Fraley is delivering a presentation (click here for PDF version) as a part of the Morgan Stanley Chemicals and Paper & Packaging Roundtable in San Francisco.

“There’s a very defined shift in the sales in the U.S. agricultural industry away from crop chemicals and to seeds and traits,” says Fraley. “We made a significant bet on biotechnology in the 1980s, and that investment catapulted Monsanto to the head of a larger industry shift.”

In his remarks, Fraley will illustrate that this value shift is well underway in the industry with the “first round” of biotechnology traits and seed breeding advancements being delivered to farmers through the seeds they plant. Fraley believes that future value will be created not only by “stacking” multiple traits into the seed, but also by providing improved food and feed traits alongside the agronomic traits currently available.

“In the future, the value shift to the seed will be even more dramatic, as technology traits that enhance water usage and nutrient uptake in the plant, or traits that improve human health or animal nutrition are introduced,” Fraley says.

In his presentation, Fraley will cite examples of projects in Monsanto’s pipeline that are expected to contribute to the value shift to seeds and traits, including:

• drought tolerant crops, which are designed to enhance yield and environmental benefits by improving water use;
• Healthier oils for use in food products, including Omega-3s which promote heart health and low-linolenic soybean oil that reduce or eliminate trans fats; and,
• High-lysine corn, which can improve the balance of amino acids in animal feed.

Fraley says the combination of new biotechnology traits and improved plant breeding methods – which include marker-assisted techniques that use molecular markers in addition to physical measurement of traits in plant breeding programs – are the major factors leading to this dramatic shift in value to the seed.

“The rapid adoption of the first generation of technology traits has given innovators the confidence to redouble their efforts for the second- and third-generation products,” Fraley says.

Fiscal-Year 2005 Earnings Target for Ongoing Business Reiterated

In his comments, Fraley will also reaffirm the company’s 2005 fiscal year earnings per share (EPS) in the range of $1.77 to $1.90 on an ongoing basis. However, the company will record a tax benefit of approximately 39 cents per share in the first quarter of 2005 as a result of the loss incurred on the European wheat and barley business. This means that on a reported basis, the company now expects earnings to be in the range of 43 cents per share for the first quarter and in the range of $2.16 to $2.29 per share for the full fiscal year. Previously, the company expected reported earnings to be flat with 2004 first-quarter results of 4 cents per share, and full-year earnings in the range of $1.77 to $1.90 per share. (See reconciliation table with this news release.)

Monsanto will report its complete first-quarter fiscal year 2005 earnings on Wednesday, Jan. 5, 2005.