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ROBB FRALEY
CHIEF TECHNOLOGY OFFICER




CITIGROUP 17th ANNUAL CHEMICAL
CONFERENCE



December 5, 2006


                 ...
Forward-Looking Statements

Certain statements contained in this presentation are quot;forward-looking statements,quot; su...
OVERVIEW


Six Building Blocks Extend Leadership and Elevate Gross
Margin Opportunity Through 2010

                      ...
U.S. CORN GROWTH

 Opportunity for Corn Gross Profit Increases in Next Four Years
 With Increased Traits and Branded Seed ...
U.S. CORN GROWTH

  Monsanto’s Global Breeding Engines Deliver Yield
  Advantages Over Best-in-Class Competitors
         ...
U.S. CORN GROWTH


 First Decision Farmers Make Is Seed Germplasm; More and
 More Farmers Have Been Choosing Monsanto Seed...
U.S. CORN GROWTH


 Each New Trait Stacks Additive Gross Margin to Upgrade
 Financial and Commercial Platform

           ...
U.S. CORN GROWTH


 Projected Demand From Ethanol in U.S. Provides Positive Pull
 for Monsanto Corn Technology


         ...
U.S. CORN GROWTH

 Best Combination of Germplasm and Traits Delivers
 Best Yield
                                         ...
U.S. CORN GROWTH

 Unprecedented Early Season Orders Signal Strong Start to
 Achieve 2010 Trait Opportunity
              ...
INTERNATIONAL CORN GROWTH


 Gross Profit Value of Seed Internationally Varies, Yet Still
 Solid Contributor to Growth, Co...
GLOBAL BIOTECH TRAIT GROWTH


 Significant Growth Opportunity Lies in Expansion of Existing
 Commercial Biotech Traits Glo...
COTTON GROWTH


 Most Significant Near-Term Opportunity in Cotton Is
 Upgrading to Second-Generation Traits

             ...
SEMINIS GROWTH


 Seminis To Leverage Portfolio, Pricing and Molecular
 Breeding To Create New Growth

                   ...
SEMINIS GROWTH

   Genetic Mapping Timetable Supports Commercial
   Launches of Molecular Breeding Hybrids by End of Decad...
PIPELINE


   Monsanto’s Pipeline Is Funded for Growth, but Focused on
   Return on Investment
                           ...
PIPELINE

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

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


Six Building Blocks Extend Leadership and Elevate Gross
Margin Opportunity Through 2010

