ROBB FRALEY
CHIEF TECHNOLOGY OFFICER




MONSANTO EUROPEAN INVESTOR DAY



November 10, 2006



                          ...
OVERVIEW

  R&D Focus Aligns With Growth Drivers to Extend Leadership
  Through 2010

                                    ...
OVERVIEW

        Farmers Buy Yield; Our R&D Approach Oriented
        Around Meeting That Customer Need
                R...
BREEDING

   Monsanto’s Global Breeding Engines Deliver Yield
   Advantages Over Best-in-Class Competitors

              ...
BREEDING


  Best Combination of Germplasm and Traits Delivers
  Best Yield
                                            FO...
BREEDING

   Breeding Advances in France Fuel Market Share Growth


                                               CORN GR...
BREEDING


  Corn Market Share Gains Still To Fully Reflect Power of
  Molecular Breeding Application

                   ...
BREEDING

  Seminis R&D to Focus on Top Five Crops Supported by
  Molecular Marker Platforms

                            ...
BREEDING

    Genetic Mapping Timetable Supports Commercial
    Launches of Molecular Breeding Hybrids by End of Decade


...
BIOTECHNOLOGY

Top-Ten Traits Poised to Deliver Significant Value
                                                        ...
BIOTECHNOLOGY


  Roundup RReady2Yield Soybeans Offer Yield Improvement
  Over First-Generation Roundup Ready Soybeans
   ...
BIOTECHNOLOGY

  Reflecting HIT Status, Roundup RReady2Yield Soybeans Is
  Targeted for Monsanto’s Most Significant Commer...
BIOTECHNOLOGY

  Tests of Drought-Tolerant Corn Continue to Validate
  Concept
                                           ...
BIOTECHNOLOGY

  Multi-Generational Drought-Tolerant Corn to Create
  Value Across Multiple Market Segments
              ...
BIOTECHNOLOGY

  Vistive III Soybeans Have Potential To Leapfrog on
  Commercial Development Track
                       ...
BIOTECHNOLOGY

Vistive III Soybeans Meet Multiple Needs in Food
Industry                                   KEY MARKET ACRE...
BIOTECHNOLOGY

   Omega-3 Soybeans Have Met Early Development
   Targets for Both Food Application and Field Performance
 ...
BIOTECHNOLOGY

   Early Field Testing Indicates Nitrogen Utilization Corn Offers
   Yield Benefits in Both Limited and Nor...
BIOTECHNOLOGY

   Nitrogen Utilization Technology Extends Benefits Across
   Crop Families
                               ...
BIOTECHNOLOGY

    Opportunity in Renewable Fuels Is Driving Yield Demand in
    Agriculture
                             ...
BIOTECHNOLOGY

   MaveraTM High-Value Corn with Lysine to Provide
   Incremental Value to Both Feed and Fuel Markets
     ...
RENESSEN OPPORTUNITY

Renessen’s New System Bolts Onto Conventional Dry Milling
Process and Makes More Efficient Use of Co...
SUMMARY

                            Breeding and Biotech Come Together To Lift The Ceiling
                            on...
SUMMARY

  R&D Focus Aligns With Growth Drivers to Extend Leadership
  Through 2010

                                     ...
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monsanto EU_RobbFraley_1110006

