Brett Begemann is the Executive Vice President of Global Commercial at Monsanto. This document provides an overview of:
1) Changing global market forces are increasing demand for feed and fuel, stretching global supply and requiring increased productivity per acre.
2) Monsanto is on track to double gross profit by 2012 through the rollout of new product drivers in corn, cotton, soybeans, and its pipeline.
3) In the U.S., DEKALB and ASI corn shares are expected to increase in 2008, positioning Monsanto for further growth through 2012.
3. OVERVIEW
Market Forces Are Changing Supply-Demand Patterns
Globally, Creating a New Dynamic Across Agriculture
EMERGENCE OF DEMAND-DRIVEN AGRICULTURE: STATE OF AGRICULTURE:
NEW DEMAND AND PRODUCTION TRENDS The New Demand Environment
FACTORS:
Growing wealth
Expanding ethanol ► INCREASING PROTEIN
and population in
and export
DEMAND
Asia creates new
demands favor U.S.
demand for
as low-cost corn Wealth drives meat
imported grain
producer
consumption – changing
feed demand
► ASCENSION OF CHINA
China’s growth is reaching
limits of domestic
production, driving huge
changes in export
environment
Brazil exploits land
Argentina ► ESTABLISHMENT OF
availability advantage
leverages to become BIOFUELS
geographic commodity soy
proximity to Assuming only base-case
producer to meet
supply corn to demand from China adoption of biofuels, more
Latin America
corn and soy needed in next
decade
3
4. OVERVIEW
Feed and Fuel Demand Is Increasing; Only Time-Effective
Solution Is Increasing Productivity Per Acre
STATE OF AGRICULTURE:
STRETCHING SUPPLY – ENDING STOCKS: Monsanto’s Advantages
WORLD SUPPLY AND USE FOR TOTAL GRAINS1
Demand Requires Yield
600 30% MARKET
CUSTOMER
METRIC TONS (IN MILLIONS)
25%
500
Farmers Buy Yield
400 20%
Monsanto is a technology
15%
300
company in an industry
historically starved for
200 10%
breakthrough innovation
5%
100
Innovation:
► Creates new value through
0 0%
breakthrough products
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
► Creates new markets that
ENDING STOCKS AS A
ENDING STOCKS
didn’t exist before our
PERCENT OF TOTAL USE
products
Annual grain carryover is
Monsanto grows because of
declining – even at a period of
what we do, not what the
historic production levels
commodity cycles do
1. USDA World Agricultural Supply and Demand Estimates
4
5. OVERVIEW
On Track to Double Gross Profit by 2012, Growth Drivers Roll
Out In Balanced, Additive Progression
GROSS PROFIT DRIVERS: • Yield & stress platform
R&D Pipeline DRIVERS:
TIMELINE OF INCREMENTAL IMPACT • Breakthrough platforms
Progression of significant new gross- • Protected culture
Seminis DRIVERS:
• Molecular markers
profit generation from each strategic
driver
• 2nd-gen trait acceleration
Cotton DRIVERS:
• Breeding inroads
• Roundup Ready 2 Yield platform
Soybean DRIVERS:
• Seed share growth
• Seed share growth
International Corn DRIVERS:
• Unlocking trait approvals in LA
• Trait penetration and seed share growth
U.S. Corn DRIVERS:
• SmartStax platform
2008 2009 2010 2011 2012
2012+
2011-2012
2009 2010
U.S. drought-
Delta and Pine
U.S. SmartStax
Roundup Ready 2
MILESTONES
tolerant corn launch
Land U.S.
Yield soybeans corn launch
portfolio
controlled
2012+
Large-scale converted to
commercial release
Stacked trait
second-
Roundup Ready 2
soybean launches,
First major selling Yield soybean generation stack
including dedicated
season for LA corn launch
product for Brazil
traits
Projected branded corn share gains globally
2008 to 2012
6. U.S. CORN
DEKALB Expected to Gain Two-to-Three Share Points and
ASI One-to-Two Share Points in U.S. Corn Seed in 2008
DEKALB AND ASI U.S. CORN SHARE EVOLUTION:
2001-2008F
35%
DEKALB 2012 TARGET RANGE: 28% - 33%
30%
U.S.
