monsanto eu_robbfraley_1110006

1

ROBB FRALEYCHIEF TECHNOLOGY OFFICER

MONSANTO EUROPEAN INVESTOR DAY

November 10, 2006

2

R&D Focus Aligns With Growth Drivers to Extend Leadership Through 2010

OVERVIEW

FACTORSITUATION ANALYSIS

R&D APPLICATION

BREEDING

BIOTECH

BREEDING

BREEDING

BIOTECH

BIOTECH

BREEDING

BIOTECH

U.S. cornGrowing demand pressures feed and fuel supply

International corn

Better yields needed to improve global competitiveness

Global biotech traits

Opportunity exists to upgrade plant performance with traits

Cotton platform

Improve global productivity through technology infusion

SeminisHighly fragmented market, ready for new technology

R&D pipeline

Deliver higher value technologies faster

Application of our breeding and biotech capabilities fully supports our six gross profit drivers

MONSANTO’S R&D OPPORTUNITY

PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

ELI

TE

G

ER

MP

LAS

M

GE

NO

MIC

S

MA

RK

ER

S

ITP

LAT

FOR

M

AN

ALY

TIC

S

CO

MM

ER

CIA

LBREEDING

BIOTECHNOLOGY

GGermplasmR

SEED 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

RK

ER

SM

AR

KE

RS

ITP

LAT

FOR

MIT

PLA

TFO

RM

AN

ALY

TIC

SA

NA

LYT

ICS

CO

MM

ER

CIA

LC

OM

ME

RC

IAL

BREEDING

BIOTECHNOLOGY

GGermplasmR


R&D PHASE:

3

Farmers Buy Yield; Our R&D Approach Oriented Around Meeting That Customer Need

OVERVIEW

R&D APPROACH

FAR

M A

PP

RO

AC

H

=

X

SEED• Starting point of all

agriculture; farmers maximize genetics in seed for yield

• 60% of farmers select seed first, thendecide on biotech traits

TECHNOLOGY• Technology is used to

protect and maximize yield potential of seed

GENETIC POTENTIALInherent yield possible from the seed

YIELDFarmer’s Purchase

Decision = XPERCENT OF GENETIC

GAIN PRESERVEDAmount of yield potential

protected

• Germplasm library assembled from 36 programs in 12 countries

• >100 breeding research centers worldwide

• >2,000 genetic markers used by breeders for corn today

• 50% of breeding population comes from inter-company, inter-country crosses

• Molecular breeding improves genetic potential by 2X versus conventional breeding

GERMPLASM BREEDING

• Monsanto is only company to develop and commercialize complete above-ground, below-ground insect-control and weed-control traits

4

BREEDING

Monsanto’s Global Breeding Engines Deliver Yield Advantages Over Best-in-Class Competitors

170

175

180

185

190

195

2002006 PRELIMINARY U.S.

COMPETITIVE CORN YIELD COMPARISON

RELATIVE MATURITIES (DAYS)

COMPETITORS

DEKALB

BU

SH

ELS

/AC

RE

U.S. CornSITUATION:

• Top 3 purchase drivers for farmers buying DEKALB corn seed all relate to performance of underlying germplasm

OUTLOOK:

• Preliminary yield data from 2006 indicates continued yield advantage versus best-in-class competitors

• Final data will be shared in January

110 105 115

In 2006, across the 110-day maturity zone that covers one-third of U.S. corn production, DEKALB outperformed the competition by roughly 11 bushels per acre on average

YIELD ADVANTAGE

100 95

5

0.00

0.05

0.10

0.15

0.20

0.25

Best Combination of Germplasm and Traits Delivers Best Yield

FOCUS: YIELD PER ACRE (PRELIMINARY)

150

160

170

180

190

200 YieldGardRootworm or YieldGard Plus

Herculex® Rootworm or Herculex XTRA

BU

SH

ELS

PE

R A

CR

E

194 bu/ac

182.4 bu/ac

BREEDING

U.S. CornSITUATION:

• In 2006, across four states and 267 locations, DEKALB seed with YieldGard Rootworm or YieldGard Plus outperformed competitive seed and trait performance by roughly 10 bu/ac on average

• In 2006, across 81 locations, statistically there is no difference between the performance of YieldGard Rootworm or YieldGard Plus and competitive traits

OUTLOOK:

