Reputation Analysis

Lindsay M. Kaplan Reed Schneider Emma M. Mundy Suryabala ShenbagamurthyCaroline L Kinsey

Introduction to Monsanto● Monsanto is a publicly traded American agrochemical and agricultural

biotechnology corporation● Headquartered in St. Louis, Missouri● CEO: Hugh Grant● Leading producer of genetically engineered seeds and herbicide

(Roundup)

Customers

CustomersMission Statement: Consumer Friendly● “...Monsanto remains focused on enabling both small-holder and large-

scale farmers to produce more from their land while conserving more of our world’s natural resources such as water and energy.”

● Committed to “collaborating with farmers, researchers and others to cultivate innovative ideas from every perspective.”

Customers Monsanto is customer friendly but it costs:

● Customer Financing Program: As of August 31, 2014: $503 million in outstanding balances

● Customer Incentive Program:

– Based on specific performance, purchase volumes, promptness of payment, and market share increases

– More than 60% of customers are involved in the program, which leads to a 3-5% annual company loss

Customers 2015 Shareholder Report

Monsanto Understands the Power of Public Opinion● Acknowledges how public opinion can affect sales, plant approvals, regulatory requirements and

customer purchase decisions

● “Public concern can affect the timing of, and whether we are to obtain, government approval.”

● “Opponents…have attacked farmers’ fields and facilities…and may launch future attacks…which could affect our sales and our costs.”

Customers: Issues Stubborn attitude + angry customers = loss of revenue

● Monsanto refused to reduce seed price despite customer concern in the drop of cost of corn, which has declined from $8/bushel to $4/bushel

● In 2014: Agreed to a $2.357 million class action settlement with Idaho, Oregon and Washington farmers due to an alleged contamination of soft white wheat

CustomersFinancial success relies on a few large U.S. agricultural distributors:

● In 2014 its 4 largest U.S. distributors represented 22% of worldwide net sales and 40% of U.S. net sales

● One major U.S. distributor represented 13% of worldwide net sales and 21% of U.S. net sales for the Seeds and Genomics segment

Financials

FinancialsNet Sales

● 2014 Net Sales: $15.855 billion● 2013 Net Sales: $14.861 billion● 2012 Net Sales: $13.504 billion

Earnings Before Interest and Taxes (EBIT)

● 2014: $3.952 billion● 2013: $3.460 billion● 2012: $3.047 billion

FinancialsJanuary, 2015

● Monsanto reported a 34% drop in quarterly profit, in part because of lower planted corn acreage in South America and a shift in timing of some sales, but the decline was less steep than analysts expected.

● Net sales fell to $2.9 billion in the first quarter ended Nov. 30 from $3.1 billion a year earlier.

FinancialsMarch, 2015

● Monsanto Co.’s stock had fallen more than 3% since the WHO issued a report saying the herbicide glyphosate, around which many of the seed and biotech company’s products revolve, can “probably” cause cancer.

● Monsanto stock was trading at $113.61 a share, down $2.16 from the previous week.

FinancialsApril, 2015

● Monsanto reported earnings and revenue that missed analysts' estimates for its fiscal quarter ended Feb. 28 (Dollar's rally--9% rise--could cut 35 to 40 cents from its full-year earnings per share).

● Earnings for the quarter came in at $2.90 per share, below the $2.93 analysts had expected.

Media

Key players in Media● Top Newsmakers

- WSJ leads news coverage: Jacob Bunge is Monsanto & agricultural reporter- NYT doesn’t cover as consistently from a news standpoint, but has published

op-eds penned by Monsanto in response to criticism of company (Mark Bittman, herbicide, GMOs, etc.)

- Other major outlets cover the main stories (ABC, NBC, CNN, FOX, CBS)● Trades

- Sustainability/environmental media also thrive on Monsanto news (Greenbiz, TriplePundit, Mother Nature Network)

- Science Opinion outlets vary in opinion (ThinkProgress, Agroprofessional)● Local St. Louis News

- As a St. Louis-based company, outlets within home city consistently cover (St. Louis Busines Journal, St. Louis Post-Dispatch/STL Today - Tim Barker is beat reporter); other midwest state news outlets keep close eye as well

Key issues in Media

Economic climate/financial plight (20+ news stories per month)● Prices of corn and soybeans down → farmers choosing cheaper seeds and

cutting corners on farm supplies● Currency shifts have made seeds/chemicals more expensive for abroad,

reducing foreign trade agreements

Anti-GMO labeling lobbying (500+ news stories)● Outspoken opposition and huge lobbying effort

Detrimental Research ● International Agency for Research on Cancer (French arm of WHO) published

major study declaring that glyphosate (dominant ingredient used in Monsanto’s trademark Roundup herbicide) may be a carcinogen (100+ news stories)

● Analyst with brokerage firm CLSA Ltd.: “The IARC classification is significant because it’s the first time a relatively credible agency has taken aim at glyphosate.”

