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monsanto 09-28-05

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    monsanto 09-28-05 monsanto 09-28-05 Presentation Transcript

    • ROBB FRALEY Chief Technology Officer CREDIT SUISSE FIRST BOSTON INVESTMENT CONFERENCE Sept. 28, 2005 1
    • Forward-Looking Statements Certain statements contained in this presentation, such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, currency impact, business and financial plans, the outcome of contingencies and other non-historical facts are quot;forward-looking statements.quot; 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: the company's exposure to various contingencies, including those related to Solutia Inc., litigation, intellectual property, regulatory compliance (including seed quality), environmental contamination and antitrust; successful completion and operation of recent and proposed acquisitions; fluctuations in exchange rates and other developments related to foreign currencies and economies; increased generic and branded competition for the company's Roundup herbicide; the accuracy of the company’s estimates and projections, for example, those with respect to product returns and grower use of our products and related distribution inventory levels; the effect of weather conditions and commodity markets on the agriculture business; the success of the company’s research and development activities and the speed with which regulatory authorizations and product launches may be achieved; domestic and foreign social, legal and political developments, especially those relating to agricultural products developed through biotechnology; the company’s ability to successfully market new and existing products in new and existing domestic and international markets; the company’s ability to obtain payment for the products that it sells; the company's ability to achieve and maintain protection for its intellectual property; the company's ability to fund its short-term financing needs; and other risks and factors detailed in the company's filings with the U.S. Securities and Exchange Commission. 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 revise or update any forward-looking statements or any of the factors that may affect actual results, whether as a result of new information, future events or otherwise. 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 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. Fiscal Year In this presentation, unless otherwise specified, references to Monsanto’s fiscal years refer to the 12-month period ending August 31. Trademarks Roundup, Roundup Ready, Roundup RReady2Yield, Bollgard, Bollgard II, YieldGard, Monsanto Imagine, Vine Design, Asgrow, DEKALB, Monsanto Choice Genetics, Posilac, Processor Preferred, Vistive and Seminis, Seminis Vegetable Seeds, Royal Sluis, Petoseed, and Bruinsma are trademarks owned by Monsanto Company and its wholly-owned subsidiaries and are italicized the first time they appear in this presentation. 3
    • OVERVIEW Monsanto Has Established Strategic Platforms in High-Value Crops SEED & TRAIT CROP PLATFORMS CROP PLATFORMS CORN Licensed d de AS CORN ran I OILSEEDS B Biotechnology COTTON Breeding I AS Genomics VEGETABLES VEGETABLES Licensed OILSEEDS Branded TECHNOLOGY PLATFORMS Germplasm GERMPLASM GR d de GENOMICS G ran B E BREEDING BR Bra d COTTON nse nde Lice d BIOTECHNOLOGY B I 4
