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  1. 1. MONSANTO R&D PLATFORM ACQUISITION: CanaVialis S.A. and Alellyx S.A. for Sugar Cane CanaVialis S A and Alellyx S A for Sugar Cane November 3, 2008
  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 company's 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; developments related to foreign currencies and d l t ti iti th t f jl it d l t l t dt f i i d economies; successful operation of recent 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 company's company's most recent reports on forms 10-Q and 10-K. 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 Td k 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. © 2008 Monsanto Company 2
  3. 3. OVERVIEW Pending Acquisition of CanaVialis S.A. and Alellyx S.A. in Brazil Represents R&D Platform Investment in Sugar Cane • Monsanto makes R & D platform investment in sugar cane through pending acquisition of Aly Participacoes Ltda., which operates the Brazilian sugar cane breeding and technology companies, CanaVialis S.A. and Alellyx S.A. • Alellyx and CanaVialis are the only privately owned sugar cane businesses in OPPORTUNITY Brazil • CanaVialis is currently the world’s largest private sugar cane breeder • Alellyx is Monsanto’s current partner for development of Bt/Roundup Ready sugar cane and is developing other unique biotech traits for sugar cane g pg q g • Sugar cane is grown on nearly 50M acres worldwide, with ~17M planted in Brazil • Brazil is the #1 sugar cane producer and #1 finished sugar exporter • Brazil is the #2 producer of ethanol with 33% of the global production • Monsanto signs stock purchase agreement to acquire Aly Participacoes Ltda., which operates CanaVialis, S.A. and Alellyx S.A., for 616 million Brazilian reais, or roughly $290 million USD FINANCIAL • Transaction to be paid for with existing excess cash TERMS • Significant in-process R&D is expected from purchase price allocation • Acquisition represents long-term investment in R & D and breeding; not expected to be accretive to earnings until middle of next decade • Existing Bt/Roundup Ready collaboration work by Alellyx continues and is enhanced with Monsanto’s acquisition; existing collaboration agreement ends upon change of control NEXT STEPS • There are no required regulatory approvals. We are completing standard closing procedures and expect to close as soon as practical. 3 1. Source = FAO and Organization for Economic Co-operation and Development project
  4. 4. OVERVIEW Experience and Investment Creates Technology Platform That Can Be Leveraged in Adjacent Spaces Core Row-Crop Platform Adjacencies CORN SOYBEANS COTTON VEGETABLES SUGAR CANE PLATFORM CRITERIA Global pportunity Acreage Commercial Op Systems In Pl S I Place DEKALB Asgrow Deltapine Seminis CanaVialis Germplasm Asset ASI ASI ogy Technolo Use of Advanced Breeding Tools Applicable Biotech Research R&D Platform R&D: 1980s R&D: 1980s R&D: 1980s Investment: Germplasm Germplasm Asset: Germplasm Germplasm Asset: 2005 Initial Investment 2008 Asset: 1990s 1990s Asset: 2007 and 2008 Positive Existing Positive Not Business Conditions Outlook Relevant 4
  5. 5. OVERVIEW As A Monocot, Sugar Cane Directly Benefits From Head Start Provided By Corn MONOCOT PLATFORM SUGAR CANE PLATFORM CORN PLATFORM Monocots are the category of plants Perennial monocot, regarded as generally including grasses and grains “tall grass” Established Private Strong Baseline Germplasm Genomics Maps and BREEDING: For Screening and Strategies • Leading marker Development platform • Commercial-scale Breeding Technology Rapid Development breeding program of Step-Change and Tools BIOTECH: Varieties • Current commercial (Marker-Trait Associations) traits • Robust pipeline, including Yield & g Immediate Traits Identified, Applicable f Stress Leads + Access to Biotech Trait Leads Trait Pipeline Anticipated Sugar Cane Development Stages Elite Pre-Elite Launches Launches BREEDING: Initiation of Advanced Breeding Accelerated Marker-Assisted Breeding PHASE 1: 3-5 Years PHASE 2: 5-10+Years BIOTECH: Continue Trait Development Trait Development and Commercialization First trait target: Insect-protected + Roundup Ready 5
  6. 6. OVERVIEW Sugar Cane Significant Long Term Opportunity; Brazil Is the Largest Market BRAZIL SUGAR CANE PRODUCTION AND EXPORT • Sugar cane is planted on nearly 50M acres GLOBAL SUGAR CANE worldwide PRODUCERS • B il is most important market with 17M acres Brazil i ti tt k t ith • #1 sugar cane producer; lowest production cost/ton 8% • #1 sugar exporter • #2 ethanol producer th l d 20% 36% • International Sugar Organization estimates world consumption will outpace production by 3.9M tons in 2008-09; FAO and FAPRI see trend continuing into next decade • FAO and Economic Co-operation and 27% Development project forecasts ethanol production from all sources will reach ~125 B Brazil Rest of World India China liters in 2017; 2x 2007 production 6
  7. 7. OVERVIEW Sugar Cane Is a Perennial Monocot Planted via Propagation; Germplasm Today in Brazil Is Primarily from Public Sources BRAZIL SUGAR CANE PRODUCTION SUGAR CANE LIFE CYCLE •SSugar cane is planted via propagation, not seeds i l td i ti t d Ratoon removal • Two planting windows per year 140 and new 120 • Sugar cane is a perennial monocot; a tall grass MT CANE PER HA seedlings planted 100 • Cane stand lasts 5 years; 5 cuts over a lifetime 80 • Harvest deteriorates approximately 50% over time pp y 1st Cut E 60 • Vigor, insects, drought and vegetative competition are 40 key factors in stand “health” 5th 20 Cut 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 SOURCE: FNP-AGRA BRAZIL SUGAR CANE GERMPLASM SOURCES • Primary germplasm source today is public/universities BRAZILIAN SUGAR CANE GERMPLASM SOURCES TODAY • CanaVialis is only p y private breeder; program focused on ;p g the following: • Production and quality improvement for poor and Industry Group 20% dry soils CTC • Varieties adapted for mechanical harvest or for Other Public enhanced production stability p y 20% 60% • Energy cane Unimproved • Early intent for CanaVialis is to employ both a branded and licensed strategy, working within existing industry 7
  8. 8. OVERVIEW Sugar Cane Farming Requires Intensive Inputs to Manage the Five Year Life Cycle BRAZIL SUGAR CANE PRODUCTION • Brazil is most important market with 17M acres planted • Average yield per annual harvest is 78 tons of sugar cane/HA , with an average of 144 kgs f k of sugar content per t of cane tt ton f • Current ATR price(sugar content price) is $R0.24/kg (approximately 12 cents USD/kg today); average annual sugar receipt /HA at this price is ~$1,350 USD • Approximately 75% of the sugar cane produced is grown on lands owned or rented by sugar mills • Mills purchase germplasm, paying an annual fee over the life of the cane, to access the leading germplasm and receive ongoing agronomic consultation. Current annual fees for germplasm and services approximates $5-$10 USD/HA. • Current practice for annual weed control is ~$60 USD/HA $60 • Current practice for annual insect control is ~$10-$15 USD/HA • Production costs are roughly $20/ton cheaper than Australia and India; irrigation increases costs in the latter countries Monsanto estimates 8