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    monsanto 01_16_09 monsanto 01_16_09 Presentation Transcript

    • R&D PIPELINE REVIEW ROBB FRALEY, PH.D. CHIEF TECHNOLOGY OFFICER January 16, 2009 1
    • Forward-Looking Statements Certain 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 periodic report to the SEC. 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. © 2009 Monsanto Company 2
    • 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 ongoing 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, not replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with GAAP. 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. With respect to the time period prior to Sept. 1, 2000, references to Monsanto in this presentation also refer to the agricultural business of Pharmacia. FISCAL YEAR: References to year, or to fiscal year, are on a fiscal year basis and refer to the 12-month period ending August 31. 3
    • FY2009 Guidance Supports 20 Percent Plus Growth Rate FY2008 2009F Q1 2009 Q1 2008 CHANGE EARNINGS $4.40-$4.50 $3.64 ONGOING EARNINGS PER ~20-24% >80% $0.98 $0.45 118% SHARE GROWTH GROWTH FROM 2007 FROM 2008 $678M $495M 37% Seeds & Genomics Gross Profit $3.9B $4.5-$4.6B Corn Seed & Traits Gross Profit $2.2B ~$2.8B $403M $285M 41% Soybean Seed & Traits Gross Profit $725M ~$700M $145M $111M 31% Cotton Seed & Traits Gross Profit $313M ~$300M $26M $24M 8% Vegetable Seeds Gross Profit $394M ~$500M $80M $64M 25% All Other Seed & Traits Gross Profit $251M ~$200M $24M $11M 118% Roundup And All Other Glyphosate- $804M $487M 65% $2.0B $2.4-2.5B based Herbicides Gross Profit $68M $57M 19% All Other Ag Productivity Gross Profit $344M ~$400M CASH MANAGEMENT AND SPENDING FREE CASH FLOW $124M $740M -83% $772M >$1.8B $124M $996M -88% Operating Cash $2.8B >$3B $274M $154M 78% Capital Expenditures $918M ~$1B 21% 22% Dec. 1 pt SG&A as a Percent of Sales 20% 19% Range R&D as a Percent of Sales (Excluding 9.5%-10% <10% <10% FLAT 9% acquired IPR&D) Range 4
    • Monsanto’s Biotech Pipeline Is Accelerating, With Progress in Key Projects and on Highest-Value Platforms MILESTONES: Biotech pipeline progress is accelerating 6 projects either advanced from one phase to another or were added to the pipeline First time ever transitioned 2 projects from Phase 3 Q1 Q4 to Phase 4 with each project remaining in Phase 3 for only 1 year Q2 First addition of a project in sugarcane, Q3 accelerating expansion into new areas Accelerated progress is on the most meaningful platforms and products Advanced phases on 2 critical yield & stress products Drought-tolerant corn lead moves into Phase 4 ANNUAL R&D CYCLE: SEEDS & TRAITS with first regulatory submission WHAT CHANGED 2008-2009? Higher-yielding soybeans move into Phase 3 with strong field trial performance • 4 projects advanced phases SmartStax, the new platform for corn, moves into • 2 products added pre-launch Phase 4 with EPA submission • 1 product launched and 1 in demonstration: Biotech pipeline robust with new • Roundup Ready 2 Yield soybeans collaborations and broad scale testing • YieldGard VT Pro – Commercial Demonstration Entered into more than 1,400 technology-related ► • 2 products removed: agreements; 40% more than FY2007 • High-oil corn Field tested over 2,500 genes in 13,000 field events ► • Mavera high-value corn with lysine in 180 locations in phase 1-3 projects ~89,000 drought plots and ~48,000 SmartStax plots ► 5
    • Monsanto’s Investment in Breeding Continues to Yield Results; Improving Germplasm Base Across Crops 15 BUSHELS/ACRE DEKALB ANNUAL YIELD ADVANTAGE DEKALB 3-YEAR ROLLING AVERAGE YIELD ADVANTAGE 10 9.6 8.8 8.4 8.4 8.3 8.2 7.8 7.1 5 0 2005 2006 2007 2008 ASGROW FINAL ANNUAL YIELD ADVANTAGE 2 BUSHELS/ACRE ASGROW FINAL 3-YEAR ROLLING AVERAGE YIELD ADVANTAGE 1.5 1.5 1 1.4 1.2 1.1 1.0 0.5 0.7 0 2006 2007 2008 2009 Deltapine Bollgard II Roundup 2008 Deltapine Bollgard II Roundup CROP VALUE ($/ACRE) Ready Flex Ready Flex 700 2008 Competitive Bollgard II Roundup 2008 Deltapine 555 Bollgard Roundup Ready Flex Ready 600 500 400 Beltwide N. Tier S. Tier TX, OK N = 78 N = 189 N = 25 N = 61 6
    • Final Yield Trial Results Reinforce Yield Advantage of DEKALB Seed in the U.S. 2008 FINAL U.S. COMPETITIVE CORN YIELD COMPARISON: DEKALB 3-YEAR ROLLING AVERAGE YIELD ADVANTAGES 14 2005-2007 2003-2005 12 2006-2008 11.5 2004-2006 (APPROXIMATE DIFFERENCES) GEOGRAPHY: U.S. 10.4 10 Grow 1-2 Share 2009 OBJECTIVE: 8.8 Points 8.4 BUSHELS/ACRE 2008 PERFORMANCE UPDATE 8 7.6 • DEKALB consistently 6 out-yields competitive best over time and changing environmental 4 conditions 2.9 • DEKALB’s overall 3-year 2 average yield advantage continues to improve 0 each year 95 100 105 110 115 Overall RELATIVE MATURITY ZONE Source: Annual yield advantage calculated each year by comparing leading DEKALB volume products within each RM zone to national competitor products within 2 RM days. 2008 data as of November 23, 2008. Weighted average calculated to 15% moisture. >230,000 comparisons represented in the overall 3-year of rolling averages. 7
    • New 2009 Deltapine Bollgard II Roundup Ready Flex Varieties Provide Greater Value to Growers DELTAPINE 2008 COMPETITIVE YIELD TRIALS NEW: 750 Value difference of 2009 Deltapine Bollgard II Roundup Ready Flex 700 Crop Value ($/acre) vs. control checks Crop Value ($/acre) +5.9-6.6% +9.3-12.2% +4.8-9.9% +7.2-9.5% GEOGRAPHY: U.S. 650 Convert fully to 600 Bollgard II 2012 Roundup OBJECTIVE: 550 Ready Flex varieties 500 2008 PERFORMANCE UPDATE 450 • In 2008, in > 530 trials, the new class of 400 Deltapine Bollgard II Roundup Ready Flex Beltwide N. Tier S. Tier TX, OK varieties out-performs N = 189 N = 25 N = 61 N = 78 the competition and existing 2008 Deltapine 2009 Deltapine Bollgard II Roundup Ready Flex varieties, from a value perspective, by nearly 5- 2008 Competitive Bollgard II Roundup Ready Flex 12% across the cotton- 2008 Deltapine Bollgard II Roundup Ready Flex growing regions of the U.S. 2008 Deltapine 555 Bollgard Roundup Ready 8
