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Monsanto is extending its industry leadership through 2012, executives tell investors at annual field event

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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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