monsanto 06-14-06
TRANSCRIPT
1
BRETT BEGEMANNEXECUTIVE VICE PRESIDENT, INTERNATIONAL COMMERCIAL
MERRILL LYNCH,AGRICULTURAL CHEMICALS CONFERENCE
JUNE 14, 2006
2
Forward-Looking Statements
Certain statements contained in this release are "forward-looking statements," such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of biotechnology products; the success of the company's research and development activities; the outcomes of major lawsuits, including proceedings related to Solutia Inc.; developments related to foreign currencies and economies; successful completion and operation of recent and proposed acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the company's ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and other risks and factors detailed in the company's filings with the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results.
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Non-GAAP Financial Information
This presentation may use the non-GAAP financial measures of “free cash flow,” earnings per share (EPS) on an ongoing basis, and Return on Capital (ROC). We define free cash flow as the total of cash flows from operating activities and investing activities. A non-GAAP EPS financial measure, which we refer to as on-going EPS, excludes certain after-tax items that we do not consider part of ongoing operations, which are identified in the reconciliation. ROC means net income (without the effect of certain items) exclusive of after-tax interest expenses, divided by the average of the beginning year and ending year net capital employed, as defined in the reconciliation. Our presentation of non-GAAP financial measures is intended to supplement investors’ understanding of our operating performance. These non-GAAP financial measures are not intended to replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with accounting principles generally accepted in the United States. Furthermore, these non-GAAP financial measures may not be comparable to similar measures used by other companies. The non-GAAP financial measures used in this presentation are reconciled to the most directly comparable financial measures calculated and presented in accordance with GAAP, which can be found at the end of this presentation.
Trademarks
Roundup, Roundup Ready, Roundup RReady2Yield, Bollgard, Bollgard II, YieldGard, YieldGard Corn Borer and Design, YieldGard Rootworm and Design, Asgrow and the A Design, DEKALB and the Winged Ear Design, Monsanto Imagine and the Vine Design, Asgrow, DEKALB, Monsanto Choice Genetics, Posilac, Processor Preferred, Vistive, Stoneville and Seminis are trademarks owned by Monsanto Company and its wholly-owned subsidiaries and are italicized the first time they appear in this presentation.
Mavera™ is a trademark of Renessen.
© 2006 Monsanto Company
