3. OVERVIEW
Market Forces Are Changing Agricultural Production Trends
Globally
MACRO PRODUCTION TRENDS OVER THE NEXT DECADE:
CORN, SOYBEANS, COTTON
Biodiesel drives
oilseed demand in
Expanding ethanol
Europe
and export Growing wealth and
demands favor U.S. population in Asia
as low-cost corn creates new demand
producer for imported grain
U.S. ramps up production of Biggest increases in
corn; Soy crop becomes cotton acreage come in
increasingly focused on Asia, with U.S. focused on
higher-value segments over quality and consistency of
commodities supply
Brazil exploits land
Argentina leverages
availability advantage to
geographic proximity to
become commodity soy
supply corn to Latin
producer to meet demand
America
from China
3
4. OVERVIEW
Ag Landscape Is Changing, But Monsanto Is Well Positioned
Ahead of Emerging Trends
TRENDS OVER NEXT
OPPORTUNITIES SOLUTIONS
FIVE YEARS
Nitrogen-utilization corn has
Bring commodities into
The demand for corn potential to do for input
proprietary in-seed commodities what insect
grain will remain revenue generators control did for insecticides
CORN strong; Yield provides
Drought-tolerance family of
the bridge between fuel Address universal trends, traits in development creates a
and food-feed demands platform for yield-and-stress in
like water use
seed
Improved-oils platform allows
De-commoditize the
There will be a U.S. production to differentiate
and focus on high-value
market in the U.S.
bifurcation of the global segment
SOYBEANS soybean production
Yield traits and first-ever
Support commodity
into commodity and approaches designed for Latin
production in Latin
value-added streams America help bolster increased
America production
Cotton breeding has a head
Cotton must become start versus early work in corn
more profitable for Use technology infusion in 1990s
COTTON to lift yield and returns
farmers – boosting Combined with further trait
upgrades, cotton is an
yields is key expanding technology platform
4
5. OVERVIEW
International Contributes Across Several of Our Six Growth
Drivers and Aligns with Emerging Trends in Agriculture
INTERNATIONAL BUSINESS DRIVERS
International Corn
KEY PRIORITIES 2010 OUTLOOK
MONSANTO’S OPPORTUNITY Continue share growth for Monsanto Grow 1-2 share points annually in key countries;
stabilize Brazil share
brands
By the end of the decade, Monsanto
projects a gross margin in the range of 52- Global biotech traits
54%, reflecting growth opportunity in six
KEY PRIORITIES 2010 OUTLOOK
areas of seeds and traits
FACTOR Increase penetration of Roundup Ready Soy in
Roundup Ready Soy Penetration in
Brazil to U.S. level of 95%; currently at 50%
Brazil penetration
U.S. corn
Second-Generation Cotton Traits in Shift Indian hybrid market to Bollgard II;
currently 1M acres of 15-20M acre opportunity
India
International corn
Complete approval for YieldGard Corn Borer/
Stacked Corn Traits in Argentina Roundup Ready stack to facilitate penetration
Global biotech traits of RR corn in Argentina
Complete approval for YieldGard Corn Borer for
Corn Traits in Brazil
Cotton platform Brazil and launch in 100% infested market
Expand to acres of meaningful scale in key
YieldGard Corn Borer in Europe
Seminis countries in Europe
R&D pipeline
R&D pipeline
KEY PRIORITIES 2010 OUTLOOK
Insect-protected soybeans currently in Phase II;
Insect-Protected Soybeans in Brazil prepare for launch in early next decade in Brazil
