monsanto 12-04-06

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TED CROSBIEBREEDING LEAD

CITIGROUP PRE-CONFERENCE TEACH-IN

December 4, 2006

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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 completion and operation of recent and proposed acquisitions, including Delta and Pine Land Company; 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 filings with 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.

Trademarks

Trademarks owned by Monsanto Company and its wholly-owned subsidiaries are italicized in this presentation.

Mavera is a trademark of Renessen, LLC.

© 2006 Monsanto Company

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OVERVIEW

Breeding and Biotech Provide Parallel R&D Paths to Commercial Products

PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

BREEDING and BIOTECHNOLOGY form two R&D pathways

Separate, but parallel, the BREEDING and BIOTECHNOLOGY pathways are linked by shared tools.

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BREEDING

BIOTECHNOLOGY

GGermplasm

RSEED SOLD TO FARMERS

R&D PHASE:

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Germplasm Is Building Block for Better Seed; Germplasm Library Is Building Block for Better Breeding

BREEDING

TEMPERATESUB-TROPICAL

TROPICAL

SUB-TROPICAL

TEMPERATE

CORN SEED GERMPLASM LIBRARYASSEMBLED GEOGRAPHIC POOLS

GERMPLASM

OVERVIEW:Germplasm is like breeding in thoroughbred race horses –just as breeders select for the fastest race horses, seed breeders look to pair the best pool of genes for the strongest yielding seed

APPLICATION: Germplasm pools allow breeders to target key physiological traits:

Monsanto’s corn germplasm library is assembled from 36 breeding programs in 12 different countriesAnnually, breeders exchange more than a million different “packages” of germplasm material>50% of Monsanto’s corn hybrids result from intra-company crosses

• Increased Yield• Disease Resistance• Stress Tolerance• Grain Quality / Added Value

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Markers Allow Breeders to Get Best Combinations of Germplasm Faster With Greater Predictability

BREEDING

Regions associated with yield coming from Parent 1

1 2 5 6 7 8 9 103 4

Regions associated with yield coming from Parent 2

MARKERS

OVERVIEW:A corn plant has 40,000 genes spanning 10 chromosomes. Characteristics – or traits – are built from different pieces on different chromosomes. Markers are DNA ‘flags’ that indicate where particular genes are located

APPLICATION: Using markers to make better selections, breeders can improve the probability of success:

TRACKING CHARACTERISTICS FOR YIELDYIELD-RELATED AREAS ON CORN CHROMOSOMES

Probability of finding 1 trait that is controlled by 20 genes“Random” crosses: 1 per trillion

1 in 5

After application of markers and

breeding technology

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Products of Molecular Breeding Only Beginning to Enter the Commercial Portfolio

BREEDING

0%

5%

10%

15%

20%

2001 2002 2003 2004 2005 2006 2007F 2008F 2009F 2010F0%

2%

4%

6%

8%

10%

12%

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2006 BRANDED U.S. MARKET SHARE: 19%

DEKALB AND ASGROW U.S. BRAND MARKET SHARE

PROGRESSION OF BREEDING TECHNOLOGY

IN THE COMMERCIAL

PORTFOLIO

CYCLE 1: INTEGRATION OF GLOBAL GERMPLASM

• ASSEMBLED 36 MAJOR CORN BREEDING PROGRAMS IN 12 COUNTRIES

• FIRST INTRA-COMPANY CROSSES; BY CYCLE 3, >50% OF HYBRIDS IN THE U.S. PORTFOLIO MADE THROUGH INTRA-COMPANY CROSSES

CYCLE 2:APPLICATION OF MOLECULAR BREEDING TO SELECTION

CYCLE 3: SELECTION POWER OF MOLECULAR BREEDING

• MOLECULAR BREEDING IMPROVES GENETIC POTENTIAL BY 2X VERSUS CONVENTIONAL BREEDING

• IN 2006, FIRST MOLECULAR BREEDING HYBRIDS ENTERED COMMERCIAL PORTFOLIO

• PREDICTIVE COMBINATIONS ALLOW MORE EFFICIENT BREEDING

• MOLECULAR BREEDING ACCELERATES TRAIT INTEGRATION BY SHORTENING ‘BACKCROSSING’ CYCLES

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Core Research Methods Have Applicability Across Crop Platforms, Magnifying Investment and Productivity