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U.S., Brazil and Argentina Account for More Than 90 Percent of World Grain Trade
OVERVIEW
UNITED STATES
KEY TRENDS
ETHANOL DRIVES ADDITIONAL CORN DEMAND
SOYBEANS EVOLVE INTO A HIGHER VALUE, SPECIALTY MARKET
Source: U.S.D.A. Foreign Agricultural Service, ABIOVE, Independent Economists & Monsanto Estimates
ASIA PACIFIC
KEY TRENDS
CHINA BECOMES A NET IMPORTER OF CORN AND SOYBEAN IMPORTS ACCELERATE
GROWING WEALTH & POPULATION DRIVES GRAIN DEMAND
GLOBAL VIEW - 2010 HORIZON
EUROPE
KEY TRENDS
BIO-DIESEL DRIVES OILSEED DEMAND
EU REMAINS WORLD’S PRINCIPAL DESTINATION FOR SOYBEAN MEAL
CHINA: NET IMPORTS
-10
0
10
20
30
40
2005 2010
CORN SOY
MET
RIC
TO
NS
(M)
SOUTH AMERICA
KEY TRENDS
SOYBEAN ACREAGE INCREASES
DEMAND FOR CORN INCREASES FOR DOMESTIC FEED
5
COMMERCIAL
Farmers ‘Buy Yield,’ Creating Opportunity for Seeds and Traits Growth
+
=
MONSANTO’S POSITION: CORN
The elegance of a seed and trait approach is that the seed is the package and traits can be ‘stacked’ for maximum effect
In 2005, Monsanto introduced the first triple-stack of biotech traits
FARMERS’ DECISION EQUATION
SEED(GENETIC GAIN)The starting point of all agriculture; farmers need to maximize ‘genetics’ in seed for yield
TECHNOLOGY(% OF GENETIC GAIN PRESERVED)Technology is used to protect and maximize the yield potential of the seed
MAXIMUM YIELD POTENTIAL
The basic equation represents the maximum yield potential multiplied by the percent of that yield preserved by technology
Retail brands
Licensing
Regional brands
‘Above ground’ protection
Weed control system
‘Below ground’ protection
+
=
6
Breeding and Biotechnology Combine to Advance Harvested Yield to the Next Level
COMMERCIAL
NA
TU
RA
L Y
IELD
S
UP
PR
ES
SIO
N
INSECT PRESSURE
WEED PRESSURE
NUTRIENT DEFICIENCY
WATER DEFICIENCY
CU
RR
EN
T Y
IELD
P
RO
TE
CT
ION
SEED MANUFACTURING
WEED-CONTROL TRAITS
ABOVE-GROUND INSECT CONTROL
BELOW-GROUND INSECT CONTROL
FOCUS: YIELD
NET REALIZED YIELD
PERCENT OF GENETIC GAIN PRESERVEDX
GENETIC POTENTIAL
WHAT MATTERS TO FARMERS IS THE YIELD AT HARVEST, WHICH IS A FUNCTION OF HOW MUCH POTENTIAL A SEED HAS AND HOW IT’S PROTECTED:
NET REALIZED YIELD WITH CURRENTPROTECTION
NET REALIZED YIELD WITHFUTURE PROTECTION OPPORTUNITIES
GENETIC POTENTIAL PRESERVED THROUGH BIOTECH TRAITS AND PRODUCTION ADVANCES
GENETIC POTENTIAL (FUTURE)
GENETIC POTENTIAL (CURRENT)
NET REALIZED YIELD WITH NO PROTECTION
SECOND-GENERATION INSECT CONTROL
DROUGHT TOLERANCE
IMPROVED NITROGEN UTILIZATION
BR
EE
DIN
G
AD
VA
NC
ES
PR
OT
EC
TIO
N A
ND
EN
HA
NC
EM
EN
T
7
COMMERCIAL
Opportunity to Improve Global Corn Yields Comes Through Investments in Technology
CORN YIELD TRENDS(BUSHELS PER ACRE)
1990 2000 2005
70
137
93
CHINA 74 78 80
47
29
24
WORLD AVERAGE 59 75
149
109
54
31
25SUB-SAHARAN AFRICA
22
113UNITED STATES
INDIA
ARGENTINA 60
BRAZIL 33
23
U.S.MOST TECHNOLOGICALLY ADVANCED CORN MARKET SIGNIFICANT PUBLIC AND PRIVATE INVESTMENT IN BREEDING AND BIOTECH