Drought Tolerant Corn in Brazil, Currently in Phase II in the pipeline; pursue
launch in U.S., Latin America and Europe
Argentina and Europe
Drought Tolerant Cotton in Australia, Currently in Phase I in the pipeline; pursue
launch in U.S., Australia, India and Brazil
India & Brazil
5
6. INTERNATIONAL CORN
Consistent Share Gains in High-Value International Corn
Markets Contributes Solid Growth
International Corn
2007 PERFORMANCE1 MARKET FUNDAMENTALS
SITUATION:
AVERAGE 2007 2007 HYBRID 3-YEAR TREND:
MONSANTO
RETAIL VALUE SHARE POINT MARKET SIZE SHARE POINT
BRAND SHARE
• Value is in the seed PER ACRE CHANGE (ACRES) CHANGE (’04-’07)
EUROPE-AFRICA
• Early focus on high-value
temperate hybrids has
$69 +1 27M 13% +3
Europe (EU 27)
led to annual 1 to 2 share
point gains in key
$23 +2
South Africa 6M 51% +13
countries
LATIN AMERICA
OUTLOOK:
$29 -4
Brazil 23M 30% -5
• Continued targeting of 1
to 2 share point gains in
$26 +5
Argentina 8M 40% +5
all regions except Brazil,
ASIA-PACIFIC
where plan is to stabilize
share
$15 +4
India 7M 39% +10
• Increased emphasis on
breeding in tropical
hybrids planned to stop
share loss in Brazil
1. Reflects expectations for share performance for 2007 planting season; For Brazil and Argentina, reflects 2006-2007
planting season
6
7. INTERNATIONAL CORN
Corn Market Share Gains Yet To Fully Reflect Power of
Molecular Breeding Application
DEKALB MARKET SHARE
International Corn
45% ARGENTINA INDIA MOLECULAR-BREEDING (MAB)
SITUATION: and DIHAPLOID HYBRIDS AS A
12%
EUROPE
BRAZIL PERCENT OF BRANDED UNITS
40%
IN COMMERCIAL CORN PORTFOLIO
PERCENT OF BRANDED UNITS SOLD
SOLD IN EX-U.S. COMMERCIAL
• Conventional breeding
CORN PORTFOLIO
BRANDED MARKET SHARE
35%
improves genetic gain
10%
on average by 1.5% per
30%
year
8%
25%
OUTLOOK:
6%
• Molecular breeding
20%
improves genetic
15%
potential by 2X versus
4%
conventional breeding
10%
• By 2010, over 8% of
2%
commercial portfolio will
5%
be derived from
molecular breeding and
0% 0%
dihaploid technologies
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
COMMERCIAL PORTFOLIO
PROGRAMS IN 12 MORE EFFICIENT
PROGRESSION
COUNTRIES BREEDING
OF BREEDING • EU IS ROUGHLY 2 YEARS
TECHNOLOGY BEHIND THE U.S. FOLLOWED
• FIRST INTRA-COMPANY • APPLY MOLECULAR
IN THE BY LATIN AMERICA AND ASIA
CROSSES BREEDING TO TROPICAL
COMMERCIAL PACIFIC
MARKETS, SUCH AS
PORTFOLIO BRAZIL AND ASIA
7
8. INTERNATIONAL CORN
Acquisition of Agroeste in Brazil Bolsters Market Share and
Provides Diverse Germplasm
20071 BRAZIL CORN MARKET SHARE
International Corn
SITUATION: Agroeste, 10%
Monsanto, 30%
• Acquisition increases
Dow/Agromen,
focus on the high value
15%
segment in Brazil
• Solid position in the
southern region
complements our existing
base
• Potential synergies with
existing corn germplasm
Others, 11%
OUTLOOK:
• Increased emphasis on
Pioneer, 22% Syngenta, 12%
breeding in tropical
hybrids and access to
germplasm from this ACQUISITION OF AGROESTE
acquisition should stabilize
• Acquired 100 percent ownership of Agroeste in September 2007 for
share in Brazil
approximately $100 million cash
• Potential to accelerate
• Strong core management team to remain in place and run similar to the ASI
launch of YieldGard Corn
model in the United States
Borer
• Approximately 20-25 million acres of hybrid corn planted annually in Brazil;
Agroeste brand used on approximately 10 percent in 2007
8
1. Reflects 2006-2007 planting season
