the Sponsor would have conducted for any entity that was to become a shareholder in such Sponsor, including customer identification procedures and enhanced due diligence for higher risk clients, including Politically Exposed Persons and the Sponsor certifies that no issues have been identified with respect to such due diligence.

3.6.2.3

is made on the New York Stock Exchange by a publicly-traded company or pursuant to a transfer made under Rule 144 of the Securities Act of 1933.

3.6.3 in the event that either Borrower makes a prepayment under Section 3.6.1 or 3.6.2, it shall pay the prepayment premium set out in Section 3.5.2.

Section 3.7 Application of Prepayments.

3.7.1 Amounts of principal prepaid under Section 3.5 ( Voluntary Prepayments ), Section 3.6 ( Mandatory Prepayments ), Section 6.2.15 ( Prepayment ) or Section 6.6 ( Insurance ) shall:

3.7.1.1

first, be allocated by IDB pro rata between the A Loan and the B Loan in proportion to their respective principal amounts outstanding; and

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3.7.1.2

then, be applied by IDB to all the respective outstanding installments of principal of each of the A Loan and the B Loan in inverse order of maturity.

3.7.2 Any principal amount of the Loan prepaid under Section 3.5 ( Voluntary Prepayments ), Section 3.6 ( Mandatory Prepayments ), Section 6.2.15 ( Prepayment ) or Section 6.6 ( Insurance ) may not be reborrowed.

Section 3.8 Charges and Fees.

The Borrowers shall pay to IDB the following fees:

3.8.1 a commitment fee (the Commitment Fee ) at the rate of one half of one percent (0.5%) per annum of the undisbursed and uncancelled portion of the Loan, provided that if the Third B Loan Tranche is not disbursed as of December 15, 2011, the Commitment Fee for the Third B Loan Tranche shall be (i) from (and including) December 16, 2011 to (and including) January 15, 2011, a rate of eighty-five hundredths of one percent (0.85%) of the undisbursed and uncancelled portion of the Third B Loan Tranche, (ii) from (and including) January 16, 2011 to the Commitment Termination Date, a rate of one percent (1%) of undisbursed and uncancelled portion of the Third B Loan Tranche.

The Commitment Fee shall:

3.8.1.1

begin to accrue on the earlier of (a) ninety (90) days after the Effective Date (as defined under the Original Loan Agreement) and (b) the First Disbursement Date; provided that for the Third B Loan Tranche it shall begin to accrue on December 2, 2011;

3.8.1.2

be calculated on the basis of a 360-day year for the actual number of days elapsed; and

3.8.1.3

be payable in arrears on the Interest Payment Dates in each year, the first such payment to be due on the first Interest Payment Date occurring after the date on which the Commitment Fee begins to accrue pursuant to Section 3.8.1.1 ( Charges and Fees );

3.8.2 an annual administration fee of five thousand Dollars ($5,000) per Participant payable (a) upon the earlier of (i) the date that is thirty (30) days after the Effective Date and (ii) the first Interest Payment Date; and (b) thereafter, on each anniversary of the first Interest Payment Date for so long as any portion of the B Loan is outstanding, provided that such fee shall not exceed thirty thousand Dollars ($30,000) in any given year; and

3.8.3 the fees set out in the Fee Letters.

Section 3.9 Currency and Place of Payment.

Payments of all Obligations due to IDB shall be made in Dollars, in immediately available funds, to the Paying Agent at the New York office of The Bank of New York Mellon, Account No. 211705 (ABA #021-000-018) for further credit to Receipt Account No. 141642 no later

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than 11:00 a.m. New York City time, or at such other bank or banks, in such place or places, as IDB shall from time to time designate. IDB may deem any payment, or part thereof, relating to the Loan that is received after that time as made on the next Business Day and, accordingly, interest shall accrue on any Participant’s pro rata share of that payment with respect to which IDB is unable to make same day remittance to that Participant.

Section 3.10 Judgment Currency

3.10.1 The payment obligations of the Borrowers under this Agreement shall not be discharged by an amount paid in a currency or place other than as set forth in Section 3.9 ( Currency and Place of Payment ), whether pursuant to a judgment or otherwise, to the extent that the amount so paid on conversion to Dollars and transferred to the account set forth in Section 3.9 ( Currency and Place of Payment ) under normal banking procedures does not yield the amount of Dollars due hereunder. If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in Dollars into another currency (the Second Currency ), the rate of exchange which shall be applied shall be that at which in accordance with normal banking procedures IDB could purchase Dollars with the Second Currency on the Business Day next preceding the date on which such judgment is rendered. Notwithstanding the rate of exchange actually applied in rendering such judgment, the Borrowers shall, as a separate obligation, pay to IDB on demand in Dollars, such additional amount as is necessary to enable IDB to receive, after conversion of the amount received in the Second Currency to Dollars and transfer to the account set forth in Section 3.9 ( Currency and Place of Payment ) in accordance with normal banking procedures, the full amount due to IDB under this Agreement.

3.10.2 Notwithstanding the terms of Section 3.10.1 ( Judgment Currency ), IDB may require the Borrowers to pay (or reimburse IDB) in any currency other than Dollars for:

3.10.2.1

any Taxes and other amounts payable under Section 3.13 ( Taxes ); and

3.10.2.2

any fees, costs and expenses payable under Section 3.14 ( Costs , Expenses and Losses ); and

in each case to the extent such amounts are payable in such other currency.

Section 3.11 Allocation of Partial Payments.

If IDB at any time receives less than the full amount then due and payable to it in respect of the Obligations, IDB shall have the right (as between IDB and each of the Borrowers) to allocate and apply such payment in any way or manner and for such purpose or purposes under this Agreement or any other Financing Document as IDB in its discretion determines, notwithstanding any instruction that each of the Borrowers may give to the contrary.

Section 3.12 Late Charges.

3.12.1 Without limiting the remedies available to IDB under this Agreement, any other Financing Agreement or otherwise, if either Borrower:

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3.12.1.1

fails to make any payment of principal or interest (including interest payable pursuant to this Section) when due hereunder (whether at stated maturity or upon acceleration), the Borrowers shall pay interest on the amount of that payment due and unpaid at the rate that shall be the sum of two percent (2.00%) per annum plus the then applicable A Loan Interest Rate (with respect to amounts relating to the A Loan) or the B Loan Interest Rate (with respect to amounts relating to the B Loan) in effect from time to time; or

3.12.1.2

fails to pay any Obligations (other than principal of, and interest on, the A Loan and the B Loan), when due (whether at stated maturity or upon acceleration), the Borrowers shall pay interest on such overdue and unpaid amounts at a rate per annum equal to the sum of two percent (2.00%) per annum plus the higher of: (a) the A Loan Interest Rate; and (b) the B Loan Interest Rate.

3.12.2 Interest at the rates referred to in Sections 3.12.1.1 and 3.12.1.2 ( Late Charges ) shall accrue from the date the payment was due until the date on which such payment is made in full but excluding the date on which IDB actually receives the payment (as well after as before judgment), and shall be payable on demand, or, if not demanded, on each Interest Payment Date falling after any such overdue amount became due.

Section 3.13 Taxes.

3.13.1 Each of the Borrowers acknowledges that under the Agreement Establishing the Inter-American Development Bank dated December 30, 1959, IDB and its Property, income and transactions are immune from all Taxes imposed by IDB Members.

3.13.2 Notwithstanding the foregoing, each of the Borrowers shall pay or cause to be paid all Taxes and other liabilities of whatsoever nature (other than any Taxes imposed on or measured by net income) imposed on or in connection with the payment of any Obligation by any Authority of Argentina or any Authority of any other jurisdiction from or through which any such payment is made, including payments made by IDB to the Participants under the respective Participation Agreements (all such Taxes and liabilities, collectively, Transaction Taxes ).

3.13.3 All payments by each of the Borrowers under this Agreement or under any other Financing Document shall be made free and clear of and without deduction or withholding for or on account of any Transaction Taxes. If either Borrower is required by applicable law or otherwise to deduct or withhold any Transaction Taxes from any such payment (a) the amount payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional amounts payable under this Section) IDB receives the full amount it would have received had no such deduction or withholding been required, and (b) each of the Borrowers shall make such deduction or withholding and shall pay the full amount deducted or withheld to the relevant Authority in accordance with applicable law.

3.13.4 Each of the Borrowers shall pay any stamp, recording, documentary or similar taxes and all other charges or levies payable on or in connection with the execution, delivery, registration, consularization, translation, notarization or enforcement of this Agreement and the other Financing Documents (collectively, Other Taxes ).

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3.13.5 Each of the Borrowers shall indemnify IDB and the Paying Agent for the full amount of Transaction Taxes and Other Taxes arising in connection with payments made under any Financing Document (including any Transaction Taxes or Other Taxes imposed by any Authority on amounts payable under this Section 3.13 ( Taxes )) and paid by IDB and the Paying Agent and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnity shall be made within ten (10) days from the date the indemnitee makes written demand therefor.

3.13.6 Each of the Borrowers shall furnish to IDB, within thirty (30) days after the date the payment of any Transaction Taxes or Other Taxes is due, certified copies of receipts evidencing such payment by the Borrower(s) or, if such receipts are not obtainable, other evidence of such payments by the Borrower(s) satisfactory to IDB.

Section 3.14 Costs, Expenses and Losses.

3.14.1 If IDB or any Participant shall incur cost, expense or loss as a result of the Borrowers:

3.14.1.1

failing to (a) pay any Obligations on the due date therefor; (b) borrow in accordance with any Disbursement Request; (c) make any prepayment in accordance with a notice of prepayment pursuant to Section 3.5 ( Voluntary Prepayments ) or Section 3.6 ( Mandatory Prepayments ); or (d) make any repayment or prepayment required pursuant to Section 3.3 ( Repayment ), Section 3.19 ( Illegality ) or Section 6.2.15 ( Prepayment ), as the case may be;

3.14.1.2

prepaying all or any portion of the Loan on a date other than an Interest Payment Date (and for the avoidance of doubt, the making of the Partial Current A Loan Payment pursuant to Section 1.7.1.2 shall not be considered a prepayment);

3.14.1.3

cancelling any or all of the Loans pursuant to Section 3.15 ( Suspension or Cancellation by IDB ) or Section 3.16 ( Cancellation by the Borrower ); and

3.14.1.4

failing to submit a Disbursement Request for the last Disbursement (a) on or prior to the Commitment Termination Date, or (b) prior to the cancellation of any undisbursed amounts of the A Loan in accordance with Section 3.15 ( Suspension or Cancellation by IDB ) or Section 3.16 ( Cancellation by the Borrower ),

then the Borrowers shall immediately pay, in Dollars, to IDB the amount that IDB shall notify the Borrowers from time to time as being the aggregate of such actual costs, expenses and losses.

3.14.2 For purposes of this Section 3.14 ( Costs , Expenses and Losses ), “costs, expenses or losses” shall include any interest paid or payable to cover any unpaid amount, any “broken

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funding” or hedge liquidation costs and any loss, premium, penalty or expense that may be incurred in liquidating or employing deposits of or borrowings from third parties in order to make, maintain or fund all or any part of the Loan or a Participation but, in each case, after taking into account any Fixed Rate Breakage Costs received by IDB, and, in the case of a late payment, after taking into account any late payment interest received by IDB under Section 3.12 ( Late Charges ). IDB’s determination of any “costs, expenses or losses” shall be final and conclusive and bind the Borrower unless the Borrower proves to IDB’s satisfaction that the determination involved manifest error.

Section 3.15 Suspension or Cancellation by IDB.

3.15.1 IDB may, by notice to the Borrowers, suspend the right of the Borrowers to request Disbursements or cancel all or any portion of the undisbursed balance of the Loan if:

3.15.1.1

any Default or Event of Default has occurred and is continuing;

3.15.1.2

the Commitment Termination Date has occurred; or

3.15.1.3

Argentina ceases to be an IDB Member.

3.15.2 Upon the giving of such notice, the right of the Borrowers to request any further Disbursements shall be suspended (for such period and on such conditions as determined by IDB in its discretion) or cancelled, as the case may be. The exercise by IDB of its right of suspension shall not preclude IDB from exercising its right of cancellation, either for the same or any other reason, and shall not limit any other rights of IDB under any other provision of this Agreement or any of the other Financing Documents.

Section 3.16 Cancellation by the Borrowers.

3.16.1 The Borrowers may, by notice to IDB, irrevocably request IDB to cancel the undisbursed portion of the Loan effective as of the date specified in such notice (which shall be a date not earlier than fifteen (15) Business Days after the date of that notice), provided that IDB has received payment of all Obligations due and payable on the date of such cancellation, and a cancellation fee in an amount equal to two percent (2%) of the cancelled portion of the Loan.

3.16.2 Upon receipt of the notice of the Borrowers referred to in Section 3.16.1 above, IDB shall, by notice to the Borrowers, cancel the undisbursed portion of the Loan effective as of such specified date if IDB has received payment of all fees and other Obligations (other than principal of and interest on the Loan) then due and payable or, in the case of the Commitment Fee, accrued.

Section 3.17 Terms and Conditions Applicable to Cancellation or Suspension.

3.17.1 Upon any cancellation, the Borrowers shall, subject to Section 3.17.3 (Terms and Conditions Applicable to Cancellation or Suspension), pay to IDB all fees and other Obligations (other than principal of and interest on the Loan) then due and payable or, in the case of the Commitment Fee, accrued up to the date of any such cancellation, including any amounts owed pursuant to Section 3.14 ( Costs , Expenses and Losses ).

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3.17.2 The Commitment Fee applicable to any undisbursed and uncancelled portion of the Loan shall continue to accrue and be payable during any suspension of IDB’s obligation to make Disbursements pursuant to Section 3.15 ( Suspension or Cancellation by IDB ).

3.17.3 The undisbursed portion of the Loan shall be automatically reduced by the portion of the Loan cancelled under Section 3.15 ( Suspension or Cancellation by IDB ) or Section 3.16 ( Cancellation by the Borrowers ). Such reduction shall be applied pro rata to the A Loan and the B Loan.

Section 3.18 Increased Costs.

3.18.1 On each Interest Payment Date the Borrowers shall pay, in addition to interest and principal, if applicable, on the Loan, the amount that IDB from time to time notifies to the Borrowers in an Increased Costs Certificate as being the aggregate Increased Costs of IDB or any Participant accrued and unpaid prior to such Interest Payment Date.

3.18.2 If the Borrowers are required to pay any Increased Costs pursuant to Section 3.18.1 ( Increased Costs ), they may prepay, in whole, but not in part, that part of the Loan with respect to which the Increased Costs are incurred. Such prepayment shall be made in accordance with Section 3.5 ( Voluntary Prepayment ) except that provisions with respect to the timing of any prepayment set forth in Section 3.5.1.1 ( Voluntary Prepayment ), the minimum prepayment amount set forth in Section 3.5.1.3 ( Voluntary Prepayment ) and the prepayment premium set forth in Section 3.5.2 ( Voluntary Prepayment ) shall not apply.

Section 3.19 Illegality.

Notwithstanding anything to the contrary contained in this Agreement, if, after the Effective Date, any change made in any applicable law or the interpretation or application thereof by any Authority (a Relevant Change ) makes it unlawful for IDB or any Participant to continue to maintain or to fund the Loan or the relevant Participation or any portion thereof:

3.19.1 the Borrowers shall, upon request by IDB (but subject to any applicable Authorization having been obtained), immediately prepay in full that portion of the Loan that IDB advises is so affected;

3.19.2 concurrently with a prepayment pursuant to Section 3.19.1 ( Illegality ), the Borrowers shall pay (a) all accrued and unpaid interest on the Loan; (b) all accrued and unpaid Increased Costs (if any) on the Loan; (c) the amount payable (if any) in respect of such prepayment pursuant to Sections 3.13 ( Taxes ) and 3.14.1.2 ( Costs , Expenses and Losses ); (d) any Fixed Rate Breakage Costs due as a result of the Borrowers making an A Loan Fixed Interest Rate Election and prepaying all or any portion of the A Loan; and (e) all other Obligations then due and payable; it being understood that no prepayment premium shall be payable in connection with any prepayment made pursuant to this Section 3.19.2;

3.19.3 the Borrowers shall take all reasonable steps to obtain, as quickly as possible after receipt of IDB’s request for prepayment, the Authorizations referred to in Section 3.19.1 ( Illegality ) if any such Authorizations are then required; and

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3.19.4 the Borrowers’ right to request Disbursement of the undisbursed portion of the Loan affected by the Relevant Change shall terminate upon the Borrowers’ receipt of IDB’s request for prepayment under this Section 3.19 ( Illegality ).

Section 3.20 Reimbursement of Expenses.

The Borrowers shall pay to IDB, or as IDB may direct:

3.20.1 the reasonable and documented fees and expenses of each of the Consultants (other than the Economic Consultant) in each case incurred in connection with the transactions contemplated herein;

3.20.2 the reasonable and documented fees and expenses of IDB (including the reasonable and documented fees and expenses of IDB’s counsel) in Argentina and the United States incurred in connection with:

3.20.2.1

the preparation for the Loan, including any due diligence;

3.20.2.2

the preparation, review, negotiation, execution, implementation and, where appropriate, translation, registration and notarization of the Financing Documents and any other documents relating to them;

3.20.2.3

the giving of any legal opinions IDB requires under this Agreement and any other Financing Document;

3.20.2.4

IDB’s administration of the Loan, the preservation or exercise of any of IDB’s rights under any Financing Document or otherwise in connection with any amendment, supplement or modification to, or waiver under, any of the Financing Documents; and

3.20.2.5

the registration (where appropriate) and the delivery of the evidences of indebtedness relating to the Loan and its disbursement.

3.20.3 the reasonable and documented out-of-pocket expenses (including travel and subsistence expenses), not exceeding the equivalent of fifteen thousand Dollars ($15,000) in any calendar year, incurred by IDB in relation to its annual Loan supervision review, including the supervision of compliance with Environmental and Social Provisions and Environmental and Social Requirements, payable upon receipt of a statement of those expenses from IDB;

3.20.4 the reasonable and documented fees and expenses of the Paying Agent as provided in the Paying Agency Agreement; and

3.20.5 the costs and expenses incurred by IDB in relation to efforts to preserve, enforce or protect its rights under any Financing Document, including with respect to IDB’s rights under this Section 3.20 ( Reimbursement of Expenses ) and any corresponding terms in any of the other Financing Documents, or the exercise of its rights or powers consequent upon or arising out of the occurrence of any Default, including legal and other professional consultants’ fees.

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Part 2: A Loan and B Loan Interest Rate Terms and Conditions

Section 3.21 A Loan Fixed Rate Option

In the event the Borrowers elect for the A Loan to bear interest at the A Loan Fixed Interest Rate by delivering an A Fixed Interest Rate Loan Election notice, the following provisions shall apply:

3.21.1 The A Loan shall bear interest at the A Loan Fixed Interest Rate as from the A Loan Fixed Interest Rate Election notice.

3.21.2 Interest on the A Loan outstanding principal amount shall accrue from day to day, computed on the basis of the actual number of days elapsed and a year of three hundred and sixty (360) days and be payable in arrears on each Interest Payment Date; provided that with respect to any A Loan Disbursement made less than ten (10) days before an Interest Payment date, interest on that Disbursement shall be payable commencing on the second Interest Payment Date following the date of that Disbursement.

3.21.3 The A Loan Fixed Interest Rate for the A Loan shall be the rate that is the sum of:

(i)

the Disbursement Swap Market Fixed Rate as of the applicable A Loan Fixed Interest Rate Determination Date; plus

(ii)

the Applicable Spread.

3.21.4 On the applicable A Loan Fixed Interest Rate Determination Date, IDB shall determine the A Loan Fixed Interest Rate for the A Loan and promptly notify the Borrowers in writing of such rate.

3.21.5 IDB’s determination of the A Loan Fixed Interest Rate on the applicable A Loan Fixed Interest Rate Determination Date shall be final and conclusive and shall bind the Borrowers unless either Borrower proves to IDB’s satisfaction that the determination involved manifest error.

Section 3.22 A Loan Variable Rate Option

Subject to Section 3.12 ( Late Charges ), from the Acceptance Date (or, thereafter if the Borrowers have previously delivered an A Loan Fixed Interest Rate Election pursuant to Section 3.21, then from the date the Borrowers subsequently deliver an A Loan Variable Interest Rate Election), the Borrowers shall pay interest on the principal amount of the A Loan outstanding from time to time in accordance with this Section 3.22 ( A Loan Variable Rate Option ).

3.22.1 Interest on the A Loan shall accrue from day to day for any Interest Period from and including the first day of such Interest Period to, but excluding, the last day of such Interest Period computed on the basis of actual number of days elapsed in such Interest Period and a year of three hundred and sixty (360) days and be payable in arrears on the Interest Payment Date falling at the end of that Interest Period; provided that with respect to any A Loan

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Disbursement made less than ten (10) days before an Interest Payment Date, interest on that Disbursement shall be payable commencing on the second Interest Payment Date following the date of that Disbursement.

3.22.2 During each Interest Period, the A Loan (or, with respect to the first Interest Period for each A Loan Disbursement, the amount of that Disbursement) shall bear interest at the A Loan Variable Interest Rate for that Interest Period.

3.22.3 Subject to Section 3.24 ( Change in Interest Period ), the A Loan Variable Interest Rate for any Interest Period shall be the rate that is the sum of:

3.22.3.1

the Applicable LIBOR on the Interest Rate Determination Date for that Interest Period; plus

3.22.3.2

the Applicable Spread.

3.22.4 On each Interest Rate Determination Date, IDB shall determine the A Loan Variable Interest Rate applicable to the relevant Interest Period and promptly notify the Borrowers of such rate.

3.22.5 IDB’s determination, from time to time, of the A Loan Variable Interest Rate shall be final and conclusive and shall bind the Borrowers unless either Borrower proves to IDB’s satisfaction that the determination involved manifest error.

Section 3.23 B Loan Interest.

Subject to Section 3.12 ( Late Charges ), the Borrowers shall pay interest on the outstanding principal amount of the B Loan from time to time in accordance with this Section 3.23 ( B Loan Interest ).

3.23.1 Interest on the B Loan shall accrue from day to day for any Interest Period from and including the first day of such Interest Period to, but excluding, the last day of such Interest Period computed on the basis of actual number of days elapsed in such Interest Period and a year of three hundred and sixty (360) days and be payable in arrears on the Interest Payment Date falling at the end of that Interest Period; provided that with respect to any B Loan Disbursement made less than ten (10) days before an Interest Payment Date, interest on that Disbursement shall be payable commencing on the second Interest Payment Date following the date of that Disbursement.

3.23.2 During each Interest Period, the B Loan (or, with respect to the first Interest Period for each B Loan Disbursement, the amount of that Disbursement) shall bear interest at the B Loan Interest Rate for that Interest Period.

3.23.3 Subject to Section 3.23 ( Change in Interest Period ), the B Loan Interest Rate for any Interest Period shall be the rate that is the sum of:

3.23.3.1

the Applicable LIBOR on the Interest Rate Determination Date for that Interest Period; plus

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3.23.3.2

the Applicable Spread.

3.23.4 On each Interest Rate Determination Date, IDB shall determine the B Loan Interest Rate applicable to the relevant Interest Period and promptly notify the Borrowers of such rate.

3.23.5 IDB’s determination, from time to time, of the B Loan Interest Rate shall be final and conclusive and bind the Borrowers unless either Borrower proves to IDB’s satisfaction that the determination involved manifest error.

Section 3.24 Change in Interest Period.

Without prejudice to the terms of Section 3.12 ( Late Charges ), if at any time while any amounts are outstanding under the A Loan or the B Loan, the Borrowers fail to pay any amount of principal of, or interest on, either the A Loan or the B Loan when due (whether at stated maturity or upon acceleration), and any part of that amount remains unpaid on the third (3rd) Business Day immediately preceding any Interest Payment Date falling after that amount became due, then:

3.24.1 IDB may elect that the duration of the Interest Period in respect of the A Loan or the B Loan, as applicable, commencing on that Interest Payment Date and, subject to Section 3.24.2 ( Change in Interest Period ), any subsequent Interest Period shall be six (6), five (5), four (4) three (3), two (2), or one (1) month in duration and shall notify the Borrowers of such election and the duration of such Interest Periods; and

3.24.2 unless a Default has occurred and is continuing, IDB shall reinstate Interest Periods of six (6) months as of the first Interest Payment Date that is May 15 or November 15 falling at least three (3) Business Days after the payment default is remedied in full and shall inform the Borrowers of such reinstatement.

Section 3.25 Notes.

To further evidence its obligation to repay the Loan, with interest accrued thereon, at the request of IDB, the Borrowers shall issue and deliver to IDB, on each Disbursement Date and prior to each Disbursement pagarés subject to Argentine law substantially in the form of Exhibit 8 ( Form of A Loan Promissory Note ) and Exhibit 9 ( Form of B Loan Promissory Note ) (collectively, the Notes ) in respect of each of the A Loan Disbursement and the B Loan Disbursement, respectively. The Notes shall be valid and enforceable as to their principal amount to the extent of the aggregate amounts disbursed and then outstanding hereunder and, as to interest, to the extent of the interest accrued thereon in accordance with the terms of this Agreement.

The Borrowers’ obligation to pay the principal of, and interest on, the Loan shall be evidenced by (i) Notes evidencing principal as provided below (which at IDB’s request at any time after the third anniversary of the issuance thereof shall be replaced by newly issued Notes for the then outstanding principal amount of the Loans evidenced by the newly issued Notes), and (ii) Notes evidencing interest on such Loan (for each applicable Interest Period), in each case duly executed and delivered by the Borrowers. The Borrower shall execute Notes after the Acceptance Date and as a condition of the Effective Date in replacement of the Notes

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evidencing the principal of the A Loan as of the Acceptance Date with Notes reflecting the amended terms of the A Loan which will be effective as of the Effective Date, provided that, with respect to the Notes evidencing the principal of the A Loan to be executed in the Province of Santa Fe, the Borrower shall only be required to execute such replacement Notes not more than 30 days prior to the expiry of the existing Notes which were executed in the Province of Santa Fe and in respect of the principal amount of the A Loan outstanding on such date only, and the Borrower agrees that it will ensure that such Notes are issued by such date.

Each Note shall (i) be non-negotiable (“no a la orden”), payable on demand (“a la vista”) to the order of IDB, (ii) in the case of Notes evidencing principal, be dated the date of the relevant Disbursement Date, and in the case of Notes evidencing interest, be dated the first date of the relevant Interest Period, (iii) in the case of Notes evidencing principal, be in an amount equal to the amount to be disbursed, and in the case of each Note evidencing interest, be in a stated amount equal to all accrued and unpaid interest hereunder in respect of such Loan from the date of such Note plus all interest that will accrue in respect of such Loan during the Interest Period covered by such Note, (iv) bear default interest as provided in Section 3.12, and (v) be signed by a duly authorized representative on behalf of each Borrower, and such signature and the capacity of each such representative shall be certified by an Argentine notary public.

Upon repayment in full of the principal of the Loan, IDB shall return the Note that reflects that such principal has been paid, to the Borrowers marked “cancelled”.

On the first Business Day of each Interest Period after the initial Interest Period applicable to a Loan, the Borrowers shall execute and deliver to IDB a Note evidencing interest payable hereunder in respect of the Interest Period for such Loan covered by such Note, appropriately completed to include the information specified in this Section, which Note shall, to the extent that the Borrowers have paid all interest accrued during the preceding Interest Period, replace the Note then in existence evidencing such interest. Upon the receipt of such new Note, IDB shall return the Note which has been replaced to one or more of the Borrowers marked “cancelled”; provided, however, that if the Borrowers fail to replace such Note evidencing interest but nonetheless pay all interest accrued during the preceding Interest Period, IDB shall be entitled to retain such Note and, if applicable, claim the amount of interest that may accrue in the following Interest Period.

Neither the execution, delivery, participation or assignment of any Note, or the commencement of any procedure (whether out-of-court or in court) or exercise of any remedy in connection with any Note, nor the total or partial collection of any Note shall be deemed to be a waiver of any right of IDB under this Agreement, or an amendment of any term or condition of this Agreement, including with respect to the governing law of this Agreement. The rights and claims of IDB under the Notes shall not replace or supersede any rights and claims of IDB under this Agreement; provided, however, that payment of any part of the principal of any such Note in accordance with the terms of this Agreement shall, to the extent that such payment would discharge the Borrowers’ obligations under this Agreement in respect of the payment of the principal or interest of the Loan evidenced by such Note, discharge such obligation pro tanto.

Upon receipt by the Borrowers of a certificate of IDB certifying as to, and indemnities from IDB satisfactory to the Borrowers in respect of any claim, loss or expense arising out of, the

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loss, theft, destruction or mutilation of any Note, the Borrowers shall execute and deliver in lieu thereof a new Note dated the same date and in the same principal amount as the Note so replaced.

Notwithstanding discharge in full of any Note, if the amount (including, without limitation, default interest) paid or payable to IDB under such Note (whether arising from the enforcement thereof in Argentina or otherwise, including, without limitation, any shortfall of such amount paid in US Dollars caused by the application of Argentine foreign exchange regulations) is less than the amount due and payable to IDB in accordance with this Agreement with respect to the Loans, or any portion thereof, evidenced by such Note, the Borrowers agree, to the fullest extent they may effectively do so, to pay to IDB upon demand the difference.

At IDB’s request, each of the Borrowers shall promptly execute and deliver new Notes satisfactory to IDB to substitute for the Notes previously delivered to IDB other than any Note returned by IDB to the Borrowers marked “cancelled”, provided that the Borrowers shall have previously or simultaneously received the Notes in substitution for which IDB requests such new Notes.

Section 3.26 Payments under Notes and Loan.

3.26.1 The issuance, execution and delivery of any Note pursuant to this Agreement shall not be or be construed as a novation with respect to this Agreement or any other agreement between IDB and the Borrowers and shall not limit, reduce or otherwise affect the obligations or rights of the Borrowers under this Agreement, and the rights and claims of IDB under any Note shall not replace or supersede the rights and claims of IDB under this Agreement, all subject to the remaining provisions of this Section 3.26 ( Payments Under Notes and Loan ).

3.26.2 Payment of the principal amount of any Note shall pro tanto discharge the obligation of the Borrowers to repay that portion of the A Loan and/or B Loan to which such Note relates; and payment of interest accrued on any Note shall pro tanto discharge the obligation of the Borrowers to pay such amount of interest on that portion of the A Loan and/or B Loan to which such Note relates.

3.26.3 Payment of the principal amount of the A Loan and/or B Loan shall pro tanto discharge the obligation of the Borrowers to repay the principal amount of the Note or Notes relating to that portion of the A Loan and/or B Loan; and payment of interest accrued on the A Loan and/or B Loan shall pro tanto discharge the obligation of the Borrowers to pay such amount of interest in respect of the Note or Notes relating to the A Loan and/or B Loan to which such interest relates.

3.26.4 Each of the Borrowers shall indemnify and hold harmless IDB and its agents, employees, directors, successors and assigns from and against any claim, damage, charge, proceeding, liability, costs and expenses made, filed, asserted or collected from any of them as a result of, or in connection with, the issuance, execution, delivery, or enforcement of any Note issued pursuant to this Section, other than with respect to any indemnities provided by IDB under Section 3.25 by reason of the execution and delivery by the Borrowers of new Notes.

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Section 3.27 Alternate Base Rate.

3.27.1 If with respect to the Loan, IDB determines (on its own or at the request of the Required Participants) that LIBOR for any Interest Period will not adequately reflect the cost of making, funding or maintaining the Loan, IDB shall notify the Borrowers of the Alternate Base Rate applicable to the Loan for such Interest Period, which Alternate Base Rate shall serve as LIBOR for the Loan for such Interest Period.

3.27.2 Upon the occurrence of any of the events described in Section 3.27.1, IDB may elect to apply Applicable LIBOR rather than the Alternate Base Rate, in calculating the A Loan Interest Rate applicable to the A Loan or the relevant Disbursement thereof (as applicable).

ARTICLE 4.

Representations and Warranties

Section 4.1 Representations and Warranties.

Each of the Borrowers represents and warrants as of the Effective Date and on each Disbursement Date that:

4.1.1 Organization; Powers . (i) Adeco is a sociedad anónima , and Pilagá is a sociedad anónima , each duly incorporated, validly existing and in good standing under the laws of Argentina and each is authorized to do business in Argentina and each other jurisdiction where the character of its Property or nature of its activities makes such authorization necessary. (ii) It has all requisite corporate power and authority to own its Property, conduct its business as presently conducted and to enter into, and comply with its obligations under, this Agreement and the other Financing Documents to which it is a party, or will, in the case of any Financing Document not executed as at the Effective Date, when that Financing Document is executed, have the requisite corporate power and authority to enter into, and comply with its obligations under, that Financing Document.

4.1.2 Enforceability . Each Financing Document to which it is a party has been, or will be, duly authorized and executed by it and constitutes, or will, when executed, constitute, a valid and legally binding obligation of it, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws relating to or affecting the rights of creditors generally, and except as the enforceability of the Financing Documents is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including without limitation (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing.

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4.1.3 No Violation . Neither the execution and delivery by it of any Financing Document to which it is a party nor (when all the Relevant Permits referred to in Section 4.1.4 (Relevant Permits) have been obtained) the compliance by it with its terms will:

4.1.3.1

contravene any judgment, decree or order or any law, rule or regulation applicable to it or any Authorization;

4.1.3.2

contravene or result in any breach of any of the terms of, or constitute a default or require any consent under the terms of, any indenture, mortgage, deed of trust, agreement or other arrangement to which it is a party or by which it is bound or to which it may be subject;

4.1.3.3

result in the creation or imposition of (or the obligation to create or impose) any Lien (other than Permitted Liens) upon any part of its Property; or

4.1.3.4

violate the terms of its Organizational Documents.

4.1.4 Relevant Permits .

4.1.4.1

Schedule 2 ( Relevant Permits ) specifies all Relevant Permits other than Authorizations that are of a routine nature and obtainable in the ordinary course of business;

4.1.4.2

Each Relevant Permit required as of the date hereof is set forth in Section 1 of Schedule 2 and each such Relevant Permit has been validly issued and obtained and is in full force and effect;

4.1.4.3

None of such Relevant Permits is the subject of an appeal or judicial or other review by any Authority;

4.1.4.4

All conditions (if any) to the effectiveness of each such Relevant Permit have been fully satisfied;

4.1.4.5

It is in compliance in all respects with each such Relevant Permit;

4.1.4.6

It has applied (or is making arrangements to apply) for all Relevant Permits set forth in Section 2 of Schedule 2, and has no reason to believe that it will not obtain in a timely manner and maintain in full force and effect each such Relevant Permit; and

4.1.4.7

It has no reason to believe that any Relevant Permit that requires renewal will not be renewed as and when required under applicable law without the imposition of additional restrictions or conditions or any Relevant Permit will be withdrawn, suspended, cancelled, varied, surrendered or revoked.

4.1.5 Compliance with Applicable Laws . It is in compliance in all material respects with all laws, rules and regulations applicable to it including any Environmental Laws.

4.1.6 No Default . No Default has occurred and is continuing.

4.1.7 Litigation .

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4.1.7.1

Except as otherwise disclosed in the Financial Statements referred to in Section 4.1.10 ( Financial Statements ), no action, suit, other legal proceeding, arbitral proceeding, administrative proceeding, investigation or other claim before or of any Authority is presently in progress or pending against it or any Affiliate of it or any Sponsor, or, to the best of its knowledge, has been threatened in writing against it or any Affiliate of it or any Sponsor, which either:

4.1.7.1.1

relates to or arises under a Financing Document or the transactions contemplated thereby; or

4.1.7.1.2

by itself or together with any other such proceeding or claim, has had or could reasonably be expected to have a Material Adverse Effect; and

4.1.7.2

No judgment, order or award has been issued that has had or could reasonably be expected to have a Material Adverse Effect.

4.1.8 Payment of Taxes .

4.1.8.1

It has filed timely or caused to be filed timely all Tax Returns required to be filed by it and has paid or caused to be paid all Taxes due and payable by it whether shown to be due and payable on such Tax Returns or on any assessment received by it or otherwise, except to the extent any such Taxes are being diligently contested by appropriate proceedings or other actions in good faith and with respect to which adequate reserves have been established on its books in accordance with the Accounting Principles.

4.1.8.2

All Taxes required to be deducted or withheld from payments by it have been timely and duly deducted or withheld and properly paid to the appropriate Authority.

4.1.8.3

Except as otherwise disclosed in the Financial Statements referred to in Section 4.1.10 ( Financial Statements ), it has not received notice of any pending audits, examinations, investigations, proceedings or claims with respect to any Taxes nor to the best of its knowledge are any such actions threatened.

4.1.8.4

Except as otherwise disclosed in such Financial Statements, it has not received notice of any Lien with respect to Taxes that has been filed against any of its Property nor to the best of its knowledge has any such Lien been threatened.

4.1.9 Applicable Taxes .

4.1.9.1

Under the laws of Argentina, it is not required to deduct or withhold Taxes from any payment to be made by it under this Agreement or any other Financing Document.

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4.1.9.2

No Taxes or Other Taxes are required to be paid on or in connection with the execution, delivery, registration, notarization or enforcement of this Agreement or any other Financing Document other than with respect to the Mortgages.

4.1.9.3

Neither the execution, delivery, registration, notarization or enforcement of any Financing Document, nor the consummation of any of the transactions contemplated thereby, will result in any Tax (exclusive of Taxes on net income) being imposed by any Authority of Argentina upon or with respect to IDB, any of the Participants, the Paying Agent, or any other agent of IDB.

4.1.10 Financial Statements .

4.1.10.1

The Financial Statements as at and for the period ending on December 31, 2010 and the Financial Statements for the period ending on June 30, 2011, already delivered to IDB were prepared from and are in accordance with its books and records and give a true and fair view in all material respects of the financial position of it as of the date thereof and the results of its operations and cash flow for the period then ended, all in conformity with the Accounting Principles.

4.1.10.2

Except as disclosed in Schedule 4 ( Liabilities ), such Financial Statements disclose all material liabilities (contingent or otherwise) of it and the reserves, if any, for such liabilities and all unrealized or anticipated material liabilities or losses arising from commitments entered into by it (whether or not such commitments have been disclosed in such Financial Statements).

4.1.11 No Material Adverse Effect . Since December 31, 2010:

4.1.11.1

There has been no condition or event that has had or could be reasonably expected to have a Material Adverse Effect;

4.1.11.2

No Restricted Payments have been made (other than the Permitted 2008 Dividend); and

4.1.11.3

It has not undertaken or agreed to undertake any substantial obligation.

4.1.12 Ownership of Property ; Liens . It has good, legal and valid title to all its Property (including all real property on which any of the Required Capital Expenditure is or will be situated or which is subject to the Security and all revenue) free of all Liens other than Permitted Liens.

4.1.13 Debt and Contractual Obligations . It has no outstanding Debt, except for Debt permitted pursuant to Section 6.2.2 ( Permitted Indebtedness ). It has not executed or delivered any powers of attorney or similar documents that grant or purport to grant authority to another Person to manage or control the affairs of it or to undertake any obligation on its behalf, except in the ordinary course of business.

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4.1.14 Provision of Information, etc.

4.1.14.1

All information heretofore or hereafter furnished in writing by or on behalf of it or any of its Affiliates to IDB in connection with the transactions contemplated hereunder (other than opinions, projections and other forward-looking statements) was on its date of issue and continues to be, or will be when furnished, as the case may be, true, complete and correct in all material respects and does not and will not contain any misstatements or omissions that would make it misleading in any material respect. There are no documents, events or conditions that have not been disclosed in writing to IDB that are material in the context of the Financing Documents or that could reasonably be expected to have a Material Adverse Effect.

4.1.14.2

The opinions, projections, and other forward-looking statements included in such information provided to IDB in connection with the transactions contemplated hereunder were prepared in good faith, with due care and diligence, utilizing reasonable assumptions, by or on behalf of it or any of its Affiliates, and such opinions, projections and other forward-looking statements represented its views as at the date on which they were prepared.

4.1.14.3

No event has occurred since the date of provision of any written information to IDB referred to in this Section 4.1.14 that has rendered its contents materially untrue, inaccurate or incomplete.

4.1.15 Immunity . The execution and delivery by it of, and the compliance with its obligations under, this Agreement and the other Financing Documents to which it is a party constitute private and commercial acts of it rather than public or governmental acts. Neither it nor any of its Property has any immunity (sovereign or otherwise) from any legal action, suit or proceeding (whether service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) or from the jurisdiction of any court or from set-off.

4.1.16 Legal Form; Enforceability . This Agreement and the other Financing Documents to which it is a party are, or when duly executed and delivered, translated by a sworn public translator into the Spanish language and certified by the Colegio Público de Traductores, notarized and, if executed outside of Argentina consularized, will be, in proper legal form under the laws of Argentina for the enforcement thereof under such laws. All formalities required in Argentina for the validity and enforceability of this Agreement and the other Financing Documents (including any necessary translation by a sworn public translator into the Spanish language and certified by the Colegio Público de Traductores, notarization of the Security Documents, filing for, registration of the Security Documents with the real estate registry of the relevant jurisdiction, recording or filing with any court or other Authority in Argentina) have been or will be accomplished prior to the First Disbursement Date, and no notarization is required other than as described above, for the validity and enforceability thereof.

4.1.17 Pari Passu . The obligations of it under the Financing Documents are senior, unconditional, secured and unsubordinated obligations and rank and will rank in all respects at least pari passu in priority of payment with all other present and future unsecured and unsubordinated obligations of it.

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4.1.18 Share Capital .

4.1.18.1

The authorized Share Capital of Adeco consists of 310,045,206 shares of Ps. 1 each and Pilagá consists of 9,784,224 shares of Ps. 10 each, of which the following shares are outstanding and are owned beneficially and legally of record by the Persons indicated below:

4.1.18.1.1

as per Adeco, by (i) Leterton España S.L. Sociedad Unipersonal, holding 15,502,260 shares of Ps. 1 each representing 5.00% of Adeco’s capital stock, and (ii) Kadesh Hispania S.L, holding 294,542,946 shares of Ps. 1 each representing 95% of Adeco’s capital stock; and

4.1.18.1.2

as per Pilagá, by (i) Adecoagro LP, holding 9,771,661 shares of Ps. 10 each, representing 99.872% of Pilagá’s capital stock, (ii) Gómez Pombo’s heirs, holding 4,020 shares of Ps 10 each, representing 0.041% of Pilagá’s capital stock, and (iii) unidentified shareholders, holding 8,543 shares of Ps 10 each, representing 0.087% of Pilagá’s capital stock.

4.1.18.2

Each such share is entitled to one vote with respect to the appointment of each Person proposed to serve on the board of directors of each Borrower and all other matters requiring a vote of the Shareholders under applicable law.

4.1.18.3

All such shares have been duly authorized, validly issued, fully paid for full cash consideration and are nonassessable. The following capital increases are pending of registration with the Public Registry of Commerce of the City of Buenos Aires: (i) as per Adeco, capital increase from Ps. 289,545,206 to Ps. 310,045,206; (ii) as per Pilagá, capital increase from Ps. 79,606,950 to Ps. 97,842,240.