• Farmers make their seed purchase decision on the total system performance of the seed-and-trait package versus the trait or germplasm individually

DEKALB PIONEER

FOCUS: TRAIT PERFORMANCE - ROOT PROTECTION (PRELIMINARY)

DEKALB PIONEER

YieldGard Rootworm or YieldGard Plus

Herculex®Rootworm or Herculex XTRA

NO

DE

IN

JUR

Y S

CA

LE

.17.20

Difference between two traits statistically insignificant

6

Breeding Advances in France Fuel Market Share GrowthBREEDING

CORN GRAIN HYBRID REGISTRATION – FRANCE

2003 - 2005

International CornSITUATION:

• From 2003 – 2005, Monsanto led the way with 36 new corn grain hybrids or 19% of the total new product entrants approved in France

• DEKALB market share has grown 5 points over last two years

• For first time ever, DEKALB is co-leading brand in France

OUTLOOK:

• Yield data will be shared in January

• Corn grain hybrid registration in France will be updated

From 2003 – 2005, Monsanto registered more hybrids than its primary competitors across broadest growing regions, accounting for 19% of all newly registered hybrids in France

BREEDING ACCELERATION

1115

6

51

12

4 2

29

136

2

35

0

10

20

30

40

50

60

MONSANTO PIONEER SYNGENTA ALL OTHER

2003 2004 2005

7

BREEDING

0%

5%

10%

15%

20%

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

2%

4%

6%

8%

10%

12%

Corn Market Share Gains Still To Fully Reflect Power of Molecular Breeding Application

U.S

. MA

RK

ET

SH

AR

E

MOLECULAR-BREEDING HYBRIDS AS A PERCENT OF BRANDED UNITS SOLD IN COMMERCIAL CORN PORTFOLIO

PE

RC

EN

T O

F BR

AN

DE

D U

NIT

S S

OLD

IN

CO

MM

ER

CIA

L CO

RN

PO

RT

FOLIO

2006 BRANDED U.S. MARKET SHARE: 19%

DEKALB AND ASGROW U.S. BRAND MARKET SHARE

U.S. and International Corn

SITUATION:

• Conventional breeding improves genetic gain on average by 1.5% per year

OUTLOOK:

• Molecular breeding improves genetic potential by 2X versus conventional breeding

• By 2010, over 12% of commercial portfolio will be derived from molecular breeding

PROGRESSION OF BREEDING TECHNOLOGY

IN THE COMMERCIAL

PORTFOLIO

CYCLE 2:APPLICATION OF MAB TO SELECTION

CYCLE 3: SELECTION POWER OF MOLECULAR BREEDING

• BY 2006, FIRST MOLECULAR BREEDING HYBRIDS ENTER U.S. COMMERCIAL PORTFOLIO

• EU IS ROUGHLY 2 YEARS BEHIND THE U.S. FOLLOWED BY LATIN AMERICA AND ASIA PACIFIC

• PREDICTIVE COMBINATIONS ALLOW MORE EFFICIENT BREEDING

• APPLY MOLECULAR BREEDING TO TROPICAL MARKETS, SUCH AS BRAZIL AND ASIA

CYCLE 1: INTEGRATION OF GLOBAL GERMPLASM

• ASSEMBLED 36 MAJOR CORN BREEDING PROGRAMS IN 12 COUNTRIES

• FIRST INTRA-COMPANY CROSSES

8

Seminis R&D to Focus on Top Five Crops Supported by Molecular Marker Platforms

BREEDING

SeminisSITUATION:

• In 2006, narrowed commercial focus to 25 crops that generate most profit

OUTLOOK:

• Significant marker platforms to support advancements in quality and consumer traits for top 5 crops

TOP 5 CROPSSTRATEGIC FOCUS INVESTMENTS

Tomato

• Consumer benefits such as flavor and seedless

• Grower benefits such as disease resistance

• Advance molecular markers

• Consumer benefit traits such as shape, sweetness and color


• Increase breeding investments in NAFTA


• Strengthen germplasm

• Strengthen germplasm


• Novel flavor for consumers• Grower yield through hybrid

conversion and disease resistance

• Consumer benefits such as firmness, sugars, shelf life and flavor

• Aggressive hybrid conversion for yield and uniformity

• Reduce pungency for consumers

Sweet pepper

Hot pepper

Melon

Onion

9

BREEDING

Genetic Mapping Timetable Supports Commercial Launches of Molecular Breeding Hybrids by End of Decade

