monsanto 11-10-05c

1

CARL CASALEEXECUTIVE VICE PRESIDENT,

NORTH AMERICA COMMERCIAL

MONSANTO BIENNIAL U.S. INVESTOR DAYNov. 10, 2005

2

OVERVIEW

Two-Step, Two-Horizon Strategy Creates a Line of Sight for Success through 2010

2006 2007 2008 2009 2010

GROWGrow Current Portfolio

Grow Globally

Grow the Pipeline LEADLead through Innovation

Lead in an Increasingly Competitive Market

Lead in New Market Opportunities

TARGET: NORTH AMERICA

3

OVERVIEW

Roundup Is Positioned for Stable Contribution

U.S. Branded RoundupHerbicideCREATING VALUE

BUSINESS REPORT

U.S. Branded Roundup Herbicide

Decreased Increased

Business Complexity

Product Innovations

Staffing

Working Capital Investment

Structural changes to Roundupbusiness completed; staffing, portfolio, marketing programs optimized

Working capital structure changed to unlock additional free cash

Pricing in world band of $11-$13 per REG; incremental volume growth with Roundup Ready crop expansion

4

OVERVIEW

Acceleration In Seeds and Traits Drives NALAN Commercial Gross Profit Evolution

2003

TOTAL GROSS PROFIT = $2.3M

MONSANTO GROSS PROFIT GROWTH



2005 2007F

ALL OTHER AGRICULTURAL PRODUCTIVITY

ROUNDUP AND OTHER GLYPHOSATE-BASED HERBICIDES

SEEDS & GENOMICS

5

OVERVIEW

Biotechnology Adoption Reflects Trait Value, Independent of Commodity Prices

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

Source: USDA and Monsanto estimates

CORN BIOTECH ACRES

CORN COMMODITY PRICES

SOYBEAN BITOECH ACRES

SOYBEAN COMMODITY PRICES

R2 = .38

0

5

10

15

20

25

30

35

40

45

50

2000 2001 2002 2003 2004 2005

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

ACRES(IN MILLIONS) $/BU

CORN

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

ACRES(IN MILLIONS) $/BU

R2 = .58

SOYBEANS

6

OVERVIEW

Corn and Soy Acreage Is Resistant to Change and Monsanto Is Protected if it Does

2006 AVERAGE GROSS PROFIT DIFFERENTIAL PER ACRE

Corn vs. Soy = $0.33

64

66

68

70

72

74

76

78

2001 2002 2003 2004 200565

67

69

71

73

75

77

79

81

83

85

2001 2002 2003 2004 2005

PLANTED CORN ACRES

Source: USDA and Monsanto estimates

3.2M ACRES LARGEST ONE-YEAR CHANGE IN FIVE-YEAR PERIOD

AC

RE

S (

IN M

ILLI

ON

S)

PLANTED SOYBEAN ACRES3M ACRES

LARGEST ONE-YEAR CHANGE

IN FIVE-YEAR PERIOD

AC

RE

S (

IN M

ILLI

ON

S)

7

GROW AND LEAD

Growth in Next Two Years Primarily Comes From Corn and Cotton, Leadership Comes from Expanding the Market

2006 2007 2008 2009 2010

GROW

LEAD


Grow branded and licensed cotton seed market share while rapidly penetrating second-generation stacked trait combinations

Grow value of corn franchise by using multiple go-to-market channels; increasing market share; expanding the trait market; and driving stacked-trait penetration

New traits are commercialized annually

Monsanto’s global “genetic footprint” has expandedMonsanto’s combination of germplasm and stacked traits is platform of choice for farmers, and foundation for introduction and expansion of new traits

8

0%

10%

20%

30%

40%

50%

60%

2001 2002 2003 2004 2005 2006F 2007F

TARGET: GROW

Grow the value of the corn franchiseU.S. Corn Market Share

GROW

Monsanto’s Germplasm Reach Continues to Translate to Greater Market Share

HOLDENS/CORN STATES LICENSEES AMERICAN SEEDS, INC BRANDS DEKALB AND ASGROW BRANDS

SUSTAINABLE 1-2 POINT BRANDED SHARE GAINS

43% 44%46% 49%

51%

9

TARGET: LEAD

Monsanto’s global “genetic footprint” has expanded

U.S. Corn Channel Strategy

LEAD

Global Breeding Capabilities Create Full Product Pipeline for Three Channels

150

160

170

180

190

200

95 100 105 110 115

RELATIVE MATURITIES (DAYS)