BREEDING

CROP PLATRFORMS

CORN

SOYBEANS

COTTON

VEGETABLES

MARKER DISCOVERY

MARKER DETECTION

IT SYSTEMS

SHARED TECHNOLOGY AND METHODS

Focused on methods for discovering new

markers, moving to a “SNP” (single

nucleotide polymorphism)

platform for all crops

APPLICATION TODAY:Thousands of SNP markers already identified and in use for cornand soybeans

OPPORTUNITY: Development of SNP markers for 9 different row crop and vegetable species

MARKER-TRAIT ASSOCIATIONS

Focused on state-of-the-art platforms to detect markers that maximize efficiency and minimize cost

APPLICATION TODAY:Proprietary automated systems in place for corn, soybeans and cotton

OPPORTUNITY: Leverage existing platforms for additional species and upgrading systems for all crops

Focused on creating unified decision-

making systems to better enable

breeding efficiency

APPLICATION TODAY:Proprietary interconnected IT systems in place for corn, soybeans and cotton

OPPORTUNITY: Utilize existing systems to provide comparable capabilities for vegetables

Focused on the best application of marker-trait

associations to select for most commercially-relevant traits

APPLICATION TODAY:Associations used for complex traits –like yield – in corn and soybeans, and simpler traits in vegetables

OPPORTUNITY: Marker-trait associations will allow for predictive breeding for key traits in all relevant crops

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Delivering Yield Favors Companies That Can Provide Both Breeding and Biotechnology Improvements in Concert

BREEDING + BIOTECHNOLOGY

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INSECT PRESSURE

WEED PRESSURE

NUTRIENT DEFICIENCY

WATER DEFICIENCY

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SEED MANUFACTURING

WEED-CONTROL TRAITS

ABOVE-GROUND INSECT CONTROL

BELOW-GROUND INSECT CONTROL

FOCUS: YIELD

NET REALIZED YIELD

PERCENT OF GENETIC GAIN PRESERVEDX

GENETIC POTENTIAL

WHAT MATTERS TO FARMERS IS THE YIELD AT HARVEST, WHICH IS A FUNCTION OF HOW MUCH POTENTIAL A SEED HAS AND HOW IT’S PROTECTED:

NET REALIZED YIELD WITH CURRENTPROTECTION

NET REALIZED YIELD WITHFUTURE PROTECTION OPPORTUNITIES

GENETIC POTENTIAL PRESERVED THROUGH BIOTECH TRAITS AND PRODUCTION ADVANCES

GENETIC POTENTIAL (FUTURE)

GENETIC POTENTIAL (CURRENT)

NET REALIZED YIELD WITH NO PROTECTION

SECOND-GENERATION INSECT CONTROL

DROUGHT TOLERANCE

IMPROVED NITROGEN UTILIZATION

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BIOTECHNOLOGY

Early Pipeline Work Focuses On Identifying Best Genes and Introducing Leads Into Plants for Development

BIOTECH DISCOVERY

GENE SOURCES:Hundreds of thousands of genes are screened to find candidates for biotech traits• Genes come from plant

sources, including bacteria, fungi, microorganisms (like baker’s yeast) and native genes in plants

• Genes used in insect-protected crops to date are from “bacillus thuringiensis,” or “Bt,” a class of naturally occurring soil bacteria with thousands of different strains that target specific insects

GENE INSERTION:There are two key methods used to insert genes into plants:• Agrobacterium• Particle acceleration (gene

gun)

PARTICLE ACCELERATION – GENE GUN

AGROBACTERIUM

Agrobacterium tumefaciensnaturally inserts DNA segments into plant cells –this is used to transfer identified genes

Gene guns use “biolistics,” using particles coated in DNA that are introduced into plant cells

