monsanto 01-08-08

1

R&D PIPELINE REVIEWTERRY CREWS CFO

STEVE PADGETTE, PH.D.VICE PRESIDENT, BIOTECHNOLOGY

January 8-9, 2008

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Forward-Looking Statements

Certain statements contained in this presentation are "forward-looking statements," 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 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 most recent periodic report to 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.

TrademarksTrademarks 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

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Non-GAAP Financial Information

With respect to the time period prior to Sept. 1, 2000, references to Monsanto in this presentation also refer to the agricultural business of Pharmacia.

FISCAL YEAR:References to year, or to fiscal year, are on a fiscal year basis and refer to the 12-month period ending August 31.

This presentation may use the non-GAAP financial measures of “free cash flow,” earnings per share (EPS) on an ongoing basis and Return on Capital (ROC). We define free cash flow as the total of cash flows from operating activities and investing activities. A non-GAAP EPS financial measure, which we refer to as ongoing EPS, excludes certain after-tax items that we do not consider part of ongoing operations, which are identified in the reconciliation. ROC means net income (without the effect of certain items) exclusive of after-tax interest expenses, divided by the average of the beginning year and ending year net capital employed, as defined in the reconciliation. Our presentation of non-GAAP financial measures is intended to supplement investors’ understanding of our operating performance, not replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with GAAP. Furthermore, these non-GAAP financial measures may not be comparable to similar measures used by other companies. The non-GAAP financial measures used in this presentation are reconciled to the most directly comparable financial measures calculated and presented in accordance with GAAP. Monsanto is unable to provide a reconciliation of the 2008 ROC goal to projected net income and financial position for 2008 without unreasonable effort. As shown in the ROC reconciliation for the previous year, the calculation of ROC is complex, and Monsanto does not have sufficient information at this point in the fiscal year to reasonably estimate its operating profit after-tax and average capital for 2008 due to market and other conditions that are outside of Monsanto’s control.

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2008 Again Projects Double-Digit Earnings Growth, Strong Cash Generation and Improved Margins

FINANCIAL REVIEW

2007 2008FEARNINGS

ONGOING EARNINGS PER SHARE$2.00

54% GROWTH FROM 2006

$2.50-$2.6025-30% GROWTH

FROM 2007

Gross Profit as a Percent of Sales 50%Further progress on

trajectory toward 52-54% 2010 target

Seeds & Traits Gross Profit $3.0B ~$3.5BRoundup And All Other Glyphosate-based

Herbicides Gross Profit $854M Greater than $1B

All Other Ag Productivity Gross Profit $418M ~$350MCASH MANAGEMENT AND SPENDING

FREE CASH FLOW $(57)M $900M-$1BReturn on Capital 14.8% Consistent with 2007 levels

Capital Expenditures $509M Greater than $800MSG&A as a Percent of Sales 22% 20-21% Range

R&D as a Percent of Sales 9% 10% RangeReceivables as a Percent of Sales 18% Consistent with 2007 levelsInventories as a Percent of Sales 20% Consistent with 2007 levels

5

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2004 2007 2012

Given Growth Opportunities, Monsanto Has Potential to More Than Double Gross Profit Over Next Five Years

OVERVIEW

2012 GROWTH RANGE

Gross profit targeted to double from 2007 through 2012

STRATEGIC PLAYBOOK

All growth is organic, from base business and pipeline

U.S. CornInternational CornSoybeansCottonSeminisR&D Pipeline

Acquisitions to be pursued, but are not included in this growth projectionEarnings continue to translate into operating cash, and value created for shareowners through combination of acquisitions, share repurchases and dividends

MONSANTO GROSS PROFITGROWTH TARGET

GR

OS

S P

RO

FIT

(IN

MIL

LIO

NS

)

MIL

ES

TO

NE

S

2007Base Gross Profit:

$4,286M

2010Gross margin target: 52-54%

ONGOING EPS GROWTH: MID-TO-HIGH TEENS

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OVERVIEW

Our Biotech and Breeding Pipeline Is Accelerating, With Progress in Projects and Widening Yield Advantages

MILESTONES:Biotech pipeline is accelerating

10 projects either advanced phases or were added to the pipeline – among the most in any annual updateFirst time transitioned 4 projects from Phase 2 to Phase 3First multi-generational advancement as 2 generations of corn drought family advanceSmartStax enters the pipeline as the platform for corn, complementing Roundup RReady2Yield as the soybean platform

Breeding programs yields impressive

DEKALB germplasm maintains impressive 8.4 bu/ac advantage; gap widens to 14.6 bu/ac when protected with YieldGard VT Triple stackAsgrow germplasm yield advantage improves to average 1.27 bu/ac; Roundup RReady2Yield to provide 7-11% boost