9. GLOBAL BIOTECH TRAITS
Penetration of Roundup Ready Soybeans in Brazil Expected
to Mirror U.S. Penetration Curve
ROUNDUP READY SOYBEANS
PENETRATION AS A PERCENTAGE OF THE OPPORTUNITY
Global Biotech Traits
SITUATION:
120%
• Brazil Roundup Ready
soybean penetration
100%
currently at 50% of the
opportunity
80%
OPPORTUNITY:
• Potential to penetrate
60%
95% of the acres in Brazil
at peak share,
40%
establishing footprint for 50% penetration in Brazil consistent
transition to Roundup with U.S. trend in year four
20%
RReady2Yield and insect-
protected soybeans
0%
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07
U.S. Roundup Ready soybeans
Brazil Roundup Ready soybeans
9
10. GLOBAL BIOTECH TRAITS
Bollgard Penetration Accelerated as Indian Farmers
Experienced Clear Economic Benefit of the Technology
Global Biotech Traits
BOLLGARD COTTON VS. CONVENTIONAL COTTON IN INDIA
SITUATION:
ASSOCHAM STUDY OF BT COTTON FARMING IN INDIA1
• Depressed cotton prices
and lack of yield
improvement had
reduced on-farm profits
in India
AVERAGE YIELD • Estimated 50% increase in Bt cotton yields compared
India is the 2nd largest
•
with conventional cotton yields in 2006
cotton producer in the
world and seeks to PESTICIDE SPRAYS • Number of sprays reduced by approximately five;
surpass China via
average savings of $21 per acre for Bt cotton farmers
increased yields
NET PROFIT PER • Estimated 162% increase in 2006 to $172/acre for
OPPORTUNITY:
ACRE farmers planting Bt Cotton; additional $1.5B in
• Transition to biotech income earned collectively by Indian farmers using
improves yield and Bt cotton in 2006
reduces inputs to
PRODUCT • 93% of Bt cotton farmers satisfied with Bt
improve profits PERFORMANCE performance
• Opportunity to widen gap
of economic benefit with
Bollgard II and Roundup
Ready Flex
1Assocham launched two studies on “BT Cotton Farming in India” after 2006 season; Indicus Analytics covered
9000 farmers in 467 villages and 28 districts of the 8 cotton growing states and IMRB study covered nearly 6000
farmers from 111 Taluks of 37 districts including 4188 farmers using biotech traits and 1793 conventional cotton
farmers in 9 cotton growing states.
10
11. GLOBAL BIOTECH TRAITS
Bollgard Cotton Penetration in India Nearly Doubles in 2007;
Creates Platform for Second-Generation Traits
Global Biotech Traits
BOLLGARD & BOLLGARD II COTTON IN INDIA
SITUATION:
M ACRES
• Bollgard planted on 13M
acres and Bollgard II
planted to slightly more
25
than 1M acres
• Hybrid market in India
15-20M
20
now estimated to be 15-
BOLLGARD II BOLLGARD
20M acres
M ACRES
OPPORTUNITY:
15
• Opportunity to upgrade
100% of the Bollgard
acres with Bollgard II
10
technology in India
5
RETAIL PRICE /ACRE
SEED & TRAIT
0
BOLLGARD BOLLGARD II
2004 2005 2007
2006 2010
$ 18 $22
OPPORTUNITY
11
12. GLOBAL BIOTECH TRAITS
Launch of Roundup Ready Flex in India Would Provide
Opportunity to Further Improve Grower Profitability
ROUNDUP READY FLEX OPPORTUNITY IN INDIA
25
15-20M
20
Global Biotech Traits
SITUATION:
BOLLGARD
15
M ACRES
• Roundup Ready Flex
currently launched in the
BOLLGARD II
U.S. and Australia
10
• Roundup Ready Flex
ROUNDUP READY
awaiting approval in FLEX/BOLLGARD II
5
India; will only be offered
in a stack with Bollgard II
OPPORTUNITY:
0
• Roundup Ready Flex has
2007 AT LAUNCH
a fit on all of the 15-20M
OPPORTUNITY
hybrid cotton acres in
India; allows India to
leapfrog directly to 2nd