  1. 1. ROBB FRALEY CHIEF TECHNOLOGY OFFICER MONSANTO EUROPEAN INVESTOR DAY November 10, 2006 1
  2. 2. OVERVIEW R&D Focus Aligns With Growth Drivers to Extend Leadership Through 2010 SITUATION R&D FACTOR ANALYSIS APPLICATION MONSANTO’S R&D OPPORTUNITY BREEDING Growing demand U.S. corn pressures feed Application of our breeding and biotech BIOTECH capabilities fully supports our six gross and fuel supply profit drivers Better yields International needed to BREEDING corn improve global DISCOVERY PHASE I PHASE II R&D PHASE: PHASE III PHASE IV LAUNCH competitiveness BREEDING Opportunity exists Global biotech to upgrade plant BIOTECH COMMERCIAL IT PLATFORM GERMPLASM G ANALYTICS MARKERS traits performance with GENOMICS SEED ELITE Germplasm traits SOLD TO FARMERS R Improve global BREEDING productivity BIOTECHNOLOGY Cotton through platform technology BIOTECH infusion Highly fragmented BREEDING Seminis market, ready for new technology Deliver higher value BIOTECH R&D pipeline technologies faster 2
  3. 3. OVERVIEW Farmers Buy Yield; Our R&D Approach Oriented Around Meeting That Customer Need R&D APPROACH PERCENT OF GENETIC YIELD GENETIC POTENTIAL FARM APPROACH GAIN PRESERVED = X Farmer’s Purchase Inherent yield possible from the seed Amount of yield potential Decision BREEDING GERMPLASM protected = SEED • Starting point of all agriculture; farmers maximize genetics in seed for yield • 60% of farmers select • Germplasm library • >2,000 genetic seed first, then • Monsanto is only assembled from markers used by decide on biotech company to develop 36 programs in 12 traits breeders for corn and commercialize countries X today complete above- • >100 breeding • 50% of breeding ground, below-ground research centers population comes insect-control and worldwide from inter-company, TECHNOLOGY weed-control traits inter-country crosses • Technology is used to protect and maximize • Molecular breeding yield potential of seed improves genetic potential by 2X versus conventional breeding 3
  4. 4. BREEDING Monsanto’s Global Breeding Engines Deliver Yield Advantages Over Best-in-Class Competitors 2006 PRELIMINARY U.S. COMPETITIVE CORN YIELD COMPARISON 200 DEKALB U.S. Corn 195 SITUATION: COMPETITORS • Top 3 purchase drivers for BUSHELS/ACRE farmers buying DEKALB 190 corn seed all relate to performance of underlying 185 germplasm OUTLOOK: • Preliminary yield data 180 from 2006 indicates continued yield advantage 175 versus best-in-class competitors • Final data will be shared in 170 RELATIVE MATURITIES (DAYS) January 115 95 100 105 110 YIELD ADVANTAGE In 2006, across the 110-day maturity zone that covers one-third of U.S. corn production, DEKALB outperformed the competition by roughly 11 bushels per acre on average 4
  5. 5. BREEDING Best Combination of Germplasm and Traits Delivers Best Yield FOCUS: YIELD PER ACRE (PRELIMINARY) U.S. Corn 194 YieldGard 200 SITUATION: bu/ac Rootworm or BUSHELS PER ACRE 182.4 • In 2006, across four states and YieldGard Plus 190 bu/ac 267 locations, DEKALB seed Herculex® with YieldGard Rootworm or 180 Rootworm or YieldGard Plus outperformed Herculex XTRA 170 competitive seed and trait performance by roughly 10 160 bu/ac on average • In 2006, across 81 locations, 150 DEKALB PIONEER statistically there is no difference between the performance of YieldGard Rootworm or YieldGard Plus FOCUS: TRAIT PERFORMANCE - ROOT PROTECTION (PRELIMINARY) and competitive traits 0.25 YieldGard Rootworm Difference between two traits OUTLOOK: NODE INJURY SCALE or YieldGard Plus statistically insignificant 0.20 • Farmers make their seed Herculex® .20 purchase decision on the total Rootworm or .17 0.15 Herculex XTRA system performance of the seed-and-trait package versus 0.10 the trait or germplasm individually 0.05 0.00 PIONEER DEKALB 5