    • TECHNOLOGY LEADERSHIP Breeding and Biotech Provide Parallel R&D Paths to Commercial Products BREEDING and BIOTECHNOLOGY form two R&D pathways Separate, but parallel, the BREEDING and BIOTECHNOLOGY pathways are linked by shared tools. DISCOVERY PHASE I PHASE II PHASE III PHASE IV LAUNCH BREEDING G IT PLATFORM COMMERCIAL ANALYTICS GENOMICS MARKERS Germplasm R BIOTECHNOLOGY 5
    • TECHNOLOGY LEADERSHIP Breeding is the Research Engine that Brings Commercial Value to Germplasm Molecular Markers CREATING VALUE Genetic dissection of phenotype: allowing breeders to understand what genes control desired phenotypes B Efficiency of selection: improving the efficiency and scale of Breeding screening for key characteristics R Increased genetic gain: driving improvement in overall gain in key characteristics, such as yield Improved conversion: helping get new biotech traits into the elite germplasm quickly for improved market opportunity CONCEPT: Optimizing germplasm variation: helping integrate favorable Molecular markers genetic variation from non-elite germplasm bring distinct value to breeding Pre-selection: allowing breeders to eliminate the least-desirable programs germplasm quickly to focus on the best set of germplasm Predictive associations: allowing breeders to identify superior crosses from elite germplasm pools 6
    • TECHNOLOGY LEADERSHIP Industry’s Most Diverse Genetic Pool in Corn Creates New Opportunities for Monsanto U.S. KEY MARKET ACRES BRAZIL ARGENTINA BRAND LICENSED ASI Corn Germplasm 80M 30M 6M AVAILABLE MARKET CREATING VALUE 14% 33% 4% 35% 49% PERCENT PENETRATED Monsanto has the largest private international collection of corn • Value measured in germplasm, spanning 6 continents, 3 temperature zones, and 36 market share gains; U.S. acquired breeding programs branded seed share with 4th year No other company can make as many unique crosses from as many of 1+ point gain unique germplasm libraries as Monsanto 2004 U.S. CORN YIELD GAINS INTERNATIONAL GERMPLASM NETWORK UP NEXT Monsanto Branded Competitors • Germplasm now 220 BUSHELS PER ACRE contributing to 3 210 channels: brands, 200 licensed and ASI 190 180 170 160 150 95 100 105 110 115 RELATIVE MATURITY (DAYS) DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 7
    • TECHNOLOGY LEADERSHIP Monsanto’s Germplasm Reach Has Grown Significantly Through Branded and Licensed Seeds U.S. CORN MARKET SHARE – BRANDS AND LICENSEES HOLDENS/CORN STATES LICENSEES AMERICAN SEEDS, INC BRANDS 60% 53% DEKALB AND ASGROW BRANDS 49% 50% 46% 44% 43% 40% 30% 20% 6 pt Branded 10% Share Growth In 4 Years 0% 2001 2002 2003 2004 2005 8
    • TECHNOLOGY LEADERSHIP Monsanto Holds Number 1 or 2 Positions in Corn Market Share in All Key Geographies 2005 CORN MARKET SHARE IN KEY GEOGRAPHIES DUPONT/PIONEER MONSANTO1 60% SYNGENTA U.S. ASI DOW U.S. LICENSED 50% 40% 30% 20% 10% 0% ASIA- EUROPE- NORTH LATIN PACIFIC AFRICA AMERICA AMERICA Source: Monsanto estimates 1. Monsanto share is for DEKALB and Asgrow brands only 9
    • TECHNOLOGY LEADERSHIP There is a Clear Opportunity to Drive Growth in Emergent’s Position in Cotton Market 120% 1.4 1.35 100% 1.3 TRAIT INTENSITY INDEX MARKET SHARE POSITION 80% 1.25 60% 1.2 1.15 40% 1.1 20% 1.05 0% 1 2002 2003 2004 2005 EMERGENT FIBERMAX PHYTOGEN DELTA & PINE LAND OTHERS Source: Doane Market Research , reflects share of acres planted 10
