monsanto 03-15-05

1

Merrill Lynch Chemicals ConferenceNew York

March 15, 2005

KERRY PREETEVice President, U.S. Crop Production

2

Forward-Looking Statements

Certain statements contained in this presentation, such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, currency impact, business and financial plans and other non-historical facts are "forward-looking statements." 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: the company's exposure to various contingencies, including those related to Solutia Inc., litigation, intellectual property, regulatory compliance (including seed quality), environmental contamination and antitrust; successful completion and operation of recent and proposed acquisitions; fluctuations in exchange rates and other developments related to foreign currencies and economies; increased generic and branded competition for the company's Roundup herbicide; the accuracy of the company’s estimates and projections, for example, those with respect to product returns and grower use of our products and related distribution inventory levels; the effect of weather conditions and commodity markets on the agriculture business; the success of the company’s research and development activities and the speed with which regulatory authorizations and product launches may be achieved; domestic and foreign social, legal and political developments, especially those relating to agricultural products developed through biotechnology; the company’s ability to successfully market new and existing products in new and existing domestic and international markets; the company’s ability to obtain payment for the products that it sells; the company's ability to achieve and maintain protection for its intellectual property; the effects of the company's accounting policies and changes in generally accepted accounting principles; the company's ability to fund its short-term financing needs; and other risks and factors detailed in the company's filings with the U.S. Securities and Exchange Commission. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to revise or update any forward-looking statements or any of the factors that may affect actual results, whether as a result of new information, future events or otherwise.

3

Non-GAAP Financial Information

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 on-going 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 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 at the end of this presentation. Our presentation of non-GAAP financial measures is intended to supplement investors’ understanding of our operating performance. These non-GAAP financial measures are not intended to replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with accounting principles generally accepted in the United States. 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, which can be found at the end of this presentation.

Fiscal Year

In this presentation, unless otherwise specified, references to Monsanto’s fiscal years refer to the 12-month period ending August 31.

Trademarks

Roundup, Roundup Ready, Bollgard, Bollgard II, YieldGard, Monsanto, Imagine, Vine Design, Asgrow, DEKALB, Monsanto Choice Genetics, Posilac, Processor Preferred, and Vistive are trademarks owned by Monsanto Company and its wholly-owned subsidiaries.

4

OVERVIEW

Monsanto Has Established Strategic Platforms inHigh-Value Crops

MOLECULAR AND CONVENTIONAL BREEDING

BIOTECHNOLOGY

CORN SOYBEANS COTTON VEGETABLELARGE-ACRE CROPS SMALL-ACRE CROPS

Branded Licensed Branded Licensed Branded Licensed BrandedASI

DEKALBASGROW

HOLDEN’S/ CORN

STATESAMERICAN

SEEDS, INC.

SEMINIS*ASGROWDEKALB

HOLDEN’S/ CORN

STATES

EMERGENT*

COTTON STATES

R&D PLATFORMS

SEED & TRAIT CROP PLATFORMS

*Pending

ASI

AMERICAN SEEDS, INC.

5

OVERVIEW

Biotechnology Adoption Reflects Trait Value, Independent of Commodity Prices

0

5

10

15

20

25

30

35

40

45

2000 2001 2002 2003 2004$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

MONSANTO U.S. BIOTECH ACRES VS. AVERAGE MARKET PRICE

Source: USDA and Monsanto estimates

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2004$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