  6. 6. BREEDING Breeding Advances in France Fuel Market Share Growth CORN GRAIN HYBRID International Corn REGISTRATION – FRANCE SITUATION: 2003 - 2005 • From 2003 – 2005, Monsanto led the way with 36 new corn grain hybrids 60 or 19% of the total new 51 product entrants approved 50 in France 40 • DEKALB market share has 35 29 grown 5 points over last 30 two years • For first time ever, 20 15 12 13 11 DEKALB is co-leading 6 10 brand in France 6 4 2 2 OUTLOOK: 0 MONSANTO PIONEER SYNGENTA ALL OTHER • Yield data will be shared in January 2003 2004 2005 • Corn grain hybrid registration in France will BREEDING ACCELERATION be updated From 2003 – 2005, Monsanto registered more hybrids than its primary competitors across broadest growing regions, accounting for 19% of all newly registered hybrids in France 6
  7. 7. BREEDING Corn Market Share Gains Still To Fully Reflect Power of Molecular Breeding Application MOLECULAR-BREEDING HYBRIDS AS A PERCENT OF BRANDED U.S. and UNITS SOLD IN COMMERCIAL 20% International Corn 2006 BRANDED U.S. CORN PORTFOLIO 12% MARKET SHARE: 19% IN COMMERCIAL CORN PORTFOLIO PERCENT OF BRANDED UNITS SOLD SITUATION: 10% • Conventional breeding 15% U.S. MARKET SHARE improves genetic gain on average by 1.5% per 8% year 10% DEKALB AND ASGROW OUTLOOK: 6% U.S. BRAND MARKET SHARE • Molecular breeding improves genetic 4% 5% potential by 2X versus conventional breeding 2% • By 2010, over 12% of commercial portfolio will 0% 0% be derived from molecular breeding 2001 2002 2003 2004 2005 2006 2007F 2008F 2009F 2010F CYCLE 1: CYCLE 2: CYCLE 3: INTEGRATION OF APPLICATION OF MAB SELECTION POWER OF GLOBAL GERMPLASM TO SELECTION MOLECULAR BREEDING • BY 2006, FIRST MOLECULAR • ASSEMBLED 36 MAJOR • PREDICTIVE BREEDING HYBRIDS ENTER CORN BREEDING COMBINATIONS ALLOW U.S. COMMERCIAL PROGRAMS IN 12 MORE EFFICIENT PROGRESSION PORTFOLIO COUNTRIES BREEDING OF BREEDING TECHNOLOGY • EU IS ROUGHLY 2 YEARS • FIRST INTRA-COMPANY • APPLY MOLECULAR IN THE BEHIND THE U.S. FOLLOWED CROSSES BREEDING TO TROPICAL COMMERCIAL BY LATIN AMERICA AND ASIA MARKETS, SUCH AS PORTFOLIO PACIFIC BRAZIL AND ASIA 7
  8. 8. BREEDING Seminis R&D to Focus on Top Five Crops Supported by Molecular Marker Platforms TOP 5 CROPS Seminis STRATEGIC FOCUS INVESTMENTS SITUATION: • Consumer benefits such as • In 2006, narrowed flavor and seedless • Advance Tomato commercial focus to 25 molecular markers • Grower benefits such as disease crops that generate resistance most profit • Consumer benefit traits such as • Advance OUTLOOK: Sweet pepper molecular markers shape, sweetness and color • Significant marker platforms to support • Novel flavor for consumers advancements in quality • Increase breeding • Grower yield through hybrid and consumer traits for investments in Hot pepper conversion and disease top 5 crops NAFTA resistance • Advance • Consumer benefits such as molecular markers firmness, sugars, shelf life and Melon • Strengthen flavor germplasm • Strengthen • Aggressive hybrid conversion for germplasm yield and uniformity Onion • Advance • Reduce pungency for consumers molecular markers 8