    • TECHNOLOGY LEADERSHIP Molecular Breeding is Used To Create New Source of Seed for U.S. Cotton Farmers KEY MARKET AREAS U.S. TARGET MARKET 7M-8M Cotton States CREATING VALUE PERCENT PENETRATED 0% The capabilities and knowledge we’ve refined in bringing new corn • Licensing fee germplasm to the market applies in cotton as well reflects value of top quality germplasm, Germplasm licensed from third parties and developed through molecular separate from value breeding by Monsanto of trait Seed production under way for commercialization in 2006 • Cotton seed currently sells for Cotton States launching exclusively on a second-generation trait platform average of $20 per 2004 COTTON STATES FIELD TRIALS acre 1,600 UP NEXT 1,500 LBS LINT/ACRE • 2006 will be first year of sales to 1,400 farmers of Cotton States germplasm 1,300 through licensees 1,200 COTTON STATES COMPETITIVE VARIETIES VARIETIES DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 11
    • TECHNOLOGY LEADERSHIP Seminis Addition to Monsanto Opens New Business and Research Opportunities SIGNIFICANT CROPS MARKET MARKET SHARE POSITION Seminis Vegetable BEANS 31% 1 CUCUMBER Seeds 38% 1 CREATING VALUE HOT PEPPER 34% 1 SWEET PEPPER 29% 1 Seminis has the largest TOMATO 23% 1 • Vegetable seed ONIONS 25% 2 global vegetable germplasm industry CAGR at library 4.8% There are more “targets” for vegetable breeders to fill farmer needs and • Fruit & vegetable consumer quality preferences seeds only VEGETABLE FRESHNESS INDEX INNOVATION THROUGH BREEDING represent approx. 3.6% of farmgate PERCENT OF NEW value (corn: 13.2%; PRODUCTS IN 25% soybeans: 11.4%) COMMERCIAL PORTFOLIO 20% • Significant growth opportunities in 15% hybrid creation 10% 5% 0% 2002 2003 2004 2005F DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Early Development Adv. Development Pre-Launch 12
    • TECHNOLOGY LEADERSHIP Molecular Breeding Can Be Applied to Seminis’ Sweet Corn Breeding Programs KEY MARKET POSITION WORLDWIDE Knowledge Transfer MARKET POSITION 4 to Sweet Corn CREATING VALUE Immediate access to broad corn • Breeding germplasm base knowledge transfer increases potential Within 4 weeks of closing the new product Seminis acquisition, Monsanto offerings had identified 1,000 corn • Molecular markers to help with Seminis breeding speeds sweet corn breeding creation of new hybrids • Accelerated genetic gains have potential to translate to market share gains, higher market value DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Early Development Adv. Development Pre-Launch 13
    • TECHNOLOGY LEADERSHIP Biotechnology Complements Breeding to Bring Farmers the Best Options Biotechnology CREATING VALUE The use of biotechnology is an additive tool where there is a special value to be brought that can justify the additional R&D B investment Biotechnology BITOECH OPPORTUNITY Second Generation Stacked I • Bollgard II cotton • YieldGard Plus corn 2003 2004 • Roundup Ready Flex • YieldGard Plus with cotton 2006 Roundup Ready Corn 2 • Second-generation 2005 YieldGard Corn Borer Breakthrough Platforms corn PHASE III • Drought-tolerant corn • Roundup RReady2Yield PHASE I soybeans PHASE III • Omega-3 soybeans Growth Opportunities PHASE II • Roundup Ready Corn 2 2001 14