ARGENTINA CONSOLIDATED GERMPLASM POOL AND TECHNOLOGY ADOPTION HAVE LED TO YIELD INCREASES
BRAZIL YIELDS ARE SIGNIFICANTLY BELOW WORLD AVERAGE YIELDS POISED TO IMPROVE BECAUSE OF BREEDING INVESTMENTS
INDIA LARGE, FRAGMENTED MARKET, MUCH OF WHICH IS LOW TECHNOLOGY AND SUBSISTENCE FARMING
CORN YIELD HIGHLIGHTS
Source: Doane Forecast
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COMMERCIAL
Monsanto’s Global Germplasm and Breeding Programs Pave Way for Future Share Growth Internationally
SCORECARDGLOBAL BRANDED MARKET SHARE
FY2004 FY2005 FY2006F CHANGE (’04-’06)
14%
14%
13%
10%
14%
26%
17%
38%
35%
29%
37%
58%
35%
35%
19%
18%
15%
15%
21%
32%
23%
49%
35%
35%
38%
60%
34%
35%
NORTH AMERICAN REGION 16% +5%
+4%
+2%
+5%
+7%
+6%
+6%
+11%
FLAT
+6%
+1%
+2%
-1%
FLAT
SOUTH AFRICA 44%
MEXICO 57%
BRAZIL 35%
ARGENTINA 37%
16%UNITED STATES
EUROPE-AFRICA REGION 15%
FRANCE 14%
ITALY 17%
HUNGARY 30%
TURKEY 23%
ASIA-PACIFIC REGION 37%
INDIA 34%
LATIN AMERICA REGION 38%
10 COUNTRIES REPRESENT 80% OF THE GERMPLASM MARKET VALUE
IN THOSE 10 COUNTRIES, MONSANTO HOLDS No. 1 POSITION IN SIX
STRENGTHS:
IN EUROPE-AFRICA REGION, GROWTH WAS STRONGEST ACROSS LARGEST MARKETS
IN ASIA-PACIFIC AND LATIN AMERICA REGIONS, MARKET LEADERSHIP WAS MAINTAINED AND PROFITABILITY GREW
CHALLENGES:
IN BRAZIL, PRUDENT CREDIT POLICIES ARE LIMITING SHARE GROWTH OPPORTUNITIES
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Corn Market Share Gains Still To Fully Reflect Power of Molecular Breeding Application
PROGRESSION OF BREEDING TECHNOLOGY
IN THE COMMERCIAL
PORTFOLIO
COMMERCIAL
COMPETITIVE ADVANTAGE
BUILT ON OUR INVESTMENTS
2001 2002 2003 2004 2005 2006 2007 2008 2009
CYCLE 1: INTEGRATION OF GLOBAL GERMPLASM
• ASSEMBLED 36 MAJOR CORN BREEDING PROGRAMS IN 12 COUNTRIES
CYCLE 2:APPLICATION OF MOLECULAR BREEDING TO SELECTION
CYCLE 3: SELECTION POWER OF MOLECULAR BREEDING
• MOLECULAR BREEDING DOUBLES GENETIC POTENTIAL VERSUS CONVENTIONAL BREEDING
• BY 2006, FIRST MOLECULAR BREEDING HYBRIDS ENTER COMMERCIAL PORTFOLIO
• PREDICTIVE COMBINATIONS ALLOW MORE EFFICIENT BREEDING
• MOLECULAR BREEDING ACCELERATES TRAIT INTEGRATION BY SHORTENING ‘BACKCROSSING’ CYCLES
•FIRST INTRA-COMPANY CROSSES; BY CYCLE 3, MORE THAN 50% OF HYBRIDS IN THE U.S. PORTFOLIO MADE THROUGH INTRA-COMPANY CROSSES
•APPLY MOLECULAR BREEDING TO U.S.
•APPLY MOLECULAR BREEDING IN EUROPE
•APPLY MOLECULAR BREEDING RESULTS FROM TEMPERATE TO TROPICAL MARKETS, SUCH AS BRAZIL AND ASIA
ACTIONS TAKEN
•IN U.S. , BY 2006, FIRST MOLECULAR BREEDING HYBRIDS ENTER COMMERCIAL PORTFOLIO
•IN EUROPE, BY 2008, FIRST MOLECULAR BREEDING HYBRIDS ENTER COMMERCIAL PORTOLIO
•IN BRAZIL AND ASIA, BY 2009, FIRST MOLECULAR BREEDING HYBRIDS ENTER COMMERCIAL PORTFOLIO
OPPORTUNITY
10
COMMERCIAL
FOCUS: EUROPE
COMMERCIAL OPPORTUNITY
CORN GERMPLASM
MARKET FACTS
ACRES 2005 2006F
25.5M 26M
OILSEEDS 27M 28M