GEOGRAPHY:
23% 25% - 26%
Grow footprint 25%
OBJECTIVE:
20%
2008 STATUS
20%
16%
• DEKALB expected to gain
14%
13%
2- 3 points in 2008 for total 15% 12% 10% -
share of 25-to-26 percent in 10% 11%
9%
U.S. market 10%
• ASI expected to gain 1-to-2 5%
4%
share points organically in 5%
2008 season
0%
2012 OUTLOOK
2001 2002 2003 2004 2005 2006 2007 2008F
• DEKALB to grow share
2007
through 2012 by up to 10 2005 DEKALB ends
points cumulatively from Monsanto projects 1-2 2007 with 23%
2007 share of 23 percent point share gains for share,
DEKALB from 2005 through
• Continued organic share achieving
2010 2010 target 3
growth in ASI
years early
7. U.S. CORN
With Added Trait Protection, Strong Growth Opportunity
Remains For U.S. Corn
U.S. CORN TRAIT OPPORTUNITY: 2005-2010F
220 60
U.S. TRIPLE-STACK ACRES
200
U.S. TRAIT ACRES
50
180
(IN MILLIONS)
(IN MILLIONS)
160
40
140
120
30
100
80
20
60
40 10
20
CATALYSTS OF
0 0
2010 TRIPLE STACK
2007 2008F
2005 2006 2007 2008 2010F
Opportunity
GROWTH
Rootworm Control 45-55M
20.8M 26-28M
Channel Triple
Corn Borer Control Penetration
60-70M
42.4M 40-42M
Glyphosate Tolerance DEKALB Supply
80M
57.9M 63-65M
Guarantee
Triple Stack 17.6M 25-27M 45-55M
Yield Insurance
Trait acres reflect the total acres planted with each individual trait. In the case of stacked traits, each absolute
acre will be reflected by two or more trait acres.
Program
Source: “Monsanto Biotechnology Trait Acreage” available through: monsanto.com/investors/
7
8. INTERNATIONAL CORN
DEKALB Expected to Gain Corn Share in Argentina and Hold
Share in Brazil; Retaining Leadership in Both Markets
ARGENTINA BRAZIL
Argentina &
GEOGRAPHY:
Brazil
2007 2008F 2007 2008F
Expand
(06/07 (07/08 (06/07 (07/08
international
OBJECTIVE:
SEASON) SEASON) SEASON) SEASON)
footprint
HYBRID
2008 STATUS
MARKET
8M1 10M1 23M 26M
• Expected to grow 5 share
SIZE
points in a market that is
25 percent larger than in
2007 in Argentina
DEKALB 40% 45% 40% 40%
• DEKALB and Agroeste
SHARE
combined are forecasted
to be flat with 2007 in AVG.
Brazil, delivering on our RETAIL
goal to stabilize share
PRICE FOR
2012 OUTLOOK $23/AC $29/AC $29/AC $34/AC
DEKALB
HYBRID
• Target 1-to-2 share points
CORN
of growth annually
SEED
through 2012
1. Source: KLEFFMANN Marketing Services
9. INTERNATIONAL CORN
Approval of Stacked Corn in Argentina to Accelerate Roundup
Ready Adoption; 30-to-40 Percent Availability Planned for 2009
TRAITED CORN ACRES PLANTED VS. OPPORTUNITY IN ARGENTINA
ROUNDUP READY CORN 2 SMARTSTAX
10 YIELDGARD CORN BORER 9M
Argentina
GEOGRAPHY:
8M
Set the table for 8
7M
M ACRES DOUBLE AND TRIPLE OPPORTUNITY
biotech trait
6M
OBJECTIVE:
ramp outside 6
the U.S.
2008 STATUS 4
• 86 percent of corn borer
control opportunity
2
.8M
penetrated in 2008 season;
Roundup Ready Corn 2
0
relatively untapped
• Approximately 150K acres of
OPPORTUNITY
2007 2008F
double stack planted in first
year of launch
• Seed production for 30-to-40 ROUNDUP READY CORN 2 YIELDGARD CORN BORER - ARGENTINA
percent double-stack traits in
• Growers forced to trade off between insect and weed control prior to approval
2009
of double stack; penetration expected to accelerate much faster than with
2012 OUTLOOK single traits.
• 100 percent of corn acres in Argentina infested with sugarcane corn borer and
• Continue penetration of
corn earworm, making SmartStax an excellent fit for this market
double-stack to create
footprint for SmartStax
10. INTERNATIONAL CORN
Approval Received in Brazil for YieldGard Corn Borer; Limited
Launch Planned for 2009
TRAITED CORN OPPORTUNITY IN BRAZIL
Brazil
GEOGRAPHY:
Set the table for
biotech trait 20 15-20M
OBJECTIVE:
ramp outside
SMARTSTAX
the U.S.