                       ...
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monsanto 12-05-06

  1. 1. ROBB FRALEY CHIEF TECHNOLOGY OFFICER CITIGROUP 17th ANNUAL CHEMICAL CONFERENCE December 5, 2006 1
  2. 2. 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, including proceedings related to Solutia Inc.; developments related to foreign currencies and economies; successful completion and operation of recent and proposed 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 filings with 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. Mavera™ is a trademark of Renessen. © 2006 Monsanto Company 2
  3. 3. OVERVIEW Six Building Blocks Extend Leadership and Elevate Gross Margin Opportunity Through 2010 MONSANTO’S OPPORTUNITY GROSS MARGIN OPPORTUNITY Delta between 2006 current gross GROSS PROFIT AS A PERCENT OF SALES margin and a 51-53% trajectory 54% reflects continued growth opportunity for seeds and traits FACTOR VALUE1 GROSS MARGIN ‘PULL’ 52% HIGH U.S. corn International MEDIUM 50% corn Global biotech MEDIUM traits 48% LOW CURRENT LEVEL Cotton platform MEDIUM Seminis 46% HIGH R&D pipeline 44% 2003 2004 2005 2006 2007F 2008F 2009F 2010F 1. Increment to total gross profit in the period 2006-2010; Some categories will overlap. MEDIUM LOW HIGH >$250M $100M - $250M <$100M 3
  4. 4. U.S. CORN GROWTH Opportunity for Corn Gross Profit Increases in Next Four Years With Increased Traits and Branded Seed Share U.S PLANTED ACREAGE 90 TOTAL PLANTED CORN & SOYBEAN ACRES (2001-2010)1 U.S. Corn CORN SITUATION: 85 ACRES (IN MILLIONS) SOYBEANS • Monsanto assumes a U.S. corn market of 80M acres annually 80 • Largest historical swing in U.S. acreage has been less than 5 75 percent OUTLOOK: 70 • Combination of increased penetration of stacked traits 65 and expansion of Monsanto branded share increases 60 relative value of a corn acre versus a soy acre 2001 2002 2003 2004 2005 2008F 2009F 2010F 2006-2007F • The gross profit differential between an average soybean GROSS PROFIT DIFFERENTIAL: CORN vs. SOY acre and a corn acre in a Monsanto national seed brand In 2006, the average gross-profit differential for seeds and increases 2X in favor of corn traits in DEKALB and Asgrow brands favored corn at ~$0.80 from 2006 to 2007F an acre. For 2007, that differential is expected to be ~$3.00 an acre in favor of corn. 1. USDA data and projections 2. Comparative difference in seeds-and-traits gross profit between soybeans and corn, as sold in Monsanto national seed brands 4
  5. 5. U.S. CORN GROWTH 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 BUSHELS/ACRE for farmers buying 190 DEKALB corn seed all relate to performance of 185 underlying germplasm OUTLOOK: • Preliminary yield data 180 from 2006 indicates continued yield 175 advantage versus best- in-class competitors • Final data will be shared 170 RELATIVE MATURITIES (DAYS) in 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 5
  6. 6. U.S. CORN GROWTH First Decision Farmers Make Is Seed Germplasm; More and More Farmers Have Been Choosing Monsanto Seed U.S. CORN MARKET SHARE EVOLUTION MONSANTO BRANDS AND LICENSEES U.S. Corn LICENSEES’ BRANDS 60% AMERICAN SEEDS, INC. BRANDS SITUATION: ASGROW AND DEKALB BRANDS • In 2006, Monsanto’s DEKALB 50% and Asgrow brands grew by 3 market share points 40% Continued • Over 5 years, comparable gains of 1-2 market share gain was 9 points 30% points for OUTLOOK: national 20% • Gain of 1 market share point in brands U.S. adds approximately $10M to $15M to corn seed gross 10% profit in a Monsanto national seed brand 0% 2001 2002 2003 2004 2005 2007F 2006 ACREAGE EXPANSION In 2006, the addition of 1 market share point in a Monsanto national brand translated into an average incremental value of approximately $10M-$15M in gross profit opportunity for Monsanto for the seed alone 6