BU

SH

ELS

/AC

RE

1

2

3 Channel: Licensed, non-exclusiveOutlet: Regional, high-touch

Target reach: Local

2005 COMPETITIVE CORN YIELD COMPARISON

Channel: OwnedOutlet: Regional, high-touch

Target reach: Local

Channel: OwnedOutlet: Retail

Target reach: National

MONSANTO BRANDS COMPETITORS

10

TARGET: GROW

Grow the value of the corn franchiseRoundup ReadyCorn

GROW

Market Opportunity for Roundup Ready Corn on Track for 60M Acres Longer Term

SUSTAINABLEACREAGE GROWTH

0

5

10

15

20

25

30

1998 1999 2000 2001 2002 2003 2004 2005 2006F 2007F

U.S

. AC

RE

S

Roundup Ready corn is on pace for 50M acres in 2008 in the U.S.INFLECTION

POINT:DOMESTIC

CHANNELING PROGRAM

INFLECTION POINT: EU

IMPORT APPROVALS

11

TARGET: GROW

Grow the value of the corn franchiseRoundup ReadyCorn

GROW

Roundup Ready Is Poised to Penetrate Pre-Emergent Market Segments

PRE-EMERGENT TREATMENT ONLY

POST-EMERGENT TREATMENT ONLY

PRE- AND POST-EMERGENT TREATMENTS

U.S. CORN HERBICIDE APPLICATON SEGMENTS

Source: Doane Marketing Research

31% 32%

37%

CURRENT PENETRATION

PRE-EMERGENT MARKET

MARKET OPPORTUNITY

CURRENT PENETRATION

POST-EMERGENT MARKET

MARKET OPPORTUNITY

6%

51%

CURRENT PENETRATION

PRE- AND POST-EMERGENT MARKET

MARKET OPPORTUNITY

37%

12

TARGET: GROW

Grow the value of the corn franchiseRoundup ReadyCorn Advantage

GROW

Roundup Ready Corn Provides Yield Advantage Vs. Conventional Pre/Pre-Post Programs

CONVENTIONAL SYSTEM – SAME ROUNDUP READY HYBRID

ROUNDUP READY SYSTEM

150

160

170

180190

200

210

2001 2002 2003 2004 4 YearAverage

BU

SH

ELS

/AC

RE

5.5 BU/AC YIELD ADVANTAGE


6 BU/AC YIELD ADVANTAGE



13

TARGET: GROW

Grow the value of the corn franchiseZone-Based Royalty System

GROW

Zone-Based Royalties Leverage Roundup Ready Corn Base and Expand Market for YieldGard Family

Source: 2004 Farm Progress Grower Survey and Monsanto Estimates

STATES WITH WEED CONTROL NEEDS

SEGMENTED VALUE OPPORTUNITY

STATES WITH CONSISTENT NEED FOR WEED CONTROL, CORN-BORER CONTROL AND ROOTWORM CONTROL

STATES WITH CONSISTENT NEED FOR WEED CONTROL, CORN-BORER CONTROL AND SPORADIC ROOTWORM CONTROL

14

TARGET: GROW

Grow the value of the corn franchiseExpanding Trait Penetration

GROW

Seed Partners Have Responded Positively to Zone Based Royalties With Increased Trait Production

0%

10%

20%

30%

40%

50%

60%

2005 2006

LICENSEES1BRANDED COMPOSITE AVERAGE2

ROUNDUP READY SUPPLY

LICENSEES1BRANDED COMPOSITE AVERAGE2

YIELDGARD ROOTWORM SUPPLY

0%

10%

20%

30%

40%

50%

60%

2005 2006

Illinois/Indiana Seed Partners Are Ramping Up Production of Roundup Ready and

YieldGard Rootworm

1. A sub set of largest Holden’s/Corn States Licensees Operating in Illinois and Indiana2. A composite of all Holden’s/Corn States Licensees Operating in Illinois and Indiana

15

TARGET: LEAD

Monsanto’s combination of germplasm and stacked traits is platform of choice

Expanding YieldGard Rootworm Trait Penetration

LEAD

YieldGard Rootworm Penetration Increases Despite Competition

MONSANTO YIELDGARD ROOTWORM REMAINING AVAILABLE MARKET

2005

TOTAL ROOTWORM ACRES = 10-15 M

2006F


2010F


4M8M 15M

16

LEAD

Royalty Revenue Will Grow Despite Greater Competition as Regional Licensees Gain, Total Market Expands

Monsanto’s RoyaltyRevenue Stream

TARGET: LEAD

Grow the value of the corn franchise

OTHER DUPONT & SYNGENTA

2005

50% 50%

2010F

68%

32%

17

TARGET: GROW

Grow the branded & licensed cotton seed market share

Emergent Cotton Seed Brand

GROW

Direct Participation in Cotton Opens New Avenues for Market Penetration

Breeding gains will build on 2005 market share growth with 1-to-2 points of annual market share gains forecast

Stoneville and Nexgen brands also to lead launch of Bollgard II/Roundup Ready Flex stack