15
M ACRES
2008 STATUS
ROUNDUP READY CORN 2
• Awaiting final hybrid
10
registrations after YIELDGARD CORN BORER
receiving approvals from
both CTNbio and CNBS 5
2012 OUTLOOK
0
• First-generation corn
traits launched to create
OPPORTUNITY
2008
footprint for SmartStax
REGULATORY APPROVAL PROCESS IN BRAZIL
• First step consists of approval from CTNBio, Brazil’s biosafety
commission, which is managed by the Ministry of Science and
Technology to make science-based technical assessments
• CTNBio approval may be followed by a review from the National
Biosafety Council (CNBS) to examine social and economic factors
• Hybrid registrations required before commercial launch
11. SOYBEANS
Asgrow Soybean Share Expected to Increase in Expanded
Market in 2008
U.S. SOYBEAN BRANDED AND LICENSED SEED SHARE
100%
U.S. SOYBEAN SEED MARKET SHARE
90% CORN STATES
ASI
ASGROW
LICENSEES
80%
70%
(PERCENTAGE)
60%
50%
40%
30%
20%
10%
0%
2004 2005 2006 2007 2012
TARGET
12. SOYBEANS
Roundup Ready Soybeans in Brazil Mirroring U.S.
Penetration Curve, Creating Future Footprint for Growth
Soybeans
CROP:
ROUNDUP READY SOYBEANS:
Grow Roundup
PENETRATION AS PERCENT OF OPPORTUNITY
Ready
penetration in
Brazil to create 120%
OBJECTIVE:
platform for
100%
Roundup
Ready 2 Yield
soybeans 80%
2008 STATUS
60% 55% penetration in
Brazil consistent with
• Brazil Roundup Ready U.S. trend in year five
40%
soybean penetration
expected to be 55 percent
20%
of opportunity
0%
2012 OUTLOOK
• Potential to penetrate 95
6
7
8
9
0
1
2
3
4
5
6
7
8F
'9
'9
'9
'9
'0
'0
'0
'0
'0
'0
'0
'0
'0
percent of Brazilian acres U.S. Roundup Ready soybeans
U.S. Roundup Ready soybeans
at peak, establishing
Brazil Roundup Ready soybeans
Brazil Roundup Ready soybeans
footprint for transition to
insect-protected Roundup
Ready 2 Yield soybeans
13. COTTON
U.S. Cotton in Transition in 2008; Plans in Place to Deliver
Gross Profit Growth Toward the End of the Decade
Cotton
CROP:
DELTA AND PINE LAND VALUE CREATION
Increase
STAGED OPPORTUNITIES FOR INCREASING BUSINESS VALUE
penetration of
second
OBJECTIVE:
generation
New
double stack Traits
2008 STATUS
Molecular
• U.S. cotton acres
Breeding
VALUE CREATION OPPORTUNITY
expected to decline to
less than 9.5M1 acres Trait Increased production of
second-generation double stack
• Availability of second Acceleration
generation traits in the
International Opportunity to grow international cotton seed and
U.S. established prior to trait business with complementary geographies
Markets
acquisition, limiting 2008
growth Initial
Expanded global seed market share
2012 OUTLOOK Germplasm Value
• Delta and Pine Land’s Trait Royalty D&PL traits previously split 70/30 to Monsanto;
portfolio fully converted now accrue 100 percent to Monsanto
Conversion
to second-generation
FY2009 FY2010+
traits in all U.S. segments FY2007 FY2008
JUNE 2007
D&PL acquisition
1. U.S. acres planted estimated per the National Cotton Council
14. R & D PIPELINE
Entire Monsanto Pipeline Is Targeted Toward Meeting
Emerging Trends Over Next Decade
BIOTECH TRAIT PIPELINE: JANUARY 2008 UPDATE
PHASE PHASE PHASE PHASE
PHASE PHASE PHASE PHASE
D
D 1 2 3 4
1 2 3 4
AGRONOMIC TRAITS
YIELD AND STRESS PIPELINE
ROUNDUP READY 2 YIELD SOYBEANS
DROUGHT-TOLERANT CORN
FAMILY
YIELDGARD VT PRO