  7. 7. U.S. CORN GROWTH Each New Trait Stacks Additive Gross Margin to Upgrade Financial and Commercial Platform INCREASED MARGINS WITH STACKING VALUE PROGRESSION OF STACKED CORN TRAITS U.S. Corn 67% SITUATION: 68% 4 TRAIT GROSS PROFIT VALUE PER ACRE 65% • Stacking corn traits on to our 66% 3.5 GROSS PROFIT PER ACRE AS A 63% PERCENTAGE OF NET SALES germplasm improves gross 64% profit contribution 3 61% 62% • In 2006, Monsanto national 2.5 (INDEXED) brands sold more stacked 60% traits than single traits 2 58% • In 2007, in our national brands, 1.5 Monsanto expects to sell more 56% triple stacks than singles 1 54% OUTLOOK: 0.5 52% • Addition of each stacked trait increases gross profit as a 0 50% SEED ONLY 1 TRAIT 2 TRAITS 3 TRAITS 4 TRAITS percent of sales for each bag of seed sold GROSS PROFIT AS A PERCENT OF SALES For currently commercialized traits, the demand for triple- stack traits can double gross profit per acre over seed alone in DEKALB/Asgrow brands “4 trait” value assumed to be an average of the retail value of the three other first-generation traits 7
  8. 8. U.S. CORN GROWTH Projected Demand From Ethanol in U.S. Provides Positive Pull for Monsanto Corn Technology U.S. ETHANOL AND CORN TRAITS U.S. Corn CORRELATION OF ETHANOL SITES AND TRAIT PENETRATION SITUATION: • Assumption that by 2010, Average trait ethanol is MTBE replacement – penetration was representing 10% of U.S. fuel 2.5 X greater in supply NON- areas with a high • Ethanol demand could require DRAW concentration of AREA equivalent of up to 25M U.S. ETHANOL ethanol facilities DRAW AREA acres by 2010 compared with OUTLOOK: areas without or having low • Ethanol demand creates pull concentrations of on corn that favors ethanol facilities technologies that enhance yield, such as molecular Higher trait breeding and biotech penetration per • The average trait penetration is acre corresponds 2.5 X greater in areas of to increased ethanol facilities gross profit per ETHANOL PLANTS UNDER ETHANOL PLANTS IN CONSTRUCTION acre PRODUCTION 8
  9. 9. U.S. CORN GROWTH Best Combination of Germplasm and Traits Delivers Best Yield FOCUS: YIELD PER ACRE 2006 (PRELIMINARY) U.S. Corn 194 YieldGard 200 SITUATION: bu/ac Rootworm or BUSHELS PER ACRE 182.4 YieldGard Plus • In 2006, across four states and 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 was no difference between the performance of YieldGard FOCUS: TRAIT PERFORMANCE - ROOT PROTECTION (PRELIMINARY) Rootworm or YieldGard Plus 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 Rootworm or purchase decision on the total .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 DEKALB PIONEER® 9
  10. 10. U.S. CORN GROWTH Unprecedented Early Season Orders Signal Strong Start to Achieve 2010 Trait Opportunity 160 2007 FRONTLINE UPDATE: 140 Our national corn brands could have TRAIT ACRES IN MILLIONS more than 35 120 percent of all seed sales in the form of 100 a triple stack For the first time, 80 we will sell more acres of a triple- 60 stacked hybrid than a corn hybrid with just one trait 40 20 0 2005 2006 2007F 2010F U.S. CORN TRAIT ACRES1 (IN MILLIONS) 2010 MARKET 2006 ACTUAL OPPORTUNITY 2005 ACTUAL 2007 FORECAST U.S.YIELDGARD CORN BORER 32.1 32.3 >32 50-60 ACRES U.S. YIELDGARD ROOTWORM 4.1 10 >15 25-30 ACRES U.S. ROUNDUP READY CORN 2 24.8 32.7 >40 60 ACRES 1. Trait acres reflect the total acres planted with each individual trait. In the case of stacked traits, each absolute acre will be reflected by two or more trait acres. 10