Q1 Q4

Q3Q2

ANNUAL R&D CYCLE: SEEDS & TRAITSWHAT CHANGED 2007-2008?• 5 projects advanced phases• 5 products added• Vistive II removed in favor of Vistive III• “Water-use efficiency” soybeans reclassified as

“2nd-Gen Higher-Yielding soybeans”• Two former Renessen projects rolled into the Monsanto

pipeline

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Pipeline Leverages Power of Breeding and Biotech for Current Commercial Growth and New Platforms in Next Decade

OVERVIEW

MONSANTO’S R&D PIPELINE

Pipeline Priorities Through 2012BREEDING

Continue to Drive Breeding Gains Across Crop Platforms

► Ensure momentum in corn breeding continues► Accelerate ramp up of soybean breeding► Continue application of proven tools to cotton and

vegetables

Pipeline Priorities Through 2012BIOTECHNOLOGY

Deliver the Value in Monsanto’s Established Trait Pipeline

Unlock the Opportunity in Yield and Stress Through the BASF Collaboration

► Deliver the industry’s first traits in the emerging yield-and-stress arena

► Change the trait-value opportunity with “product families”

PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

ELI

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MP

LAS

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NO

MIC

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MA

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ER

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LAT

FOR

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AN

ALY

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S

CO

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ER

CIA

L

BREEDING

BIOTECHNOLOGYGGermplasm

RSEED SOLD TO FARMERS

R&D PHASE: PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

ELI

TE

G

ER

MP

LAS

ME

LIT

E

GE

RM

PLA

SM

GE

NO

MIC

SG

EN

OM

ICS

MA

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LAT

FOR

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PLA

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ICS

CO

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ER

CIA

LC

OM

ME

RC

IAL

TR

AIT

INT

EG

RA

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BREEDING

BIOTECHNOLOGYGGermplasm

RSEED SOLD TO FARMERS

R&D PHASE:

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Final Yield Trial Results Reinforce Yield Advantage of DEKALB Seed in U.S.

GEOGRAPHY: U.S.OBJECTIVE: Grow footprint2007 PERFORMANCE UPDATE

• In > 14,000 comparisons, Monsanto out-yields competitive best by 8.4 bu/ac

• In 110-day RM, Monsanto’s lead remains a strong 12 bu/ac advantage

2007 FINAL U.S. COMPETITIVE CORN YIELD COMPARISON: DEKALB

FINAL:

190

205

195 197

179

186

193189 188

163

191

155150

155

160

165

170

175

180

185

190

195

200

205

210

COMPETITORS

DEKALB

BU

SH

ELS

/AC

RE

(AP

PR

OX

IMA

TE

DIF

FER

EN

CE

S)

7.8

>480

95 RM

8.4

>14,000

Overall

5.512.05.110.4APPROXIMATE BU/AC

>5,270>5,220>1,820>1,220COMPARISONS:

115 RM110 RM105 RM100 RMRELATIVE MATURITIES (DAYS)►

ADVANTAGE:

Source: 2007 Monsanto and third party trials through November 15, 2007. Weighted average, calculated to 15% moisture. DEKALBproducts are compared with national competitive products that contain similar crop protection traits.

CORN BREEDING

9

211.6

197.0

190

194

198

202

206

210

MONSANTO PioneerDEKALB Hybrids with YieldGard VT

Triple

AV

E. B

US

HE

LS P

ER

AC

RE

Nearly 1,700 comparisons in 17 states: DEKALBseed, protected by YieldGard VT Triple,

outperformed the best competitive seed-and-trait package by >14.6 bu/ac on average

Seed & Trait: Head-to-Head

Again in 2007, Best in Class Germplasm and Trait Integration Delivers Best Yield

CORN BREEDING

FINAL TOTAL DEKALB SEED & TRAIT YIELD PERFORMANCE IN 2007

Competitive Hybrids with Herculex®

XTRA and Roundup Ready Corn 2

Performance in Key Corn Belt StatesNE IA IL

Comparisons: >70

210bu/ac

193bu/ac

>400Monsanto

Brands:214bu/ac

219bu/ac

Competitive Brand:

800

200bu/ac

202 bu/ac

14.6BU/AC

ADVANTAGE

®

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Roundup RReady2Yield and Molecular Breeding Rewrite Historic Soybean Yield Trends

SOYBEAN BREEDING

36

38

40

42

44

46

48

50

52

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2009-2010Roundup RReady2Yieldcontrolled commercial release + commercial launch

MAB-ROUNDUP RREADY2YIELDPLATFORM

2007Asgrow germplasm shows yield advantage in all zones based on

greater than 16,000 comparisons, with an average advantage of 1.27

bu/acre for groups 1 thru 5

Roundup RReady2Yield creates step change of 7-11% across portfolio

AV

ER

AG

E Y

IELD

(B

U/A

CR

E)