ROUNDUP READY FLEX TECHNOLOGY
generation technology
ACRE OPPORTUNITY 15-20M acres
Reduces labor costs associated with hand weeding
EXPECTED BENEFITS Reduces fuel associated with mechanical harrowing
Replacement for herbicides used by some growers; ~$10/acre
12
13. GLOBAL BIOTECH TRAITS
Approval of Stacked Corn Traits in Argentina Opens the Door
for Increased Roundup Ready Corn Penetration
TRAITED CORN OPPORTUNITY IN ARGENTINA
Global Biotech Traits 10
ROUNDUP READY CORN
SITUATION:
YIELDGARD CORN BORER
8
• Currently only single
traits are available in
YIELDGARD ROOTWORM
corn in Argentina
M ACRES 6
• Roundup Ready
YieldGard Corn Borer
corn received regulatory
4
approval in Argentina at
the end of August;
awaiting local approvals
2
for hybrids containing
the stack
0
OPPORTUNITY:
2007 2010
• Roundup Ready Corn
OPPORTUNITY
has a fit on all acres of
corn in Argentina; ROUNDUP READY YIELDGARD CORN BORER - ARGENTINA
currently growers
• Currently eight million acres planted to corn in Argentina today; expected to
unwilling to give up corn
grow to 10 million acres to fill U.S. export gap
borer control for
• Growers today utilize pre-plant herbicides in lieu of Roundup Ready technology
superior Roundup Ready
weed control • Growers seek both technologies but currently forced to make trade-offs
• Significant loss from European corn borer and lack of other viable control
options makes YieldGard Corn Borer the technology of first choice
13
14. GLOBAL BIOTECH TRAITS
Several Corn Trait Products Await Approval for Use in Brazil;
Country in Need of Improved Corn Yields
TRAITED CORN OPPORTUNITY IN BRAZIL
Global Biotech Traits
25
SITUATION:
15-20M
• Brazil plants approximately
ROUNDUP READY CORN
20
20-25M acres to hybrid corn,
its number two crop after
YIELDGARD CORN BORER
soybeans
M ACRES 15
• Yields are low and demand
YIELDGARD ROOTWORM
for exports up
10
• Currently there are no
commercial biotech traits
approved for use in corn,
5
although CTNBio recently
approved YieldGard Corn
Borer
0
• Seeking approval of the
2007 2010
specific hybrids that contain
OPPORTUNITY
the event by the Ag ministry
• Agroeste acquisition REGULATORY APPROVAL PROCESS IN BRAZIL
expands base for launch
• First step consists of approval from CTNBio, Brazil’s biosafety
OPPORTUNITY: commission, which is managed by the Ministry of Science and
Technology to make science-based technical assessments
• 100 percent of the corn
• CTNBio approval may be followed by a review from the National
acres planted in Brazil are
Biosafety Council (CNBS) to examine social and economic factors
infested with corn borer
• Hybrid variety registrations required before commercial launch
14
15. GLOBAL BIOTECH TRAITS
YieldGard Corn Borer Moves Beyond Trial Status in Europe as
270K Acres Planted Across Eight Countries in 2007
YIELDGARD CORN BORER 2010 OPPORTUNITY IN EUROPE
Global Biotech Traits
8M
SITUATION:
Acres
• YieldGard corn borer
approved for planting in
YIELDGARD CORN BORER PENETRATION IN EUROPE IN 2007
eight European countries
and in South Africa
OPPORTUNITY: 270K
Acres
• Nearly 30 percent of the
corn acres planted in
Europe are infested with
European corn borer
0.0 2.0 4.0 6.0 8.0 10.0
• Growers seek expanded
M ACRES
YieldGard corn borer
acreage and additional
YIELDGARD CORN BORER BENEFITS
traits
• Average 2006 yield advantage of 21 bushels per acre across European
locations
• Dramatic reduction of fumonisin on harvested grain provides a reduced