  11. 11. INTERNATIONAL CORN GROWTH Gross Profit Value of Seed Internationally Varies, Yet Still Solid Contributor to Growth, Commercial Platform TOTAL HYBRID GROSS MONSANTO CHANGE MARKET MARKET PROFIT BRAND OUTLOOK (’04-’06) SIZE SIZE VALUE PER SHARE (ACRES) (ACRES) ACRE1 International Corn EUROPE-AFRICA SITUATION: HIGH France 7.5M 7.5M 15% +5% • Second most • Primary value in valuable market HIGH Italy 3.2M 3.2M 21% +7% international corn markets behind U.S. today is in the seed • Molecular MEDIUM Hungary 2.7M 2.7M 32% +6% breeding • Breeding gains that have HIGH application is ~ 2 Turkey 0.8M 0.7M 21% +4% been made in the U.S. set years behind LOW U.S. South Africa 6.0M 6.0M 50% +12% pace for market share LATIN AMERICA growth in other international markets MEDIUM • Argentina is Mexico 17.3M 3.9M 61% +3% OUTLOOK: only country in LOW Brazil 30.8M 20.6M 34% -1% region with • Monsanto is targeting to biotech traits grow share in each of the • Next priority for LOW Argentina 7.3M 7.0M 35% FLAT most valuable corn-growing molecular breeding countries ASIA-PACIFIC • India is primary market of LOW India 15.6M 5.9M 35% +6% longer-term value in region 1. Average incremental value in gross profit opportunity for the seed value (excluding traits) of the addition of an acre in a Monsanto brand: MEDIUM HIGH LOW >$20 $10 - $20 <$10 11
  12. 12. GLOBAL BIOTECH TRAIT GROWTH Significant Growth Opportunity Lies in Expansion of Existing Commercial Biotech Traits Globally GLOBAL MARKET OPPORTUNITY MARKET OPPORTUNITY FOR BIOTECH TRAITS THROUGH 20101 Global Biotech Traits SITUATION: SOYBEANS COTTON CORN • Historically, most rapid BOLLGARD ROUNDUP ROUNDUP YIELDGARD ROUNDUP AND YIELDGARD adoption has been in the READY READY CORN READY BOLLGARD ROOTWORM CORN 2 BORER (FLEX) II U.S., also the most highly penetrated market United States 70M 10-15M 6-8M 60M 50-60M 25-30M • Penetration is moving globally, trait by trait, Brazil 50M 3M 2M 20M 15M 5M country by country Argentina 35M - - 5M 4M 1M OUTLOOK: • As is the case in the U.S., India - 10-15M 10-15M 3 – 5M 3 – 5M - largest category of Europe 1M - - 24M 8M 5M opportunity internationally is corn trait adoption Africa 0.2M 11M 10M 6M 4M - • Even where some traits – 0.5M- 0.5M- Australia - - - - like cotton – are 0.8M 0.8M penetrated, there’s still an 34.5- 28.5- 118- upgrade opportunity to Total Key 156.2M 84-96M 36-41M second- generation traits Markets 44.8M 35.8M 120M 2006 86% 39% 57% 29% 42% 26% Penetration2 1. Market Opportunity reflects total acres where technology is applicable, not necessarily acres projected for penetration by 2010. 2. 2006 Penetration is compared to the 2010 opportunity 12
  13. 13. COTTON GROWTH Most Significant Near-Term Opportunity in Cotton Is Upgrading to Second-Generation Traits U.S. PENETRATION OF COTTON TRAITS: 2006 PENETRATION OF COTTON TRAITS IN 2006 AS A PERCENT OF 2010 TOTAL MARKET OPPORTUNITY1 Cotton Platform FIRST GENERATION SITUATION: • Cotton trait platform is the first Bollgard to move forward on complete replacement of first-generation Roundup traits with second-generation Ready upgrades • Roundup Ready Flex cotton SECOND GENERATION launched in the U.S. in 2006; Launched in Australia for Bollgard II FY2007 planting Roundup OUTLOOK: Ready • Expansion of second- Flex generation trait offerings creates opportunity to invest 0% 20% 40% 60% 80% 100% in penetration of higher-margin 2006 SECOND-GENERATION TRAIT traits in Delta and Pine Land PENETRATION2 offerings <10% DELTA AND PINE LAND >40% STONEVILLE 1. Percent of total market opportunity reflects the ratio of number of actual acres planted to total trait-acre opportunity identified for each particular trait 2. Second-generation trait penetration reflects percent of commercial portfolio containing either Roundup Ready Flex, Bollgard II or both traits. 13
  14. 14. SEMINIS GROWTH Seminis To Leverage Portfolio, Pricing and Molecular Breeding To Create New Growth SEMINIS VALUE NET PRESENT VALUE OF GROSS PROFIT BY PRODUCT TIERS Seminis PRODUCT RANKING SITUATION: WITHIN 25-CROP • In 2006, narrowed commercial PORTFOLIO: and research focus to 25 crops that generate the most profit FIRST TIER • Began application of breeding technology, with genome-wide Tomato marker platform for tomatoes Sweet Pepper and peppers; Melons, Hot Pepper watermelons and the brassica Onion ~50% family of cabbage, broccoli Melon and cauliflower next SECOND TIER OUTLOOK: THIRD TIER • Seminis gross profit as a percent of sales was in the FOURTH TIER 60% range and will continue to grow through price increases SEMINIS VALUE The top 5 crops in Seminis portfolio represent ~50% of the expected gross profit contribution going forward 14