8.5

9

9.5

10

10.5

11

11.5

2000 2001 2002 2003 2004$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

LEFT AXIS: ACRES (MILLIONS) RIGHT AXIS: $ PER ACRE

CORN BIOTECH ACRES

CORN PRICES SOYBEAN BIOTECH ACRES

SOYBEAN PRICES

COTTON BIOTECH ACRES

COTTONPRICES

6

BIOTECH ACRES PLANTED 2004

REMAINING AVAILABLE MARKET

SOYBEANS COTTON CORN

TRAIT PENETRATION 97% 68% 88% 34% 80% 9%

Roundup Ready

Roundup Ready

Bollgard I and II

Roundup Ready

YieldGard Corn Borer

YieldGard Root-worm

AVAILABLE MARKET 70M 10-15M 6-8M 50M 30M-40M 15-20M

MARKET LEADERSHIP

Growth Remains for Biotechnology, Particularly in Corn

KEY MARKET: UNITED STATES

7

MARKET LEADERSHIP

Value of Soybean Weed Control Has Shifted to Seeds and Roundup Ready Trait

Source: Monsanto and Doane Market Research

$47

$40

1995 2004

$ P

ER

AC

RE

HERBICIDE COST

TRAIT VALUE

1999

ROUNDUP READY

$43

CONVENTIONAL

HERBICIDE

SEED

ROUNDUP READY TRAIT

U.S. GROWER SOYBEAN SYSTEM COST

8

MARKET LEADERSHIP

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED

U.S. BRAZIL ARGENTINA

5M TBD TBD

0% 0% 0%

Vistive Is the First of a Family of Improved Oils for Food Uses

VistiveLow Linolenic Soy

First of a three-product step-change in oil profiles; launch in 2005

Most oil already under contract with food companies

Oil to be in on-the-shelf consumer products in late 2005

DISCOVERY PHASE IProof of Concept

PHASE IIEarly Development

PHASE IIIAdv. Development

PHASE IVPre-Launch

LAUNCH

• Contract grown, value shared. Monsanto sells to growers, processors pay grower premium and royalty to Monsanto after harvest and crushing

• To be stacked with Mid-Oleic before full market penetration is achieved

• 1 acre = approximately 500 lbs. of oil

OIL PROFILES ALONG THE THREE-STEP CHANGE IMPROVEMENT

STANDARD SOYBEAN

LOW LIN

MID OLEIC + LOW LIN

ZERO SAT + MID OLEIC +

LOW LIN

LINOLENIC18:3

LINOLEIC18:2

OLEIC18:1

SATS18:0 / 16:0

CREATING VALUE

9

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED


<1M TBD TBD

0% 0% 0%

Breeding Breakthrough Improves the Taste and Mouth-Feel of Soy-Based Foods

Improved-ProteinSoybeans for Food

Created through breeding technologies

Improves taste and mouth-feel

Consumer applications in beverages and meat alternatives

Developed with molecular markers and analytical screenings to accelerate breeding

Produced in high-yielding varieties for testing




PHASE IVPre-Launch

LAUNCH

• Contract grown, value shared. Monsanto sells to growers, processors pay grower premium and royalty to Monsanto after harvest and crushing

• Small acres, but high value per acre

INNOVATION - BREEDING

CREATING VALUE

10

MARKET LEADERSHIP

Monsanto Now Services Seed Market Through Three Outlets

CORN

Branded Licensed American Seeds Inc.

INDEPENDENT SEED CO.

11

MARKET LEADERSHIP

Monsanto’s Germplasm Reach Has Grown Through Branded and Broadly Licensed Seeds

0%

10%

20%

30%

40%

50%

MONSANTO ANDLICENSEES

PIONEER SYNGENTA MYCOGEN

2004 U.S. CORN MARKET SHARE

49%

33%

14%

4% Branded Growth in

3 Years4%

DEKALB AND ASGROW BRANDS

AMERICAN SEEDSHOLDEN’S/CORN STATES LICENSEES

*

* Syngenta pro forma for acquisition of Advanta and Golden Harvest

12

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED

ASI BRAZIL ARGENTINA

80M 30M 6M

2% 35% 49%

LICENSEDBRANDU.S.

33%14%

MARKET LEADERSHIP

Diversity of Corn Seed Breeding Is Driving Market Share Growth; Poised to Expand

Corn Breeding

Late 1990s: Acquired 36 major corn breeding programs (12 countries X average of 3 companies per country)

Today: Over 60% of corn hybrids represent new products over three-year period

Monsanto’s elite corn germplasm out-yielded competitors’ germplasm across 2004 field trials




PHASE IVPre-Launch

LAUNCH

CREATING VALUE

• Value measured in market share gains; Monsanto’s U.S. branded seed gained 4 points in 3 years

• Elite, high-yielding germplasm refreshes product portfolio at the high end of pricing

• Highest priced branded conventional hybrid averages $100/unit or $36/acre

2004 U.S. CORN YIELD GAINS

150

160

170

180

190

200

210

220

95 100 105 110 115

MONSANTO BRANDED COMPETITORSB

US

HE

LS P

ER

AC

RE

RELATIVE MATURITY (DAYS)

13

0

5

10

15

20

25

1998 1999 2000 2001 2002 2003 2004 2005F

MIL

LIO

NS

OF

AC

RE

S

Market Potential for Roundup Ready Corn Poised To Accelerate

MARKET LEADERSHIP

Roundup ReadyCornCREATING VALUE




PHASE IVPre-Launch

LAUNCH

Current forecast of 20M acres of Roundup Ready corn in 2005 U.S. season

With European import approval for single trait, U.S. market potential is now 50M acres

Production plans under way to accelerate growth in 2006

ARGENTINA

5M

<1%

KEY MARKET AREAS

TARGET MARKET

PERCENT PENETRATED

U.S.

