Monmouth, Illinois
August 12, 2008
Milestones for 2009 signal
soybean renaissance and acceleration of corn momentum, with
gross-profit growth in corn of 25 percent to 30 percent
Monsanto Company (NYSE:
MON) is in a position between 2008 and 2012 to launch multiple
game-changing technologies, widen its competitive lead, and
create even greater growth from seeds and traits as it brings
greater yield to farmers around the world, Hugh Grant,
Monsanto's chairman, chief executive officer and president, will
tell investors today.
Grant's comments will kick off the company's third-annual summer
field event for investors, held at Monsanto's field research
facility in Monmouth, Ill.
In the working research fields at the Monmouth facility,
investors will get a first-hand look at the next-generation
products in Monsanto's R&D pipeline that represent game-changing
technologies for growers, Grant indicated.
"There's no crystal ball in agriculture, but when you walk
through these research fields, it's as close as you come to
seeing the future in agriculture," said Grant. "Within one farm,
you see the technologies that already exist and have the
potential to rewrite the agricultural landscape next year and 10
years from now planted side-by-side. Based on our innovation, we
have the potential to double yields for our customers in corn,
cotton and soybeans by 2030."
"With what we have in hand today, we're in a position to widen
our lead over the competition, with acceleration beginning with
25 percent to 30 percent gross-profit growth in our corn
business in fiscal year 2009."
Grant indicated that recent performance and continued
opportunities in the company's key platforms, including its U.S.
soybean and corn businesses featured at the investor event,
underscore the company's expanding technology leadership and
first-mover advantage.
Soybean Renaissance
The centerpiece of Monsanto's investor event is its Roundup
Ready 2 Yield soybean technology which is on track for a
controlled commercial release on 1 million to 2 million acres in
2009.
"New technology rewrites historical assumptions about yield, and
that's exactly the case with Roundup Ready 2 Yield soybeans,"
said Grant. "We expect Roundup Ready 2 Yield to be delivered on
time, as promised and with a step change in yield that's
equivalent to almost a decade's worth of breeding gains."
Grant noted that the gross profit of the soybean seeds and
traits business globally is expected to grow by approximately 15
percent for fiscal year 2008. In fiscal year 2009, soybean gross
profit is expected to grow by an additional 5 percent,
recognizing that Monsanto expects total U.S. planted acres to
decline to 70 million acres from the estimated 74 million acres
planted this year.
As a part of today's event, investors will see a seed production
field of Roundup Ready 2 Yield soybeans that will support more
than 1,000 acres of commercial seed to be sold in 2009, one of
dozens of seed production fields planted this year as Monsanto
gears up for the release.
Creating Value for Soybean Growers
As the first new soybean biotechnology trait launch in more than
a decade and the first-ever yield-enhancing trait for soybeans,
Roundup Ready 2 Yield soybeans are among the most anticipated
new product launches in the seed industry, Grant said.
At current commodity values, Roundup Ready 2 Yield soybean's 7
percent to 11 percent yield advantage versus first-generation
Roundup Ready varieties creates approximately $35-to-$65 of
incremental yield value to farmers for the trait alone.
Consistent with Monsanto's established approach to sharing value
created with farmers, the suggested retail premium for Roundup
Ready 2 Yield trait in Monsanto's Asgrow brand compared with the
first-generation Roundup Ready trait will be roughly one-third
to one-half of this newly created value. At the retail level for
the Asgrow brand, pricing for seed with the Roundup Ready 2
Yield trait will reflect a seamless price for the value of the
elite seed germplasm and the trait, as well as new seed
treatments offered with Roundup Ready 2 Yield.
In addition to Roundup Ready 2 Yield soybeans, Monsanto
highlighted a number of other key soybean pipeline products that
are under development that would be stacked with the Roundup
Ready 2 Yield trait. These soybean products
include: dicamba tolerant soybeans; soybeans containing an
intrinsic yield trait that would provide additional yield on top
of the Roundup Ready 2 Yield trait; a soybean product which
produces omega-3 fatty acids; and a soybean product that
produces a high stability soybean oil that eliminates trans fats
and reduces the saturated fat content of soybean oil.
Corn Momentum
The re-launch of the soybean platform follows the path of the
continuing momentum generated by the company's corn business,
both in the United States and internationally, Grant noted.