risk of grain rejection
15
16. GLOBAL BIOTECH TRAITS
Significant Growth Opportunity Lies in Expansion of Existing
Commercial Biotech Traits Globally
INTERNATIONAL MARKET OPPORTUNITY
MARKET OPPORTUNITY FOR BIOTECH TRAITS THROUGH 20101
Global Biotech
Traits
SOYBEANS COTTON CORN
SITUATION:
BOLLGARD
ROUNDUP ROUNDUP YIELDGARD
• Biotech traits are now ROUNDUP AND YIELDGARD
READY READY CORN
READY BOLLGARD ROOTWORM
CORN 2 BORER
(FLEX)
approved for planting II
in all major agricultural
Brazil 50-60M 3M 2M 15-20M 15-20M 5M
regions
Argentina 39M - - 9M 7M 5M
OUTLOOK:
India - 15-20M 15-20M 6M 6M -
• As is the case in the
U.S., largest category
Europe(EU27) 1M - - 24M 8M 5M
of opportunity
South Africa 0.2M 0.15M 0.15M 6M 4M -
internationally is corn
trait adoption
0.5M- 0.5M-
Australia - - - -
• With current traits, 0.8M 0.8M
international
Total Key
opportunity still exists 90.2- 18.7- 17.7- 60-
40-45M 15M
International
to nearly triple to 100.2M 24M 23M 65M
Markets
approximately 270M
acres from 2007
62-81%2
2007 Penetration 71-79% 4-5% 3% 16-18% 0%
penetration of
approximately 95M
acres
1. Market Opportunity reflects total acres where technology is applicable, not necessarily acres projected for penetration by 2010.
2. Primarily Bollgard penetration; opportunity to expand to second generation technology.
16
17. R&D PIPELINE
Pipeline Has Some Likely Blockbusters and Some
Hidden Gems
ANNUAL R&D CYCLE: SEEDS & TRAITS BIOTECH TRAIT PIPELINE
SOYBEANS ARE EMERGING FROM CORN’S
SHADOW
Roundup RReady2Yield creates platform for future
First product developed exclusively for an ex-US
market will be in soybeans
Soybeans could be a 3+ stack by middle of next
decade
COTTON POTENTIAL TO BE UNLOCKED
Q1 Q4
Second-generation stacked products to accelerate
globally
Q2 Q3 Cotton could be a 3+ stack by middle of next decade
with drought tolerance and lygus control
YIELD AND STRESS POTENTIAL EXPLODING
Drought tolerance in corn expected to be first of a
rapid series of blockbuster traits
BREEDING PIPELINE
BREEDING ENGINE FIRING ON ALL CYLINDERS
At a greater pace than ever before, new breeding tools
are being applied across all platforms and resulting in
breakthrough products
17
18. R & D PIPELINE
Insect-Protected Soybeans in Development for Heavily Infested
Latin America Market
KEY MARKET ACRES BRAZIL ARGENTINA
AVAILABLE MARKET 50-60M 35M
Insect-Protected Soybeans
PERCENT PENETRATED 0% 0%
INITIAL PERFORMANCE OF INSECT-PROTECTED SOYBEANS
2005/06 ARGENTINA – 10 LOCATIONS
R&D Pipeline 6%
OVER NO-INSECTICIDE CONTROL
AVERAGE YIELD INCREASE (%)
INSECT-PROTECTED SOYBEANS 5%
4%
SITUATION:
3%
PHASE II
2007 STATUS:
2%
• First Monsanto trait developed exclusively for a
1%
non-U.S. market, notably Brazil and Argentina,
1.0 % 5.5 %
where insect pressure is a significant issue
0%
• Initial field trials demonstrate significant yield
INSECTICIDE TREATED INSECT-PROTECED
protection vs. unsprayed controls
SOYBEANS
• Intended as a stacked offering with Roundup
MONMOUTH, IL SCREENHOUSE – 2007
RReady2Yield soybeans for effective control of
both insects and weeds
VALUE CONSIDERATIONS:
• Value proposition set by the insecticide sprays
displaced and enhanced yield that accrues to the
farmer
• Insect pressure present on all acres in Brazil
RETAIL VALUE/ACRE: $10 - $30/acre
TOTAL ACRE
85-95M acres
OPPORTUNITY:
WITHOUT GENE WITH GENE
(NO SPRAYS) (NO SPRAYS)
18
19. R & D PIPELINE