50M

32%

U.S. ROUNDUP READY CORN ACREAGE GROWTH

• 2005 U.S. trait fee of $8-$10 per acre in Monsanto branded seed for single trait

• Grower profits average of $12 per acre on yield gains alone; additional cost savings on labor, fuel and equipment

• Provides grower greater flexibility in weed control

14

Corn Trait Mix Continues To Accelerate Toward Stacked Platform

AC

RE

S (

MIL

LIO

NS

)

Source: Monsanto estimates

MARKET LEADERSHIP

U.S. CORN TRAIT ACRES

0

10

20

30

40

50

1998 1999 2000 2001 2002 2003 2004 2005F

STACKED TRAITS YIELDGARD CORN BORER OR YIELDGARD

ROOTWORM SINGLE TRAIT

ROUNDUP READY CORN SINGLE TRAIT

15

Triple-Stacked Corn Traits Fill a “Sweet Spot” in U.S. Corn Market Needs

MARKET LEADERSHIP

CORE ACRESVALUE REFLECTS BROAD

TECHNOLOGY FIT

INSURANCE ACRESINSURANCE VALUE WITH PRICE

ELASTICITY

ROUNDUP READY

YIELDGARD CORN

BORER

YIELDGARD ROOTWORM

INSURANCE ACRESINSURANCE VALUE WITH PRICE

ELASTICITY

16

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED


4M 1M 4M

0% 0% 0%

High-Lysine Corn: First and Second Generation

Lower cost of lysine animal feed ration

Improved amino acid balance; increased total energy

High lysine corn mixed with feed proportionately to replace lysine in feeding system

Two-product step-change in lysine content




PHASE IVPre-Launch

LAUNCH

High Lysine Enhances Animal Feed, Shifts Value to Seed

• Market value for feed-grade lysine is roughly $1 billion annually

• Value shared with Cargill through 50/50 Renessen joint venture

INNOVATION - BIOTECHNOLOGY

LYSINE TOTALS IN TESTING

CREATING VALUE

First-Generation High-Lysine Corn

Second-Generation High-Lysine Corn

4,000

Parts per million (PPM)

4,000

Parts per million (PPM)

0

0

Target: 1,000 PPM

Target: 4,000 PPM

17


Second-Generation YieldGard Corn Borer Controls More Insects

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED


30-40M 15M 4M

0% 0% 0%CREATING VALUE

Second-Generation YieldGard Corn Borer

Broad control solution for fall armyworm and corn earworm for global expansion

Durability solution for insect resistance management

Excellent control in high infestation levels




PHASE IVPre-Launch

LAUNCH

• Value reflects enhanced insect control and insect resistance management. Lifts value of YieldGard Corn Borer trait.

CORN EARWORM FEEDING DAMAGE IN TRIALS

0

2

4

6

8

10

12

EA

R D

AM

AG

E (

CM

)

2ND-GENERATION YIELDGARD CORN BORER EVENTS

YIELDGARD CORN BORER COMPETING

PRODUCT

CONTROL

18

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED


TBD TBD TBD

0% 0% 0%

Drought Stress Tolerance To Be a Family of High-Value Traits in Multiple Crops

Drought-TolerantCorn

Yield protection on all acres against water deficits

Yield enhancement through improved water use on drought-prone acres and cost savings on irrigated acres

Two gene leads obtained positive results with more than one transformed event




PHASE IVPre-Launch

LAUNCH

• Pricing will reflect yield gains in all three markets; value of higher yields shared with farmer

• Stacking with weed and insect control enhances the margin opportunity

• Irrigation currently costs $50 to $100 per acre


0

5

10

15

20

25

30

YIE

LD I

NC

RE

AS

E

(BU

/AC

)

EVENT 1 EVENT 2 EVENT 30

2

4

6

8

10

12

14

16

18

EVENT 1 EVENT 2 EVENT 3

3 EVENTS: GENE 1 3 EVENTS: GENE 2

GERMPLASM 1 GERMPLASM 2

CREATING VALUE

YIELD INCREASE IN TWO GENE TRIALS

19

Emergent and Cotton States Mirror Monsanto’s Market Approach for Corn

DEKALB ASGROW

MARKET LEADERSHIP

HOLDEN’S

EMERGENT

COTTON STATES

•Access to quality germplasm•Brand recognition in important markets

•Seed and trait share growth

•Growth through seed breeding enhancements

•Trait value capture through enhanced marketing channels

•Rapid penetration of future technology advances

BRANDED PLATFORM

LICENSING PLATFORM

20

MARKET LEADERSHIP

Emergent Has Held U.S. Market Share Over Last Six Years; Clear Opportunity To Drive Growth