4.1.18.4

Except as specified in Section 4.1.18.1 ( Share Capital ), no Person has any Equity Rights in respect of either Borrower.

4.1.19 Status of Security .

4.1.19.1

The Security Documents create, or will create when executed and registered with the applicable registry, valid and enforceable first priority Liens (or other interests or rights of the kind purported to be created thereby) over all of the Secured Property.

4.1.19.2

None of the Security is liable to avoidance in liquidation, insolvency, bankruptcy or other similar proceedings.

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4.1.19.3

It has not received any notice of any adverse claims by any Person in respect of its ownership or entitlement to the Secured Property.

4.1.20 Environmental and Social .

4.1.20.1

With respect to each Borrower:

4.1.20.1.1

there is no past or existing substantial non-compliance with any Environmental and Social Provision that is not being adequately addressed in accordance with an Environmental Plan approved by IDB;

4.1.20.1.2

there are no significant adverse risks or impacts relating to Environmental or Social Matters that have not been adequately mitigated or compensated;

4.1.20.1.3

there has been no action, either directly or indirectly, associated with either Borrower or any Capital Expenditure that has resulted, directly or indirectly, in the resettlement or indemnification of any Person or business; and

4.1.20.1.4

it has no liabilities related to Environmental or Social Matters, and each of the following statements is true (a) no Hazardous Substances have at any time been generated, used, treated, recycled, stored on, transported to or from or Released at, on, under or from any of the real property owned by it other than in compliance at all times with all applicable Environmental Laws and prudent industry practice; (b) there are not now any underground storage tanks located at any of the real property owned by it, and, to the best of the Borrowers’ knowledge, there are no outstanding liabilities related to the presence of any such storage tanks in any such real property; (c) there is no friable asbestos, lead-based paint, polychlorinated biphenyls (“PCBs”), or radon contained in or forming part of, or contaminating any part of any of the real property owned by it; and (d) there is no evidence of soil or groundwater contamination associated with any part of any of the real property owned by it.

4.1.20.2

To the best of its knowledge, after due inquiry there are no pending or threatened Environmental Claims or substantial complaints relating to Environmental or Social Matters.

4.1.20.3

All information contained in any document or material submitted by either of the Borrowers or any Person on their behalf to any Authority in connection with any Environmental or Social Matters was true, complete and accurate in all respects at the time of submission and no such document or material omitted any information the omission of which would have made such document or material misleading in any respect.

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4.1.20.4

IDB has been provided with true and complete copies of Environmental Plans and all other investigations, studies, audits, reviews, reports, plans or other analyses conducted by or on behalf of, or that are in the possession of, either of the Borrowers with respect to any Environmental or Social Matters.

4.1.20.5

The Borrowers are not aware of any fact or circumstance that would contravene or conflict with, in any substantial respect, any conclusion, finding or assumption contained in any Environmental Plan or other document referred to in the preceding subclause.

4.1.20.6

The Borrowers are in substantial compliance with all Environmental and Social Requirements.

4.1.21 Availability and Transfer of Foreign Currency . Except as noted in the list of Relevant Permits set forth in Schedule 2 ( Relevant Permits ) hereto (which permits have been obtained and are in full force and effect), no foreign exchange control approvals or other Authorizations are required to ensure the availability of Dollars to enable it to perform all of its obligations under each Financing Document to which it is a party in accordance with the terms thereof. There are no restrictions or requirements that limit the availability or transfer of foreign exchange for the purpose of the performance by it of its respective obligations under this Agreement or any other Financing Document to which it is a party.

4.1.22 Bankruptcy; Insolvency; Winding-up . It has not taken any corporate action nor have any other legal steps been taken or legal proceedings been commenced or, to the best of its knowledge, threatened against it seeking a reorganization, moratorium, arrangement, adjustment or composition or for the appointment of a receiver, liquidator, assignee, sequestrator (or similar official) in relation to any part of its Property, or for the winding up, dissolution or re-organization of it or any of its Subsidiaries or of any or all of the Property of it or any of its Subsidiaries.

4.1.23 Choice of Law; Consent to Jurisdiction . Under the law of Argentina, the choice of the law of New York to govern this Agreement and the other Financing Documents stated to be governed by such law is valid and binding. The consent to the jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan and the courts of the United States of America District Court for the Southern District of New York in Section 8.10 ( Applicable Law and Jurisdiction ) is valid and binding and not subject to revocation, and service of process effected in the manner set forth in Section 8.10 ( Applicable Law and Jurisdiction ) will be effective to confer personal jurisdiction over it in such courts.

4.1.24 Subsidiaries; Investments . It does not have any Subsidiaries nor any Investment in any Person other than Permitted Investments.

4.1.25 Annual Budget; Base Case . The Annual Budget for Financial Year 2008 and the Base Case have been prepared in good faith on the basis of reasonable assumptions and it has no reason to believe that such assumptions are incorrect or misleading in any material respect.

4.1.26 Prohibited Practices . Neither it nor any of its Affiliates, nor any Person acting on its behalf, has committed or engaged in any Prohibited Practice.

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4.1.27 Foreign Asset Control and Anti-money Laundering Regulations . None of its activities have, and none of the borrowing of the Loan by it hereunder and its use of the proceeds thereof will, violate any of the Foreign Asset Control and Anti-Money Laundering Regulations.

4.1.28 ERISA . Neither it nor any of its ERISA Affiliates currently maintains an ERISA Plan, and has not incurred in the preceding five (5) years any obligation or liability in connection with, an ERISA Plan. All contributions required to be made by the Borrowers or any of its Subsidiaries with respect to a Foreign Benefit Plan have been timely made. Each Foreign Benefit Plan has been maintained in substantial compliance with its terms and with the requirements of any applicable laws and has been maintained, where required, in good standing with applicable Authorities. Neither it nor any of its Subsidiaries has incurred any obligation in connection with the termination, withdrawal from, or payment of benefits under any Foreign Benefit Plan.

4.1.29 Investment Company Act . It is not required to register as an “investment company” under the Investment Company Act of 1940, as amended.

4.1.30 Affiliate Transactions . As of the Acceptance Date, (i) there are no Affiliate Transactions other than the ones identified in Schedule 7 ( Affiliate Transactions ) and (ii) the long-term lease contracts entered into by the Borrowers with any affiliated company in order to meet the Capital Expenditures have been negotiated and entered into at arms length.

4.1.31 Borrowers Are Non-Bank Entities . The Borrowers are non-bank entities located outside the United States of America, and understand that it is the policy of the Board of Governors of the Federal Reserve System (the Board ) that extensions of credit by international banking facilities (as defined as Section 204.8(a) of Regulation D of the Board) may be used only to finance the non-U.S. operations of a customer (or its foreign Affiliates) located outside the United States of America as provided in Section 204.8(a)(3)(vi) of such Regulation D. Therefore, the Borrowers hereby agree that, to the extent that the Loans are made by any such international banking facility, the proceeds of the Loan will be used solely to finance its operations outside the United States of America or those operations of its non-U.S. Affiliates.

4.1.32 No Omissions . None of the representations and warranties in this Section 4.1 ( Representations and Warranties ) omits any matter the omission of which makes any of such representations and warranties misleading.

Section 4.2 Acknowledgment and Warranty.

Each of the Borrowers acknowledges that it makes the representations and warranties contained in Section 4.1 ( Representations and Warranties ) with the intention of inducing IDB to enter into this Agreement and the other Financing Documents (and the Participants to enter into the Participation Agreements) and that IDB has entered into this Agreement and the other Financing Documents (and the Participants have entered or will enter, as the case may be, into the Participation Agreements) on the basis of, and in full reliance on, each such representation and warranty.

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ARTICLE 5.

Conditions Precedent to Disbursement

Section 5.1 Conditions Precedent to First Disbursement.

The obligation of IDB to make the first Disbursement is subject to the fulfillment in a manner satisfactory to IDB, prior to or on the First Disbursement Date, of the following conditions:

5.1.1 Participants’ Commitment . IDB has received formal commitments from Participants to acquire Participations in an aggregate amount equal to the amount set out in section (a) of the definition of B Loan Commitment, and such commitments shall be in full force and effect as evidenced by the due execution and delivery by each such Participant of a Participation Agreement.

5.1.2 Organizational Documents .

5.1.2.1

IDB has received copies of the Organizational Documents of each Borrower duly registered with the competent commercial registry and accompanied by a certificate substantially in the form of Exhibit 5 ( Form of Borrower’s Certificate Regarding Organizational Documents ) signed by an Authorized Representative of the relevant Borrower certifying such copies as true and complete; and

5.1.2.2

the Organizational Documents of each Borrower are in form and substance satisfactory to IDB.

5.1.3 Directors’ and Shareholders’ Resolutions of the Borrowers . IDB has received a copy of the resolutions of the board of directors and the Shareholders of each Borrower, certified by an Authorized Representative of the relevant Borrower as being in full force and effect as of the First Disbursement Date, along with any other necessary approvals or registrations (or evidence thereof), which in each case are required to authorize:

5.1.3.1

the execution, delivery and performance of the Financing Documents to which the relevant Borrower is a party; and

5.1.3.2

a specified Person or Persons to execute such Financing Documents.

5.1.4 Incumbency of the Borrowers . IDB has received a Certificate of Incumbency and Authority dated as of the First Disbursement Date.

5.1.5 Financing Documents . Subject to Section 5.2.15 ( Required Hedge ), each Financing Document is in form and substance satisfactory to IDB, is unconditional and fully effective in accordance with its terms (except for this Agreement having become unconditional and fully effective, if that is a condition of any of those documents), and has been duly authorized, executed and delivered by all parties thereto. IDB has received the original or a copy of each Financing Document that has been entered into on or prior to the First Disbursement Date to which IDB is not a party, certified (in the case of copies) by an Authorized Representative of

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each Borrower as a true and complete copy thereof and, in the case of any Financing Document (other than the Notes) that has been executed and delivered in a language other than English, IDB has received an English translation thereof certified by a certified public translator to be true and complete, if IDB requests.

5.1.6 Security Documents . The Security has been duly created and perfected as valid and enforceable first priority Liens or other interests or rights of the kind the relevant Security Documents purport to create over all of the Secured Property. Any and all documents required to be filed registered, notarized or recorded to create and perfect the Security as valid and enforceable first priority Liens or other interests or rights of the kind the relevant Security Documents purport to create over all of the Secured Property have been properly notarized and promptly after execution filed in each office of each jurisdiction in which such filings, registrations, notarizations or recordings are required and IDB will upon registration receive originals of all Security Documents.

5.1.7 Environmental and Social .

5.1.7.1

IDB has received a report, in form and substance satisfactory to IDB, from the Environmental and Social Consultant confirming that the Borrowers are in compliance with all applicable Environmental Laws and that either (i) all necessary arrangements have been made and are being implemented by each of the Borrowers to comply with the Environmental and Social Provisions and Environmental and Social Requirements or (ii) setting forth recommendations regarding arrangements that need to be made by each of the Borrowers to comply with the Environmental and Social Provisions and Environmental and Social Requirements.

5.1.7.2

In the case of 5.7.1.1(ii), IDB has received evidence satisfactory to it that each of the Borrowers has implemented such recommendations or included them in the Preliminary Complementary ESHS Action Plan.

5.1.7.3

IDB has received, in form and substance satisfactory to IDB, each of the following:

5.1.7.3.1

the Environmental, Social, Health and Safety Action Plan; provided that the updating of this plan in accordance with the Complementary ESHS Action Plan is understood not to be a condition prior to first disbursement;

5.1.7.3.2

the Environmental and Social Management Plans and any deliverables that are due in accordance therewith and with the chronogram established in the Environmental, Social, Health and Safety Action Plan;

5.1.7.3.3

the Emergency and Contingency Plan for each Capital Expenditure as applicable in accordance with the ESHSP;

5.1.7.3.4

the biodiversity studies for Ita Caboo and San Joaquin;

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5.1.7.3.5

the Environmental and Social Management Plan for dryland agriculture in Ita Caboo.

5.1.7.4

The Borrowers have designated an EMS Manager satisfactory to IDB.

5.1.8 Legal Opinions . IDB has received a legal opinion or opinions dated as of the First Disbursement Date, addressed to IDB and in form and substance satisfactory to IDB, from:

5.1.8.1

Marval, O’Farrell & Mairal, Argentine counsel to the Borrowers;

5.1.8.2

Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the Borrowers;

5.1.8.3

Clifford Chance US LLP, New York counsel to IDB; and

5.1.8.4

Bruchou, Fernandez Madero & Lombardi, Argentine counsel to IDB covering such matters incident to the transactions contemplated by the Financing Documents as IDB may reasonably require.

5.1.9 Financial Statements . IDB has received copies of the Financial Statements referred to in Section 4.1.10 ( Financial Statements ) certified by the Auditors.

5.1.10 Process Agent . IDB has received letters substantially in the form of Exhibit 7 ( Form of Service of Process Letter ) relating to the appointment of an agent for service of process by all Persons required to appoint such an agent under the Financing Documents, together with evidence satisfactory to IDB of each such process agent’s unconditional acceptance of such appointment to act as such until the date six (6) months after the final maturity date of the Loan.

5.1.11 Authorization of Auditors . IDB has received a copy of the authorization to the Auditors, substantially in the form of Exhibit 4 ( Form of Authorization to Auditors ), signed by an Authorized Representative of each Borrower and acknowledged and consented to by an Authorized Representative of the Auditors.

5.1.12 Annual Budget; Base Case . The Annual Budget for 2008 and the Base Case are in form and substance satisfactory to IDB.

5.1.13 Real Estate Consultant’s Report . IDB has received a report from the Real Estate Consultant in form and substance satisfactory to IDB.

5.1.14 Relevant Permits . IDB has received copies of all Relevant Permits set forth in Section 1 of Schedule 2 ( Relevant Permits ), which shall be in form and substance satisfactory to IDB.

5.1.15 Outstanding Debt . Arrangements have been put into place for the repayment, as soon as possible and in any circumstances within thirty (30) days of the first Disbursement, of not less than thirty five million Dollars ($35,000,000) of the Outstanding Debt listed in Schedule 9 ( Outstanding Debt ) of the Original Loan Agreement from the proceeds of the first Disbursement.

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Section 5.2 Conditions of all Disbursements.

The obligation of IDB to make any Disbursement of the Loan (including, except where otherwise stated, the first Disbursement) is also subject to the fulfillment, in a manner satisfactory to IDB, of the following conditions:

5.2.1 Disbursement Request . IDB has received a Disbursement Request with respect to the Disbursement in accordance with Section 3.2 (Disbursement Procedure), together with a receipt substantially in the form of Exhibit 2 (Form of Disbursement Receipt). The Disbursement Request shall evidence use of proceeds by each Borrower in sufficient detail satisfactory to IDB and in compliance with Section 6.1.1 (Use of Proceeds).

5.2.2 Default . No Default has occurred and is continuing or will occur as a result of the making of the Disbursement.

5.2.3 Representations and Warranties . All representations and warranties made by the Borrowers in Article 4 are true and correct with reference to the facts and circumstances existing on the date of the Disbursement Request and on the Disbursement Date with the same effect as though such representations and warranties had been made on and as of each such date (except that any representation and warranty that relates expressly to an earlier date shall be deemed made only as of such earlier date) and will remain so immediately following such Disbursement; provided that the references to Financial Statements, the Annual Budget and the Base Case shall be deemed to be references to the most recent Financial Statements, Annual Budget and Base Case delivered to IDB.

5.2.4 Fees . The Borrowers have paid all fees due prior to or as of the relevant Disbursement Date pursuant to each Financing Document.

5.2.5 Expenses . IDB has been reimbursed for all fees and expenses required to be reimbursed prior to or as of the relevant Disbursement Date pursuant to this Agreement (including all invoiced fees and expenses of IDB’s counsel as provided in Section 3.20 ( Reimbursement of Expenses )) or has received confirmation that those fees and expenses have been paid directly.

5.2.6 Subsequent Legal Opinions , Reports and Certifications . To the extent that there has been a change to any applicable law affecting any Financing Document since the date of the legal opinions received pursuant to Section 5.1.8 ( Legal Opinions ) and if IDB so requests, IDB has received, in form and substance satisfactory to IDB, and with respect to any matter incident to such Disbursement, (a) a legal opinion or opinions from IDB’s counsel or counsel to the Borrowers and (b) a report or certification from any of the Consultants as reasonably requested by IDB.

5.2.7 Material Adverse Effect . Since the Effective Date, nothing has occurred that has or could reasonably be expected to have a Material Adverse Effect.

5.2.8 Material Loss or Liability . Since December 31, 2010, neither Borrower has incurred any material loss or liability (except such liabilities as may be incurred in accordance with Section 6.2 ( Negative Covenants )).

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5.2.9 Environmental and Social .

5.2.9.1

An Authorized Representative of each Borrower has certified as part of the Disbursement Request that:

5.2.9.1.1

the respective Borrower is substantially in compliance with all Environmental and Social Provisions and Environmental and Social Requirements or is implementing the actions set forth in the Environmental, Social, Health and Safety Action Plan or any Corrective Action Plan to achieve such compliance; and

5.2.9.1.2

in relation to such Borrower, there are no (a) significant risks or adverse impacts with respect to Environmental or Social Matters that have not been adequately mitigated or compensated; (b) known Environmental Claims; or (c) substantial complaints relating to Environmental or Social Matters.

5.2.9.2

IDB has received each Environmental Plan that is due in accordance with the chronograms established pursuant to the Environmental, Social, Health and Safety Action Plan or otherwise required in conjunction with any Required Capital Expenditure in accordance with the Environmental and Social Provisions and the Environmental and Social Requirements.

5.2.9.3

IDB has received an audit report, in form and substance satisfactory to IDB, from the Environmental and Social Consultant: (i) confirming that the Borrowers are substantially in compliance with all applicable Environmental Law, Environmental and Social Provisions and Environmental and Social Requirements; (ii) confirming that all necessary arrangements have been made and are being implemented by each of the Borrowers to comply with such Laws, Provisions and Requirements; and/or (iii) if necessary, including recommendations regarding additional arrangements to be made by each of the Borrowers to achieve such compliance with (i) and (ii).

5.2.9.4

In the case of 5.2.9.3 (iii), the Borrower has included the additional arrangements in the Preliminary Complementary Action ESHS Plan.

5.2.10 Financial Ratios . The Borrowers are in compliance with Section 6.2.3 ( Financial Ratios ).

5.2.11 Proceeds . The proceeds of the Disbursement are needed by the Borrowers for the purposes described in Section 2.1 ( Purpose ) within twelve (12) months of the date of the Disbursement Request (other than with respect to the Free Stall Project II and the SECCI Projects).

5.2.12 Financing Documents . Each Financing Document remains in full force and effect in accordance with its terms.

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5.2.13 Notes . The Borrowers shall have duly executed and delivered to IDB the Notes required to be delivered in respect of such Disbursement.

5.2.14 Required Hedge . The Borrowers have provided IDB with evidence that arrangements have been put in place to ensure that the Required Hedge will be implemented with respect to the applicable Disbursement.

Section 5.3 Conditions Precedent to Disbursement of the Third B Loan Tranche

The obligation of IDB to make a Disbursement of the Third B Loan Tranche is subject to the fulfillment in a manner satisfactory to IDB, prior to or on the Disbursement Date, of the following conditions (in addition to those conditions set forth in Section 5.2 ( Conditions of all Disbursements )):

5.3.1 Organizational Documents

5.3.1.1

IDB has received a certificate from each Borrower that either no amendments have been made to the Organizational Documents Delivered to IDB pursuant to Section 5.1.2.1 or attaching a copy of any amendment.

5.3.2 Directors’ and Shareholders’ Resolutions of the Borrowers . IDB has received a certified copy of the resolutions of the board of directors of each Borrower and the Shareholders of Adeco, certified by an Authorized Representative of the relevant Borrower as being in full force and effect as of the Disbursement Date of the Third B Loan Tranche, along with any other necessary approvals or registrations (or evidence thereof), which in each case are required to authorize:

5.3.2.1

the execution, delivery and performance of the Financing Document Amendments to which the relevant Borrower is a party and the Notes to be issued by the Borrower with respect to the Third B Loan Tranche; and

5.3.2.2

a specified Person or Persons to execute the documents mentioned in 5.3.2.1.

5.3.3 Incumbency of the Borrowers . IDB has received a Certificate of Incumbency and Authority dated as of the Disbursement Date of the Third B Loan Tranche.

5.3.4 Financing Documents . Each of this Agreement, the Security Documents, including the amendments to the mortgages described in (ii)(a) and (ii)(b) under the definition of Security Documents and the Notes (including the replacement Notes to be provided under Clause 3.25 ( Notes )) is in form and substance satisfactory to IDB, is unconditional and fully effective in accordance with its terms, and has been duly authorized, executed and delivered by all parties thereto. IDB has received the original of the Borrowers’ acceptance of the Offer No. 2/2011, the Financing Document Amendments and the Notes that have been entered into on or prior to the Disbursement Date of the Third B Loan Tranche to which IDB is not a party, certified (in the case of copies) by an Authorized Representative of each Borrower as a true and complete copy thereof and, in the case of this Agreement and the Financing Document Amendments that have been executed and delivered in a language other than English, IDB has received an English translation thereof certified by a certified public translator to be true and complete, if IDB requests.

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5.3.5 Security Documents . (a) The Security, including the amendments to the mortgages described in (ii)(a) and (ii)(b) under the definition of Security Documents, has been duly executed and filed in each of the relevant real estate registries of each jurisdiction in which such filings, registrations, notarizations or recordings are required in respect of all interests or rights of the kind the relevant Security Documents purport to create over all of the Secured Property, and (b) IDB has received a report (“ Informe sobre Hipotecas , Inhibiciones , Embargos y otras medidas ”) from each relevant real estate registry showing that (x) such amendments to the mortgages have been filed with such real estate registry; and (y) no other Lien has been filed other than the Liens created under the Security Documents.

5.3.6 Taxes . Each of the Borrowers has fully paid the Other Taxes such that no Other Taxes remain outstanding.

5.3.7 Legal Opinions . IDB has received a legal opinion or opinions dated as of the Third B Loan Tranche Disbursement Date, addressed to IDB and in form and substance satisfactory to IDB, from:

5.3.7.1

Marval, O’Farrell & Mairal, Argentine counsel to the Borrowers;

5.3.7.2

[ intentionally deleted ];

5.3.7.3

Clifford Chance US LLP, New York counsel to IDB; and

5.3.7.4

Bruchou, Fernández Madero & Lombardi, Argentine counsel to IDB covering such matters incident to the transactions contemplated by this Agreement, the Financing Document Amendments and the Notes, as IDB may reasonably require.

5.3.8 Participants’ Commitment . IDB has received formal commitments from Participants to acquire Participations in an aggregate amount equal to the amount set out in section (c) of the definition of B Loan Commitment, and such commitments shall be in full force and effect as evidenced by the due execution and delivery by each such Participant of a Participation Agreement.

5.3.9 Authorization . All Authorizations set forth in Schedule 2, Part 2 have been obtained (including prior to the Acceptance Date).

Section 5.4 Conditions for IDB Benefit.

The conditions in Section 5.1 (Conditions Precedent to First Disbursement), Section 5.2 (Conditions of all Disbursements) and Section 5.3 (Conditions Precedent to Disbursement of the Third B Loan Tranche) are for the benefit of IDB and may be waived only by IDB in its discretion.

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ARTICLE 6.

Covenants

Section 6.1 Affirmative Covenants.

Unless IDB otherwise agrees, each Borrower shall:

6.1.1 Use of Proceeds . Cause:

6.1.1.1

[ intentionally deleted ]

6.1.1.2

the proceeds of each A Loan Disbursement to be applied only in reimbursement of, or payment for, the Required Capital Expenditures and, if sufficient funds are available the Permitted Capital Expenditures and any associated working capital and only in territories of IDB Members or for goods produced in or services supplied from or originating in such territories;

6.1.1.3

internally generated internal cash flows in an amount not less than the amount of the A Loan, to be applied on a Combined Basis to pay for Required Capital Expenditures and any associated working capital; and

6.1.1.4

the proceeds of the Disbursement of the First B Loan Tranche and the Second B Loan Tranche to be applied exclusively to repay the Outstanding Debt and the proceeds of the Third B Loan Tranche to be applied exclusively for the purposes set out in Section 2.1 (Purpose) and shall be used in the provinces where the relevant Notes were issued.

6.1.2 Existence; Continuing Engagement in Business . Maintain its corporate existence and take all reasonable action necessary to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business.

6.1.3 Property . Maintain all Property necessary for it businesses in good working order and condition, ordinary wear and tear excepted, free of Liens other than Permitted Liens.

6.1.4 Systems; Books and Records . Maintain an accounting and cost control system, management information system and books of account and other records adequate to reflect truly and fairly the financial condition of it and the results of its operations in conformity with the Accounting Principles, the Financing Documents, applicable law, the Relevant Permits and prudent industry practice.

6.1.5 Access . Upon IDB’s request, such request to be made with reasonable prior notice to it, except if a Default is continuing or if special circumstances so require, permit representatives of IDB and any agent of IDB, including the Consultants and any other consultant appointed by IDB, during normal business hours, to:

6.1.5.1

visit and inspect any premises where its business is conducted;

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6.1.5.2

inspect all of its facilities, plant, equipment and other Property and examine, make abstracts and make photocopies or reproductions of any of its books of account and records; and

6.1.5.3

have access to those of its employees with day-to-day responsibility in the Project and officers who have or may have knowledge of the matters with respect to which IDB seeks information or of the business, operations, Property and financial and other condition of it generally.

6.1.6 Auditors .

6.1.6.1

Maintain at all times PricewaterhouseCoopers, or any other internationally recognized independent public accounting firm acceptable to IDB, as auditors;

6.1.6.2

Authorize the Auditors (whose fees and expenses shall be for the account of the relevant Borrower) to communicate directly with IDB at any time regarding its accounts and operations by executing and delivering to the Auditors (with a copy to IDB) an authorization substantially in the form of Exhibit 4 ( Form of Authorization to Auditors ), and obtaining the Auditors’ acknowledgment and consent thereto; and

6.1.6.3

No later than thirty (30) days after any change in Auditors, issue a similar authorization to the new Auditors and provide a copy thereof to IDB.

6.1.6.4

Deliver to IDB, no later then May 31, 2009, a certificate from the Auditors confirming that (i) they have been appointed as the Borrowers’ independent public accountants and (ii) the Borrower’s accounting and cost control system and management information system are adequate for the purpose of the Borrowers’ compliance with the requirements set forth in Section 6.1.4 ( Systems; Books and Records ).

6.1.7 Maintenance of Relevant Permits .

6.1.7.1

Obtain timely and maintain in force, or cause to be obtained timely and maintained in force (and where appropriate, timely renew or cause to be timely renewed) all Relevant Permits;

6.1.7.2

Perform and observe or cause to be performed or observed, all material obligations, conditions and restrictions contained in, or imposed on it by all such Relevant Permits; and

6.1.7.3

If IDB requests, deliver to IDB a copy of each such Relevant Permit, certified by an Authorized Representative of it, within ten (10) days of its issuance or renewal.

6.1.8 Conditions of Business; Compliance with Applicable Law . Conduct its business in accordance with prudent industry practice, all applicable laws, the Foreign Asset Control and Anti-money Laundering Regulations, Relevant Permits and the Financing Documents and comply with the BCRA regulations as in effect from time to time.

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6.1.9 Taxes . File timely or cause to be filed timely all Tax Returns required to be filed by it and pay or cause to be paid all Taxes due and payable by it whether shown to be due and payable on such Tax Returns or on any assessment received by it or otherwise, except to the extent any such Taxes are being diligently contested by appropriate proceedings in good faith and with respect to which adequate reserves have been established on the books of it in accordance with the Accounting Principles.

6.1.10 Pari Passu . Take such action as may be necessary to ensure that, at all times, the obligations of it under the Financing Documents are senior, unconditional, secured and unsubordinated obligations, and rank and will rank at least pari passu in priority of payment with all other unsecured and unsubordinated obligations of it outstanding from time to time, except for such exceptions as are provided by applicable law.

6.1.11 Security and Further Assurances .

6.1.11.1

From time to time or promptly upon request by IDB and at its cost and expense, execute, acknowledge and deliver or cause to be executed, acknowledged and delivered such further documents and instruments and take all other actions necessary, or in the reasonable opinion of IDB, desirable:

6.1.11.1.1

for perfecting or maintaining in full force and effect the Security or for re-registering the Security;

6.1.11.1.2

to enable it to comply with its obligations under the Financing Documents;

6.1.11.1.3

to implement the terms of the Financing Documents; and

6.1.11.1.4

to preserve and protect IDB’s rights under the Financing Documents.

6.1.11.2

If IDB requests, defend, at the cost and expense of the Borrowers, IDB’s right, title and interest to the Security and the Secured Property.

6.1.11.3

in the event that the Loan Coverage Ratio is less than 1.5:1.0 at any time, create, perfect and maintain, no later than three (3) months, provided that, the Borrowers may request a one time, three (3) month extension of such term, which request shall not be unreasonable denied by the IDB, from the date of calculation, in full force and effect further Security over real estate assets acceptable to IDB to the extent necessary so that, immediately after giving effect to such creation and perfection, the Loan Coverage Ratio shall be at least 1.5:1.0.

6.1.12 Required Hedge . Maintain at all times the Required Hedge in respect of the Loan.

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6.1.13 Other Information . Cooperate with and produce all information, analysis and reports required by IDB regarding its business, including information regarding actual and expected future expenditures on training and community programs, harvest activities provided by third parties, existence of new purchaser of products of the Borrowers, any significant changes in the Borrowers’ senior management or organizational structure, and any significant technology other than the free stall system, used by the Borrowers, to enable IDB to assess the developmental impact and additionality of the Project.

6.1.14 Required Capital Expenditures . Complete the Required Capital Expenditures by no later than December 31, 2009 (other than with respect to: (i) the Ombu Project, which shall be completed no later than December 31, 2010; (ii) the San Joaquin Project and the Ita Caabo project, which shall be completed no later than December 31, 2011; (iii) the Free Stall Project II, which shall be completed no later than December 31, 2012); and (iv) the SECCI Projects, which shall be completed no later than December 31, 2013.

6.1.15 Capital Expenditures .

6.1.15.1

Complete the Original Capital Expenditures in an aggregate of sixty two million Dollars ($62,000,000) as follows: (i) in the case of Adeco, forty four million Dollars ($44,000,000) and (ii) in the case of Pilagà, eighteen million Dollars ($18,000,000).

6.1.15.2

Complete New Eligible Capital Expenditures in an aggregate of twenty million Dollars ($20,000,000), such amount to be distributed between Adeco and Pilagá in the manner to be determined by the Borrowers.

6.1.15.3

Complete the Original Capital Expenditures and New Eligible Capital Expenditures by no later than December 31, 2012, and complete the SECCI Projects no later than December 31, 2013.

6.1.15.4

Account for working capital that is associated with each Original Capital Expenditure and New Eligible Capital Expenditure, in each case that it is not able to account for associated taxes.

6.1.16 Deferred Lease Payments . Ensure that all Deferred Lease Payments are subject to a subordination agreement between IDB, the relevant Borrower and the relevant counterparty reflecting the terms set forth in Schedule 11.

Section 6.2 Negative Covenants.

Unless IDB otherwise agrees, neither Borrower shall:

6.2.1 Limitation on Restricted Payments . Make any Restricted Payment, unless each of the Restricted Payment Conditions are satisfied.

6.2.2 Permitted Indebtedness . Incur, assume or permit to exist any Debt other than:

6.2.2.1

the Loan;

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6.2.2.2

the Permitted Credit Line; and

6.2.2.3

any other Debt to the extent that such Debt would not result in either Borrower failing to comply with the Financial Ratios.

6.2.3 Financial Ratios . Permit at any time on a Combined Basis (tested on a quarterly and yearly basis):

6.2.3.1

As of each Financial Quarter Date, permit the Debt of the Borrowers, on a Combined Basis, to exceed one hundred and fifty million Dollars ($150,000,000) during 2011, one hundred and fifty-five million Dollars ($155,000,000) during 2012 and one hundred and sixty million Dollars US

6.2.3.2

Permit at any other time, unless otherwise specified in this Section 6.2.3.2, on a Combined Basis (tested on a yearly basis):

6.2.3.2.1

the Total Liabilities to Equity Ratio, for each Financial Year, to exceed:

(a)

1.6:1.0 during 2011; and

(b)

1.7:1.0 during 2012 and thereafter;

6.2.3.2.2

the Current Asset to Current Liabilities Ratio, for each Financial Year, to be less than:

(a)

in 2011 an 2012, 1.1:10;

(b)

in 2013, 1.15:1.0;

(c)

beginning in 2014, 1.2:1.0;

6.2.3.2.3

the Interest Coverage Ratio for each Financial Year, to be less than:

(a)

2.1:1.0 during 2011;

(b)

2.15:1.0 during 2012;

(c)

2.20:1.0 during 2013;

(d)

2.25:1.0 during 2014;

(e)

2.30:1.0 during 2015;

(f)

2.40:1.0 during 2016;

(h)

2.50:1.0 during 2017;

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(h)

2.60:1.0 during 2018;

6.2.3.2.4

the Loan Coverage Ratio to be less than 1.5:1.0 at any time.

provided, for the purposes of the foregoing financial ratios, (i) Deferred Lease Payments that are subordinated to all amounts due to IDB hereunder pursuant to subordination agreements between IDB, the relevant Borrower and the relevant counterparty to such Lease Agreement reflecting the terms contained in Schedule 11 shall not be considered Debt nor Total Liabilities and (ii) any calculation of any financial ratio made on a Combined Basis shall exclude the amount of any Loans between the Borrowers.

6.2.4 [ intentionally deleted ]

6.2.5 Obligations of Others . Except to the extent (i) permitted in Section 6.2.2 (Permitted Indebtedness), (ii) indemnities are required pursuant to any of the Financing Documents or in any document providing for Debt permitted under Section 6.2.2 (Permitted Indebtedness), (iii) required by applicable law or (iv) indemnities are included in commercial contracts provided in the ordinary course of business, enter into any guarantee or indemnity or otherwise assume the obligations of another Person, including the obligations of any member of the Group other than obligations of members of the Group which do not exceed ten million Dollars ($10,000,000) on a Combined Basis in aggregate at any time, or indemnify or agree to indemnify any Person from and against any claim, loss, damage, expense or other liability.

6.2.6 Liens . Create, assume or permit to exist any Lien on any of its Property other than Permitted Liens.

6.2.7 Fundamental Changes to the Borrowers .

6.2.7.1

(a) Enter into any agreement or arrangement whereby its affairs are managed by any Person (other than an employee or officer of a Borrower), (b) change any provision of its Organizational Documents in any manner that would be inconsistent with or breach any provision of any Financing Document or that could be reasonably likely to have a Material Adverse Effect, or (c) change its office domicile from that of its jurisdiction of incorporation.

6.2.7.2

(a) Undertake or permit itself to merge, consolidate, spin-off or reorganize, or (b) undertake to issue or issue any Share Capital or Equity Rights or otherwise change its capital structure.

6.2.8 Sale of Assets . Sell, lease (other than any lease entered into with Quickfood S.A. for the lease of certain farmland as described in the Waiver Request No. 2 dated December 24, 2009), transfer or otherwise dispose of (by one or a series of transactions, related or not) any of its Property except:

6.2.8.1

assets other than real estate assets with an aggregate value of less than five million Dollars ($5,000,000) in any twelve (12) month period on a Combined Basis;

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6.2.8.2

real estate assets with an aggregate value of less than twenty million Dollars ($20,000,000) in any twelve (12) month period on a Combined Basis.

6.2.9 [ Intentionally deleted ]

6.2.10 Sales Agency . Establish any sole and exclusive purchasing or sales agency other than in the ordinary course of business for companies similar to the Borrowers.

6.2.11 Partnership, Profit Sharing or Royalties . Enter into any partnership, joint venture, consortium, profit-sharing or royalty agreement or other similar arrangement whereby its income or profits are, or might be, shared with any other Person other than in the ordinary course of business.

6.2.12 Investments; Loans .

6.2.12.1

Form or have any Subsidiary.

6.2.12.2

Make or permit to exist any Investments in any Person other than Permitted Investments.

6.2.13 Affiliate Transactions . Enter into any transaction, including the purchase, sale, lease or exchange of Property or the rendering of any service, with any member of the Group (other than a transaction solely between the Borrowers) (an Affiliate Transaction ) unless such transaction is:

6.2.13.1

specifically provided for or permitted under the Financing Documents;

6.2.13.2

upon terms that are fair and reasonable to it and at fair market value (determined on the basis of an arm’s length transaction that would be entered into between two willing unrelated parties);

6.2.13.3

a renewal, extension, modification or similar transaction with respect to any Affiliate Transaction in existence as of May 15, 2010,

provided, however, that

(i)	neither Borrower shall have intercompany loans outstanding to any other member of the Group unless both Borrowers are in compliance, before and after such intercompany loan is made, with the financial ratios set forth in Section 6.2.3 ( Financial Ratios );

(ii)	the Borrowers shall not make any new intercompany loans to any other member of the Group prior to the date on which, pursuant to Section 6.3.1, the Borrowers deliver to the Lenders, the Financial Statements and the certificate of the Auditors for the Financial Year ended December 31, 2010;

(iii)

the aggregate principal amount of all intercompany loans of either of the Borrowers to any other member of the Group shall not exceed ten million Dollars (US$10,000,000) in aggregate on a Combined Basis at any given time; and

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(iv)	any new intercompany debt of the Borrowers shall be subordinated to the Loan at all times on the terms described in Schedule 11 ( Intercompany Subordination Terms ).

6.2.14 Scope of Business . Change the nature or scope of its business or enter into any other business, either directly or indirectly, unconnected with the agribusiness or renewable energy sectors.

6.2.15 Accounting Changes . Change its Financial Year, or make or permit any change in accounting policies or reporting practices, except as required to comply with the Accounting Principles or its Financial Year.

6.2.16 Prepayment . Prepay (whether voluntarily or involuntarily) or repurchase any Long-term Debt (other than the Loan and the Existing Obligations) pursuant to any agreement or arrangement, unless:

6.2.16.1

such Long-term Debt is refinanced using new Long-term Debt on equivalent or more favorable terms to it; or

6.2.16.2

it gives IDB at least thirty (30) days’ advance written notice of its intention to make the proposed prepayment and, if IDB so requires, it simultaneously prepays a proportionate amount of the Loan in accordance with Section 3.5.4 ( Voluntary Prepayment ) except that there shall be no minimum amount, or (except as provided above) advance notice period for such prepayment.

6.2.17 Prohibited Practices . Commit or engage in (and shall not authorize or permit any Affiliate or any other Person acting on its behalf to commit or engage in) any Prohibited Practice, and if IDB notifies it of its concern that there has been a violation of this Section or of Section 6.2.16 ( Prohibited Practices ), it shall cooperate in good faith with IDB and its representatives in determining whether such a violation has occurred, and shall respond promptly and in reasonable detail to any notice from IDB, and shall furnish documentary support for such response upon IDB’s request.

6.2.18 ERISA . No ERISA Affiliate shall establish, contribute to, acquire or maintain an ERISA Plan at any time during the term of this Agreement.

6.2.19 Amendment of Lease Agreement . Amend, modify or change any term or condition of any Lease Agreement in any manner that would adversely affect the rights of IDB under this Agreement, including without limitation, in a manner that permits payments of Deferred Lease Payments prior to the date when all principal (whether or not then due and payable), interest and other amounts payable to IDB under this Agreement have been paid in full.

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Section 6.3 Information.

Each of the Borrowers shall deliver to IDB:

6.3.1 Audited Annual Financial Statements . As soon as available but in any event within one hundred and twenty (120) days after the end of each Financial Year:

6.3.1.1

two (2) copies of its audited Financial Statements for such Financial Year setting forth in each case in comparative form the corresponding figures for the previous Financial Year;

6.3.1.2

a certificate of the Auditors reporting on such Financial Statements:

6.3.1.2.1

stating that in making their examination, the Auditors obtained no knowledge of any Default, except as specified in such certificate;

6.3.1.2.2

stating that based on such Financial Statements and information reviewed in connection with the audit, the Borrowers are in compliance with Sections 6.1.4 ( Systems; Books and Records ) (solely after May 31, 2009), 6.2.2 ( Permitted Indebtedness ), 6.2.13 ( Scope of Business ), 6.2.14 ( Accounting Changes ), and 6.2.15 ( Prepayment ), or specifying any non-compliance; and

6.3.1.2.3

setting forth in reasonable detail all information necessary to calculate (and providing the calculations necessary to determine) each of the Financial Ratios during the applicable period and as at the last day of the period covered, as relevant, by the Financial Statements.

6.3.1.3

a certificate of an Authorized Representative of each Borrower certifying that during the applicable period and as of the end of the relevant Financial Year it was in compliance with all the terms and conditions of the Financing Documents and that no Default has occurred, except as specified in such certificate.

6.3.2 Unaudited Quarterly Financial Statements . As soon as available but in any event within sixty (60) days after the end of each of the three (3) Financial Quarters of each Financial Year commencing with the Financial Quarter ending on March 31, 2009:

6.3.2.1

two (2) copies of the unaudited Financial Statements of each Borrower for such quarterly period setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Financial Year; and

6.3.2.2

a certificate of an Authorized Representative of each Borrower:

6.3.2.2.1

certifying that the Financial Statements delivered pursuant to Section 6.3.2.1 ( Unaudited Quarterly Financial Statements ) were prepared from and are in accordance with each Borrower’s books and records and give a true and fair view of the financial position of the Borrowers as of the date thereof and the results of its operations and cash flow for the relevant Financial Quarter, all in conformity with the Accounting Principles;

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6.3.2.2.2

certifying that during the applicable period and as of the relevant Financial Quarter Date the Borrowers were in compliance with all the terms and conditions of the Financing Documents and that no Default has occurred, except as specified in such certificate; and

6.3.2.2.3

6.3.2.3

a certificate of the Auditors setting forth in reasonable detail all information necessary to calculate (and providing the calculations necessary to determine) each of the Financial Ratios set forth in Sections 6.2.3.2 and 6.2.3.3 during the applicable period and as at the last day of the period covered, as relevant, by the most recent Financial Statements.

6.3.2.4

a statement of EBITDA of each Borrower for such fiscal quarter on both a collective and individual basis.

6.3.2.5

a statement of Debt as of the last date of each fiscal quarter of each Borrower on an individual and combined basis.

6.3.3 Annual Review of Operations . As soon as available but in any event within one hundred twenty (120) days after the end of each Financial Year, (i) an annual review of operations in the form of and addressing the topics listed in Schedule 6 ( Information to be Included in Annual Review of Operations ) (which may be updated by IDB from time to time); (ii) a progress report on the Required Capital Expenditures in a form agreed with IDB; and (iii) an annual valuation of the Secured Property prepared by the Real Estate Consultant.

6.3.4 Notices .

6.3.4.1

Promptly upon the occurrence of a Default, a notice specifying the nature of that Default and any steps it is taking to remedy it.