    • TECHNOLOGY LEADERSHIP Roundup Ready Corn Acreage Expected to Grow 25 Percent in 2006 KEY MARKET AREAS U.S. ARGENTINA Roundup Ready TARGET MARKET 50M 5M Corn 2 CREATING VALUE PERCENT PENETRATED 48% <1% Current forecast of 23-24M acres of Roundup Ready corn in VALUE TO 50M 2005 U.S. season ACRES 30M acres targeted in U.S. for 2006 • 2005 U.S. trait fee of $8-$10 per acre With European import approval for single trait, U.S. market in Monsanto potential is now 50M acres branded seed for single trait U.S. ROUNDUP READY CORN ACREAGE GROWTH • Total retail value of 35 incremental 20M acres: approx. 30 MILLIONS OF ACRES $160M-$200M Inflection 25 Points: There • Monsanto shares a are new 20 portion of retail trajectories value with channel 15 for growth in • Value boosted by Roundup 10 incremental Ready Corn Roundup use 5 0 1998 1999 2000 2001 2002 2003 2004 2005F 2006F DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 15
    • TECHNOLOGY LEADERSHIP Drought Pressure in Central Corn Belt Demonstrating Performance Value of YieldGard Rootworm KEY MARKET ACRES U.S. BRAZIL ARGENTINA YieldGard Rootworm 5M 1M AVAILABLE MARKET 15-20M 2005 Corn PERFORMANCE 19% 0% 0% PERCENT PENETRATED ILLINOIS DROUGHT OBSERVATIONS • With dry conditions in the Central Corn YieldGard Belt, observed Rootworm’s yield advantage appears to be 10-20 protection allows bushels per acre for heartier roots over insecticides that can tap what moisture exists The difference between YieldGard INSECTICIDE TREATED-CORN Rootworm plants and conventional YIELDGARD ROOTWORM ones is visible DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 16
    • TECHNOLOGY LEADERSHIP Stacked Trait Growth Is Driving Corn Acceleration % MON U.S. BIOTECH 2005 TRAIT ACRES STACKED MARGIN OPPS U.S. Biotech Trait CORN 33% 61M ACRES 46.5M Intensity Index CREATING VALUE COTTON 66% 17.9M ACRES 10.8M VALUE CREATED SOYBEANS -- 67.2M ACRES 67.2M WITH 3 TRAITS 2005 1.6 • 2005 saw launch of first triple-stacked 1.65 product, YieldGard 1.5 Plus with Roundup AVERAGE TRAITS PER ACRE Ready Corn 2 1.4 ACRES IN MILLIONS • Average per-acre 1.3 1.33 opportunity: Seed $30 1.2 RR $10 1.1 YG Corn Borer $5 YG Rootworm $15 1 1.0 TOTAL $60 6 7 8 9 0 1 2 3 F F F 99 99 99 99 00 00 00 00 4 5 6 00 00 00 1 1 1 1 2 2 2 2 2 2 2 SOYBEANS (1 TRAIT) CORN (3 TRAITS) COTTON (2 TRAITS) 17
    • TECHNOLOGY LEADERSHIP Continued Innovation in R&D is Translating to Significant Activity at Every Phase of the Pipeline The projects that advance in the pipeline advance more rapidly and have a higher prospective probability of commercial success DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCHED Proof of Concept Proof of Concept Adv. Development Early Development Pre-Launch 17 TRAIT TESTING TO REGULATORY & SELECTING DETERMINGING IDENTIFYING PRODUCTS + SELECT COMMERCIAL COMMERCIAL WHICH LEADS GENES & TRAITS ANNUAL COMMERCIAL DEVELOPMENT PRODUCTS SHOW PROMISE AS TARGETS GERMPLASM CANDIDATES TRACKS •ROUNDUP READY BIOTECH SOYBEANS, COTTON, CANOLA & CORN SEED PERFORMANCE TRAIT SCREENS •BOLLGARD & BULK UP SCREENS BOLLGARD II COTTON VALIDATING REGULATORY BUSINESS HIGH VOLUMES OF IDENTIFY LEADS •COTTON STACKS CONCEPTS STUDIES STRATEGY GENES •YIELDGARD EXPANDED FIELD