U.S. COTTON SEED MARKET SHARE

0%

20%

40%

60%

80%

100%

1999 2000 2001 2002 2003 2004

DELTA & PINE LANDOTHERSFIBERMAX

PHYTOGENEMERGENT

Source: USDA, based on planted acres

21

Molecular Breeding Used To Create New Source of Seed for U.S. Cotton Farmers

Cotton States

Germplasm licensed from third parties and developed through molecular breeding by Monsanto

Seed production under way for commercialization in 2006

Cotton States launching exclusively on a second-generation trait platform




PHASE IVPre-Launch

LAUNCH

MARKET LEADERSHIP

CREATING VALUE

KEY MARKET AREAS

TARGET MARKET

PERCENT PENETRATED

U.S.

7M-8M

0%

• Rapid and broad introduction of traits and future innovations

• Licensing fee reflects value of top quality germplasm, separate from value of trait

• Cotton seed currently sells for average of $20 per acre

2004 COTTON STATES FIELD TRIALSLB

S. L

INT

/AC

RE

1,200

1,300

1,400

1,500

1,600

COTTON STATES VARIETIES

COMPETITIVE VARIETIES

22

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED




PHASE IVPre-Launch

LAUNCH

Roundup ReadyFlex Cotton

Expanded window of over-the-top application for more “flexible” weed control

Increased grower convenience

Reduced need for specialized spray equipment

8 cotton seed companies currently breeding trait into varieties

Added Flexibility Means Better Weed Control, Greater Value in Cotton

U.S. AUSTRALIA

10-15M 0.5-0.8M

0% 0%

• Value reflects greater convenience and enhanced weed control; lifts the value of the Roundup Readytrait

• Roundup ReadyFlex Cotton will be available only stacked with Bollgard II, which also should boost Bollgard IIadoption


CREATING VALUE

23

MARKET LEADERSHIP

Cotton Market Already Has Shifted to Stacked Platform; Emergent Can Accelerate that Trend

U.S. MONSANTO COTTON TRAIT ACRES

0

3

6

9

12

15

1998 1999 2000 2001 2002 2003 2004 2005F

AC

RE

S (

MIL

LIO

NS

)

BOLLGARD & BOLLGARD II ROUNDUP READY STACKED

Source: Monsanto estimates

24

FINANCIAL GROWTH

Monsanto’s Seed and Trait Gross Profit Growth Driven First by Strong Base Business, then by Pending Acquisitions

2003 2004 2005F PRO FORMA*

ROUNDUP AND OTHER GLYPHOSATE-BASED HERBICIDES

SEEDS AND TRAITS

$2.3 BILLION $2.6 BILLION $2.9 BILLION

ALL OTHER AG PRODUCTIVITY

GROSS PROFIT

47%30%

23%

53%

28%

19%

61%

23%

16%

* Includes Seminis and Emergent estimates

47% Gross Profit/Net Sales 47% Gross Profit/Net Sales 48% Gross Profit/Net Sales

25

$0

$200

$400

$600

$800

$1,000

$1,200

2003 2004 2005F 2006F 2007F

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

2003 2004 2005F 2006F 2007F

FINANCIAL GROWTH

Growth of Monsanto’s Ongoing Business Is Accelerating, Generating Significant Free Cash Flow

MONSANTO ONGOING EPS BEFORE ACQUISITIONS

MONSANTO FREE CASH FLOW BEFORE ACQUISITIONS

$ M

ILLI

ON

S

15% growth

15% growth

$700-$800M

26

FINANCIAL GROWTH

Acquisitions of Seminis and Emergent Add to EPS and Free Cash Flow Forecasts

MONSANTO PRO FORMA EPS FORECAST

MONSANTO PRO FORMA FREE CASH FLOW FORECAST

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2003 2004 2005F 2006F 2007F ($1,000)

($500)

$0

$500

$1,000

$1,500

2003 2004 2005F 2006F 2007F$

MIL

LIO

NS

17% growth

20%-25% growth

$825-$925M

Impact of Seminis and Emergent acquisitions

27

SUMMARY

Monsanto Has Established Strategic Platforms inHigh-Value Crops

MOLECULAR AND CONVENTIONAL BREEDING

BIOTECHNOLOGY

CORN SOYBEANS COTTON VEGETABLELARGE-ACRE CROPS SMALL-ACRE CROPS

Branded Licensed Branded Licensed Branded Licensed BrandedASI

DEKALBASGROW

HOLDEN’S/ CORN

STATESAMERICAN

SEEDS, INC.