    • Phase Advancements For Key Projects Reflect Progress and Strength Throughout Monsanto’s Industry-Leading Pipeline BIOTECH TRAIT PIPELINE: JANUARY 2009 UPDATE PHASE PHASE PHASE PHASE D 1 3 2 4 AGRONOMIC TRAITS PHASE PHASE PHASE PHASE D 1 3 2 4 SMARTSTAX CORN YIELD AND STRESS PIPELINE DICAMBA-TOLERANT SOYBEANS DROUGHT-TOLERANT CORN FAMILY INSECT-PROTECTED + ROUNDUP READY 2 YIELD SOYBEANS DROUGHT-TOLERANT CORN 2ND GEN INSECT-PROTECTED +ROUNDUP READY 2 YIELD SOYBEANS 2ND-GEN DROUGHT-TOLERANT CORN INSECT-PROTECTED + ROUNDUP READY SUGARCANE NITROGEN-UTILIZATION CORN BOLLGARD III FAMILY NITROGEN-UTILIZATION CORN SOYBEAN NEMATODE-RESISTANCE BROAD-ACRE HIGHER-YIELDING SOYBEAN DISEASE CORN FAMILY HIGHER-YIELDING CORN DICAMBA AND GLUFOSINATE- TOLERANT COTTON BROAD-ACRE HIGHER-YIELDING COTTON LYGUS CONTROL SOYBEAN FAMILY YIELDGARD ROOTWORM III HIGHER-YIELDING SOYBEANS 2ND-GEN HIGHER-YIELDING SOYBEANS VALUE-ADDED TRAITS DROUGHT-TOLERANT COTTON FAMILY EXTRAX™ CORN PROCESSING SYSTEM2 DROUGHT-TOLERANT COTTON HIGH-OIL SOYBEANS BROAD-ACRE HIGHER-YIELDING CANOLA FAMILY 2ND-GEN HIGH-OIL SOYBEANS HIGHER-YIELDING + ROUNDUP READY 2 YIELD CANOLA1 OMEGA-3 ENRICHED SOYBEANS The colored bar associated with each project indicates which phase that project is in. It is VISTIVE III SOYBEANS not intended to represent the relative status of the project within a particular stage. Jan. 3, 2009 Advancements/Additions HIGH-STEARATE SOYBEANS (VIA BIOTECH) High Impact Technologies (HIT) project 1. For higher-yielding + Roundup Ready 2 Yield canola, only the value of the higher-yielding trait is incorporated into the Yield and Stress collaboration with BASF 2. Value of licensing the EXTRAX™ technology is shared with Cargill as a part of Renessen 9 joint venture
    • Roundup Ready 2 Yield Soybeans Introduction Highly Anticipated by Farmers Because of Step Change In Yield ROUNDUP READY 2 YIELD LAUNCH PLANS ► U.S. controlled commercial release on 1-2M acres in maturity groups 2 and 3 ► >50% of the U.S. soybean acres planted are in groups 2 and 3 ► Multiple varieties available for 2009 2009 release VALUE PROPOSITION ► EU import approval recently obtained, YIELD IMPROVEMENT ON ~3.8 bu/ac AVERAGE YIELDS demonstrating continued global IN GROUPS 2 & 3: acceptance INCREMENTAL YIELD VALUE TO ~$38/ac ► Launch on 5-6M acres in the U.S. with FARMER (VERSUS ROUNDUP READY): 2010 up to 30 new varieties with expanded PRICING maturity groups SEAMLESS PRICE FOR FIRST- $49-$52 ► Expand majority of Asgrow varieties to GENERATION ROUNDUP READY 2011 SEED (PER ACRE)1: Roundup Ready 2 Yield SEAMLESS PRICE $69-$72 FOR ROUNDUP READY 2 YIELD SEED (PER ACRE)1: 10 1. Reflects seamless price to the farmer, including trait value, germplasm value and value provided by the seed treatment.