SOYBEAN YIELD PROGRESSION: 2000-2012

MAB gains set new trajectory on top of Roundup RReady2Yield step change

All breeding going forward is built on Roundup RReady2Yieldfoundation and uses applied MAB technology

HISTORIC GAIN: 0.50 BU/AC

SOYBEAN YIELD AT HISTORIC RATE GAIN

EXPECTED TREND WITH APPLIED MOLECULAR BREEDING (MAB)

USDA AVERAGE YIELD/AC1

TREND LINE OF USDA YIELD

1. USDA NASS: http://www.nass.usda.gov/QuickStats/

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Phase Advancements For Key Projects Reflect Progress and Strength Throughout Monsanto’s Industry-Leading Pipeline

BIOTECH PIPELINE

DPHASE

1PHASE

2PHASE

3PHASE

4AGRONOMIC TRAITS

EXTRAX™ CORN PROCESSING SYSTEM + MAVERA™ HIGH-VALUE

CORN WITH LYSINE2

VISTIVE III SOYBEANS

HIGH-STEARATE SOYBEANS(VIA BIOTECH)

HIGH-OIL CORN

2ND-GEN HIGH-OIL SOYBEANS

SMARTSTAX CORN

SOYBEAN DISEASE

VALUE-ADDED TRAITS

DICAMBA-TOLERANT COTTON

SOYBEAN NEMATODE-RESISTANCE

INSECT-PROTECTED + ROUNDUP RREADY2YIELD SOYBEANS

DICAMBA-TOLERANT SOYBEANS

YIELDGARD VT PRO2ND-GEN YIELDGARD CORN BORER

YIELDGARD ROOTWORM III

BOLLGARD III

COTTON LYGUS CONTROL

OMEGA-3 ENRICHED SOYBEANS

ROUNDUP RREADY2YIELD SOYBEANS

HIGH-OIL SOYBEANSHIGHER-YIELDING + ROUNDUP

RREADY2YIELD CANOLA1

BROAD-ACRE HIGHER-YIELDING CANOLA FAMILY

DROUGHT-TOLERANT COTTON

2ND-GEN HIGHER-YIELDING SOYBEANS

BROAD-ACRE HIGHER-YIELDING SOYBEAN FAMILY

HIGHER-YIELDING SOYBEANS

DROUGHT-TOLERANT COTTON FAMILY

BROAD-ACRE HIGHER-YIELDING CORN FAMILY

HIGHER-YIELDING CORN

YIELD AND STRESS PIPELINE

NITROGEN-UTILIZATION CORN

NITROGEN-UTILIZATION CORN FAMILY

2ND-GEN DROUGHT-TOLERANT CORN

DROUGHT-TOLERANT CORN

DROUGHT-TOLERANT CORN FAMILY

PHASE

4PHASE

3PHASE

2PHASE

1D

The colored bar associated with each project indicates which phase that project is in. It is not intended to represent the relative status of the project within a particular stage.

High Impact Technologies (HIT) project

Jan. 3, 2008 Advancements/Additions

1. For higher-yielding + Roundup RReady2Yield canola, only the value of the higher-yielding trait is incorporated into the Yield and Stress collaboration with BASF2. Value of licensing the EXTRAX™ technology is shared with Cargill as a part of Renessen joint venture

BIOTECH TRAIT PIPELINE: JANUARY 2008 UPDATE

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Lead Drought-Tolerant Corn Project Advances to Phase 3 With Fourth Year of Strong Field Results

NEW: FOURTH SEASON OF YIELD IMPROVEMENT UNDER DROUGHT STRESS

Drought-tolerant corn lead consistently delivering yield improvements under drought conditions in U.S. for fourth year in a row

Yiel

d D

iffer

ence

(bu/

acre

)

02468

10121416

2004 2005 2006 2007a b b b

13.4% 6.7% 10.6% 11.3%Percentage yield difference vs. control

Average Yield Improvement of Lead Event

a: data from two hybridsb: data from three hybrids

PRODUCT CONCEPT TARGET RANGE

1. Acre opportunity reflects acres where technology fits at Monsanto's current 2007 market share in respective crops

2. 2020 value reflects gross sales opportunity in launch country in year 2020

R&D PipelineDrought-Tolerant Corn Family: Lead Project

HIT ProjectADVANCED:Phase 3

SOURCES OF VALUE:

1Improved yieldTargeting 8-10% yield improvement in water-stress environments

PROJECT CONCEPT:

Drought-tolerance family aimed at providing consistent yield and buffering against effects of water limitationsVALUE:

LAUNCH-COUNTRY ACRES1: 55M

2020 VALUE2: $300-$500M

8 TOTAL LOCATIONS

15 TOTAL LOCATIONS

9 TOTAL LOCATIONS

11 TOTAL LOCATIONS

BIOTECH PIPELINE

13

CONTROL HYBRID(76 BU/AC)

WITH GENE(94 BU/AC)

SUPERIOR, NE - FIELD TRIALS – 2007

2007 Dryland Field Tests of Lead Drought Event Offers Visual Evidence of Increased Yield In Stressed Conditions

NEW: 2007 FIELD TESTING SHOWS VISUAL PROOF OF YIELD IMPROVEMENT

Water stress exposure during different stages of development can have significant effect on corn yield; Monsanto’s lead drought-tolerance trait shows a significant yield advantage compared with controls under drought stress



R&D PipelineDrought-Tolerant Corn Family: Lead Project

HIT ProjectADVANCED:Phase 3

SOURCES OF VALUE:


PROJECT CONCEPT:



2020 VALUE2: $300-$500M

BIOTECH PIPELINE

14

Second-Generation Drought-Tolerant Corn Advances to Phase 2 With Multi-Year Performance in Field Testing

NEW: SECOND-GEN DROUGHT CORN EVENTS PROVIDE CONSISTENT YIELD ADVANTAGE



R&D PipelineDrought-Tolerant Corn Family: Second-Generation Project

STATUS: ADVANCED:Phase 2

SOURCES OF VALUE:


2Water substitutionVariable costs in pumped irrigation of >$100/ acre

PROJECT CONCEPT:



2020 VALUE2: $300-$500M

• Performance demonstrated in 2 different test hybrids and over a broad range of drought-stress conditions in both lower-yielding and higher-yielding environments (52-188 bu/ac)

Consistent drought yield performance of top 3 events over 2 years (5 locations/year)

(All three events significant @ p≤0.10); Statistical significance determined by ANOVA (2006) or nonparametric test (2007)

Drought Efficacy for Second-Gen Events


Yiel

d D

iffer

ence

Ove

r Con

trol

s (%

)

0

2

4

6

8

10

12

14

16

EVENT 1 EVENT 2 EVENT 3 EVENT 1 EVENT 2 EVENT 3

2006 2007

HIGHER-YIELDING ENVIRONMENT

AVERAGE YIELD: 166 BU/AC

LOWER-YIELDING ENVIRONMENT

AVERAGE YIELD: 53 BU/AC

BIOTECH PIPELINE

15

In Continued Field Testing, Nitrogen Utilization Leads Show Yield Improvement Under Normal Nitrogen

NEW: LEAD PERFORMANCE UNDER NORMAL NITROGEN CONDITIONS



R&D PipelineNitrogen-Utilization Corn Family: Lead Project

STATUS: Phase 1PROJECT CONCEPT:

Targets ways to use nitrogen more efficiently, exploring potential to boost yield under normal nitrogen conditions or stabilize it in low nitrogen environmentsVALUE:


2020 VALUE2: $300-$500MSOURCES OF VALUE:

1Improved yieldYield improvement in normal nitrogen environments

2Nitrogen reductionImproving yield in low nitrogen environments

Under normal nitrogen conditions, lead Nitrogen-Utilization trait has demonstrated yield advantages in multiple backgrounds over multiple years

Yiel

d In

crea

se (b

u/A

c)

TRIALS IN MULTIPLE HYBRID BACKGROUNDS

(16 LOC)

Bar color correlates with the specific hybrid background tested. Same bar color in different tests and different years indicates same hybrid was used.All trials conducted under sufficient nitrogen application levels.

2006

2006 YIELD TRIALS:SUFFICIENT N LEVELS

(37 LOC TOTAL)

2007

2007 YIELD TRIALS:SUFFICIENT N LEVELS

(20 LOC TOTAL)

Statistically significant @ p≤0.10*

-2TRIALS IN MULTIPLE

HYBRID BACKGROUNDS(15 LOC)

02468

1012

* * * * * *

2005

*

2005 YIELD

TRIALS: (23 LOC TOTAL)

BIOTECH PIPELINE

16

NEW: YIELDGARD VT PRO IN FINAL REGULATORY PHASE

YieldGard VT PRO Will Provide Dual Mode of Action for Increased Product Durability and Broader Spectrum Control

R&D PipelineYieldGard VT PRO

STATUS: Phase 4

1Higher per-acre yield from improved spectrum and consistency of control

2Higher on-farm yield from potential for reduced refuge acre requirements

PROJECT CONCEPT:

YieldGard VT PRO is the second-generation of YieldGard Corn Borer and broadens the spectrum of insect control and increases the durability of the trait with the use of two proteins for dual modes of action for resistance managementVALUE:

LAUNCH-COUNTRY ACRES: 60-65M

2020 VALUE: SMARTSTAX COMPONENT

SOURCES OF VALUE:

0

2

4

6

8

10

12

0123456789

10

YieldGard VT PROcontains two proteins for effective control of target insect pests:

European cornborer and southwestern cornborerCorn earworm and fall armyworm

Provides broader spectrum and greater consistencyAwaiting final regulatory import approvals in key countries, EPA registration and USDA deregulation

2007 YieldGard VT PRO Field TrialsCorn Earworm Damage Ratings

2007 & 2006 YieldGard VT Pro Field TrialsFall Armyworm Damage Ratings

# of

Dam

aged

Ker

nels

per

Ear

0-9

Dam

age

Rat

ing

Scal

e

2006; N=3

2007; N=5

2007; N=9

BIOTECH PIPELINE

Roundup ReadyCorn 2

YieldGard Corn Borer

with Roundup Ready Corn 2

YieldGard VT Pro with Roundup

Ready Corn 2

Herculex®with

Roundup Ready Corn 2

Herculex®Control YieldGard VT PRO

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Third-Generation Corn Rootworm Technology Shows Early Promise and Highlights Innovation in the Pipeline

NEW:RNAi AND NOVEL PROTEIN APPROACHES DEMONSTRATE EXCELLENT PROTECTION AGAINST CORN ROOTWORM FEEDING

RNAi technology is an innovative approach that uses targeted regulation of gene expression for rootworm control (Baum JA, et al. Nature Biotechnology; 2007,25, 1322-1325)

► Early yield trials demonstrate yield equivalency for both RNAiand novel protein constructs

YieldGardRootworm x

RNAiTechnology

RNAiTechnology

YieldGardRootworm

Negative Check

R&D PipelineYieldGard Rootworm III


YieldGard Rootworm delivers effective and consistent in-plant protection against western, northern and Mexican corn rootworm. Third generation technology, namely RNAi technology, is targeted to provide an additional mode of action for improved spectrum and durability.

BIOTECH PIPELINE

Protein

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

YieldGardVT Rootworm/

Roundup Ready 2

RNAi 1 RNAi 2 New InsectControl

Negative

Roo

t Dam

age

(0-3

) Sca

le 2007 Field Efficacy Tests5 locations

High Pressure Greenhouse Test

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Roundup RReady2Yield Soybean Approaching Commercialization; Will Serve As Platform for Soybean Trait Pipeline

NEW: FOUR YEARS OF DATA CONTINUE TO VALIDATE 7-11% YIELD ADVANTAGE


2. 2020 value reflects gross sales opportunity in launch country in year 2020 Roundup RReady2Yield soybeans yield 7 to 11 percent higher

than Roundup Ready soybeans based on 73 Monsanto field trials from 2004-2007

R&D PipelineRoundup RReady2Yield Soybeans

HIT Project Phase 4

SOURCES OF VALUE:

1 Improved yieldTargeting 7-11% yield increase

PROJECT CONCEPT:

Roundup RReady2Yield provides enhanced yield, with a target of 7-11% yield increase compared with Roundup Ready soybeansVALUE:


2020 VALUE2: $300-$500M

9%

7%

9%

7%

11%

0%

2%

4%

6%

8%

10%

12%

2004 2005 2006 2007

% Y

ield

Incr

ease

ove

r R

ound

up R

eady

Near-Isoline Comparisons:Roundup RReady2Yield vs. Roundup Ready

4 YEAR AVERAGE

BIOTECH PIPELINE

19

NEW: FIELD PERFORMANCE OF BT SOYBEANS

• Also exhibits the glyphosate tolerance of Roundup RReady2Yield soybean varieties

Insect-protected soybeans with Roundup RReady2Yield technology provides effective protection against key lepidopteran pests, better than chemical insecticides

Insect-Protected Soybeans Are First-Ever Monsanto Trait Developed Exclusively for Non-U.S. Opportunity

Tifton, GA Loxley, AL St. Gabriel, LA Alexandria, LAMaturity Group V

2007 Insect Efficacy Trials - 4 Locations

05

101520253035404550

UNSPRAYED SPRAYED UNSPRAYED SPRAYEDMea

n La

rvae

per

Met

er R

ow(s

easo

ncu

mul

ativ

e) ±

sta

ndar

d er

ror

non-Bt Bt Non-Bt

1. Acre opportunity reflects acres where trait could have technological fit. Opportunity does not reflect acres that may be planted to a competitive trait or acres required for insect-resistance management (IRM) set-aside refuges


R&D PipelineInsect-Protected Soybeans with Roundup RReady2Yield


2020 COMMERCIAL VALUE2: $150-$300M

SOURCES OF VALUE:

