- 1. BRETT BEGEMANN EXECUTIVE VICE PRESIDENT, GLOBAL COMMERCIAL
MERRILL LYNCH AGRICULTURAL CHEMICALS CONFERENCEJune 5, 2008 1
2. Forward-Looking StatementsCertain statements contained in
this presentation are quot;forward-looking statements,quot; 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; developments related to foreign currencies and economies;
successful operation of recent 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
most recent reports on forms 10-Q and 10-K. Undue reliance should
not be placed on these forward- looking statements, which are
current only as of the date of this presentation. The company
disclaims any current intention or obligation to update any
forward-looking statements or any of the factors that may affect
actual results.Trademarks Trademarks owned by Monsanto Company and
its wholly-owned subsidiaries are italicized in this presentation.
All other trademarks are the property of their respective owners.
2008 Monsanto Company2 3. OVERVIEW Even with Record Corn Prices
Spurring Planting, Global Corn Production Per Acre Is Sub-Optimized
TodayGLOBAL CORN PRODUCTION1: YIELD CORE PRODUCTIVITY MEASURES AND
EVALUATIONBoosting yield-per-acre can make ameaningful differencein
supply-demand CANADAenvironment EU 27 3M ACRES 136 BU/AC 500M
BUSHELS27M ACRES If India, Mexico and 90% HYBRID U.S. Brazil moved
to 100 99 BU/ACCHINA 2B BUSHELSbushel per acre yields, 90M ACRES
151 BU/AC 69M ACRESthey could produceMEXICO 13B BUSHELS 83 BU/AC 6B
BUSHELS nearly 4 billion18M ACRESadditional bushels of 25% HYBRID
INDIA48 BU/ACBRAZILcorn annually equal to 900M BUSHELS 20M ACRES36M
ACRES total world corn exports45% HYBRID75% HYBRID 32 BU/ACin
2007.58 BU/AC700M BUSHELS2B BUSHELSARGENTINA 10M ACRES 111 BU/AC
900M BUSHELS Optimization of yield per acre 1. Source: USDAFAS and
internal Poor/Subsistence Sub-Optimized Optimizedestimates.3 4.
OVERVIEWMonsanto Is the Technology Play in the Ag Space, Creating
Value By Using Technology to Boost Yield and Reduce Risk MONSANTOS
TECHNOLOGY PROPOSITION:CREATING VALUE THROUGH YIELD
2.00BIOTECHPROTECTING YIELD U.S. Corn Yield Per Acre Making sure
potential U.S. Yield Per Acre (Indexed: 1980) 1.75 yield translates
to realized yield1.50 REDUCING RISK 1.25 By reducing volatility
caused by insects and environment, 1.00 biotech reduces production
risk0.7519801985 1990 1995 20002005BREEDING VALUE INCREASING YIELD
Average U.S. yields for CREATING YIELDcorn has increased >20% in
Food, Feed and Boosting the inherent yieldlast 20 yearsFuel
possible from the seed 4 5. OVERVIEWWith Continued Emphasis on
Breeding and Biotech, 300 Bushel-Per-Acre Corn Is Achievable by
2030 PROJECTED CORN YIELD PROGRESSION:1970-2030F300BIOTECHYield
& stress traitsbring incremental andadditive yield gains
250MOLECULAR BREEDING U.S. Yield Per Acre (bu/ac)Advanced breeding
200doubles the rate ofannual genetic gainBASELINE 150U.S. average
cornyield: 151 bu/ac in2007 10050YIELD Historically yields 0
doubled over 1970199020102030 almost 50 years;Historical
