monsanto 2004/11/03

1

Robert T. Fraley, Ph.D.Robert T. Fraley, Ph.D.

Chief Technology Officer and Executive Vice PresidentChief Technology Officer and Executive Vice President

Chemicals and Paper and Packaging RoundtableChemicals and Paper and Packaging Roundtable

Morgan StanleyMorgan Stanley

November 3, 2004November 3, 2004

2

Certain statements contained in this presentation, such as stateCertain statements contained in this presentation, such as statements concerning the company's anticipated ments concerning the company's anticipated financial results, current and future product performance, regulfinancial results, current and future product performance, regulatory approvals, currency impact, business and atory approvals, currency impact, business and financial plans and other nonfinancial plans and other non--historical facts are "forwardhistorical facts are "forward--looking statements." These statements are based on looking statements." These statements are based on current expectations and currently available information. Howevecurrent expectations and currently available information. However, since these statements are based on factors that r, since these statements are based on factors that involve risks and uncertainties, the companyinvolve risks and uncertainties, the company’’s actual performance and results may differ materially from thoss actual performance and results may differ materially from those e described or implied by such forwarddescribed or implied by such forward--looking statements. Factors that could cause or contribute to sulooking statements. Factors that could cause or contribute to such differences ch differences include, among others: the company's exposure to various continginclude, among others: the company's exposure to various contingencies, including those related to Solutia Inc., encies, including those related to Solutia Inc., litigation, intellectual property, regulatory compliance (includlitigation, intellectual property, regulatory compliance (including seed quality), environmental contamination and ing seed quality), environmental contamination and antitrust; fluctuations in exchange rates and other developmentsantitrust; fluctuations in exchange rates and other developments related to foreign currencies and economies; related to foreign currencies and economies; increased generic and branded competition for the company's Rounincreased generic and branded competition for the company's Roundup herbicide; the accuracy of the companydup herbicide; the accuracy of the company’’s s estimates and projections, for example, those with respect to prestimates and projections, for example, those with respect to product returns and grower use of our products and oduct returns and grower use of our products and related distribution inventory levels; the effect of weather conrelated distribution inventory levels; the effect of weather conditions and commodity markets on the agriculture ditions and commodity markets on the agriculture business; the success of the companybusiness; the success of the company’’s research and development activities and the speed with which rs research and development activities and the speed with which regulatory egulatory authorizations and product launches may be achieved; domestic anauthorizations and product launches may be achieved; domestic and foreign social, legal and political d foreign social, legal and political developments, especially those relating to agricultural productsdevelopments, especially those relating to agricultural products developed through biotechnology; the company's developed through biotechnology; the company's ability to continue to manage its costs; the companyability to continue to manage its costs; the company’’s ability to successfully market new and existing products in s ability to successfully market new and existing products in new and existing domestic and international markets; the companynew and existing domestic and international markets; the company’’s ability to obtain payment for the products that s ability to obtain payment for the products that it sells; the company's ability to achieve and maintain protectiit sells; the company's ability to achieve and maintain protection for its intellectual property; the effects of the on for its intellectual property; the effects of the company's accounting policies and changes in generally accepted company's accounting policies and changes in generally accepted accounting principles; the company's ability to accounting principles; the company's ability to fund its shortfund its short--term financing needs; general economic and business conditions; term financing needs; general economic and business conditions; political and economic conditions political and economic conditions due to threat of future terrorist activity and related military due to threat of future terrorist activity and related military action; and other risks and factors detailed in the action; and other risks and factors detailed in the company's filings with the U.S. Securities and Exchange Commissicompany's filings with the U.S. Securities and Exchange Commission. Undue reliance should not be placed on these on. Undue reliance should not be placed on these forwardforward--looking statements, which are current only as of the date of thilooking statements, which are current only as of the date of this release. The company disclaims any s release. The company disclaims any current intention to revise or update any forwardcurrent intention to revise or update any forward--looking statements or any of the factors that may affect actual looking statements or any of the factors that may affect actual results, whether as a result of new information, future events oresults, whether as a result of new information, future events or otherwise. r otherwise.