GENE TRANSFER PLASMID

DNA

AGROBACTERIUM TUMEFACIENS

GENEINSERTIONTRANSFORMED

PLANT CELL WITH GENE

NUCLEUSCHROMOSOME

DNA

GENEINSERTION

NUCLEUSCHROMOSOME

PARTICLE ACCELERATION

TRANSFORMED PLANT CELL

WITH GENE

DNA-COATED PELLETS

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BIOTECHNOLOGY

Biotech Pipeline Follows Pharmaceutical-Like Development

DISCOVERYGene/Trait Identification

PHASE IProof Of Concept

PHASE IIEarly Development

PHASE IIIAdvanced Development

PHASE IVPre-launch

AVERAGE DURATION1 24 to 48 MONTHS 12 to 24 MONTHS 12 to 24 MONTHS 12 to 24 MONTHS 12 to 36 MONTHS

GENES IN TESTING TENS OF THOUSANDS THOUSANDS 10s <5 1

MONSANTO DISCOVERY + COLLABORATIVE PARTNERS

KEY INFLECTION POINT:AFTER PHASE II COMMERCIAL SUCCESS GOES TO >50% WITH LEADS ON COMMERCIAL TRACK

1. Time estimates are based on our experience; they can overlap. Total development time for any particular product may be shorter or longer than the time estimated here.

TRAIT INTEGRATION

FIELD TESTING

REGULATORY DATA GENERATIONREGULATORY SUBMISSIONSEED BULK UP

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BIOTECHNOLOGY

Stage-Gate Model Provides Systematic Evaluation and Built-In Cost Prioritization





PHASE IVPre-launch

AVERAGE DURATION1 24 to 48 MONTHS 12 to 24 MONTHS 12 to 24 MONTHS 12 to 24 MONTHS 12 to 36 MONTHS

KEY ACTIVITY

• High-throughput gene screening

• Model crop testing

• Optimizing gene in greenhouse and fields to establish proof of concept

• Commercial transformations of genes into crop plants

• Scale up events for large-scale field testing

• Extensive field testing to generate regulatory data and for agronomic testing

• Completion of regulatory submissions

• Commercial seed bulk up

TRIGGER TO ADVANCE TO NEXT PHASE

AVERAGE PROBABILITY OF SUCCESS2

5% 25% 50% 75% 90%

RELATIVE R&D COST PER PROJECT3

1. Time estimates are based on our experience; they can overlap. Total development time for any particular product may be shorter or longer than the time estimated here.2. This is the estimated average probability that the traits will ultimately become commercial products, based on our experience. These probabilities may change over time.3. Relative cost reflects an estimate of cumulative costs for a composite project. Actual spending will vary for any individual project.

GENE LEADS IDENTIFIED

“BEST” GENES IDENTIFIED

LEAD EVENTS SELECTED

REGULATORY PACKAGES SUBMITTED

RELEVANT REGULATORY REVIEWS COMPLETED

COST-INFLECTION POINT:PER-PROJECT COSTS ONLY MOVE UP ONCE COMMERCIAL TRANSFORMATIONS ARE MADE, AND THE PROBABILITY OF SUCCESS ALSO INCREASES

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Over the Last Decade, First-Generation Biotech Traits Have Revolutionized Farmers’ Approaches to Weeds and Bugs

BIOTECHNOLOGY

FIRST-GENERATION TRAITS

CORN SOYBEANS COTTON

WEED CONTROL

INSECT CONTROL

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YIELDGARD CORN BORER (1997)

YIELDGARDROOTWORM (2003)

ROUNDUP READYSOYBEANS (1996)

ROUNDUP READYCORN (1998)

ROUNDUP READYCOTTON (1997)

BOLLGARDCOTTON (1996)

BIOTECHNOLOGYGLOBAL IMPACT: FIRST DECADE

PRODUCTIVITY:Yield of key crops like corn, soybeans and cotton increased by 6.8B lbs in the U.S. in 2004

ECONOMIC RETURN: $6.5B increase in farm income in 2004Cumulative increase in farm income of $27B from 1996-2004

PESTICIDE REDUCTION: 379M lbs, 6% reduction

ENVIRONMENTAL BENEFIT: Reduced >10B kg carbon dioxide emission, equal to removing 5 M cars from the road for a year

Source: Graham Brooks, 2005, www.agbioforum.org; NCFAP report, 2005; Ford Runge & Barry Ryan 2004

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YieldGard Rootworm Corn

Second Year of Drought Pressure in Central Corn Belt Demonstrates Performance Value of YieldGard Rootworm

BIOTECHNOLOGY

KEY MARKET ACRES U.S. BRAZIL ARGENTINA

AVAILABLE MARKET 25-30M 5M 1M

PERCENT PENETRATED 40% 0% 0%

Commercial PortfolioYieldGard Rootworm

SITUATION:

RETAIL VALUE/ACRE: $17-$19/acre

TOTAL ACRE OPPORTUNITY: 25-30M (U.S.)