0%

5%

10%

15%

20%

25%

30%

2004 2005 2006F 2007F

SUSTAINABLE1-2 POINT SHARE GAIN WITH EMERGENT & COTTON STATES

MONSANTO COTTON SHARE GROWTH

EMERGENT

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TARGET: GROW

Grow the branded & licensed cotton seed market share

Roundup ReadyFlex Cotton

GROW

Experience Curve Allows Monsanto to Stage Largest Trait Launch in Biotech History

Value reflects greater convenience and enhanced weed control; lifts value of the Roundup Ready trait

Anticipated largest trait launch ever with 2-3 million acres, pending final approvals

80-90% of Roundup Ready Flex to be stacked with Bollgard II

Broad introduction led by Emergent and Cotton States

U.S. MONSANTO COTTON TRAIT ACRES

0

3

6

9

12

15

1998 1999 2000 2001 2002 2003 2004 2005

BOLLGARD & BOLLGARD II

ROUNDUP READY

STACKED

STACKEDPENETRATION

TREND

19

TARGET: LEAD


Expanding Cotton Trait Penetration

LEAD

Monsanto’s Stacked Cotton Traits Have Been Established to Remain the Technology of Choice

MONSANTO STACKEDCOTTON TRAITS

REMAINING AVAILABLE MARKET

2006F

TOTAL ROUNDUP READY FLEX/

BOLLGARD II ACRES ACRES = 8-10 M

2008F 2010F

2-3M





6M 7M

20

TARGET: LEAD


Roundup RReady2Yield Soybeans

LEAD

Second-Generation Roundup RReady2Yield Soybeans Enhances Weed Control, Offers Disease Insurance

HISTORICAL SOY YIELD GAINS Return value to farmer by bringing new technology

Yield improvement of 3 - 4+ bushels per acre in 2004 field trials

Flexibility by providing wider window of application

Research under way on potential for additional insurance for Asian soybean rust

Provides the platform for future soy technologies

y = 0.4246x - 811.11

20

25

30

35

40

45

1970 1980 1990 2000

BU

SH

ELS

/AC

RE

21

TARGET: GROW

Successfully launch and grow new products that serve the farmer, processor and consumer markets

Vistive Low Linolenic Soybeans

GROW

Vistive Brand Branches Out With More Acres, More Seeds, More Processors

Available market 5M acres, 100K acres planted in 2005, growing to 500K in 2006

One seed variety in 2005 growing to 10+ in 2006, 4 processors in 2006, from two in prior year

Oil sold out from 2005; to be in consumer products in late 2005

800+ Farmers in Eastern and Northeastern Iowa planted Vistive soybeans this year

In 2006, additional brands and varieties will expand the maturity zones and geographic reach

of Vistive

20052006

22

TARGET: LEAD

New traits are commercialized annuallyVistive Family of Traits

LEAD

First-Generation Vistive Soybeans Initiate Value Creation Across the Food Chain

• Crop Yield• Agronomic Performance• Germplasm Choice• Income Opportunity

• Stronger Brands• Category Expansion• Quality Assurance• Raw Material Supply

• Great Taste• Improved Health• Product Convenience• Economical Price

AG INPUTS(SEED)

FARM PRODUCTION

(GRAIN)

CRUSHING REFINING

(OIL)

FOOD MANUFACTURE

(PRODUCTS)

CONSUMER DEMAND(FOOD)

SUPPLY MANAGEMENT DEMAND CREATION

Monsanto Food Quality Traits Deliver Value Across the Food

Supply Chain

23

TARGET: LEAD


Market Opportunity

LEAD

Growth Still Considerable for Biotech Traits in United States, Particularly as Corn Market Expands

SOYBEANS COTTON CORNRoundup

Ready Flex

AVAILABLE MARKET AS REPORTED 2003

70M 10-15M 0M

10-15M

6-8M 50M 30M-40M 15-20M

Roundup Ready

Roundup Ready

Bollgard I and II

Roundup Ready

YieldGard Corn Borer

YieldGard Rootworm

2010AVAILABLE MARKET

70M 0M1 6-8M 60M 50M-60M 25-30M

KEY MARKET: UNITED STATES

BIOTECH ACRES PLANTED 2005

REMAINING AVAILABLE MARKET

UPDATED FORECAST

1. Roundup Ready market cannibalized by Roundup Ready Flex cotton

24

OVERVIEW

Two-Step, Two-Horizon Strategy Creates a Line of Sight for Success through 2010

2006 2007 2008 2009 2010

GROWGrow Current Portfolio

Grow Globally

Grow the Pipeline LEADLead through Innovation

Lead in an Increasingly Competitive Market

Lead in New Market Opportunities


monsanto 11-10-05c

Economy & Finance