    • Roundup Ready 2 Yield Will Be the First Biotech Yield Trait Offered in Soybeans FINAL ROUNDUP READY 2 YIELD SOYBEANS VERSUS COMMERCIAL CHECKS NEW: COMPARISONS TO COMMERCIAL ROUNDUP READY SOYBEANS – 2 YEAR SUMMARY 60 COMPETITORS’ PRODUCT WITH ROUNDUP READY 2 YIELD ROUNDUP READY TRAIT Two year summary Bushels per Acre 55 (2007-2008) of head-to-head 54.5 55.2 55.5 comparisons between all 50 Roundup Ready 2 49.9 51.7 51.4 Yield products available for sale in 2009 vs. national 45 competitor Roundup Ready products. Final 40 data as of December 9, 2008. 35 2 3 Overall RELATIVE MATURITIES: COMPARISONS: >1,000 >2,900 >3,900 APPROXIMATE BU/AC ADVANTAGE FOR ROUNDUP 4.6 3.8 3.8 READY 2 YIELD: PERCENT YIELD ADVANTAGE 9.1% 7.3% 7.4% FOR ROUNDUP READY 2 YIELD1: ► Power in the Pod: Roundup Ready 2 Yield soybean varieties provide higher yields by producing more 3-bean pods per plant2 1 Roundup Ready 2 Yield percent yield advantages ranged from 6 to 12% across year and maturity group combinations. 2 SOURCE: 19 Monsanto field trials with seed counted from over 4,728 plants from 340 plots. p value <0.001 Data as of November 24, 2008. 11
    • SmartStax Corn Advances to Phase 4 with EPA Submission, Closing In On Estimated 2010 Launch SMARTSTAX R&D Pipeline LAUNCH PLANS SmartStax Corn ► SmartStax EPA submission made June 16, 2008 ADVANCED STATUS: Phase 4 ► Requested reduction in refuge for both PROJECT CONCEPT: above-ground and below-ground corn pests SmartStax combines the following to 5% from current 20% requirement in the herbicide-tolerant and insect-protection corn belt 2008 traits for the most complete control: • YieldGard VT Rootworm with ► Necessary global regulatory submissions made Roundup Ready Corn 2 and YieldGard and first import approval received from Japan VT PRO • Herculex® I and Herculex® RW in December • Liberty Link® ► All insect efficacy data confirmed VALUE: ► December 2008: EPA approved amendment to LAUNCH-COUNTRY 55-65M allow for reduction in above-ground corn pest ACRES1: refuge to 5% from 20% in the corn belt for 2020 VALUE2: $300-$500M second-generation YieldGard corn borer WHOLE-FARM YIELD IMPROVEMENT 2009 technology; YieldGard VT Pro component of ESTIMATES: SmartStax IMPROVED CONSISTENCY FOR ► SmartStax yield testing in Monsanto hybrids in 1 1. Acre opportunity reflects acres where technology fits at PRIMARY AND SECONDARY Monsanto's current 2007 market share in respective crops 3 PESTS summer 2009 2. 2020 value reflects gross sales opportunity in launch 2country in year 2020 REFUGE 4 REDUCED ► Planned U.S. launch of SmartStax4 2010 TOTAL: 5-10% 1. Acre opportunity reflects acres where technology fits at Monsanto's current 2007 market share in respective crops 2. 2020 value reflects gross sales opportunity in launch country in year 2020 Herculex® is a registered trademark of Dow Agrosciences LLC 12 3. As compared to YieldGard VT Triple 4. Subject to EPA approval Liberty Link® is a registered trademark of Bayer CropScience AG
    • SmartStax Insect Efficacy Trials Highlight Increased Durability and Insect Spectrum of New Corn Platform 2007 & 2008 SmartStax EFFICACY TRIALS NEW: R&D Pipeline Node Injury Scale 0-3 1.5 SmartStax Corn CRW Root Damage Ratings ADVANCED STATUS: 1.0 Phase 4 PROJECT CONCEPT: 0.5 SmartStax combines the following herbicide-tolerant and insect-protection 0.0 traits for the most complete control: YieldGard VT Roundup Herculex® SmartStax • YieldGard VT Rootworm with Rootworm Ready Corn Rootworm 6.0 with Roundup Roundup Ready Corn 2 and YieldGard Damaged Area (cm2) Ready Corn 2 VT PRO 5.0 • Herculex® I and Herculex® RW Corn Earworm Damage 4.0 • Liberty Link® 3.0 VALUE: 2.0 LAUNCH-COUNTRY 1.0 55-65M ACRES1: 0.0 2020 VALUE2: $300-$500M Roundup Herculex® SmartStax YieldGard VT Ready Corn Corn Borer Triple PRO WHOLE-FARM YIELD IMPROVEMENT ESTIMATES: The second-generation YieldGard corn borer trait, a key SmartStax component, demonstrates incremental yield benefit of IMPROVED CONSISTENCY FOR 11. Acre opportunity reflects acres where technology fits at PRIMARY AND SECONDARY 4 percent over first-generation corn borer traits in preliminary Monsanto's current 2007 market share in respective crops PESTS 3 data from 2 years of comparisons 2. 