CORN
CORN BORER INSECT PROBLEM IS SIGNIFICANT IN EUROPEOILSEED ACRES INCLUDE SUNFLOWER, OILSEED RAPE, AND SOYBEANS
BREEDING GAINS HAVE ESTABLISHED A YIELD ADVANTAGE FOR MONSANTO’S EUROPEAN GERMPLASM
OVER THE LAST 3 YEARS, OUR BRANDS HAVE GAINED 7 MARKET SHARE POINTS IN ITALY AND 5 IN FRANCE
STRATEGIC ALLIANCES AND HYBRID LICENSING INCREASE GENETIC FOOTPRINT FOR FUTURE TRAIT PENETRATION
100
110
120
130
140
150
160
85 90 95 100 105 110 115
MONSANTOCOMPETITOR
2005 CORN YIELD
BU
SH
ELS
PE
R A
CR
E
Yield Advantages Fuel Market Share Growth in Europe
MATURITY ZONES IN DAYS
11
Market Leadership In Corn Maintained While Refreshing Portfolio Mix Through Advanced Breeding
COMMERCIAL
FOCUS: BRAZIL
COMMERCIAL OPPORTUNITY
CORN GERMPLASM
MARKET FACTS
ACRES 2005 2006F
20M 20M
SOYBEANS 52M 50M
CORN
SOYBEAN YIELDS SUPERIOR TO U.S. AVERAGESCORN YIELDS LAG U.S. AVERAGES PORTFOLIO MIX SHIFT DROVE HIGHER YIELDS FOR FARMERS
AND INCREASED PROFITABILITY FOR MONSANTOBRANDED BUSINESS COUPLED WITH LICENSING AGREEMENTS
WITH AGROMEN AND AGROESTE EXTEND PLATFORM FOR FUTURE TRAIT PENETRATION
0%
20%
40%
60%
80%
100%
2003 2006F
HIGH TIER MEDIUM TIER LOW TIER
28%
54%
38%
34% 21%
25%
CORN PORTFOLIO MIX
~2X INCREASE
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Seminis to Leverage Portfolio, Pricing and Molecular Breeding to Create New Growth
COMMERCIAL
VALUE ENHANCEMENT TIMELINEOVER THE MID-TERM, SEMINIS WILL UNDERGO THREE PHASES OF EXECUTION EN ROUTE TOUNLOCKING ADDITIONAL VALUE
OPERATIONAL EXCELLENCE BY END OF FY 2007
NEW VALUE CREATIONBY END OF FY 2008
PIPELINE ADVANCEMENTBY END OF FY 2010
IDENTIFY AND IMPLEMENT OPPORTUNITIES TO PRICE PRODUCTS TO VALUE
BUILD BUSINESS MODELS TO CREATE AND CAPTURE DOWNSTREAM VALUE OPPORTUNITIES
ENHANCE PRODUCT QUALITY AND REDUCE COSTS THROUGH MANUFACTURING AND LOGISTICAL IMPROVEMENTS
AGGRESSIVELY MAKE HYBRID CONVERSIONS IN STRATEGIC CROPS
COMMERCIALIZE FIRST HYBRIDS DEVELOPED BY MOLECULAR BREEDING
LAUNCH SUCCESSION OF CONSUMER BENEFIT PRODUCTS
PRIORITIZE PRODUCT PORTFOLIO BY FOCUSING ON 20 – 25 KEY CROPS THAT DRIVE PROFITABILITY
ASSEMBLE GENETIC MAPS FOR KEY CROPS
ENHANCE R&D CAPABILITY AND DEPLOY MOLECULAR MARKERS FOR AGRONOMIC AND CONSUMER BENEFITS
INTEGRATE AND STREAMLINE BACK –OFFICE OPERATIONS
FOCUS: SEMINIS
+ +
13
KEY MARKET AREAS
ACRES
AVAILABLE SEED MARKET
EUROPE N.AMERICA
.6M .2M
$ 86 M $ 24 M
PERCENT PENETRATED 2% 4%
ENHANCED CANTALOUPECREATING VALUE
COMMERCIAL
Expanding Line of Cantaloupe Offers Improved Post-Harvest and Fresh-Processing Quality
3108
PROJECT OVERVIEWMULTI-GENERATIONAL: PHASE III THROUGH LAUNCH
Not as well as expected As expected Better than
expected
• Consistent quality and flavor, consumer experience• Higher marketable yield and profitability• Better shelf life and excellent flavor • High sugars even during challenging winter harvest
months
Quality
Horticultural Performance