COMMERCIAL MARKETING HAND TRAITS IN MODELS TESTING FOR CORN BORER TRIALS PREP OFF & CROPS GENE FUNCTION •YIELDGARD ROOTWORM •YIELDGARD PLUS BREEDING BREEDING TRAITS COMMERCIAL SEED •CORN STACKS TRAIT SCREENS FIELD TRIALS INTO CROPS PERFORMANCE BULK UP •VISTIVE LOW- TESTING LINOLENIC GENETIC MAPPING VALIDATE MOVE TRAITS TO MARKETING HAND SOYBEANS FOR BREEDING MAPPING RESULTS COMMERCIAL OFF DETERMINE •ASGROW AND OPPORTUNITIES GERMPLASM MARKET FIT VALIDATE DEKALB GENETIC GAINS BREEDING SOYBEAN PROGRAM VARIETIES & CORN HYBRIDS 18
    • TECHNOLOGY LEADERSHIP Feedback from 2005 Field Testing Indicates Continuing Momentum in Pipeline Opportunities EARLY FEEDBACK FROM 2005 ANNUAL R&D CYCLE: SEEDS & TRAITS FIELD WORK December No The steady progress of second- ary ve PORTFOLIO mb nu Ja er generation biotech traits from the UPDATE pipeline continues DATA PRIORITY ary Oc Roundup Ready Flex cotton ANALYSIS UPDATE bru tob Fe er Second-generation YieldGard Corn Borer corn Roundup RReady2Yield soybeans September DATA March Our healthier oils platform is COLLECTION generating good commercial opportunity Ap First products of our Renessen JV are st ril gu Au nearing commercialization FIELD TESTING Significant progress on longer horizon Ma y ly projects as viable leads are advancing Ju for drought tolerance in three crops June 19
    • TECHNOLOGY LEADERSHIP Roundup Ready Flex Launch To Be Largest in 10-Year History of Biotech Traits KEY MARKET ACRES U.S. AUSTRALIA Roundup Ready AVAILABLE MARKET 10-15M 0.5-0.8M 2005 Flex Cotton PERFORMANCE 0% 0% PERCENT PENETRATED • Value reflects Anticipated largest trait launch of 2-3 million acres, pending final greater approvals convenience and enhanced weed 80-90% of Roundup Ready Flex to be stacked with Bollgard II control; lifts the 8 cotton seed companies currently breeding trait into varieties value of the Roundup Ready trait The Roundup Ready UP NEXT Flex cotton trait will be coupled with our • 2006 commercial Stoneville brand and launch, expected our Cotton States on 2-3 M acres licensing as a showcase of Monsanto’s cotton business DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 20
    • TECHNOLOGY LEADERSHIP Testing of Second-Generation Roundup RReady2Yield Soybeans Indicates Extended Control KEY MARKET ACRES U.S. BRAZIL ARGENTINA Roundup RReady2Yield 70M 50M 30M AVAILABLE MARKET 2005 Soybeans PERFORMANCE 0% 0% 0% PERCENT PENETRATED Identified lead event during agronomic and tolerance trials during the • Yield improvement of 5+ bushels per 2004 U.S. field season. acre in 2004 field Second-generation testing indicates improved tolerance under extended trials spray conditions • Predicted added 2005: IN THE FIELD value: $19-27 per FIELD TRIAL YIELD acre ROUNDUP ROUNDUP READY RREADY2YIELD SOYBEANS SOYBEANS UP NEXT 65 • 2005 field trial data 60 will support BU/ACRE upcoming regulatory 55 submission 50 SPRAY SPRAY SPRAY TIME 1 TIME 2 TIME 1&2 DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 21