Yield30-Year Trend Going forward, yields shouldMolecular Breeding
Advances Biotech Advancesdouble in 25 5 6. OVERVIEWOn Track in
2008, Growth Drivers Continue to Set Stage for Growth Through
2012GROSS PROFIT OUTLOOK BY SEGMENT 2007-2012F $10,000TOTAL GROSS
All Other Agricultural Productivity PROFIT GROWS Roundup and Other
Glyphosate-based HerbicidesTO >2X $8,0002007 BASELINE Seeds
& Genomics $6,000$4,000GROWTH COMES FROM SEEDS & $2,000
TRAITS $0 20072008F2009F 2010F 2011F 2012F U.S. Corn Intl Corn
Cotton Vegetables R&D Pipeline Soybeans Expand seed Establish
and Prepare for Accelerate U.S. Reinvigorate Largest-ever
footprintexpand seedcommercialtraits and marginsR&D
fieldfootprintlaunch of breedingeffort Drive trait Complete Roundup
penetration Drive trait Drive intl traits DeRuiter Ready 2
Yieldpenetration purchase SmartStaxAccelerated traitRoundup Ready
Globalized$1B Vegetable Game-ChangingPlatform platform2 Yield
PlatformCotton Platform PlatformLaunches 7. U.S. CORNIn a
Contracted Corn Market, Monsanto Brands Have Grown Share and
Increased Trait Penetration U.S. Corn Pre-Season Current
EstimateEstimate STATUS2-3 shareSEED SHARE 1-2 shareGROWTH: With
acres down from 93M in 2007, in 2008 Monsanto55%-60%TRIPLE
50%+PENETRATION: has:1-2 shareSEED SHARE Organic growth Increased
market share in GROWTH:DEKALB and ASI55%-60%TRIPLE 50%+ Expanded
triple stack PENETRATION:penetration Realized trait priceMARKET
RESEARCH1: FARMER SATISFACTION WITH DEKALBincreases Share growth
continues toPercent of customers very satisfied or somewhat
satisfied with seed be based on farmers corn brand: recognition of
superior100% performance vs. direct 93% competitors 88% 80%
1.Monsanto market research, 60% December 2007 40%20% 0% 20062007 7
8. U.S. CORNSmartStax Resets Trait Platform in 2010, Changes
Competitive Standard and Opens New Acre OpportunityLIKELIHOOD OF
PLANTING SmartStax TECHNOLOGYSMARTSTAXAssuming it was available at
a reasonable or acceptable price and in the right hybrids for
COMMERCIAL OPPORTUNITY your farm, how likely are you to plant this
next generation of insect protectiontechnology? Definitely will or
Probably will 2010 LAUNCH TARGET: YIELDGARD CORNTARGET ACRE60-65M
85% BORER USERS WHO OPPORTUNITY: TREAT FOR ROOTWORM VALUE
PROPOSITION0%10%20% 30%40%50%60%70%80% 90% 100% 2008 trials
evaluating SmartStax in elitePERCENT OF FARMERS germplasm,
quantifying sources of potential yield advantages: HERCULEX I CORN
81% BORER USERS WHOTREAT FOR Improved ROOTWORM1-2% consistency: 0%
10% 20% 30%40%50%60%70%80% 90% 100%Primary pests Improved
LIKELIHOOD OF SWITCHING BRANDS FOR SmartStax consistency: 1-2%
Secondary pests If your current seed brand did not offer this new
Monsanto Insect Protection Technology, how likely would you be to
switch seed brands to obtain this new technology? Would you say:
Very likely or Somewhat likely 3-6% Reduced refuge YIELDGARD CORN
74%BORER USERS WHO5-10%TREAT FORROOTWORM0%10% 20%30%40%50% 60% 70%
80% 90% 100%PERCENT OF FARMERSHERCULEX I CORN65%BORER USERS WHO
TREAT FORROOTWORM0%10% 20%30%40%50% 60% 70% 80% 90% 100% 8 9.
