monsanto monmouth2


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monsanto monmouth2

  1. 1. Momentum in the Field Carl Casale August 30, 2004 1
  2. 2. Forward-Looking Statements Forward-Looking Statements Forward- Certain statements contained in this presentation, such as statements concerning the company's anticipated financial statements results, current and future product performance, regulatory approvals, currency impact, business and financial plans and approvals, other non-historical facts are quot;forward-looking statements.quot; These statements are based on current expectations and non- quot;forward- expectations 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 those company’ such forward-looking statements. Factors that could cause or contribute to such differences include, among others: the forward- such company’s exposure to various contingencies, including those related to Solutia, Inc., litigation, intellectual property, company’ regulatory compliance (including seed quality), environmental contamination and antitrust; fluctuations in exchange rates contamination and other developments related to foreign currencies and economies; increased generic and branded competition for the economies; company's Roundup herbicide; the accuracy of the company’s estimates and projections, for example, those with respect company’ to product returns and grower use of our products and related distribution inventory levels; the effect of weather distribution conditions and commodity markets on the agriculture business; the success of the company’s research and the company’ development activities and the speed with which regulatory authorizations and product launches may be achieved; rizations autho domestic and foreign social, legal and political developments, especially those relating to agricultural products especially developed through biotechnology; the company's ability to continue to manage its costs; the company’s ability to continue company’ successfully market new and existing products in new and existing domestic and international markets; the company’s existing company’ ability to obtain payment for the products that it sells; the company's ability to achieve and maintain protection for its company's intellectual property; the effects of the company's accounting policies and changes in generally accepted accounting policies principles; the company's ability to fund its short-term financing needs; general economic and business conditions; short- political and economic conditions due to threat of future terrorist activity and related military action; and other risks and terrorist factors detailed in the company's filings with the U.S. Securities and Exchange Commission. Undue reliance should not Securities be placed on these forward-looking statements, which are current only as of the date of this release. The company forward- this disclaims any current intention to revise or update any forward-looking statements or any of the factors that may affect forward- actual results, whether as a result of new information, future events or otherwise. events 2
  3. 3. Round 1: First-Generation Traits Biotechnology Is Most Rapidly Adopted Technology in the History of Agriculture Global Monsanto Planted Biotech Acres Acres in millions 180 160 Canola 140 Cotton Corn 120 Soybeans 100 80 60 40 20 0 96 97 98 99 00 01 02 03 y ar 19 19 19 19 20 20 20 20 in im el Pr 04 Source: Monsanto estimates 20 3
  4. 4. Round 1: First-Generation Traits Biotechnology Provides Better Economical and Environmental Solutions Effect of Biotech Crops on U.S. Pesticide Use in 2001 Million Lbs Soybeans (29) Corn (8) Cotton (8) Canola (1) Total Reduction in (46) Pesticide Use Source: “Plant Biotechnology: Current and Potential Impact for Improving Pest Management in U.S. Agriculture,” Leonard P. Gianessi, National Center for Food & Agriculture Policy. Agriculture,” Gianessi, 4
  5. 5. Round 1: Seed Breeding Early, Major Investment In Seeds Captured Value Shift Brand Share Licensed Share Monsanto Genetic Market Share in U.S. Corn Seed 49% 60% 48% 45% 43% 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 Preliminary Source: Monsanto 5