    • TECHNOLOGY LEADERSHIP Drought Stress Tolerance To Be Family of High-Value Traits in Multiple Crops U.S. AFFECTED CORN, COTTON, SOY ACREAGE MARKET SEGMENTS Drought-Tolerant CONSITENT DROUGHT 13-16M STRESS (WESTERN US) 2005 Family of Traits PERFORMANCE REDUCED IRRIGATION 20M COSTS 30-50M DROUGHT “INSURANCE” • Successful BROAD-ACRE WATER USE 128-148M greenhouse testing EFFICIENCY of cotton DROUGHT-TOLERANT CORN • Continued field testing of corn and PHASE I 2 YEARS OF FIELD TRIALS soybeans DROUGHT-TOLERANT UP NEXT SOYBEANS PHASE I • Identifying FIRST YEAR OF FIELD TRIALS potential commercial leads as field testing DROUGHT-TOLERANT continues COTTON PHASE I FIRST YEAR OF GREENHOUSE DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 22
    • TECHNOLOGY LEADERSHIP Drought Stress Tolerance To Be Family of High-Value Traits in Multiple Crops U.S. AFFECTED CORN MARKET ACREAGE SEGMENTS Drought-Tolerant CONSITENT DROUGHT 10-13M STRESS (WESTERN US) 2005 Corn PERFORMANCE REDUCED IRRIGATION 12M COSTS 30-50M DROUGHT “INSURANCE” Yield protection on all acres against • Pricing will reflect BROAD-ACRE WATER USE yield gains in all 70-80M water deficits EFFICIENCY three markets; Yield enhancement through improved water use on drought-prone acres and value of higher cost savings on irrigated acres yields shared with farmer More than two leads have demonstrated positive traits in corn field trials EXAMPLES OF o 40 34 32 C POSITIVE TRAITS OBSERVED UNDER UP NEXT WATER STRESS: • Enhanced growth • Begin to identify potential • Reduced leaf commercial leads rolling through additional • Reduced leaf testing temperature CONTROL WITH GENE CONTROL WITH GENE • Enhanced yield REDUCED LEAF REDUCED LEAF ROLLING TEMPERATURE DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 23
    • TECHNOLOGY LEADERSHIP Nitrogen Use Is Second Only to Water Use as an Opportunity in Agriculture KEY MARKET ACRES U.S. BRAZIL ARGENTINA Higher-Yielding TBD TBD TBD AVAILABLE MARKET 2005 Corn PERFORMANCE 0% 0% 0% PERCENT PENETRATED • Functional hits from Increased yield TOLERANCE TO LOW NITROGEN genomics screens achieved through are advanced to crop enhanced nitrogen testing for product prioritization uptake and utilization • 21 leads are under testing in 5 locations Potential to reduce in 2005 fertilizer inputs WITH GENE CONTROL WITH GENE CONTROL UP NEXT DARKER GREEN LEAVES DARKER GREEN LEAVES • Multi-location field studies of leads WITH GENE CONTROL WITH GENE CONTROL DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 24
    • TECHNOLOGY LEADERSHIP High Lysine Enhances Animal Feed, Shifts Value to Seed KEY MARKET ACRES U.S. BRAZIL ARGENTINA Renessen High Lysine Corn: 4M 1M 4M AVAILABLE MARKET 2005 First and Second Generations PERFORMANCE 0% 0% 0% PERCENT PENETRATED • Completing Improved amino acid balance; increased total energy regulatory review Two-product step-change in lysine content UP NEXT LYSINE TOTALS IN TESTING 2ND GENERATION 5000 • Currently identifying brand MINIMUM 4000 name and TARGET marketing position 3000 • Hopeful to have technology in 1ST GENERATION 2000 farmers’ fields by 2007 MINIMUM 1000 TARGET 0 CONTROL SOUTH US RESULT CONTROL EVENT 1 EVENT 2 AMERICA RESULT DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 2nd GENERATION 25
    • TECHNOLOGY LEADERSHIP Vistive Is A Family of Improved Oils for Food Uses Healthier Oils: Family of Traits CREATING VALUE STANDARD SOYBEAN FAMILY CURRENTLY NOT OPTIMAL FOR MOST PROCESSED FOOD VISTIVE LOW-LINOLENIC SOYBEANS APPLICATIONS TARGET: LINOLENIC ACID – MORE STABLE, NO TRANS FATS LINOLENIC ACID LAUNCH 500K ACRES COMMERCIAL VISTIVE II SOYBEANS OLEIC ACID TARGET: INCREASED OLEIC FOR HEALTH LINOLEIC PHASE 3 ACID VISTIVE III SOYBEANS STERATE & TARGET: MORE STABLE, NO TRANS, LOWEST SATS, LIKE PALMITATE ‘OLIVE OIL’ PHASE 2 DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 26