SeminisSITUATION:

• Began application of breeding technology, with genome-wide marker platform for tomatoes and peppers

• Melons, watermelons and brassica family of cabbage, broccoli and cauliflower next

OUTLOOK:

• By 2009, Seminis should have 1,000+ markers for 9 crops

NU

MB

ER

OF

MA

RK

ER

S D

EV

ELO

PE

D

TARGET:1,000 markers

BRASSICA

TOMATO

Current Status

MELON WATERMELON

2007F 2008F 2009F

1,000

500

PEPPER

ONION, CUCUMBER, LETTUCE

SWEET CORN5,000

MARKER PLATFORMSMARKER APPLICATION FOR KEY CROPS (2006-2009)

10

PHASE SOURCE OF VALUE VALUE PER ACRE

ACRE BASE

CORE MARKETS

Renessen Corn Processing System and Mavera™ High-Value Corn with

Lysine24 Feed and fuel $10 - $30 20M

U.SBrazil

Europe

Omega-3 soybeans 3 Improved health >$30 5M U.S.

YieldGard VT PRO2nd-GEN YIELDGARD CORN BORER 3 Insect protection $10 - $30 41M

U.S.Brazil

Europe

Higher yielding soybeans 2 Yield enhancement $10 - $30 155MU.S.

Brazil Argentina

Roundup RReady2Yield soybeans 3 Yield enhancement $10 - $30 155MU.S.

Brazil Argentina

Drought-tolerant corn 2 Water replacement and yield $10 - $30 164M

U.SBrazil

Europe

Vistive III soybeans 2 Improved health $10 - $30 12-15M U.S.

Nitrogen utilization corn 1 Nitrogen replacement and yield $10 - $30 164M

U.SBrazil

Europe

Insect-protected soybeans WITH ROUNDUP RREADY2YIELD

Drought-tolerant cotton 1 Water replacement and yield $10 - $30 36M

U.S.IndiaBrazil

Australia

2 Yield and insect protection $20 - $40 95M Brazil

Argentina

HIT

HIT

HIT

Top-Ten Traits Poised to Deliver Significant ValueBIOTECHNOLOGY

2. Value and acres are for direct feed piece only and do not include value for Renessen’s corn processing system, which is to be determined

PIPELINE VALUE: TOP-TEN PROJECTSREFLECTING COMMERCIAL VALUE1

1. Top ten not presented in ranked order; Commercial value calculated by penetration and retail value during three-year span at peak.

11

BIOTECHNOLOGY

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

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

R&D PipelineHIT

ProjectRoundup 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

VALUE CONSIDERATIONS:

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

12



PERCENT PENETRATED 0% 0% 0%Roundup RReady2Yield Soybeans

Reflecting HIT Status, Roundup RReady2Yield Soybeans Is Targeted for Monsanto’s Most Significant Commercial Launch

ROUNDUP RREADY2YIELD: COMMERCIAL MILESTONESSTARTING POINTU.S. REGULATORY APPROVAL

SEASON 1 LAUNCH YEARGLOBAL REGULATORY CLEARANCES

COMMERCIAL LAUNCHPRE-COMMERCIAL USER-RELIABILITY TRIALS

0

0.5

1

1.5

2

2.5

3

CORN TRAITSSOYBEAN TRAITS COTTON TRAITS

LAUNCH ACRES OF U.S. TRAITSHISTORICAL COMMERCIALIZED TRAITS (1996-2006)

Target acreage for Roundup RReady2Yield commercial launch is expected to be a multiple above historical acreages in launch years

AC

RE

S (

IN M

ILLI

ON

S)

AVERAGE HISTORIC TRAIT LAUNCH: 1.2M ACRES

BIOTECHNOLOGY

R&D Pipeline

HIT Project

RoundupRReady2Yieldsoybeans

SITUATION:

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




• Yield data from 45 trials will be shared in January


P R O J E C T

13

P R O J E C T

BIOTECHNOLOGY

DROUGHT TOLERANT CORN IN THE FIELDFIELD TRIAL PHOTOS FROM 2006 R&D Pipeline

HIT Project Drought-tolerant corn

SITUATION:

• 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




• 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:

Tests of Drought-Tolerant Corn Continue to Validate Concept

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.