  9. 9. BREEDING Genetic Mapping Timetable Supports Commercial Launches of Molecular Breeding Hybrids by End of Decade MARKER PLATFORMS MARKER APPLICATION FOR KEY CROPS (2006-2009) Seminis SITUATION: 5,000 SWEET CORN • Began application of NUMBER OF MARKERS DEVELOPED breeding technology, with genome-wide marker platform for tomatoes and peppers • Melons, watermelons TARGET: 1,000 and brassica family of 1,000 markers cabbage, broccoli and cauliflower next OUTLOOK: BRASSICA • By 2009, Seminis 500 TOMATO should have 1,000+ MELON markers for 9 crops WATERMELON PEPPER ONION, CUCUMBER, LETTUCE 2009F 2007F 2008F Current Status 9
  10. 10. BIOTECHNOLOGY Top-Ten Traits Poised to Deliver Significant Value PIPELINE VALUE: TOP-TEN PROJECTS REFLECTING COMMERCIAL VALUE1 VALUE PER ACRE CORE PHASE SOURCE OF VALUE ACRE BASE MARKETS Renessen Corn Processing System U.S 4 Brazil $10 - $30 20M and Mavera™ High-Value Corn with Feed and fuel Europe Lysine2 U.S. HIT 3 Roundup RReady2Yield soybeans $10 - $30 155M Brazil Yield enhancement Argentina 3 Omega-3 soybeans >$30 5M U.S. Improved health U.S. 3 YieldGard VT PRO $10 - $30 41M Brazil Insect protection 2 -GEN YIELDGARD CORN BORER nd Europe U.S 2 HIT Water replacement Drought-tolerant corn $10 - $30 164M Brazil and yield Europe HIT 2 U.S. Vistive III soybeans $10 - $30 12-15M Improved health U.S. 2 Higher yielding soybeans $10 - $30 155M Brazil Yield enhancement Argentina 2 Brazil Yield and insect Insect-protected soybeans $20 - $40 95M WITH ROUNDUP RREADY2YIELD Argentina protection U.S. 1 India Water replacement Drought-tolerant cotton $10 - $30 36M Brazil and yield Australia U.S 1 Nitrogen replacement Nitrogen utilization corn $10 - $30 164M Brazil and yield Europe 1. Top ten not presented in ranked 2. Value and acres are for direct order; Commercial value feed piece only and do not calculated by penetration and include value for Renessen’s corn retail value during three-year processing system, which is to be span at peak. determined 10
  11. 11. BIOTECHNOLOGY Roundup RReady2Yield Soybeans Offer Yield Improvement Over First-Generation Roundup Ready Soybeans KEY MARKET ACRES U.S. BRAZIL ARGENTINA Roundup RReady2Yield AVAILABLE MARKET 70M 50M 35M Soybeans PERCENT PENETRATED 0% 0% 0% P R O JE CT ROUNDUP RREADY2YIELD IN THE FIELD FIELD TRIAL PHOTOS FROM 2006 R&D Pipeline HIT Roundup Project Ready2Yield soybeans LOCATION: Stonington, Illinois SITUATION: ACTIVITY: On Track 2006 STATUS: Monsanto researchers check • Yield data from 45 trials will be performance shared in January indicators in the fields such as plant VALUE CONSIDERATIONS: height, and pod size and number • Value is additive, with target of up to 5 bushel-per-acre yield OBSERVATIONS: improvement over comparable 25 locations across the U.S. tested Roundup Ready soybeans 11,000 lines tested RETAIL $10 - $30/acre VALUE/ACRE: in 45 trials TOTAL ACRE 155M acres OPPORTUNITY: 11