    • TECHNOLOGY LEADERSHIP Vistive Is First of Family of Improved Oils for Food Uses KEY MARKET ACRES U.S. BRAZIL ARGENTINA Vistive Low- 5M TBD TBD AVAILABLE MARKET 2005 Linolenic Soy PERFORMANCE 2% 0% 0% PERCENT PENETRATED Vistive was developed by screening Monsanto’s germplasm and using • Successful launch advanced tools in breeding, effectively launching in 36 months from concept of Asgrow AG2421V and Oil sold out from 2005; To be in consumer products in late 2005 AG2321V • Approximately In 2006, additional brands and varieties will expand 100,000 acres the maturity zones and geographic reach of Vistive planted in Iowa UP NEXT 2006 2005 2005 500K acres 100K acres 2006 10+ seed brands 1 seed brand 800+ Farmers in Eastern 4+ processors 2 processors and Northeastern Iowa planted Vistive soybeans this year DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 27
    • TECHNOLOGY LEADERSHIP Vistive Offers the Ability to Declare Zero Trans Fats on Food Labels KEY MARKET ACRES U.S. BRAZIL ARGENTINA Vistive Low- 5M TBD TBD AVAILABLE MARKET Linolenic Soy CREATING VALUE 2% 0% 0% PERCENT PENETRATED EXAMPLE: USE IN TORTILLA CHIPS • Vistive provides opportunity to declare zero trans fat 100% PARTIALLY 100% PALM OIL HYDROGENATED and use the nutrient 100% VISTIVE SOYBEAN OIL content claims of “Low in saturated Nutrition Facts Nutrition Facts Nutrition Facts fat, contains 7 g of Tortilla Chips (Plain, white corn) Tortilla Chips (Plain, white corn) Tortilla Chips (Plain, white corn) total fat per serving” Serving Size – 1 0z. (28 g) Serving Size – 1 0z. (28 g) Serving Size – 1 0z. (28 g) and “Reduced Amount Per Serving Amount Per Serving Amount Per Serving Saturated Fat” Calories 140 Calories 140 Calories 140 Calories from Fat 60 Calories from Fat 60 Calories from Fat 60 • Even in Palm Oil % Daily Value % Daily Value % Daily Value substitution, trans Total Fat 7 g 11% Total Fat 7 g 11% Total Fat 7 g 11% fat eliminated at the Saturated Fat 1.5 g 8% Saturated Fat 3 g 15% Saturated Fat 1 g 5% expense of a 1.5 Trans Fat 2 g Trans Fat 0 g Trans Fat 0 g 0% g/serving increase in Cholesterol 0% Cholesterol 0% Cholesterol 0% saturated fat. Sodium 120 mg 5% Sodium 120 mg 5% Sodium 120 mg 5% Total Carbohydrate 19 g 6% Total Carbohydrate 19 g 6% Total Carbohydrate 19 g 6% Dietary Fiber 2 g 8% Dietary Fiber 2 g 8% Dietary Fiber 2 g 8% Sugars 0 g Sugars 0 g Sugars 0 g Protein 2 g 4% Protein 2 g 4% Protein 2 g 4% 28
    • TECHNOLOGY LEADERSHIP Breeding Breakthrough Improves the Taste and Mouth- Feel of Soy-Based Foods KEY MARKET ACRES U.S. BRAZIL ARGENTINA Improved-protein <1M TBD TBD AVAILABLE MARKET 2005 soybeans for food PERFORMANCE 0% 0% 0% PERCENT PENETRATED Improves taste and mouth-feel with consumer applications in • Yield trials of beverages and meat alternatives; Improved taste for nutritional bars commercial variety candidates Initiating seed production and identifying additional varieties for successful commercialization and validating performance in food products IMPROVED HBC = IMPROVED SOLUBILITY PROFILE LOWER AFFINITY FOR SOLUBILITY & Vinton 81 ODORS, CREATES