Monsanto 2001 Strategy Hendrik Verfaillie's Presentation At The Goldman, Sachs & Co Fifth Annual AgChemicals/AgBiotechnology Conference 6feb01

Monsanto 2001 Strategy

Hendrik Verfaillie's Presentation At The Goldman, Sachs & Co Fifth Annual AgChemicals/AgBiotechnology Conference 6feb01

Disclaimer:

Certain statements contained in this presentation, such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, currency impact, business and financial plans and other non-historical facts are "forward-looking statements." These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such factors include, among others: management's ability to achieve its cost-cutting objectives; the company's ability to successfully market new and existing products in new and existing domestic and international markets; the success of the company's research and development activities and the speed with which regulatory authorizations and product roll-outs may be achieved; the company's ability to achieve and maintain protection for its intellectual property; fluctuations in exchange rates; the effects of the company's accounting policies and changes in generally accepted accounting principles; the company's exposure to lawsuits regarding intellectual property and product liability, and other lawsuits and contingencies related to actual or alleged environmental contamination; domestic and foreign social, legal and political developments, especially those relating to agricultural products developed through biotechnology; increased generic and branded competition for the company's Roundup herbicide following the expiration of U.S. patent protection in September 2000; the seasonal nature of the company's agriculture business and the effect of weather conditions and commodity markets on that business; the company's ability to fund its short-term financing needs; general economic and business conditions; the company's ability to attract and retain current management and other employees of the company; and other risks and factors detailed in the company's filings with the U.S. Securities and Exchange Commission. The company disclaims any intention or obligation to revise or update any forward-looking statements or any factors that may cause results to differ, whether as a result of new information, future events or otherwise.

Investment Highlights

Strong and growing core business
Great upside from biotechnology and genomics
- First mover advantage in biotechnology with more than 90% of biotech trait acres
Broadest and deepest pipeline in industry
Steady profit growth through innovation and margin expansion

The trilogy of Chemistry, Traits and Seeds
Roundup Ready & Insect Resistant Crops
Integrated Channel & Technology Transfer

Conservation Tillage Potential

Market conditions:
- Roundup ideally suited for con-till
- Roundup on 70% of con-till acres
- Acres less than 30% penetrated
Grower benefits:
- Reduced labor, fuel and equipment costs
- Higher soil moisture
- Increased yield potential -Reduced soil erosion

            1996  113 million acres
            1999  208 million acres
Market Potential  750 million acres

Roundup Strategy Delivers

Technology
Scale
Supply agreements
Conservation tillage
Price elasticity
Roundup Ready crops
New formulations
Distribution breadth
Integrated portfolio

Roundup Ready Growth Potential (Millions of Acres)

                            Remaining
 Crop        200 Acres      Potential   Total
Corn             1+           209+       210
Soybeans        70+            60+       130
Canola           5+            65+        70
Cotton          10+            25+        35

First Mover Advantage in Traits and Technology

28% of all agricultural
53% of all USDA product approvals received
More than 90% global share of biotech traits
USDA Approvals

Monsanto       27
Aventis        11 
DuPont Pioneer  3 
Zeneca          2 
Novartis        2 
Dow             2

Brazilian Roundup Ready Soybeans

Effect of Provisional Measure - Establishes CTNBio as national authority on biotech
Next steps
- Provisional Measure finalized with Congress
- Environmental assessment completed and approved
- State permits obtained; labeling rules and other regulations met for commercial planting

Soybean (Acres in Millions)

Country      Biotech   Conventional   Total
US             45+         30+         75
Brazil          0+         33+         33
Argentina      24+          1+         25

Roundup Ready Corn EC Status

Member State Actions (completed)

Spain recommended approval for EU production (May 1999)
UK recommended approval for import (November 1999)

European Commission Actions (pending)

Formal vote on revisions to biotech rules (90/220) including general labeling and traceability
Draft approval decision on Roundup Ready corn completed by Commission
15 member states vote on final approval for Roundup Ready corn

Indian Cotton Potential

Focus on hybrid cotton for value capture and quality
Third year of Bt field tests with limited seed production

               Acres In 
   Cotton      Millions
Total            22
Hybrid           11
Conventional     11
Suitable for Bt  11

2001 Focus for Biotech Acceptance

United States
       U.S. regulatory system remains strong
       Acceptance grows with U.S. consumers
       U.S. food system regains confidence in biotech
       YieldGard corn and Bollgard cotton receive U.S. re-registrations
Japan
       Japanese regulatory system and commercial market remains open
Europe
       European regulatory system reopens for product approvals
Brazil
       Government establishes effective regulatory system
Global
       Growers increase purchases of biotech traits
       Global market penetration accelerates