  12. 12. BIOTECHNOLOGY Reflecting HIT Status, Roundup RReady2Yield Soybeans Is Targeted for Monsanto’s Most Significant Commercial Launch KEY MARKET ACRES U.S. BRAZIL ARGENTINA Roundup RReady2Yield AVAILABLE MARKET 70M 50M 35M Soybeans PERCENT PENETRATED 0% 0% 0% P R O JE CT LAUNCH ACRES OF U.S. TRAITS 3 HISTORICAL COMMERCIALIZED TRAITS (1996-2006) R&D Pipeline 2.5 ACRES (IN MILLIONS) Roundup HIT AVERAGE HISTORIC 2 RReady2Yield TRAIT LAUNCH: Project 1.2M ACRES soybeans 1.5 SITUATION: 1 On Track 2006 STATUS: 0.5 • Yield data from 45 trials will be 0 shared in January SOYBEAN TRAITS COTTON TRAITS CORN TRAITS VALUE CONSIDERATIONS: Target acreage for Roundup RReady2Yield commercial • Value is additive, with target of up to 5 bushel-per-acre yield launch is expected to be a multiple above historical acreages improvement over comparable in launch years Roundup Ready soybeans RETAIL ROUNDUP RREADY2YIELD: COMMERCIAL MILESTONES $10 - $30/acre VALUE/ACRE: STARTING POINT U.S. REGULATORY TOTAL ACRE APPROVAL 155M acres OPPORTUNITY: SEASON 1 LAUNCH YEAR GLOBAL REGULATORY CLEARANCES PRE-COMMERCIAL USER-RELIABILITY COMMERCIAL LAUNCH TRIALS 12
  13. 13. BIOTECHNOLOGY Tests of Drought-Tolerant Corn Continue to Validate Concept KEY MARKET ACRES U.S. BRAZIL EUROPE Drought-tolerant AVAILABLE MARKET 80M 30M 24M corn PERCENT PENETRATED 0% 0% 0% P R O JE CT DROUGHT TOLERANT CORN IN THE FIELD R&D Pipeline FIELD TRIAL PHOTOS FROM 2006 HIT Project Drought-tolerant corn SITUATION: On Track 2006 STATUS: LOCATION: • Continued expansion of testing in lead Vacaville, California ACTIVITY: genes and events in moisture-stressed Monsanto and broad acre environments researcher checks • Currently testing hundreds of genes performance across several generations of drought indicators in the traits field such as chlorophyl content, • Results will be shared in January ear size, and plant height VALUE CONSIDERATIONS: OBSERVATIONS: • Value of trait reflects better yields Confirming third under moisture-stressed conditions year of field trial • Value will be specific to variable costs data in U.S. of water use by farmers, rather than fixed costs of irrigation RETAIL $10 - $30/acre VALUE/ACRE: TOTAL ACRE 164M acres OPPORTUNITY: 13
  14. 14. BIOTECHNOLOGY Multi-Generational Drought-Tolerant Corn to Create Value Across Multiple Market Segments KEY MARKET ACRES U.S. BRAZIL EUROPE Drought-tolerant AVAILABLE MARKET 80M 30M 24M corn PERCENT PENETRATED 0% 0% 0% P R O JE CT SEGMENTED VALUE OPPORTUNITY ACROSS MARKETS: EUROPE EXAMPLE R&D Pipeline HIT Project Drought Monitor Drought-tolerant corn D0: Abnormally Dry SITUATION: D1: Drought - Moderate On Track 2006 STATUS: D1: Drought - Severe D1: Drought - Extreme • Continued expansion of testing in lead genes D1: Drought - Exceptional in moisture-stressed and broad acre environments. • Currently testing hundreds of genes across several generations of drought traits Source: UCL Department of Space and Climate Physics • Results will be shared in January VALUE CONSIDERATIONS: IRRIGATED DRYLAND STABILITY • Value of trait reflects better yields under Irrigated Non-Irrigated Non-Irrigated moisture-stressed conditions; varies by Value is in Value is in Value is in region (see table at right) replacing improved yields improved yields • Value will be specific to variable costs of irrigation, reducing annually, by when moisture is water use by farmers, rather than fixed costs variable costs of improving water- less than optimal irrigation use efficiency of irrigation RETAIL VALUE/ACRE: $10 - $30/acre TOTAL ACRE 164M acres OPPORTUNITY: 14