EMULSIFYING Commodity BALANCED FLAVORS (SIMILAR TO MON HBC UP NEXT HBC LESS BINDING OF MILK) BETTER OFF-FLAVORS Casein TASTE AND 0 2 4 6 8 10 12 TEXTURE • Seed bulk up to Bound 2 pentyl pyridine 25 Median particle diameter (microns) Glycinin begin for moles/mole protein) 20 HBC IMPROVED GELLING (FIRM) commercialization 15 RETAINS MOISTURE IN High BC 10 β-conglycinin MEAT PRODUCTS, 5 CREATING FIRM & Control 0 0.3 0.6 0.9 1.3 1.6 1.8 2.1 TENDER TEXTURE 0 500 1000 1500 2000 2 pentyl pyridine (mM) Elastic modulus (Pa) DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 29
    • TECHNOLOGY LEADERSHIP Breeding Breakthrough Improves the Taste and Mouth- Feel of Soy-Based Foods KEY MARKET ACRES U.S. BRAZIL ARGENTINA Improved-protein <1M TBD TBD AVAILABLE MARKET soybeans for food CREATING VALUE 0% 0% 0% PERCENT PENETRATED EXISTING SOYBEANS PRODUCT CONCEPT BBreeding Β-CONGLYCININ MUTAGENESIS Β-CONGLYCININ 10% 16-22% R GLYCININ GLYCININ 14% 0-6% Gy1-5 Genes O A1 A2 B1 B2 C1 C2D1aD1b D2 E F G HI J KL MN CONCEPT: Gy5 Develop High Gy3 Beta-Conglycinin Gy2 Gy7 Soybeans Using Gy1 Gy4 Markers to Select for Altered Protein Levels 30
    • TECHNOLOGY LEADERSHIP Omega-3 Biofortification Could Be a Food Industry Breakthrough KEY MARKET ACRES U.S. BRAZIL ARGENTINA TBD TBD TBD AVAILABLE MARKET Omega-3 Oilseeds 2005 PERFORMANCE 0% 0% 0% PERCENT PENETRATED American Heart Association, American Diabetic Association, and 1,600+ • Field tests in U.S. research studies support health benefits and Argentina showed SDA levels Enhanced stability; Best applications in refrigerated or frozen foods or at product concept as animal feed for Omega-3 enriched poultry or pork with good agronomic OMEGA-3 (SDA LEVELS) IN SOYBEAN FIELD TRIALS performance 25 FATTY ACID WT % TARGET 20 UP NEXT 15 • Continued testing to confirm commercial 10 opportunity 5 0 OMEGA-3 EVENTS IN FIELD TESTING DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 31
    • GROWTH OPPORTUNITIES Pipeline Is Valued Across Market Opportunities and Crops PRICING VALUE MATRIX 4 3 2 HIGH PER-ACRE ($11-$100+) OMEGA-3 SOYBEANS BOLLGARD II COTTON (AUSTRALIA) IMPROVED-PROTEIN SOYBEANS FOR FOOD PROCESSOR PREFERRED ELITE GERMPLASM BOLLGARD II COTTON BOLLGARD II COTTON (INDIA) ROUNDUP ROUNDUP READY + FLEX COTTON YIELDGARD READY ROUNDUP READY 2ND GENERATION ROOTWORM SOYBEANS + FLEX COTTON HIGH-LYSINE CORN (AUSTRALIA) 2ND GENERATION ROUNDUP IMPROVED-ENERGY CORN III READY SOYBEANS HIGHER-YIELDING CORN SMALL-ACRE (0-10 MILION)1 LARGE-ACRE (11-100 MILLION+)1 DROUGHT ROUNDUP READY CORN TOLERANT COTTON LOW PER-ACRE ($0-$10)2 VISTIVE ZERO SATURATED FAT + MID- IMPROVED-PROTEIN OLEIC + LOW-LINOLENIC SOYBEANS HIGHER- SOYBEANS FOR FEED YIELDING YIELDGARD CORN BORER VISTIVE MID-OLEIC + LOW- SOYBEANS LINOLENIC SOYBEANS VISTIVE SOYBEANS DROUGHT TOLERANT IMPROVED-OIL CORN SOYBEANS FOR PROCESSING HIGH-LYSINE CORN DROUGHT TOLERANT 1 2 SOYBEANS Pipeline projects denoted in white text and represent global value; Commercial products denoted in gold and are U.S.-only, unless otherwise indicated. 1. “Acre Potential” represents the maximum acre penetration by the trait individually and as a stacked trait in the three-year span during its peak. 2. “Per-Acre” premium represents the per-acre average value in the three-year span during the trait penetration peak. 32