Monsanto Has Strong Brand Shares

Corn Brand Share

NA       11%
E/A       9%
LA       59%
AP       27%
Total    21%
Pioneer  30%

Soybean Brand Share

NA       21%
E/A      40%
LA        4%
AP        0%
Total    14%
Pioneer  13%

Monsanto Has Leading Genetic Shares

Corn Genetics Share

NA       41%
E/A      16%
LA       62%
AP       42%
Total    38%
Pioneer  30%

Soybean Genetics Share

NA       35%
E/A      40%
LA        8%
AP        0%
Total    23%
Pioneer  13%

Monsanto’s Seed/Trait Strategy

Customer Portfolio
       Value added pricing; provide unique customer solutions.
Brands
       Strengthen brand equity and global brand positioning
Traits Technology Platform
       Maximize trait penetration via strategic use of brands and licensing
Germplasm
       Accelerate rate of genetic gain through genomics and global germplasm leverage

2001 Focus Areas

Grow sales of Roundup through brand leadership and volume growth.
Gain key regulatory approvals for biotech crops and accelerate global commercialization.
Realize full value through effective commercialization of pipeline.

Product Pipeline (Subject to technological success and regulatory approval)

SHORT-TERM (2001-2002)
CROP YIELD AND PRODUCTIVITY
         Refresh Current Seed Portfolio with:
         130 New Corn Hybrids
         150 New Soybean Varieties
         20 New Other Oilseed Varieties
         20 New Wheat Varieties
INSECT AND DISEASE MANAGEMENT
         MaxGard Insect-Protected Corn
         Second-Generation Bollgard Cotton
         Latitude Fungicide
WEED MANAGEMENT
         Roundup Ready Corn
         Roundup Ready Sugar Beets
FEED AND FOOD
         N/A

MEDIUM-TERM (2003-2005)
CROP YIELD AND PRODUCTIVITY
         Higher-Yielding Soybeans
         Higher-Yielding Canola
         Additional New Hybrids and Varieties in Key Crops
INSECT AND DISEASE MANAGEMENT
         Roundup Ready and Insect-Protected Soybeans
         Second-Generation YieldGard Corn
         Extended Control Seed Treatment
WEED MANAGEMENT
         Roundup Ready Wheat
         Roundup Ready Rice
         Roundup Ready Alfalfa
FEED AND FOOD
         Improved-Energy Corn
         Corn Enhanced with Essential Amino Acids

LONG-TERM (2006 and beyond)
CROP YIELD AND PRODUCTIVITY
         Higher-Yielding Corn
         Higher-Yielding Cotton
         Specialized Seed Corn
         Drought-Tolerant Corn
         Cold-Tolerant Corn nAdditional New Hybrids and Varieties in Key Crops
INSECT AND DISEASE MANAGEMENT
         Enhanced Bollgard Cotton
WEED MANAGEMENT
         Enhanced Roundup Ready Cotton
FEED AND FOOD
         Corn Enhanced with Essential Amino Acids
         Improved-Protein Soybeans
         High-Oil Canola
         High-Oil Soybeans
         Improved-Oil Soybeans
         Zero-Saturate Soybeans

MaxGard Corn Provides CRW Protection

Benefits:
•Consistent, season long control of CRW
•Insecticide savings of $12-14 per acre
Market:
•Fit on 50 million acres globally
Status:
•U.S. and Japanese regulatory submissions made
MaxGard Corn vs. Insecticides (Root Rating 1-5)
MaxGard            1.43
Lorsban            2.36
Counter            2.16
Force              2.17
Check              3.58
Economic Threshold 3.0
(Yield & Lodging) 
Source: University Research Trials (15 locations, 1999)

Bollgard® II Cotton Improves Current Product

Benefits:
•Bollgard II gives improved performance against cotton Bollworm, Beet & Fall Armyworms and Soybean Loopers.
•Insect resistance management
Status:
•US regulatory filings made

Growth Drivers

Short Term 2001 - 2002
          Grow Roundup, seeds, existing traits
          Increase margins
          Win biotech acceptance

Medium Term 2003 - 2005
Plus...
          Accelerating biotech growth
          Accelerating seed business growth

Long Term 2006 and beyond
Plus...
          Pipeline growth
          Yield traits
          Downstream businesses

source: http://www.monsanto.com/monsanto/media/01/01feb6_wallstreet_files/frame.htm

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