● During conference call with reporters, Monsanto attacked report and announced counter campaign, incorporating counter-opinions from academics and farm-group officials

- Lobbying for IARC to retract its findings and explain further how it came to its conclusions (will likely never happen)

- Scientist and Monsanto supporter Patrick Moore told a journalist that it’s completely safe for humans to drink large amounts of Roundup, but refused to drink it to prove point; Monsanto then denied association with him

Media SentimentLovers:● Regardless of potential environmental impact, Monsanto products do make

farming easier and less time consuming● Despite high prices (first 250 acres free; $3/additional acre), farmers love

ClimatePro platform, which uses data analysis and satellite imaging to diagnose health of crop fields and helps them make strategic farming decisions

Media SentimentHaters:● GMO, carcinogenic nature of products often criticized for harm to consumers● Common criticism is that Monsanto neglects to admit harmful effects on

environment and instead responds to affected parties by throwing money at them○ $3.6 million donation to National Fish and Wildlife Foundation's Monarch

Butterfly Conservation Fund after herbicide said to be wiping out Monarch butterfly population)

○ Recently paid $350,000 to settle class action lawsuits brought by farmers in 7 states over tainted wheat; $50,000 to agricultural schools -- soft white wheat contained GMO after inspection indicated otherwise

● Monsanto lobbying against GMO labeling means they have something to hide○ Monsanto employee Dr. Bill Moar recently leaked to media (surprisingly, not

too much pick-up) that company has entire department dedicated to discrediting scientific opinions against them with naysaying research

Monsanto and Government

Monsanto & Government● Three organizations responsible for regulating genetically modified

products in the USA:- FDA, EPA, The United States Department of Agriculture

● Last month the World Health Organization released its most recent assessment of glyphosate as “probably carcinogenic.”

● Monsanto has set up a site called “GMO Answers” where they explain that the WHO did their study based on ‘existing research’ that does not include any new evidence

● The EPA has this week announced plans to conduct a review of glyphosate in conjunction with Canadian regulators. More than 60 countries either regulate or ban GMOs but the U.S. is not one of them

Monsanto & Government● Hillary Clinton announced her bid for presidency and the media jumped on her

2014 appearance as a keynote speaker “I stand in favor of using seeds and products with a proven track record. There is a big gap between what the facts are, and what perceptions are.”

● Monsanto has a department dedicated solely to ‘discrediting’ and ‘debunking’ scientists.

● President Obama signed a bill into law in 2013: “authorizing USDA to grant ‘temporary’ permission for GMO crops to be planted, even if a judge has ruled that such crops were not properly approved, only while the necessary reviews are completed.”

● As of October 2013 Monsanto are backing an anti-labeling campaign in DC. In 2012 they spent $8.1 million opposing Proposition 37 in the state of California

Monsanto & Government● Michael Taylor, a former Monsanto Vice President for Public Policy was

hired by president Obama to be the Senior Advisor to the Commissioner of the FDA

● In the 1990s Monsanto successfully lobbied the US and UK governments to raise permitted glyphosate levels in soybeans. IWikileaks in 2011 releases cables, which proved that US government officials were working directly for Monsanto in Europe. High-level US government intervention supported Spain’s support of GMO foods and effectively managed to “persuade the EU not to strengthen biotechnology laws.” This led to the WTO ruling against EU’s banning of GMOs

Monsanto & Government● The Ukraine controls a third of all arable land in Europe and Monsanto has

set its sights on introducing GMO seeds to the soil there. This will soon reshape the market for agricultural products in the EU and has gone largely unnoticed due to the political upheaval in the country

● Just last week media outlets reported that three Chinese citizens are taking China's Ministry of Agriculture to court in a bid to make public a toxicology report supporting the approval of Monsanto's popular weed killer, Roundup, 27 years ago. The case, a rare example of a lawsuit by private citizens against the Chinese government, comes amid renewed attention on glyphosate.

Social Media

Social Media● Facebook - 98k Likes● Facebook- Posts - Once per day

- Posts focus on farmers and food facts/studies- Regularly replies to comments, especially negative comments.

Answers questions & corrects misinformation- High engagement for each post (replies/likes)

Social Media: Facebook Risks● Millions Against Monsanto - 728k Likes

- Entire Group is anti-Monsanto and GMOs- Higher engagement and post frequency- Organic Consumers.org- Organizes demonstrations against Monsanto

● Negative comments on page

Social Media: Twitter● Twitter Page - @MonsantoCo - 61.1k Followers

- Tweets multiple times a day- Some engagement with Tweets- Similar content as Facebook

● Over 100k mentions of “Monsanto” since March

● Twitter risks:- Many anti-Monsanto accounts. (Occupy Monsanto - 16.9k followers)

Social Media: Instagram● @MonsantoCo - 3.8k Followers● Over 140 posts

○ Some negative comments on posts■ “Your seeds are cancer #poison”

Questions?