14

KEY MARKET ACRES U.S. BRAZIL EUROPE


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

Multi-Generational Drought-Tolerant Corn to Create Value Across Multiple Market Segments

SEGMENTED VALUE OPPORTUNITY ACROSS MARKETS: EUROPE EXAMPLE

IRRIGATED DRYLAND STABILITY

Irrigated Non-Irrigated Non-Irrigated

Value is in replacing irrigation, reducing variable costs of irrigation

Value is in improved yields annually, by improving water-use efficiency

Value is in improved yields when moisture is less than optimal

Source: UCL Department of Space and Climate Physics

BIOTECHNOLOGY

R&D PipelineHIT Project Drought-tolerant corn

SITUATION:

• Value of trait reflects better yields under moisture-stressed conditions; varies by region (see table at right)

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




• Continued expansion of testing in lead genes 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:

Drought Monitor

D0: Abnormally Dry

D1: Drought - Moderate

D1: Drought - Severe

D1: Drought - Extreme

D1: Drought - Exceptional

P R O J E C T

15

Vistive III SoybeansP R O J E C T

BIOTECHNOLOGY

R&D PipelineHIT

ProjectVistive III Soybeans

SITUATION:

• Approximately 40M acres of U.S. soybean crop is crushed for oil; Vistive III is optimal for non-hydrogenated and hydrogenated-frying segments

• Vistive III has potential to be priced at a premium to conventional soybean oil


OPPORTUNITY: 12M - 15M acres


• Field trial results on oil composition and oil yield will be reviewed in January


0%PERCENT PENETRATED

12-15MAVAILABLE MARKET

U.S.KEY MARKET ACRES

Vistive III Soybeans Have Potential To Leapfrog on Commercial Development Track

LOCATION:Sperry, Iowa

ACTIVITY: 2006 summer agronomic testing

OBSERVATIONS:First broad acre field testing in U.S. with lead events

VISTIVE III FIELD TRIAL PHOTOS FROM 2006

16

KEY MARKET ACRES U.S.

AVAILABLE MARKET 12-15M

PERCENT PENETRATED 0%Vistive III Soybeans

Vistive III Soybeans Meet Multiple Needs in Food Industry

BIOTECHNOLOGY

IMPROVED SOYBEAN QUALITY FOR LIQUID OILS

OIL FOR FRYING AND SPRAYING

CrackersSnack chips

CONSUMER MARKETVISTIVE

FAMILY

IMPROVING NUTRITIONAL PROFILE OF SOYBEAN OIL

LINOLENIC18:3

LINOLEIC18:2

OLEIC18:1

SATS18:0 / 16:0

STANDARD SOYBEAN

TARGET: VISTIVE III LOW-LIN – MID-OLEIC –

LOW-SAT SOYBEANS

Major market segments for U.S. soybean oilNON-

HYDROGENATEDHYDROGENATED-

FRYINGHYDROGENATED-

BAKING

For salad oils, household use

For various frying applications

For various baking applications

Uses 50% of total crushing (~20M acres)



SITUATION:

R&D Pipeline

• Approximately 40M acres of U.S. soybean crop is crushed for oil; Vistive III is optimal for non-hydrogenated and hydrogenated-frying segments

• Vistive III has potential to be priced at a premium to conventional soybean oil

12M – 15M acresTOTAL ACRE OPPORTUNITY:

$10 - $30/acreRETAIL VALUE/ACRE:

Vistive III Soybeans

2006 STATUS:


On Track

• Field trial results on oil composition and oil yield will be reviewed in January

HIT Project

P R O J E C T

17

BIOTECHNOLOGY

Omega-3 Soybeans Have Met Early Development Targets for Both Food Application and Field Performance

Omega-3 soybeans

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

TA

ST

E R

AT

ING

0

5

10

Soy Oil SDA Oil Fish OilOmega-3

18

BIOTECHNOLOGY

Early Field Testing Indicates Nitrogen Utilization Corn Offers Yield Benefits in Both Limited and Normal Nitrogen Conditions

Nitrogen utilization corn

NITROGEN CONTROL TESTING R&D Pipeline

Nitrogen utilization cornSITUATION:

• Value created through improved yield in both limited and normal nitrogen environments