1Insecticide substitutionBased on 2 current sprays costing almost $6/acre total

2Improved yieldEarly indications of 4+% increase over chemical insecticides

PROJECT CONCEPT:

Insect-protected soybeans use Bt technology widely adopted in corn and cotton to control insect pests, especially economically important pests for Brazilian farmers. The Bt trait is combined with Roundup RReady2YieldVALUE:

LAUNCH-COUNTRY: BrazilLAUNCH-COUNTRY

ACRE OPPORTUNITY1: 50M

BIOTECH PIPELINE

20

1. Acre opportunity reflects acres where trait could have technological fit. Opportunity does not reflect acres that may be planted to a competitive trait or acres required for insect-resistance management (IRM) set-aside refuges


R&D PipelineInsect-Protected Soybeans with Roundup RReady2Yield


2020 COMMERCIAL VALUE2: $150-$300M

SOURCES OF VALUE:

1Insecticide substitutionBased on 2 current sprays costing almost $6/acre total

2Improved yield4+% increase over chemical insecticides

PROJECT CONCEPT:

Insect-protected soybeans use Bt technology widely adopted in corn and cotton to control insect pests, especially economically important pests for Brazilian farmers. The Bt trait is combined with Roundup RReady2YieldVALUE:

LAUNCH-COUNTRY: BrazilLAUNCH-COUNTRY

ACRE OPPORTUNITY1: 50M

Insect-Protected Soybeans Are First-Ever Monsanto Trait Developed Exclusively for Non-U.S. Opportunity

TIPTON, GA - FIELD EFFICACY TRIAL – 2007

2007 FIELD TESTING SHOWS VISUAL PROOF OF CONTROLNEW:

Insect-protected soybeans with Roundup RReady2Yield technology demonstrated significant protection from key lepidopteran pests, including soybean looper, in 2007 tests

CONTROL(NO INSECTICIDE)

WITH GENE(NO INSECTICIDE)

BIOTECH PIPELINE

21

NEW: FIELD PERFORMANCE DEMONSTRATES EXCELLENT DICAMBA TOLERANCE



Agronomic trials in 28 locations showed comparable yields between dicamba treated plots and untreated controls, even at application 3X approved rates –indicating commercial tolerance and yield performance

R&D PipelineDicamba-Tolerant Soybeans


2020 COMMERCIAL VALUE2: <$150M

SOURCES OF VALUE:

1Increased FlexibilityImproved weed control options with two modes of action

PROJECT CONCEPT:

Provide new, unique mode of action, designed to provide soybean growers with most effective weed management system available when stacked with Roundup RReady2YieldVALUE:

LAUNCH-COUNTRY ACRE OPPORTUNITY1: 45M

Dicamba-Tolerant Soybeans Advance to Phase 3 With Excellent Tolerance and Yield Data From 2007 Field Trials

EVENT 1 EVENT 2 EVENT 3

Yiel

d (b

u/ac

)Untreated1x1 lb/ac, 2x

1x1x1 lb/ac, 3x2x2 lb/ac, 4x

0

20

40

60

802007 Efficacy Yield

BIOTECH PIPELINE

▼ DMO Enzyme Structure

22

NEW: VISTIVE III COMPOSITION TARGETS

Vistive III Advanced to Phase 3 After Meeting Compositional and Yield Targets



R&D PipelineVistive III Soybeans

HIT ProjectADVANCED:

Phase 3PROJECT CONCEPT:

Vistive III trait is designed, by combining breeding and biotechnology, to lower linolenic and saturate content while boosting oleic content to produce an oil with the same preferable mono-unsaturated fat content as olive oil and the low saturated fat content found in canola oilVALUE:

LAUNCH-COUNTRY ACRES1: 15 - 20M

2020 VALUE2: <$150MSOURCES OF VALUE:

1

Oil replacement valueFor frying applications and oil blends for baking, roughly 15 -20M acres planted for oil used for food

8%56%20%15%COMMODITY SOYBEANS

≤ 3%12-25%55-80%<7%VISTIVE III TARGETS

18:3LINOLENIC

18:2LINOLEIC

18:1OLEIC

18:0 + 16:0SATURATES

CATEGORY►

Fatty

Aci

d (%

)7%

14%21%28%35%42%49%56%63%70%77%84%

Vistive III Low Lin – Mid Oleic – Low SatVistive Low Lin Alone

Mid Oleic – Low Sat Trait Alone

6%

77%

14%

3%

When breeding (green bar) and biotech (yellow bar) are combined, Vistive III (red bar) meets all product concept compositional targets

• Additionally, 3 years of biotech trait field data in the U.S. and Argentina indicate that yield is not statistically different from