2020 value reflects gross sales opportunity in launch country in year 2020 2 REDUCED REFUGE 4 Fewer damaged kernels from earworm drives yield advantage TOTAL: 5-10% 1. Acre opportunity reflects acres where technology fits at Monsanto's current 2007 market share in respective crops 2. 2020 value reflects gross sales opportunity in launch country in year 2020 Herculex® is a registered trademark of Dow Agrosciences LLC 13 3. As compared to YieldGard VT Triple 4. Subject to EPA approval Liberty Link® is a registered trademark of Bayer CropScience AG
    • Lead Drought-Tolerant Corn Project Advances to Phase 4; 2008 Dry Land Field Tests Mark Fifth Season of Increased Yield FIFTH YEAR OF CONSISTENT YIELD NEW: IMPROVEMENT UNDER DROUGHT STRESS R&D Pipeline Average Yield Improvement of Lead Event Percentage yield difference vs. control 16 Drought-Tolerant Corn Family: Yield Difference (bu/acre) Lead Project 10.5% 11.3% 7.7% 13.4% 6.7% 14 ADVANCED: HIT Project Phase 4 12 10 VALUE: LAUNCH-COUNTRY 8 55M ACRES-FAMILY1: 6 2020 VALUE- $300-$500M FAMILY2: 4 SOURCES OF VALUE: 2 Improved yield 0 Targeting 6-10% yield improvement 2004 2005 2006 2007 2008 in water-stress environments; historically the dry land farms of the 5 TOTAL 9 TOTAL 11 TOTAL 8 TOTAL 15 TOTAL Western Great Plains LOCATIONS LOCATIONS LOCATIONS LOCATIONS LOCATIONS ▲ 2008 Western Great Plains Testing: Lead event continued to demonstrate a yield advantage in a drought stress environment Evaluation of best germplasm and trait combinations underway Regulatory submissions in progress, with initial submission to 1. Acre opportunity reflects acres where technology fits at Monsanto's current 2008 market share in respective crops FDA made December 19, 2008 2. 2020 value reflects gross sales opportunity in launch country in year 2020 14 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
    • Higher-Yielding Soybeans Advance to Phase 3 With Continued Demonstration of Improved Yield Over Conventional Controls 2008 HIGHER-YIELDING SOYBEAN AGRONOMIC NEW: TESTING VERSUS CONTROLS R&D Pipeline Higher-Yielding Soybean Family: Dayton, Iowa -- 2008 Lead Project Control Transgenic ADVANCED STATUS: Phase 3 VALUE: LAUNCH-COUNTRY 45M ACRES-FAMILY1: 2020 VALUE- $300-$500M FAMILY2: SOURCES OF VALUE: Improved yield Targeting 6-10% yield improvement through insertion of key genes Lead events 1 and 2 showing average yield advantage of 7.4% and 6.7%, respectively, over controls in meta analysis across three seasons of testing in 56 environments 1. Acre opportunity reflects acres where technology fits at Monsanto's current 2008 market share in respective crops Higher-yielding trait built upon yield platform of Roundup 2. 2020 value reflects gross sales opportunity in launch country in year 2020 Ready 2 Yield 15 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