  15. 15. SEMINIS GROWTH 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 and TARGET: 1,000 brassica family of 1,000 markers cabbage, broccoli and cauliflower next OUTLOOK: BRASSICA 500 • By 2009, Seminis should TOMATO have > 10,000 markers for MELON 9 crops WATERMELON PEPPER ONION, CUCUMBER, LETTUCE 2009F 2007F 2008F Current Status 15
  16. 16. PIPELINE Monsanto’s Pipeline Is Funded for Growth, but Focused on Return on Investment PIPELINE VALUE: TOP-TEN PROJECTS REFLECTING COMMERCIAL VALUE1 SOURCE OF VALUE PER ACRE CORE PHASE R&D Pipeline VALUE ACRE BASE MARKETS Renessen Corn Processing SITUATION: U.S 4 $10 - $30 10M Brazil System and Mavera™ High- Feed and fuel Europe Value Corn with Lysine2 In FY2006: U.S. • There was positive HIT Roundup RReady2Yield 3 Yield $10 - $30 155M Brazil movement – enhancement soybeans Argentina advancing phases or 3 Improved U.S. Omega 3 soybeans >$30 5M adding to the pipeline nutrition – in 50 percent of the U.S. 3 YieldGard VT PRO $10 - $30 41M Brazil Insect protection pipeline projects 2 -GEN YIELDGARD CORN BORER nd Europe • Three projects were U.S Water 2 HIT HIT designated as “HIT” Drought-tolerant corn $10 - $30 164M Brazil replacement and Europe yield projects reflecting 2 Improved our confidence in Vistive III soybeans $10 - $30 12-15M U.S. nutrition their commercial U.S. track 2 Yield Higher yielding soybeans $10 - $30 155M Brazil enhancement Argentina 1. Top ten not presented in ranked order; Commercial 2 Brazil Insect-protected soybeans <$10 95M Yield value calculated by WITH ROUNDUP RREADY2YIELD Argentina penetration and retail value during three-year U.S. Water span at peak. 1 India Drought-tolerant cotton $10 - $30 36M replacement and Brazil 2. Value and acres are for yield Australia direct feed piece only and do not include value for U.S Nitrogen Renessen’s corn 1 Brazil Nitrogen utilization corn $10 - $30 164M replacement and processing system, which Europe is to be determined yield 16
  17. 17. PIPELINE 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 LOCATION: Project Ready2Yield soybeans Stonington, Illinois ACTIVITY: SITUATION: Monsanto On Track 2006 STATUS: researchers check performance • Yield data from 45 trials will be indicators in the shared in January fields such as plant height, and pod size VALUE CONSIDERATIONS: and number • Value is additive, with target of OBSERVATIONS: up to 5 bushel-per-acre yield 25 locations across improvement over comparable the U.S. tested Roundup Ready soybeans 11,000 lines tested in 45 trials RETAIL $10 - $30/acre VALUE/ACRE: TOTAL ACRE 155M acres OPPORTUNITY: 17
  18. 18. PIPELINE 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: Vacaville, California • Continued expansion of testing in lead ACTIVITY: genes and events in moisture-stressed Monsanto and broad acre environments researcher checks • Currently testing hundreds of genes performance indicators in the across several generations of drought field such as traits 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: 18
  19. 19. SUMMARY Six Building Blocks Extend Leadership and Elevate Gross Margin Opportunity Through 2010 MONSANTO’S OPPORTUNITY GROSS MARGIN OPPORTUNITY Delta between 2006 current gross GROSS PROFIT AS A PERCENT OF SALES margin and a 51-53% trajectory 54% reflects continued growth opportunity for seeds and traits FACTOR VALUE1 GROSS MARGIN ‘PULL’ 52% HIGH U.S. corn International MEDIUM 50% corn Global biotech MEDIUM traits 48% LOW CURRENT LEVEL Cotton platform MEDIUM Seminis 46% HIGH R&D pipeline 44% 2003 2004 2005 2006 2007F 2008F 2009F 2010F 1. Increment to total gross profit in the period 2006-2010; Some categories will overlap. MEDIUM LOW HIGH >$250M $100M - $250M <$100M 19

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