ForwardForward--Looking StatementsLooking Statements

3

Additional DisclosuresAdditional Disclosures

This presentation uses the nonThis presentation uses the non--GAAP financial measure of earnings per share (GAAP financial measure of earnings per share (““EPSEPS””) excluding the effect of ) excluding the effect of certain items. A noncertain items. A non--GAAP EPS financial measure (which we sometimes refer to as EPS oGAAP EPS financial measure (which we sometimes refer to as EPS on an ongoing basis) may n an ongoing basis) may exclude the impact of restructuring charges, charges associated exclude the impact of restructuring charges, charges associated with the settlement of litigation, gains and losses with the settlement of litigation, gains and losses on the sale of assets, and certain other items. The specific iton the sale of assets, and certain other items. The specific items that are excluded from, and result in, our nonems that are excluded from, and result in, our non--GAAP EPS financial measure are clearly identified as such in thiGAAP EPS financial measure are clearly identified as such in this presentation. The presentation of EPS excluding s presentation. The presentation of EPS excluding the effect of certain items is intended to supplement investorsthe effect of certain items is intended to supplement investors’’ understanding of our operating performance. This understanding of our operating performance. This nonnon--GAAP financial measure may not be comparable to similar measuresGAAP financial measure may not be comparable to similar measures used by other companies. Furthermore, used by other companies. Furthermore, this nonthis non--GAAP financial measure is not intended to replace net income (loGAAP financial measure is not intended to replace net income (loss), cash flows, financial position, or ss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with accomprehensive income (loss), as determined in accordance with accounting principles generally accepted in the counting principles generally accepted in the United States. The nonUnited States. The non--GAAP financial measure used in this presentation is reconciled tGAAP financial measure used in this presentation is reconciled to the most directly o the most directly comparable financial measure calculated and presented in accordacomparable financial measure calculated and presented in accordance with GAAP and can be found at the end of nce with GAAP and can be found at the end of this presentation.this presentation.

Fiscal YearFiscal YearIn this presentation, unless otherwise specified:In this presentation, unless otherwise specified:References to years, or to fiscal years, 2001 through 2006 are oReferences to years, or to fiscal years, 2001 through 2006 are on a fiscal year basis and refer to the 12n a fiscal year basis and refer to the 12--month period month period

ending August 31.ending August 31.

TrademarksTrademarksRoundup, Roundup Ready, Bollgard, Bollgard II, YieldGard, HarnesRoundup, Roundup Ready, Bollgard, Bollgard II, YieldGard, Harness, Posilac , VISTIVE, Processor Preferred and the s, Posilac , VISTIVE, Processor Preferred and the Monsanto, Imagine and vine logo are trademarks owned by MonsantoMonsanto, Imagine and vine logo are trademarks owned by Monsanto Company and its wholly owned subsidiaries. All Company and its wholly owned subsidiaries. All other trademarks are the property of their respective owners. other trademarks are the property of their respective owners. ©© 2004. Monsanto Company. All Rights Reserved.2004. Monsanto Company. All Rights Reserved.

4

Biotechnology Is Most Rapidly Adopted Technology in Biotechnology Is Most Rapidly Adopted Technology in History of AgricultureHistory of Agriculture

Global Monsanto Planted Biotech AcresGlobal Monsanto Planted Biotech AcresAcres in millionsAcres in millions

Source: Monsanto estimatesSource: Monsanto estimates

0

20

40

60

80

100

120

140

160

180

1996 1997 1998 1999 2000 2001 2002 2003 2004

Canola

Cotton

Corn

Soybeans

OverviewOverview

5

Source: Source: ““US Agriculture of Biotechnology Derived Crops Planted in 2003 US Agriculture of Biotechnology Derived Crops Planted in 2003 –– An Update of Eleven cases An Update of Eleven cases of Eleven Case Studies,of Eleven Case Studies,”” National Center for Food & Agriculture Policy. October 20, 20National Center for Food & Agriculture Policy. October 20, 200404

Effect of Biotech Crops on U.S. Pesticide UseEffect of Biotech Crops on U.S. Pesticide Usein 2003in 2003

Biotechnology Provides Better Economical and Biotechnology Provides Better Economical and Environmental SolutionsEnvironmental Solutions

(46)(46)Total Reduction in Total Reduction in Pesticide UsePesticide Use

(0.2)(0.2)CanolaCanola

(13)(13)CottonCotton

(13)(13)CornCorn

(20)(20)SoybeansSoybeans

Million Million Lbs.Lbs.

OverviewOverview

6

45% 48% 49%43%

0%

10%

20%

30%

40%

50%

60%

2001 2002 2003 2004

Early, Major Investment In Seeds Captured Value ShiftEarly, Major Investment In Seeds Captured Value ShiftOverviewOverview

Monsanto Licensed ShareMonsanto Licensed ShareMonsanto Brand ShareMonsanto Brand Share

Monsanto Genetic Market Share in U.S. Corn SeedMonsanto Genetic Market Share in U.S. Corn Seed

Source: Monsanto EstimatesSource: Monsanto Estimates

DupontDupont--Pioneer SharePioneer Share

7

Product Development, Regulatory and Commercial Product Development, Regulatory and Commercial Experience Generate MomentumExperience Generate Momentum