6.3.4.2

Prompt notice of any material dispute under any of the Financing Documents.

6.3.4.3

Prompt notice of any revocation, denial or non-renewal of any Relevant Permit.

6.3.4.4

Promptly upon becoming aware thereof, notice of any action, suit, other legal proceeding, administrative proceedings or other claim before any Authority that has had or may reasonably be expected to have a Material Adverse Effect, and notice to IDB by facsimile of that event specifying the nature of those proceedings and the steps it is taking or proposes to take with respect thereto.

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6.3.4.5

Prompt notice of any proposed material changes in the nature or scope of its business operations.

6.3.4.6

Prompt notice of any change in the composition of the board of directors or of any change in management personnel.

6.3.4.7

Prompt notice of any material event of loss.

6.3.4.8

Prompt notice of any other event or condition which has had or could reasonably be expected to have a Material Adverse Effect.

6.3.4.9

Promptly upon becoming aware of the existence of any violation of any of the Foreign Asset Control and Anti-money Laundering Regulations by it, or any investigation by any Authority relating thereto, provide notice thereof, including a description of the violation or the matter under investigation, as the case may be, and the steps that are being taken to resolve such matter.

6.3.4.10

In the case of each of Section 6.3.4.1 through 6.3.4.9, “prompt” or “promptly” shall means as soon as available but in any event within five (5) Local Business Days of the occurrence of the relevant event.

6.3.5 Communications with Auditors . Promptly following receipt thereof by either Borrower, two (2) copies of any management letter or other communication sent by the Auditors (or any other accountants retained such Borrower) to it in relation to its financial, accounting and other systems, its management information system or its accounts, if not otherwise delivered under Section 6.3.1 ( Audited Annual Financial Statements ).

6.3.6 Affiliate Transactions . Promptly, upon entering into an Affiliate Transaction, a certificate of an Authorized Representative of the relevant Borrower describing in detail the commercial and financial terms of any such Affiliate Transaction and certifying that such Affiliate Transaction complies with the Financing Documents including Section 6.2.13 ( Affiliate Transactions ).

6.3.7 Additional Information . From time to time, such information as IDB may reasonably request, including information with respect to either Borrower, its Property, the Project and the performance by it of its obligations under the Financing Documents.

Section 6.4 Budgets.

6.4.1 Annual Budget . Not later than ninety (90) days after the beginning of each Financial Year, each Borrower shall deliver to IDB two (2) copies of the Annual Budget for such Financial Year.

Section 6.5 Environmental and Social.

6.5.1 Affirmative Covenants . Unless IDB otherwise agrees in writing, each of the Borrowers shall:

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6.5.1.1

comply with all Environmental and Social Provisions and Environmental and Social Requirements and otherwise ensure that there are no significant impacts or risks relating to Environmental or Social Matters with respect to its business that are not adequately mitigated or compensated;

6.5.1.2

in accordance with the chronogram established in the Environmental, Social, Health and Safety Action Plan: (a) present an EMS in form and content satisfactory to the IDB; (b) implement the EMS, and all related Environmental Plans; and (c) keep the EMS and all related Environmental Plans in operation;

6.5.1.3

implement: (a) adequate on-going information disclosure and public consultation activities with the local population relating to Environmental or Social Matters pertaining to its business; (b) adequate systems to ensure that all companies contracted for construction and operation activities with respect to Capital Expenditures perform such activities in compliance with the applicable Environmental and Social Provisions and Environmental and Social Requirements; (c) Environmental and Social Management Plans (ESMPs) with respect to each Capital Expenditure (except the ERP Project), and as applicable, in accordance with the EMS with respect to the operations and activities related to the operations of either of the Borrowers; (c) Environmental Assessments or Environmental Impact Assessments and any resulting management measures required to address any specific Environmental or Social Matters in accordance with the Environmental and Social Provisions and Environmental and Social Requirements, within ninety (90) days of commencing operations on each leased farm;

6.5.1.4

submit in form and content satisfactory to the IDB and in accordance with the chronogram established pursuant to the Environmental, Social, Health and Safety Action Plan: (a) the Environmental and Social Management Plans for each Capital Expenditure (except the ERP Project); (b) the final Environmental Impact Assessments for: (i) the Ita Caboo and San Joaquin Feedlot Projects; (ii) the Christophersen Free Stall Project; (iii) the North Dry Plant; (iv) the Doña Marina Project, (v) the Franck Mill and (vi) any other project requiring an Environmental Impact Assessment that has been approved by IDB for inclusion or substitution of a Capital Expenditure; and (c) an environmental evaluation of the ongoing Feedlot Projects at El Meridiano and (d) the Environmental and Social Management Plans for the projects listed in items (b) and (c). For the avoidance of doubt, all Environmental Impact Assessments and environmental evaluations will be finalized in consultation with local stakeholders of the Borrower in accordance with the Environmental and Social Requirements and each ESMP will be in place prior to the commencement of construction or other activities for the projects listed in (b) above;

6.5.1.5

should the Borrowers pursue the Land Transformation from dryland to irrigated agriculture in Ita Caboo or any other Land Transformation with

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respect to a Capital Expenditure, (i) notify the IDB of such decision in advance; (ii) submit to IDB, prior to commencing such Land Transformation, the Environmental Impact Assessments (including reasonable evidence of consultations with affected persons or groups), Environmental and Social Management Plans and any other documentation and information required by IDB to ensure that the proposed operations will comply with the Environmental Provisions and Environmental and Social Requirements; and (iii) upon approval of the Environmental and Social Management Plan by IDB, implement same;

6.5.1.6

should either Borrower change the productive use under a Capital Expenditure, or propose to substitute Capital Expenditure or add new projects to the Capital Expenditures, such Borrower shall: (i) notify IDB in advance of the proposed projects and the respective environmental and social regulations and proposed management measures; (ii) agree with IDB upon the assessments, studies and management plans that are reasonably required to ensure that the proposed project will comply with the Environmental and Social Provisions and Environmental and Social Requirements; (iii) submit to IDB, prior to commencing such project, the environmental assessments (including reasonable evidence of consultations with affected persons or groups), Environmental and Social Management Plans and any other documentation and information as agreed with the IDB; and (iv) upon approval of the Environmental and Social Management Plan by IDB, implement the same.

6.5.1.7

upon the reasonable request of IDB, permit IDB, or an independent Environmental and Social Consultant engaged by IDB, at the expense of the Borrowers, to perform monitoring activities and visits and independent audits (including access to sites, documentation and personnel, and consultations with local stakeholders) with respect to Environmental or Social Matters as follows:

6.5.1.7.1

to carry out an annual independent audit of the Borrowers’ environmental and social performance in order to:

(i) assess progress in the implementation of the ESHSP including the Complementary ESHS Action Plan once integrated therein, and make any recommendations if applicable;

(ii) confirm compliance by the Borrowers with the Environmental and Social Provisions and Environmental and Social Requirements and identify any significant adverse impacts, risks or liabilities with respect to Environmental or Social Matters that have not been adequately mitigated or compensated; and

(iii) if necessary, request a Corrective Action Plan, in form and substance satisfactory to IDB, to correct any identified

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non-compliance or deficiency, whereupon the Borrowers shall present such Corrective Action Plan within thirty (30) days of any such request and upon approval by the IDB implement such Corrective Action Plan;

6.5.1.7.2

to conduct special audits to address any material issues specifically identified in routine audits and reporting, or as the result of third party complaints that in the reasonable opinion of IDB merit investigation; and

6.5.1.7.3

cooperate fully with the IDB’s Independent Consultation and Investigation Mechanism (ICIM), provided that access to information designated as non-public in accordance with applicable regulations may be withheld to the extent required by said regulations.

6.5.1.8

undertake the following:

6.5.1.8.1

implement ongoing information disclosure and consultation activities related to environmental, social and health and safety aspects of the Required Capital Expenditures in accordance with the EMS; and

6.5.1.8.2

prior to commencing any Capital Expenditure, in accordance with the applicable Environmental and Social Requirements: (a) prepare and submit, in form and content satisfactory to the IDB: (i) an Environmental Assessment or Environmental Impact Assessment at least sixty (60) days prior to commencing the such Capital Expenditure; (ii) after consulting with the stakeholders, an Environmental and Social Management Plan at least thirty (30) days prior to commencing the Required Capital Expenditure; and (iv) prior to commencing the Land Transformation, (x) evidence that the necessary licenses and permits have been granted in accordance with the land use plan of the respective province, state or municipality requirements and (y) evidence that the relevant ESMP is in operation.

6.5.1.9

Present, in form and substance satisfactory to the IDB, within three (3) months of the Effective Date (as defined in Section 1.1 hereof ( Definitions ), a detailed and final Complementary Environmental, Social, Health and Safety Action Plan in accordance with the Preliminary Complementary ESHS Action Plan set forth in Schedule 13 hereto.

6.5.2 Negative Covenants . Unless IDB otherwise agrees in writing, neither Borrower shall make any substantial change or modification to any Environmental Plan or the EMS.

6.5.3 Environmental Information Covenants .

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6.5.3.1

Each Borrower shall deliver to IDB an Environmental and Social Compliance Report, in form and substance satisfactory to IDB:

6.5.3.1.1

Until December 31, 2016, or an earlier date agreed upon between IDB and the Borrowers upon accomplishment of the implementation of all actions stipulated in the ESHS Action Plan as updated in accordance with the Complementary ESHS Action Plan, for each semester of each calendar year, in respect of that semester or part thereof no later than forty five (45) days after the end of each such semester;

6.5.3.1.2

thereafter, for each calendar year in respect of that calendar year, no later than sixty (60) days after the end of each such period.

6.5.3.2

Each Borrower shall notify IDB as soon as possible, but in any event within fifteen (15) Local Business Days of its occurrence, of any fact, circumstance, condition or occurrence that has or could likely result in any of the following:

6.5.3.2.1

any significant non-compliance with the Environmental and Social Provisions or Environmental and Social Requirements;

6.5.3.2.2

any significant adverse impact relating to any Environmental or Social Matter, including any deaths or significant injuries or accidents, Release of Hazardous Substances, significant unplanned Releases, explosions or fires;

6.5.3.2.3

any substantive written communication with any Authority relating to any Environmental or Social Matter;

6.5.3.2.4

any Environmental Claim; or

6.5.3.2.5

any substantive complaints relating to Environmental or Social Matters;

and such notice shall include a reasonable description of the event detailing the extent, magnitude, impact and cause of such event together with corrective or remedial actions taken or proposed to be taken with respect thereto, and, as necessary and/or reasonably requested by the IDB, a Corrective Action Plan in form and substance satisfactory to IDB, to be presented within thirty (30) Local Business Days of such a request and implemented upon approval by IDB.

6.5.3.3

The Borrowers shall additionally provide to IDB at the same time that it provides the Environmental and Social Compliance Report in accordance with Section 6.5.3.1.2 an annual estimate of green house gases produced by the Capital Expenditures.

Section 6.6 Insurance.

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6.6.1 Insurance Requirements and Undertakings . Each of the Borrowers shall:

6.6.1.1

insure and keep insured, with financially sound and reputable insurers (and re-insured with reputable international insurers, if applicable) their assets and business against such risks and to such extent as is usual for prudent companies carrying on business such as that carried on by each of the Borrowers and consistent with past practices of the Borrowers, including, without limitation, third party liability insurance and any other insurance required by law.

6.6.1.2

punctually pay when due any premium, commission and any other amounts and take such other action as may be necessary for effecting and maintaining in force each Insurance Policy;

provided always that if at any time and for any reason any insurance required to be maintained under this Agreement shall not be in full force and effect, then IDB shall thereupon or at any time while the same is continuing be entitled (but have no such obligation) on its own behalf to procure that insurance at the expense of the Borrower(s) and to take all such steps to minimize hazard as IDB may consider expedient or necessary.

6.6.2 Application of Proceeds .

6.6.2.1

At its discretion, IDB may remit the proceeds of any insurance paid to it to the Borrower(s) to repair or replace the relevant damaged Property or may apply those proceeds towards any amount payable to IDB under this Agreement, including to repay or prepay all or any part of the Loan in accordance with Section 3.7 ( Application of Prepayments ); provided that there shall be no minimum amount or notice period for any such

6.6.2.2

Each Borrower shall use any insurance proceeds it receives (whether from IDB or directly from the insurers) for loss of or damage to any asset solely to replace or repair that asset except as provided for in Section 3.6.1.2 ( Mandatory Payments ).

6.6.3 Reporting Requirements . Each of the Borrowers shall provide to IDB the following:

6.6.3.1

as soon as possible after its occurrence, notice of any event that entitles it to claim an aggregate amount exceeding the equivalent of two hundred thousand Dollars ($200,000) under any one or more Insurance Policies; and

6.6.3.2

within thirty (30) days after the end of each Financial Year, a certificate, in form and substance satisfactory to IDB, from its insurers or insurance brokers, summarizing all insurance then maintained by it, specifying the Property and aspects of its business insured, the amount and risks covered, the names of the beneficiaries, the names of the insurers and any special features of the Insurance Policies in effect on the date of such certificate.

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ARTICLE 7.

Events of Default

Section 7.1 General Acceleration Terms and Conditions.

7.1.1 If an Event of Default occurs and is continuing (whether it is voluntary or involuntary, or results from the operation of any applicable law or pursuant to or as a result of any act or failure to act by any Authority or otherwise), IDB may, by notice to each Borrower, take any or all of the following actions:

7.1.1.1

terminate the relevant Borrower’s right to request, and any obligation of IDB to make, Disbursements of the Loan, whereupon such right and obligation shall immediately terminate;

7.1.1.2

declare the Loan or such part of the Loan as is specified in the notice (with accrued interest thereon) and all other Obligations to be due and payable forthwith, whereupon the same shall become immediately due and payable without any further notice and without any presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by each Borrower;

7.1.1.3

enforce or cause the enforcement of all or any part of the Security; and

7.1.1.4

exercise any other remedies that may be available to IDB under any Financing Document or applicable law.

7.1.2 Upon receipt of a notice from IDB under Section 7.1.1 ( General Acceleration Terms and Conditions ), the Borrowers shall immediately repay the Loan or such part of the Loan as is specified in the notice and all other amounts then declared to be due and payable with respect thereto. Except as expressly provided in this Section 7.1 ( General Acceleration Terms and Conditions ), each Borrower waives presentment, demand, protest or other notice of any kind with respect to that demand for immediate payment and IDB’s exercise of remedies.

Section 7.2 Events of Default.

It shall be an Event of Default if:

7.2.1 Payments by Borrowers .

7.2.1.1

Failure to Make Payments under Financing Documents . The Borrowers fail to pay when due (whether at stated maturity or otherwise) any Obligation, including principal of, or interest on, the Loan, which is not paid within five (5) days of its due date.

7.2.1.2

Failure to Make Other Payments Owed to IDB . Either Borrower fails to pay when due (whether at stated maturity or otherwise) any part of the principal of, or interest on, any loan from IDB to such Borrower (other than the Loan)

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or any reimbursement obligation in respect of a guarantee provided by IDB for either Borrower’s benefit and any such failure continues for more than any applicable period of grace.

7.2.1.3

Failure to Pay Debt . Either Borrower fails to pay any amount outstanding with respect to any of its (i) Indebtedness for Money Borrowed or (ii) Debt (other than Indebtedness for Money Borrowed, the Obligations and any other loan from IDB), having an aggregate principal amount in excess of three million Dollars ($3,000,000) or to perform any of its obligations when due, under any agreement pursuant to which there is outstanding any such Debt, and any such failure continues for more than any applicable period of grace, or any such Debt becomes prematurely due and payable or is placed on demand.

7.2.1.4

Restricted Payments . Either Borrower makes any Restricted Payment in contravention of the Restricted Payment Conditions.

7.2.2

Financing Documents .

7.2.2.1

Breach of Financing Documents . Any Borrower fails to comply with any of its obligations contained in this Agreement or any other Financing Document or any other agreement between either Borrower and IDB (other than an obligation referred to elsewhere in this Section 7.2 ( Events of Default )) and, if in the reasonable determination of IDB capable of remedy, such failure has continued for a period of thirty (30) days after either Borrower becomes aware, or should have become aware, of such failure to comply; provided that no cure period shall apply if, in the reasonable determination of IDB, such failure has had or could reasonably be expected to have a Material Adverse Effect or if such non-compliance is incapable of being remedied.

7.2.2.2

Revocation , Termination or Repudiation of Financing Documents . Any Financing Document or any of its terms:

7.2.2.2.1

is revoked or terminated by either Borrower, or becomes void or ceases to be in full force and effect in each case as by a final, non-appealable decision of a court of competent jurisdiction;

7.2.2.2.2

becomes, or the performance of or compliance with any material obligation thereunder becomes, unlawful, except as provided in Section 3.19; or

7.2.2.2.3

is repudiated by any Borrower party thereto or its legality, validity or enforceability is challenged pursuant to judicial proceedings by any Person other than IDB.

7.2.2.3

Security Documents . Any Security Document or interests created thereunder cease to be in full force and effect and/or become unlawful or unenforceable and which has not been cured within ninety (90) days after from the date of such illegality or unenforceability.

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7.2.2.4

Priority . IDB ceases to hold a valid and enforceable first priority Lien over any of the Secured Property.

7.2.3 Misrepresentation . Any representation or warranty confirmed or made by either Borrower in any Financing Document or in any document delivered thereunder is found to have been incorrect or misleading in any material respect when confirmed or made, unless the condition or event giving rise to such incorrect or misleading representation or warranty has been cured within thirty (30) days after IDB’s notice to the Borrower of such finding.

7.2.4 Expropriation . Any Authority:

7.2.4.1

Seizure of Property . condemns, nationalizes, seizes, confiscates or otherwise expropriates all or any substantial part of the Property of either Borrower or of their respective Share Capital or commences any proceeding in furtherance of any of the foregoing;

7.2.4.2

Control of Property . assumes custody or control of a material part of the Property of either Borrower, the business or operations of either Borrower or their respective Share Capital; or

7.2.4.3

Interruption of Business . takes any action to displace a material part of the management of either Borrower, to curtail its authority to conduct its business, to dissolve or disestablish it, or to prevent it or its officers from carrying on all or a substantial part of its business or operations.

7.2.5 Insolvency Events .

7.2.5.1

Involuntary Proceedings . An involuntary proceeding is commenced or an involuntary petition is filed seeking:

7.2.5.1.1

an adjudication of either Borrower as bankrupt or insolvent;

7.2.5.1.2

liquidation, winding up, reorganization, moratorium, arrangement, adjustment or composition of, or other relief in respect of, either Borrower or its debts, or of a substantial part of its Property under applicable law; or

7.2.5.1.3

the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of either Borrower or of any substantial part of its Property;

and in any such case, such proceeding or petition is not dismissed within thirty (30) days ordering any of the foregoing is entered.

7.2.5.2

Voluntary Proceedings. Either Borrower:

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7.2.5.2.1

voluntarily commences any proceeding or files any petition seeking liquidation, reorganization or other relief under applicable law including without limitation, the execution of an “acuerdo preventivo extrajudicial” under Argentine Law No. 24,522, as amended;

7.2.5.2.2

applies for or consents to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of it or of any substantial part of its Property;

7.2.5.2.3

makes a general assignment for the benefit of creditors;

7.2.5.2.4

requests a moratorium or suspension of payment or reorganization of debts from any competent Authority;

7.2.5.2.5

institutes proceedings or takes any form of corporate action to be liquidated or adjudicated bankrupt or insolvent;

7.2.5.2.6

consents to the institution of, or fails to contest in a timely and appropriate manner, any proceeding or petition described in Section 7.2.5.1 ( Involuntary Proceedings ); or

7.2.5.2.7

takes any action for the purpose of effecting any of the foregoing.

7.2.5.3

Inability to Pay Debts . Either Borrower becomes unable, admits in writing its inability or fails generally to pay its debts as they become due or otherwise becomes insolvent.

7.2.5.4

Events Analogous to Bankruptcy , Insolvency , Etc . Any other event occurs that under any applicable law would have an effect analogous to any of those events listed in Section 7.2.5.1 ( Involuntary Proceedings ), 7.2.5.2 ( Voluntary Proceedings ) or 7.2.5.3 ( Inability to Pay Debts ).

7.2.5.5

Environmental and Social Compliance . Any of the following has occurred: (a) either of the Borrowers shall be in default in the due performance or observance by either of them of any term, covenant or agreement contained in Section 6.5 ( Environmental and Social ); or (b) any Environmental or Social Matter with respect to a Capital Expenditure occurs that has, or could reasonably be expected to have, a Material Adverse Effect on the Project or the Borrowers; and (c) in the case of either clause (a) or (b) above, either (x) a Corrective Action Plan in form and substance reasonably satisfactory to the IDB shall not have been submitted to the IDB within thirty (30) days of the occurrence of such default, event or breach or (y) in the reasonable judgment of the IDB a cure is not being diligently pursued in accordance with such Corrective Action Plan.

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7.2.6 Attachment . An attachment or analogous process is levied or enforced upon or issued against any of the Property of either Borrower for an amount in excess of the equivalent of ten million Dollars ($10,000,000).

7.2.7 Judgments . A final judgment, order or arbitral award is rendered against either Borrower or any of its Property for an amount in excess of the equivalent of five million Dollars ($5,000,000) and remains unsatisfied for a period of ninety (90) days.

7.2.8 Legal Proceedings . Any action, suit or other legal proceeding (including arbitration proceedings) is commenced against either Borrower that, in the opinion of IDB, has had or reasonably could be expected to have a Material Adverse Effect.

7.2.9 Failure to Maintain Relevant Permits . Any Relevant Permit is not obtained or renewed when required or is rescinded, terminated or otherwise lapses or ceases to be in full force and effect or any Person fails to comply in any respect with any Relevant Permit, and such Relevant Permit is not restored or reinstated or the non-compliance cured within twenty (20) days of such event.

7.2.10 Material Adverse Effect . Any event occurs or any condition exists that, in the opinion of IDB, has had or reasonably could be expected to have a Material Adverse Effect.

7.2.11 Moratorium . Any Authority of Argentina declares any general payment delay, refusal to pay or acknowledge a payment obligation, repudiation or other action (whether or not formally announced) that relates to debts or any category of debt, not to be paid in accordance with their terms.

7.2.12 Abandonment; Interruption . Either Borrower ceases to carry on its business; or the Project is abandoned by either Borrower for more than ninety (90) continuous days.

7.2.13 Deferred Lease Payments . Any Deferred Lease Payment that is subordinated to any amount payable to IDB is paid by either Borrower prior to the date when all principal (whether or not then due and payable), interest and other amounts payable to IDB under this Agreement have been paid in full.

Section 7.3 Bankruptcy.

Notwithstanding any provision in this Agreement to the contrary, if any event described in Section 7.2.5.1 ( Involuntary Proceedings ) or Section 7.2.5.2 ( Voluntary Proceedings ) occurs or any other event occurs that under any applicable law would have an effect analogous to any of the events listed in Section 7.2.5.1 ( Involuntary Proceedings ) or Section 7.2.5.2 ( Voluntary Proceedings ), each Borrower’s right to request, and any obligation of IDB to make, Disbursements shall automatically terminate, and the principal of the Loan then outstanding, together with accrued interest thereon and all fees and other Obligations outstanding, shall automatically become immediately due and payable, without any presentment, demand, protest or notice of any kind, all of which the Borrowers hereby waive.

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ARTICLE 8.

Miscellaneous

Section 8.1 Notices.

Any notice, request, demand or other communication to be given or made under this Agreement shall be in writing. Subject to Section 8.10.4 ( Applicable Law and Jurisdiction ) any notice, request, demand or other communication may be delivered by hand, prepaid certified or registered airmail, internationally recognized courier service, or facsimile to the party’s address specified below or at such other address as such party shall have designated by notice to the party giving or making such notice, request, demand or other communication, and shall be effective upon receipt. All time periods to be counted from the delivery of any notice, request, demand or other communication pursuant to this Agreement shall be counted from the date of receipt of any such notice, request, demand or other communication pursuant to the terms of this Section 8.1.

For Adeco:

Adeco Agropecuaria S.A.

Fondo de la Legua 936

B1640EDO | Martínez

Buenos Aires, Argentina

Attention: Claudio González Lobo

Alternative address for communications by facsimile:

Facsimile: +5411 4836 8639

For Pilagá:

Pilagá S.A.

Fondo de la Legua 936

B1640EDO | Martínez

Buenos Aires, Argentina

Attention: Claudio González Lobo

Alternative address for communications by facsimile:

Facsimile: +5411 4836 8639

For IDB:

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington D.C. 20577

Attention: Manager and Portfolio Management Unit, Private Sector Department

Facsimile: +1 (202) 312.4135

Alternative address for communications by facsimile:

Facsimile: +1 (202) 312-4122

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Section 8.2 English Language.

All documents to be furnished or communications to be given or made under this Agreement or any of the other Financing Documents shall be in the English language. To the extent that the original of any such document or communication is in a language other than English, it shall be accompanied by a translation into English certified by an Authorized Representative of the relevant Borrower to be a true and correct translation of the original. IDB may, if it so requires, obtain at the cost and expense of the applicable Borrower an English translation of any document or communication received from that Borrower in a language other than English and unaccompanied by the relevant translation. IDB may deem any such translation to be the governing version between that Borrower and IDB.

Section 8.3 Indemnity.

8.3.1 Each of the Borrowers shall indemnify and hold harmless IDB and each Participant, together with its respective officers, directors, agents, employees, representatives, attorneys, Affiliates, successors and assigns (collectively, the Indemnified Persons ) from and against any and all claims, actions, suits, judgments, demands, damages (excluding indirect and punitive claims), losses, liabilities (including liabilities for penalties), reasonable costs or expenses of any nature or kind whatsoever, including reasonable fees and disbursements of counsel on a full indemnity basis, arising out of or in connection with:

8.3.1.1

the execution, delivery, enforcement or performance of, and any transaction contemplated under, this Agreement or any of the other Financing Documents;

8.3.1.2

the Loan or the use or intended use of the proceeds therefrom;

8.3.1.3

any actual or alleged presence or Release of Hazardous Materials on or from any Property owned or operated by either Borrower, any Environmental Claim, any failure by either Borrower to comply with any Environmental and Social Provision, Environmental and Social Requirement or any other Environmental or Social Matter; or

8.3.1.4

any actual or prospective claim, action, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnified Person is a party thereto;

(all of the foregoing, collectively, the Indemnified Liabilities );

provided that, neither Borrower shall have any obligation whatsoever hereunder to any such Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of any such Indemnified Person as determined by the final judgment of a court of competent jurisdiction.

8.3.2 The rights granted under this Section 8.3 ( Indemnity ) are in addition to the rights granted under any other provision of this Agreement under any other Financing Document or under applicable law.

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8.3.3 This Section 8.3 ( Indemnity ) shall survive repayment of the Obligations.

8.3.4 All amounts payable to any Indemnified Person under this Section 8.3 ( Indemnity ) shall be paid within thirty (30) days after receipt by the relevant Borrower from such Indemnified Person of a reasonably detailed invoice therefor.

Section 8.4 Successors and Assigns.

This Agreement binds and benefits the respective successors and assigns of the parties, except that the Borrowers may not assign or delegate any of their respective rights or obligations under this Agreement or any other Financing Document without the prior consent of IDB. IDB may assign to one or more banks or other entities all or a portion of all of its rights and obligations under this Agreement and the other Financing Documents, provided that the assignment of all or a portion of this Agreement by IDB shall necessarily include the assignment of the Notes for an equal amount to the debt assigned (being the Borrowers obliged to issue new Notes in favor of IDB and the assignee upon surrender to the Borrowers for its cancellation of the Notes so transferred or assigned); provided further that no Note shall be transferred without simultaneously assigning all or a portion of this Agreement for an equal amount of principal and/or interest hereunder. Any assignment or delegation in violation of this Section shall be void.

Section 8.5 Counterparts.

This Agreement may be executed in several counterparts, each of which is an original, but all of which together shall constitute one and the same agreement.

Section 8.6 Confidential Information.

8.6.1 IDB may disclose any documents or records of, or information relating to, each Borrower, its Property, business or affairs, or the Project (collectively, the Borrowers’ Information ) to:

8.6.1.1

any existing or future co-lenders of IDB, the Participants (or any Affiliate thereof) or any other Person with a participation in or who intends to purchase a participation in a portion of Loan and the Paying Agent;

8.6.1.2

any Person in connection with the exercise of any power, remedy, right, authority or discretion relevant to this Agreement or any other Financing Document (including in connection with IDB’s defense of any legal action, suit or proceeding brought by any other party to a Financing Document);

8.6.1.3

any Person, to the extent required to do so under any applicable law;

8.6.1.4

any banking or other regulatory or examining authorities (whether governmental or otherwise) pursuant to and in accordance with whose instructions IDB and other banks must customarily comply;

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8.6.1.5

the directors, officers, employees, arrangers, attorneys, consultants, rating agencies, independent auditors and advisors (including the Consultants and any other technical, financial and other advisors) of each of IDB, the Inter-American Investment Corporation, the Multilateral Investment Fund, and their respective Affiliates; and

8.6.1.6

any Person in connection with any proposed sale, transfer, assignment or other disposition of IDB’s rights under this Agreement or any other Financing Document.

8.6.2 Each Borrower expressly authorizes IDB and the Participants to request from any Person information relating to it and it agrees to hold IDB and the Participants harmless and exempt from any and all liability under applicable law in connection with the request for, and disclosure of, such information.

8.6.3 Each Borrower acknowledges and agrees that, notwithstanding the terms of any other agreement between it and IDB, a disclosure of its Information by IDB in the circumstances contemplated by this Section 8.6 ( Confidential Information ) does not violate any duty owed to it under this Agreement or under any such other agreement.

Section 8.7 Amendment.

Any amendment or waiver of, or any consent given under, any provision of this Agreement shall be in writing and, in the case of any amendment, signed by the Borrowers and IDB or their permitted successors and assigns.

Section 8.8 Savings of Rights; Remedies and Waivers.

8.8.1 The rights and remedies of IDB in relation to any misrepresentation or breach of warranty on the part of either Borrower shall not be prejudiced by any investigation by or on behalf of IDB or any of the Participants into the affairs of either Borrower, by the execution or the performance of this Agreement or by any other act or thing that may be done by or on behalf of IDB in connection with this Agreement and that might, apart from this Section, prejudice such rights or remedies.

8.8.2 No course of dealing or waiver by IDB in connection with any condition of Disbursement under this Agreement shall impair any right, power or remedy of IDB with respect to any other condition of Disbursement, or be construed to be a waiver thereof; nor shall the action of IDB with respect to any Disbursement affect or impair any right, power or remedy of IDB with respect to any other Disbursement.

8.8.3 Unless IDB otherwise notifies the Borrowers and without prejudice to the generality of Section 8.8.2 ( Savings of Rights; Remedies and Waivers ), the right of IDB to require compliance with any condition under this Agreement that may be waived by IDB with respect to any Disbursement is expressly preserved for the purposes of any subsequent Disbursement.

8.8.4 No course of dealing and no failure or delay by IDB in exercising, in whole or in part, any power, remedy, discretion, authority or other right under this Agreement or any other

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agreement shall waive or impair, or be construed to be a waiver of or an acquiescence in, such or any other power, remedy, discretion, authority or right under this Agreement, or in any manner preclude its additional or future exercise; nor shall the action of IDB with respect to any Default, or any acquiescence by it therein, affect or impair any right, power or remedy of IDB with respect to any other Default.

Section 8.9 Severability.

Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining terms and conditions hereof and without affecting the validity or enforceability of any provision in any other jurisdiction. Where terms of any applicable law resulting in such prohibition or unenforceability may be waived, they are waived by the parties to the full extent permitted by law so that this Agreement shall be deemed a valid and binding agreement, enforceable in accordance with its terms.

Section 8.10 Applicable Law and Jurisdiction.

8.10.1 THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

8.10.2 Each of the Borrowers hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan and of the United States of America District Court for the Southern District of New York, and any appellate court from any thereof, in any legal action, suit or proceeding arising out of or relating to this Agreement or any other Financing Document to which such Borrower is a party. Final judgment against such Borrower in any such legal action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction including Argentina by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the judgment, or in any other manner provided by law.

8.10.3 Nothing in this Agreement shall affect the right of IDB to commence legal proceedings or otherwise sue either Borrower in Argentina or any other appropriate jurisdiction, or concurrently in more than one jurisdiction, or to serve process, pleadings and other legal papers upon either Borrower in any manner authorized by the laws of any such jurisdiction.

8.10.4 By the execution and delivery of this Agreement, each of the Borrowers hereby irrevocably agrees to designate, appoint and empower CT Corporation System, with offices at 111 Eighth Avenue, 13th Floor, New York, N.Y. 10019, as its authorized agent solely to receive for and on its behalf service of summons or other legal process in any legal action, suit or proceeding in any court specified in Section 8.10.2 ( Applicable Law and Jurisdiction ).

8.10.5 Each of the Borrowers shall, for so long as this Agreement is in effect, maintain a duly appointed and authorized agent in New York, New York to receive for and on its behalf service of summons, complaint or other legal process in any legal action, suit or proceeding IDB may bring in the State of New York in respect of this Agreement or any other Financing Document to which such Borrower is a party and shall keep IDB advised of the identity and location of such agent.

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8.10.6 Each of the Borrowers further irrevocably consents, if for any reason there is no authorized agent for service of process in New York, New York, to the service of process being made out of the courts referred to in Section 8.10.2 ( Applicable Law and Jurisdiction ) by mailing copies thereof by registered United States of America air mail, postage prepaid, to such Borrower at its address specified in Section 8.1 ( Notices ), and in such a case IDB shall also send by facsimile, or have sent by facsimile, a copy of such process to each Borrower.

8.10.7 Service of process in the manner provided in this Section 8.10 ( Applicable Law and Jurisdiction ) in any action, suit or proceeding shall be deemed personal service and accepted by each of the Borrowers as such and shall be valid and binding upon each Borrower for all the purposes of any such action suit or proceeding.

8.10.8 Each of the Borrowers irrevocably waives, to the fullest extent permitted by applicable law:

8.10.8.1

any objection that it may now or hereafter have to the laying of venue of any action, suit or proceeding brought in any court referred to in this Section;

8.10.8.2

any claim that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum; and

8.10.8.3

its right of removal of any matter commenced by IDB in the courts of the State of New York to any court of the United States of America.

8.10.9 To the extent that either Borrower may, in any action, suit or proceeding brought in any of the courts referred to in Section 8.10.2 ( Applicable Law and Jurisdiction ), any court of Argentina or elsewhere arising out of or in connection with this Agreement or any other Financing Document to which either Borrower is a party, be entitled to the benefit of any provision of law requiring IDB in such action (excepción de arraigo), suit or proceeding to post security for the costs of either Borrower or to post a bond or to take similar action, as the case may be, each of the Borrowers hereby irrevocably waives such benefit, in each case to the fullest extent now or hereafter permitted under the laws of Argentina or, as the case may be, the other jurisdiction in which such court is located.

8.10.10 To the extent that either Borrower may be entitled in any jurisdiction to claim for itself or its Property immunity in respect of its obligations under this Agreement or any other Financing Document to which either Borrower is a party from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process or to the extent that in any jurisdiction that immunity (whether or not claimed) may be attributed to it or its Property, each of the Borrowers irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted now or in the future by the laws of such jurisdiction.

8.10.11 Each of the Borrowers hereby acknowledges that IDB shall be entitled under applicable law, including the terms of the International Organizations Immunities Act of 1945 (22 U.S.C. §288), to immunity from a trial by jury in any action, suit or proceeding arising out of or relating to this Agreement or any other Financing Document to which either Borrower is a party or the transactions contemplated hereby or thereby, brought against IDB in any court of the

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United States of America. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT TO WHICH EITHER BORROWER IS A PARTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND IN ANY COUNTERCLAIM THEREON, BROUGHT BY OR AGAINST IDB IN ANY FORUM IN WHICH IDB IS NOT ENTITLED TO IMMUNITY FROM TRIAL BY JURY. Each of the Borrowers agrees that the waivers set forth above shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States of America (28 U.S.C. §§1602-1611) and are intended to be irrevocable and not subject to withdrawal for purposes of such Act.

Section 8.11 Term of Agreement.

This Agreement shall continue in force until the date on which IDB is satisfied that all amounts outstanding under the Financing Documents have been indefeasibly paid and discharged in full and neither Borrower has a right to request, and IDB is under no obligation to make, any further Disbursement.

Section 8.12 Set-Off.

In addition to any rights and remedies of IDB provided by applicable law, IDB shall have the right, without prior presentment, demand, protest or notice to either Borrower, any such presentment, demand, protest or notice being expressly waived by either Borrower to the extent permitted by applicable law, upon any Obligation becoming due and payable by each of the Borrowers (whether at the stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by IDB to or for the credit of such Borrower. IDB shall promptly notify such Borrower after it makes any such set-off and application; provided that, failure to give such notice shall not affect the validity of such set-off and application.

Section 8.13 Entire Agreement.

This Agreement and the other Financing Documents represent the final and complete agreement of the parties hereto with respect to the financing of the Project, and all prior negotiations, representations, understandings, writings and statements of any nature with respect thereto are hereby superseded in their entirety by the terms of this Agreement and the other Financing Documents.

Section 8.14 No Third Party Beneficiaries.

The agreement of IDB to make the Loan to the Borrowers on the terms and conditions set forth in this Agreement and the other Financing Documents is solely for the benefit of each of the Borrowers, and no other Person shall have any rights hereunder against IDB with respect to the Loan, the proceeds thereof or otherwise.

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Section 8.15 Waiver and Estoppel.

8.15.1 To the extent permitted by applicable law, each of the Borrowers hereby agrees that it will not at any time, in any manner whatsoever, claim, or take the benefit or advantage of, any appraisement, valuation, stay, extension, moratorium, turnover or redemption law, or any law permitting it to direct the order in which the Secured Property shall be sold, now or at any time hereafter in force, that may delay, prevent or otherwise affect the performance or enforcement of this Agreement or any other Financing Document, and to the extent permitted by applicable law, waives all benefit or advantage of all such laws, and each Borrower hereby covenants that it will not hinder, delay or impede the execution of any power granted to IDB in this Agreement or any other Financing Document but will suffer and permit the execution of every such power as though no such law were in force.

8.15.2 To the extent permitted by applicable law, each of the Borrowers, on behalf of itself and all who may claim through or under it, including any and all subsequent creditors, vendees, assignees and lienholders, waives and releases all rights to demand or to have any marshalling of the Secured Property upon any sale, whether made under any power of sale granted herein or in any other Financing Document or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Agreement or any other Financing Document and consents and agrees that all of the Secured Property may at any such sale be offered and sold as an entirety.

8.15.3 Each of the Borrowers waives, to the extent permitted by applicable law, presentment, demand, protest and any notice of any kind (except notices explicitly required hereunder or under any other Financing Document) in connection with this Agreement and the other Financing Documents, and with any action taken by IDB with respect to the Secured Property.

Section 8.16 Survival.

All representations and warranties made in this Agreement, in any other Financing Document and in any document, certificate or statement delivered pursuant hereto or in connection herewith and Sections 3.10 ( Judgment Currency ), 3.13 ( Taxes ), 3.14 ( Costs , Expenses and Losses ), 3.18 ( Increased Costs ), 3.20 ( Reimbursement of Expenses ), 8.3 ( Indemnity ), 8.6 ( Confidential Information ) and 8.10 ( Applicable Law and Jurisdiction ) and any related provisions of Article 1 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment in full or expiration or termination of the Loan or the termination of this Agreement or any other Financing Document or any provision hereof or thereof.

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SCHEDULE 1

Page 1 of 1

[ intentionally deleted ]

SCHEDULE 2

Page 1 of 2

RELEVANT PERMITS

(See Section 4.1.4 ( Relevant Permits ) of this Agreement)

Section 1. Permits already obtained.

(a)

Pilagá :

(i) National Industrial Registry, registered under No. 288406-4;

(ii) Argentine National Customs, registered as importer and exporter;

(iii) National Institute of Seeds (INASE), National Register of Seed Trade and Supervision, Registration No. 1700/ABDEF;

(iv) National Service of Agri-alimentary Sanity and Quality, Office of International Trade (SENASA), registered as Commercial Operator under registry number: 10.402 as exporter and importer;

(v) Authorization by Resolution No. 042/2007, dated as of March 2, 2007 granted by the National Superintendence of Borders to purchase: (i) nine rural properties in the Department of Mercedes, Province of Corrientes; and (ii) twelve rural properties in Formosa, Province of Formosa.

(vi) Rice-growing project in the San Joaquin Establishment, registered before; (i) the National Secretary for Environment and Sustainable Development under file No. 02101¬00099161; and (ii) the National Secretary of Water under file No. 01801-0010209

(vii) Registration before the Institute of Water and Environment at the province of Corrientes; and

(viii) National Bureau of Agricultural Trade Control, registered under No. 88155-4.

(b)

Adeco :

(i) Argentine National Customs, registered as importer and exporter;

(ii) National Institute of Seeds (INASE), National Register of Seed Trade and Supervision, Registration No. 4498 / D;

(iii) National service of Agri-alimentary Sanity and Quality, Office of International Trade (SENASA), registered as Commercial Operator under registry number: 11.959 as importer;

(iv) Authorization by Resolution No. 65,963 dated as of January 20, 2004 granted by the National Superintendence of Borders to purchase the rural property denominated as San Agustin located at the Department of Curuzú Cuatia, Province of Corrientes.

(v) Categorization of the free stall “La Estabilidad”, under category No. 1(low environmental impact), and registration No. 02101-0007178-5

(vi) Registration before the Institute of Water and Environment at the province of Corrientes; and

(vii) National Bureau of Agricultural Trade Control, registered under No. 94557-9;

(ix) Provincia de Santa Fe, Secretaría de Medio Ambiente, resolution 057, July 13, 2011 (Molino Franck); and

(x) Dona Marina

(a)

ICAA resolution 466, dated September 7, 2010.

(b)

ICAA resolution 355, dated July 12, 2010.

(c)

ICAA resolution 377, dated July 19, 2011.

(d)

ICAA resolution 513, dated September 16, 2011.

(e)

Agreement with Vialidad Nacional, dated June 15, 2011.

(f)

ICAA resolution 157, dated April 15, 2011.

Section 2. Permits to be obtained prior to first Disbursement of the Third B Loan Tranche (if not already obtained)

Molino Franck

(i) Provincia de Santa Fe, Secretaría de Medio Ambiente, resolution 057, July 13, 2011.

Dona Marina

(a)	ICAA resolution 466, dated September 7, 2010.

(b)	ICAA resolution 355, dated July 12, 2010.

(c)	ICAA resolution 377, dated July 19, 2011.

(d)	ICAA resolution 513, dated September 16, 2011.

(e)	Agreement with Vialidad Nacional, dated June 15, 2011.

(f)	ICAA resolution 157, dated April 15, 2011.