  15. 15. BIOTECHNOLOGY Vistive III Soybeans Have Potential To Leapfrog on Commercial Development Track KEY MARKET ACRES U.S. Vistive III Soybeans AVAILABLE MARKET 12-15M PERCENT PENETRATED 0% P R O JE CT VISTIVE III FIELD TRIAL PHOTOS FROM 2006 R&D Pipeline HIT Vistive III Soybeans Project SITUATION: LOCATION: On Track 2006 STATUS: Sperry, Iowa ACTIVITY: • Field trial results on oil composition 2006 summer and oil yield will be reviewed in agronomic January testing VALUE CONSIDERATIONS: OBSERVATIONS: • Approximately 40M acres of U.S. First broad acre soybean crop is crushed for oil; field testing in U.S. with lead Vistive III is optimal for non- events hydrogenated and hydrogenated- frying segments • Vistive III has potential to be priced at a premium to conventional soybean oil RETAIL VALUE/ACRE: $10 - $30/acre TOTAL ACRE 12M - 15M acres OPPORTUNITY: 15
  16. 16. BIOTECHNOLOGY Vistive III Soybeans Meet Multiple Needs in Food Industry KEY MARKET ACRES U.S. AVAILABLE MARKET 12-15M Vistive III Soybeans P R O JE CT PERCENT PENETRATED 0% CONSUMER VISTIVE MARKET R&D Pipeline FAMILY OIL FOR HIT Vistive III Soybeans FRYING AND IMPROVED SOYBEAN Project SPRAYING QUALITY FOR LIQUID OILS SITUATION: Crackers Snack chips On Track 2006 STATUS: • Field trial results on oil composition and oil yield will be IMPROVING NUTRITIONAL reviewed in January PROFILE OF SOYBEAN OIL VALUE CONSIDERATIONS: LINOLENIC LINOLEIC OLEIC SATS 18:3 18:2 18:1 18:0 / 16:0 • Approximately 40M acres of U.S. STANDARD SOYBEAN soybean crop is crushed for oil; Vistive III is optimal for non- TARGET: VISTIVE III hydrogenated and hydrogenated- LOW-LIN – MID-OLEIC – LOW-SAT SOYBEANS frying segments • Vistive III has potential to be Major market segments for U.S. soybean oil priced at a premium to NON- HYDROGENATED- HYDROGENATED- HYDROGENATED FRYING BAKING conventional soybean oil RETAIL For salad oils, For various For various $10 - $30/acre VALUE/ACRE: household use frying baking TOTAL ACRE applications applications 12M – 15M acres OPPORTUNITY: Uses 50% of Uses 25% of Uses 25% of total crushing total crushing total crushing (~20M acres) (~10M acres) (~10M acres) 16
  17. 17. BIOTECHNOLOGY Omega-3 Soybeans Have Met Early Development Targets for Both Food Application and Field Performance KEY MARKET ACRES U.S. Omega-3 soybeans AVAILABLE MARKET 5M PERCENT PENETRATED 0% R&D Pipeline Omega-3 soybeans OMEGA-3 OIL TASTE RESULTS FROM 2005 SITUATION: On Track STATUS: 10 TASTE RATING • Extensive field testing for 5 lead events in U.S. 0 • Food formulation results will Omega-3 be shared in January Soy Oil SDA Oil Fish Oil VALUE CONSIDERATIONS: • Value created through a Taste Rating 0-15 Scale product with similar profile Score of zero indicates no flavor to soybean oil in taste, shelf- life and oil stability but with In taste-testing, Omega-3 oil containing a superior nutritional and stearidonic acid (SDA) oil compares taste profile to fish oil favorably versus fish oil and commodity RETAIL Salad Dressing soy oil >$30/acre VALUE/ACRE: with SDA Oil Testing also focused on field performance, TOTAL ACRE demonstrating Omega-3 soybean yield on 5M acres OPPORTUNITY: par with commodity soybeans – an important factor to farmers growing specialty crops 17