    • Dicamba and Glufosinate-Tolerant Cotton Demonstrated Excellent Tolerance in 2008, Advancing to Phase 2 DGT COTTON DEMONSTRATES EXCELLENT NEW: TOLERANCE IN 2008 FIELD TRIALS R&D Pipeline Dicamba and Glufosinate-Tolerant Winterville, Mississippi – July 2008 Cotton (DGT Cotton) ADVANCED STATUS: DGT Cotton Non-transgenic Phase 2 Control VALUE: LAUNCH-COUNTRY 8-10M ACRES1: 2020 VALUE2: <$150M SOURCES OF VALUE: Increased Flexibility Improved weed control options with three modes of action for herbicide tolerance: Roundup Ready Flex plus dicamba and glufosinate-tolerance DGT cotton showed tolerance to dicamba and glufosinate at three applications at two times the recommended application rates DGT cotton demonstrated yield parity to conventional cotton in first year of field trials Planned to stack with Roundup Ready Flex for launch 1. Acre opportunity reflects acres where technology fits in first country of launch 16 2. 2020 value reflects gross sales opportunity in launch country in year 2020
    • Roundup Ready and Insect-Protected Sugar Cane Advanced to Phase 1 as First Project in New Focus Crop FIRST ROUNDUP READY AND INSECT- NEW: PROTECTED SUGAR CANE FIELD TRIAL R&D Pipeline Roundup Ready and Insect- Conchal, Brazil – September 2008 Protected Sugar Cane ADVANCED: STATUS: Phase 1 VALUE: LAUNCH-COUNTRY 13.5M ACRES1: 2020 VALUE2: <$150M SOURCES OF VALUE: Reduced insecticide use Potential to reduce insecticides 1. through insertion of key genes for in-plant insect control Improved yield Potential to improve yield with improved insect control, Multi-event field trial established in the Sao Paulo region of specifically of the sugar cane Brazil in September 2. borer, from insertion of key genes and improved weed These events have shown efficacy in initial greenhouse control with Roundup Ready studies gene conveying herbicide 1. Acre opportunity in 2020 assuming 17M acres planted and a 20% refuge. tolerance 2. 2020 value reflects gross sales opportunity in launch country in year 2020 17
    • Second-Generation Soybean Insect Control Product for Brazil Moves into Phase 1; Targets Improved Spectrum and Durability 2nd GENERATION INSECT-CONTROL NEW: SOYBEAN EVENTS MOVE TO PHASE 1 R&D Pipeline 2nd Gen Insect-Protected +Roundup Ready 2 Yield Soybean ADVANCED STATUS: Phase 1 VALUE: LAUNCH-COUNTRY: Brazil LAUNCH-COUNTRY ACRES1: 50M 2020 VALUE2: TBD SOURCES OF VALUE: Insecticide Reduction - - + + + - 1. Improved spectrum for secondary pests Efficacy is measured by insect mortality and 2. Reduced Refuge reduction of leaf feeding 20 events across 5 constructs were selected based on efficacy in a leaf disc insect bioassay Events express either one or two lead Bt proteins Second-generation insect-protected product will contain at 1. Acre opportunity reflects acres where technology expected to fit least two distinct modes of action to enhance spectrum and 2. 2020 value to be determined when product moves to increase durability Phase 2 18
    • Cotton Plant Tests Reveal First Break-Through in Piercing, Sucking Insects with Phase 1 Cotton Lygus Control Lead Lygus-Resistant Cotton Leaves 200 0.9 R&D Pipeline Lygus-Resistant Cotton Leaves -PPM 180 0.8 Mean insect mass -mg Cotton Lygus Mean Insect Mass (mg) 160 PPM Fresh Weight Phase 1 0.7 STATUS: 140 VALUE: 0.6 120 LAUNCH-COUNTRY ACRES1: 8-10M 0.5 100 2020 VALUE2: TBD 0.4 80 SOURCES OF VALUE: 0.3 60 0.2 Insecticide Reduction 40 1. Improved spectrum for 0.1 20 secondary pests such as lygus 0 0 Improved Yield 1 2 3 4 5 6 7 8 9 Improved yield from reduced 2. damage to bolls and improved plant health Cotton lygus-resistant plants show activity against lygus in Lygus nymphs growth chamber events as evidenced by decreasing mass gain for lygus as concentration of resistant-plant leaves increases First break-through in developing a biotech product with resistance to piercing, sucking insects such as lygus - + Protein Crystal 19 protein protein Structure