New Hybrids (white flesh, orange flesh, green flesh)
OBSERVATIONS
DISCOVERY PHASE IProof of Concept
PHASE IIEarly Development
PHASE IIIAdv. Development
PHASE IVPre-Launch
LAUNCH
14
EXAMPLE: BIOTECH TRAITS IN BRAZIL
OPPORTUNITY: 50M ACRES OF SOYBEANS AND 20M ACRES OF CORN
OPPORTUNITY:ROUNDUP READY FLEX WITH BOLLGARD II STACK LAUNCHES IN FY 2007
OPPORTUNITY: BOLLGARD II LAUNCHES IN 2006 ON LIMITED ACRES
6M+ ACRES TARGETED TO HAVE BOLLGARD IN 2006
80% OF ALL ACRES HAVE A TRAIT. OVER HALF OF ALL ACRES WITH AT LEAST ONE TRAIT ARE STACKED
PENETRATION AND EXPANSION
CURRENT STATUS:
IN 2006, ~25M ROUNDUP READY SOYBEANS ACRESIN CORN, NO BIOTECH ACRES WERE PLANTED
EXAMPLE: COTTON TRAITS IN AUSTRALIA
STACKING
CURRENT STATUS:
EXAMPLE: SECOND-GENERATION COTTON TRAITS IN INDIA
MULTI-GENERATION
CURRENT STATUS:
Existing Biotech Traits Set Up Three Pathways for Mid-Term Growth Internationally
COMMERCIAL
15
Market Potential for International Biotech Traits by 2010 Highlights Continued Growth Potential
COMMERCIAL
BIOTECH ACRES PLANTED 2005
REMAINING AVAILABLE ACRES
54% 0% 15% <1% 17% 0%
SOYBEANS COTTON CORN
AFRICA 0.2M 11M 10M 6M 4M -
TOTAL KEY MARKETS 86.2M 24.5–29.8M 22.5-27.8M 58-60M 34-36M 11M
KEY MARKETS ROUNDUP READY
ROUNDUP READYFLEX
BOLLGARD AND
BOLLGARD II
ROUNDUP READY CORN 2
YIELDGARDCORN BORER
YIELDGARDROOTWORM
BRAZIL 50M 3M 2M 20M 15M 5M
ARGENTINA 35M - - 5M 4M 1M
INDIA - 10-15M 10-15M 3 – 5M 3 – 5M -
EUROPE 1M - - 24M 8M 5M
AUSTRALIA - 0.5M-0.8M 0.5M-0.8M - - -
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COMMERCIAL
FOCUS: BRAZIL
COMMERCIAL OPPORTUNITY
SOYBEAN TRAITS CORN TRAITS
CURRENT MARKET POTENTIAL IS 50M; UPSIDE OPPORTUNITY FOR ADDITIONAL 10-30M ACRES TO COME UNDER CULTIVATION
IN 2006, SAVED SEED ESTIMATED AT 20M ACRES AND NEW SEED ESTIMATED AT 5M
VALUE CAPTURE SYSTEM FOR SAVED SEED IS FUNCTIONING AT 97% INTEGRITY
BRAZIL HAS TWO CORN-GROWING SEASONSYIELDGARD CORN BORER AND ROUNDUP READY
CORN 2 HAVE BEEN SUBMITTED FOR REGULATORY APPROVAL
Roundup Ready Soybean Penetration Accelerates, Corn Trait Adoption Poised for Solid Growth
0
10
20
30
40
50
2004 2005 2006F
AC
RE
S I
N M
ILLI
ON
S
MARKET OPPORTUNITY=50M
SUMMER CORN GROWING REGION
WINTER CORN GROWING
REGION
17
COMMERCIAL
FOCUS: AUSTRALIA
COMMERCIAL OPPORTUNITY
COTTON TRAITS
MARKET FACTS
ACRES 2005 2006
.5M -
.8M.5M -.8MCOTTON
BOLLWORM IS A MORE SIGNIFICANT INSECT PEST THAN IN THE U.S.
ROUNDUP READY FLEX WILL LAUNCH IN AUSTRALIA AND THE U.S. IN CALENDAR YEAR 2006
RETAIL VALUE PER ACRE HAS INCREASED MORE THAN 4 TIMES FROM 2004 TO 2006 BECAUSE OF STACKING AND SECOND-GENERATION TRAIT UPGRADES
FARMER SAVES $35 - $40 PER ACRE USING MONSANTO’S STACK OF ROUNDUP READY FLEX WITH BOLLGARD II VERSUS CONVENTIONAL SYSTEMS
Momentum in Stacking Cotton Traits in Australia Extends Margin Potential Per Acre
0
100
200
300
400
500
600
700
2004 2005 2006
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