BIOTECH PIPELINE

control

23

BIOTECH PIPELINE

NEW: SDA SOYBEAN OIL METS FOOD APPLICATION TARGETS



Food Prototypes Containing SDA Soybean Oil from Omega-3 SDA Enhanced Soybeans Meets Consumer Acceptability

R&D PipelineOmega-3 SDA Enhanced Soybeans


Omega-3 SDA enhanced soybeans represent a land-based source of essential Omega-3 fatty acids. Targeting 20 percent stearidonic acid (SDA) with taste, shelf life and oil stability of soybean oil.VALUE:

LAUNCH-COUNTRY ACRES1: <1M


1

High Value OilProduct similar to soybean oil in taste, shelf-life and oil stability, but with the superior nutritional profile of fish oil

7.146.476.59 6.6

7.146.53

123456789

Margarine Yogurt Drink Granola Bar

Consumer Acceptability – Overall Liking

Recent results show comparable consumer acceptability between SDA soy oil and conventional soy oil in margarine spreads, yogurt, yogurt drinks and granola bars

► No significant yield differences between Omega-3 SDA enhanced lead event and the control over 5 growing seasons and 65 locations

1= D

islik

e ex

trem

ely

9=

Lik

e Ex

trem

ely

Control (Soy Oil ) SDA Soy Oil

a aaa

a a

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atin

g

a Not Statistically Different

24



• Higher-yielding trait will be stacked on top of Roundup RReady2Yield and other soybean-pipeline traits with an additive yield boost

More than 60 events were tested at 18 locations, with lead events showing strong yield advantages over conventional controls

Higher-Yielding Soybeans Continue to Demonstrate Improved Yield Over Conventional Controls

NEW: 2007 HIGHER-YIELDING SOYBEAN AGRONOMIC TESTING VERSUS CONTROLS

Ave

rage

Yie

ld A

dvan

tage

(Bu/

Ac

Incr

ease

Ove

r Con

trol

)

EVENT 1 EVENT 2 EVENT 3 EVENT 4 EVENT 5

Percent yield difference vs. control7.1%

6.2% 6.2% 6.2% 6.1%

18 Locations


0.0

1.0

2.0

3.0

4.0

5.0

6.0

R&D PipelineHigher-Yielding Soybeans Family:Lead Project

STATUS: Phase 2


1Improved yieldTargeting additive yield to U.S. average of 42 bu/ac

PROJECT CONCEPT:

Higher-yielding soybeans aimed at boosting intrinsic yield potential of soybeans through insertion of key genesVALUE:


BIOTECH PIPELINE

25

R&D PipelineDrought-Tolerant Cotton

STATUS: Phase 1

• Building a portfolio of genes that confer drought tolerance in cotton

• Initial field results show positive phenotypes for multiple genes in water-stressed conditions

PROJECT CONCEPT:

Drought-tolerant cotton is designed to minimize risk in cotton farming by providing yield stability in environments experiencing sporadic or consistent water stress and by reducing water needs on irrigated acres.PROJECT UPDATE:

U.S. Field Testing Identifies Drought-Tolerance Leads in Cotton

BIOTECH PIPELINE

NEW: EARLY RESULTS ON DROUGHT-TOLERANT COTTON TESTING IN THE U.S.

CONTROLWITH GENECONTROLWITH GENE

Mid-SeasonHalfway, TX – September 2007

Late SeasonHalfway, TX – October 2007

02468101214161820

YIE

LD D

IFFE

RE

NC

E P

ER

CE

NT

(lbs

see

d co

tton

/AC

RE

)

Event 1Event 2

2006 – 4 locations2007 – 7-9 locations

2006 2007Water Stressed Non-Stressed

2006 2007

4.0% 10.1%6.7% 4.6%19% 4.7%8.5% 4.9%Percent yield difference vs. control – Across multiple locations

26

Strong Pipeline Reflects Growing Innovation, Opportunity in Latter-Stage Projects and Emerging Value in Yield and Stress