    • Second Generation Drought-Tolerant Corn Consistently Demonstrates Yield Benefit in Third Year of Testing SECOND-GENERATION DROUGHT-TOLERANT NEW: CORN: THIRD YEAR OF TESTING R&D Pipeline Drought-Tolerant Corn Family: Percentage yield difference vs. control 18 Yield Difference (bu/acre) Second-Generation Project +10% +15% +9% 16 Phase 2 STATUS: 14 VALUE: 12 LAUNCH-COUNTRY 55M 10 ACRES-FAMILY1: 8 2020 VALUE2: $300-500M 6 SOURCES OF VALUE: 4 Improved Yield 2 Targeting 6-10% yield 0 1 improvement in water-stress environments in a broad- 2006 2007 2008 acre application HIGH LOW LOW Water Substitution DROUGHT DROUGHT DROUGHT 53 bu/ac base 2 166 bu/ac base Pumped irrigation has a 173 bu/ac base 4 locations 7 locations 5 locations variable cost of >$100/ acre. 16 reps total 21 reps total 20 reps total 1. Acre opportunity reflects acres where technology fits at Currently selecting commercial event for second-generation Monsanto's current 2007 market share in respective crops 2. 2020 value reflects gross sales opportunity in launch drought-tolerant corn country in year 2020 20 20 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
    • First Product from Higher-Yielding Corn Family Showed Improved Yield in 2008 Trials HIGHER-YIELDING CORN GENERATES YIELD NEW: ADVANTAGE VERSUS CONTROLS Percent yield difference vs. control R&D Pipeline Yield Difference (bu/ac) 16.0 5.8% 6.0% 5.4% 4.6% Higher-Yielding Corn Family: Lead Project 12.0 Phase 2 STATUS: VALUE: 8.0 LAUNCH-COUNTRY 55M ACRES-FAMILY1: 2020 VALUE- >$1B 4.0 FAMILY2: SOURCES OF VALUE: 0.0 Improved yield Targeting 6-10% yield improvement Event 1 Event 2 Event 3 Event 4 through insertion of key genes 18 Locations Potential commercial events were yield tested at 18 locations in the U.S. in 2008 1. Acre opportunity reflects acres where technology fits at 8 potential commercial events enhanced yield over controls Monsanto's current 2008 market share in respective crops in the target range for the product concept 2. 2020 value reflects gross sales opportunity in launch country in year 2020 Potential commercial events will be advanced to a more powerful trial in U.S. in 2009 21 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
    • Consistent Yield Benefit from Nitrogen Utilization Lead Across Two Years of Testing Under Limited Nitrogen Applications NITROGEN-UTILIZATION CORN LEADS REPEAT NEW: YIELD ADVANTAGE R&D Pipeline With Gene Control Nitrogen-Utilization Corn Family: Lead Project 240 Phase 1 LEAD STATUS: 8%* Yield – (bu/ac) 220 VALUE: 200 LAUNCH-COUNTRY 180 55M ACRES-FAMILY1: 160 2020 VALUE- $300-$500M 140 FAMILY2: 23%* 120 SOURCES OF VALUE: 100 Improved yield 80 Yield improvement in normal 1 nitrogen environments 0 60 200 Nitrogen reduction Lbs of applied Nitrogen 2 Improving yield in low nitrogen 2007 2008 2008 environments 2 locations, 4 locations, 16 locations, * p<0.1 3 reps 3 reps 1 rep Gene provides potential for reducing input costs as 1. Acre opportunity reflects acres where technology fits at demonstrated by two years of field performance Monsanto's current 2008 market share in respective crops 2. 2020 value reflects gross sales opportunity in launch country in year 2020 22 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
    • Investment in Traits Yields Significant Returns for Both Monsanto and Growers ROUNDUP READY SOYBEAN TRAIT LIFE-TO-DATE NET SALES = ~$4.0B GROWERS RECEIVED ~$11B1 OF FARM INCOME BENEFIT ~40X INITIAL INVESTMENT ~$100M INITIAL R&D INVESTMENT 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1. SOURCE: Graham Brookes & Peter Barfoot PG Economics Ltd, UK June 2008 “GM crops: global socio-economic and environmental impacts 1996-2006” Amounts in nominal terms and represent global farm income benefit from 1996-2006. Argentina benefit excluded from Roundup Ready soybean grower farm income benefit. 23