  6. 6. Round 1: First-Generation Traits Early Biotech Portfolio Success Has Provided Unique Industry Insights Percentage of 2004 U.S. total planted acres (Preliminary) Monsanto products 100 Competitive products 80 60 40 20 0 n ts ts rn ts rn or i i ai co co tra tra Ic tr k x IM n n n n e to or ea Li ul ld ot C yb c rty e er C rfi So be H a le Li C Source: Monsanto 6
  7. 7. Round 1: First-Generation Traits Roundup Ready Soybeans Deliver Superior Weed Control at Competitive System Cost U.S. Grower System Cost Roundup Ready Soybeans $ per acre Trait Herbicide Seed Herbicide Cost $52 $48 $40 Trait Cost 1995 2003 1999 Unmatched weed control in Roundup Ready Soybeans Conventional Roundup Ready Source: Monsanto and Doane Market Research 7
  8. 8. Round 1: First-Generation Traits Yieldgard Rootworm Continues High Satisfaction Pattern with Biotech Traits Percent of customers very or somewhat satisfied1 100% 80% 60% 40% 20% 0% Bollgard/ Yieldgard Roundup Roundup Roundup Yieldgard Roundup Corn Ready Ready Ready Rootworm Ready Borer* Cotton* Corn* Soybeans* Corn** Cotton* 1Based on all growers using specified seed and treatment and able to answer very satisfied, somewhat satisfied, neutral, or not satisfied. *Source: Marketing Horizons Trait Satisfaction Studies 2002 **Source: Marketing Horizons Trait Satisfaction Studies 2004 8
  9. 9. Round 1: First-Generation Traits Market Potential for Biotech Traits Highlights Continued Growth Opportunity Total Available Market in Acres Soybeans Cotton Corn Key Markets Roundup Roundup Bollgard I Roundup YieldGard YieldGard Ready Ready and II Ready Corn Root- Borer worm United States 70M 10-15M 6-8M 20M-50M 30M-40M 15-20M Brazil 50M - - 20M 15M 5M Argentina 30M - - 5M 4M 1M India - - 10-15M - - - Australia - 0.5M-0.8M 0.5M-0.8M - - - Biotech Acres Planted 2004 Preliminary Remaining 64% 66% 26% 21% 61% 8% 64% Available 66% 26% 21% 61% 8% Market 9
  10. 10. Round 2: Stacked Traits Stacking Biotech Traits Adds New Dimension to Market Potential—Multiplying Margin Opportunities Monsanto U.S. Biotech Intensity Index* Average number of biotech traits per biotech acre 1.6 Cotton (2 Traits) 1.5 Corn (3 Traits) 1.5 Soybeans (1 Trait) 1.4 1.3 1.2 1.2 1.1 1.0 1 1996 1997 1998 1999 2000 2001 2002 2003 2004F 2005F 2006F U.S. Biotech Margin Opportunities – 2004 Preliminary* Corn Cotton 16 million 52 million 10 million 1.2 42 million 1.5 biotech biotech X = X = biotech intensity biotech intensity margin margin Acres index acres index opportunities opportunities * Monsanto Traits Only 10
  11. 11. Round 2: Second-Generation Traits Upgrades in Technology Raise the Bar on Competition-- Roundup Ready Flex Cotton Product Status • Roundup Ready Flex offers a • Phase 3 of wider window of Roundup development application with higher use rates and enhanced crop safety Value Considerations Available Market • Incremental pricing opportunity over • 10-15 million acre upgrade in U.S current Roundup Ready cotton • 0.5-0.8 million acre upgrade in • Stack with Bollgard II enhances margin Australia opportunity Over-the-top window of application Roundup Ready® Flex Cotton Roundup Ready® Cotton (< 4 lf.) Emergence Layby Preharvest Harvest 11
  12. 12. Round 3: Food Traits First-Generation Output Trait Approaching—Low Linolenic Soy “Food manufacturers are scrambling to eliminate trans fat from their products” Harvard Health Watch Product Market Need Linolenic Trans fat labeling on foods 18:3 Linoleic Oleic Sats mandated by FDA in 2006 Std Soybean Features Low Lin Soy Linolenic acid < 3% Technical Status A more stable soy oil • 2005 prototype testing requiring less hydrogenation: • 2006 commercial launch reduce/eliminate trans fats Likely Uses Better flavor profile • Substitute for hydrogenated oil Full agronomic and yield and blends for low trans performance solutions 12
  13. 13. Round 3: Food, Feed and Yield Traits Pipeline Products Reach New Markets and Expand Base in Corn, Soybeans and Cotton Food Healthier Oil Soy Yield (Low Linolenic Feed Mid Oleic Omega-3 Soy Omega- Low Saturate) Enhanced High Drought Tolerant Improved Protein Soy Lysine Corn Corn, Soy, Cotton (Beta Conglycinin) Low Linolenic Cold Tolerant High Lysine Corn Soy Corn Improved Protein Soy Nitrogen Utilization Corn Commercialized Agronomic Traits YieldGard Roundup YieldGard Corn Borer Ready Corn, Rootworm Bollgard I & II Soy, Cotton Corn Cotton 2nd Generation Roundup Ready YGCB II Corn YGRW II Corn Agronomic Traits Flex Cotton 13