OverviewOverview

0123456

MON DD BAY DOW SYT BAS

Pipeline products Pipeline products in USDA in USDA

review processreview process

05

1015202530


USDA BiotechUSDA BiotechApprovalsApprovals

020406080

100120140


U.S. Trait Acres U.S. Trait Acres 20042004

8

Round 1:Round 1: Seed and SingleSeed and Single--Trait Positions Firmly Trait Positions Firmly Established and GrowingEstablished and Growing

•• Seed Breeding AdvancementsSeed Breeding Advancements

•• FirstFirst--Generation TraitsGeneration Traits

•• Geographic ExpansionGeographic Expansion

•• Value CaptureValue Capture

Round 1

9

Now Commercializing First InterNow Commercializing First Inter--Company Corn Company Corn Hybrids from Industry’s Most Diverse Genetic PoolHybrids from Industry’s Most Diverse Genetic Pool

Round 1: BreedingRound 1: Breeding

TemperateTemperateTemperate

Sub-TropicalSubSub--TropicalTropical

TropicalTropicalTropical

Sub-TropicalSubSub--TropicalTropical

TemperateTemperateTemperate

6-to-8 year process66--toto--8 year process8 year processLate 1990sLate 1990s

Acquired 36 major corn Acquired 36 major corn breeding programsbreeding programs

((12 countries x average of 3 12 countries x average of 3 companies per country)companies per country)

Early 2000sEarly 2000sCrossed genetic lines Crossed genetic lines

across acquired across acquired companiescompanies

TodayTodayLaunching new hybrids Launching new hybrids

from interfrom inter--company company crossescrosses

Monsanto Monsanto corn corn

germplasm germplasm flows flows

globallyglobally

10DiscoveryDiscovery Phase 1Phase 1

Proof of ConceptProof of ConceptPhase 2Phase 2

Early DevelopmentEarly DevelopmentPhase 3Phase 3

Adv. DevelopmentAdv. DevelopmentPhase 4Phase 4

PrePre--LaunchLaunchLaunchLaunch

Roundup Ready Soybeans Continue To Deliver ValueRoundup Ready Soybeans Continue To Deliver ValueRound 1: FirstRound 1: First--Generation TraitsGeneration Traits

Source: Monsanto and Doane Market ResearchSource: Monsanto and Doane Market Research

$48$48 $40$40

19951995 2005F2005F

$ per acre$ per acre Herbicide Herbicide CostCost

Trait Trait CostCost

19991999Roundup ReadyRoundup Ready

$52$52

ConventionalConventional

HerbicideHerbicide

SeedSeed

TraitTrait

11 U.S. Grower System CostU.S. Grower System Cost

Key Market AcresKey Market AcresKey Market Acres

100%100%100%15%15%15%96%96%96%Percent Penetrated (2004)Percent Penetrated (2004)Percent Penetrated (2004)30M30M30M50M50M50M70M70M70MAvailable MarketAvailable MarketAvailable Market

ArgentinaArgentinaArgentinaBrazilBrazilBrazilU.S.U.S.U.S.Contributing PlatformsContributing Platforms

GenomicsGenomics

ConventionalConventionalBreedingBreeding

Crop AnalyticsCrop Analytics

BiotechnologyBiotechnology

MolecularMolecularBreedingBreeding

11

Contributing PlatformsContributing Platforms

DiscoveryDiscovery Phase 1Phase 1Proof of ConceptProof of Concept

Phase 2Phase 2Early DevelopmentEarly Development

Phase 3Phase 3Adv. DevelopmentAdv. Development

Phase 4Phase 4PrePre--LaunchLaunch

LaunchLaunch

Roundup Ready Soybean Value Grows Through Roundup Ready Soybean Value Grows Through Geographic ExpansionGeographic Expansion

Round 1: Geographic Expansion and Value CaptureRound 1: Geographic Expansion and Value Capture



ArgentinaArgentinaArgentinaBrazilBrazilBrazilU.S.U.S.U.S.