SCHEDULE 3

Page 1 of 1

MEMBER COUNTRIES OF IDB


Argentina		Israel
Austria		Italy
Bahamas		Jamaica
Barbados		Japan
Belgium		Republic of Korea
Belize		Mexico
Bolivia		Netherlands
Brazil		Nicaragua
Canada		Norway
Chile		Panama
China		Paraguay
Colombia
Costa Rica		Peru
Croatia		Portugal
Denmark		Slovenia
Dominican Republic		Spain
Ecuador		Suriname
El Salvador		Sweden
Finland		Switzerland
France		Trinidad and Tobago
Germany		United Kingdom
Guatemala		United States of America
Guyana		Uruguay
Haiti		Venezuela
Honduras

SCHEDULE 4

Page 1 of 3

LIABILITIES

(See Section 4.1.10 ( Financial Statements ) of this Agreement)

Adeco Agropecuaria S.A.


	Al 30/09/11 Local currency
PASIVO CORRIENTE
Comerciales		127.290.628
Préstamos		113.635.397
Remuneraciones y Cargas Soc		16.517.996
Cargas Fiscales		3.198.934
Otros		—
Previsiones		1.122.954

Total de pasivo corriente		261.765.909
PASIVO NO CORRIENTE
Comerciales		6.468.452
Préstamos		182.879.332
Cargas Fiscales		25.169.435

Total de pasivo no corriente		214.517.219

Guarantees Provided

Adeco Agropecuaria S.A. in favor to Usina Monte Alegre for an amount of 5,000,000 USD since April 2006. The remaining guarantee as of December 2008 is 1,000,000 USD due June 2009.

Adeco Agropecuaria S.A. in favor to Adeco Agropecuaria Brasil Ltda. for an amount of 1,000,000 USD since October 2006. The remaining guarantee as of December 2008 is 200,000 USD due may 2009.

Pilagá S.A.


	Al 30/09/11 Local currency
PASIVO CORRIENTE
Comerciales		107.747.593
Préstamos		88.079.104
Remuneraciones y Cargas Soc		5.840.668
Cargas Fiscales		2.306.383
Otros		129.066
Previsiones		1.299.701

Total de pasivo corriente		205.402.515
PASIVO NO CORRIENTE
Comerciales		15.333.330
Préstamos		43.852.210
Cargas Fiscales		763.509

Total de pasivo no corriente		59.949.049

SCHEDULE 4

Page 3 of 3


Other liabilities
Current
Dividends payables			22,250,005
Leasing payables			4,725,523
Labor lawsuits allowance			843,729
Others			—

			27,819,257

Guarantees Provided

Adeco Agropecuaria S.A. in favor to Usina Monte Alegre for an amount of 5,000,000 USD since April 2006. The remaining guarantee as of December 2008 is 1,000,000 USD due June 2009.

Adeco Agropecuaria S.A. in favor to Adeco Agropecuaria Brasil Ltda. for an amount of 1,000,000 USD since October 2006. The remaining guarantee as of December 2008 is 200,000 USD due may 2009.

SCHEDULE 5

Page 1 of 1

INSURANCE REQUIREMENTS

[ Intentionally Deleted ]

SCHEDULE 6

Page 1 of 1

INFORMATION TO BE INCLUDED IN ANNUAL REVIEW OF OPERATIONS*

(See Section 6.3.3 ( Annual Review of Operations ) of this Agreement)

(1)	Indicators to measure the performance of the Project .


	Current Year End	Previous Year End	Baseline (2008)
Milk production (liters/cow/day)*			24 liters/cow/day
Rice production (tons)*			108,208 tons
Debt maturity profile			0.7 years
Number of employees (full time)*			945
Number of employees (part time)			NA
Number of employees (indirect, including those for outsourcing activities such as harvesting from third parties)			NA
Arable land for crop production			99,195

SCHEDULE 7

Page 1 of 2

AFFILIATE TRANSACTIONS

(See Section 4.1.30 ( Affiliate Transactions ))

Adeco Agropecuaria S.A. (figures in local currency)

Receivables


Agroinvest S.A.			9.446.964
San Jose			2.496.544
Forsalta S.A.			854.360
Establecimientos El Orden S.A.			4.477.413
Cavok S.A.			4.202.429
Dinaluca			10.277.407

			31.755.117

Payables
Bañado del Salado S.A.			1.199.655
Santa Regina Agropecuaria S.R.L.			32.171
Simoneta			64.455

			1.296.280

Pilaga S.A. (figures in local currency )


Receivables
Bañado del Salado S.A.			1.470.925
Santa Regina Agropecuaria S.R.L.			606.354
Agroinvest S.A.			498.080
Cavok S.A.			9.403
Establecimientos El Orden S.A.			8.664
Forsalta S.A.			8.400
Dinaluca			1.369.907
Simoneta			2.100
Agroforestal			2.100
San Jose			8.400

			3.984.333

Payables
Agroinvest S.A.			542.821
Bañado del Salado S.A.			472.129
Dinaluca			2.794
Forsalta S.A.			1.400
Agroforestal			1.400
Simoneta			1.400
Establecimientos El Orden S.A.			1.400
Santa Regina Agropecuaria S.R.L.			1.400
Cavok S.A.			1.400
San Jose			1.400

			1.027.544

Guarantees Provided

Adeco Agropecuaria S.A. in favor to Usina Monte Alegre for an amount of 5,000,000 USD since April 2006. The remaining guarantee as of December 2008 is 1,000,000 USD due June 2009.

Adeco Agropecuaria S.A. in favor to Adeco Agropecuaria Brasil Ltda. for an amount of 1,000,000 USD since October 2006. The remaining guarantee as of December 2008 is 200,000 USD due may 2009.

SCHEDULE 8

Page 1 of 4

CAPITAL EXPENDITURES

PART A: REQUIRED CAPITAL

EXPENDITURES


Investment Project	Company	Reference	Location
Free Stall project I	Adeco	Second stage	Cristophersen, Province of Santa Fe

Free Stall project II (deadline 2012)	Adeco	First and second stage	Cristophersen, Province of Santa Fe

ERP project	Adeco	Oracle ERP implementation

La Alegria project	Adeco	Farm acquisition	Villegas, Province of Buenos Aires

La Alegria project	Adeco	Working capital	Villegas, Province of Buenos Aires

SECCI project - Free stall facilities (deadline 2013)	Adeco	i) Cofinancing of studies and ii) investment in equipment: reduction of wastewater discharges and pollution and greenhouse gas control methods for livestock waste management (Ita Caabo, and Meridiano)	Cristophersen, Province of Santa Fe

San Joaquin project	Pilaga	Land transformation	Colonia San Joaquin, Prov. of Sta Fe

San Joaquin project	Pilaga	Working capital	Colonia San Joaquin, Province of Sta Fe


Investment Project	Company	Reference	Location
Feed Lot- El Meridiano	Pilaga	Investment in machinery and corrals	General Villegas, province of Buenos Aires

Feed Lot- El Meridiano	Pilaga	Working capital	General Villegas, Province of Buenos Aires

Feed Lot- Ita Caabo	Pilaga	Investment in machinery and corrals	Mercedes, Province of Corrientes

Feed Lot- Ita Caabo	Pilaga	Working capital	Mercedes, Province of Corrientes

Ita Caabo project	Pilaga	Land transformation	Mercedes, Province of Corrientes

Ita Caabo project	Pilaga	Working capital	Mercedes, Province of Corrientes

Ombu project	Pilaga	Land transformation	Laishí, Province of Formosa

Ombu project	Pilaga	Working capital	Laishí, Province of Formosa

Upgrade Molino UMA	Pilaga	Increase production capacity and pack. lines	Mercedes, Province of Corrientes

PART B: PERMITTED CAPITAL EXPENDITURES


Investment Project	Company	Reference	Location
Feed Lot- San Joaquin	Pilaga	Investment in machinery and corrals	Colonia San Joaquin, Province of Sta Fe

Feed Lot- San Joaquin	Pilaga	Working capital	Colonia San Joaquin, Province of Sta Fe

Galicia Warrant rice mill	Pilaga	Galicia plant’s acquisition	San Salvador, Province of Entre Rios

Land leases	Adeco	Increase’s Adeco production capacity throught the use of leased farms	To be defined as needed

Storage and drying facility project	Adeco	Handling, drying, and storage facility	Selva, Province of Santiago del Estero

PART C: NEW ELIGIBLE CAPITAL EXPENDITURES


Investment Project	Company	Reference	Location
Franck Mill	Pilaga	Mill construction	Franck, Santa Fe

Mil parts & maintenance	Pilaga	Mills parts, repairs and maintenance	Corrientes and Santa Fe

Dona Marina	Adeco	Land transformation	Corrientes

Grain storage plants	Adeco	New facility for storage	Corrientes, Santa Fe

Vehicles	Adeco/Pilaga	Fleet renewal	Corrientes, Santa Fe, Entre Rios

Headquarters BA	Adeco	New office layout	Buenos Aires

Hardware & software	Adeco	Oracle ERP update and manteinance	Buenos Aires

Farm Infrastructure	Pilaga	Investment in machinery -housing	Corrientes, Santa Fe

SCHEDULE 9

Page 1 of 2

OUTSTANDING DEBT

[Schedule current as of December 19, 2008]

Debt to be Refinanced


Creditor	Borrower	Outstanding amount (Pesos)	Due date	Currency
Bco Nació	Adeco	(4,967,958)	16/12/2008	Pesos
Bco Standard	Adeco	(1,919,113)	19/12/2008	Pesos
Bco HSBC	Adeco	(3,370,000)	05/01/2009	USD
Bco HSBC	Adeco	(1,685,000)	05/01/2009	USD
Bco HSBC	Adeco	(6,300,006)	22/01/2009	USD
Bco HSBC	Adeco	(1,655,000)	04/01/2009	USD
Bco HSBC	Adeco	(4,717,500)	09/01/2009	USD
Bco HSBC	Adeco	(1,231,200)	13/12/2008	USD
Bco HSBC	Adeco	(3,052,000)	09/02/2008	USD
Bco HSBC	Adeco	(3,320,000)	18/01/2009	USD
Bco Standard	Adeco	(9,300,000)	17/10/2009	Pesos
Bco Standard	Adeco	(3,300,000)	15/05/2009	USD
Bco Patagonia	Adeco	(12,712,000)	04/03/2009	USD
Bco Superville	Adeco	(6,040,000)	19/12/2008	USD
Bco Frances	Adeco	(7,000,000)	19/01/2009	Pesos
Bco Santander Río	Adeco	(6,000,000)	22/12/2008	Pesos
Bco Santander Rio	Adeco	(2,500,000)	22/12/2008	Pesos
Bco Santander Rio	Adeco	(10,000,000)	23/04/2009	Pesos
Bco Comafi	Adeco	(3,132,000)	22/12/2008	USD
Bco Comafi	Adeco	(3,120,000)	23/12/2008	USD
Bco Comafi	Adeco	(3,063,000)	22/12/2008	USD
Bco Comafi	Adeco	(3,132,000)	22/12/2008	USD
Bco Galicia	Adeco	(8,268,338)	30/11/2008	USD
Bco Provincia	Adeco	(4,575,000)	03/01/2009	USD
Bco Itau	Adeco	(10,692,500)	23/12/2008	USD
Bco Itau	Adeco	(3,178,000)	23/12/2008	USD


Creditor	Borrower	Outstanding amount (Pesos)	Due date	Currency
Bco Itau	Adeco	(4,768,500)	30/12/2008	USD
Bco Itau	Adeco	(9,764,500)	10/02/2009	USD
Bco Ciudad	Adeco	(12,000,000)	14/01/2009	Pesos
Bco Bersa	Adeco	(3,000,000)	09/01/2009	Pesos
Bco Citi	Adeco	(20,000,000)	17/12/2008	USD
Galicia (Hipoteca)	Adeco	(361,000)	30/06/2010	Pesos
Bco Nación	Pilaga	(4,000,000)	18/12/2008	Pesos
Bco HSBC	Pilaga	(3,150,000)	22/12/2008	USD
Bco HSBC	Pilaga	(1,572,500)	09/01/2009	USD
Bco HSBC	Pilaga	(3,145,000)	17/12/2008	USD
Bco HSBC	Pilaga	(1,572,500)	17/12/2008	USD
Bco HSBC	Pilaga	(6,340,000)	11/01/2009	USD
Bco Comafi	Pilaga	(3,150,000)	19/12/2008	USD
Bco Comafi	Pilaga	(3,150,000)	23/12/2008	USD
Bco Comafi	Pilaga	(3,150,000)	22/12/2008	USD
Bco Galicia	Pilaga	(184,150)	07/11/2008	USD
Bco Galicia	Pilaga	(4,186,000)	30/12/2008	USD
Bco Provincia	Pilaga	(7,887,500)	16/04/2009	USD
Bco Frances	Pilaga	(6,000,000)	19/01/2009	Pesos
Bco Santander Río	Pilaga	(3,000,000)	17/04/2009	Pesos
Bco Itau	Pilaga	(15,145,000)	30/12/2008	USD
Bco BERSA	Pilaga	(5,000,000)	09/01/2009	Pesos
Bco Ciudad	Pilaga	(4,500,000)	16/02/2009	Pesos
Bco Itau	Pilaga	(4,570,000)	30/12/2008	USD
Bco Citi	Pilaga	(4,500,000)	29/12/2008	USD
Bco Superville	Pilaga	(6,420,000)	20/01/2009	USD
Bco Nación	Pilaga	(145,450)	30/06/2012	Pesos

SCHEDULE 10

Page 1 of 1

EXISTING LIENS

i) First priority mortgage over San Agustin Farm, located in Curuzú Cuatiá, Province of Corrientes, , in favor of Banco de Galicia y Buenos Aires S.A. for the amount of U$S2,615,133

ii) Second priority mortgage over San Agustin Farm located in Curuzú Cuatiá, Province of Buenos Aires , in favor of the Banco Galicia Uruguay S.A. for the amount of U$S445,980.

iii) Gas Pipeline Right of Way over San Agustin Farm, located in Curuzú Cuatiá, Province of Corrientes, in favor of Transportadora de Gas del Mercosur S.A.

iv) Right of Way over La Alegria Farm, located in Villegas, Province of Buenos Aires, in favor of Los Huaincos M.L.S.A.

v) Electric Line Right of Way over Ita Caabo Farm, located in Mercedes, Province of Corrientes, in favor of Líneas Mesopotámicas S.A.

vi) First priority mortgage in favor of Banco Río de la Plata S.A. (currently denominated as “Banco Santander Río S.A”), dated as of: January 9th 1995, for the total amount of U$S137,004, registered under the following number: Volume 438 A, Page 75, Number 302415, for the plot A of “Carmen” farm, located in Diego de Alvear, Department of Gral Lopez (Domain number: Volume 498, Page 436, Number 307617)

vii) Drainage channel easement over La Rosa Farm, located in San Justo, Province of Santa Fe.

SCHEDULE 11

Page 1 of 2

INTERCOMPANY SUBORDINATION TERMS

1. Subject to the provisions of paragraph 2 hereof, any and all future indebtedness and liability of any of the Borrowers to any member of the Group (other than the Borrowers) (such other members of the Group, individually and collectively, the “ Subordinator ”, and all of such future indebtedness and liability being herein collectively called “ Subordinator Indebtedness ”) shall hereafter be subordinated in right of payment to all present and future indebtedness and liability of the Borrowers to IDB under and in connection with this Agreement (the “ Senior Indebtedness ”). The Subordinator acknowledges and agrees in favour of IDB that the Subordinator will not hold any lien, mortgage or other charge of whatsoever nature or kind over the assets of any of the Borrowers as security for the Subordinator Indebtedness. All present and future security held by IDB as security for the Senior Indebtedness is referred to herein as the “ Senior Security ”.

2. Until the Senior Indebtedness has been paid in full, the Subordinator shall not, unless otherwise permitted pursuant to this Agreement or upon obtaining the prior written consent of IDB, claim, demand or receive from any of the Borrowers or any other source, payment of any Subordinator Indebtedness. Provided that no Default or Event of Default has occurred under this Agreement, any of the Borrowers may make normal course payments of principal and interest on the Subordinator Indebtedness to the Subordinator. The IDB or any of the Borrowers, as applicable, will advise the Subordinator of the occurrence of a Default or Event of Default at which point in time no further payments shall be made, received or accepted in respect of the Subordinator Indebtedness. For greater certainty, the Subordinator agrees that the Subordinator Indebtedness, including interest on the Subordinator Indebtedness, shall not, upon the occurrence of a Default or an Event of Default under this Agreement, be paid, withdrawn, forgiven or otherwise satisfied, but shall remain unpaid by the corresponding Borrower. If any amounts are received by the Subordinator or by any agent on account of any of the Subordinator Indebtedness after the occurrence of a Default or an Event of Default under the Loan Agreement, such amounts shall be held in trust by such person for IDB and forthwith paid to IDB on demand. The Subordinator shall not be entitled to exercise any right of set-off or combination of accounts it now has or hereafter may have in respect of any Subordinator Indebtedness.

3. As long as any Senior Indebtedness remains outstanding, the Subordinator shall not, without IDB’s prior written consent: (a) exercise or seek to exercise any right or remedy with respect to Subordinator Indebtedness including any collection or enforcement right or remedy; or (b) institute any action or proceeding against the corresponding Borrower or to enforce or with respect to any such right or remedy including without limitation any possession, sale or foreclosure action; or (c) contest, protest or object to any enforcement proceeding or other action commenced by IDB, any other exercise by IDB of any right or remedy under any Security Document or at law, or any application by IDB of monies or proceeds.

4. As long as any Senior Indebtedness remains outstanding, the Subordinator shall not, without the prior written consent of IDB, sell, assign or otherwise transfer, in whole or in part,

any Subordinator Indebtedness (or ask for or obtain any negotiable paper or other evidence of any Subordinator Indebtedness) or any interest therein to any person, or create, incur or permit to exist any security interest, lien, charge, hypothecary interest or other encumbrance whatsoever in or affecting any Subordinator Indebtedness in favor of any person unless: (a) such action is made expressly subject to this Terms of Subordination; and (b) such person delivers to IDB a written agreement to be bound by all provisions of this Terms of Subordination.

SCHEDULE 12

Lease Agreements

(i) the Lease Agreement, effective as of January 1, 2010, between Adeco and Santa Regina Agropecuaria S.R.L.;

(ii) the Lease Agreement, effective as of January 1, 2010, between Adeco and Agrícola Ganadera San Jose S.R.L.;

(iii) the Lease Agreement, effective as of January 1, 2010, between Adeco and Agroinvest S.A.;

(iv) the Lease Agreement, effective as of January 1, 2010, between Adeco and Forsalta S.A.;

(v) the Lease Agreement, effective as of January 1, 2010, between Adeco and Bañado del Salado S.A;

(vi) the Lease Agreement, effective as of July 1, 2010, between Adeco and Cavok S.A.; and

(vii) the Lease Agreement, effective as of July 1, 2010, between Adeco and Establecimiento El Orden S.A

SCHEDULE 13

PRELIMINARY COMPLEMENTARY ENVIRONMENTAL, SOCIAL, HEALTH AND

SAFETY (ESHS) ACTION PLAN

[ see attachment included after this page ]

SCHEDULE 14

REPAYMENT SCHEDULE


A- loan
Year	Date		Capital payment		Outstanding
2011		11/1/2011 11/15/2011		0.00 2,416,179.00		22,416,179.00 20,000,000.00
2012		5/15/2012 11/15/2012		0.00 1,538,461.00		20,000,000.00 18,461,539.00
2013		5/15/2013 11/15/2013		1.538.461.00 1.538.461.00		16.923.078.00 15.384.617.00
2014		5/15/2014 11/15/2014		1.538.461.00 1.538.461.00		13.846.156.00 12.307.695.00
2015		5/15/2015 11/15/2015		1.538.461.00 1.538.461.00		10.769.234.00 9.230.773.00
2016		5/15/2016 11/15/2016		1.538.461.00 1.538.461.00		7.692.312.00 6.153.851.00
2017		5/15/2017 11/15/2017		1.538.461.00 1.538.461.00		4.615.390.00 3.076.929.00
2018		5/15/2018 11/15/2018		1.538.461.00 1.538.468.00		1,538,468.00 0.00

B-loan
Year	Date		Capital payment		Outstanding
2011		11/1/2011 11/15/2011		0.00 0.00		29,166,480.00 60,000,000.00
2012		5/15/2012 11/15/2012		0.00 6,666,666.00		60,000,000.00 53,333,334.00
2013		5/15/2013 11/15/2013		6,666,666.00 6,666,666.00		46,666,668.00 40,000,002.00
2014		5/15/2014 11/15/2014		6,666,666.00 6,666,666.00		33.333.336.00 26.666.670.00
2015		5/15/2015 11/15/2015		6,666,666.00 6,666,666.00		20,000,004.00 13,333,338.00
2016		5/15/2016 11/15/2016		6,666,666.00 6,666,672.00		6,666,672.00 0.00

EXHIBIT 1

Page 1 of 4

FORM OF DISBURSEMENT REQUEST

(See Section 3.2 ( Disbursement Procedure ) of this Agreement)

[BORROWER’S LETTERHEAD]

[Date]

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attn: Private Sector Department, Portfolio Management Unit

Ladies and Gentlemen:

Loan No. 2028A/OC-AR

Request for Loan Disbursement No. [ ] ^*

Reference is made to the Original Loan Agreement as amended by the Offer 02/2011 dated as of November [ ], 2011, sent by Inter-American Development Bank ( IDB ) to Adeco Agropecuaria S.A. and Pilaga S.A. (the Borrowers ), and accepted by the Borrowers on November [ ], 2011 (such amended agreement, the Amended Loan ). Capitalized terms used but not defined in this request have the meanings assigned to them in the Amended Loan. The rules of interpretation set forth in Section 1.2 ( Interpretation ) of the Amended Loan shall apply to this request.

The Borrowers irrevocably request disbursement on [ , ] (or as soon as practicable thereafter) of the amount of [ Dollars ($ )] under the Loan (the Disbursement ) consisting of a B Loan Disbursement in the amount of [ Dollars ($ )], in accordance with Section 3.2 ( Disbursement Procedure ) of the Loan Agreement. IDB is requested to pay such amount to the account in [the City of New York] of [ name of Borrower ], Account No at [ name and address of bank ] for further credit to [insert name of relevant Borrowers ]’s Account No. at [ name and address of bank ] in [ city and country ].

^*	Each to be numbered in series.

[Enclosed is a signed[, stamped] but undated receipt for the amount of the Disbursement. The Borrowers authorize you to date such receipt with the Disbursement Date.] ¹ OR [Immediately upon receipt of the disbursed funds, the Borrower shall deliver to IDB a receipt therefor substantially in the form of Exhibit 2 ( Form of Disbursement Receipt ) to the Amended Loan.] ²

The Borrowers certify that all conditions set forth in Section 5.2 ( Conditions of all Disbursements ) and Section 5.3 ( Conditions of all Disbursements ) of the Amended Loan have been satisfied. For the avoidance of doubt, for the purpose of Section 5.2 ( Conditions of all Disbursements ) and Section 5.3 ( Conditions Precedent to the Third B Loan Tranche Disbursement ) of the Amended Loan, the Borrowers hereby certify as follows:

(a) no Event of Default and no Potential Event of Default has occurred and is continuing;

(b) the representations and warranties made in Article (iv) of the Amended Loan are true and correct in all material respect on and as of the date of this request and will be true on the date of the Disbursement of the Loan with the same effect as if such representations and warranties has been made on and as of each such date;

(c) since the date of the Amended Loan, nothing has occurred which has or could reasonably be expected to have a Material Adverse Effect;

(d) since December 31, 2007, neither Borrower has incurred any material loss or liability (except such liabilities as may be incurred in accordance with Section 6.2 ( Negative Covenants );

( e ) the Borrowers are in compliance with the Financial Ratios set forth in Section 6.2.3 of the Amended Loan;

(f) each Financing Document remains in full force and effect in accordance with its terms;

(g) the proceeds of the Disbursement are needed by the Borrowers for the purpose described in Section 2.1 of the Amended Loan and within twelve (12) months of the date of this request (other than with respect to the Free Stall Project II and the SECCI Projects); and

(h) arrangements have been put into place for the repayment of not less than thirty five million Dollars ($35,000,000) of the Outstanding Debt from the proceeds of the Disbursement.

The above certifications are effective as of the date hereof and shall continue to be effective as of the Disbursement Date for this Disbursement. If any certification is no longer valid as of or prior to such Disbursement Date, the Borrowers will notify IDB immediately and, on demand, repay the Disbursement (or any portion thereof) if the Disbursement is made prior to IDB’s receipt of such notice.

¹	To be used if Borrower does not object to delivering an undated receipt simultaneously with the Disbursement Request. See Section 3.2.1 ( Disbursement Procedure ).

²	To be used if Borrower objects to delivering an undated receipt simultaneously with the Disbursement Request. See footnote to Section 3.2.1 ( Disbursement Procedure ). The text in this section 3 should track the text used in Section 3.2.1 ( Disbursement Procedure ).


Yours truly,

[ADECO AGROPECUARIA S.A.]/[PILAGÀ S.A.]

By:
Authorized Representative ³

³	As named in the Borrower’s Certificate of Incumbency and Authority. See Exhibit 4 ( Form of Certificate of Incumbency and Authority ).

EXHIBIT 1

Page 4 of 4

ANNEX A TO DISBURSEMENT REQUEST DATED [ ]

Loan Number: 2028A/OC-AR

Disbursement Number: [ ]


GOODS / SERVICES	COUNTRY OF ORIGIN	% CONTENT VIS- À-VIS A LOAN DISBURSEMENT	AMOUNT (US$)








TOTAL LOAN DISBURSEMENT		100%

EXHIBIT 2

Page 1 of 2

FORM OF DISBURSEMENT RECEIPT

(See Section 3.2 ( Disbursement Procedure ) of this Agreement)

[BORROWER’S LETTERHEAD]

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attn: Private Sector Department, Portfolio Management Unit

Ladies and Gentlemen:

Loan No. 2028A/OC-AR (the Loan )

Disbursement Receipt No. [ ] ¹

We, Adeco Agropecuaria S.A., Pilaga S.A. (the Borrowers ), hereby acknowledge receipt on the date hereof, of the sum of Dollars ($ ) disbursed to us by Inter-American Development Bank ( IDB ) under the Loan of Dollars ($ ) provided for in the loan. Of this sum, Dollars ($ ) is an A Loan Disbursement and is a B Loan Disbursement.


		Yours truly,

		[ADECO AGROPECUARIA S.A.]/[PILAGÁ S.A.]

		By:
		Authorized Representative ²

¹	To correspond with the number of the Disbursement Request. See Exhibit 1 ( Form of Disbursement Request ).

²	As named in the Borrower’s Certificate of Incumbency and Authority. See Exhibit 4 ( Form of Certificate of Incumbency and Authority ).

EXHIBIT 3

Page 1 of 2

FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY

(See Section 5.1.4 ( Incumbency of the Borrowers ) of this Agreement)

[BORROWER’S LETTERHEAD]

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attn: Private Sector Department, Portfolio Management Unit

Ladies and Gentlemen:

Loan No. 2028A/OC-AR

Certificate of Incumbency and Authority

Reference is made to the Original Loan Agreement as amended by the Offer 02/2011 dated as of November [ ], 2011, sent by Inter-American Development Bank ( IDB ) to Adeco Agropecuaria S.A., and Pilaga S.A. (the Borrowers ), and accepted by the Borrowers on November [ ], 2011 (such amended agreement, the Amended Loan ). Capitalized terms used but not defined in this certificate have the meanings assigned to them in the Amended Loan.

I, the undersigned [Chairman/Director] of [ insert name of applicable Borrower ], duly authorized to do so, hereby certify that the following are the names, offices and true specimen signatures of the persons each of whom are, and will continue to be, authorized:

(1)	to sign on [ insert name of applicable Borrower ] s behalf, the Disbursement Requests provided for in Section 3.2 ( Disbursement Procedure ) of the Amended Loan;

(2)

to sign on [ insert name of applicable Borrower ] s behalf, the certifications provided for in the definitions of Environmental and Social Compliance Report and Section 5.1 ( Conditions Precedent to First Disbursement ), Section 6.3 ( Information ) and Section 6.4 ( Budgets ) of the Amended Loan ; and

(3)	to take any other action required or permitted to be taken, done, signed or executed on [ insert name of applicable Borrower ] ’s behalf, under the Financing Documents or any other agreement to which [ insert name of applicable Borrower ] and IDB may be parties.


Name Office				Specimen Signature

IDB may assume that any such person continues to be so authorized until IDB receives authorized notice from [ insert name of applicable Borrower ] that they, or any one of them, are no longer authorized.


		Yours truly,

		[ADECO AGROPECUARIA S.A.]/[PILAGÁ S.A.]

		By:
		[Chairman/Director]

EXHIBIT 4

Page 1 of 2

FORM OF AUTHORIZATION TO AUDITORS

[BORROWER’S LETTERHEAD]

(See Section 5.1.11 ( Authorization of Auditors ) of this Agreement)

[NAME OF AUDITORS]

[ADDRESS]

Ladies and Gentlemen:

Reference is made to the Original Loan Agreement as amended by the Offer 02/2011 dated as of November [_], 2011, sent by Inter-American Development Bank ( IDB ) to Adeco Agropecuaria S.A. and Pilaga S.A. (the Borrowers ), and accepted by the Borrowers on November [ ], 2011 (such amended agreement, the Amended Loan ). For your information, we enclose a copy of the Amended Loan. Capitalized terms used but not defined in this certificate have the meanings assigned to them in the Amended Loan.

We authorize and request you to send two (2) copies of our audited Financial Statements for each Financial Year to IDB to enable us to satisfy our obligation to IDB under Section 6.3.1.1 ( Audited Annual Financial Statements ) of the Amended Loan. When submitting the same to IDB, please also send, at the same time, a copy of your full audit report on such accounts to IDB.

Please note that, under Sections 6.3.1.2.1 and 6.3.1.2.2 ( Audited Annual Financial Statements ), and 6.3.5 ( Communications with Auditors ) of the Amended Loan, we are obliged to provide IDB with:

(a)	a certificate from you certifying that in making your examination, you obtained no knowledge of any Default, except as specified in such certificate;

(b)

a certificate from you certifying that, based on such Financial Statements and information reviewed in connection with the audit, we are in compliance with Sections 6.1.4 ( Systems ; Books and Records ) (solely after May 31, 2009), 6.2.2 ( Permitted Indebtedness ), 6.2.8 ( Purchase of Assets), 6.2.13 ( Scope of Business ), 6.2.14 ( Accounting Changes ), and 6.2.15 ( Prepayment ) of the Amended Loan during the applicable period and as of the end of that Financial Year, as relevant, or specifying any non-compliance; and

(c)

a copy of any management letter or other communication from you to us or our management commenting, with respect to the relevant Financial Year, on, among other things, the adequacy of in relation to our financial control procedures and accounting and other systems, our management information systems or our accounts.

Please also submit each such communication and report to IDB with the audited accounts.

For our records, please ensure that you send to us a copy of every written communication that you receive from IDB immediately upon receipt and a copy of each reply made by you immediately upon issuance of that reply.


		Yours truly,

		[ADECO AGROPECUARIA S.A.]/[PILAGÁ S.A.]

		By:
		Authorized Representative ¹

ACKNOWLEDGED AND AGREED:


[NAME OF AUDITORS]

By:
Authorized Representative

Enclosure: IDB Loan Agreement

cc:	Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attn: Private Sector Department, Portfolio Management Unit

¹	As named in the Borrower’s Certificate of Incumbency and Authoruty. See Exhibit 3 ( Form of Certificate of Incumbency and Authority ).

EXHIBIT 5

Page 1 of 2

FORM OF BORROWER’S CERTIFICATE REGARDING

ORGANIZATIONAL DOCUMENTS

(See Section 5.1.2 ( Organizational Documents ) of this Agreement)

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attn: Private Sector Department, Portfolio Management Unit Ladies and Gentlemen:

Loan No. 2028A/OC-AR

Certificate Regarding Organizational Documents

1. Reference is made to the Original Loan Agreement as amended by the Offer 02/2011 dated as of November [ ], 2011, sent by Inter-American Development Bank ( IDB ) to Adeco Agropecuaria S.A. and Pilaga S.A. (the Borrowers ), and accepted by the Borrowers on November [ ], 2011 (such amended agreement, the Amended Loan ). Capitalized terms used but not defined in this certificate have the meanings assigned to them in the Amended Loan.

2. Copies of the following documents are attached, which documents constitute all of the Organizational Documents of [ insert name of applicable Borrower ]: ¹

2.1

2.2

3.	[ insert name of applicable Borrower ] certifies that:

3.1

the attached copies of the Organizational Documents are true and complete copies of the respective originals; and

3.2

no proceedings have been commenced to amend any of the Organizational Documents.

¹	This should reflect the list of Organizational Documents of the Borrower produced by Borrower’s local counsel and concurred in by IDB’s local counsel.


Yours truly,

[ADECO AGROPECUARIA S.A.]/[PILAGÁ S.A.]

By:
Authorized Representative ²

²	As named in the Borrower’s Certificate of Incumbency and Authority. See Exhibit 3 ( Form of Certificate of Incumbency and Authority ).

EXHIBIT 6

Page 1 of 2

FORM OF BORROWER’S CERTIFICATE ON DISTRIBUTION OF

RESTRICTED PAYMENTS

(See Section 6.2.1 ( Limitation on Restricted Payments ) of this Agreement)

[BORROWER’S LETTERHEAD]

[Date]

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attn: Private Sector Department, Portfolio Management Unit

Ladies and Gentlemen:

Loan No. 2028A/OC-AR

Certification on Distribution of Restricted Payments

Reference is made to the Original Loan Agreement as amended by the Offer 02/2011 dated as of November [ ], 2011, sent by Inter-American Development Bank ( IDB ) to Adeco Agropecuaria S.A., Pilagá S.A. (the Borrowers ) and accepted by the Borrowers on November [ ], 2011 (such amended agreement, the Amended Loan ). Capitalized terms used but not defined in this certificate have the meanings assigned to them in the Amended Loan.

This is to inform IDB that [ insert name of applicable Borrower ] plans to make a Restricted Payment in the form of [ describe type of Restricted Payment ] in the aggregate amount of Dollars ($ ). Pursuant to Section 6.2.1 ( Limitations on Restricted Payments ) of the Amended Loan, [ insert name of applicable Borrower ] hereby certifies that, as at the date hereof: ¹

2.1

the Restricted Payment is [ insert amount ], will be made on [ date ], which is a Restricted Payment Date;

2.2

no Default has occurred and is continuing or would exist after the making of this Restricted Payment;

¹	See footnotes to Section 6.2.1 ( Limitations on Restricted Payments ) regarding applicability of following paragraphs.

² 2.3

2.4

the Total Liabilities to Equity Ratio as at the end of the most recent financial quarter for which financial statements have been delivered under Section 6.3.1 ( Audited Annual Financial Statements ) is less than or equal to 0.9:1.0 for each Borrower on an individual basis;

2.5

the Debt to EBITDA as at the most recent financial quarter date for which financial statements have been delivered under Section 6.3.1 ( Audited Annual Financial Statements ) is less than or equal to 2.75:1.0 on a Combined Basis;

2.6

the Loan Coverage Ratio is equal to or higher than 1.5:1.0 for each Borrower on an individual basis;

2.7

the first principal repayment of the Loan has been made; and

2.8

this Certificate is being delivered to IDB no later than thirty (30) days prior to the proposed Restricted Payment Date.

3.	[ insert name of applicable Borrower ] undertakes not to give effect to the Restricted Payment or any part thereof if, at the time of so doing or after giving effect to it, [ insert name of applicable Borrower ] could not certify the matters referred to in Section 2 of this certificate.


		Yours truly,

		[ADECO AGROPECUARIA S.A.]/[PILAGÁ S.A.]

		By:
		Authorized Representative ³

²	The deleted paragraph is duplicative of the immediately following paragraph.

³	As named in the Borrower’s Certificate of Incumbency and Authority. See Exhibit 3 ( Form of Certificate of Incumbency and Authority ).

138

EXHIBIT 7

Page 1 of 2

FORM OF SERVICE OF PROCESS LETTER

[PROCESS AGENT’S LETTERHEAD]

(See Section 8.10 ( Applicable Law and Jurisdiction ) of this Agreement)

[Date]

Inter-American Development Bank

1300 New York Avenue, N.W.

Washington, D.C. 20577

United States of America

Attn: Private Sector Department, Portfolio Management Unit

Ladies and Gentlemen:

Loan No. 2028A/OC-AR

Agency for Service of Process

Reference is made to the Original Loan Agreement as amended by the Offer 02/2011 dated as of November [ ], 2011, sent by Inter-American Development Bank ( IDB ) to Adeco Agropecuaria S.A. and Pilaga S.A. (the Borrowers ), and accepted by the Borrowers on November [ ], 2011 (such amended agreement, the Amended Loan ). Capitalized terms used but not defined in this certificate have the meanings assigned to them in the Amended Loan.

Pursuant to Section 8.10 ( Applicable Law and Jurisdiction ) of the Amended Loan, the Borrower has irrevocably designated and appointed the undersigned [ ], whose offices are currently located at [ ], New York, as its authorized agent solely to receive for and on [ insert name of applicable Borrower ] ’s behalf, service of summons or other legal process in any legal action, suit or proceeding in any court specified in Section 8.10.2 ( Applicable Law and Jurisdiction ) of the Amended Loan.

The undersigned informs you that it has irrevocably and unconditionally accepted that appointment as process agent as set forth in Section 8.10 ( Applicable Law and Jurisdiction ) of the Amended Loan from [ date ] until [ date ] and agrees with IDB that the undersigned shall (i) inform IDB promptly in writing of any change in the address of the undersigned in New York, (ii) perform its obligations as process agent in accordance with the relevant terms of Section 8.10 ( Applicable Law and Jurisdiction ) of the Amended Loan, and (iii) promptly forward to the Borrower any legal process received by the undersigned in its capacity as process agent.

4.	As process agent, the undersigned and its successors shall discharge the above-mentioned obligations and shall not refuse fulfillment of such obligations as provided in Section 8.10 ( Applicable Law and Jurisdiction ) of the Amended Loan.


		Yours truly,

		[NAME OF PROCESS AGENT]

		By:
		Name:
		Title:

cc:	[ADECO AGROPECUARIA S.A.]/[PILAGÁ S.A.]

[ADDRESS OF BORROWER]

EXHIBIT 8

Page 1 of 2

FORM OF A LOAN PROMISSORY NOTE

(See Section 3.25 ( Notes ) of this Agreement)

PAGARÉ

[Provincia de Buenos Aires]/[Provincia de Santa Fe], [ ] de [ ] de 200 [ ] Por U$S[Amount]

POR VALOR RECIBIDO en efectivo a nuestra entera satisfaction, ADECO AGROPECUARIA S.A. y PILAGÁ S.A. (los “Libradores”), obligándose en forma irrevocable e incondicional como codeudores solidarios, en los términos de los artículos 699 y siguientes del Código Civil de la República Argentina, con domicilio en forma conjunta en [ ], ([ ]) Ciudad Autonoma de Buenos Aires, pagaremos incondicionalmente, A LA VISTA Y SIN PROTESTO (artículo 50 decreto-ley 5.965/63) a INTER-AMERICAN DEVELOPMENT BANK (“IDB”), en sus oficinas sitas en [ ], no a la orden, la suma de U$S [Amount in Numbers] (dólares estadounidenses billete [Amount in Words]), el día en que el presente Pagaré fuere presentado para su cobro (la “Fecha de Pago”). Dicho pago se realizará indefectiblemente en dólares estadounidenses billete (clausula de pago efectivo en moneda extranjera, Artículo 44, tercer párrafo, del decreto-ley 5.965/63 de la República Argentina) a IDB en su cuenta [ ]. Se deja ampliado el plazo de presentation de este pagaré para su pago hasta el día [ ] en los términos del artículo 36 del decreto-ley 5.965/63.

En caso de incumplimiento en el pago de los montos adeudados bajo el presente Pagaré en la Fecha de Pago, se incurrirá en mora de pleno derecho, sin necesidad de interpelación previa alguna.

A partir de la fecha en la cual este pagaré sea presentado para su cobro, el capital de este pagaré devengará un interés punitorio del [Interest Rate]% ([Interest Rate in Words] por ciento) anual hasta la fecha del efectivo pago.

Todos los montos adeudados en virtud del presente Pagaré serán pagados libres de, y sin deducciones por, impuestos, contribuciones, tasas, gastos, derechos, y/o retenciones, presentes o futuros, de cualquier naturaleza o tipo, sean estos de jurisdictión nacional o provincial de la Repùblica Argentina, o tributos cobrados por cualquier autoridad impositiva de la Repùblica Argentina o por cualquier otro país o jurisdictión a través de la cual se efectuaren pagos bajo el presente. En caso de ser aplicable algún impuesto, contributión, tasa, cargo, gasto, derecho y/o retention de la índole mencionada, éste será pagado exclusivamente por los Libradores.

Los Libradores renuncian expresa e irrevocablemente a:

(i) interponer o invocar todas las excepciones previstas para el juicio ejecutivo excepto la exception de pago total o parcial fundada en documento escrito emanado de IDB.

(ii) la excepción de arraigo, y

(iii) a recusar sin expresión de causa al juzgado interviniente en la eventual ejecución de este pagaré.

Para todos los efectos legales derivados de este pagaré, los Libradores constituyen domicilio especial en el lugar indicado en el encabezamiento de este pagaré, donde serán válidas todas las notificaciones que en el mismo se practiquen y tendrá el carácter de domicilio constituido para todos los efectos judiciales de los términos del artículo 40 y concordantes del Código Procesal, Civil y Comercial de la Nación.

Toda controversia que se suscite con motivo de este Pagaré, su validez, interpretación, cumplimiento y/o incumplimiento sera sometida a los Tribunales Ordinarios de Primera Instancia con competencia en materia comercial de la Ciudad de Autonoma Buenos Aires, con expresa renuncia a cualquier otro fuero o jurisdictión.

Las sumas adeudadas en virtud de este pagaré se encuentran garantizadas por [DESCRIPTION OF MORTGAGES]

Este Pagaré se regirá por, y deberá ser interpretado de acuerdo con, el derecho argentino, especialmente el decreto-ley 5.965/63 de la Argentina.

ADECOAGROPECUARIA S.A.

Nombre:

Cargo:

PILAGÀ S.A.

Nombre:

Cargo:

EXHIBIT 9

Page 1 of 2

FORM OF B LOAN PROMISSORY NOTE

(See Section 3.25 ( Notes ) of this Agreement)

PAGARÉ

[Provincia de Buenos Aires]/[Provincia de Santa Fe], [ ] de [ ] de 200 [ ] Por U$S[Amount]

POR VALOR RECIBIDO en efectivo a nuestra entera satisfactión, ADECO AGROPECUARIA S.A. y PILAGÀ S.A. (los “Libradores”), obligándose en forma irrevocable e incondicional como codeudores solidarios, en los tórminos de los artículos 699 y siguientes del Código Civil de la República Argentina, con domicilio en forma conjunta en [ ], ([ ]) Ciudad Autónoma de Buenos Aires, pagaremos incondicionalmente, A LA VISTA Y SIN PROTESTO (artículo 50 decreto-ley 5.965/63) a INTER-AMERICAN DEVELOPMENT BANK (“IDB”), en sus oficinas sitas en [ ], no a la orden, la suma de U$S [Amount in Numbers] (dólares estadounidenses billete [Amount in Words]), el día en que el presente Pagaré fuere presentado para su cobro (la “Fecha de Pago”). Dicho pago se realizará indefectiblemente en dólares estadounidenses billete (clausula de pago efectivo en moneda extranjera, Artículo 44, tercer párrafo, del decreto-ley 5.965/63 de la República Argentina) a IDB en su cuenta [ ]. Se deja ampliado el plazo de presentation de este pagaré para su pago hasta el día [ ] en los términos del artículo 36 del decreto-ley 5.965/63.