• YieldGard Rootworm delivers effective and consistent in-plant protection against western, northern and Mexican corn rootworms

VALUE CONSIDERATIONS:

LOCATION:

Ogallala Aquifer, Colorado

ACTIVITY: First year of moisture probe studies comparing water use

OBSERVATIONS:

One of the benefits of better-protected, stronger roots is that corn plants can better use the available water –making YieldGard Rootworm an effective “drought” trait

SOIL PROBE ANALYSIS OF WATER USE COMPARISONS OF SIMILAR GENETICS IN COLORADO

Soil InsecticideDKC 61-72 with Force®

YieldGard RootwormDKC 61-68 (YieldGard Plus)

HIGH WATER ABSORPTION

MODERATE WATER ABSORPTION

LOW WATER ABSORPTION

Water Use Key

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Continued R&D Innovation Expands Breadth and Depth From First-Generation Platform

BIOTECHNOLOGY

FIRST-GENERATION TRAITSR&D PIPELINE ADVANCEMENTS

SELECTED UPGRADES AND NEW TARGET CONCEPTS

CORN SOYBEANS COTTON CORN SOYBEANS COTTON

WEED CONTROL

• Roundup Ready corn

• Roundup Readysoybeans

• Roundup Readycotton

• Roundup Ready Corn 2

• Roundup RReady2Yieldsoybeans

• Roundup Ready Flex cotton

INSECT CONTROL

• YieldGardCorn Borer

• YieldGard Rootworm

• Bollgardcotton

• YieldGard VTRootworm/RR2 (2ND GEN ROOTWORM)

• YieldGard VT PRO(2ND GEN CORN BORER)

• Insect-protected soybeans

• Bollgard IIcotton

• Bollgard III cotton

YIELD & STRESS

TOLERANCE

• Drought-tolerant corn

• Nitrogen-utilization corn

• Higher-yielding soybeans

• Drought-tolerant soybeans

• Drought-tolerant cotton

FEED PROCESSING

• Mavera™ high-value corn with lysine

• Mavera ™

high-value soybeans

HEALTHIER FOODS

• Vistive brand soybeans

• Omega-3 soybeans

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Green text = CommercializedBlack text = Currently in development or pending commercialization

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KEY MARKET ACRES U.S. BRAZIL ARGENTINA

AVAILABLE MARKET 70M 50M 35M

PERCENT PENETRATED 0% 0% 0%Roundup RReady2Yield SoybeansP R O J E C T

BIOTECHNOLOGY

R&D PipelineRoundup Ready2Yield soybeans

SITUATION:

• Value is additive, with target of up to 5 bushel-per-acre yield improvement over comparable Roundup Ready soybeans

RETAIL VALUE/ACRE: $10 - $30/acreTOTAL ACRE

OPPORTUNITY: 155M acres

2006 STATUS: On Track

• Yield data from 45 trials will be shared in January


ROUNDUP RREADY2YIELD IN THE FIELDFIELD TRIAL PHOTOS FROM 2006

LOCATION:Stonington, Illinois

ACTIVITY: Monsanto researchers check performance indicators in the fields such as plant height, and pod size and number

OBSERVATIONS:25 locations across the U.S. tested

11,000 lines tested in 45 trials

Second-Generation Roundup RReady2Yield Soybeans Offer Yield Improvement Over First-Generation

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P R O J E C T

DROUGHT TOLERANT CORN IN THE FIELDFIELD TRIAL PHOTOS FROM 2006

BIOTECHNOLOGY

R&D PipelineDrought-tolerant corn

SITUATION:

2006 STATUS: On Track

• Continued expansion of testing in lead genes and events in moisture-stressed and broad acre environments

• Currently testing hundreds of genes across several generations of drought traits

• Results will be shared in JanuaryVALUE CONSIDERATIONS:

• Value of trait reflects better yields under moisture-stressed conditions

• Value will be specific to variable costs of water use by farmers, rather than fixed costs of irrigation

RETAIL VALUE/ACRE: $10 - $30/acreTOTAL ACRE

OPPORTUNITY: 164M acres

Drought-Tolerant Corn Targets Issue of Water-Use Efficiency in Agriculture

Drought-tolerant corn 0%0%0%PERCENT PENETRATED

24M

EUROPE

30M80MAVAILABLE MARKET

BRAZILU.S.KEY MARKET ACRES

LOCATION:Vacaville, California

ACTIVITY: Monsanto researcher checks performance indicators in the field such as chlorophyl content, ear size, and plant height

OBSERVATIONS:Confirming third year of field trial data in U.S.