GenomicsGenomics





22 Brazil Value CaptureBrazil Value Capture

BrazilBrazil

GrainGrain--based based system system implementedimplemented

Over 95% of grain originators in Over 95% of grain originators in the territory the territory under contract under contract

Provisional measure in place Provisional measure in place for for 2005 season2005 season

Sale of Roundup Sale of Roundup Ready soybean Ready soybean varieties for this varieties for this

area requires new area requires new regulatory regulatory approvalsapprovals

Varieties from Varieties from Argentina are Argentina are adaptable to adaptable to

this areathis area

40 million planted soybean acres40 million planted soybean acres


System SuccessSystem Success

12






LaunchLaunch




GenomicsGenomics





33 Argentina, Uruguay, Paraquay Value CaptureArgentina, Uruguay, Paraquay Value Capture

Argentina, Uruguay, ParaguayArgentina, Uruguay, ParaguaySystem DevelopmentSystem Development


GrainGrain--based based system being discussedsystem being discussed

2005 and 2006 2005 and 2006 guidance excludes earnings guidance excludes earnings effecteffect of this systemof this system

Roundup Ready Soybean Value Grows Through Roundup Ready Soybean Value Grows Through Geographic ExpansionGeographic Expansion

Round 1: Geographic Expansion and Value CaptureRound 1: Geographic Expansion and Value Capture






Available Market for Roundup Ready Corn Is GrowingAvailable Market for Roundup Ready Corn Is GrowingRound 1: Geographic ExpansionRound 1: Geographic Expansion




GenomicsGenomics





Regulatory ProcessesRegulatory ProcessesEuropean UnionEuropean Union

22 products in regulatory queue 22 products in regulatory queue under Directive 2001/18; 11 from under Directive 2001/18; 11 from MonsantoMonsanto

Roundup Ready corn (NK603) Roundup Ready corn (NK603) approved for importation and whole approved for importation and whole corn feed in July 2004; approved for corn feed in July 2004; approved for Novel Food in October 2004Novel Food in October 2004

Applications for stacks in queueApplications for stacks in queue

ArgentinaArgentina

NK603 approved for planting in NK603 approved for planting in Argentina in July 2004Argentina in July 2004

Application for stacks in queueApplication for stacks in queue

11

14






LaunchLaunch

Available Market for Roundup Ready Corn Is GrowingAvailable Market for Roundup Ready Corn Is GrowingRound 1: Geographic ExpansionRound 1: Geographic Expansion

22 Grain Channeling in the U.S.Grain Channeling in the U.S.

Business ApproachBusiness ApproachWebsite indicates to farmers Website indicates to farmers which elevators in their area which elevators in their area accept biotech grain not yet accept biotech grain not yet approved for import into the approved for import into the European UnionEuropean UnionCommunication and Communication and education program under wayeducation program under wayPercent of growers citing Percent of growers citing grain marketing concerns has grain marketing concerns has dropped from roughly 60% to dropped from roughly 60% to nearly 30% in past year*nearly 30% in past year*

*Based on Roundup Ready corn surveys taken in fall of 2003 and *Based on Roundup Ready corn surveys taken in fall of 2003 and spring of 2004 in Eastern Iowa/Northern Illinois regionspring of 2004 in Eastern Iowa/Northern Illinois region

www.866sellcorn.comwww.866sellcorn.com




GenomicsGenomics










Round 1: FirstRound 1: First--Generation TraitsGeneration TraitsYieldGard Rootworm Continues High Satisfaction YieldGard Rootworm Continues High Satisfaction Pattern with Biotech TraitsPattern with Biotech Traits


0%0%0%0%0%0%9%9%9%Percent Penetrated (2004)Percent Penetrated (2004)Percent Penetrated (2004)1M1M1M5M5M5M15M-20M15M15M--20M20MAvailable MarketAvailable MarketAvailable Market


11 Grower SatisfactionGrower Satisfaction

11Based on all growers using specified seed and treatment and ableBased on all growers using specified seed and treatment and able to answer very satisfied, somewhat satisfied, neutral, or not sto answer very satisfied, somewhat satisfied, neutral, or not satisfied.atisfied.*Source: Marketing Horizons Trait Satisfaction Studies 2002*Source: Marketing Horizons Trait Satisfaction Studies 2002**Source: Marketing Horizons Trait Satisfaction Studies 2004**Source: Marketing Horizons Trait Satisfaction Studies 2004

0%

20%

40%

60%

80%

100%

RoundupRoundupReadyReady

Soybeans*Soybeans*

RoundupRoundupReady Ready Cotton*Cotton*

Bollgard/Bollgard/RoundupRoundup

ReadyReadyCotton*Cotton*

Roundup Roundup ReadyReadyCorn*Corn*

YieldGardYieldGardRootwormRootworm

Corn**Corn**

YieldGardYieldGardCornCorn

Borer*Borer*

Percent of customers very or somewhat satisfiedPercent of customers very or somewhat satisfied11


GenomicsGenomics





16

22 Split planter 32Split planter 32--inch rows inch rows –– Rock County, MN Rock County, MN –– August , 2004August , 2004