En caso de incumplimiento en el pago de los montos adeudados bajo el presente Pagaré en la Fecha de Pago, se incurrirá en mora de pleno derecho, sin necesidad de interpelación previa alguna.

Todos los montos adeudados en virtud del presente Pagaré serán pagados libres de, y sin deducciones por, impuestos, contribuciones, tasas, gastos, derechos, y/o retenciones, presentes o futuros, de cualquier naturaleza o tipo, sean estos de jurisdictión nacional o provincial de la República Argentina, o tributos cobrados por cualquier autoridad impositiva de la República Argentina o por cualquier otro país o jurisdictión a través de la cual se efectuaren pagos bajo el presente. En caso de ser aplicable algún impuesto, contributión, tasa, cargo, gasto, derecho y/o retention de la índole mencionada, este sera pagado exclusivamente por los Libradores.

Los Libradores renuncian expresa e irrevocablemente a:

(i) interponer o invocar todas las excepciones previstas para el juicio ejecutivo excepto la exception de pago total o parcial fundada en documento escrito emanado de IDB.

(ii) la excepción de arraigo, y

(iii) a recusar sin expresión de causa al juzgado interviniente en la eventual ejecución de este pagaré.

Las sumas adeudadas en virtud de este pagaré se encuentran garantizadas por [DESCRIPTION OF MORTGAGES]

Este Pagaré se regirá por, y deberá ser interpretado de acuerdo con, el derecho argentino, especialmente el decreto-ley 5.965/63 de la Argentina.

ADECOAGROPECUARIA S.A.

Nombre:

Cargo:

PILAGÀ S.A.

Nombre:

Cargo:

Exhibit 4.41

Buenos Aires, August 18th, 2011

Messrs.

Kadesh Hispania, S.L.

Leterton España, S.L.

[Handwritten:] With a copy to Adecoagro LP for purposes of

section 7.15 of this Offer.

Dear Sirs,

In accordance with certain negotiations held, we (“Sellers”) hereby submit this offer to transfer to you 100% of the outstanding shares of Compañía Agroforestal de Servicios y Mandatos S.A. (defined as the “ Offer ”).

This Offer includes the covenants agreed upon on the basis of the negotiations held in relation to the possible acquisition on behalf of Kadesh Hispania, S.L. and Leterton España, S.L. (defined as the “ Purchasers ”) of one hundred (100) per cent of the issued, subscribed and outstanding capital stock (defined as the “ Shares ”) of Compañía Agroforestal de Servicios y Mandatos S.A., an Argentine corporation (Sociedad Anónima) incorporated in the City of Buenos Aires on December 18th, 1978 and registered with the Argentine Superintendence of Corporations (IGJ) on May 14th, 1979 under record number 1372, Book number 93, Volume A of the Book of Corporations (Sociedades Anónimas) (defined as the “ Company ”).

This Offer shall be deemed accepted by Purchasers in case Payment at the Closing is made by them as provided by Section 1.02 (a)(i) in this Offer.

In case of being accepted, the Offer shall be governed by the following terms and conditions:

ARTICLE ONE

PURCHASE AND SALE OF SHARES AND ANTITRUST LAW

SECTION 1.01. Purchase and Sale of the Shares .

Subject to the terms and conditions set forth in this Offer, Sellers sell, transfer, assign and deliver to Purchasers, on the Closing Date, the total number of Shares, free of any Lien, together with all and not less than all the rights – current and future – attached to them which are, without limitation, described in items (i) to (iv) in this Section 1.01; and Purchasers agree to buy and receive the Shares, and to pay the Purchase Price as set forth in Section 1.02 in consideration thereof, in accordance with such provisions:

(i)

all rights of Sellers in relation to irrevocable capital contributions made to the Company and not capitalized as of the Closing Date;

(ii)

any rights to retained earnings of the Company until the Closing Date and not distributed as of the Closing Date (including income accrued in the fiscal year commencing on July 1st, 2010) and in general, any other concept which shall or may result in the issuance of fully paid-in shares;

(iii)

any rights related to the subscription of Shares corresponding to subscriptions offered by the Company until the Closing Date;

(iv)

any rights to receive shares which have been subscribed before, or issued as of, the Closing Date by the Company;

(v)

any rights related to the distribution of shares which have been declared by the Company before the Closing Date, whether due to the capitalization of capital adjustment accounts or reserves, or for any other reason, whether or not distributed as of the Closing Date; and

(vi)

any other distribution method applied by the Company until the Closing Date due to capital reductions, distribution of capital surplus or for any other reason, which have not been distributed as of the Closing Date.

A description of the Shares owned by Sellers is attached hereto as Exhibit 1.01 .

SECTION 1.02 Purchase Price .

(a) The total purchase price (defined as the “ Purchase Price ”) for the Shares shall amount to EIGHTEEN MILLION DOLLARS (USD18,000,000), free of Expenses, and shall be paid and adjusted according to the following provisions:

(i)

on the Closing Date, Purchasers shall pay Sellers ONE MILLION THREE HUNDRED FIFTY THOUSAND DOLLARS (USD 1,350,000) of the Purchase Price (defined as the “ Payment at the Closing ”). The Payment at the Closing shall be made on the Closing Date by wire transfer to the foreign bank accounts owned by Sellers with freely available funds and net of transfer expenses which are stated in Exhibit 1.02(a) (defined as the “ Bank Accounts of Sellers ”):

and

(ii)

Purchasers shall transfer to the bank account which shall be informed to Purchasers in accordance with paragraph (d) of this Section 1.02, and subject to the provisions of Sections 1.02, 1.03 and/or 1.04, as the case may be, the amount of SIXTEEN MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS (USD16,650,000) (defined as the “ Balance of the Price ”), minus any amounts corresponding to Damages and/or Indemnifiable Liabilities (as stated in Section 5.02 below) which are known before the date of payment of the Balance of the Price.

(b) The Balance of the Price (which for purposes of this Section 1.02 shall include indistinctly, as the case may be, the Adjusted Balance of the Price I, the Adjusted Balance of the Price II, the Adjusted Balance of the Price III and/or the Adjusted Balance of the Price IV, as all such terms are defined below) shall accrue the following interest rate (defined as the “ Interest ”):

(i)

for the first six (6) months following the Closing Date (defined as the “ First Term ”), the Balance of the Price, (y) including any Damages and/or Indemnifiable Liabilities, as such term is defined in Section 5.02, which have been Withheld but which have not been effectively paid by Purchasers and/or the Company (jointly referred to as the “ Damages Withheld ”) during the First Term; but (z) excluding from the Balance of the Price any Damages and/or Indemnifiable Liabilities which Purchasers and/or the Company have effectively paid on account of Damages and/or Indemnifiable Liabilities, as provided by Section 5.02 of this Offer (defined as the “ Damages Settled ”) for the First Term (jointly (y) and (z) defined as the “ Adjusted Balance of the Price I ”), shall accrue for the First Term, an annual interest rate of two point five (2.5) per cent on such Adjusted Balance of the Price I applicable to such First Term, the annual interest term being understood as a period of three hundred and sixty (360) running days following the Closing Date. Upon expiration of the First Term, the accrued interest shall be capitalized on the Adjusted Balance I.

(ii)

upon expiration of the First Term and for the following six (6) calendar months (defined as the “ Second Term ”), the Adjusted Balance of the Price I, (x) including any Damages Withheld during the Second Term; but (y) excluding from the Adjusted Balance of the Price I any Damages Settled during the Second Term ((x) and (y) jointly referred to as the “ Adjusted Balance of the Price II ”) shall accrue during the Second Term an annual interest rate of three point five (3.5) per cent on such Adjusted Balance of the Price II applicable to the Second Term, the annual interest term being understood as a period of three hundred and sixty (360) running days commencing upon the expiration of the First Term. Upon expiration of the Second Term, the accrued interest shall be capitalized on the Adjusted Balance II.

(iii)

upon expiration of the Second Term and for the following six (6) calendar months (defined as the “ Third Term ”), the Adjusted Balance of the Price II, (x) including any Damages Withheld during the Third Term; but (y) excluding from the Adjusted Balance of the Price II any Damages Settled during the Third Term ((x) and (y) jointly referred to as the “ Adjusted Balance of the Price III ”); shall accrue during such Third Term an annual interest rate of four point five (4.5) per cent on such Adjusted Balance of the Price III applicable to the Third Term, the annual interest term being understood as a period of three hundred and sixty (360) running days commencing upon the expiration of the Second Term. Upon expiration of the Third Term, the accrued interest shall be capitalized on the Adjusted Balance III.

(iv)

upon expiration of the Third Term and for the following six (6) calendar months (defined as the “ Fourth Term ”), the Adjusted Balance of the Price III, (x) including any Damages Withheld during the Fourth Term; but (y) excluding from the Adjusted Balance of the Price III any Damages Settled during the Fourth Term ((x) and (y) jointly referred to as the “ Adjusted Balance of the Price IV ”) shall accrue during the Fourth Term an annual interest rate of five point five (5.5) per cent on such Adjusted Balance of the Price IV applicable to the Fourth Term, the annual interest term being understood as a period of three hundred and sixty (360) running days commencing upon the expiration of the Third Term. Upon expiration of the Fourth Term, the accrued interest shall be capitalized on the Adjusted Balance IV.

(v)

The Parties acknowledge that for the calculation of the Interest on the Adjusted Balance of the Price I, the Adjusted Balance of the Price II, the Adjusted Balance of the Price III and the Adjusted Balance of the Price IV, respectively, the Interest on Damages Settled corresponding to the First Term, the Second Term, the Third Term and the Fourth Term, respectively, will be calculated until the date such Damages Settled are paid in full by Purchasers and/or the Company.

(c) the amounts deductible as Damages or Indemnifiable Liabilities will accrue the same Interest as from their date of occurrence to the time they are deducted from the Balance of the Price as established in paragraph (b) of this Section 1.02. Notwithstanding the foregoing, Sellers may pay in full any amounts arising from Damages and/or Indemnifiable Liabilities at any time after their occurrence.

(d) The Balance of the Price adjusted pursuant to Section 1.02 (a)(ii) and (b), respectively, plus Interest on such amounts paid (defined as the “ Adjusted Balance ”) will be transferred by Purchasers (i) to Sellers on the fifth (5 ^th ) Business Day following notice served by Purchasers to Sellers or by Sellers to Purchasers, whatever occurs first, stating that no condition subsequent has occurred as stated in Section 1.03 and/or 1.04 (defined as the “ Notice ”), to the Bank Accounts informed by Sellers to Purchasers on the second (2º) Business Day following receipt by Sellers of the Notice or following the date of delivery of such Notice by Sellers to Purchasers, or (ii) on the other hand, upon the occurrence of a condition subsequent as stated in Section 1.03 and/or 1.04, Purchasers´ obligation to pay Sellers the Adjusted Balance will be extinguished by operation of law, therefore extinguishing Purchasers’ obligation to pay Sellers the Balance of the Price to Sellers’ satisfaction in accordance with Sections 1.03 and/or 1.04 of this Offer. Furthermore, Sellers hereby undertake to reimburse Purchasers, according to the procedure described in Section 5.04, and to the extent and limits set forth by Section 5.05, any amounts without duplication, plus any Interest that Purchasers and/or the Company have had to pay for Damages Settled until the date Purchasers serve notice on Sellers or Sellers serve notice on Purchasers, whatever occurs first, stating that any of the conditions subsequent mentioned in Section 1.03 and/or 1.04 have occurred, and Purchasers transfer title to the Shares to Sellers. Likewise, the Parties agree that upon occurrence of the event established in sub-item (i) of this paragraph (d), Purchasers will withhold on the relevant date of payment from the Adjusted Balance the amount of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS (USD 1,500,000) as security for Damages and/or Indemnifiable Liabilities not known until such time (defined as the “ Security Balance ”). From the Security Balance, Purchasers will withhold: (i) the amount of ONE MILLION DOLLARS (USD 1,000,000) for a term of two (2) years commencing on the Closing Date, and Purchasers shall pay and transfer on the fifth (5th) Business Day following the expiration of the second (2nd) anniversary of the Closing Date, to the Bank Accounts of Sellers to be informed to Purchasers on the date of expiration of the second (2nd) anniversary of the Closing Date, the amount of ONE MILLION DOLLARS (USD 1,000,000) minus Damages Withheld and Damages Settled within the period running from the creation of the Security Balance to the expiration of the second (2nd) anniversary (defined as the “ Adjusted Security Balance ”) and (ii) the amount of FIVE HUNDRED THOUSAND DOLLARS (USD 500,000)

or the total amount of the Security Balance as of the date the Adjusted Security Balance is paid pursuant to item (i) of this Paragraph (d) in case such balance were lower than FIVE HUNDRED THOUSAND DOLLARS (USD 500,000) (defined as the “ Final Security Balance ”) for a term of three (3) years following the Closing Date, and Purchasers shall pay and transfer, on the fifth (5th) Business Day following expiration of the third (3rd) anniversary of the Closing Date, to the Bank Accounts of Sellers notified by them to Purchasers on the date of expiration of the third anniversary of the Closing Date, the Final Security Balance minus Damages Withheld and Damages Settled within the period running from the reimbursement of the Adjusted Security Balance to the expiration of the third anniversary of the Closing Date. Such Security Balance shall be adjusted mutatis mutandi to the same terms and conditions established, with no limitation, in relation to Withholdings and deductions made for Damages and/or Indemnifiable Liabilities as provided by Paragraphs (b), (c), (e), (f), (g) and (h) of this Section 1.02 and by Article V, as the case may be. The Security Balance, the Adjusted Security Balance and/or the Final Security Balance, as the case may be, shall accrue an annual interest rate similar to the one applicable to Treasury Bonds for thirty (30) years, from the date of payment of the Adjusted Balance, providing that after such date no Interest shall be accrued for Damages and/or Indemnifiable Liabilities Withheld or occurred after such date.

(e) For the purpose of avoiding any doubts in the interpretation of this Section, Purchasers’ obligation to pay Sellers the Balance of the Price and/or the Security Balance, as the case may be, (i) will be decreased on a Dollar-by-Dollar basis, without duplication, for the amount of Damages or Indemnifiable Liabilities; and (ii) in case the total amount of the Balance of the Price and/or the Security Balance, as the case may be, is subject to Withholdings for Damages or Indemnifiable Liabilities, Purchasers will not be obliged to pay any amount as Balance of the Price and/or Security Balance, as the case may be, to Sellers on the respective dates of payment.

(f) Purchasers will be entitled to deduct or withhold from the Balance of the Price and/or the Security Balance, as the case may be, and if necessary, from any other balance which Purchasers may owe to Sellers under the terms of this Offer or of any other agreement entered into between Sellers and Purchasers or the Company, an amount equal to the Damages or Indemnifiable Liabilities claimed under the provisions of Article V and to collect from the Balance of the Price, any Damages or Indemnifiable Liabilities which must be paid in full in accordance with the provisions of this Offer (hereinafter indistinctly referred to as the “ Withholdings ” or the “ Withholding ”). It is hereby stated that the Withholding may be made even if Damages or Indemnifiable Liabilities are not enforceable, provided that there is a claim from a third party or that such Damages and/or Indemnifiable Liabilities have been verified. In that event, Purchasers will be entitled to withhold an amount equivalent to principal, interest and costs estimated in good faith.

(g) In the event that Purchasers deduct from the Balance of the Price and/or the Security Balance, as the case may be, any amounts for Damages or Indemnifiable Liabilities (to the extent established for such terms in Section 5.02) including any Interest in accordance with Paragraph (c) of this Section 1.02, such deduction shall be charged in first place to the Interest accrued until the date of deduction and then to the principal of the Balance of the Price, as the case may be.

(h) the Parties agree that any amount initially stated in Pesos which shall be paid by Sellers to Purchasers or deducted or offset by Purchasers pursuant to the provisions of this Offer shall be paid and/or offset in Dollars. For such purpose, any amount in Argentine Pesos shall be converted to Dollars as follows: (x) if at the time of the currency conversion the sole and free foreign exchange market of the Argentine Republic still exists, the selling exchange rate informed by Banco de la Nación Argentina for converting Pesos to Dollars at 11 am, Buenos Aires time, on the Business Day immediately preceding the date on which the relevant payment or offset must be made will be applied, or (z) if at the time of the currency conversion the sole and free foreign exchange market of the Argentine Republic does not exist or in case such exchange market was split into different official exchange rates, consideration shall be taken as to amount of Dollars which will result from the sale of the amount of BODEN 2015 that may be purchased in New York or Montevideo, at Sellers´ option, with the amount of Pesos to be converted, considering for such purpose the price of BODEN 2015 corresponding to the closing of operations of the Market chosen on the Business Day immediately preceding the day on which the pertinent payment or offset shall be performed. Evidence of the above mentioned exchange rates will be given by means of publications appearing in Argentine specialized newspapers, such as “Ámbito Financiero” or “El Cronista”, among others, or in international publications in the event such Argentine newspapers contain no information about the business day immediately preceding the date of payment. If, at the time of the currency conversion, BODEN 2015 does no longer exist, the Argentine Bond in Dollars with the highest trading volume in the Market that Sellers would have chosen as provided herein above, shall be considered.

(i) Purchasers assure Sellers that, notwithstanding the fact that they have the amount of Dollars necessary to pay in full the Balance of the Price, the depreciation of the Argentine Peso or the Euro in relation to the Dollar or the split of the sole and free foreign exchange market in the Argentine Republic into different types of official exchange rates, constitute risks which they have analysed carefully and decided to face; therefore, they waive their right to claim application of the doctrine of unforeseeability [“teoría de la imprevisión”] or to ask for the readjustment of the Balance of the Price in case any of such depreciation events occur. Furthermore, Sellers assure Purchasers that, notwithstanding the fact that they have the amount of Dollars necessary to pay in full any Damages and/or Indemnifiable Liabilities, the depreciation of the Argentine Peso or the Euro vis-à-vis the Dollar or the split of the sole and free foreign exchange market in the Argentine Republic into different types of official exchange rates, constitute risks which they have analysed carefully and decided to face and, therefore, they waive their right to claim the doctrine of unforeseeability or to ask for the readjustment of the Damages and/or Indemnifiable Liabilities in case any of such depreciation events occur.

Exhibit 1.02 of this Offer contains the details of the allocation of the Purchase Price among the Sellers and of the Shares acquired by Purchasers.

SECTION 1.03 Notice and Effects of SDT Resolution—Condition Subsequent

The Parties will inform CNDC of the transactions established in this Offer in compliance with this Section 1.03 (a) and 1.03 (b). In case the Secretariat of Domestic Trade (SDT for its English acronym) or the Argentine Antitrust Tribunal (CNDC for its Spanish acronym) notifies the Parties their denial to authorize the purchase and sale of the Shares under the terms and conditions set forth in this Offer or the declaration of any subordination, restriction or condition for the obtainment of the Antitrust Approval, the Parties agree that such circumstance will be considered as a condition subsequent to this Offer and the Parties will be subject to the provisions stated in Section 1.02, paragraph (d) sub-item (ii).

(a) Sellers’ filing requirements with the CNDC

On the second (2nd) Business Day following the Closing Date, Sellers shall file together with Purchasers Form F-1 with the CNDC (Argentine Antitrust Tribunal) for purposes of giving notice of the provisions of this Offer and requesting the Antitrust Approval. For such purpose, Sellers undertake to prepare, file and duly grant any act, filing or documentation which might be necessary or required in order to fulfil any administrative requirements related to the issuance of the Antitrust Approval (including, but not limited to the correct and complete filing of the Form F-1 with the CNDC with no mistakes, misrepresentations or omissions and/or the duly filing of any other documentation which may be required by such Tribunal in order to issue its decision in relation to the transaction established in this Offer), and to comply with all the terms set forth by the Argentine Law No. 25,156 as amended, and with CNDC regulations. Sellers undertake to act as promptly and reasonably as possible as regards the analysis and the provision of the information to be filed with the CNDC. Sellers undertake to provide any necessary assistance to Purchasers and to answer, in due time and manner, any requirements made by the CNDC during the conduct of the proceedings leading to the obtainment of the Antitrust Approval and to keep Purchasers informed in relation to the progress or development of the above mentioned requirements which may have come to their knowledge.

(b) Purchasers’ filing requirements with the CNDC

On the second (2nd) Business Day following the Closing Date, Purchasers shall file together with Sellers Form F-1 with the CNDC, for purposes of giving notice of the provisions of this Offer and requesting the Antitrust Approval. For such purpose, Purchasers undertake to prepare, file and duly grant any act, filing and documentation which might be necessary or required in order to fulfil any administrative requirements related to the issuance of the Antitrust Approval (including, but not limited to, the correct and complete filing of the Form F-1 with the CNDC, with no mistakes, misrepresentations or omissions, and/or the duly filing of any other documentation which may be required by such Tribunal in order to issue its decision in relation to the transaction established in this Offer), and to comply with all the terms set forth by the Argentine Law No. 25,156 as amended, and with CNDC regulations. Purchasers undertake to act as promptly and reasonably as possible as regards the analysis and the provision of the information to be filed with the CNDC. Purchasers undertake to keep Sellers informed in relation to the progress or development of the above mentioned requirements which may have come to their knowledge.

SECTION 1.04 Prohibition to Purchase Shares on behalf of Purchasers by Applicable Law following the Closing Date—Condition Subsequent

The Parties expressly agree that if on or after the Closing Date any general regulation published or in force in the Argentine Republic issued by any Governmental Authority restrains, prohibits or disqualifies Purchasers and/or any of its Affiliates (in the event Purchasers assigned this Offer in whole or in part to such Affiliate in accordance with Section 7.12) to lawfully hold full legal, irrevocable and unconditional title to the Shares without the obligation to sell or dispose of any of the Shares and/or of the goods or rights comprising the assets of the Company, pursuant to the provisions set forth herein, such event will be considered as a condition subsequent under this Offer with the effects established in Section 1.02., paragraph (d), sub-item (ii) hereof.

ARTICLE TWO

CLOSING

SECTION 2.01. The Closing

The closing of the transaction (defined as the “ Closing ”) which is consummated by this Offer is performed on the Closing Date at Marval O’Farrell & Mairal offices, domiciled at Avenida Leandro N. Alem 928, 7 ^th floor, City of Buenos Aires.

SECTION 2.02 Acts to be performed at the Closing

On the Closing Date the Parties shall perform the following acts:

(a) Sellers shall:

(1) deliver the corresponding Stock Certificates to Purchasers ready to transfer valid, full legal and perfect title to all Shares, free of any Lien. For such purpose, each one of the Sellers shall comply with the notice stated by section 215 of the Argentine Corporate Law, by sending a letter similar to the one attached hereto as Exhibit 2.02 (a)(1) , notifying the Company of the transfer of the Shares to Purchasers and the cancellation of the stock certificates of the Company issued in the name of Sellers, and requesting registration of the transfer of the title to the stock of the Company in the name of Purchasers in the Company’s Registry Book of Shareholders; and shall deliver to the Company the stock certificates evidencing their shares of stock for cancellation for purposes of the transfer.

(2) Cause:

(i)

a meeting of the Board of Directors to be held for the purpose of: (w) acknowledging receipt of the notice mentioned in paragraph (a) sub-item (a) herein above; (x) ordering the cancellation of the stock certificates of the Company which Sellers will deliver to them in accordance with paragraph (a) sub-item (1) hereinabove; (y) ordering the relevant issuance of new stock certificates of the Company in the name of Purchasers; and (z) ordering registration of the transfer of the stock certificates in the name of Purchasers in the relevant Book. At the above mentioned Meeting of the Board, the election of officers among the new Directors appointed at the Closing shall be performed:

(ii)	the issuance of new stock certificates of the Company in the name of Purchasers;

(iii)

the registration of the transfer of the Company’s Shares in the Company’s Registry Book of Shareholders;

(3) deliver to Purchasers the resignation letters of the Company’s Directors and Managers in the form attached hereto as Exhibit 2.02 (a)(3).

(4) deliver to Purchasers a receipt for the Payment at the Closing in the form substantially similar to the model attached hereto as Exhibit 2.02 (a)(4) upon receipt of the amount stated in Section 1.02 paragraph (a)(1) in the Bank Account of Sellers.

(5) terminate the Lease Agreement entered into by the Company and Las Aleutianas S.A. on August 1st, 2010, without any liability for the Company.

(5) make available to Purchasers the following accounting books and documentation of the Company:

(i)	Book of Minutes of Board Meetings;

(ii)	Book of Minutes of Shareholders´ Meetings;

(iii)

Registry Book of Shareholders;

(iv)	Shareholders’ Attendance Record and Stock Deposit Book;

(v)	Accounting Books;

(vi)	Balance Sheets of the Company published from the fiscal year ending on June 30th, 2005;

(vii)

Notarial Records of the real property owned by the Company;

(viii)

Sworn statements of Taxes filed with the Tax Authorities listed herein below: income tax for the last five fiscal years preceding the Closing Date and the sworn statements corresponding to other Taxes applicable to the business activity of the Company.

(6) call and hold a unanimous shareholders’ meeting at the Company in which Sellers will (i) approve the resignations of all the Directors and Managers of the Company, stating thereby that such Directors and Managers have no claims against the Company; (ii) accept the resignations and unanimously approve the performance of all the resigning Directors; and (iii) appoint the new Board of Directors of the Company, in accordance with Purchasers’ written instructions to Sellers.

(7) each of the Sellers, as appropriate, shall provide evidence given by any legally reliable means of his/her spouse’s consent in order to transfer the Shares owned by them to Purchasers by submitting the corresponding notices pursuant to section 215 of the Argentine Corporate Law.

(8) Sellers shall deliver to Purchasers:

(i)	evidence of payment in full of all receivables and debts of the Company with Affiliates of Sellers, and any other fee or loan that for any reason the Company may owe to Sellers;

(ii)

evidence of being on schedule, as of the Closing Date, with the payments of any amounts due on account of taxes, with filings of documents or accounting statements as required by the Argentine Superintendence of Corporations (Inspección General de Justicia), including any capital increases and decreases pending registration, and with the registration of the current Board of Directors of the Company including any warranties and the settlement of special domiciles, etc.

(iii)

evidence that, before the Closing Date, any powers of attorney granted by the Company have been revoked as required by Purchasers to Sellers.

(b)	On the Closing Date, Purchasers shall:

(1)	deliver to Sellers the documents contemplated under the terms of this Offer;

(2)	make the Payment at the Closing as stated in Section 1.02;

(3)	cause the Chairman of the Board of Directors of the Company to subscribe and deliver to Purchasers the new stock certificates of the Company recorded in the name of Purchasers.

SECTION 2.03 Entire Act .

All the acts to be performed at the Closing are deemed to be part of a sole and single act.

ARTICLE THREE

SELLERS’ REPRESENTATIONS AND WARRANTIES

SECTION 3.01 Sellers’ Representations and Warranties

Sellers jointly and severally represent and warrant the following to Purchasers as of the Closing Date:

(a) Sellers’ Capacity; Approvals and Consents

(1) That they have legal capacity, legal standing and powers to make this Offer and to consummate the purchase and sale herein contemplated and that, except as provided in Sections 1.03, 2.02(a)(7) and 7.10, no consent or authorization from any other individual, entity or Governmental Authority is required other than the Antitrust Approval. There is no legal, judicial or contractual restriction that may affect the disposition of their assets, in general, or of their own Shares. Sellers’ delivery and acceptance of this Offer, as appropriate, has been duly authorized by their respective spouses. This transaction is duly performed and executed by each Seller, and it constitutes each Seller’s valid and binding obligation, which may be enforced against each Seller as per its terms.

(2) Sellers have full powers and authority as are necessary to present, agree to and execute this Offer and the remaining offers and documents related hereto; to undertake due fulfilment of the obligations assumed by Sellers hereunder and under the other offers and documents related hereto; and to consummate the transactions contemplated herein.

(3) Sellers’ delivery, acceptance and compliance of this Offer and of any other document related thereto does not: (i) infringe any provision of applicable regulations, laws or by-laws to which Sellers, the Company or the Shares may be subject; (ii) infringe any resolution, decision or judgment issued by any judicial or Governmental Authority that may be applicable to Sellers, the Company or the Shares, or any instrument or agreement to which the Company or Sellers are a party; and (iii) result in the creation or the imposition of Liens or claims of any nature on the Company and/or on any of the assets and/or Shares of the Company.

(4) Sellers have good, full legal and exclusive title to all the Shares. Furthermore, Sellers represent and warrant both that the gift arising from the offer of gratuitous donation made by their parents by means of deed three hundred and sixty-two (362) evidencing each Seller’s acceptance of such offer sent to the Company on July 7th, 2010 and the communication sent to the Company by the donors and donees, pursuant to article 215 of the Argentine Corporate Law –all of which is evidenced by two (2) minutes of the board of directors, dated July 7th, 2010–, attested to by Notary Public from this city, Christian Gonzalo Alvariñas Canton, on June 23rd, 2010, is valid and binding, and has been performed pursuant to the provisions of the applicable law, and also that there are no other heirs of such donors who have legal right and/or may affect the full right of ownership of Sellers’ Shares;

(5) Sellers are free of any Liens, temporary restraining orders, court orders or any other claims or actions that may restrain them from freely disposing of the Shares in whole or in part; and

(6) Sellers are not in insolvency proceedings and they have not filed for reorganization nor bankruptcy proceedings, and no pending petitions in bankruptcy have been filed against them.

(7) Sellers are not vested with immunity and/or any special situation that prevent them from being parties to legal proceedings and becoming subject to a judgment.

(b) Company Incorporation and Capacity

(1) The Company has been duly incorporated and is validly existing and in good standing under the laws of the Argentine Republic, pursuant to the following data:

Compañía Agroforestal de Servicios y Mandatos S.A., a corporation ( sociedad anónima ) incorporated on December 18th, 1978, in the City of Buenos Aires, Argentine Republic, registered with the Superintendence of Corporations on May 14th, 1979, under N° 1372, in Book 93, Volume “A” of the Book of Corporations, domiciled at Ricardo Rojas 401, 9 ^th floor, City of Buenos Aires.

(2) The Company has full powers to manage and dispose of its assets and property to the extent it has been performing and performs such acts in the jurisdictions that the Company operates, and also has the necessary capacity to own and operate the business. The purchase and sale contemplated herein shall have no adverse effect on the Company’s licenses and/or authorizations so as to maintain, after the Closing, the Company’s business activity as it is being run today.

(3) The copy of the Company’s by-laws included in Exhibit 3.01 (b)(3) contains the by-laws currently in force as of the date hereof and includes any and all prior modifications thereto. Such by-laws are duly recorded in the Superintendence of Corporations.

(4) The Book of Minutes of Board Meetings and Shareholders´ Meetings contain all the minutes drafted as of the Closing Date, are correct in all material respects and truly reflect the decisions adopted by the Company’s administrative and governing bodies.

(1) The Company’s capital stock amounts to ARS 4,000,000 (four million Argentine pesos), represented by 4,000,000 (four million) registered and non-endorsable shares of common stock of ARS 1 (one Argentine Peso) par value each and entitled to one (one) vote per share.

(2) The Shares have been validly issued, subscribed and paid, and are recorded in the Registry Book of Company’s Shareholders. Such shares are not subject to any Lien or property ownership division of any nature. The Shares do not require further contributions of any kind and/or on any account whatsoever. The Shares represent 100% of the Company’s total outstanding capital and voting stock.

(3) The Shares are Sellers’ exclusive property, and Sellers have full and perfect legal title to such Shares. No Share has been issued in violation of preemptive rights. No options, warrants, conversion rights, obligations and/or agreements related to voting, redeeming, purchasing or selling shares, to preemptive or other rights or agreements currently in effect related to the Company’s capital exist or, if such preemptive rights exist, they have been irrevocably waived in favour of Purchasers. There is no agreement or restriction related to the Company’s capacity to issue shares. There are no irrevocable contributions or any other agreement or payment obligation in the Company likely to be capitalized or converted in new shares of Company. Each one of the Sellers has full legal title to the Shares such Seller transfers. Neither the Company nor Sellers have entered into agreements that prevent or restrict holding, subscribing or selling the Shares. There is no Lien, pledge and/or attachment of any nature, or limitation of property ownership of any kind regarding the Shares. The Shares are not subject to rights of first refusal or drag along rights in favour of any Person or legal entity; therefore, there is no third parties’ right regarding the sale of Shares as of the date hereof.

(4) The Company has not authorized to issue any capital stock which has not been so far issued.

(5) The Company does not hold an interest in any business organization, does not hold a direct or indirect interest, including any interest in partnerships (Argentine “ sociedades de personas ”), temporary union of companies (UTE, for its Spanish acronym) or any other agreement of enterprise cooperation, joint ventures, in any other Person, entity or business in the Argentine Republic or abroad.

(6) There are not outstanding in the Company: (i) any increases or reductions in capital; (ii) any subscriptions, issuances or redemptions of shares; (iii) any amendments to the by-laws, mergers, split-ups or goodwill transfers; or (iv) any other company acts of similar importance.

(d) Accounting Information

(1) The Company’s balance sheets, income statements, supplementary notes and annual reports corresponding to the last full three fiscal years are attached hereto as Exhibit 3.01 (d)(1) (defined as “ Financial Statements ”). The Financial Statements have been prepared pursuant to the GAAP, are true, accurate and complete and do not include or omit to include any facts which inclusion or omission, respectively, may cause such Financial Statements to be misleading.

(2) The Financial Statements have been prepared according to the Company’s books and records, and reasonably reflect the economic and financial position and the result of Company’s transactions as of the dates at which they were issued.

(3) The Company’s Financial Statements, accounting information and records show all the pertinent liabilities and assets, pursuant to the applicable GAAP, and the Company’s situation, status and/or circumstances and those of its respective assets and liabilities, and the contingent situation and/or circumstances that are currently known to the Company.

(4) The Company’s Financial Statements, accounting information and records show as assets only the existing property which is owned by and title to which is held by the Company and which values were calculated, for accounting thereof, by applying valuation methods consistent with applicable GAAP. Except for the information shown or established in the Company’s Financial Statements: (i) the Company has no other liabilities (whether accrued, contingent or of any other nature); and (ii) the Company has not made any illegal payment whatsoever for purposes of procuring any business.

(5) The Company has not received any notice or claim stating that its records are incorrect and that correction thereof is required.

(6) Exhibit 3.01 (d)(6) details the hardware, software and licensed applications owned by the Company which are used for keeping, maintaining and using its records, pursuant to valid, binding and effective license agreements entered into between the Company and each of the companies that are the owners of such software.

(e) Books and Records

All books and records containing the aforementioned information have been prepared and are complete and accurate in all material respects. Furthermore, they are kept pursuant to applicable laws, with a view to a good business management and, if applicable, according to GAAP. All book entries are legally supported by their respective vouchers.

(f) Absence of Material Changes

From March 31st, 2011 to the Closing Date, the Company has not:

(1) unless as stated in Exhibit 3.01 (f)(l) , performed any transaction, entered into any agreement (including, without limitation, the imposition of any Lien on Company’s assets), nor undertaken any debt or obligation (whether contingent or effective), or granted credits (by means of credit notes) in circumstances other than in the regular course of business.

(2) unless as stated in Exhibit 3.01 (f)(2), made investments in capital goods and/or any other type of transaction for an aggregate amount exceeding USD 300,000 (three hundred thousand Dollars);

(3) issued or agreed to issue, sold or agreed to sell any share of the Company’s capital, issued or sold any security convertible in, or options on, or warrants to buy, or rights to subscribe, any shares of such capital, nor has it entered into any agreement that binds the Company to perform any of the aforementioned actions, or issued or agreed to issue any debt security, or entered into transactions related to the Company’s capital, or accepted any irrevocable contribution on account of future subscription of shares of the Company;

(4) distributed or paid dividends or made any allocations in relation to the Company’s capital stock;

(5) redeemed, purchased or otherwise acquired any share of its capital stock;

(6) issued new shares or securities;

(7) sold or encumbered its real property or the Company’s assets;

(8) unless as stated in Exhibit 3.01 (f)(8), sold and/or encumbered any assets and/or in particular any property, plant and equipment of the Company which existed as of March 31st, 2011 and which are recorded in the Company’s Financial Statements for the fiscal year ended on June 30th, 2011, except for any purchases occurred after June 30th, 2011 made in the ordinary course of business and recorded in the Company’s accounting books.

(9) had any change in relation to the Company’s activities, assets or businesses which, in general terms, may cause a Material Adverse Effect to the Company’s results or to its financial situation;

(10) had any dispute related to labor, social security, taxes and/or judicial matters which affects or may affect the Company;

(11) entered into or amended any engagement or termination contract or agreement, or any other agreement of any nature with directors, managers, advisors, officers or employees of the Company in circumstances other than in the ordinary course of business and regular activities, except for increases or bonuses granted to employees (excluding directors) in the regular course of business and according to market practices, nor has it increased the remuneration, bonus, awards on account of services rendered or any other similar benefit granted to any of such officers or employees or thereby accrued or agreed upon any pension plan, retirement plan or similar social security benefit.

(12) changed its normal and ordinary business policies in relation to granting credit to clients, credit limits, payment terms and conditions. Since June 30th, 2011, the Company’s activity has been conducted in the regular course of business and substantially in the same manner as it has been conducted during the last five (5) fiscal years by the Company.

(13) entered into any oral or written agreement to perform any of the aforementioned acts; or

(14) paid in advance any outstanding obligation which has been recorded in the accounting records of the Company, other than in accordance with the consistent past practices.

Furthermore, from June 30th, 2011 to the Closing Date: (i) no damage, destruction or loss, whether covered or not by insurance policies, which may have had a Material Adverse Effect on the Company’s assets, its economic and financial situation or its business activity has occurred; and (ii) no significant change has taken place in the Company’s net worth.

(g) Absence of Unreported Liabilities

From March 31st, 2011 to the Closing Date, the Company has not undertaken or suffered the imposition of liabilities, regardless of their cause or title, other than duly recorded liabilities that may have arisen in the regular course of business of the Company.

Except for the Company’s liabilities existing as of March 31st, 2011 and for the duly recorded liabilities subsequently incurred in the regular course of business of the Company, the Company has no liabilities of any nature, including without limitation, financial loans, fiscal, labor or social security obligations arising out of agreements entered into with its clients, suppliers and/or third parties, or of any other nature (whether accrued, undisclosed or contingent).

As of the Closing Date, the Company has no liabilities (including without limitation liabilities on account of Taxes, labor matters, Customs or foreign exchange matters) that may result in a Material Adverse Effect, except for the liabilities detailed in the Company’s Financial Statements or those for which a reserve has been made in the Company’s Financial Statements for the fiscal year closed on June 30th, 2011 or in the company’s accounting books and records, and for those which have arisen in the regular course of business after March 31st, 2011; all of them being evidenced by the Company’s books and records.

(h) Company’s Assets, Title to Assets; Absence of Liens. Real Property, Personal Property and Livestock

(1) The Company is the owner of the real property detailed in Exhibit 3.01 (h)(l) (defined as “ Real Property ”). The original deeds of the Real Property are delivered by Sellers to Purchasers on the Closing Date. Copies of each deed are attached hereto as Exhibit 3.01 (h)(1)(a) .

(2) Except as stated in Exhibit 3.01 (h)(2) , the Company is the owner of each piece of Real Property along with everything built, fixed, planted, set in and attached to the ground, and has full legal and transferable title thereto; all of which Purchasers declare to know and accept in their current state, free of any type of mortgage, Lien, inhibition, claim, easement, license, right-of-way, restriction, option and superior right of any nature. All taxes on real property and further charges applied to such Real Property have been duly and timely paid by the Company, respectively; and the Company does not owe any amount on that account.

(3) The Company is the owner of the personal property and livestock detailed in the inventory attached hereto as Exhibit 3.01 (h)(3), provided that the list of livestock included in such Exhibit evidences the stock existing as of July 31st, 2011 and that, since that date, the Company has sold cattle in the regular course of business and as per market conditions, and consequently such stock has decreased due to aforesaid sales (defined as “ Personal Property ”). The Company has full legal title to each piece of personal property detailed, which is free of any type of Lien.

(4)	The Company leases the personal property detailed in Exhibit 3.01 (h)(4).

(5) The Company’s recordable Real Property and Personal Property are in good condition, subject to wear and tear resulting from regular use thereof. Furthermore, such property is free from hidden or apparent defects.

6) The Company is the owner, on its own behalf and for its account, and has full legal and marketable title to the accounts receivable and other credits included in the Company’s accounting records, to the accounts receivable and other credits accrued from the date of the last Financial Statement to the Closing Date, free from any pledges, assignment of property as security, attachments or of any other Lien, or options or rights granted to third parties.

(7) The Company’s Real Property complies with all applicable laws and regulations; and as regards owned and leased Real Property, the Company has the pertinent permits and authorizations to perform the activities related to the business activity which is therein performed as per the current level of activity.

(i)	Taxes and Customs Matters

(1) The Company has submitted all the national, provincial and municipal tax returns; and such tax returns are true, correct and complete in all respects. The Company has timely paid all the amounts due on account of Taxes. Consequently, the Company has no tax liabilities whatsoever for which the pertinent reserves have not been recorded and/or accumulated as of the date hereof regarding any Tax, including without limitation income tax, gross income, VAT, stamp duty, real estate tax or the like. The Company has withheld and paid any amounts that should have been withheld and paid, as per applicable regulations on taxation or on social security, to the respective Governmental Authority in proper time and manner. For purposes hereof, the term “Tax” shall mean any tax, including without limitation liens, tariffs, charges, royalties and services imposed by national, provincial or municipal authorities, and any other tax of any nature, however it may be called, including withholdings and contributions to social security, as well as any other charge imposed in a like manner as taxes.

(2) There are no claims notified to the Company or known to Sellers related to any default of social security or taxation obligations, or of any obligations derived from insurance and occupational hazards, nor ongoing tax audits being conducted by any national, provincial or municipal tax authority notified to the Company or known to Sellers.

(3) The Company’s books and records fully reflect the obligations accrued on account of all the Taxes that have not become due or that are not payable yet. The previsions and/or provisions made for tax obligations in the Company’s Financial Statements for the fiscal year closed on June 30th, 2011 are and shall be adequate for paying all the Company’s Taxes to which such previsions and/or provisions refer, regardless of whether or not they have been challenged by the Company, for the period ending on the date hereof and for all previous periods as per the regulations and criteria prevailing as of that date.

(4) Except as stated in Exhibit 3.01 (i)(4) , the Company is on schedule with the payment of its Taxes.

(5) The representations made in this item (i) comprise all matters related to the import and export transactions which the Company may have entered into and/or in which the Company may have participated, and to the customs and foreign exchange regime applicable as a consequence thereof.