    • Strong Pipeline Reflects Growing Innovation and Value of Emerging Yield and Stress Traits DISCOVERY PHASE 1 PHASE 2 PHASE 3 PHASE 4 Drought-Tolerant Family HIGH FAMILY TRAITS► CORN: Nitrogen- BROAD-ACRE HIGH Utilization FAMILY TRAITS► COLLABORATION YIELD YIELD & STRESS Family Broad-Acre, MEGA Higher-Yielding FAMILY TRAITS► Family SOYBEANS: Broad-Acre, BROAD-ACRE HIGH Higher-Yielding FAMILY TRAITS► YIELD Family 2020 VALUE RANGES: Bollgard III Omega-3 soybeans cotton Higher - MEGA HIGH SmartStax Yielding corn $300M-$500M Insect-protected Roundup >$1BM Roundup Ready Ready 2 2 Yield soybeans Yield canola Dicamba- Dicamba MID LOW tolerant and soybeans <$150M glufosinate- $150M-$300M tolerant Vistive III cotton High-oil Corn Soybeans Cotton Canola soybeans Note: 2020 value ranges reflect expected annual gross sales in launch country in 2020. 24
    • Monsanto’s Biotech Pipeline Is Accelerating, With Progress in Key Projects and on Highest-Value Platforms R&D PIPELINE STATUS: R&D success reflected in 2 products moving into commercial arena and 4 phase changes Roundup Ready 2 Yield to be released on 1-2M acres in 2009, creating new platform for soybeans Q1 Q4 Second-generation YieldGard Corn Borer serves as core component of SmartStax, the unique insect and weed control platform for future yield Q2 Q3 and stress traits Drought-tolerant corn moves into Phase 4 with first regulatory submission; estimated first yield and stress trait to launch in corn High-yielding soybeans move to Phase 3 and create opportunity to reset yield potential after Roundup Ready 2 Yield R&D pipeline commercial value potential unmatched in the industry Pipeline potential gross sales of $5B by 2020 Includes 4 blockbusters and 1 mega-blockbuster Conservatively excludes value for breeding, vegetables and multi-country opportunities 25
    • Reconciliation of Non-GAAP Financial Measures Reconciliation of Free Cash Flow Fiscal Year Fiscal Year Fiscal Year First First $ Millions 2009 Forecast 2008 2007 Quarter 2009 Quarter 2008 Net Cash Provided (Required) by Operations $3,000 $2,799 $1,854 $114 $996 Net Cash Provided (Required) by Investing Activities (1,200) (2,027) (1,911) $10 (256) Free Cash Flow $1,800 $772 $(57) $740 $124 Net Cash Provided (Required) by Financing Activities N/A (102) (583) (47) (258) Effect of Exchange Rate Changes on Cash and Cash Equivalents N/A 77 46 (137) 58 Net Increase (Decrease) in Cash and Cash Equivalents N/A $747 $(594) $751 $(271) Reconciliation of Non-GAAP EPS First First Fiscal Year Fiscal Year Fiscal Year $ per share 2009 Forecast 2008 2007 Quarter 2009 Quarter 2008 TBD1 $3.62 $1.79 $1.00 $0.46 Diluted Earnings (Loss) per Share Solutia Claim Settlement -- ($0.23) -- -- -- Loss (Income) on Discontinued Operations ($0.02) ($0.04) ($0.15) ($0.02) ($0.01) In-Process R & D Write-Off Related to the De Ruiter Acquisition -- $0.29 -- -- -- In-Process R & D Write-Off Related to the Delta & Pine Land -- -- $0.34 -- -- (D&PL) Acquisition In-Process R & D Write-Off Related to the Aly Participacoes TBD1 -- -- -- -- Ltda. Acquisition Diluted Earnings (Loss) per Share from Ongoing Business $4.40-$4.50 $3.64 $1.98 $0.98 $0.45 1. The company is not able to provide a reconciliation to reported EPS guidance for fiscal year 2009 at this time, as it is still evaluating purchase accounting adjustments related to its recent acquisition of the Brazilian sugar cane business Aly Participacoes Ltda. Such adjustments are dependent upon the completion of valuations of certain intangible 26 assets, including in-process R&D which requires immediate expense recognition and it is expected to be significant.