12121111886644151533

11

1.1. DEKALB DKC46DEKALB DKC46--22 22 –– YieldGard RootwormYieldGard Rootworm2.2. Mycogen 2K541 CruiserMycogen 2K541 Cruiser3.3. DEKALB DKC42DEKALB DKC42--88 88 –– YieldGard RootwormYieldGard Rootworm4.4. DEKALB DKC52DEKALB DKC52--40 40 –– YieldGard RootwormYieldGard Rootworm5.5. Wensman W6212RR untreatedWensman W6212RR untreated6.6. DEKALB DKC42DEKALB DKC42--88 88 –– YieldGard RootwormYieldGard Rootworm7.7. Pioneer 38H66 CruiserPioneer 38H66 Cruiser8.8. DEKALB DKC51DEKALB DKC51--39 39 –– YieldGard RootwormYieldGard Rootworm9.9. DEKALB DKC47DEKALB DKC47--10 P25010 P25010.10. DEKALB DKC46DEKALB DKC46--28 P25028 P25011.11. DEKALB DKC42DEKALB DKC42--88 88 –– YieldGard RootwormYieldGard Rootworm12.12. DEKALB DKC46DEKALB DKC46--22 22 –– YieldGard RootwormYieldGard Rootworm13.13. AgVenture 4882RR Cruiser CRWAgVenture 4882RR Cruiser CRW14.14. Channel 6965RR Cruiser CRWChannel 6965RR Cruiser CRW15.15. DEKALB DKC42DEKALB DKC42--88 88 –– YieldGard RootwormYieldGard Rootworm16.16. Kruger 93P92 untreatedKruger 93P92 untreated

17






LaunchLaunch



0%0%0%0%0%0%9%9%9%Percent Penetrated (2004)Percent Penetrated (2004)Percent Penetrated (2004)1M1M1M5M5M5M15M-20M15M15M--20M20MAvailable MarketAvailable MarketAvailable Market


GenomicsGenomics





33 YieldGard Rootworm ProtectionYieldGard Rootworm Protection

18

Round 2:Round 2: Monsanto Is Uniquely Positioned To Monsanto Is Uniquely Positioned To Bring Next Generation of Traits to MarketBring Next Generation of Traits to Market

•• Continued Growth from Round 1 Continued Growth from Round 1

•• SecondSecond--Generation TraitsGeneration Traits

•• Greater Intensity of Stacked TraitsGreater Intensity of Stacked Traits

Round 2Round 1







0%0%0%0%0%0%Percent PenetratedPercent PenetratedPercent Penetrated0.5M – 0.8M0.5M 0.5M –– 0.8M0.8M10M-15M10M10M--15M15MAvailable MarketAvailable MarketAvailable MarketAustraliaAustraliaAustraliaU.S.U.S.U.S.

Upgrades in Technology Raise the Bar Upgrades in Technology Raise the Bar ---- Roundup Roundup Ready Flex CottonReady Flex Cotton

Round 2: SecondRound 2: Second--Generation TraitsGeneration Traits

11 Expanded Window of ApplicationExpanded Window of Application

EmergenceEmergence LaybyLayby Preharvest HarvestPreharvest Harvest

OverOver--thethe--top window of applicationtop window of applicationRoundup ReadyRoundup Ready®® Flex Cotton Flex Cotton

Roundup ReadyRoundup Ready®®

CottonCotton((< < 4 lf.)4 lf.)

Expanded window of overExpanded window of over--thethe--top applicationtop application-- Increased margin of crop safetyIncreased margin of crop safety-- More More ““flexibleflexible”” weed controlweed control

Increased grower convenienceIncreased grower convenienceReduced need for specialized spray equipmentReduced need for specialized spray equipment


GenomicsGenomics





20






LaunchLaunch



Upgrades in Technology Raise the Bar Upgrades in Technology Raise the Bar ---- Roundup Roundup Ready Flex CottonReady Flex Cotton


Over 200 field trials conducted in 2004Over 200 field trials conducted in 2004

8 cotton seed companies participating in trial 8 cotton seed companies participating in trial programprogram

Cotton States launching exclusively on a Cotton States launching exclusively on a secondsecond--generation trait platformgeneration trait platform

22 Field Trial UpdateField Trial Update

Results from the Field

Coming in January 2005

Results from the FieldResults from the Field

Coming in January 2005Coming in January 2005

GenomicsGenomics





21






LaunchLaunch




GenomicsGenomics





Broad Licensing Supports Roundup Ready Flex Broad Licensing Supports Roundup Ready Flex IntroductionIntroduction

33 Broad LicensingBroad LicensingBroad licensing mitigates risk of seed market share Broad licensing mitigates risk of seed market share changeschanges