STATUS: On Track

• Continued expansion of testing in limited and normal nitrogen environments

• Results will be shared in January


Limited Nitrogen Normal Nitrogen

0%0%0%PERCENT PENETRATED

24M

EUROPE

30M80MAVAILABLE MARKET

BRAZILU.S.KEY MARKET ACRES

LOCATION:Morrisonville, Illinois and Jerseyville, Illinois

ACTIVITY: Field control testing to measure nitrogen uptake and to screen genes for nitrogen utilization

OBSERVATIONS:Under normal nitrogen, corn has good chlorophyll content, normal ear development and higher yield

19

BIOTECHNOLOGY

Nitrogen Utilization Technology Extends Benefits Across Crop Families

Nitrogen utilization canola

2006 NITROGEN CANOLA CONTROL TESTING

R&D PipelineNitrogen utilization canola

SITUATION:

• Value created through improved yield in both limited and in normal nitrogen environments


OPPORTUNITY: 25-30M acres

STATUS: On Track

• Continued expansion of testing in limited and normal nitrogen environments

• Results will be shared in January

VALUE CONSIDERATIONS

KEY MARKET ACRES U.S. CANADA EUROPE

AVAILABLE MARKET 1-2M 12-14M 12-14M

PERCENT PENETRATED 0% 0% 0%

1100

1200

1300

1400

1500

1600

1700

1800

0 50 100 150 200NITROGEN APPLIED (LBS/ACRE)

YIEL

D (L

BS/

AC

RE)

11%

Conventional use rate

18%

15%16%

9%

Nitrogen gene

Control

NITROGEN UTILIZATION CANOLAOBSERVATIONS:Significant increase in pod development

CANOLA CONTROL

OBSERVATIONS:Significantly less pod activity

20

MILLIO

NS

OF A

CR

ES

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0

5

10

15

20

25

30

35

40

45

BIL

LIO

NS

OF

GA

LLO

NS

MILLIO

NS

OF A

CR

ES

Opportunity in Renewable Fuels Is Driving Yield Demand in Agriculture

GLOBAL BIODIESEL OUTLOOK

BIOTECHNOLOGY

SUGAR CANECORNU.S.

BRAZIL

BIODIESEL

BIL

LIO

NS

OF

GA

LLO

NS

0

0.5

1

1.5

2

2.5

3

3.5

4

2005 2006 2007 2008 2009 2010 2011 2012

0

2

4

6

8

10

12

14

16

18

20

PALMRAPESEED & CANOLA SOYBEAN

ETHANOL ASSUMPTION

• MTBE replacement by 2010 is base case

• Incremental yield gains through technological innovations allow further substitution

BIODIESEL ASSUMPTION

• In EU, biodiesel to represent 5% of transport fuels with U.S. growing up to 2%

U.S. & BRAZIL ETHANOL OUTLOOK

Source: Proexporter Network, Pro Mar And Monsanto Estimates

21

BIOTECHNOLOGY

HIGH-VALUE CORN WITH LYSINE IN THE FIELDFIELD TRIAL PHOTOS FROM 2006

LOCATION:Monmouth, Illinois

ACTIVITY: Renessen researchers check performance indicators such as plant height, chlorophyl and ear fill. They also use advanced crop analytics to help track the oil levels in plants

OBSERVATIONS:U.S. received regulatory approval in 2006; Agronomic testing in the field to select best hybrids

Renessen’s MaveraTM High-Value Corn with Lysine



PERCENT PENETRATED 0% 0% 0%

R&D PipelineMavera High-Value Corn with

LysineSITUATION:


• Hybrid performance including yield and nutrient composition will be shared in January

VALUE CONSIDERATIONS

• Enhances level of limiting essential amino acids and corn oil content in feed, and lowers cost of animal rations

• Incremental value extracted through Renessen’s Corn Processing Technology

RETAIL VALUE/ACRE: <$10/acre1

TOTAL ACRE OPPORTUNITY: <10M acres1

MaveraTM High-Value Corn with Lysine to Provide Incremental Value to Both Feed and Fuel Markets

1Value and acres are for direct feed piece only and do not include value for processing component

22

FermentationFermentation DistillationDistillationElevatorElevatorNUTRIENT

DENSE CORN

NUTRIENT DENSE CORN

Renessen’s New System Bolts Onto Conventional Dry Milling Process and Makes More Efficient Use of Corn Seed