For fiscal year 2008, gross profit in the corn seeds and traits
business is expected to grow by approximately 25 percent. The
company expects corn gross profit to grow another 25 percent to
30 percent in fiscal year 2009 because of the value being
delivered to farmers through high-yielding hybrids. Grant noted
that the gross profit expectation reflected an assumption of 90
million planted acres in the key U.S. corn market for 2009.
Among the key milestones Grant noted within the corn platform:
- U.S. seed share: Going
into the 2009 selling season, Monsanto expects to extend its
8-straight years of corn share gains as farmers continue to
switch to higher yielding seeds. Monsanto recently increased
its 2009 share expectation for its national seed brand,
DEKALB, to 2 or more points, up from its previous range of
1-2 share points. The increase reflects the company's
continuing confidence in the ability of its underlying seed
and traits to outperform the best competitive alternatives,
Grant said.
Monsanto's American Seeds, Inc. (ASI) brands also gained 1-2
share points in 2008, establishing ASI's seed position at
10-11 percent of the total market.
The company expects ASI's organic growth to continue with a
1-share point gain targeted for 2009.
- Expanded trait
penetration: Farmers in the United States planted
approximately 28 million acres of Monsanto's triple-stack
corn in 2008, above original projections of 25 million to 27
million acres. For 2009, Monsanto expects triple-stack
acreage will grow to 34 million to 35 million acres,
reflecting more than 65 percent penetration in the DEKALB
and ASI brands.
Supporting the expanded trait penetration in 2009 will be an
expanded value-based pricing model for corn traits. The new
approach creates seven pricing zones in the United States
and better matches the trait pricing to the value the farmer
receives and is expected to help further trait penetration
and set the stage for the launch of the SmartStax corn
platform in 2010. While prices vary by region, the weighted
average price of triple-stack traits will increase
approximately one-third from 2008 to 2009.
- Preparation for SmartStax
regulatory approval: In June, Monsanto announced it had
submitted its SmartStax product to the U.S. Environmental
Protection Agency for regulatory approval, making it the
first-ever stacked product with multiple effective genes
against both lepidopteran and corn rootworm pests to reach
this important regulatory milestone. The product remains on
track for commercial launch in 2010 pending appropriate
regulatory approvals.
- International growth:
Monsanto reiterated its target to grow its share in key
international corn geographies by 1-2 share points in 2009.
In Latin America, Monsanto is launching new trait packages
in both Argentina and Brazil. The Argentinean and Brazilian
regulatory approvals came earlier than anticipated in
Monsanto's growth plan, accelerating the company's
opportunity and creating an important first-mover advantage,
Grant said.
- In Argentina, Monsanto
received the first-ever approval for a double-stack
trait combination, YieldGard Corn Borer with Roundup
Ready Corn 2, and plans to offer the combination on more
than 1 million acres in its first year of introduction.
- In Brazil, Monsanto
received planting approval for the YieldGard Corn Borer
trait and is planning for a 1 million to 2 million acre
launch for the upcoming 2008-2009 season.
- Corn pipeline: Grant
also highlighted Monsanto's progress on its next
generation of biotechnology traits, including its
drought-tolerant corn and corn with enhanced nitrogen
use efficiency. Monsanto continues to lead the industry
in the development of new traits targeted to increase
grower yields.
Investor Event Materials
Materials related to this investor briefing are available on the
company's web site at http://www.monsanto.com/. These materials
include:
A comprehensive
guide that provides an overview of the projects
featured as a part of the investor field event. A
copy of the field guide is available at:
http://www.monsanto.com/monsanto/layout/investor/financial/presentations.asp.
Presentations by Monsanto's executive team will also
be available on Monsanto's website at:
http://www.monsanto.com/monsanto/layout/investor/financial/presentations.asp.
Monsanto is an agriculture
company. The company is a leading provider of technology-based
solutions and agricultural products that improve farm
productivity and food quality. Monsanto is committed to
investing in products that can make a difference for its farmer
customers and the land they farm.
The company uses plant breeding, plant biotechnology and other
applications of modern science to support its commitment to
agriculture and the farmers that feed, clothe and fuel our
growing world.
Roundup Ready 2 Yield, Roundup Ready, DEKALB, Asgrow,
YieldGard and SmartStax are trademarks of Monsanto Company and
its wholly owned subsidiaries. |
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