0%

25%

50%

75%

100%

1999 2000 2001 2002 2003 2004

DPLStonevilleFiberMaxPhytogenOthers

U.S. cotton seed market sharesU.S. cotton seed market shares

Source: USDASource: USDA

22

1.5

1.2

1.01

1.1

1.2

1.3

1.4

1.5

1.6

1996 1997 1998 1999 2000 2001 2002 2003 2004F 2005F 2006F

Cotton (2 Traits)

Corn (3 Traits)

Soybeans (1 Trait)

Stacking Biotech Traits Adds New Dimension to Stacking Biotech Traits Adds New Dimension to Market Potential Market Potential —— Multiplying Margin OpportunitiesMultiplying Margin Opportunities

Monsanto U.S. Biotech Intensity Index*Monsanto U.S. Biotech Intensity Index*

Average number of biotech traits per biotech acreAverage number of biotech traits per biotech acre

Round 2: Stacked TraitsRound 2: Stacked Traits

10 million 10 million biotech biotech AcresAcres

16 million16 millionbiotech biotech margin margin

opportunitiesopportunities

==XX1.5 1.5

intensity intensity indexindex

CottonCotton42 million 42 million biotech biotech acresacres

52 million52 millionbiotech biotech margin margin

opportunitiesopportunities

==XX1.2 1.2

intensity intensity indexindex

CornCorn

* Monsanto traits only* Monsanto traits only

U.S. Biotech Margin OpportunitiesU.S. Biotech Margin Opportunities

23

Round 3:Round 3: Pipeline Potential Builds on Established Pipeline Potential Builds on Established PlatformPlatform

•• Continued Growth from Rounds 1 & 2Continued Growth from Rounds 1 & 2

•• Improved Food and Feed Biotech TraitsImproved Food and Feed Biotech Traits

•• Biotech Yield TraitsBiotech Yield Traits

Round 2 Round 3Round 1

24

Pipeline Products Reach New Markets and Expand Pipeline Products Reach New Markets and Expand Base in Corn, Soybeans and CottonBase in Corn, Soybeans and Cotton

Round 3: Food, Feed and Yield TraitsRound 3: Food, Feed and Yield Traits

Roundup Ready Roundup Ready Flex CottonFlex Cotton

YieldGard YieldGard Rootworm Rootworm

CornCorn

YieldGard YieldGard Corn BorerCorn Borer

Bollgard I & II Bollgard I & II CottonCotton

Roundup Roundup Ready Corn, Ready Corn, Soy, CottonSoy, Cotton

Commercialized Agronomic TraitsCommercialized Agronomic Traits

YGCB II CornYGCB II Corn YGRW II CornYGRW II Corn22ndnd GenerationGenerationAgronomic TraitsAgronomic Traits

Nitrogen Nitrogen Utilization CornUtilization Corn

Cold Tolerant Cold Tolerant CornCorn

Drought Tolerant Drought Tolerant Corn, Soy, CottonCorn, Soy, Cotton

YieldYield

Low Linolenic Low Linolenic SoySoy

Healthier Oil SoyHealthier Oil Soy(Low Linolenic(Low Linolenic

Mid OleicMid OleicLow Saturate)Low Saturate)

OmegaOmega--3 Soy3 Soy(Stearidonic acid)(Stearidonic acid)

FoodFoodFeedFeed

High Lysine CornHigh Lysine Corn

Enhanced High Enhanced High Lysine CornLysine Corn

Improved Protein Improved Protein SoySoy

Improved Protein SoyImproved Protein Soy(Beta Conglycinin)(Beta Conglycinin)






High Lysine Enhances Essential Amino Acids in FeedHigh Lysine Enhances Essential Amino Acids in FeedRound 3: Feed TraitsRound 3: Feed Traits


0%0%0%0%0%0%0%0%0%Percent PenetratedPercent PenetratedPercent PenetratedTBDTBDTBDTBDTBDTBDTBDTBDTBDAvailable MarketAvailable MarketAvailable Market


GenomicsGenomics





11 High Lysine Corn High Lysine Corn Enhance level of limiting Enhance level of limiting essential amino acids in feedessential amino acids in feed

Lower cost of animal feed rationLower cost of animal feed ration

Improved amino acid balanceImproved amino acid balance

High Lysine Corn High Lysine Corn –– Total LysineTotal Lysine

Inde

xed

Inde

xed

00

5050

100100

150150

Neg.Neg. Neg.Neg.Pos.Pos. Pos.Pos.Event 1Event 1 Event 2Event 2

TargetTargetIncreased total Increased total energyenergy

U.S. regulatory U.S. regulatory packages packages submittedsubmitted

26






LaunchLaunch

High Lysine Enhances Essential Amino Acids in FeedHigh Lysine Enhances Essential Amino Acids in FeedRound 3: Feed TraitsRound 3: Feed Traits