PHASE2020

COMMERCIAL VALUE

COUNTRY OF

LAUNCH

ADDITIONAL GEOGRAPHIC OPPORTUNITY

SOURCES OF VALUE

Drought-Tolerant Corn Family

Insect Protected + Roundup RReady2Yield Soybeans 3 MID Brazil ARGENTINA

• Improved yield• Improved insect protection

Vistive III Soybeans 3 LOW U.S. N/A • Food industry functionality

Dicamba-Tolerant Soybeans 3 LOW U.S. BRAZILARGENTINA • Durable weed control

Bollgard III Cotton 2 MID U.S.INDIA

AUSTRALIABRAZIL

• Improved insect protection

Roundup RReady2Yield Canola 2 LOW Canada U.S.EU 27 • Improved yield

3 LEAD HIGH U.S.BRAZIL

ARGENTINAEU 27

• Improved yield• Water replacement

Nitrogen-Utilization Corn Family 1 LEAD HIGH U.S.BRAZIL

ARGENTINAEU 27

• Improved yield• Nitrogen replacement

Broad-Acre, Higher-Yielding Corn Family 2 LEAD MEGA U.S.BRAZIL

ARGENTINAEU 27

• Improved yield

Broad-Acre, Higher-Yielding Soybean Family 2 LEAD HIGH U.S. BRAZIL

ARGENTINA • Improved yield

Roundup RReady2Yield Soybeans 4 HIGH U.S. BRAZILARGENTINA • Improved yield

YieldGard VT PRO 4 HIGH U.S.BRAZIL

ARGENTINAEU 27

• Improved yield• Improved insect protection

Improved-Protein Soybeans 4 LOW U.S. N/A • Food industry functionality

High-Oil Soybeans 3 LOW U.S. BRAZILARGENTINA • Food industry functionality

Omega-3 Soybeans 3 HIGH U.S. N/A • Food industry functionality

YE

ILD

& S

TR

ES

S

<$150MLOW $150-$300MMID $300-$500MHIGH >$1BMEGA

COMMERCIAL VALUE RANGES AT 2020:

BIOTECH PIPELINE

27

Our Biotech and Breeding Pipeline Is Accelerating, With Progress in Projects and Widening Yield Advantages

MILESTONES:Biotech pipeline is accelerating

10 projects either advanced phases or were added to the pipeline – among the most in any annual updateFirst time transitioned 4 projects from Phase 2 to Phase 3First multi-generational advancement as 2 generations of corn drought family advanceSmartStax enters the pipeline as the platform for corn, complementing Roundup RReady2Yield as the soybean platform

Breeding programs yields impressive

DEKALB germplasm maintains impressive 8.4 bu/ac advantage; gap widens to 14.6 bu/ac when protected with YieldGard VT Triple stackAsgrow germplasm yield advantage improves to average 1.27 bu/ac; Roundup RReady2Yield to provide 7-11% boost

Q1 Q4

Q3Q2

ANNUAL R&D CYCLE: SEEDS & TRAITSWHAT CHANGED 2007-2008?• 5 projects advanced phases• 5 products were added• Vistive II was removed in favor of Vistive III• “Water-use efficiency” soybeans reclassified as

“2nd-Gen Higher-yielding soybeans”• Two former Renessen projects were rolled into the

Monsanto pipeline

SUMMARY

28

Reconciliation of Non-GAAP Financial Measures

Reconciliation of Free Cash FlowFiscal Year

2008Target

Fiscal Year2007

$1,950 - $2,050 $1,854

(1,911)

$(57)

(583)

46

$(594)

(1,050)

$900 - $1,000

N/A

Effect of Exchange Rate Changes on Cash and Cash Equivalents N/A 58 5

N/A

Three Months Ended

Nov. 30, 2007

Three Months Ended

Nov. 30, 2006

Net Cash Provided (Required) by Operations $996 $600

Net Cash Provided (Required) by Investing Activities (256) (67)

Free Cash Flow $740 $533

Net Cash Provided (Required) by Financing Activities (47) (156)

Net Increase (Decrease) in Cash and Cash Equivalents $751 $382

$ Millions

$ per share

Three Months Ended

Nov. 30, 2007 Fiscal Year 2007

Diluted Earnings per Share $0.46

--

--

--

--

$0.46

$1.79

Loss (Income) on Discontinued Operations $(0.13)

In-Process R&D Write-Off Related to the Delta & Pine Land (D&PL) Acquisition

$0.34

Tax Charge on Repatriated Earnings --

Cumulative Effect of Change in Accounting Principle

Diluted Earnings (Loss) per Share from Ongoing Business

--

$2.00

Reconciliation of Non-GAAP EPS

29

Reconciliation of Non-GAAP Financial Measures

Reconciliation of Return on Capital

Total Monsanto Company and Subsidiaries:12 Months

EndedAug. 31, 2007

Operating Profit After-tax (excluding certain items) $1,116

Average Capital $7,533

Return on Capital 14.8%

Operating Profit After-tax (excluding certain items):

Net Income $993

Adjustment for certain items, after-tax:

2007 In-Process R & D Related to the D&PL Acquisition

$186

Loss (Income) on Discontinued Operations ($71)

Interest Expense – Net of Taxes $8

Operating Profit After-tax (excluding certain items) $1,116

$ Millions

As of Aug. 31,

2007

Average Capital:

Short-Term and Long-Term Debt $1,420

Shareowners’ Equity $7,505

Cash and Cash Equivalents $(866)

Cash for Operations $150

Total Capital $8,209

Prior Period Capital $6,857

Average Capital $7,533

monsanto 01-08-08

Economy & Finance