Family of Drought-Tolerant Corn Products to Create
Differentiated Value Across Multiple Market Segments
KEY MARKET ACRES U.S. BRAZIL ARGENTINA EUROPE
Drought-tolerant AVAILABLE MARKET 90M 20-25M 10M 27M
corn PERCENT PENETRATED 0% 0% 0% 0%
R&D Pipeline
HIT Project Drought-tolerant corn
P R O JE CT
PART OF MONSANTO BASF YIELD AND STRESS R&D
COLLABORATION
Phase II
2006 STATUS:
• Lead event has consistently delivered yield
improvements under water stressed conditions
across four seasons of testing in the United States
and Latin America, with yield advantage of up to 12
bushels per acre
• Currently in fifth season of field testing; significant
expansion in number of locations, test environments
and germplasm backgrounds
VALUE CONSIDERATIONS:
• Value of trait reflects better yields under moisture-
IRRIGATED DRYLAND STABILITY
stressed conditions; varies by region
• Value will be specific to variable costs of water use by
Irrigated Non-Irrigated Non-Irrigated
farmers, not fixed costs of irrigation
• Corn needs 18-to-20 inches of moisture during the Value is in Value is in Value is in
growing season replacing improved yields improved yields
irrigation, reducing annually, by when moisture is
RETAIL VALUE/ACRE: $10 - $30/acre variable costs of improving water- less than optimal
irrigation use efficiency
TOTAL ACRE
147M-152M acres
OPPORTUNITY:
19
20. R & D PIPELINE
Drought Tolerant Cotton in Development to Address Needs
in All Key Cotton Regions
KEY MARKET ACRES U.S. BRAZIL AUSTRALIA INDIA
AVAILABLE MARKET 10-15M 2-4M 0.5-0.8M 15-25M
PERCENT PENETRATED 0% 0% 0% 0%
LAS CRUCES, NEW MEXICO - 2006
R&D Pipeline
DROUGHT TOLERANT COTTON
PART OF MONSANTO-BASF YIELD AND STRESS R&D
COLLABORATION
PHASE I
2007 STATUS:
• First drought leads are advancing to multi-
location testing
• First leads in field testing are showing
promise; continued evaluation to assess
drought performance
WITH GENE
WITHOUT GENE
VALUE CONSIDERATIONS:
• Value of trait reflects better yields under
GREENHOUSE TESTING
moisture-stressed conditions; varies by
region Davis, CA – 2007
• Value will be specific to variable costs of
water use by farmers, not fixed costs of
irrigation
RETAIL VALUE/ACRE: $10 - $30/acre
TOTAL ACRE
27-45M acres
OPPORTUNITY:
with without with without
gene gene gene gene
Fully watered Stressed
20
21. SUMMARY
International Well Positioned for Layers of Complementary
Growth Through the End of the Decade
International
SITUATION:
INTERNATIONAL VALUE CREATION
• Base of corn seed STAGED OPPORTUNITIES FOR INCREASING BUSINESS VALUE
established and growing
• First-generation traits in
Successful launch of
cotton and soybeans enjoy
pipeline traits
significant penetration
VALUE CREATION OPPORTUNITY
increases in 2007 in Brazil
Pursue final approvals of stacked corn in Argentina and
and India
traited corn in Brazil and launch
• Recent regulatory approvals
in Latin America provide Convert Indian market to Bollgard II while increasing overall
opportunity for corn trait penetration of insect-protected cotton
expansion Ex U.S.
• Pipeline provides promise
Increase penetration in first-generation Roundup Ready
of new traits in yield and
soybeans in Brazil to set platform for future soy technologies
stress
OUTLOOK:
Grow share in branded corn by 1-2 share points annually
2007 2008 2009 2010
• Expect contribution from BEYOND
International to drive margin
expansion to 52-54% by the
end of the decade
21