AC
RE
S I
N T
HO
US
AN
DS
TR
AIT
INT
EN
IST
Y P
ER
AC
RE
SINGLE TRAIT DOUBLE STACK TRAIT INTENSITY
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FOCUS: INDIA
COMMERCIAL OPPORTUNITY
COTTON TRAITS
MARKET FACTS
2005 2006F
CORN 3 -5M 3 –5M
COTTON 10M -15M
10M –15M
CORN TRAITS
ACRESBOLLGARD II LAUNCHES ON LIMITED ACRES IN 2006 LEADING TO
EVENTUAL REPLACEMENT OF BOLLGARDBOLLGARD BENEFITS:
FARMER NET RETURN INCREASED BY 163%OVERALL COTTON YIELD IMPROVED BY 58%PESTICIDE LOADING REDUCED BY 50%
MANUAL FAMILY FARMING PRACTICES60 PERCENT OF FARMS < 2.5 ACRESSIGNIFICANT OPEN POLLINATED ACRES OF COTTON AND CORN REPRESENT ADDITIONAL OPPORTUNITY FOR HYBRID CONVERSION
CORN BORER, WEEDS AND DROUGHT CONDITIONS IN NORTHERN INDIA ARE SIGNIFICANT PROBLEMS
YIELDGARD CORN BORER AND ROUNDUP READY CORN 2 SUBMITTED FOR REGULATORY APPROVAL
RAPID MARKET SHARE GROWTH OF 15 POINTS IN 5 YEARS HAS SOLIDIFIED BASE FOR TRAIT LAUNCHES
0
2
4
6
8
10
2004 2005 2006F
BOLLGARD ADOPTION
AC
RE
S I
N
MIL
LIO
NS
COMMERCIAL
Bollgard II Cotton Launches and Expands Insect Spectrum, Corn Traits Submitted for Regulatory Approval
6+ Million
19
PIPELINE
2006 Pipeline AS OF JANUARY 1, 2006
Bollgard III
2nd-Gen Drought-tolerant corn
DISCOVERYGene/Trait Identification
PHASE IProof Of Concept
PHASE IIEarly Development
PHASE IIIAdvanced Development
PHASE IVPre-launch
Dicamba-tolerant soybeans
YieldGard Rootworm II
Mavera™ High-value corn with lysine1
Mavera™ I High-value soybeans1
Mavera™ II High-value soybeans1
2nd-Gen High-value corn with lysine1
Feed Corn with balanced proteins1
High oil soybeans for processing1
Improved-protein soybeans
Vistive II Low Lin – Mid Oleic soybeans
Vistive III Low Lin – Mid Oleic – Low Sat soybeans
Omega-3 soybeans
Roundup Ready Flex cotton
Roundup RReady2Yield soybeans
Roundup RReady2Yield canola
Insect-protected soybeans
Drought-tolerant corn
Soybean nematode-resistance
Higher-yielding canola
Dicamba-tolerant cotton
2nd-Gen YieldGard Rootworm
2nd-Gen YieldGard Corn Borer
Drought-tolerant soybeans
Drought-tolerant cotton
Higher-yielding corn
Nitrogen utilization corn
Higher-yielding soybeans
FAR
ME
RP
RO
CE
SS
OR
CO
NS
UM
ER
1. These product candidates are in the Renessen pipeline. Renessen is a Monsanto/Cargill joint venture
20
KEY MARKET ACRES
AVAILABLE MARKET
PERCENT PENETRATED
EUROPE BRAZIL ARGENTINA
24M 30M 6M
0% 0% 0%
DISCOVERY PHASE IProof of Concept
PHASE IIEarly Development
PHASE IIIAdv. Development
PHASE IVPre-Launch
LAUNCH
Multi-Generational Drought-Tolerant Corn Is Advancing Closer to Commercial Reality with Global Applications
DROUGHT MAP SOUTH AMERICA & EUROPE
TECHNOLOGY
BROAD ACRE WATER USE EFFICIENCY
AREAS WITH CONSISTENTDROUGHT STRESS AND IRRIGATION REQUIREMENTS
AREAS WITH INCONSISTENTDROUGHT STRESS
DROUGHT TECHNOLOGY
RE
SU
LTS
WITH TRAIT WITHOUT TRAITWITH TRAIT WITHOUT TRAIT
4032 34oC 4032 34oC