  18. 18. BIOTECHNOLOGY Early Field Testing Indicates Nitrogen Utilization Corn Offers Yield Benefits in Both Limited and Normal Nitrogen Conditions KEY MARKET ACRES U.S. BRAZIL EUROPE Nitrogen utilization corn AVAILABLE MARKET 80M 30M 24M PERCENT PENETRATED 0% 0% 0% NITROGEN CONTROL TESTING R&D Pipeline Nitrogen utilization corn SITUATION: LOCATION: On Track STATUS: Morrisonville, Illinois and • Continued expansion of Jerseyville, Illinois ACTIVITY: testing in limited and normal Field control nitrogen environments testing to measure • Results will be shared in nitrogen uptake January and to screen genes for nitrogen VALUE CONSIDERATIONS: utilization • Value created through OBSERVATIONS: improved yield in both Under normal limited and normal nitrogen nitrogen, corn has environments good chlorophyll content, normal RETAIL $10 - $30/acre VALUE/ACRE: ear development and higher yield TOTAL ACRE 164M acres OPPORTUNITY: Limited Nitrogen Normal Nitrogen 18
  19. 19. BIOTECHNOLOGY Nitrogen Utilization Technology Extends Benefits Across Crop Families KEY MARKET ACRES U.S. CANADA EUROPE Nitrogen utilization canola AVAILABLE MARKET 1-2M 12-14M 12-14M PERCENT PENETRATED 0% 0% 0% 2006 NITROGEN R&D Pipeline CANOLA CONTROL TESTING Nitrogen utilization canola SITUATION: 1800 On Track STATUS: 1700 • Continued expansion of testing in limited and normal YIELD (LBS/ACRE) 1600 nitrogen environments NITROGEN UTILIZATION 15% 9% • Results will be shared in CANOLA 1500 OBSERVATIONS: 16% January Significant increase in pod 11% development 1400 VALUE CONSIDERATIONS • Value created through 1300 improved yield in both 18% limited and in normal 1200 nitrogen environments RETAIL $10 - $30/acre 1100 VALUE/ACRE: 0 50 100 150 200 TOTAL ACRE 25-30M acres OPPORTUNITY: NITROGEN APPLIED (LBS/ACRE) CANOLA CONTROL Conventional use rate OBSERVATIONS: Nitrogen gene Significantly less pod activity Control 19
  20. 20. BIOTECHNOLOGY Opportunity in Renewable Fuels Is Driving Yield Demand in Agriculture U.S. & BRAZIL ETHANOL OUTLOOK ETHANOL 30 45 ASSUMPTION BILLIONS OF GALLONS 40 MILLIONS OF ACRES 25 • MTBE replacement by 35 2010 is base case 20 30 • Incremental yield 25 gains through 15 20 technological 10 15 innovations allow further substitution 10 5 5 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CORN U.S. SUGAR CANE BRAZIL BIODIESEL 4 20 GLOBAL BIODIESEL OUTLOOK ASSUMPTION 18 BILLIONS OF GALLONS MILLIONS OF ACRES 3.5 16 • In EU, biodiesel to 3 14 represent 5% of 2.5 12 transport fuels with 2 10 U.S. growing up to 2% 8 1.5 6 1 4 0.5 2 0 0 2005 2006 2007 2008 2009 2010 2011 2012 BIODIESEL PALM SOYBEAN RAPESEED & CANOLA 20 Source: Proexporter Network, Pro Mar And Monsanto Estimates
  21. 21. BIOTECHNOLOGY MaveraTM High-Value Corn with Lysine to Provide Incremental Value to Both Feed and Fuel Markets KEY MARKET ACRES U.S. BRAZIL ARGENTINA Renessen’s MaveraTM High- AVAILABLE MARKET 5M 2M 1M Value Corn with Lysine PERCENT PENETRATED 0% 0% 0% HIGH-VALUE CORN WITH LYSINE IN THE FIELD R&D Pipeline FIELD TRIAL PHOTOS FROM 2006 Mavera High-Value Corn with Lysine LOCATION: Monmouth, Illinois SITUATION: ACTIVITY: On Track 2006 STATUS: Renessen researchers check performance • Hybrid performance including indicators such as plant yield and nutrient composition height, chlorophyl and ear fill. They also use will be shared in January advanced crop analytics VALUE CONSIDERATIONS to help track the oil levels in plants • Enhances level of limiting OBSERVATIONS: essential amino acids and corn oil content in feed, and lowers U.S. received regulatory approval in 2006; cost of animal rations Agronomic testing in the • Incremental value extracted field to select best through Renessen’s Corn hybrids Processing Technology RETAIL <$10/acre1 VALUE/ACRE: TOTAL ACRE <10M acres1 OPPORTUNITY: 1Value and acres are for direct feed piece only and do not 21 include value for processing component