INTERNATIONAL CORNCorn Growth Isnt Isolated to U.S.; Expanding Seed
Footprint Ahead of New Biotech Launches Increasingly
ImportantINTERNATIONAL CORN BRAND PERFORMANCE: LEADING MARKET
INDICATORS OF MONSANTO BRAND SHARE PERFORMANCE 2008U.S.EU27 2007
NATIONAL 2007 BRAND23% 13%BRAND SHARE: SHARE: PRE-SEASONPRE-SEASON
+1-2 shareSHARE +1-2 shareSHARE ESTIMATE: ESTIMATE:CURRENTCURRENT
+2-3 shareSHARE +0.5 share SHARE ESTIMATE:ESTIMATE:INDIAARGENTINA
2007 BRAND2007 TOTAL39% 40% SHARE:BRAND SHARE: PRE-SEASON
PRE-SEASON +1-2 share +1-2 share SHARESHARE ESTIMATE: ESTIMATE:
CURRENTBRAZILCURRENTFlat +5 shareSHARESHAREESTIMATE: ESTIMATE: 2007
TOTAL 40% BRAND SHARE: PRE-SEASON FlatSHARE ESTIMATE: CURRENT Held
SHARE ShareESTIMATE:9 10. INTERNATIONAL CORNLarger Seed Footprints
in South America Enable Larger Launches and Faster Ramp Up Than
Competition LATIN AMERICAN TRAIT OUTLOOK: 2008-2009 PLANTING SEASON
BRAZILARGENTINA 2007-2008 SEASON 2007-2008 SEASONHYBRID MARKET
SIZE:27MHYBRID MARKET SIZE:10MBRAND SHARE:40%BRAND SHARE:45%
NEAREST-COMPETITOR NEAREST-COMPETITOR~20%~15% SHARE: SHARE:
2008-2009 SEASON 2008-2009 SEASONRECENT TRAITYieldGard CornRECENT
TRAIT Stack: APPROVAL:APPROVAL: BorerYieldGard CornBorer with
ESTIMATED TOTAL 15-20M ACRE OPPORTUNITY:Roundup Ready Corn 2 TOTAL
ACRES10MACCESSED IN ESTIMATED TOTALMONSANTO BRAND:7-9M ACRE
OPPORTUNITY:TOTAL ACRES4.5MACCESSED INMONSANTO BRAND: Strong brand
presencemeans Monsanto has 2008-2009 TRAIT LAUNCH access to >50%
of trait TARGETED LAUNCH:1-2Mmarket opportunity inits brands
allowing 2008-2009 TRAIT LAUNCH for aggressive traitpenetration
TARGETED LAUNCH: 1-1.5M 10 11. U.S. CORN Monsantos Pricing Model
Aimed at Total Value Created;Shared with Farmer YieldGard VT Triple
Improved YieldPRICING TO VALUE EXAMPLE: 2008 Yield-advantage value
at 3-5 year average Yield1Improved commodity price IMPROVED YIELD
Value shared with farmers 15-20(BU/AC):3-5 YEAR COMMODITY PRICE:
$2.35 Indirect Benefits Quantified benefits, such as convenience
and $35-$47 peace of mindIndirect Benefits2 Value shared with
farmers CONVENIENCE/ $5PEACE OF MIND: Replacement ValueIncremental
Value Created $40-$52 Factors costs farmers would have incurred
for( + ) substitute insect and weed control 100% of replacement
value is captured PRICING APPROACH PRICING APPROACHCost3:Per-Acre
Trait $28-$36 Percentage of incremental value shared ultimately
determined by market research,Value4Replacement($17) pricing
simulations and focus groups to assess:Incremental Farmer Cost:
$11-$19 Market Share ImplicationsIncremental Value Shared:60-70%
Trait Penetration Effect Competitive Reaction 1. Monsanto
estimates, based on better insect and weed control over
conventional options 2. Monsanto estimates, based on farmer surveys
quantifying benefits such as convenience andpeace of mind 3. Retail
price range for YieldGard VT Triple in 2008, at normal seeding
rates 4. Subtracts costs farmers would have spent had they not used
a trait package11 12. SOYBEANSYield Improvement in Soybeans is
Largest Area of Interest Among U.S. Farmers Today CORN VS. SOYBEAN
HISTORIC YIELD TRENDS:1930-20078Corn Yield Soybean YieldCORNCorn
yields have7increased 7X in thelast century6 Indexed Yield Per
Acre5 4SOYBEANS3 Soybean yields haveincreased 3X in thesame period2
1 0YIELD 193019401950 1960 19701980 1990 2000U.S. soybean growers
areanxious for technology that can deliver step-change in yield 12
13. SOYBEANSRoundup Ready 2 Yield Soybeans Have Potential to
Deliver Up to 10 Years of Breeding Gains Through One Trait ROUNDUP
READY 2 YIELD SOYBEANS:SECOND-GENERATION WEED CONTROL
OPPORTUNITYU.S. SOYBEANS Near-Isoline Comparisons: Roundup Ready 2
Yield vs. Roundup Ready 2007 U.S. AVERAGE 41.6 bu YIELD PER ACRE: %