(j) Insurance

(1) The Company has purchased the insurance policies listed in Exhibit 3.01 (j)(1) , which cover all the activities and assets therein indicated. Such policies are fully in force, valid and enforceable.

(2) The Company has insurance policies that, to the best of Sellers’ knowledge, sufficiently protect the Company’s estate, Real Property, Personal Property, assets, personnel, businesses and transactions, pursuant to the regulations applicable to the industry. There is no default regarding any of such insurance policies, all of which are valid and in full force and effect. All premiums related thereto, which cover all the periods up to the date hereof, have been paid. Sellers have provided Purchasers with a true copy of all the insurance policies purchased by the Company which are effectiveas of the date hereof. There are no pending claims filed by the Company or being filed against it in relation to such insurance policies.

(3) Exhibit 3.01 (j)(3) contains details of the insurance claims occurred and which have been reported to insurance companies in the last five years.

(k) Labor and Social Security Matters; Collective Bargaining Agreements; Job Offers, Additional Benefits for Employees; Third-Party Service Providers

(1) The Company has complied and complies with all laws on labor, social security and health and safety in force in the Argentine Republic, as regards all its employees. The Company has no certain or contingent liabilities related to failure to comply with such obligations.

(2) The Company’s employees are included in the Collective Bargaining Agreement that is applicable to them in accordance with the laws in force and with the activity they perform. At present there are no: (i) controversies between the Company and trade unions which have led to strikes or organized work stoppages; (ii) legal proceedings for alleged infringements of labor, social security or health and safety laws before a court or governmental agency which have been notified to the Company or are known to Sellers; (iii) joint commissions, labor conciliations or arbitrations which have been notified to the Company or which are known to

Sellers; (iv) accusations or charges, which have been notified to the Company or are known to Sellers for failure to pay contributions to trade unions or medical insurance; (v) conflicts related to the Company’s personnel union classification; and/or (vi) conflicts between trade unions and the Company.

(3) Payments owed and filings due pursuant to the laws on labor, social security and occupational hazards have been timely and legally made or reserved, and allowances have been made therefore; and no outstanding debts on account of such issues exist as of the Closing Date. There are no claims notified to the Company or known to Sellers regarding damages on account of occupational accidents, deaths, commissions or any other matter related to social security or occupational claims brought against the Company by former or current employees, directors or third parties who may have worked for the Company or for third parties in the premises where the Company conducts its business. The Company currently complies with all the regulations in force in relation to staff recruitment; there being no hidden labor relationship whatsoever.

(4) All benefits, plans and agreements recorded in the collective bargaining agreements to which the Company is subject have been complied with at all times, pursuant to their respective terms and to the legal provisions applicable. The Company’s personnel is included, as per the personnel business activity, in the following Collective Bargaining Agreements: Unión Argentina de Trabajadores Rurales y Estibadores (Argentine Trade Union of Farm workers) and they are aware of all the information related to their labor rights and benefits, including, without limitation, their right to participate in the relevant unions and to reasonably express their opinions. No contract, agreement, plan, trust, escrow agreement, guarantee, letter, understanding or any other written or oral agreement requires or provides for any payment in cash or any other consideration, nor otherwise provides for any type of special benefit other than those benefits established by the labor laws, the collective bargaining agreements and the regulations applicable to any employee upon termination of employment, including, without limitation, the execution of this Offer or any transaction contemplated herein.

(5) The Company has no plan, agreement or commitment of payment, benefit, award, subsidy and/or compensation other than and/or additional to the payment of monthly salaries (and thirteenth salary), to be paid to the personnel of the Company as of the date hereof, nor any plan, agreement or commitment regarding incentives, deferred remuneration, profit sharing, stock options, equity compensation benefits, share acquisition, saving, retirement, pension or any other benefit plans, except for the ones stipulated by law.

(6) The Company complies with all national and provincial laws on employment and labor practices, including without limitation salaries, working hours and acknowledgment of additional benefits. The Company has not engaged in unfair or illegal labor practices, including without limitation unfair, unequal and discriminatory treatment in hiring processes, working conditions, wages or termination of employment.

(7) The Company does not and has not hired any individuals under the age of 18 in any manner that may be deemed as exploitation or an unsafe practice. The Company does not and has not hired forced manpower, which is understood, without limitation, as any work not voluntarily performed or performed under threat of violence or punishment. The Company does not render illegal or prohibited services.

(8) The working environment in which the Company conducts its business is safe and healthy. The Company has taken all the necessary steps to prevent potential accidents, injuries and illnesses, by establishing, among others, policies of prevention, protection and employee training as per the recommendations made by the Labor Risk Insurance Company (ART, for its Spanish acronym) hired by the Company. The Company has an occupational medical service for the performance of medical pre-employment examinations.

(9) The Company does not have any variable compensation plan effective or subject to the results of operations or to the individual performance of each employee belonging to this group. There are no agreements providing for any payments to employees depending on the value of any of the Company’s shares of stock or of any equity interest in the Company, or on any change of control of the Company; and no amount shall be payable nor any obligation shall arise (contingent or of any other nature) regarding any of the Company’s directors or employees.

(10)	No strike or other material labor dispute is being suffered by the Company.

(11) Exhibit 3.01(k)(l) contains a list of all of the Company’s employees, their salaries, benefits, job positions and seniority.

(12) Except as stated in Exhibit 3.01 (k)(12) , there are no loans of any nature granted by the Company to its employees and/or directors, nor loans to its employees and/or directors guaranteed by the Company.

(13) Except as stated in Exhibit 3.01 (k)(13) , the Company has no pension plans and/or guarantees, benefits or allowances granted to its employees and directors.

(i)	Environmental Matters

(1) The Company currently complies and has complied at all times before the Closing Date with environmental laws and regulations. Sellers have no knowledge about the existence of conditions, circumstances, acts and/or omissions of the Company in that respect which may adversely affect the Company or which may lead to an audit, claim or legal action for damages or injuries or for the infringement of environmental regulations currently in force. Sellers have no knowledge about the fact that the Company or any other person whose acts may cause the Company to be liable, has failed to comply with its environmental, health and safety obligations.

(2) The Company has not received any notice of any resolution stating that environmental, health or safety laws have been violated. Sellers have no knowledge about the existence of any current or potential claim or action filed against the Company grounded on the regulations related to hazardous waste, environment and occupational safety applicable to each of the jurisdictions where Sellers´ business is conducted and their assets are located. Sellers have no knowledge about the existence of any event that may give rise to such claims or actions, as a consequence of the infringement of applicable laws.

(3) The Company has all the permits and authorizations required by environmental laws and/or those necessary in each jurisdiction where its business is conducted and its assets are located, so as to conduct its business as it is being currently conducted. For purposes hereof, “material permits or authorizations” shall be understood as those which lack or omission may give rise to closure, suspension or modification of the activities and the business that the Company conducts or to the application of sanctions to the Company. To Sellers’ best knowledge, in the Company’s Real Property and/or in the places where the Company conducts its business, there have been no pollution events whatsoever which might have been considered as environmental or any other kind of damage for which the Company may be liable. There are no materials containing asbestos or “PCB” inside or above the premises where the Company conducts its business. Effluents and other toxic waste caused by the premises where the Company conducts its business are treated, stored and/or transported pursuant to applicable laws issued by the corresponding Governmental Authorities and such effluents and toxic waste do not generate and have never generated, without limitation, contamination affecting the employees, neighbours to the premises, the plots of land where such pieces of real property are settled, the adjoining plots of land, the groundwater layer, the fauna and/or the environment.

(4) Sellers have no knowledge that the Company has caused environmental damage of any kind in the conduct of its business activities for which the Company may be liable to any third party for the infringement of environmental laws.

(m)	Law Compliance

(1) The Company’s business is conducted in compliance with applicable laws, ordinances and/or regulations issued by Governmental Authorities and entities.

(2) All governmental approvals, permits and licenses required to conduct its activities are fully in force and valid and the Company complies with all the necessary requirements so as to maintain them in effect in all their material respects.

(n)

Disputes

Exhibit 3.01 (n)(l) contains a list (collectively defined as “ Disputes ”) of: (i) any lawsuits, legal actions, administrative proceedings or investigations initiated by or against the Company, as plaintiff, main defendant, co-defendant or summoned third party, or related in any manner to its activities or to the transactions herein contemplated, which are pending and known to the Company, (ii) any existing and, to Sellers’ best knowledge, actual or threatened orders, judgments, precautionary measures, awards, resolutions or writs issued against the Company and notified to it, to which the Company is or shall be subject to comply. Sellers have no knowledge of the existence of any pending or threatened proceeding before a court or governmental body involving the Company and/or Sellers, by means of which a judgment, decree, resolution or order may be issued which may have an adverse effect on the Shares, the Company’s assets or business and/or on the purchase and sale contemplated herein, or which may prevent the delivery and acceptance of this Offer, may turn the purchase and sale contemplated herein unlawful or that may cause termination of the purchase and sale contemplated by this Offer or that may require Purchasers to divest of the Shares. Sellers have no knowledge of any threatened action or proceeding by any Governmental Authority against the Company or Sellers based on the infringement of any applicable provincial or local laws and regulatory provisions. There are no agreements on professional fees, nor professional fees, costs, legal expenses and/or other litigation expenses which have not been paid by the Company.

Without limiting in any manner whatsoever the generality of the aforementioned paragraph, Sellers represent that there is no litigation and/or claim of any nature, whether current or pending or, to Sellers’ knowledge, threatened by Company’s clients in relation with the products that the Company trades, except for the claim described in Exhibit 3.01 (n)(2).

(n’)	Guarantees in Favour of Third Parties

The Company has not granted any guarantees, sureties or bonds, nor undertaken any commitments or debts for the benefit of any Person. Sellers have no knowledge about any situation or the occurrence of any event that may give rise to a claim against the Company for any liability arising under any express or implied guarantee that is not fully insured.

(o)	Agreements

The agreements and the legal relations listed in Exhibit 3.01 (o) are the only agreements (oral or written) in force to which the Company is a party. Furthermore, the Company does not infringe its obligations nor fails to comply with them, pursuant to their terms and conditions. All the agreements listed in the above mentioned Exhibit are valid, legally binding and enforceable pursuant to their terms. Any agreements between the Company and Affiliates or related companies (if any) have been entered into upon terms and conditions on an arm’s length basis. Such agreements will be considered lawfully terminated by Sellers or by the Company, as the case may be, on the Closing Date, without further responsibility for the Company or Purchasers.

Except as stated in Exhibit 3.01 (o)(1) , there are no agreements entered into by the Company which provide for any effects in the relationship of the parties in the event of change of control, either directly or indirectly, of the Company.

(p)	Third Parties’ Rights

Except as stated in Exhibit 3.01 (p), (i) the Company has not entered into any lease, license, easement or gratuitous loan agreement, or other oral or written agreement granting any rights to third parties regarding the Company’s personal or real property, and (ii) no individual or entity has any right to possess or to occupy any piece of Company’s property.

(q)	Shareholders’ Agreements

Regarding the Company, there are no shareholders’ agreements, syndication agreements, parasocial agreements, call options, put options, usufruct of assets or other agreements entered into between Sellers themselves or between Sellers and any third party, or between the Company and any third party, which may limit, encumber or divide the ownership title to property, the transferability of Shares or the rights attached to them.

(r)	Bank Accounts

Exhibit 3.01 (r) includes a list of all the bank accounts of the Company and the names of each individual authorized to operate with such accounts and to draw checks therefrom.

(s)	Powers of Attorney

Other than those listed in Exhibit 3.01 (s), there are no powers-of-attorney in effect authorizing any individual to act, individually or jointly, on the Company’s behalf and for its account. Revocation of any or all the powers-of-attorney stated in the aforementioned Exhibit shall not grant any attorney-in-fact the right to demand any sum of money from the Company or its shareholders for any reason.

(t)

Defaults

The Company is not in default, and no event has occurred, either by the elapse of time nor by notice, which may give rise to the default of any outstanding promissory note, trust agreement, mortgage, contract or agreement to which the Company is a party or by which it is bound, or to the default under any provision of the articles of incorporation or the by-laws of the Company. The execution and acceptance of this Offer, performance hereunder and the consummation of the purchase and sale herein contemplated shall not infringe any provision and shall not constitute a default, modification, acceleration under any law, provision, precautionary measure or decision issued by any court, Governmental Authority or entity, or board of arbitrators, of any agreement, promissory note, security agreement, or other agreement or act to which the Company or Sellers are a party or by which the Company or Sellers are bound.

(u)	Debts and Credits with Affiliates

Except as provided in Exhibit 3.01 (u) , the Company has no credits or debts, transactions or agreements with Sellers, Affiliates (without including the Company in this definition) and/or with related companies of Sellers (without limitation, companies in which one or some Company’s direct and/or indirect owners are shareholders, regardless of the percentage of capital represented by such shares in the relevant company, and/or in which Sellers exercise a dominating influence, and/or companies in which any of its owners are directors or managers of the Company and/or relatives of its directors, managers or the Sellers themselves, within the fourth degree of kinship).

(v)	Inventories; Credits; Contract Forms

The Company’s inventories as stated in the Financial Statements pertaining to the Company’s fiscal year closed on June 30th, 2011 are recorded pursuant to the valuation rules established in the notes attached thereto and they do not infringe such valuation rules or the GAAP. The Company’s credits are valid and constitute legally enforceable obligations against the respective debtors.

(w)	Statement of accuracy

No representation or warranty made by Sellers in this Offer contains or will contain as of the Closing Date any false assertion of any event nor omits or shall omit on the Closing Date to state any event that is required to be informed on such Closing Date and that is necessary for the representations made herein not to be misleading.

(x)

Products

All products manufactured and/or traded by the Company have any permits, certificates and authorizations required by national, provincial and/or municipal laws in force. Except as stated in Exhibit 3.01 (n)(2) , there is no claim whatsoever made by any Governmental Authority, consumer association or third party in relation to products manufactured and/or traded by the Company. All finished and unfinished products, raw materials, supplies and further materials, in each case, related to the Company’s business, are of acceptable quality and may be sold on equal terms with respect to third parties, pursuant to regular commercial terms and conditions, and they comply, without limitation, with all regulations applicable thereto.

(y)	Intellectual Property

(1) Exhibit 3.01 (y) includes an accurate and full list of all the Intellectual Property Rights that the Company uses to conduct its business. Such Exhibit includes a detail of the jurisdictions in which the Intellectual Property was registered and indicates (1) if applicable, if a license has been granted to a third party; and (2) in case such Intellectual Property does not belong to the Company, evidence of the relevant agreement under which the Company uses such Intellectual Property. The Intellectual Property listed in such Exhibit has been duly applied for, registered and filed with the corresponding trademark and patent or other authorities, and any such applications, registrations and filings have been kept in effect and have been properly renewed, pursuant to the legal requirements of the pertaining jurisdiction. There is no Lien, claim or legal action from any person in connection with the Intellectual Property. The Company has the sole and exclusive right to use the Intellectual Property in the jurisdictions where it conducts its business, including without limitation the jurisdictions where its products are distributed or sold; and the perfection of the transactions herein contemplated shall not modify or limit such rights. The use of any software without the pertaining licenses and its eventual identification in the exhibits attached hereto shall not extinguish Sellers´ liability for Damages derived from the lack of such licenses.

(2) The Intellectual Property used or held in relation to the business does not infringe or impair the rights of any other person; and no other person has infringed the Company’s rights in relation to its Intellectual Property.

(3) There are no fees on account of licenses, royalties or any other amounts payable to third parties by the Company in connection with the use of the Intellectual Property.

(4) Except as stated in Exhibit 3.01 (y)(4) , the Company is not a party to the technical support agreements currently in force. There is no current or threatened claims related to the technical support agreements to which the Company has been a party before the Closing Date.

(z)	Company’s Carriers and Providers

Exhibit 3.01 (z)(l) lists the individuals and entities that have conducted, occasionally and/or on a permanent basis, for the last two (2) years preceding the Closing Date, or that conduct at present the transportation of the products for the Company (defined as “ Carriers ”). Except for Carriers detailed in Exhibits 3.01 (z)(l) , there are no other third parties that transport Company’s products in any manner whatsoever. Exhibit 3.01 (z)(2) lists the individuals and entities that render or have rendered services to the Company for the last two (2) years preceding the Closing Date, in the areas of catering, security, cleaning, sowing, harvesting and/or farming tasks in general (defined as “ Providers ”). Except for the persons listed in Exhibit 3.01 (z)(2) , no other third parties have been Providers of the Company. All the agreements with Carriers and Providers have been entered into as agreements between independent parties, each such parties being responsible for its own acts and those of its dependants, and in full compliance with the applicable laws.

(aa)	Promissory Notes, Sureties, Bonds

The Company has not executed or issued any promissory notes, sureties or bonds of any nature which may be effective as of the Closing Date, in favour of any third party, including, without limitation, any shareholders of the Company or members of the board of directors.

(bb)	Foreign Exchange Matters

The Company has complied and complies with all regulations on foreign exchange, including all regulations applicable to the import and export of goods (for example, without limitation, the Company complies with the regulations governing the repatriation of assets and the submission of reports to the Central Bank of the Argentine Republic). There are no summary proceedings on foreign exchange matters or any other type of foreign exchange Disputes initiated against the Company. Exhibit 3.01 (bb) details the current export and import transactions as of the Closing Date.

(cc)

Dividends

The Company does not owe any amount whatsoever to Sellers or to any other Person on account of declared or outstanding dividends; in any case, Sellers waive any right to file any claim in connection therewith.

(dd)	Lease Agreements

Exhibit 3.01 (dd) lists all leases pursuant to which the Company is the lessor, sublessor, lessee or sublessee of any piece of real property, identifying in each case its location. The Company has not extended or committed to extend any of the listed agreements.

(ee)	Permits, Authorizations

(1) The Company is and has been in full compliance with all the Legal Requirements applicable to it, to its business activity or transactions, and to the property or the use of any of its assets. Furthermore, it has all the permits, licenses, approvals and/or any other required authorizations to conduct its business as same is currently conducted. The above mentioned

term “Legal Requirements” means any order, constitution, law, decree, ordinance, authorization, regulation, by-laws or treaty, whether federal, provincial, municipal, international, multinational or administrative, as well as any award, decision, judicial requirement, order, resolution or summons issued, performed or ordered by any court of justice, tribunal, arbitrator or Governmental Authority.

(2) The Company has not received any notice or communication whatsoever (whether oral or written) from any Governmental Authority or any other person regarding any current, alleged or potential infringement of any Legal Requirement or non-compliance therewith. Further, the Company does not have any reason to believe that it may receive such a notice or communication in the future.

(3) To Sellers’ best knowledge, neither an event has occurred nor any circumstances exists which (i) may derive or result in the infringement of any Legal Requirement by the Company; or (ii) may give rise to any obligation for the Company to initiate, or pay the costs in whole or in part of, any remedy of any nature applicable thereto.

ARTICLE FOUR

REPRESENTATIONS AND WARRANTIES OF PURCHASERS.

SECTION 4.01 Representations and Warranties of Purchasers

Purchasers represent and warrant the following to Sellers on the Closing Date:

(a)	Organization and Requirements

Each one of Purchasers is a company duly organized according to the laws of its jurisdiction of incorporation and is vested with full powers and authority to send this Offer, and data of each Purchaser is as follows:

(l) Kadesh Hispania, S.L is a single-member company ( sociedad unipersonal ) duly organized in the Kingdom of Spain, domiciled at Calle Juan Vara Terán 14, Santa Cruz de Tenerife, Spain and with a valid C.I.F. B-83953901. It is organized pursuant to the Notarial Record Instrument executed on April 1, 2004 before Notary from Madrid, D. José Luis Martínez-Gil Vich, under Record number 854 of the notary registration book and recorded in the Registry of Commerce of Santa Cruz de Tenerife on Volume 2649, Folio 170, General Section, Page TF-3605, 1st and 2nd Registration and recorded in the Registry of Commerce of the City of Buenos Aires as per the provisions set forth by section 123 of the Argentine Law No. 19550, on October 8, 2004 under Record number 1021, Book 57, Volume B of Foreign Bylaws Book. Adecoagro L.P. is the holder of all the company’s capital and votes of Kadesh Hispania, S.L .

(2) Leterton España, S.L is a single-member company duly organized in Spain, domiciled at Calle Juan Vara Terán 14, Santa Cruz de Tenerife, Spain and with a valid C.I.F. B-83979724. It is organized pursuant to the Notarial Record Instrument executed on April 1, 2004 before Notary from Madrid, D. José Luis Martínez-Gil Vich, under Record number 1121 of the notary registration book and recorded in the Registry of Commerce of Santa Cruz de Tenerife on Volume 2649, Folio 170, General Section, Page TF-3605, 1st and 2nd Registration and recorded in the Registry of Commerce of the City of Buenos Aires as per the provisions set forth by section 123 of the Argentine Law number 19550, on October 8, 2004 under Record number 1,020, Book 57, Volume B of Foreign Bylaws Book. Adecoagro L.P. is the holder of all the company’s capital and votes of Leterton Hispania, S.L.

(b)	Authorization

Purchasers are not currently, nor will be as of the Closing Date, affected by any restriction or impediment to execute and perform this Offer. Neither the execution of this Offer nor its performance results in any default or infringement by Purchasers of any law, executive order, administrative resolution or court order, agreement, permit, certificate, license or any other legal instrument to which Purchasers may be parties or by which Purchasers may be bound or subject to.

(c)	Sufficient Powers

(l) Purchasers and their attorneys–in-fact, regarding their acts in the name and on behalf of Purchasers, as of the Closing Date, have full powers and authority as may be necessary to accept, agree on this Offer and execute it and the remaining offers and documents related hereto, to cause fulfilment of the obligations undertaken by Purchasers hereunder and under the remaining offers and documents related hereto, to consummate the transactions contemplated in this Offer and/or the remaining offers and documents related hereto, which have been duly authorized.

(2) This Offer, as any other Offer or document related hereto, is or has been duly signed, delivered and executed by Purchasers and/or their attorneys-in-fact, and constitutes or shall constitute, as the case may be, a legal, valid and binding obligation of Purchasers, legally enforceable in accordance with its pertinent terms.

(3) The delivery, acceptance, compliance and execution of this Offer, and of any other offer or document related hereto, does not require and will not require Purchasers to obtain any other consent, waiver, authorization or approval from any person, entity or authority or Governmental Authority except for those stated in this Offer and the Antitrust Approval.

(4) The delivery, acceptance and compliance of this Offer and of any other offer or document related hereto by Purchasers do not: (i) infringe any provision contained in any regulations or applicable law to which Purchasers may be subject; (ii) violate or result in an infringement or constitute grounds for termination, total or partial amendment or expiration of any term or condition of any contract, agreement or collective agreement under which Purchasers and/or any of their assets are bound to or involved with, and (iii) infringe any resolution, decision or judgment issued by any Governmental Authority or judicial authority applicable to Purchasers.

(5) Purchasers (i) are free from any Lien, injunction, court order or any other claim or action that [prevent them from] freely purchasing the Shares, (ii) are not in suspension of payments and have not filed for reorganization proceedings or their own bankruptcy, neither do they have pending petitions in bankruptcy; and (iii) are vested with immunity and/or any special situation that prevent them from being parties to legal proceedings and subject to a judgment.

(6) Does not result in the creation or imposition of Liens on the Company and/or on any of the Company’s assets and/or the relevant Shares, except for the Pledge.

(d)	Disputes and Obligations

At present there are not: (a) any legal actions, litigation, investigations or pending or imminent proceedings against Purchasers which are known to Purchasers; (b) any infringements to laws or regulations; (c) any obligations or liabilities, or (d) any events or circumstances known to Purchasers, in any case, that might result in any claim against Purchasers or in Purchasers´ obligation or liability which, jointly or otherwise, (1) may be reasonably expected to prevent, delay or impair Purchasers’ ability to comply with their obligations under this Offer in any respect, or (2) may affect the validity of this Offer or the execution of the transactions established in this Offer.

(e)	Statement of accuracy

No representation or warranty made by Purchasers in this Offer contains or shall contain as of the Closing Date any false assertion of any event nor omits or will omit on the Closing Date to state any event that is required to be informed on such Closing Date and that is necessary for the representations made herein not to be misleading.

ARTICLE FIVE

REPRESENTATIONS AND WARRANTIES—INDEMNITIES.

SECTION 5.01 Nature of the Representations

For purposes of this Offer, the information contained in the Exhibits, in the certificates and in any other documents attached hereto, as well as the representations and warranties made herein, shall be further construed as representations and warranties made in this Offer by Sellers or by Purchasers, as the case may be. The information provided by Sellers in this Offer, Exhibits, certificates and other documents attached hereto and all investigations, research and inspections performed or to be performed by Purchaser, and the results thereof, shall not limit or reduce the liability and obligation to indemnify Sellers’ Damages arising from their representations, warranties and other obligations hereunder pursuant to the provisions set forth in Section 5.02 of this Offer.

SECTION 5.02 Indemnity of Purchasers

Sellers undertake to jointly and severally defend and hold Purchasers, its Affiliates, successors and assignees, the Company and the Company’s and the Purchasers’ officers, directors, managers and employees harmless from any and all liabilities, claims, contingencies, requests, obligations, actions, damages, injuries, losses, fines, sanctions or expenses (including without limitation interests and punitive interests, reasonable attorneys’ fees and expenses) (defined as the “ Damages ”) suffered or paid or payable as a consequence of, or arising from:

(a) (1) Unregistered and/or undisclosed liabilities of the Company existing prior to the date of execution of this Offer (jointly defined as the “ Undisclosed Liabilities ”), (2) Company’s liabilities inadequately registered and/or inadequately disclosed as of March

31, 2011, and (3) liabilities arising after March 31, 2011 through the date of execution of this Offer not arising from the ordinary course of business of the Company including, under such circumstances, attorneys’ fees and other expenses required to settle such liabilities (1, 2 and 3 jointly, and jointly with the following items (b), (c) and (d), defined as the “ Indemnifiable Liabilities ”),

(b) the inaccuracy of the Representations and Warranties contained in Article III of this Offer as well as any infringements of any laws, rules or regulation and/or any default regarding any contractual undertaking, by or on behalf of the Company, arising prior to the Closing Date even if they have been disclosed herein, shall be expressly borne by Seller as Damages;

(d) any claims of third parties to the Company which cause or origin is prior to the Closing Date.

For the purposes of the provisions set forth in items (a), (b), (e) and (d) hereinabove, notices sent by Purchasers to Sellers shall include all the documentation held by Purchasers evidencing any Damages or claims which may result in Damages.

SECTION 5.03 Indemnity of Sellers

Purchasers undertake to jointly and severally defend and hold Sellers harmless from all Damages suffered or paid as a consequence of, or arising from:

(a) the inaccuracy of the Representations and Warranties contained in Article IV of this Offer;

(b) any default of the obligations undertaken by Purchasers hereunder; and/or

(c) the payment made by any of the Sellers of amounts claimed to any of the Sellers for bonds and personal guarantees granted by Sellers as stated in Exhibit 5.03(c) . This indemnification obligation shall terminate upon Purchasers obtaining the unconditional release and/or replacement of the bonds and personal guarantees described in Exhibit 5.03(c) .

For purposes of items (a) and (b) hereinabove, all notices sent by Sellers to Purchasers shall include all the documentation held by Purchasers evidencing the existence of Damages.

SECTION 5.04 Submittal and Defence of Claims—Offset

(a) Any of the Parties (defined as the “Indemnifiable Party”) that becomes aware of the existence of an event, claim, request, Damage and/or Indemnifiable Liability or of any other event that may give rise to the indemnification obligation of the other Party (the “ Indemnifying Party”) shall serve notice by any legally reliable means on the Indemnifying Party within the shortest term between (1) thirty (30) days as from becoming aware of the existence of such event, claim, request, Damage and/or Indemnifiable Liability or (2) upon

the existence of a procedural term with an expiration date, before expiry of the first half of such term, providing all the available information and documentation that such Indemnifying Party may request in relation to such event, claim or request. The Indemnifying Party shall take all the necessary steps it may deem advisable to fulfill its indemnification obligation regarding the other Party, which may, at its own expense and cost, take any other pertinent action for its defence.

(b) As soon as possible and within the shortest term, but under no circumstances after: (y) ten (10) days as from notice served by the Indemnifiable Party informing the existence of an event, claim, request, Damage and/or Indemnifiable Liability, or (z) after expiration of the first half of such term to answer a third party’s claim, the Indemnifying Party shall, by serving notice on the Indemnifiable Party, (i) indicate its consent to the claim and the manner in which the remedy shall be made effective; or (ii) indicate its objections to the claims describing the grounds therefor. In the event of silence upon expiration of the term stated herein, the Indemnifying Party will be deemed to have implicitly acknowledged the event, claim, request, Damages or Indemnifiable Liabilities and the indemnification right of the Indemnifiable Party.

(c) The acts of the Indemnifying Party according to the provisions set forth in the foregoing paragraph (b), item (i), shall imply the acknowledgement of the event, claim or request that may cause damages to be indemnified under Section 5.02 or 5.03, subject to the indemnification obligation of Sellers or the indemnification obligation of Purchasers, as the case may be. In such case, the Indemnifying Party shall be entitled to manage and control, by an attorney at law appointed and borne by such Party, the defence and resolution of such event, claim or demand and the Indemnifiable Party must cooperate with the Indemnifying Party in relation thereto by: (y) allowing the Indemnifying Party to have reasonable access, in business days and working hours, to the books and records that are necessary for the defence; (z) keeping the Indemnifiable Party continuously informed as to any developments in the action. However, it is expressly stated that (1) the Indemnifying Party shall not enter into an agreement leading to the creation or imposition of a lien on the property or assets of the Indemnifiable Party and/or the Company without its prior consent, which may not be unreasonably denied; (2) the Indemnifying Party shall not consent to any agreement that does not include as an unconditional term thereof the granting of a total release of any obligation regarding the action filed against the Indemnifiable Party; (3) the Indemnifying Party shall allow the Indemnifiable Party to participate by giving advice in relation to the conduct or settlement process by means of the attorneys at law appointed by the Indemnifying Party, at its own cost and expense; and (4) the Indemnifying Party shall agree to reimburse to the Indemnifiable Party the total amount of Damages and/or Indemnifiable Liabilities not subject to prior Withholding, within a ten (10) Business Day-term as from notice of final judgment or definitive award, or upon any settlement agreement ending the referred action (except for expenses paid by the Indemnifiable Party pursuant to the preceding item (3)) or upon them being borne by the Indemnifiable Party. Sellers’ remedy of the Damages in accordance with the provisions set forth in Section 5.02 shall be comprehensive. Purchasers’ remedy for the Damages in accordance with the provisions set forth in Section 5.03 shall be comprehensive.

defence thereof at the expense of the Indemnifying Party, subject to the decisions adopted under the mechanism stated in Section 6.02. In such regard, the Indemnifiable Party, in its own discretion, may defend, answer and make arrangements regarding such action and the Indemnifying Party, if applicable and upon request of the Indemnifiable Party, shall pay (upon resolution of the dispute as to whether the claim is a Damage and/or an Indemnifiable Liability subject to the indemnification obligation of Sellers or the indemnification obligation of Purchasers, as the case may be) the amount of any Damage or Indemnifiable Liability which compensation is provided for herein, within five (5) Business Days upon notice served by such party informing the final judgment or definitive award or the transaction performed by the Indemnifiable Party. The delay in payment shall be automatic and upon elapse of time and no court or out-of court proceeding shall be necessary in such an event. Upon delay in payment, the Parties agree an annual twelve (12) percent interest rate on the due balance in Dollars as from the date of default until the effective payment date.

(e) The payments established in this Section 5.04 shall be made in cash with immediately available funds, by wire transfer according to the written instructions received by the Indemnifiable Party. Without prejudice to this payment obligation provided for in the preceding item, in the event Sellers were the Indemnifying Party and Purchasers were the Indemnifiable Party, Purchasers may withhold from and/or offset any amount receivable by Sellers from Purchasers including, without limitation, the Balance of the Price and/or the Adjusted Balance, any amounts payable by Sellers to Purchasers. Sellers may also offset any amount payable by Purchasers to Sellers including, without limitation, the Balance of the Price and/or the Adjusted Balance, against the amounts payable by Sellers to Purchasers. Alternatively, Sellers acknowledge that Purchasers may request application of the provisions of this Section in order to make the offset and Sellers hereby waive their right to object to such offset.

(f) Notwithstanding the foregoing, where Purchasers or the Company were the Indemnifiable Party, Purchasers may cause Sellers’ obligation to indemnify Damages to be performed in the most efficient manner from a legal, accounting and/or tax point of view; and for such purpose, they shall inform Sellers the name of the effective beneficiary of the reimbursement of the incurred Damages.

(g) Sellers shall, at their own expense, continue with the defence in trial and of the claims listed in Exhibit 5.04 which is subject to the provisions contained in items (c), (e) and (f) of this Section 5.04.

SECTION 5.05 Effectiveness and limitations of the indemnification obligation .

The indemnification obligation established in this Article V shall be due and payable as from the Closing Date and until expiration of the following terms (provided that the claiming Party has not filed the claim at issue prior to the expiration of such terms, in which case, it shall remain effective until final and conclusive termination of the pertinent claim).

(a)	Sellers’ indemnification obligations shall survive:

(1)	for the period provided by the statutes of limitations in the event of: Damages or Indemnifiable Liabilities arising from defaults, inaccurate information or false statements in the Representations and Warranties made by Sellers in Sections 3.01 (a), (b) and (c) hereof;

(2)	for the period provided by the statutes of limitations in the event of Damages or Indemnifiable Liabilities related to Damages or Indemnifiable Liabilities arising from fraudulent acts;

(3)

for a five (5) year-period as from the Closing Date due to defaults or inaccurate information or false statements in the Representations and Warranties made by Sellers in Article III, Paragraphs (i) and (k), but in the case of (k) only as regards representations and warranties related to social security obligations; and

(4)	for a two (2) year-period as from the Closing Date in the event of any other Damage and/or Indemnifiable Liability not included in items (1), (2) and (3) above.

(b)	Purchasers’ indemnification obligations shall survive:

(1)	for the period provided by the statutes of limitations in the event of damages or injuries derived from fraudulent acts;

(2)	for the period provided by the statutes of limitations in the event of damages derived from defaults or inaccurate information or false statements in the Representations and Warranties made by Purchasers in Sections 4.01 (a), (b) and (c) hereof;

(3)	for a two (2) year-period as from the Closing Date in the event of any other damage not included in the foregoing items (1) and (2).

(c) Sellers’ maximum indemnification amount for Damages and/or Indemnifiable Liabilities shall be (i) the Purchase Price in case of defaults or inaccuracies or false statements in the Representations and Warranties made by Sellers in Sections 3.01 (a), (b), (c) and (h) hereof; and (ii) FOUR MILLION DOLLARS (USD 4,000,000) for any other Damages and/or Indemnifiable Liabilities, in both cases ((i) and (ii)) except for damages and/or injuries arising from fraudulent acts, in which case there shall be no limitation to Sellers’ indemnification obligation.

SECTION 5.06 Minimum indemnification amount

The Parties agree that the Indemnifying Party shall not indemnify the Indemnifiable Party until the arithmetic sum of the amounts of the Claims, Damages and/or Indemnifiable Liabilities known by the Indemnifiable Party exceeds one hundred thousand Argentine pesos (ARS 100,000) (the “ Claims Threshold ”). If the Claims Threshold is exceeded, the Indemnifying Party shall indemnify the Indemnifiable Party for the total amount of the Claims Threshold plus any amount in excess for Claims, Damages and/or Indemnifiable Liabilities pursuant to and to the extent of this Article V. Purchasers may withhold from the Adjusted Balance or the Security Balance any Claim, Damage and/or Indemnifiable Liability even if they do not reach the Claims Threshold until Sellers’ indemnification obligation regarding the relevant Claims, Damages and/or Indemnifiable Liabilities is extinguished.

SECTION 5.06 Assignment of rights

In the event the Indemnifying Party has indemnified the Indemnifiable Party in accordance with the provisions of this Article V, the Indemnifiable Party will assign, at the expense of the Indemnifying Party, to the Indemnifying Party any right of action for the recovery or subrogation that the Indemnifiable Party may have against the claimant or third parties.

ARTICLE SIX

APPLICABLE LAW AND SETTLEMENT OF DISPUTES

SECTION 6.01 Applicable Law

This Offer shall be governed by, and construed in accordance with, the laws of the Argentine Republic.

SECTION 6.02 Settlement of Disputes

(a) Any and all disputes between the parties to this Offer arising from or in connection with the negotiation, execution, interpretation, performance or non-performance of this Offer and the purchase and sale contemplated herein shall be solely and finally settled by arbitration in law (the “ Arbitration ”), which shall be conducted: (i) in Spanish, in Montevideo, Republic of Uruguay. Arbitration shall be governed by the arbitration rules of procedure established by the International Chamber of Commerce (the “ ICC ”) based in Paris, France. The arbitration court shall consist of three (3) arbitrators. Each one of the Parties (for purposes of this Section Sellers shall be deemed as one Party and Purchasers as another Party) shall be entitled to select one arbitrator among those included in the ICC arbitration list corresponding to the jurisdiction where the dispute is to be settled. The third arbitrator may be selected by mutual agreement of the Parties or, failing such agreement, he shall be appointed by the President of the ICC. The Parties hereby waive their right to file any judicial action and agree that the Arbitration award shall be final and shall not be subject to judicial review. The arbitration court shall decide the issues submitted to arbitration in accordance with (i) the provisions and business intent of this Offer, and (ii) the laws, according to the circumstances, by applying to all relevant legal issues the laws of the Argentine Republic (without regard to the rules of international private law of the Argentine Republic).

(b) The Parties agree to facilitate the arbitration by (i) making available to one another and to the arbitration court for examination, inspection and extraction all documents, books, records and personnel under their control if determined by the arbitration court to be relevant to the dispute; (ii) conducting arbitration hearings to the greatest possible extent on successive days; and (iii) observing strictly the time periods established by the ICC’s rules of procedure or by the arbitration court for the submission of evidence and briefs.

(c) Judgment on the award of the arbitration court may be entered in any court having jurisdiction over the Party to the arbitration against which enforcement of the award is being sought. The arbitration court shall divide all costs (other than the fees of counsel to each of the parties) incurred in conducting the Arbitration in the final award in accordance with what the arbitration court may deem fair and equitable under the circumstances.

ARTICLE SEVEN

MISCELLANEOUS PROVISIONS

SECTION 7.01 Notices .

All notices between the Parties shall be in writing and given by any legally reliable means, addressed as follows:

To the Sellers jointly:

Ricardo Rojas 401

Piso 9 (Cl001EAE)

Ciudad Autónoma de Buenos Aires

Argentina

With a copy (which shall not be deemed as a notice) to:

Reconquista 1166 piso 12

Ciudad Autónoma de Buenos Aires

Argentina

To Purchasers:

Adeco Agropecuaria S.A.

Avda. Fondo de la Legua 936

B1640EDO Martinez (Pcia de Buenos Aires)

With a copy (which shall not be deemed as a notice) to:

Marval, O’ Farrell & Mairal

AV. Leandro N. Alem 928, piso 7°

Ciudad de Buenos Aires

SECTION 7.02. Severability

In case any provision of this Offer was held to be invalid or unenforceable in any jurisdiction, it shall be deemed invalid in such jurisdiction to the extent of such invalidity or unenforceability, and the remaining provisions of this Offer will not be affected thereby. The invalidity or unenforceability of a provision declared in any jurisdiction shall not turn such provision invalid or affect its applicability in any other jurisdiction. In the event any provision of any law or regulation from which such invalidity or unenforceability results may be waived, the Parties hereby waive any such provision to the greatest extent permitted by law, so that this Offer shall be deemed a valid and binding Offer, enforceable in accordance with its terms.

SECTION 7.03. Public Disclosure

The Parties shall not make any public announcement or disclosure but by mutual written agreement. An exception is made in the event of those disclosures that any of the Parties is legally bound to make, in which case the text thereof shall be agreed upon with the other Party. In the event of any controversy regarding the contents of a publication, the reasonable criterion of the Party bound to make such public disclosure shall prevail.

SECTION 7.04. Confidentiality

Any information exchanged between the Parties relating to this Offer and the existence and terms of this Offer are and will continue to be treated as confidential information, except for information that becomes available to the public as a result of its disclosure either by a third party who is not subject to any confidentiality obligation or by the Party that furnished the confidential information and/or if such information is required to be disclosed by an administrative or judicial authority duly empowered to require such disclosure and/or if a controversy arises between the Parties in connection with the construction, validity, performance or default of this Offer.

SECTION 7.05. Costs and Expenses

Each Party shall pay its own expenses, including the fees and expenses of such Party’s advisor, in connection with the preparation and execution of this Offer and the completion of the transactions contemplated herein. The Parties state that they have received due legal and accounting advice for executing the transactions contemplated in this Offer.

SECTION 7.06. Taxes

Each Party shall pay any taxes that may be imposed on such Party as a consequence of the transaction consummated hereby. Notwithstanding the foregoing, the stamp tax, if applicable, shall be payable as follows: 50% (fifty percent) shall be paid by Purchasers and 50% (fifty percent) shall be paid by Sellers.

SECTION 7.07. Authorization to Execute Exhibits

(a) Purchasers hereby authorize Messrs. to execute, in the name and on behalf of Purchasers, the Exhibits to this Offer and, for such purpose, Purchasers irrevocably empower and authorize such persons, indistinctly, to sign the Exhibits to this Offer. Sellers hereby consent to such authorization. The signatures or initials of the aforementioned authorized persons shall bind the Purchasers as to the contents of the Exhibits in the same manner as the Offer and shall have the same effect and be as valid as if such Exhibits were signed by the representatives of Purchasers executing this Offer.

(b) Sellers hereby authorize Messrs. to execute, in the name and on behalf of Sellers, the Exhibits to this Offer and, for such purpose, Sellers irrevocably empower and authorize such persons, indistinctly, to sign the Exhibits to this Offer. Purchasers hereby consent to such authorization. The signatures or initials of the aforementioned authorized persons shall bind the Sellers as to the contents of the Exhibits in the same manner as the Offer and shall have the same effect and be as valid as if such Exhibits were signed by the representatives of Sellers executing this Offer.

SECTION 7.08. No waiver

No waiver by one of the Parties of its right to demand performance of any provision of this Offer shall be construed as a waiver of the provisions hereof or of the rights available to the Parties to demand performance of each and every provision of this Offer at any later time.

SECTION 7.09. Liability of Sellers

Sellers shall be jointly and severally liable for the performance of their Representations and Warranties and their obligations hereunder and each Seller hereby waives the right of excussio and division. Accordingly, a default of Sellers’ obligations by any one of the Sellers will entitle Purchasers or any other person to file any actions or claims against any one of the Sellers.

SECTION 7.10. Spouses’ Consent

Sellers’ spouses execute these presents as evidence of their consent to and agreement with the purchase and sale of the Shares, as required by the provisions of Section 1277 of the Civil Code.