  22. 22. RENESSEN OPPORTUNITY Renessen’s New System Bolts Onto Conventional Dry Milling Process and Makes More Efficient Use of Corn Seed RENESSEN PROCESS FLOW •FOR ALL PRACTICAL CONVENTIONAL DRY MILL PROCESS PURPOSES, RENESSEN CORN NUTRIENT NUTRIENT PROCESSING SYSTEM BOLTS Hammer Hammer DENSE Distillation Ethanol DENSE ONTO A CONVENTIONAL DRY Elevator Fermentation Distillation Ethanol Elevator Fermentation Mill CORN Mill CORN MILL PROCESS STEP 1: Drying Drying •START WITH A NUTRITIONALLY DENSE CORN RENESSEN FRACTIONATION AND EXTRACTION PROCESS DEVELOPED THROUGH BIOTECH OR A CONVENTIONAL HYBRID HIGHLY HIGHLY HIGH PROTEIN 4 3 FERMENTABLE Fractionation FERMENTABLE Fractionation LOW OIL DDG STEP 2: FRACTION FRACTION •PROCESS IT THROUGH A High oil High oil NOVEL PROCESS fraction TECHNOLOGY DEVELOPED BY fraction CARGILL AND RENESSEN STEP 3: Nutrient-rich Nutrient-rich Oil extraction Oil extraction meal •DELIVER FOUR HIGH-VALUE meal REVENUE STREAMS 1: HIGH-OIL CORN OR BIODIESEL Corn oil Corn oil 2: HIGH-VALUE SWINE AND POULTRY FEED 3: HIGHLY FERMENTABLE STARCH HIGH VALUE SWINE 1 2 HIGH OIL CORN 4: HIGH-PROTEIN, LOW- AND POULTRY FEED FOR FOOD OR BIODIESEL OIL DDG 22
  23. 23. SUMMARY Breeding and Biotech Come Together To Lift The Ceiling on Yield U.S. CORN YIELD HISTORY AND PROJECTED EVOLUTION 200 AVERAGE YIELD (BU/AC) (MULTIPLE REGRESSION MODEL ANALYSIS) 180 MONSANTO’S OPPORTUNITY 160 140 The delta between what is predicted and what is 120 possible is where 100 opportunity lies 80 Molecular breeding 60 boosts the genetic potential of the seed 1975 1980 1985 1990 1995 2000 2005 2010 2015 Biotech traits protect that genetic potential U.S. SOYBEAN YIELD for more practical yield 55 HISTORY AND PROJECTED EVOLUTION AVERAGE YIELD (BU/AC) 50 Breeding and Biotech (MULTIPLE REGRESSION MODEL ANALYSIS) come together to 45 change the curve of 40 yield potential 35 30 25 20 1975 1980 1985 1990 1995 2000 2005 2010 2015 USDA YIELD TREND LINE PROJECTED YIELDS WITH MOLECULAR BREEDING AND BIOTECHNOLOGY 23
  24. 24. SUMMARY R&D Focus Aligns With Growth Drivers to Extend Leadership Through 2010 SITUATION R&D FACTOR ANALYSIS APPLICATION MONSANTO’S R&D OPPORTUNITY BREEDING Growing demand U.S. corn pressures feed Application of our breeding and biotech BIOTECH capabilities fully supports our six gross and fuel supply profit drivers Better yields International needed to BREEDING corn improve global DISCOVERY PHASE I PHASE II R&D PHASE: PHASE III PHASE IV LAUNCH competitiveness BREEDING Opportunity exists Global biotech to upgrade plant BIOTECH COMMERCIAL IT PLATFORM GERMPLASM G ANALYTICS MARKERS traits performance with GENOMICS SEED ELITE Germplasm traits SOLD TO FARMERS R Improve global BREEDING productivity BIOTECHNOLOGY Cotton through platform technology BIOTECH infusion Highly fragmented BREEDING Seminis market, ready for new technology Deliver higher value BIOTECH R&D pipeline technologies faster 24

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