22 Field and Feeding Trial Update Field and Feeding Trial Update





Field trials conducted in U.S. and Field trials conducted in U.S. and Argentina this yearArgentina this yearEvaluating over 12 hybrid genotypes in Evaluating over 12 hybrid genotypes in this yearthis year’’s programs programExcellent performance demonstrated in Excellent performance demonstrated in feeding trials to datefeeding trials to date

GenomicsGenomics











0%0%0%0%0%0%0%0%0%Percent PenetratedPercent PenetratedPercent PenetratedTBDTBDTBDTBDTBDTBD5M5M5MAvailable MarketAvailable MarketAvailable Market


Preparing for 2005 Launch of FirstPreparing for 2005 Launch of First--Generation Output Generation Output Trait PreTrait Pre--Launch Launch —— VISTIVE SoybeansVISTIVE Soybeans

Round 3: Food TraitsRound 3: Food Traits

11 VISTIVE Low Linolenic SoyVISTIVE Low Linolenic Soy

Std SoybeanStd Soybean

VISTIVEVISTIVE

SatsSatsLinolenicLinolenic

18:318:3 OleicOleicLinoleicLinoleic

A more stable soy oil A more stable soy oil requiring less requiring less hydrogenation: hydrogenation: reduce/eliminate trans reduce/eliminate trans fatsfatsYield parity and Yield parity and stacked with Roundup stacked with Roundup Ready traitReady traitLinolenic acid < 3% Linolenic acid < 3%


GenomicsGenomics





28






LaunchLaunch


0%0%0%0%0%0%0%0%0%Percent PenetratedPercent PenetratedPercent PenetratedTBDTBDTBDTBDTBDTBD5M5M5MAvailable MarketAvailable MarketAvailable Market


Preparing for 2005 Launch of FirstPreparing for 2005 Launch of First--Generation Output Generation Output Trait PreTrait Pre--Launch Launch —— VISTIVE SoybeansVISTIVE Soybeans

Round 3: Food TraitsRound 3: Food Traits


Advanced field testing Advanced field testing Shipping several tons of oil to food companies Shipping several tons of oil to food companies for food formulation testingfor food formulation testingFinalizing processor programs; Ag Finalizing processor programs; Ag Processing, Inc. (AGP) and Cargill Processing, Inc. (AGP) and Cargill participatingparticipatingLaunch in 2005Launch in 2005





GenomicsGenomics













Round 3: Food TraitsRound 3: Food TraitsOmegaOmega--3 3 Biofortification Is a Food Industry Biofortification Is a Food Industry BreakthroughBreakthrough

11 Oilseed Produced OmegaOilseed Produced Omega--33American Heart Assn., American Heart Assn., American Dietetic American Dietetic Assn., and 1,600+ Assn., and 1,600+ research studies research studies support health benefitssupport health benefits

18.7

%18

.7%23

.1%

23.1

%

24.9

%24

.9%29.4

%29

.4%

30.9

%30

.9%

32.0

%39.1

%39

.1%

Soy

Prot

ein

Soy

Prot

ein

Om

ega

Om

ega --

33Fi

ber

Fibe

r

Who

le G

rain

sW

hole

Gra

ins

Vita

min

CVi

tam

in C

Vita

min

EVi

tam

in E

Folic

Aci

dFo

lic A

cid

% general population % general population stating they consider theirstating they consider their

Omega-3 Deficiency Implicated in CVD

Rat

io d

ieta

ry o

meg

a-6:

3

4:1

80:1

Japan

UKUS Diet

Canada

Recommendations are for a ratio of 4:1

omega-6 to omega-3

CV deaths/100,00050 200

Vegetable oils Vegetable oils enriched with bioenriched with bio--available Omegaavailable Omega--33OmegaOmega--3 promotes 3 promotes heart healthheart healthEnhanced stabilityEnhanced stability

diet deficient diet deficient inin……PIC?PIC?


GenomicsGenomics





30






LaunchLaunch




Round 3: Food TraitsRound 3: Food TraitsOmegaOmega--3 3 Biofortification Is a Food Industry Biofortification Is a Food Industry BreakthroughBreakthrough


2004 field trials in U.S. Midwest2004 field trials in U.S. MidwestAnalyzing OmegaAnalyzing Omega--3 oil assay in Davis, California and 3 oil assay in Davis, California and St. Louis labsSt. Louis labsTesting for taste, odor and for agronomic performanceTesting for taste, odor and for agronomic performance





PIC?PIC?