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Omega-3 Soybeans Offer Plant-Based Source of Heart-Healthy Oils

Omega-3 soybeans

BIOTECHNOLOGY

R&D PipelineOmega-3 soybeans

SITUATION:

• Value created through a product with similar profile to soybean oil in taste, shelf-life and oil stability but with a superior nutritional and taste profile to fish oil

RETAIL VALUE/ACRE: >$30/acre

TOTAL ACRE OPPORTUNITY: 5M acres

STATUS: On Track

• Extensive field testing for lead events in U.S.

• Food formulation results will be shared in January


In taste-testing, Omega-3 oil containing stearidonic acid (SDA) oil compares favorably versus fish oil and commodity soy oilTesting also focused on field performance, demonstrating Omega-3 soybean yield on par with commodity soybeans – an important factor to farmers growing specialty crops

OMEGA-3 OIL TASTE RESULTS FROM 2005

Taste Rating 0-15 ScaleScore of zero indicates no flavor

Salad Dressing with SDA Oil

0%PERCENT PENETRATED

5MAVAILABLE MARKET

U.S.KEY MARKET ACRES

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Soy Oil SDA Oil Fish OilOmega-3

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Monsanto Has a Balanced Pipeline With Core Projects for Farmers, Food and Feed Processors, and Consumers

BIOTECHNOLOGY

R&D PipelineSITUATION:

In FY2006:• Three products exited the

pipeline for commercialization• There was positive movement

– advancing phases or adding to the pipeline – in 50 percent of the pipeline projects

• Three projects were designated as “HIT” projects reflecting our confidence in their commercial track

Bollgard III

2nd-Gen Drought-tolerant corn

YieldGard Rootworm II

Dicamba-tolerant soybeans

Omega-3 soybeansVistive III soybeansVistive II soybeansImproved-protein soybeans High oil soybeans for processing1

Feed Corn with balanced proteins1

2nd-Gen High-value corn with lysine1

Mavera™ II High-value soybeans1

Mavera™ I High-value soybeans1

Mavera™ High-value corn with lysine1

PHASE IVPre-launch





Drought-tolerant corn

Insect-protected soybeans

Soybean nematode-resistance

Higher-yielding canola

Roundup RReady2Yield canolaRoundup RReady2Yield soybeans

Higher-yielding soybeansNitrogen utilization cornHigher-yielding cornDrought-tolerant cottonDrought-tolerant soybeans

2nd-Gen YieldGard Corn BorerYieldGard VT Rootworm/RR2 Dicamba-tolerant cotton

Roundup Ready Flex cotton

1. These product candidates are in the Renessen pipeline. Renessen is a Monsanto/Cargill joint venture

As of Jan. 1, 2006

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Agricultural Research Has Incredible Potential Over the Next Decade

SUMMARY

PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

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BIOTECHNOLOGY

GGermplasmR

SEED SOLD TO FARMERS

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

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GGermplasmR

SEED SOLD TO FARMERS

R&D PHASE:

TRENDS DRIVING AGRICULTURAL RESEARCH

YieldPer-acre productivity is paramount to farmers

BiofuelsU.S. will need 25M+ acres of corn and 10M+ acres of soybeans to supply biofuel needs by 2010

WaterAgriculture is responsible for 75% of freshwater withdrawal

Nitrogen UseElevated petroleum prices have spotlighted the costs of nitrogen-based fertilizers

Healthier FoodsIncreasingly health-conscious consumers are demanding healthier food solutions

Breeding and biotechnology come together to position Monsanto uniquely to target important opportunities and trends in the agricultural market

MONSANTO’S R&D OPPORTUNITY

monsanto 12-04-06

Economy & Finance