ManageMent’s Discussion anD analysis RISK FACTORS Dependence Upon Lantic  Fluctuations in Margins and Foreign Exchange  Fluctuations in Raw Sugar Prices  The Company’s business and operations are substantially affected by many factors, including prevailing margins on refined  sugar and its ability to market sugar competitively, sourcing of raw material supplies, weather conditions, operating costs and  government programs and regulations.  Rogers is entirely dependent upon the operations and assets of Lantic through its ownership of securities of this company.  Accordingly, interest payments to debenture holders and dividends to shareholders will be dependent upon the ability of  Lantic to pay its interest obligations under the subordinated notes and to declare and pay dividends on or return capital in  respect of the common shares.The terms of Lantic’s bank and other indebtedness may restrict its ability to pay dividends and  make other distributions on its shares or make payments of principal or interest on subordinated debt, including debt which  may be held, directly or indirectly, by Rogers, in certain circumstances. In addition, Lantic may defer payment of interest on  the subordinated notes at any given time for a period of up to 18 months.  The Company’s profitability is principally affected by the margins on domestic refined sugar. In turn, this price is affected by  a variety of market factors such as competition, government regulations and foreign trade policies.The Company, through  the U.S. specific quota, normally sells approximately 12,000 metric tonnes of refined sugar per year in the U.S. and also sells  beet pulp to export customers in U.S. dollars. The Company’s Taber sugar sales in Canada are priced against the #11 world  raw sugar market, which trades in U.S. dollars, while the sugar derived from the sugar beets is paid for in Canadian dollars  to the Growers. Fluctuations in the value of the Canadian dollar will impact the profitability of these sales. Except for these  sales, which currently can only be supplied by the Company’s Taber beet plant, and sales to the U.S. under other announced  specific quotas or under extraordinary circumstances like the one that occurred in the fall of 2011, most sales are in Canada  and have little exposure to foreign exchange movements.  Raw sugar prices are not a major determinant of the profitability of the Company’s cane sugar operations, as the price at  which sugar is both purchased and sold is related to the world raw sugar price and all transactions are hedged. In a market  where world raw sugar is tight due to lower production, significant premiums may be charged on nearby deliveries which  would have a negative impact on the adjusted gross margins of the cane operations.The world raw sugar price can, however,  impact the profitability of the Company’s beet operations. Sugar derived from beets is purchased at a fixed price, plus a scale  incentive when sugar prices rise over a certain level, and the selling price of domestic refined sugar rises or falls in relation  to the world raw sugar prices.  A relatively high world raw sugar price will also reduce the competitive position of liquid sugar in Canada as compared to  HFCS which could result in the loss of HFCS substitutable business for Lantic.  Rogers Sugar Inc. 30