GenomicsGenomics













Round 3: YieldRound 3: YieldDrought Stress Tolerance Is One of Potential New Drought Stress Tolerance Is One of Potential New Agronomic Traits in PipelineAgronomic Traits in Pipeline


GenomicsGenomics





11 Drought ToleranceDrought ToleranceYield protectionYield protectionon all acres to on all acres to protect against protect against water deficitswater deficits

Yield enhancementYield enhancementon all acres on all acres through improved through improved water usewater use

Cost savingsCost savingson irrigated acreson irrigated acres

Pricing depends on choice Pricing depends on choice of marketof market

Stack with weed and insect Stack with weed and insect control traits enhances control traits enhances margin opportunitymargin opportunity

32







LaunchLaunch




Round 3: YieldRound 3: Yield

GenomicsGenomics





Drought Stress Tolerance Is One of Potential New Drought Stress Tolerance Is One of Potential New Agronomic Traits in PipelineAgronomic Traits in Pipeline

33






LaunchLaunch




Round 3: YieldRound 3: YieldDrought Stress Tolerance Is One of Potential New Drought Stress Tolerance Is One of Potential New Agronomic Traits in PipelineAgronomic Traits in Pipeline

GenomicsGenomics






With With TraitTrait

ControlControl




Coming in January 2005 Coming in January 2005

34

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

2003 2004 2005F 2006F

Momentum and Acceleration Are Reflected in Momentum and Acceleration Are Reflected in 2005 and 2006 Earnings Guidance2005 and 2006 Earnings Guidance

$1.42$1.42

$1.61$1.61

$1.77 $1.77 to to

$1.90$1.90

13% 13% growthgrowth

10% 10% -- 18% 18% growthgrowth

Diluted Earnings per Share on an Ongoing BasisDiluted Earnings per Share on an Ongoing Basis

Earnings per ShareEarnings per Share$1.95 $1.95

to to $2.09$2.09

10% 10% growthgrowth

††2006F is GAAP basis (i.e. ongoing basis is expected to equal GAA2006F is GAAP basis (i.e. ongoing basis is expected to equal GAAP basis)P basis)

††

SummarySummary

35

Value Shift to Seed Continues…Value Shift to Seed Continues…SummarySummary

Source: U.S. 1996Source: U.S. 1996--2003 Doane AgroTrak & Seed Studies; 2008 Monsanto Estimate2003 Doane AgroTrak & Seed Studies; 2008 Monsanto Estimate

Crop ChemicalsCrop Chemicals GermplasmGermplasm Biotech TraitsBiotech Traits

$4.5$4.5

$3.0$3.0

$0.1$0.1

1996 1996 $7.5 Billion$7.5 Billion

$3.6$3.6

$3.5$3.5 $1.3$1.3

20032003$8.4 Billion$8.4 Billion

$2.6$2.6$3.8$3.8

$2.7$2.7

2008F 2008F $9.2 Billion$9.2 Billion

Industry value shift from crop chemicals to Industry value shift from crop chemicals to seeds and traits is well under wayseeds and traits is well under way

36

Value Shift to Food, Feed and YieldValue Shift to Food, Feed and YieldSummarySummary

SeedSeed

CropChemicals

CropCropChemicalsChemicals Value ShiftValue ShiftValue Shift

AnimalNutritionAnimalAnimal

NutritionNutrition Value ShiftValue ShiftValue Shift

HumanHealthHumanHumanHealthHealth Value ShiftValue ShiftValue Shift

Water and Soil

Nutrients

Water and Water and Soil Soil

NutrientsNutrientsValue ShiftValue ShiftValue Shift

37

Questions?Questions?

38

Reconciliation of NonReconciliation of Non--GAAP Financial MeasuresGAAP Financial Measures

Reconciliation of NonReconciliation of Non--GAAP EPSGAAP EPS

Net Income (Loss)

Cumulative Effect of Change in Accounting Principle

Income (Loss) Before Cumulative Effect of Accounting Change

Restructuring Charges – Net

Estimated 2004 Discontinued Operations and Related Restructurings – Net

Goodwill Impairment Charge for Global Wheat Business

Net Income (Loss) from Ongoing Business

12 Months Ended Aug.31, 2004

12 Months Ended Aug. 31, 2003

$ per share$ per share

$0.99

--

$0.99

$0.36

$0.02

$0.24

$1.61

$0.26

$0.05

$0.31

$0.10

$0.05

--

$1.42

Solutia PCB Litigation Settlement Expense – Net -- $0.96

Fiscal Year 2005 Target

$2.16 - $2.29

--

$2.16 - $2.29

-

-

-

$1.77 - $1.90

--

Tax Benefit Related to Loss on Wheat and Barley Business -- --$(0.39)

monsanto 2004/11/03

Economy & Finance