SECTION 7.11. Definitions

All capitalized terms which are not defined herein shall have the meanings ascribed to them in Exhibit I hereof.

SECTION 7.12. Assignment by Purchasers

Sellers irrevocably agree that this Offer may be assigned in whole or in part by Purchasers to any of their Affiliates without Sellers’ prior consent. However, prior to any such assignments, Purchasers shall serve notice on Sellers of the name of the Affiliates to which this Offer is to be assigned. Purchasers shall be jointly and severally liable together with the assignee or assignees for the faithful performance by the assignee/s of its/their obligation/s under this Offer.

SECTION 7.13. Personal Guaranties of Sellers

Purchasers shall make their best efforts to obtain the release and/or replacement of the bonds and personal guaranties granted by Sellers described in Exhibit 5.03(c). Until the occurrence of such release and/or replacement, Purchasers’ indemnification obligation established in Section 5.03(c) shall remain effective.

SECTION 7.14. Currency of Payments

All payments under this Offer shall be made in freely available American Dollars. In the event transactions in such currency cannot be legally made in the Argentine Republic, such

payments may be made, at the option of the Party entitled to receive payment, with Dollars obtained abroad, or in Pesos, or in the legal tender of the Argentine Republic. For such purpose, the following foreign currency exchange rate, at the option of the party entitled to receive payment, shall be used:

(i) The sell exchange rate of Banco de la Nación Argentina on the business day immediately preceding the date of payment; or

(ii) The amount of legal tender in the Argentine Republic which may be necessary to acquire in Buenos Aires or Montevideo, at the option of the party entitled to receive payment, Foreign Bonds of the Argentine Republic denominated in Dollars in a sufficient amount so that, once sold in New York or Montevideo, at the option of the party with right to such payment, the owed Dollar amount can be obtained, free from any fees, expenses and taxes applicable to the foreign exchange and/or stock exchange transaction, on the business day immediately preceding the date of payment. If no such mechanism can be used, then on the aforesaid date, the applicable Dollar/Peso (or the legal tender in the Argentine Republic) exchange rate prevailing in New York or Montevideo shall be used, at the option of the party entitled to receive payment. Evidence of the abovementioned exchange rates will be given by means of publications appearing in Argentine specialized newspapers, such as “Ámbito Financiero” or “El Cronista”, among others, or in international publications in the event such Argentine newspapers contain no information about the business day immediately preceding the date of payment.

On the understanding that the proposed transaction will be highly beneficial for the Parties, we remain sincerely yours.

SECTION 7.15. Guaranty

Adecoagro L.P. hereby guarantees due performance by Purchasers of their payment obligations under this Offer.

[Handwritten:] The addition to the heading reading “with a copy to Adecoagro L.P. for purposes of section 7.15 of this Offer” is valid.

[Signatures]

EXHIBIT I

DEFINITIONS

I.A. Definitions .

In addition to other definitions contained in the Offer, the following terms, when capitalized, shall have the following meanings for purposes of construing this Offer:

“ Affiliate ” shall mean, as to any Party, any company or other legal entity that controls, or that may now or hereinafter be controlled directly or indirectly by, or that is under common control with, such Party. For purposes hereof, “controlled” Company shall mean any company in which another individual or company, either directly or through another company that is controlled: (a) holds any kind of interest granting the necessary votes to cause corporate action or (b) exercises a dominant influence due to the special links existing between them.

“ Governmental Authority ” means any national, provincial or municipal governmental authorities of the Argentine Republic and foreign governmental authorities, including, but not limited to, the CNDC, the CNZS and/or any Argentine and foreign governmental agencies, courts or administrative tribunals.

“ Antitrust Approval” means the approval from the CNDC and the SDT of the transactions contemplated in this Offer and, especially, the transfer of the Shares to the Purchasers, upon the terms and within the scope provided for in Section 13, subsection a) of law No. 25,156.

“ CNDC ” means the Argentine Comisión Nacional de Defensa de la Competencia , the Argentine Antitrust Tribunal or any other agency that may replace it in the future as enforcement authority under Law N° 25,156.

“ Tax Matters ”, “ Tax ” or “ Taxes ” means any taxes, including income (net or gross), turnover, profit, alternative or ancillary, asset, privilege, license, capital, capital stock, intangible asset, services, premium, transfer, use, ad-valorem , value added, payroll, wage, natural resources consumption, employment, social security, pension, professional, personal and real property, extraordinary gains, import, indirect, custom, stamp and withholding taxes or estimated taxes, rates, contributions, levies, withholdings or governmental tax charges, including all taxes which are to be collected and paid to any governmental agency on behalf of third parties (including obligations resulting from acting as withholding agent, collection agent, substitute taxpayer, agent or broker, etc.), including, in all cases, any interest, adjustments, penalties or surcharges thereof.

“ hereof ”, “ herein ” and “ hereunder ” refer to the Offer as a whole and not to the Article, Section and Exhibits where such terms are used.

“ Dollar ” “ Dollars ”, “ USD ” and “ US$ ” mean the currency of legal tender in the United States of America.

“ Business Day” shall mean any day, other than a Saturday, Sunday or banking holiday in the Republic of Argentina or the United States of America or Spain.

“ Material Adverse Effect” means any change, effect, fact, circumstance or event that, either individually or together with all the other changes, effects, facts, circumstances or events occurring before the date of occurrence of the Material Adverse Effect, is or is likely to be materially adverse for the assets, for the financial and economic situation of the Company and/or for the results of the Company; it being understood that a Material Adverse Effect shall be deemed to have occurred if the Company incurs in one or more losses amounting to two hundred and fifty thousand Dollars (USD 250,000).

“ Closing Date ” means the date of acceptance of this Offer.

“ GAAP ” means the accounting principles generally accepted in the Argentine Republic pursuant to the rules of the Argentine Federation of Accountant’s Associations.

“ Expenses ” means any cost, expense and/or fee (i) for the wire transfer to Sellers’ Bank Accounts of the Purchase Price, the Payment at the Closing and/or the Balance of the Price; (ii) for any costs, expenses and/or fees resulting from the filings with and proceedings at the CNDC as stated in Section 1.03 of this Offer; and (iii) any costs, expenses and/or fees resulting from the acts that shall be performed as a result of the occurrence of the conditions subsequent described in Sections 1.03 and 1.04 hereof, excluding in the cases mentioned in items (i) to (iii) of this definition, any Taxes that shall be paid by Sellers as a consequence of the purchase and sale of the Shares contemplated in this Offer.

“ Lien ” means any pledge, usufruct, personal or real property rights, charges, mortgages, attachments, encumbrances, security interests, third party contractual rights, trusts, options and restrictions of any nature to the use and/or disposition of an asset in favour of third parties, whether individuals or entities.

“ Argentine Corporate Law ” means the Argentine Corporate Law No. 19,550 as amended.

“ Person ” means any individual, partnership, corporation (including a company organized as a trust), limited liability company, trust, association, joint venture, stock holding company or any other entity, government or political subdivision or agency thereof.

“ Intellectual Property ” means all registered trademarks, trade names, service marks, industrial design rights, utility models, copyright and patents as well as any applications therefor owned by or granted under a license to the Company.

“ SDT ” means the Secretariat of Domestic Trade, dependent on the Ministry of Economy of the Argentine Republic.

“ Subsidiary ” means, as regards any Person, any company in which such Person owns 50% or more of the voting stock issued by such company.

I.B. Construction

(a) The headings used in the Offer have been included for reference purposes only and shall not affect in any manner the extent and scope of the relevant provisions, nor the rights and obligations assumed by the Parties thereunder;

(b) If so required by the context, words in singular include the plural and vice versa, and the words in the masculine or neuter gender include the masculine, feminine and neuter.

(c) References to Sections, Articles and Exhibits contained in this Offer shall be understood (unless otherwise stated) as references to the Sections, Articles and Exhibits of this Offer.

NOTARIES PUBLIC ASSOCIATION

Record—Certification of Signatures – Law 404 –

Notaries Public Association – City of Buenos Aires—Argentine Republic

SCHEDULE

F001688834

Buenos Aires, August 18th, 2011 In my capacity as Assistant Notary in charge of the Book of Records No. 1521 of this City,

I HEREBY CERTIFY that the signatures appearing in the attached document, the relevant certification request of which is executed simultaneously in ENTRY number 073 of the BOOK number 57, are subscribed in my presence by the individuals whose names and identity document numbers are mentioned below together with proof of their identity. Each of the individuals provide evidence of their identity with a valid identity document, a copy of which is kept on file by me. Such individuals further state that they are acting herein on their own behalf. The attached document consists of 43 pages. The appearers subscribed aforesaid document in my presence at the place and on the date of the certification. Equal counterparts are certified on notarial pages F007437453, F001688834.

[Signature]

[Seal of Notary Public Raul Luis Arcondo]

Exhibit 4.42

[Handwritten:] Received on July 15 ^th , 2011,

Receipt does not imply acceptance.

[Signature]

Buenos Aires, July 15 ^th , 2011

Dear Sirs,

In accordance with certain negotiations held, we hereby submit this offer to acquire 100% of Simoneta S.A.’s outstanding shares (hereinafter referred to as the “ Offer ”).

This Offer includes the covenants agreed upon on the basis of the negotiations held in relation to the possible acquisition on behalf of Adecoagro L.P and/or one or more Affiliates (indistinctly defined as the “ Purchaser ” or “ Purchasers ”) of one hundred (100) percent of the issued, subscribed and outstanding capital stock (defined as the “ Shares ”) of Simoneta S.A., an Argentine corporation ( Sociedad Anónima ) incorporated in the city of Buenos Aires and registered with the Argentine Superintendence of Corporations (IGJ) on October 21st, 1991, under record number 8686, Book number 110, Volume A of the Book of Corporations ( Sociedades Anónimas ), and domiciled at Reconquista 336, floor 11 “X” of the City of Buenos Aires.

This Offer shall be deemed accepted by Sellers (as defined herein below) in case Sellers deliver to Purchasers a receipt for the amount of the Down Payment as such term is defined herein.

In case of being accepted, the Offer shall be governed by the following terms and conditions:

ARTICLE ONE

PURCHASE AND SALE OF SHARES,

ANTITRUST LAW AND APPLICABLE LAW

SECTION 1.01. Purchase and Sale of the Shares .

Subject to the terms and conditions set forth in this Offer, Sellers sell, transfer, assign and deliver to Purchasers, on the Closing Date, the total number of Shares, free of any Lien, together with all and not less than all the rights – current and future – attached to them which are, without limitation, described in items (i) to (vi) in this Section 1.01; and Purchasers agree to buy and receive the Shares, and to pay the Purchase Price as set forth in Section 1.02 in consideration thereof, in accordance with such provisions:

(i)

all rights of Sellers in relation to capital contributions made to the Company and not capitalized existing as of the Closing Date;

(ii)

any rights to retained earnings of the Company until the Closing Date and not distributed as of the Closing Date (including any income accrued from the beginning of the fiscal year 2011) and in general, any other concept which shall or may result in the issuance of fully paid-in shares;

(iii)

any rights related to the subscription of Shares corresponding to subscriptions offered by the Company until the Closing Date;

(iv)

any rights to receive the shares which have been subscribed before, or issued as of, the Closing Date by the Company;

(v)

(vi)

A description of the Shares owned by Sellers is attached hereto as Exhibit 1.01.

SECTION 1.02. Purchase Price .

(a) The total purchase price (defined as the “ Purchase Price ”) of the Shares shall amount to TWENTY ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS (USD 21,700,000) with the Price Adjustment (as provided in Section 1.03 (a)), which shall be paid as follows:

(i)

on the Closing Date, Purchasers shall pay Sellers TEN MILLION DOLLARS (USD 10,000,000) of the Purchase Price (defined as the “ Payment at the Closing ”). The Payment at the closing shall be made on the Closing Date by wire transfer to the foreign account of Sellers which Sellers will inform Purchasers on the date of acceptance of this Offer (such account defined as the “ Bank Account of the Sellers ”):

(ii)

six months following the Closing Date, Purchasers shall pay Sellers, jointly, to the Bank Account of Sellers, the amount of FIVE MILLION DOLLARS (USD 5,000,000) of the Purchase Price (defined as the “ First Balance of the Price ”, minus (1) any amounts corresponding to Damages and Indemnifiable Liabilities (as defined by Section 5.02) which are known before the date of payment of the First Balance of the Price; plus or minus, as appropriate (2) the amounts resulting from the Adjusted Payment at the Closing, as such term is defined in Section 1.03. The First Balance of the Price shall be paid by wire transfer to the Bank Account of Sellers in the same proportions as applicable to the Payment at the Closing.

(iii)

on the first anniversary of the Closing Date, Purchasers shall pay Sellers jointly to the Bank Account of Sellers, FIVE MILLION SEVEN HUNDRED THOUSAND DOLLARS (USD 5,700,000) of the Purchase Price (hereinafter referred to as “ Final Balance of the Price ” and jointly with the First Balance of the Price, the “ Balance of the Price ”), (1) minus any amounts corresponding to Damages and/or Indemnifiable Liabilities (as defined by section 5.02) which are known before the date of payment of the Final Balance of the Price and which have not been deducted from the First Balance of the Price; and (2) minus ONE MILLION DOLLARS (USD 1,000,000) (defined as the “ Security Balance Withheld ”).

(b) The First Balance of the Price, the Final Balance of the Price and the Adjusted Payment at the Closing will not accrue any interest, provided that the funds from time to time withheld as Security Balance Withheld will accrue interest at LIBOR plus two (2) percent from the Closing Date to their reimbursement to Sellers or the date on which such funds withheld are used to pay Damages and/or Indemnifiable Liabilities, whichever occurs first (the “ Interest ”).

(c) The Security Balance Withheld for Damages or Indemnifiable Liabilities (with the scope of such terms as provided under Section 5.02) shall be reimbursed, if appropriate, to Sellers net of any withholdings, deductions and/or offset that must be made on account of any Damages or Indemnifiable Liabilities payable to Sellers in two (2) installments, each of such installments covering fifty (50) percent of the amounts of the Security Balance Withheld that have not been withheld, deducted or offset upon expiration of the first and the second anniversaries of the Closing Date, respectively (the “ Released Funds ”), plus any Interest on such Released Funds.

(d) The Parties agree that any amount initially stated in Pesos which shall be paid by Sellers to Purchasers or deducted or offset by Purchasers pursuant to the provisions of this Offer shall be paid and/or offset in Dollars. For such purpose, any amount in Pesos shall be converted to Dollars by applying the selling exchange rate informed by Banco de la Nación Argentina for converting Pesos to Dollars at 11 am, Buenos Aires time, on the Business Day immediately preceding the date on which the relevant payment or offset must be made.

Exhibit 1.02 of this Offer contains the details of the allocation of the Purchase Price among the Sellers and of the Shares acquired by Purchasers.

SECTION 1.03. Purchase Price Adjustment .

(a) Pursuant to paragraph (b) of this Section 1.03, the Parties will prepare a Closing Balance Sheet as of July 31st, 2011 in order to calculate and estimate, as of that date, the Company´s assets and liabilities in the Closing Balance Sheet in accordance with paragraph (b) provided by this Section 1.03. The total amount of current an non current liabilities mentioned in the Closing Balance Sheet and any costs, expenses and Taxes related to or resulting from the realization on behalf of the Company of the Excluded Assets, except for Taxes resulting from the sale of the field owned by the Company called “el Tuti” (defined as “ Excluded Assets Adjustment Amount ”) have the effect of adjusting and reducing the Payment at the Closing; in addition, only the following assets: cash, bank deposits, accounts receivable, the percentage calculated from the Closing Date to the closing of the fiscal year 2011 of the Company of those Taxes prepaid by the Company which are detailed in Exhibit 1.03 (b), as appropriate, detailed in the Closing Balance Sheet, have the effect of adjusting and increasing the Payment at the Closing (this procedure is defined as “ Adjusted Payment at the Closing ”). The Parties declare that any other assets (including, without limitation, sowing machines, personal property and real property attached to the ground) shall not adjust the Price at the Closing. Notwithstanding the foregoing, in case of default of Purchasers of the Excluded Assets pursuant to the terms set forth by Sellers as shareholders of the Company before the Closing Date, in relation to the sale of such Excluded Assets, Sellers shall hold Purchasers and the Company harmless from such Damages as provided by Section 5.02 of this Offer.

(b) As soon as possible after the Closing Date but before September 15th, 2011, the auditors of Sellers and Purchasers (Sellers and Purchasers jointly referred to as the “ Parties ”) will calculate the Company´s assets and liabilities as of the Closing Date applying the accounting criteria and the procedures agreed upon between the Parties under Exhibit 1.03 (b) (hereinafter, the “ Closing Balance Sheet ”). The Parties agree to cooperate for the prompt issuance of the Closing Balance Sheet. Price, Waterhouse & Coopers, on behalf of Purchasers, and the firm Ricardo Schneider or whoever Sellers may designate, on behalf of Sellers, shall perform the audit procedures agreed upon on such Closing Balance Sheet and the special report prepared in accordance with the agreed upon procedures issued by Purchasers´ auditor (Price, Waterhouse & Coopers) shall be binding for the Parties, provided that no difference above ten (10) percent shall exist between Purchasers´ auditors and Sellers´ auditor. In that event, the Parties agree to appoint the firm Estudio José Supertino as independent auditor (the “ Independent Auditor ”) who shall issue a final audit report, applying the criteria and the procedures agreed upon and set forth in Exhibit 1.03 (b), in relation to the Closing Balance Sheet, within thirty (30) days from being engaged such task. The audit report of the Independent Auditor shall be binding for the Parties. The costs and expenses resulting from the task assigned to the Independent Auditor shall be paid by the Party whose auditor was wrong and who led to the difference which originated the participation of such Independent Auditor (whereas each of the Parties shall bear any expenses related to each of their auditors).

(c) The Parties will recalculate the Payment at the Closing and the Adjusted Payment at the Closing in accordance with the information contained in the Closing Balance Sheet (the “ Revision of the Adjusted Payment at the Closing ”). Any resulting difference shall be paid to Sellers or to Purchasers, as the case may be, on the date of payment of the First Balance of the Price.

(d) The First Balance of the Price and/or the Final Balance of the Price adjusted pursuant to Section 1.02 (a) (ii) and 1.02 (a) (iii) respectively, on such released amounts shall be in favor of Sellers and shall be defined as the “ Adjusted Balance ”. In case the Adjusted Balance were negative and Sellers were to

reimburse any amounts of money to Purchasers, Sellers will pay such difference to Purchasers within ten (10) Business Days from the date of payment of the Final Balance of the Price or from the time the negative Adjusted Balance is evidenced , whatever occurs first.

(e) In order to avoid any doubts in the construction of this Section, the obligation of Purchasers to pay Sellers the Balance of the Price (i) will be decreased on a Dollar-by-Dollar basis, without duplication, by any amount corresponding to Damages or Indemnifiable Liabilities and/or by the Adjusted Payment at the Closing, as appropriate; and (ii) shall be fulfilled upon payment by Purchasers of the Adjusted Balance to the Bank Account of Sellers on the respective date of payment, provided that in the event that on the respective date of payment (x) the total amount of the First Balance of the Price and/or the Final Balance of the Price were fully depleted due to the deduction of Damages or Indemnifiable Liabilities and/or the Adjusted Payment at the Closing; or (y) the total amount of the First Balance of the Price and/or the Final Balance of the Price were subject to Withholdings for Damages or Indemnifiable Liabilities, Purchasers will not be obliged to pay any amount on account of the First Balance of the Price and/or the Final Balance of the Price to Sellers on the respective dates of payment.

(f) Purchasers will be entitled to deduct or withhold, without duplication, from the Balance of the Price and if necessary, from any other balance which Purchasers may owe to Sellers under the terms of this Offer or of any other agreement entered into between Sellers and Purchasers or the Company, an amount equal to the Damages or Indemnifiable Liabilities claimed under the provisions of Article V and to collect from the Balance of the Price and the Security Balance Withheld (in this case deducting first from Interest), any Damages or Indemnifiable Liabilities which must be paid in full in accordance with the provisions of this Offer (hereinafter indistinctly referred to as the “ Withholdings ” or the “ Withholding ”). It is hereby stated that the Withholding may be made even if Damages or Indemnifiable Liabilities are not enforceable, provided that there is a written claim or that such Damages and/or Indemnifiable Liabilities have been verified. In that event, Purchasers will be entitled to withhold an amount equivalent to principal, interest and costs estimated in good faith.

SECTION 1.04. Notice and Effects of SDT Resolution .

The Parties will inform CNDC of the transactions established in this Offer in compliance with this Section 1.04. In case the Secretariat of Domestic Trade (SDT for its English acronym) or the Argentine Antitrust Tribunal (CNDC for its Spanish acronym) notifies the Parties their denial to authorize the purchase and sale of the Shares under the terms and conditions set forth in this Offer or the declaration of any restriction or condition for the obtainment of the Antitrust Approval, the Parties shall be subject to the provisions stated in Section 1.05.

Sellers and Purchasers filing requirements with the CNDC.

On the second Business Day following the Closing Date, Sellers and Purchasers shall jointly file Form F-1 with the CNDC (Argentine Antitrust Tribunal) for purposes of requesting the Antitrust Approval. For such purpose, the Parties undertake to prepare, file and duly grant any act, filing or documentation which might be necessary or required in order to fulfill any administrative requirements related to the issuance of the Antitrust Approval (including, but not limited to the correct and complete filing of Form F-1 with the CNDC with no mistakes, misrepresentations or omissions and/or the duly filing of any other documentation which may be required by such Tribunal in order to issue its decision in relation to the transaction established in this Offer), and to comply with all the terms set forth by the Argentine Law No. 25,156 as amended, and with CNDC regulations. The Parties agree that Purchasers’ legal counsels will prepare Forms F-1 for each of the Parties and will conduct on behalf of the Parties the whole filing process with the CNDC and that Purchasers shall bear the legal costs resulting from such process. Sellers undertake to provide any necessary assistance to Purchasers and to answer, in due time and manner, any requirements made by the CNDC during the conduct of the proceedings leading to the obtainment of the Antitrust Approval.

SECTION 1.05. Assignment of Rights – Sale Order – Waiver .

(a) The Parties acknowledge and accept that in case the SDT and/or the CNDC notify the Parties their denial to grant the Antitrust Approval or the imposition of any restriction or condition for the obtainment of such Antitrust Approval which were not acceptable for Purchasers, then Purchasers may establish the course of action to be followed, which may include, without limitation, filing an appeal in court, assigning their rights in relation to this Offer to a third party or selling all the Shares or their own shares or equity interest in the Company. Sellers will cooperate with Purchasers as provided for in this Article, but they shall be under no obligation to reimburse in whole or in part the Purchase Price to Purchasers and/or to any other person and/or to pay any other amount and/or to undertake any other obligation as a consequence of the SDT’s and/or the CNDC’s denial to grant the Antitrust Approval, or the imposition of by such agencies of any restrictions or conditions for the obtainment of such Antitrust Approval.

(b) Notwithstanding the foregoing, Sellers undertake to perform any acts as shall be deemed necessary and advisable by Purchasers in order to assist Purchasers in the fulfillment of the obligations imposed by the SDT and the CNDC or in order to facilitate the sale of the Shares (or, as the case may be, the interest units or the shares owned by Purchasers) to whom Purchasers may indicate. In case of a sale to a third party, Purchasers may assign in favor of such third party all their rights arising from this Offer.

(c) Each of the Sellers accepts that in the events mentioned in item (a) of this Section, i.e. in the event that the SDT or the CNDC notifies the Parties its denial to authorize the purchase and sale of the Shares under the terms and conditions set forth in this Offer or the imposition by them of any restriction or condition for the obtainment of the Antitrust Approval, Purchasers may transfer directly or indirectly all the Shares or all their own shares or equity interests or may assign the rights they are entitled to under this Offer. No previous consent or authorization from Seller will be required for the aforesaid sale or assignment as regards any terms and conditions of such sale or assignment. Therefore, Purchasers will have the right to transfer or cause to be transferred (i) the Shares; (ii) their own shares or equity interests; or (iii) the rights they are entitled to under the terms of this Offer, in all such cases, to any third party, for the price and upon the terms and conditions Purchasers may agree with such third party.

(d) In the hypothetical case that a final court order rules that the Shares shall be returned to Sellers, during the time the Shares continue to be owned by Sellers, Sellers undertake to: (i) vote at Shareholders´ Meetings or at Meetings of the Board pursuant to the express written instructions that may be provided by Purchasers; (ii) deliver to Purchasers any and all amounts Sellers may be paid, for whatever reason, as shareholders or members of the Company. In any case, and for clarification purposes, it is hereby stated that the event described in item (d) shall be construed only as having a temporary nature and limited in time, intended to enable Purchasers to transfer the Shares to the relevant third party.

(e) Purchasers undertake to bear any and all costs, expenses, Taxes and fees which may arise out of the acts and proceedings contained in this Section 1.05.

SECTION 1.06. Prohibition to Purchase Shares on behalf of Sellers under the Applicable Law following the Closing Date.

The Parties expressly agree that the terms and conditions contained in Section 1.05 shall also be applicable mutatis mutandi in case that on the Closing Date or following such date, any general regulation issued by any Governmental Authority is published or comes into force in the Argentine Republic, restraining, prohibiting or disqualifying Purchasers and/or any of its Affiliates to lawfully hold full legal, irrevocable and unconditional title to the Shares without the obligation to sell or dispose of any of the Shares and/or of the goods or rights comprising the assets of the Company, pursuant to the provisions set forth herein.

SECTION 1.07. Conditions Precedent to the Closing Date

The performance of the obligations undertaken by the Parties pursuant to this Offer shall be subject to the prior fulfillment on behalf of Sellers and Purchasers, respectively, or to Sellers’ and/or Purchasers’ waiver, as the case may be, of the conditions precedent which are described below (defined as the “ Conditions Precedent ”), whereas items (a) to (e) are understood as agreed upon in favor of Purchasers and items (f) to (h) as agreed upon in favor of Sellers:

(a) That, as of the Closing Date, Sellers shall be entitled to all the rights and shall be the owners of all the Shares of the Company stated in Section 1.01;

(b) That, as of the Closing Date, Sellers shall have fully performed all and each of the obligations and covenants undertaken by them as established in this Offer;

(c) That, as of the Closing Date, Sellers perform or shall have performed any and all acts, and deliver or shall have delivered any documentation necessary for the complete execution and perfection of the transactions contemplated under this Offer;

(d) That, as of the Closing Date, the representations and warranties made by Sellers in this Offer shall be true and correct;

(e) That, as of the Closing Date, Sellers shall have taken all the necessary steps to cause the Company to sell all the assets listed in Exhibit 1.07 (e) (defined as the “ Excluded Assets ”) and that (i) any such sales shall have been made in due time and manner and on a firm basis, and that (ii) each sale price of each Excluded Asset shall have been fully collected by the Company and that the Company shall have already paid in full any Taxes, costs and expenses payable upon the sale of the Excluded Assets or, provided the conditions of any of such sales include deferred payment of the purchase price, the due dates of any such deferred payments shall have expired before the date of payment of the First Balance of the Price or no later than two (2) Business Days following such date.

(f) That, as of the Closing Date, Purchasers shall have fully performed all and each of the obligations and covenants undertaken by them as established in this Offer;

(g) That, as of the Closing Date, Purchasers perform or shall have performed any and all acts, and deliver or shall have delivered any documentation necessary for the complete execution and perfection of the transactions contemplated under this Offer;

(h) That, as of the Closing Date, the representations and warranties made by Purchasers in this Offer shall be true and correct.

SECTION 1.08. Default of Conditions Precedent .

If, as of the Closing Date, any of the Conditions Precedent has not been fulfilled by the Parties, the non-defaulting Party may choose to:

(a) Waive its right to require prior fulfillment of the unfulfilled Condition Precedent, provided same is solely in its favor, and demand performance of this Offer; or

(b) After compliance with the provisions of Section 1.09, as appropriate, terminate this Offer and claim and collect from the defaulting Party payment of a non-performance penalty in the amount of THREE MILLION DOLLARS (USD 3,000,000).

SECTION 1.09. Settlement of Disputes

(a) Any dispute arising between the Parties in relation to the verification of the actual fulfillment of any Condition Precedent shall be submitted to the decision of the Board of Arbitration appointed in accordance with Article Six hereof.

(b) In case the award of the Board of Arbitration determines that the Condition Precedent giving rise to the dispute between the Parties has not been fulfilled by Sellers, Purchasers will exercise their rights in accordance with Section 1.08 above.

(c) In case the Board of Arbitration award determines that the Condition Precedent giving rise to the dispute has been fulfilled by Sellers, the Closing Date shall take place on the third (3rd) Business Day following the date on which notice of the award of the Board of Arbitration is served upon both Parties.

SECTION 1.10. Down Payment.

The Parties agree that Purchasers will transfer to the Bank Account of Sellers the amount of ONE MILLION DOLLARS (USD 1,000,000) as Down Payment (defined as the “ Down Payment ”). Upon occurrence of the Closing (as defined in Section 2.01), the Down Payment shall be part of the Purchase Price and shall be added to the Payment at the Closing, which shall aggregate ELEVEN MILLION DOLLARS (USD 11,000,000). On the contrary, if for any reason the Closing does not occur due to Sellers´ default, Sellers shall reimburse Purchasers the Down Payment plus an amount of ONE MILLION DOLLARS (USD 1,000,000) (the “ Double Down Payment ”). The Double Down Payment shall be paid by Sellers to Purchasers in a foreign bank account of Purchasers, within five (5) Business Days following the date of notice served on Sellers by Purchasers indicating Sellers´ default. The Double Down Payment shall not be deemed as part of the non-performance penalty provided for in Section 1.08, item (b), in case Sellers were the defaulting Party. If for any reason the Closing were not performed due to Purchasers´ default, Purchasers will lose the Down Payment and, therefore, Sellers will not reimburse the Down Payment to Purchasers. The Down Payment shall not be deemed as part of the non-performance penalty contemplated in Section 1.08, item (b), in case Purchasers were the defaulting Party.

SECTION 1.11. Currency of Payments

It is an essential condition to this purchase and sale that all payments provided for herein be made by wire transfer in Dollars. In the event transactions in such currency cannot be legally made in the Argentine Republic on the respective dates of payment and/or in case foreign exchange regulations restrain or limit the purchase, holding and/or delivery of Dollars, Purchasers or Sellers, as the case may be, may pay with Dollars obtained abroad or in Pesos. In such case, the following foreign currency exchange rate, at the option of the party entitled to receive payment, shall be used: (a) the selling exchange rate of Banco de la Nación Argentina on the Business Day immediately preceding the date of payment, or (b) the amount of Pesos which may be necessary to acquire in Buenos Aires or Montevideo (Republic of Uruguay), at the option of the party entitled to receive payment, Foreign Bonds of the Argentine Republic denominated in Dollars in a sufficient amount so that, once sold in New York (United States of America) or Montevideo (Republic of Uruguay), at the option of the party with right to such payment, the owed Dollar amount can be obtained, free from any fees, expenses and taxes, on the Business Day immediately preceding the date of payment. Evidence of the above mentioned exchange rates will be given by means of publications appearing in Argentine specialized newspapers, such as “Ámbito Financiero” or “El Cronista Comercial”, among others, which correspond to the Business Day immediately preceding the pertinent date of payment.

ARTICLE TWO

CLOSING

SECTION 2.01. The Closing .

The closing of the transaction (defined as the “ Closing ”) which is consummated by this Offer is performed on the Closing Date jointly and simultaneously at the offices of Uria & Menendez, located at Príncipe Vergara 187, Madrid, Spain, and of Marval O`Farrell & Mairal, located at Avenida Leandro N. Alem 928, 7 ^th floor, City of Buenos Aires, as the case may be, or at such other place or on such other date as the Parties may agree upon.

SECTION 2.02. Acts to be performed at the Closing.

On the Closing Date the Parties shall perform the following acts:

(a) Sellers shall:

(1) Deliver the relevant stock certificates to Purchasers ready to transfer valid, full legal and perfect title to all the Shares, free of any Lien. For such purpose, each one of the Sellers shall comply with the notice stated by section 215 of the Argentine Corporate Law, by sending a letter similar to the one attached hereto as Exhibit 2.02 (a)(1) , notifying the Company of the transfer of the Shares to Purchasers and the cancellation of the stock certificates of the Company issued in the name of Sellers, and requesting registration of the transfer of the title to the stock of the Company in the name of Purchasers in the Company’s Registry Book of Shareholders; and shall deliver to the Company the stock certificates evidencing their shares of stock for cancellation for purposes of the transfer.

(2) Cause:

(i)

A meeting of the Board of Directors to be held for purposes of: (w) acknowledging receipt of the notice mentioned in paragraph (a), sub-item (a) above; (x) ordering the cancellation of the stock certificates of the Company which Sellers will deliver to them in accordance with paragraph (a), sub-item (1) above; (y) ordering the relevant issuance of new stock certificates of the Company in the name of Purchasers; and (z) ordering registration of the transfer of the stock certificates in the name of Purchasers in the relevant Book. At the above mentioned Meeting of the Board, the election of officers among the new Directors appointed at the Closing shall be performed:

(ii)

The issuance of new stock certificates of the Company in the name of Purchasers;

(iii)

The Chairman of the Board of Directors of the Company to subscribe and deliver to Purchasers the new stock certificates of the Company recorded in the name of Purchasers, as provided for by item (ii) above.

(iv)

The registration of the transfer of the Company’s Shares in the Company’s Registry Book of Shareholders;

(3) Deliver to Purchasers the resignation letters of the Company’s Directors and Managers in the form attached hereto as Exhibit 2.02 (a)(3).

(4) Deliver to Purchasers a receipt for the Payment at the Closing in the form substantially similar to the model attached hereto as Exhibit 2.02 (a)(4) upon receipt of the amount stated in Section 1.02, paragraph (a)(1), in the Bank Account of Sellers.

(5) Make available to Purchasers the following Accounting Books and documentation of the Company:

(i)

Book of Minutes of Board Meetings;

(ii)

Book of Minutes of Shareholders´ Meetings;

(iii)

Registry Book of Shareholders;

(iv)

Shareholders’ Attendance Record and Stock Deposit Book;

(v)

Accounting Books;

(vi)

Published balance Sheets of the Company for year 2005;

(vii)

Notarial Records of the real property owned by the Company;

(viii)

Sworn statements of Taxes filed with the Tax Authorities listed below: income tax for the last five fiscal years preceding the Closing Date and the sworn statements corresponding to other Taxes applicable to the business activity of the Company.

(6) Call and hold a unanimous shareholders’ meeting at the Company in which Sellers will (i) approve the resignations of all the Directors and Managers of the Company, stating thereby that such Directors and Managers have no claims against the Company; (ii) accept the resignations and unanimously approve the performance of all the resigning Directors; and (iii) appoint the new Board of Directors of the Company, in accordance with Purchasers’ written instructions to Sellers.

(7) Each of the Sellers, as appropriate, shall provide evidence by any legally reliable means of his/her spouse’s consent in order to transfer the Shares owned by them to Purchasers by submitting the corresponding notices pursuant to section 215 of the Argentine Corporate Law.

(8) Sellers shall deliver to Purchasers:

(i)

Evidence of payment in full of all receivables and debts of the Company with Affiliates of Sellers, and any other fee or loan that for any reason the Company may owe to Sellers;

(ii)

Evidence of being on schedule, as of the Closing Date, with the payments of any amounts due on account of taxes, with filings of documents or accounting statements as required by the Argentine Superintendence of Corporations (Inspección General de Justicia), including any capital increases pending registration, and with the registration of the current Board of Directors of the Company including any warranties and the settlement of special domiciles, etc.

(iii)

Evidence that, before the Closing Date, any powers of attorney granted by the Company have been revoked as required by Purchasers to Sellers.

(b) On the Closing Date, Purchasers shall:

(1) Deliver to Sellers the documents contemplated under the terms of this Offer;

(2) Make the Payment at the Closing as stated in Section 1.02;

(3) Serve notice on the Company as required by section 215 of the Argentine Corporate Law by sending a letter similar to the sample letter attached hereto as Exhibit 2.02 (b)(3) , notifying the Company about the grant of the Pledge in favor of Sellers;

(4) Deliver the Certificates in custody to Sellers.

SECTION 2.03. Entire Act.

All the acts to be performed at the Closing are deemed to be part of a sole and single act.

ARTICLE THREE

REPRESENTATIONS AND WARRANTIES OF SELLERS

SECTION 3.01. Representations and Warranties of Sellers.

Sellers jointly and severally represent and warrant the following to Purchasers as of the Closing Date:

(a) Sellers’ Capacity; Approvals and Consents.

(1) That they have legal capacity, legal standing and powers to accept this Offer and to consummate the purchase and sale herein contemplated and that no consent or authorization from any other individual,

entity or Governmental Authority is required other than the Approval of the CNDC and the SDT. There is no legal, judicial or contractual restriction that may affect the disposition of their assets, in general, or of their own Shares. Sellers’ delivery, acceptance and execution of this Offer, as appropriate, have been duly authorized by their respective spouses. This transaction is duly performed and executed by each Seller, and it constitutes each Seller’s valid and binding obligation, which may be enforced against each Seller as per its terms.

(2) Sellers have full powers and authority as are necessary to accept, agree to and execute this Offer and the remaining offers and documents related hereto; to undertake due fulfillment of the obligations assumed by Sellers hereunder and under the other offers and documents related hereto; and to consummate the transactions contemplated herein.

(4) Sellers have good, full legal and exclusive title to all the Shares subject to this Offer.

(5) Sellers are free of any Liens, temporary restraining orders, court orders or any other claims or actions that may restrain them from freely disposing of the Shares in whole or in part; and

(6) Sellers are not in insolvency proceedings and they have not filed for reorganization nor bankruptcy proceedings, and no pending petitions in bankruptcy have been filed against them.

(7) Sellers are not vested with immunity and/or any special situation that prevent them from being parties to legal proceedings and becoming subject to a judgment.

(b) Company Incorporation and Capacity

(1) The Company has been duly incorporated and is validly existing and in good standing under the laws of the Argentine Republic, pursuant to the following data:

Simoneta S.A., a corporation (sociedad anónima) incorporated on October 1st, 1991, in the City of Buenos Aires, Argentine Republic, registered with the Superintendence of Corporations on October 21st, 1991, under N° 8686, in Book 110, Volume “A” of the Book of Corporations, domiciled at Reconquista 336, 11th floor “X”, City of Buenos Aires.

(1) The Company’s capital stock amounts to ARS 4,508,500 (four million five hundred eight thousand and five hundred Argentine pesos), represented by 4,508,500 (four million five hundred eight thousand and five hundred) registered, non-endorsable shares of common stock of ARS 1 (one Argentine Peso) par value each and entitled to one vote per share.

(2) The Shares have been validly issued, subscribed and paid, and are recorded in the books of the Company. Such shares are not subject to any Lien or property ownership division of any nature. The Shares do not require further contributions of any kind and/or on any account whatsoever. The Shares represent one hundred (100) percent of the Company’s total outstanding capital and voting stock.

(3) The Shares are Sellers’ exclusive property, and Sellers have full and perfect legal title to them. No Share has been issued in violation of preemptive rights. No options, warrants, conversion rights, obligations and/or agreements related to voting, redeeming, purchasing or selling shares, to preemptive or other rights or agreements currently in effect related to the Company’s capital exist or, if such preemptive rights exist, they have been irrevocably waived in favor of Purchasers. There is no agreement or restriction related to the Company’s capacity to issue shares. There are no irrevocable contributions or any other agreement or payment obligation in the Company likely to be capitalized or converted in new shares of the Company. Each one of the Sellers has full legal title to the Shares such Seller transfers. Neither the Company nor Sellers have entered into agreements that prevent or restrict holding, subscribing or selling the Shares. There is no Lien, pledge and/or attachment of any nature, or limitation of property ownership of any kind regarding the Shares. The Shares are not subject to rights of first refusal or drag along rights in favor of any Person or legal entity; therefore, there is no third parties’ right regarding the sale of Shares as of the date hereof.

(4) The Company has not authorized to issue any capital stock which has not been so far issued.

(5) The Company does not hold an interest in any business organization, does not hold a direct or indirect interest, including any Interest in partnerships (Argentine “ sociedades de personas ”), temporary union of companies (UTE, for its Spanish acronym) or any other agreement of enterprise cooperation, joint ventures, in any other Person, entity or business in the Argentine Republic or abroad.

(d) Accounting Information

(1) The Company’s balance sheets, income statements, supplementary notes and annual reports corresponding to the last full three fiscal years are attached hereto as Exhibit 3.01 (d)(1) (defined as “ Financial Statements ”). The Financial Statements have been prepared pursuant to the GAAP and on the basis of the books and records of the Company, and they are true, accurate and complete and do not include or omit to include any facts which inclusion or omission, respectively, may cause such Financial Statements to be misleading.

(2) The Company’s Financial Statements, accounting information and records show as assets only the existing property owned by the Company and which values were calculated, for accounting thereof, by applying valuation methods consistent with applicable GAAP. Except for the information detailed in the Company’s Financial Statements: (i) the Company has no other liabilities (whether accrued, contingent or of any other nature); and (ii) the Company has not made any illegal payment whatsoever for purposes of procuring any business.

(3) The Company has not received any notice or claim stating that its records are incorrect and that correction thereof is required.

(e) Absence of Material Changes .

From December 31st, 2010 to the Closing Date, the Company has not:

(1) Unless as stated in Exhibit 3.01 (e)(1) , performed any transaction, entered into any agreement (including, without limitation, the imposition of any Lien on the Company’s assets), nor undertaken any debt or obligation (whether actual or contingent), or granted credits (by means of credit notes) in circumstances other than in the regular course of business.

(2) Issued or agreed to issue, sold or agreed to sell any share of the Company’s capital, or issued or sold new shares of stock, securities convertible in, or options on, or warrants to buy, or rights to subscribe, any shares of such capital stock, or entered into any agreement that binds the Company to perform any of the aforementioned actions, or issued or agreed to issue any debt security, or entered into transactions related to the Company’s capital, or accepted any irrevocable contribution on account of future subscription of shares;

(3) distributed or paid dividends or made any allocations in relation to the Company’s capital stock;

(4) redeemed, purchased or otherwise acquired any share of its capital stock.

(f) Absence of Unreported Liabilities .

From December 31st, 2010 to the Closing Date, the Company has not undertaken or suffered the imposition of any deposits, regardless of their cause or title, other than duly recorded liabilities that may have arisen in the regular course of business of the Company.

Except for the Company’s liabilities evidenced by the Financial Statements as of December 31st, 2010 and shown in the unaudited balance sheet of the Company prepared by the auditors of the Parties as of the Closing Date, the Company has no liabilities of any nature, including without limitation, financial loans, fiscal, labor or social security obligations arising out of agreements entered into with its clients, suppliers and/or third parties, or of any other nature (whether accrued, undisclosed or contingent).

(g) Company´s assets: Title to assets, Absence of Liens. Real Property, Personal Property and Livestock.

(1) The Company is the owner of the real property detailed in Exhibit 3.01 (g)(1) (defined as “ Real Property ”). The original deeds of the Real Property are delivered by Sellers to Purchasers on the Closing Date. Copies of each deed are attached hereto as Exhibit 3.01 (g)(1)(a) .