Yield Increase over Roundup Ready 12% AVERAGE ANNUAL0.5 bu/acGAIN
OVER 30YEARS:11% 10%9% ROUNDUP READY 2 YIELDTARGETED YIELD7-11%9%
8%IMPROVEMENT:YIELD3-5 bu/acIMPROVEMENT ON7% 7% 6%AVERAGE
YIELDS4%2%YIELD 0% 4 YEARRoundup Ready 2 Yield has2004 20052006
2007AVERAGE potential to deliver up to 10 yearsof breeding gains
with a single Roundup Ready 2 Yield soybeans yield 7 to 11
percenttrait higher than Roundup Ready soybeans based on 73
Monsanto field trials from 2004-200713 14. COTTONDeclining Planted
Acres in U.S. Cotton Shifts Production Focus Globally; Needs
Technology ApplicationCORN VS. COTTON HISTORIC YIELD TRENDS:
1930-2007 8 CORN Corn YieldCotton Yield Corn yields have 7
increased 7X in the last century 6Indexed Yield Per Acre COTTON
Cotton yields have 5 increased 5X, but cotton acres are only 4 1/4
of what the U.S. planted at the 3 beginning of this period
210YIELD1930 1940 1950 1960 19701980 1990 2000With shrinking
U.S.cotton acres, importance ofyield-enhancing technology becomes
magnified14 15. COTTONLeast U.S.-Centric Crop, Cotton Opportunities
Lie In Breeding and Biotech Going Forward GLOBAL COTTON LANDSCAPE:
CORE PRODUCTIVITY MEASURES AND EVALUATION India U.S.OVERVIEW
OVERVIEW Expanding cotton marketCotton business effectivelywith
growing demand forbehind technology curve;technology, but
assumesCompeting againstlocal pricing riskMonsantos
technologyhead-start via Stoneville 2008 TRAIT PENETRATION: 2008
DELTA &33-36%PINE LAND 2008 BOLLGARD II SHARE:PENETRATION:
INITIATIVES INITIATIVES Breeding: Advancing 8 Biotech: Full
conversionAustraliavarieties for 2008 testingto Bollgard II by
2012using MonsantounderwayOVERVIEW breeding technology Biotech:
ApprovalSmall, but valuable trait market; Ravaged Biotech: Full
conversionpending for Roundupby 2 years of droughtto Bollgard II by
2010Ready FlexunderwayINITIATIVES Biotech: Drought-tolerant cotton
inpipeline phase 1, with expanded fieldtesting underway15 16.
VEGETABLE SEEDSDe Ruiter Seeds Helps Address Gap in Monsanto
Vegetable Seed Portfolio in Growing Protected-Culture Segment FY07
Annual net Sales = $145M FY07 Annual Net Sales = $612MPortfolio
Composition: Percent of Sales1Portfolio Composition: Percent of
Sales110%12%Open-Field Protected-Culture88%90% Pairing Seminis with
De Ruiter Seeds brings together the leading positions in open-field
and protected-culture segments Both segments benefit from the
coordinatedmolecular breeding infrastructure 1. Size of pies not to
scale with revenuegenerated by Seminis or De Ruiter Seeds16 17.
R&D PIPELINEStrong Pipeline Reflects Growing Innovation and
Leadership; Expected to Create Commercial Value of $>5B in 2020
DISCOVERY PHASE 1PHASE 2PHASE 3 PHASE 4 Drought- HIGH Tolerant
FAMILY TRAITSFamilyCORN: COLLABORATION YIELD & STRESS
Nitrogen-BROAD-ACRE HIGH Utilization FAMILY TRAITSYIELDFamily
Broad-Acre, MEGAHigher-Yielding FAMILY TRAITS Family
SOYBEANS:Broad-Acre,BROAD-ACREHIGH Higher-YieldingFAMILY TRAITS
YIELDFamily 2020 VALUE RANGES:RoundupBollgard IIIOmega-3Ready 2
Yieldsoybeans soybeansRoundup MEGA HIGHReady 2
Yieldcanola$300M-$500MInsect-protected>$1BMRoundup Ready 2 Yield
soybeansYieldGard VT PRO cornHigh-oil MIDLOW soybeans2X2012
including recent lift inRoundup to $1.8B gross profit $10,0002007
BASELINE STRATEGIC PLAYBOOKAll growth is organic, from
base$8,000business and pipeline IN MILLIONS U.S. Corn$6,000
International Corn Soybeans Cotton$4,000 Vegetables R&D
Pipeline$2,000Leadership extends as we planto deliver four
game-changing $0 technologies between now andthe middle of the next
decade 2007 2008F 2012F All Other Agricultural ProductivityRoundup
And Other Glyphosate-basedHerbicidesSeeds & Genomics 18