SEMINIS*ASGROWDEKALB

HOLDEN’S/ CORN

STATES

EMERGENT*

COTTON STATES

R&D PLATFORMS

SEED & TRAIT CROP PLATFORMS

*Pending

ASI

AMERICAN SEEDS, INC.

28

Reconciliation of Non-GAAP Financial Measures

Reconciliation of Non-GAAP EPS

Reconciliation of Free Cash Flow

$ MillionsFiscal Year 2005

Target12 Months Ended

Aug. 31, 200412 Months Ended

Aug. 31, 2003

Net Cash Provided (Required) by Operations $1,200 $1,261 $1,128

Net Cash Provided (Required) by Investing Activities $(400) $(262)

Free Cash Flow $800 $999 $646

Net Cash Provided (Required) by Financing Activities N/A $(243) $(502)

Net Increase (Decrease) in Cash and Cash Equivalents N/A $756 $144

Fiscal Year 2006 Target

$1,100

$(300)

$700-$800

N/A

N/A

$(482)

12 Months Ended Aug. 31, 2005


Net Income (Loss)

$0.71-$0.93

$2.13 - $2.30

Estimated Purchase Accounting Adjustments $0.78 - $0.85Tax Benefit on Loss from Sale of European Wheat andBarley Business

Net Income (Loss) from Ongoing Business $1.85 - $2.00 $2.13 - $2.30

$ per share

Solutia-Related Charge $0.68


$0.99

$0.36

--

$1.61

--

Restructuring Charges -- Net --$0.022004 Discontinued Operations and Related

Restructurings-- Net

--

--

--

--

$0.24Goodwill Impairment Charge for Global Wheat Business

-- --

-- --

--

--

$(0.39)

Fiscal Year 2007 Target

$1,000-$1,100

$(300)

$800

N/A

N/A


$2.45 - $2.65

----

--

--

--

--

$2.45 - $2.65


Cumulative Effect of Change in Accounting PrincipleIncome (Loss) Before Cumulative Effect of Accounting Change

-- -- -- --$0.99

$0.71-$0.93

$2.13 - $2.30 $2.45 - $2.65

$0.26$0.05$0.31$0.10$0.05

--

--

--

$0.96

$1.42

29

Reconciliation of Non-GAAP Financial Measures Pro Forma Basis

Reconciliation of Non-GAAP EPS Pro Forma

Reconciliation of Free Cash Flow Pro Forma

$ MillionsFiscal Year 2005

Target12 Months Ended

Aug. 31, 200412 Months Ended

Aug. 31, 2003

Net Cash Provided (Required) by Operations $1,200 $1,261 $1,128

Net Cash Provided (Required) by Investing Activities $(2,100) $(262)

Free Cash Flow $(900) $999 $646

Net Cash Provided (Required) by Financing Activities N/A $(243) $(502)

Net Increase (Decrease) in Cash and Cash Equivalents N/A $756 $144

Fiscal Year 2006 Target Pro Forma

$1,125-$1,200

$(300)

$825-$925

N/A

N/A

$(482)



Pro FormaNet Income (Loss)

$0.71-$0.93

$2.16 - $2.34

Estimated Purchase Accounting Adjustments $0.78 - $0.85Tax Benefit on Loss from Sale of European Wheat andBarley Business

Net Income (Loss) from Ongoing Business $1.85 - $2.00 $2.16 - $2.34

$ per share

Solutia-Related Charge $0.68


$0.99

$0.36

--

$1.61

--

Restructuring Charges -- Net --$0.022004 Discontinued Operations and Related

Restructurings-- Net

--

--

--

--

$0.24Goodwill Impairment Charge for Global Wheat Business

-- --

-- --

--

--

$(0.39)

Fiscal Year 2007 Target Pro Forma

$1,125-$1,225

$(300)

$825-$900

N/A

N/A


Pro Forma$2.59 - $2.93

----

--

--

--

--

$2.59 - $2.93


Cumulative Effect of Change in Accounting PrincipleIncome (Loss) Before Cumulative Effect of Accounting Change

-- -- -- --$0.99

$0.71-$0.93

$2.16 - $2.34 $2.59 - $2.93

$0.26$0.05$0.31$0.10$0.05

--

--

--

$0.96

$1.42

monsanto 03-15-05

Economy & Finance