(2) Except as stated in Exhibit 3.01 (g)(2) , the Company is the owner of each piece of Real Property along with everything built, fixed, planted, set in and attached to the ground, and has full legal and transferable title thereto; all of which Purchasers declare to know and accept in their current state, free of any type of mortgage, Lien, inhibition, claim, easement, license, right-of-way, restriction, option and superior right of any nature. All taxes on real property and further charges applied to such Real Property have been duly and timely paid by the Company, respectively; and the Company does not owe any amount on that account.

(3) The Company is the owner of the real property and livestock detailed in the inventory attached hereto as Exhibit 3.01 (g)(3) (defined as “ Personal Property ”). The Company has full legal title to each piece of personal property detailed, which is free of any type of Lien.

(4) The Company leases the personal property detailed in Exhibit 3.01 (g)(4).

(5) All of the Company’s recordable Real Property and Personal Property (including the equipment) are in good condition, subject to wear and tear resulting from regular use thereof. Furthermore, such property is free from hidden or apparent defects.

(6) The Company is the owner, on its own behalf and for its account, and has full legal and marketable title to the accounts receivable and other credits included in the Company’s accounting records, to the accounts receivable and other credits accrued from the date of the last Financial Statement to the Closing Date, free from any pledges, assignment of property as security, attachments or of any other Lien, or options or rights granted to third parties.

(h) Taxes and Customs Matters.

(2) There are no claims related to any default of social security or taxation obligations, or of any obligations derived from insurance and occupational hazards, nor ongoing tax audits being conducted by any national, provincial or municipal tax authority.

(3) The Company’s books and records fully reflect the obligations accrued on account of all the Taxes that have not become due or that are not payable yet. The previsions and/or provisions made for tax obligations in the Financial Statements are and shall be adequate for paying all the Company’s Taxes to which such previsions and/or provisions refer, regardless of whether or not they have been challenged by the Company, for the period ending on the date hereof and for all previous periods as per the regulations and criteria prevailing as of that date.

(4) The Company is on schedule with the payment of its Taxes.

(i) Insurance .

The Company has purchased the insurance policies listed in Exhibit 3.01 (i)(1) , which cover all of the Company’s activities and assets. Such policies are fully in force, valid and enforceable.

(j) Labor and Social Security Matters; Collective Bargaining Agreements; Job Offers, Additional Benefits for Employees; Third-Party Service Providers.

controversies between the Company and trade unions which have led to strikes or organized work stoppages; (ii) legal proceedings for alleged infringements of labor, social security or health and safety laws before a court or governmental agency; (iii) joint commissions, labor conciliations or arbitrations; (iv) accusations or charges for failure to pay contributions to trade unions or medical insurance; (v) conflicts related to the personnel union classification; and/or (vi) conflicts related to trade unions.

(3) Payments owed and filings due pursuant to the laws on labor, social security and occupational hazards have been timely and legally made or reserved, and allowances have been made therefore; and no outstanding debts on account of such issues exist as of the Closing Date. There are no claims related to damages on account of occupational accidents, deaths, commissions or any other matter related to social security or occupational claims that may be brought against the Company by former or current employees, directors or third parties who may have worked for the Company or for third parties in the premises where the Company conducts its business. The Company currently complies with all the regulations in force in relation to staff recruitment; there being no hidden labor relationship whatsoever.

(4) The Company complies with all national and provincial laws on employment and labor practices, including without limitation salaries, working hours and acknowledgment of additional benefits. The Company has not engaged in unfair or illegal labor practices, including without limitation unfair, unequal and discriminatory treatment in hiring processes, working conditions, wages or termination of employment.

(5) The Company does not and has not hired any individuals under the age of 18 in any manner that may be deemed as exploitation or an unsafe practice. The Company does not and has not hired forced manpower, which is understood, without limitation, as any work not voluntarily performed or performed under threat of violence or punishment. The Company does not render illegal or prohibited services.

(6) Exhibit 3.01(j)(11) contains a list of all of the Company’s employees, their salaries, benefits, job positions and seniority.

(k) Environmental Matters.

(1) The Company currently complies and has complied at all times before the Closing Date with environmental laws and regulations. There are no conditions, circumstances, acts and/or omissions of the Company in that respect which may adversely affect the Company or which may lead to an audit, claim or legal action for damages or injuries or for the infringement of environmental regulations currently in force. Neither the Company nor any other person whose acts may cause the Company to be liable, has failed to comply with its environmental, health and safety obligations.

(2) The Company has all the permits and authorizations required by environmental laws and/or those necessary in each jurisdiction where its business is conducted and its assets are located, so as to conduct its business as it is being currently conducted. For purposes hereof, “material permits or authorizations” shall be understood as those which lack or omission may give rise to closure, suspension or modification of the activities and the business that the Company conducts or to the application of sanctions to the Company. In the Company’s Real Property and/or in the places where the Company conducts its business, there have been no pollution events whatsoever which might have been considered as environmental or any other kind of damage for which the Company may be liable.

(l) Law Compliance .

(1) The Company’s business is conducted in compliance with applicable laws, ordinances and/or regulations issued by Governmental Authorities and agencies.

(2) All governmental approvals, permits and licenses required to conduct the Company’s activities are fully in force and valid and the Company complies with all the necessary requirements so as to maintain them in effect in all their material respects.

(m) Disputes .

Exhibit 3.01 (m)(1) lists all the lawsuits, legal actions, administrative proceedings or investigations, orders, judgments, precautionary measures, awards, resolutions or writs (jointly defined as the “ Disputes ”) existing or, to Sellers’ best knowledge and belief, those pending or threatened, initiated by or against the Company, as plaintiff, main defendant, co-defendant or summoned third party, or related in any manner to its activities or to the transactions herein contemplated. Other than the Disputes listed in the Exhibit mentioned above, no proceeding before a court or governmental body involving the Company and/or Sellers is pending or, to Sellers’ best knowledge and belief, same is threatened, as a result of which a judgment, decree, resolution or order may be issued which may have an adverse effect on the Shares, the Company’s assets or business and/or on the purchase and sale contemplated herein, or which may prevent the delivery and acceptance of this Offer or turn the purchase and sale contemplated herein unlawful or that may cause termination of the purchase and sale contemplated by this Offer or that may require Purchasers to divest of the Shares. No action or proceeding by any Governmental Authority against the Company or Sellers is pending or, to Sellers’ best knowledge and belief, same is threatened, based on the infringement of any applicable provincial or local laws and regulatory provisions. There are no agreements on professional fees, nor professional fees, costs, legal expenses and/or other litigation expenses which have not been paid by the Company, except for the fee agreements listed in Exhibit 3.01 (m)(2).

(n) Guarantees in Favor of Third Parties.

Except as provided by Exhibit 3.01 (n) , the Company has not granted any guarantees, sureties or bonds, nor undertaken any commitments or debts for the benefit of any Person. Sellers have no knowledge about any situation or the occurrence of any event that may give rise to a claim against the Company for any liability arising under any express or implied guarantee that is not fully insured.

(n´) Agreements .

The agreements and the legal relations listed in Exhibit 3.01 (n´) are the only agreements (oral or written) in force to which the Company is a party. Furthermore, the Company does not infringe its obligations nor fails to comply with them, pursuant to their terms and conditions. All the agreements listed in the above mentioned Exhibit are valid, legally binding and enforceable pursuant to their terms. Any agreements between the Company and Affiliates or related companies (if any) have been entered into upon terms and conditions on an arm’s length basis. Such agreements will be considered lawfully terminated by Sellers or by the Company, as the case may be, on the Closing Date, without further responsibility for the Company or Purchasers.

There are no agreements entered into by the Company which provide for any effects in the relationship of the parties in the event of change of control, either directly or indirectly, of the Company.

(o) Third Parties’ Rights .

The Company has not entered into any lease, license, easement or gratuitous loan agreement, or any other oral or written agreement granting any rights to third parties regarding the Company’s personal or real property, and no individual or entity has any right to hold or to occupy any piece of the Company’s property.

(p) Bank Accounts.

Exhibit 3.01 (p) includes a list of all the bank accounts of the Company and the names of each individual authorized to operate with such accounts and to draw checks therefrom.

(q) Powers of attorney .

Other than those listed in Exhibit 3.01 (q) , there are no powers-of-attorney in effect authorizing any individual to act, individually or jointly, on the Company’s behalf and for its account. Revocation of any or all the powers-of-attorney stated in the aforementioned Exhibit shall not grant any attorney-in-fact the right to demand any sum of money from the Company or its shareholders for any reason.

(r) Defaults .

(s) Debts and Credits with Affiliates.

The Company has no credits or debts, transactions or agreements with Sellers, Affiliates (without including the Company in this definition) and/or with related companies of Sellers (without limitation, companies in which one or some Company’s direct and/or indirect owners are shareholders, regardless of the percentage of capital represented by such shares in the relevant company, and/or in which Sellers exercise a dominating influence, and/or companies in which any of its owners are directors or managers of the Company and/or relatives of its directors, managers or the Sellers themselves, within the fourth degree of kinship).

(t) Inventories; Credits; Contract Forms.

The Company’s inventories as stated in the Financial Statements are recorded pursuant to the valuation rules established in the notes attached thereto and they do not infringe such valuation rules or the GAAP. The Company’s credits are valid and constitute legally enforceable obligations against the respective debtors.

(u) Statement of accuracy.

(v) Company’s Carriers and Providers .

Exhibit 3.01 (v)(1) lists the individuals and entities that have conducted, occasionally and/or on a permanent basis, for the last two (2) years preceding the Closing Date, or that conduct at present the transportation of the products, in all cases on a non-exclusive basis as regards product lines, for the Company (defined as “ Carriers ”). Except for Carriers detailed in Exhibits 3.01 (v)(2) , there are no other third parties that transport Company’s products in any manner whatsoever. Exhibit 3.01 (v)(2) further lists the individuals and entities that render or have rendered services to the Company in the areas of catering, security, cleaning (defined as the “ Providers ”). Except for the persons listed in Exhibit 3.01 (v)(2) , no other third parties have been Providers of the Company. All the agreements with Carriers and Providers have been entered into as agreements between independent parties, each such parties being responsible for its own acts and those of its dependants, and in full compliance with the applicable laws.

(w) Promissory Notes, Sureties, Bonds.

Except as stated in Exhibit 3.01(w) the Company has not executed or issued any promissory notes, sureties or bonds of any nature in favor of any third party, including, without limitation, any shareholders of the Company or members of the board of directors.

(x) Foreign Exchange Matters.

(y) Dividends .

Except for the dividends corresponding to the fiscal year closed on December 31st, 2010 of the Company as stated in Exhibit 3.01(y), which shall be distributed and paid to Sellers before the Closing Date, the Company does not owe any amount whatsoever to Sellers or to any other Person on account of declared or outstanding dividends; in any case, Sellers waive any right to file any claim in connection therewith.

(z) Lease Agreements.

Exhibit 3.01 (z) lists all leases pursuant to which the Company is the lessor, sublessor, lessee or sublessee of any piece of real property, identifying in each case its location.

(aa) Permits, Authorizations.

The Company is and has been in full compliance with all the Legal Requirements applicable to it, to its business activity or transactions, and to the property or the use of any of its assets. Furthermore, it has all the permits, licenses, approvals and/or any other required authorizations to conduct its regular business.

ARTICLE FOUR

REPRESENTATIONS AND WARRANTIES OF PURCHASERS.

SECTION 4.01. Representations and Warranties of Purchasers.

Purchasers represent and warrant the following to Sellers on the Closing Date:

(a) Organization and Requirements.

Adecoagro LP is a company duly organized according to the laws of its jurisdiction of incorporation and is vested with full powers and authority to send this Offer.

(b) Authorization.

(l) Purchasers and their attorneys–in-fact, regarding their acts in the name and on behalf of Purchasers, as of the Closing Date, have full powers and authority as may be necessary to accept, agree upon and execute this Offer and the remaining offers and documents related hereto, to cause fulfillment of the obligations undertaken by Purchasers hereunder and under the remaining offers and documents related hereto, to consummate the transactions contemplated in this Offer and/or the remaining offers and documents related hereto, which have been duly authorized.

(5) Purchasers are not in insolvency proceedings and they have not filed for reorganization or bankruptcy proceedings, and no pending petitions in bankruptcy have been filed against them.

(6) No Liens result or are imposed on the Company and/or on any of the Company’s assets and/or the relevant Shares, except for the Pledge.

(d) Statement of accuracy.

ARTICLE FIVE

REPRESENTATIONS AND WARRANTIES—INDEMNITIES

SECTION 5.01. Nature of the Representations .

SECTION 5.02. Indemnity of Purchasers .

(a) (1) Unregistered and/or undisclosed liabilities of the Company existing prior to the date of description of this Offer (jointly defined as the “ Undisclosed Liabilities ”), and (2) Company’s liabilities of any nature (defined as the “ Indemnifiable Liabilities ”).

(c) any default regarding the obligations undertaken by Sellers under this Offer or its Exhibits (including, without limitation, any Damage the Company and/or Purchasers may suffer as a consequence of the sale of the Excluded Assets); and/or

(d) any claims of third parties to the Company which cause or origin is prior to the Closing Date.

For the purposes of the provisions set forth in items (a), (b), (c) and (d) hereinabove, notices sent by Purchasers to Sellers shall include all the documentation held by Purchasers evidencing any Damages or claims which may result in Damages.

SECTION 5.03. Indemnity of Sellers .

Purchasers undertake to defend and hold Sellers harmless from all Damages suffered or paid as a consequence of, or arising from:

(a) the inaccuracy of the Representations and Warranties contained in Article IV of this Offer; and/or

(b) any default of the obligations undertaken by Purchasers hereunder.

For purposes of items (a) and (b) above, all notices sent by Sellers to Purchasers shall include all the documentation held by Sellers evidencing the existence of Damages.

SECTION 5.04. Submittal and Defense of Claims – Offset.

(a) Any of the Parties (defined as the “ Indemnifiable Party ”) that becomes aware of the existence of an event, claim, request, Damage and/or Indemnifiable Liability that may give rise to the indemnification obligation of the other Party (the “ Indemnifying Party”) shall serve notice by any legally reliable means on the Indemnifying Party within the shortest term between (1) thirty (30) days as from becoming aware of the existence of such event, claim, request, Damage and/or Indemnifiable Liability or (2) upon the existence of a procedural term with an expiration date, before expiry of the first half of such term (defined as the “ Claim Notice Term ”), providing all the available information and documentation that such Indemnifying Party may request in relation to such event, claim or request. The Indemnifying Party shall take all the necessary steps it may deem advisable to fulfill its indemnification obligation regarding the other Party, which may, at its own expense and cost, take any other pertinent action for its defense.

(c) The acts of the Indemnifying Party according to the provisions set forth in the foregoing paragraph (b), item (i), shall imply the acknowledgment of the Damage or the Indemnifiable Liability subject to the indemnification obligation of Sellers or the indemnification obligation of Purchasers, as the case may be. In such case, the Indemnifying Party shall be entitled to manage and control, by an attorney at law appointed and borne by such Party, the defense and resolution of such action and the Indemnifiable Party must cooperate with the Indemnifying Party in relation thereto by: (y) allowing the Indemnifying Party to have reasonable access, in business days and working hours, to the books and records that are necessary for the defense; (z) keeping the Indemnifiable Party continuously informed as to any developments in the action. However, it is expressly stated that (1) the Indemnifying Party shall not enter into an agreement leading to the creation or imposition of a lien on the property or assets of the Indemnifiable Party and/or the Company without its prior consent; (2) the Indemnifying Party shall not consent to any agreement that does not include as an unconditional term thereof the granting of a total release of any obligation regarding the action filed against the Indemnifiable Party; (3) the Indemnifying Party shall allow the Indemnifiable Party to participate by giving advice in relation to the conduct or settlement process by means of the attorneys at law appointed by the Indemnifiable Party, at its own cost and expense; and (4) the Indemnifying Party shall agree to reimburse to the Indemnifiable Party the total amount of Damages and/or Indemnifiable Liabilities not subject to prior Withholding, within a ten (10) Business Day-term as from notice of final judgment or definitive award, or upon any settlement agreement ending the referred action (except for expenses paid by the Indemnifiable Party pursuant to the preceding item (3)) or upon them being borne by the Indemnifiable Party. Sellers’ remedy for the Damages in accordance with the provisions set forth in Section 5.02 shall be comprehensive.

(d) On the contrary, if the Indemnifying Party acts according to the provisions of Paragraph (b), item (ii) above and it objects to the claim made by the Indemnifiable Party, the Parties shall submit the dispute to the method established in Section 6.02 hereof. In such case, upon a claim filed by a third party, the Indemnifiable Party shall be responsible for the defense thereof at the expense of the Indemnifying Party, subject to the decisions adopted under the mechanism stated in Section 6.02. In such regard, the Indemnifiable Party, in its own discretion, may defend, answer and make arrangements regarding such action and the Indemnifying Party, if applicable and upon request of the Indemnifiable Party, shall pay (upon resolution of the dispute as to whether the claim is a Damage and/or an Indemnifiable Liability subject to the indemnification obligation of Sellers or the indemnification obligation of Purchasers, as the case may be) the amount of any Damage or Indemnifiable Liability which compensation is provided for herein, within five (5) Business Days upon notice served by such party informing the final judgment or definitive award or the transaction performed by the Indemnifiable Party. The delay in payment shall be automatic and upon elapse of time and no court or out-of court proceeding shall be necessary in such an event. Upon delay in payment, the Parties agree an annual twelve (12) percent interest rate on the due balance in Dollars as from the date of default until the effective payment date.

(e) The payments established in this Section 5.04 shall be made in cash with immediately available funds, by wire transfer according to the written instructions received by the Indemnifiable Party. Without prejudice to this payment obligation provided for in the preceding item, in the event Sellers were the Indemnifying Party and Purchasers were the Indemnifiable Party, Purchasers may withhold from and/or offset any amount receivable by Sellers from Purchasers including, without limitation, the First Balance of the Price, The Final Balance of the Price and/or the Adjusted Balance, any amounts payable by Sellers to Purchasers. Sellers may also offset any amount payable by Purchasers to Sellers including, without limitation, the First Balance of the Price, the Final Balance of the Price and/or the Adjusted Balance, against the amounts payable by Sellers to Purchasers. Alternatively, Sellers acknowledge that Purchasers may request application of the provisions of this Section in order to make the offset and Sellers hereby waive their right to object to such offset.

(g) Sellers shall, at their own expense, continue with the defense in trial and of the claims listed in Exhibit 5.04 which is subject to the provisions contained in items (c), (e) and (f) provided by this Section 5.04 and item (a) (4) of Section 5.05.

SECTION 5.05. Effectiveness and limitations of the indemnification obligation .

(a)	Sellers’ indemnification obligations shall survive:

(1)

for the period provided by the statutes of limitations in the event of: Damages or Indemnifiable Liabilities arising from defaults, inaccurate information or false statements in the Representations and Warranties made by Sellers in Sections 3.01 (a), (b) and (c) hereof;

(2)

for the period provided by the statutes of limitations in the event of Damages or Indemnifiable Liabilities related to Damages or Indemnifiable Liabilities arising from fraudulent or willful acts; or from defaults, inaccurate information or misstatements in the Representations and Warranties made by Sellers in Section 3.01 (h) hereof.

(3)

for a six (6) year-term from the Closing Date in the event of any other Damage and/or Indemnifiable Liability not included in items (1) and (2) above:

(b) Purchasers’ indemnification obligations shall survive for five (5) years as from the Closing Date.

(c) Sellers’ maximum indemnification amount for Damages and/or Indemnifiable Liabilities shall be the Purchase Price If such Indemnifiable Liabilities and/or Damages exceed the Purchase Price, Sellers irrevocably undertake to reimburse Purchasers (upon Purchasers request) the Purchase Price plus all other expenses, costs (including without limitation reasonable Taxes and fees of Purchasers’ attorneys at law) and Purchasers undertake to return to Sellers the Shares (the “ Unwind ”). Upon occurrence of the Unwind and prior to the return of the Shares to Sellers, Purchasers will be entitled to all dividends of the company and to recover the value of any improvements made by Purchasers until the Unwind date.

ARTICLE SIX

APPLICABLE LAW AND SETTLEMENT OF DISPUTES

SECTION 6.01. Applicable Law .

This Offer shall be governed by, and construed in accordance with, the laws of the Argentine Republic.

SECTION 6.02. Settlement of Disputes .

be subject to judicial review. The arbitration court shall decide the issues submitted to arbitration in accordance with (i) the provisions and business intent of this Offer, and (ii) the laws, according to the circumstances, by applying to all relevant legal issues the laws of the Argentine Republic (without regard to the rules of international private law of the Argentine Republic).

ARTICLE SEVEN

MISCELLANEOUS PROVISIONS

SECTION 7.01. Notices.

All notices between the Parties shall be in writing and given by any legally reliable means, addressed as follows:

To the Sellers jointly:

Reconquista 336, piso 11 X, C1003ABH

Buenos Aires Argentina

With a copy (which shall not be deemed as a notice) to:

Bouchard 680, piso 14°, C1106ABH

Buenos Aires Argentina

To the Purchasers:

Fondo de la Legua 936

B1640EDO Martinez (Pcia de Buenos Aires)

With a copy (which shall not be deemed as a notice) to:

AV. Leandro N. Alem 928, piso 7°

Ciudad de Buenos Aires

SECTION 7.02. Severability.

In case any provision of this Offer shall be held to be invalid or unenforceable in any jurisdiction, it shall be deemed invalid in such jurisdiction to the extent of such invalidity or unenforceability, and the remaining provisions of this Offer will not be affected thereby. The invalidity or unenforceability of a provision declared in any jurisdiction shall not turn such provision invalid or affect its applicability in any other jurisdiction. In the event any provision of any law or regulation from which such invalidity or unenforceability results can be waived, the Parties hereby waive any such provision to the greatest extent permitted by law, so that this Offer shall be deemed a valid and binding Offer, enforceable in accordance with its terms.

SECTION 7.03. Public Disclosure.

SECTION 7.04. Confidentiality.

SECTION 7.05. Costs and Expenses

Each Party shall pay its own expenses, including the fees and expenses of such Party’s advisors, in connection with the preparation and execution of this Offer and the completion of the transactions contemplated herein. The Parties state that they have received due legal and accounting advice for executing the transactions provided for in this Offer.

SECTION 7.06. Taxes

SECTION 7.07. Authorization to Execute Exhibits.

(a) Purchasers hereby authorize Messrs to execute, in the name and on behalf of Purchasers, the Exhibits to this Offer and, for such purpose, Purchasers irrevocably empower and authorize such persons, indistinctly, to sign the Exhibits to this Offer. The Sellers hereby consent to such authorization. The signatures or initials of the aforementioned authorized persons shall bind the Purchasers as to the contents of the Exhibits in the same manner as the Offer and shall have the same effect and be as valid as if such Exhibits were signed by the representatives of Purchasers executing this Offer.

SECTION 7.08. No Waiver.

SECTION 7.09. Liability of Sellers.

Sellers shall be jointly and severally liable for the performance of their Representations and Warranties and their obligations hereunder and each Seller hereby waives the right of excussio and division. Accordingly, a default of Sellers’ obligations by any one of the Sellers will entitle Purchasers or any other person to file any actions or claims against any one of the Sellers.

SECTION 7.10. Spouses’ Consent.

Sellers’ spouses execute these presents as evidence of their consent to and agreement with the purchase and sale of the Shares as required by the provisions of Section 1277 of the Civil Code.

SECTION 7.11. Definitions.

All capitalized terms which are not defined herein shall have the meanings ascribed to them in Exhibit I hereof.

SECTION 7.12. Assignment by Adecoagro LP.

Sellers irrevocably agree that this Offer may be assigned in whole or in part by Adecoagro LP to any of its Affiliates without Sellers’ prior consent. However, prior to any such assignments, Adecoagro LP shall give notice to Sellers of the name of the Affiliates to which this Offer was assigned.

ARTICLE EIGHT

PLEDGE OF THE COMPANY’S SHARES

SECTION 8.01. Pledge of Assets Given as Security .

(a) Purchasers hereby pledge to Sellers, in a first priority degree, without assignment of any voting and economic rights, in accordance with section 580 of the Commercial Code and subsequent ones and section 219 of the Argentine Corporate Law (the “ Pledge ”), 4,508,500 (four million five hundred eight thousand five hundred) registered, non-endorsable, common shares, of AR$ 1 (one) Peso par value each and entitled to one vote per share, issued by the Company, equivalent to one hundred (100) percent of the Company’s capital stock and votes, evidenced by share certificates number [ — ] and [ — ] (the “ Pledged Shares ”), as security for the full performance of the Secured Obligations.

(b) For all legal purposes and in compliance with the provisions of section 215, first paragraph, of the Argentine Corporate Law, Purchasers shall notify the Company of the Pledge hereby granted to Sellers.

SECTION 8.02. Scope of the Pledge .

(a) Any and all shares that may hereinafter be issued to Purchasers by the Company, whether as a result of any share exchange, stock subscription, capital increase, irrevocable contribution on account of future stock subscriptions or contributions of any other nature, capitalization of the capital adjustment account, distribution of dividends in stock, capitalization of reserves, revaluations or other accounts or any other distribution of fully paid-in shares, merger, spin-off and/or any other procedure otherwise constituting a corporate reorganization of the Company shall become subject to the Pledge granted under this Offer,

provided Sellers’ authorization pursuant to Section 8.03 has been previously obtained (hereinafter, the “ Additional Pledged Shares ”). The foregoing list is included by way of illustration only. All provisions in this Offer related to the Pledged Shares shall be deemed applicable to the Additional Pledged Shares.

(b) Purchasers undertake to perform all such acts and take all such measures as may be necessary to cause the Company to make immediately the relevant entries in the Stockholders’ Record Book of the Company disclosing Sellers’ pledge rights over the Additional Pledged Shares in any of the events listed in subsection (a) above. Purchasers further undertake to exercise, directly or through any of their Affiliates, the pre-emptive right established by section 194 and related sections of the Argentine Corporate Law upon each issuance of shares by the Company after the date of this Offer and to pay such shares in full and in legal manner so that they become subject to the Pledge pursuant to the provisions of paragraph (a) above. If the aforementioned pre-emptive right is exercised by an Affiliate of Purchasers, such Affiliate shall become a party to this Offer by means of an express statement in writing.

SECTION 8.03. Obligations of Purchasers relating to the Pledge. Restrictions .

The Purchasers hereby assume the following obligations:

Without the prior written consent of the Sellers, Purchasers shall not sell, transfer, assign, exchange the Pledged Shares.

SECTION 8.04. Voting Rights. Economic Rights .

Unless a Default shall have occurred and be continuing, Purchasers shall be entitled to exercise all the voting rights related to the Pledged Shares. Purchasers will retain the economic rights unless and until a final, unappealable arbitration award determines that a Default exists.

SECTION 8.05. Remedies.

Should a Default occur, Sellers may:

(a) Remedies . Exercise, in addition to all the rights and remedies contemplated in this Offer, all the rights and remedies available in events of default provided for under Argentine laws. Without limiting the generality of the foregoing, in any such events, Sellers may, without any demand for performance or any other demand, presentment, protest, publication or notice of any nature whatsoever (except for any such notice as may be required by the laws), sell the Pledged Shares in accordance with the following procedure, at the option of Sellers:

(y) at an auction pursuant to section 585 of the Commercial Code, called by the Sellers upon 10 (ten) calendar days in advance, by means of publications for 5 (five) calendar days in one of the following newspapers: Clarín, La Nación or Ámbito Financiero. The minimum opening price shall not be less than the amounts due as First Balance of the Price and Final Balance of the Price or the Adjusted Balance, or only the Final Balance of the Price or the Adjusted Balance if the First Balance of the Price has been settled at the time of the auction, plus any costs, expenses, commissions, taxes and fees related to the auction and the sale of the Pledged Assets (the “ Minimum Opening Price ”). The price shall be paid in cash. If no offers are made at the auction for an amount equal to or exceeding the Minimum Opening Price, the auction may be adjourned for 10 (ten) calendar days and at such adjourned auction the minimum opening price shall be at least fifty percent (50%) of the Minimum Opening Price. If at the auction no offers are made for at least fifty percent (50%) of the Minimum Opening Price, the auction will be adjourned for 10 (ten) calendar days and at such adjourned auction no minimum opening price will be fixed.

The auction will be conducted by such agent or agents as may be designated by Sellers. Notice of the first auction shall be given to Seller upon 10 (ten) calendar days in advance. In no case (not even at

the adjourned auction) shall the Pledged Shares be transferred at the auction to the Purchasers or its Affiliates (as defined in the Stock Purchase and Sale Offer) for less than the Minimum Opening Price; or

(z) at a private sale, through a renown international investment bank, in cash, on credit or for future delivery and in any other manner permitted by the applicable laws. The Purchasers hereby expressly authorize the sale by means of privately negotiated transactions which may be entered into at a price negotiated by Sellers in good faith, but in no case for less than the Minimum Opening Price.

In the event of foreclosure, Purchasers shall bear any and all costs, expenses, fees and/or, in general, any charges directly related to the foreclosure of the Pledge.

(b) Remedies – Powers of Sellers . Without notice or publication, Sellers may adjourn any public or private sale or auction in accordance with section 585 of the Commercial Code, or cause the same to be adjourned by posting an announcement at the time and place fixed for such sale or auction, and the sale or auction may be made at any time and place to which the same may be so adjourned. In case of any sale of the Pledged Assets on credit or for future delivery, the Pledged Shares so sold may be withheld by the Sellers until the price thereof is paid by the purchaser, but Sellers shall have no liability if said purchaser fails to collect and pay for the Pledged Shares so sold. In case of such failure, the Pledged Shares may be sold again by following any of the procedures described in this Section 8.05.

(c) Remedies – Transfer of the Pledged Shares . Upon payment of the price for the Pledged Shares by the purchaser or purchasers thereof, Sellers shall transfer the Pledged Shares to such purchaser or purchasers and the Company and the Purchasers hereby undertake to make the relevant entry in the Stockholders’ Record Book and take all such measures and/or perform any other actions as may be necessary, in Sellers’ opinion, to facilitate the foreclosure and transfer of the Pledged Shares.

(d) Remedies – Additional Guarantees . Purchasers further agree to execute or cause the execution of any other act as may be necessary to facilitate any such sale or sales of all or any portion of the Pledged Shares, and to cause any such sale or sales to be valid and binding in accordance with this Section 8.05 and in compliance with any other applicable legal requirements.

(e) Remedies – Additional Undertaking . The Purchasers undertake and agree to execute and deliver all such documents as may be necessary or desirable so that the sale is made in compliance with the law.

(f) Remedies – Application of proceeds . Upon completion of the sale, the Sellers shall apply the proceeds thereof as follows:

(i)

(a) to the total or partial payment of the First Balance of the Price and/or the Final Balance of the Price or the Adjusted Balance, as the case may be. Each of the Sellers shall be entitled to receive, as regards the actual proceeds from the sale, the amount obtained after applying to such proceeds the percentage established in Exhibit 8.05 (f) hereto.

(ii)

if the proceeds from the sale, after deducting the costs and expenses of any nature incurred in connection with, or incidental to, the auction and sale, exceeds the amount of the First Balance of the Price and/or the Final Balance of the Price or Adjusted Balance, Sellers shall apply such proceeds to payment in full of the First Balance of the Price and/or the Final Balance of the Price or Adjusted Balance, as appropriate, and shall deposit the remaining amount in the account designated in writing by the Purchasers.

(iii)

if the proceeds from the sale, after deducting the costs and expenses of any nature incurred in connection with, or incidental to, the auction and sale, is lower than the amount of the First Balance of the Price and/or the Final Balance of the Price or the Adjusted Balance, Sellers may continue foreclosing Purchasers until payment in full of all the Secured Obligations is made and, for such purpose, Purchasers shall be liable with all their assets.

(g) Remedies – Set-off . In the event any of the Sellers purchases the Pledged Shares at the auction provided for in this Section 8.05, after deduction of the relevant expenses and Taxes, the resulting net price shall be offset against the amount equivalent to the total amount due (including interest, expenses, fees and further incidental costs due).

SECTION 8.06. Release of the Pledge.

Upon full performance of all the Secured Obligations by Purchasers, the Pledge shall be released and Sellers undertake to give and deliver to Purchasers the Certificates and all such documents as may be reasonable to evidence and execute the release of the Pledge, including the notice to the Company required by section 215 of the Argentine Corporate Law.

On the understanding that the proposed transaction will be highly beneficial for the Parties, we remain sincerely yours.

[Signature] Adecoagro LP

EXHIBIT I

Definitions

I.A. Definitions .

In addition to other definitions contained in the Offer, the following terms, when capitalized, shall have the following meanings for purposes of construing this Offer:

“ Governmental Authority ” means any national, provincial or municipal governmental authorities of the Argentine Republic and foreign governmental authorities, including, but not limited to, the CNDC and/or any Argentine and foreign governmental agencies, courts or administrative tribunals.

“ Antitrust Approval ” means the approval from the CNDC and the SDT of the transactions contemplated in this Offer and, especially, the transfer of the Shares to the Purchasers.

“ CNDC ” means the Argentine Comisión Nacional de Defensa de la Competencia, the Argentine Antitrust Tribunal or any other agency that may replace it in the future as enforcement authority under Law N° 25,156.

“ Tax Matters ”, “Tax” or “Taxes” means any taxes, including income (net or gross), turnover, profit, alternative or ancillary, asset, privilege, license, capital, capital stock, intangible asset, services, premium, transfer, use, ad-valorem, value added, payroll, wage, natural resources consumption, employment, social security, pension, professional, personal and real property, extraordinary gains, import, indirect, custom, stamp and withholding taxes or estimated taxes, rates, contributions, levies, withholdings or governmental tax charges, including all taxes which are to be collected and paid to any governmental agency on behalf of third parties (including obligations resulting from acting as withholding agent, collection agent, substitute taxpayer, agent or broker, etc.), including, in all cases, any interest, adjustments, penalties or surcharges thereof.

“ hereof ”, “ herein ” and “ hereunder ” refer to the Offer as a whole and not to the Article, Section and Exhibits where such terms are used.

“ Dollar ” “ Dollars ”, “ USD ” and “ US$ ” mean the currency of legal tender in the United States of America.

“ Business Day ” shall mean any day, other than a Saturday, Sunday or banking holiday in the Republic of Argentina or the United States of America or Spain.

“ Closing Date ” means August 15, 2011.

“ GAAP ” means the accounting principles generally accepted in the Argentine Republic pursuant to the rules of the Argentine Federation of Accountant’s Associations.

“ Lien ” means any pledge, usufruct, personal or real property rights, charges, mortgages, attachments, encumbrances, security interests, third party contractual rights, trusts, options and restrictions of any nature to the use and/or disposition of an asset in favor of third parties, whether individuals or entities.

“ Default ” means the occurrence of any fact, action or omission which constitutes a breach of the terms of this Offer or the Secured Obligations as determined by a final and unappealable arbitration award issued by the board of arbitration as provided for by Section 6.02 hereof.

“ Argentine Corporate Law ” means the Argentine Corporate Law No. 19,550 as amended.

“ LIBOR ” means the 12-month rate for inter-banking loans in Dollars published in Telerate Service Page 3750 (or such other page of any other service as may designated by the British Bankers’ Association), at 11:00 am London time, on a day in London which is two Business Days (as defined in the ISDA 2000 Definitions) prior to the Business Day (the “Relevant Date”) immediately preceding the first day of the 12-month period over which the LIBOR must be calculated. If more than one rate is published on the Relevant Date, LIBOR shall mean the arithmetic average of all such rates. If no rate is published on the Relevant Date, LIBOR shall mean the arithmetical average of the rates for 12-month inter-banking loans in Dollars offered on such Relevant Date by three (3) banks operating in the London 12-month Dollar inter-banking loan market, such banks to be selected by the creditor.

“ Secured Obligations ” means the obligation to pay the First Balance of the Price and the Final Balance of the Price or Adjusted Balance as such obligation has been assumed by Purchasers, and subject to any adjustments or withholdings as provided by Section 1.02, Section 1.03 and related terms of the Offer.

“ Person ” means any individual, partnership, corporation (including a corporation organized as a trust), limited liability company, trust, association, joint venture, stock holding company or any other entity, government or political subdivision or agency thereof.

“ SDT ” means the Secretariat of Domestic Trade, dependent on the Ministry of Economy of the Argentine Republic.

“ Subsidiary ” means, as regards any Person, any company in which such Person owns 50% or more of the voting stock issued by such company.

“ Certificates ” means the stock certificates representing the Pledged Shares.

I.B. Construction

(b) If so required by the context, words in singular include the plural and vice versa, and the words in the masculine or neuter gender include the masculine, feminine and neuter.

(c) References to Sections, Articles and Exhibits contained in this Offer shall be understood (unless otherwise stated) as references to the Sections, Articles and Exhibits of this Offer.

[Handwritten:] Received on December 19 ^th , 2011 [signature]

Buenos Aires, August 19, 2011

Dear Sirs,

As attorney-in-fact of Adecoagro L.P. (“ Adecoagro ”) I hereby refer to our offer dated July 15, 2011 for the acquisition of 100% of the outstanding shares of stock of Simoneta S.A. (the “ Offer ”).

We propose to amend and supplement certain clauses contained in the Offer which, upon your acceptance, shall be governed by the following terms and conditions (the “ Supplemental Offer ”):

ONE : All capitalized terms used in this Supplemental Offer which are not specifically defined herein shall have the meanings ascribed to them in the Offer.

TWO : The companies Kadesh Hispania S.L. and Leterton España S.L. shall be the Affiliates of Adecoagro that will purchase Simoneta S.A.’s shares in accordance with paragraph two of the Offer. Consequently, all references to Purchasers contained in the Offer and in the Supplemental Offer shall be deemed as references to Kadesh Hispania S.L. and Leterton España S.A., who shall acquire 90% and 10%, respectively, of the Shares. Purchasers execute these presents as evidence of their agreement with the foregoing.

THREE : To amend Section 1.02(c) of the Offer to read as follows:

“(c) The Security Balance Withheld for Damages or Indemnifiable Liabilities (with the scope of such terms as provided under Section 5.02) shall be reimbursed, if appropriate, to Sellers net of any withholdings, deductions and/or offset that must be made on account of any Damages or Indemnifiable Liabilities payable to Sellers in two (2) installments, each of such installments covering fifty (50) percent of the amounts of the Security Balance Withheld that have not been withheld, deducted or offset upon expiration of the second and third anniversaries of the Closing Date, respectively (the “ Released Funds ”), plus any Interest on such Released Funds.”

FOUR : To amend and postpone the Closing Date so as to occur on August 19, 2011.

FIVE : Sellers expressly agree that the fees paid to Simoneta S.A.’s directors and statutory auditors in the amount of ARS 55,000 (fifty five thousand Argentine pesos) have the effect of adjusting and reducing the Purchase Price in accordance with Section 1.03 of the Offer.

SIX : This Supplemental Offer shall be deemed accepted by each of the Sellers if a copy of the Company’s Taxpayer Registration Form (CUIT) signed by them is sent by Sellers to Purchasers.

(Signatures)

Adecoagro LP

Kadesh Hispania S.L

Leterton España S.L.

Exhibit 8.1

Subsidiaries of Adecoagro S.A.

Majority Owned Subsidiaries as of December 31, 2011:


	Name	Place of Incorporation
1	International Farmland Holdings LP	Delaware, United States
2	Adecoagro LP	Delaware, United States
3	ONA Ltd.	Malta
4	TOBA Ltd.	Malta
5	Kadesh Hispania S.L.	Spain
6	Leterton España S.L.	Spain
7	Adeco Agropecuaria S.A.	Argentina
8	Pilagá S.A.	Argentina
9	Cavok S.A.	Argentina
10	Establecimientos El Orden S.A.	Argentina
11	Agro Invest S.A.	Argentina
12	Forsalta S.A.	Argentina
13	Agrícola Ganadera San José S.R.L.	Argentina
14	Santa Regina Agropecuaria S.R.L.	Argentina
15	Bañado del Salado S.A.	Argentina
16	Dinaluca S.A.	Argentina
17	Compañía Agroforestal de Servicios y Mandatos S.A.	Argentina
18	Simoneta S.A.	Argentina
19	Ladelux S.A.	Uruguay
20	Kelizer S.A.	Uruguay
21	Adecoagro Uruguay S.A.	Uruguay
22	Adeco Brasil Participações S.A.	Brazil
23	Adeco Agropecuária Brasil S.A.	Brazil
24	Usina Monte Alegre Ltda.	Brazil
25	Angélica Agroenergia Ltda.	Brazil
26	Fazenda Mimoso Ltda.	Brazil
27	Ivinhema Agroenergia S.A.	Brazil

	Consolidated Affiliated Entities
	Name	Place of Incorporation
1	Grupo La Lácteo Inc.	Alberta, Canada
2	Grupo La Lácteo LP	Alberta, Canada
3	La Lácteo S.A.	Argentina

Exhibit 12.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. §1350)

I, Mariano Bosch, certify that:

1.	I have reviewed this annual report on Form 20-F of Adecoagro, S.A.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designated such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.	The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 27, 2012

By /s/ Mariano Bosch

Mariano Bosch

Chief Executive Officer

Exhibit 12.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. §1350)

I, Carlos A. Boero Hughes, certify that:

1.	I have reviewed this annual report on Form 20-F of Adecoagro S.A.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 27, 2012

By /s/ Carlos A. Boero Hughes

Carlos A. Boero Hughes

Chief Financial Officer

Exhibit 13.1

Officer Certifications

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Adecoagro S.A., a corporation organized under the form of a société anonyme under the laws of the Grand Duchy of Luxembourg (the “Company”), does hereby certify to such officer’s knowledge that:

The annual report on Form 20-F for the fiscal year ended December 31, 2011 (the “Form 20-F”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 27, 2012

By /s/ Mariano Bosch

Name: Mariano Bosch

Title: Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 13.2

Officer Certifications

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Dated: April 27, 2012

By /s/ Carlos A. Boero Hughes

Name: Carlos A. Boero Hughes

Title: Chief Financial Officer

Exhibit 15.1

CONSENT OF CUSHMAN & WAKEFIELD ARGENTINA S.A.

We hereby consent to the use of our name in the annual report on Form 20-F of Adecoagro S.A. and any amendments thereto (the “Annual Report”) and the references to and information contained in the Cushman & Wakefield Argentina S.A. Appraisal of Real Property report dated September 30, 2011 prepared for Adecoagro S.A., wherever appearing in the Annual Report, including but not limited to our company under the heading “Information on the Company” in the Annual Report.

Dated: April 27, 2012

Cushman & Wakefield Argentina S.A.

By:

Name: Julio C. Speroni

Title: Valuation Manager

Exhibit 15.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-173327) of Adecoagro S.A. of our report dated March 27, 2012 relating to the consolidated financial statements, which appears in this Form 20-F.


PRICE WATERHOUSE & CO. S.R.L.

by		/s/ Mariano C. Tomatis (Partner)
		Mariano C. Tomatis

Buenos Aires, Argentina

April 27, 2012