2ND-GEN YIELDGARD CORN BORER
DROUGHT-TOLERANT CORN
SMARTSTAX CORN
2ND-GEN DROUGHT-TOLERANT CORN
DICAMBA-TOLERANT SOYBEANS
NITROGEN-UTILIZATION CORN
FAMILY INSECT-PROTECTED + ROUNDUP
READY 2 YIELD SOYBEANS
NITROGEN-UTILIZATION CORN
BOLLGARD III
BROAD-ACRE HIGHER-YIELDING
CORN FAMILY SOYBEAN NEMATODE-RESISTANCE
HIGHER-YIELDING CORN SOYBEAN DISEASE
BROAD-ACRE HIGHER-YIELDING DICAMBA-TOLERANT COTTON
SOYBEAN FAMILY
COTTON LYGUS CONTROL
HIGHER-YIELDING SOYBEANS
YIELDGARD ROOTWORM III
2ND-GEN HIGHER-YIELDING
SOYBEANS
VALUE-ADDED TRAITS
DROUGHT-TOLERANT COTTON
FAMILY
DROUGHT-TOLERANT COTTON EXTRAX™ CORN PROCESSING
SYSTEM + MAVERA™ HIGH-VALUE
CORN WITH LYSINE2
BROAD-ACRE HIGHER-YIELDING
CANOLA FAMILY
HIGH-OIL SOYBEANS
HIGHER-YIELDING + ROUNDUP
READY 2 YIELD CANOLA1 2ND-GEN HIGH-OIL SOYBEANS
OMEGA-3 ENRICHED SOYBEANS
VISTIVE III SOYBEANS
High Impact Technologies (HIT) project
HIGH-STEARATE SOYBEANS
Jan. 3, 2008 Advancements/Additions (VIA BIOTECH)
The colored bar associated with each project indicates which phase that project is in. It is HIGH-OIL CORN
not intended to represent the relative status of the project within a particular stage.
1. For higher-yielding + Roundup Ready 2 Yield canola, only the value of the higher-yielding trait is incorporated into the Yield and Stress collaboration with BASF
2. Value of licensing the EXTRAX™ technology is shared with Cargill as a part of Renessen joint venture
15. R & D PIPELINE
Japan Export Approval for Roundup Ready 2 Yield Received;
On Track for 2009 Controlled Commercial Release
ROUNDUP READY 2 YIELD SOYBEANS:
Soybeans
CROP:
LAUNCH PLANS
Launch
OBJECTIVE: U.S. Full-Scale
Roundup
Launch Target:
Ready 2 Yield
P R O JE CT
5- 6M Acres
2008 STATUS
U.S. Controlled
• Consistent 7-to-11percent Commercial
yield advantage with Release Target:
Roundup Ready 2 Yield 1- 2M Acres
• U.S., Canadian and
Grower level marketing, awareness and trial
Japanese approvals
received; awaiting key
Licensee breeding
export approvals from
China, Mexico and Europe Industry coordination and communications
• Pre-launch activities • American Soybean Association and key agri-food
under way stakeholders
PRICING
Pursuit of export approvals in China, Europe and
• Yield improvement shared Mexico – JAPAN RECEIVED
with grower; average 5-
Branded and licensed seed production
year soybean commodity
2007 2008 2009 2010
price approximately $6.40
per bushel1
1. Source: NASS, USDA data 2003 to August 2007
16. R & D PIPELINE
With Roundup Ready 2 Yield Soybeans, Yield Also Becomes
Focus of Next Wave of Commercial Products
ROUNDUP READY 2 YIELD SOYBEANS: STATE OF AGRICULTURE:
SECOND-GENERATION WEED CONTROL FIELD RESULTS
A New Soybean Platform
Near-Isoline Comparisons:
Roundup Ready 2 Yield vs. Roundup Ready
% Yield Increase over Roundup Ready
12%
HIGHER-YIELDING
DICAMBA-TOLERANT
11%
10%
9% VISTIVE III
ROUNDUP READY 2 YIELD
9%
8%
7% 7%
6% ► Roundup Ready 2 Yield
becomes the platform for
4% soybean traits
► Three soybean pipeline
2%
traits advanced to Phase 3
commercial development in
0%
recent R&D update
4 YEAR
2004 2005 2006 2007 AVERAGE ► Insect-protected Roundup
Ready 2 Yield soybeans first
Roundup Ready 2 Yield soybeans yield 7 to 11 percent
platform developed solely
higher than Roundup Ready soybeans based on 73