RENESSEN OPPORTUNITY

HIGH OIL CORN FOR FOOD OR BIODIESEL

FractionationFractionation

High oil fractionHigh oil fraction

Corn oilCorn oil

Nutrient-rich meal

Nutrient-rich meal

HIGHLY FERMENTABLE

FRACTION

HIGHLY FERMENTABLE

FRACTION

Oil extractionOil extraction

HIGH VALUE SWINEAND POULTRY FEED

1 2

3

RENESSEN PROCESS FLOW

•FOR ALL PRACTICAL PURPOSES, RENESSEN CORN PROCESSING SYSTEM BOLTS ONTO A CONVENTIONAL DRY MILL PROCESS

STEP 1:

•START WITH A NUTRITIONALLY DENSE CORN DEVELOPED THROUGH BIOTECH OR A CONVENTIONAL HYBRID

•DELIVER FOUR HIGH-VALUE REVENUE STREAMS

1: HIGH-OIL CORN OR BIODIESEL2: HIGH-VALUE SWINE AND POULTRY FEED3: HIGHLY FERMENTABLE STARCH4: HIGH-PROTEIN, LOW-OIL DDG

STEP 2:

•PROCESS IT THROUGH A NOVEL PROCESS TECHNOLOGY DEVELOPED BY CARGILL AND RENESSEN

STEP 3:

DryingDrying

HIGH PROTEINLOW OIL DDG

4

EthanolEthanolHammerMill

HammerMill

CONVENTIONAL DRY MILL PROCESS

RENESSEN FRACTIONATION AND EXTRACTION PROCESS

23

SUMMARY

Breeding and Biotech Come Together To Lift The Ceiling on Yield

60

80100

120

140

160180

200

1975 1980 1985 1990 1995 2000 2005 2010 2015

AV

ER

AG

E Y

IELD

(B

U/A

C)

USDA YIELD TREND LINEPROJECTED YIELDS WITH MOLECULAR BREEDING AND BIOTECHNOLOGY

2025303540455055

1975 1980 1985 1990 1995 2000 2005 2010 2015AV

ER

AG

E Y

IELD

(B

U/A

C)

U.S. SOYBEAN YIELDHISTORY AND PROJECTED EVOLUTION

(MULTIPLE REGRESSION MODEL ANALYSIS)

MONSANTO’S OPPORTUNITY

The delta between what is predicted and what is possible is where opportunity lies

Molecular breeding boosts the genetic potential of the seed

Biotech traits protect that genetic potential for more practical yield

Breeding and Biotech come together to change the curve of yield potential

U.S. CORN YIELDHISTORY AND PROJECTED EVOLUTION

(MULTIPLE REGRESSION MODEL ANALYSIS)

24

R&D Focus Aligns With Growth Drivers to Extend Leadership Through 2010

SUMMARY

FACTORSITUATION ANALYSIS

R&D APPLICATION

BREEDING

BIOTECH

BREEDING

BREEDING

BIOTECH

BIOTECH

BREEDING

BIOTECH

U.S. cornGrowing demand pressures feed and fuel supply

International corn

Better yields needed to improve global competitiveness

Global biotech traits

Opportunity exists to upgrade plant performance with traits

Cotton platform

Improve global productivity through technology infusion

SeminisHighly fragmented market, ready for new technology

R&D pipeline

Deliver higher value technologies faster

Application of our breeding and biotech capabilities fully supports our six gross profit drivers

MONSANTO’S R&D OPPORTUNITY

PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

ELI

TE

G

ER

MP

LAS

M

GE

NO

MIC

S

MA

RK

ER

S

ITP

LAT

FOR

M

AN

ALY

TIC

S

CO

MM

ER

CIA

LBREEDING

BIOTECHNOLOGY

GGermplasmR


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

RK

ER

SM

AR

KE

RS

ITP

LAT

FOR

MIT

PLA

TFO

RM

AN

ALY

TIC

SA

NA

LYT

ICS

CO

MM

ER

CIA

LC

OM

ME

RC

IAL

BREEDING

BIOTECHNOLOGY

GGermplasmR


R&D PHASE:

monsanto eu_robbfraley_1110006

Economy & Finance

breeding breeding advances

conventional breeding

breeding ground

corn seed

genetic seed

yield advantagein

dekalb market share

best yield focus