monsanto 09-20-05a

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monsanto 09-20-05a

  1. 1. CORN SEED BUSINESS IN IBERIA Carlos Vicente Lérida, September 20th. 2005 DEKALB, give wings to your growth
  2. 2. The market frame 2 9/20/2005 Titre
  3. 3. Iberia is a very diverse agricultural market in a limited territory SPANISH AGRONOMIC CROPS SURFACE'05* k ha Cereals 6527 75% Wheat 2184 25% Barley 3195 37% Other small grains 591 7% C orn 436 5% Rice 121 1% Legumes 574 7% Potatoes 94 1% Sugar beet 100 1% C otton 86 1% Sunflower 523 6% Forrage crops 397 5% Vegetables 444 5% TOTAL AGRONOMICS CROPS 8745 100% * Surface Estimate June'05 - MAFF 3 9/20/2005 Titre
  4. 4. Corn is the highest seed market value opportunity in Iberia SEED MARKET VALUE by CROP 70 60 50 M $ of NS 40 30 20 10 0 Corn Sunflower Cotton Source: Monsanto internal data. July’05 Sunflower reflects only the added value region of Andalusia 4 9/20/2005 Titre
  5. 5. CAP (European Common Agricultural Policy) review* in ‘06 will not have an important impact on the Corn Market FARMERS OPINION ON THE EFFECT OF CAP REVIEW ON CORN SURFACE 80% 72% 60% % interviews 40% 17% 20% 10% 1% 0% Same Less More Don't know * MARKin Spanish Corn Panel 2005 – July’05 5 9/20/2005 Titre
  6. 6. CAP review will change the “farming model” Professional farmers with entrepreneurial mentality Subsidies will have a “smaller role” Looking for integrated farm management Adoption of new technologies Farming solutions vs. product use Targeting agriculture as a long term & stable business With a bigger farm size 6 9/20/2005 Titre
  7. 7. Biotech market share increases and drives market value IBERIA MARKET TREND'98-'05 800 Bt Conventional 700 600 500 k ha 400 300 200 100 0 '98 '99 '00 '01 '02 '03 '04 '05* Sources: Spanish MAFF, FAOSTAT, Monsanto internal assessment * -> Estimate 7 9/20/2005 Titre
  8. 8. Corn seed decision is taken at farmer gate, and “value” factors have greater weight than “price”. 25% % of cultivated corn hectars 20% 15% 10% 5% 0% Experience Maturity Recomendation Trial Seed quality Price Resistance to lodging Source: Kleffmann panel ‘05. Yield, the first and “logical” reason from framers, is not included 8 9/20/2005 Titre
  9. 9. Business drivers 9 9/20/2005 Titre
  10. 10. Focus on value farmers STRUCTURE OF SPANISH CORN FARMS 35% 30% % of farms % of surface 25% 20% 15% 10% 5% 0% > = 100 ha 20 to <30 10 to <20 5 to <10 50 to <100 30 to <50 2 to <5 1 to <2 <1 ha Corn farm size (ha) Source: Survey of agricultural farms 1997 – Spanish MAFF 10 9/20/2005 Titre
  11. 11. The Bt corn market geographies suffered during the 2005 growing season a severe drought (driest May-Sep period since 1947!)... Bt areas % of Cumulated Precipitation vs. Normal at April 30th, 2005 SOURCE: INM (Spanish National Meteorological Institute) 11 9/20/2005 Titre
  12. 12. However, Bt has been an important contributor to the corn business. New variety approvals for ’06 will increase its relative weight. Bt weight in the IBERIA market 700 10% 9% 600 8% 500 % vs. Total Market 7% 6% 400 k ha 5% 300 4% 3% 200 2% 100 1% 0 0% '03 '04 '05* Conventional Bt % Bt vs. Total Market Sources: Spanish MAFF, FAOSTAT, Monsanto internal assessment * -> Estimate 12 9/20/2005 Titre
  13. 13. Key initiatives 13 9/20/2005 Titre
  14. 14. Business integration, between Seeds & AgChem, offers a competitive advantage through value added programs directed to “new farming entrepreneurs” 14 9/20/2005 Titre
  15. 15. DEKALB re-launch has contributed to brand equity improvement 2005 Spain Brand Equity Score 0.93 Brand Share of Mind Brand Image Brand Loyalty + + Unaided awareness – Image attributes (QS7) Usage (QS10/S14) Overall Top 5 brands (QS5) Measures: DEKALB Likelihood to use again next Aided awareness (QS6) season (QS13/S17) Pioneer Switching behavior (QS19/S25) Likelihood to recommend (QS8) 0.29 0.54 0.10 2005 Score: + + 0.18 0.45 0.09 2003 Score: + + 0.67 Brand Equity Score 2003 Spain MARKETING HORIZONS INC.- 2005 DEKALB brand equity study - Spain 15 9/20/2005 Titre
  16. 16. Market value growth comes from Biotechnology Farmers have to aim problems for crop management in corn Endemic areas for ECB (European Corn Borer) Weeds is a major problem, specially in some geographies Solutions are very limited with traditional systems Limited control by insecticides Complex management for insect control Ban of some herbicides (i.e.: Atrazine) Bt & Roundup Ready technologies will fit the corn farmer needs in the coming years 16 9/20/2005 Titre
  17. 17. Conclusions 17 9/20/2005 Titre
  18. 18. Conclusions Stable conventional market Increasing value due to Biotech Entrepreneurial farmers vs. subsidy driven Bt has “revolutionized” the seed business Integration of seed businesses has been successful Value programs drive our growth Seed & AgChem integration is a differentiated competitive advantage Brand equity has improved substantially Roundup Ready and stack technologies (Roundup Ready + YieldGard) will be the next leap in market value growth 18 9/20/2005 Titre

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