for an international market
Monsanto field trials from 2004-2007
16
17. R & D PIPELINE
Like Roundup Ready 2 Yield Soybeans, SmartStax Corn
Resets Trait Platform for Corn
SmartStax Value: On-Farm Commercial Preparation: Field Data Generation
+ Increased Yield (per-acre and on-farm) YEAR 1 YEAR 2 YEAR 3 FORWARD
YIELD
YIELD COMPONENT 2006 2008+
BENEFIT1
Focus: Focus: SmartStax
PER-ACRE
Feasibility of full bred into elite
Improved consistency: 1-2% trait integration germplasm; yield
Primary pests data generation
Improved protection: 1-2%
Secondary pests Field Testing: 2007
ON-FARM Testing focused on trait
performance, such as
Reduced refuge 3-6%
consistency of control of
Flexibility to move to one technology targeted pests
+
platform on-farm
Initial 2007 Results
+ Durability
• Indicates superior
Flexibility to increase planting
rootworm consistency
+
populations
versus triple-stack
+ Platform for future traits standard
TRIALS: 56
• Good control of
+ Access to superior seed
STATES: 12 secondary pests
Total SmartStax Value
=
1. Yield benefit reflects expected yield benefit above triple-stack standard, on a
per-acre and whole-farm basis as noted. Ranges may overlap
17
18. R & D PIPELINE
Projects Like Nitrogen-Utilization Corn Are Positioned to Drive
Yield and Meet Demand In New Environment
PER-ACRE NITROGEN COST STATE OF AGRICULTURE:
FOR CORN PRODUCTION, IN ILLINOIS: 1990-20071 Breakthroughs in Nitrogen-Use Research
Under normal nitrogen conditions, lead Nitrogen-
$80
Utilization trait has demonstrated yield advantages
$75
in multiple backgrounds over multiple years
$70
12
*
Yield Increase (bu/Ac)
$65
** ***
*
10
$60 8
6
$55
4
2
$50
0
$45
-2 TRIALS IN
TRIALS IN
1990 1992 1994 1996 1998 2000 2002 2004 2006
MULTIPLE
MULTIPLE
HYBRID
HYBRID
Nitrogen accounts for approximately one-fifth of BACKGROUNDS
BACKGROUNDS
the operating costs for a corn producer2 (15 LOC)
(16 LOC)
Nitrogen-Utilization corn offers the potential to
bring the value of nitrogen into the seed: 2005 2006 2007
• Reducing farmers’ exposure to nitrogen
*
price volatility Statistically significant @ p≤0.10
• Boosting yield Bar color correlates with the specific hybrid background tested.
• Improving ease of use, flexibility Same bar color in different tests and different years indicates same
hybrid was used.
All trials conducted under sufficient nitrogen application levels.
1. Illinois Farm Business Farm Management
2. USDA
18
19. SUMMARY
Given Growth Opportunities, Monsanto Has Potential to
Double Gross Profit Over the Next Five Years
2012 GROWTH RANGE
MONSANTO GROSS PROFIT
GROWTH TARGET Gross profit targeted to double
from 2007 through 2012
$9,000
STRATEGIC PLAYBOOK
$8,000
All growth is organic, from
$7,000 base business and pipeline
GROSS PROFIT
(IN MILLIONS)
U.S. Corn
$6,000
International Corn
$5,000 Soybeans
Cotton
$4,000
Seminis
R&D Pipeline
$3,000
Acquisitions to be pursued,
$2,000
but are not included in this
$1,000 growth projection
$0 Earnings continue to translate
into operating cash, and value
2004 2007 2012
MILESTONES
created for shareowners
2010
2007 through combination of
Gross margin
Base Gross Profit: acquisitions, share
target: 52-54%
$4,286M repurchases and dividends
ONGOING EPS GROWTH:
MID-TO-HIGH TEENS