DROUGHT TOLERANCE ESTABLISHED THROUGH PLANT PHYSIOLOGY (PERFORMANCE) OVER THREE YEARS
21
Roundup RReady2Yield Soybeans
TECHNOLOGY
Second-Generation Roundup RReady2Yield Soybeans Enhances Yield Globally
RE
SU
LTS
INDICATIONS ARE ROUNDUP RREADY2YIELD SOYBEANS DEMONSTRATE UP TO 5 BUSHEL PER ACRE YIELD ADVANTAGE OVER COMPARABLE ROUNDUP READY VARIETIES
KEY MARKET ACRES
AVAILABLE MARKET
PERCENT PENETRATED
U.S. BRAZIL ARGENTINA
70M 50M 35M
0% 0% 0%
TECHNOLOGY IMPROVEMENT
WITH UP TO 5 BUSHEL PER ACRE YIELD IMPROVEMENT, ROUNDUP RREADY2YIELD WILL SIGNIFICANTLY ADVANCE TRADITIONAL BREEDING GAINS
PROVIDES PLATFORM FOR FUTURE SOY TECHNOLOGIES, INCLUDING THIRD-GENERATION OF WEED CONTROL IN SOYBEANS
RESEARCH UNDER WAY ON POTENTIAL FOR ADDITIONAL INSURANCE FOR ASIAN SOYBEAN RUST
SOYBEAN RUST IS A FUNGAL PATHOGEN WITH MORE THAN 40 SPECIES
RUST PREDOMINANTLY AFFECTS SOYBEANS IN BRAZIL AND ARGENTINA
YIELD LOSS IS BETWEEN 10% -80% PER YEAR GLOBALLY
FUNGICIDES FOR RUST CONTROL COST UP TO $25 PER ACRE
ASIAN RUST
22
MIL
LIO
NS
OF
TO
NS
Biodiesel Production Will Drive Incremental Vegetable Oil Demand
TECHNOLOGY
0
2
4
6
8
10
12
14
16
18
20
2005 2006F 2007F 2008F 2009F 2010F
BIODIESEL RAPESEED SOYOIL
EU 25 BIODIESEL MARKET OUTLOOK
Source: Estimates from EU targets under Directive 2003/30/EG, Oil World and Monsanto Estimates
BIODIESEL MARKET IN EU
BY 2010, BIOFUEL SHOULD REPRESENT 5.75% OF TOTAL TRANSPORT FUEL USED IN EU
BY 2010, OVER HALF OF VEGETABLE OIL PRODUCED IN EU WILL BE USED FOR BIODIESEL
FOUR PATHS TO GROWTH FOR MONSANTOIMPROVE OIL YIELD PER ACRE
–MOLECULAR BREEDING DOUBLES THE HISTORICAL RATE OF YIELD GAIN FOR SOYBEANS
–PIPELINE PRODUCTS LIKE HIGH OIL AND ROUNDUP RREADY2YIELD SOYBEANS SHOULD PROVIDE YIELD BENEFITS
MARKET GROWTH–OILSEED RAPE ACREAGE HAS POTENTIAL TO INCREASE FROM 13M TO 20M
PROCESSOR BENEFITS–PROCESSOR PREFERRED OILSEED SHOULD RESULT IN DOWNSTREAM VALUE BECAUSE OF HIGHER QUALITY GRAINS
GLOBAL GROWTH–SUPPLY CONSTRAINTS IN EU MAY SPILL OVER INTO OPPORTUNITIES FOR BRAZILIAN SOYBEANS, NORTH AMERICAN CANOLA AND RENESSEN’S CORN OIL
23
SUMMARY
Foundation Created in International Operations Sets Stage for Seed and Trait Expansion
CORN:GLOBAL BREEDING PROGRAMS ARE FUELING GROWTH IN EUROPE-AFRICA AND SUPPORTING LEADERSHIP POSITIONS IN ASIA-PACIFIC AND LATIN AMERICA
BRANDED SHARE COUPLED WITH LICENSING AGREEMENTS ESTABLISHES FOUNDATION FOR FUTURE TRAIT LAUNCHES
COTTON:TRAIT PENETRATION IS ACCELERATING IN ASIA-PACIFIC PREPARING WAY FOR MULTIPLE MARGIN OPPORTUNITIES WITH STACKING AND SECOND-GENERATION TECHNOLOGY LAUNCHES
SOYBEANS:ROUNDUP READY SOYBEAN ACRES DOUBLED IN BRAZIL IN 2006 AND ARE POISED TO REACH 50 MILLION ACRES BY 2010 WITH A SECOND-GENERATION TECHNOLOGY LAUNCH ON THE HORIZON
SEMINIS:BUILDING BUSINESS MODELS TO CREATE AND CAPTURE VALUE DOWNSTREAM IN PREPARATION FOR COMMERCIALIZATION OF FIRST HYBRIDS DERIVED FROM MOLECULAR BREEDING