monsanto 11-08-07-5_v2

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ROBB FRALEY, PH.D.CHIEF TECHNOLOGY OFFICER

MONSANTO BIENNIAL U.S. INVESTOR DAY

NOVEMBER 8, 2007

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Pipeline Leverages Power of Breeding and Biotech for Current Commercial Growth and New Platforms in Next Decade

OVERVIEW

PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

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BREEDING

BIOTECHNOLOGY

GGermplasmR

SEED SOLD TO FARMERS

R&D PHASE: PHASE II PHASE III PHASE IVPHASE IDISCOVERY LAUNCH

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R&D PHASE:

MONSANTO’S R&D PIPELINE

Pipeline Priorities Through 2012BREEDING

Continue to Drive Breeding Gains Across Crop Platforms

► Continue corn breeding momentum► Accelerate soybean breeding► Elevate cotton and vegetable

breeding

► Launch Roundup RReady2Yield as soybean pipeline platform

Unlock Opportunity in Yield and Stress Through BASF Collaboration

► Deliver industry’s first pure yield-and-stress traits

► Change trait-value opportunity with “product families”

Deliver Value in Established Trait Pipeline

BIOTECHNOLOGY

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CORN BREEDING

Early Yield Trial Results Continue to Reinforce Yield Advantage of DEKALB Seed in U.S.

GEOGRAPHY: U.S.OBJECTIVE: Grow footprint2007 PERFORMANCE UPDATE

• In > 9,900 comparisons, Monsanto outyieldscompetitive best by 8.3 bu/ac

• In 110-day RM, Monsanto’s lead is 13 bu/ac, extended from 11.7 bu/ac in 2006

2007 PRELIMINARY U.S. COMPETITIVE CORN YIELD COMPARISON: DEKALB

NEW:

191

195 196

199

181

190 191 192 191

204

170

175

180

185

190

195

200

205

210

COMPETITORS

DEKALB

BU

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/AC

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(AP

PR

OX

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DIF

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>9,900

Overall

4134.510APPROXIMATE BU/AC ADVANTAGE:

>3,700>4,000>1,400>500COMPARISONS:

115 RM110 RM105 RM100 RMRELATIVE MATURITIES (DAYS)►

Source: 2007 Monsanto and third party trials through October 24, 2007. Weighted average, calculated to 15% moisture. DEKALBproducts are compared with competitive products that contain similar crop protection traits.

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CORN BREEDING

Like National Brands, New ASI Hybrids Have Substantial Yield Advantage Over Competitive Offerings

NEW: 2007 PRELIMINARY U.S. COMPETITIVE CORN YIELD COMPARISON: ASI


• Overall, 2007 yield comparisons showing 7.5 bu/ac advantage for ASI over competitive best

197

203 203

183

190 192 193

184

166 163160

165

170

175

180

185

190

195

200

205

210

10.5

158

115 RM

11.56.513.5APPROXIMATE BU/AC ADVANTAGE:

1478712854LOCATIONS:

110 RM105 RM100 RM95RMRELATIVE MATURITIES (DAYS)►

Source: 2007 Monsanto trials through October 24, 2007.

BU

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(AP

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COMPETITORS

ASI

5

210.3

197.0

190

194

198

202

206

210

MONSANTO PioneerDEKALB, ASI and

Corn States Hybrids with YieldGard VT

Triple

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1,949 comparisons in 13 states: Monsanto’s seed, protected by YieldGard VT Triple,

outperformed the best competitive seed-and-trait package by >13 bu/ac on average

Seed & Trait: Head-to-Head

Again in 2007, Best Combination of Germplasm and Traits in Monsanto Brands Delivers Best Yield

CORN BREEDING

NEW: PRELIMINARY TOTAL SEED & TRAIT YIELD PERFORMANCE IN 2007

Competitive Hybrids with Herculex®

XTRA and Roundup Ready Corn 2

Performance in Key Corn Belt StatesNE IA IL

Comparisons: >70

210bu/ac

193bu/ac

>400Monsanto

Brands:214bu/ac

219bu/ac

Competitive Brand:

900

200bu/ac

204 bu/ac

13BU/AC

ADVANTAGE

®

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SOYBEAN BREEDING

Coming Off 2007 Share Gain, Initial Soybean Yield Performance Continues to Reinforce Breeding Leadership

NEW: 2007 PRELIMINARY U.S. COMPETITIVE SOYBEAN YIELD COMPARISON: ASGROW


• Yield data from 2007 indicates continued yield advantage for national brands versus best-in-class competitors

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58

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55

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60 COMPETITORS

ASGROW

Source: 2007 Monsanto and third party trials through October 30, 2007. Asgrowproducts are compared to competitive products. (1)

>30

5

21.511.51APPROXIMATE BU/AC ADVANTAGE:

>1,000>3,400>3,500>400>300COMPARISONS:

4321ORELATIVE MATURITIES►

BU

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Yield and Stress Collaboration Resets Pipeline Structure and Approach to Value Considerations

R&D PIPELINE

DISCOVERYGene/Trait Identification

PHASE 1Proof of Concept

PHASE 2Early Development

PHASE 3Advanced

Development

PHASE 4Pre-Launch

Independent Discovery Program

Independent Discovery Program

Pest controlHerbicide toleranceDisease resistanceLipid enhancements (Increased oil, improved fatty-acid balance)Protein enhancements (Improved amino-acid balance)Carbohydrate enhancementsBioactive compounds

Soybean nematode-resistanceDicamba-tolerant cottonCotton lyguscontrolYieldGard rootworm III

Insect-protected RoundupRReady2YieldsoybeansVistive III soybeansDicamba-tolerant soybeansMavera II high-value soybeansBollgard IIIRoundup RReady2Yield canolaHybridization system for corn

High-oil soybeansOmega-3 soybeansVistive II soybeans

Roundup RReady2YieldsoybeansImproved-protein soybeansYieldGard VT PROExtrax Corn Processing System1

24 TO 48 MONTHS 12 TO 24 MONTHS 12 TO 24 MONTHS 12 TO 24 MONTHS 12 TO 36 MONTHS

JOINT-FUNDED DEVELOPMENT

Grain yieldEnvironmental stress tolerance

Yield increaseEnvironmental stress tolerance

2nd- Generation drought-tolerant corn2nd-Generation higher-yielding soybeansDrought-tolerant cottonNitrogen-utilization corn

Drought-tolerant cornHigher-yielding canolaHigher-yielding soybeansHigher-yielding cornY

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1. Extrax is a part of the Renessen pipeline. Renessen is a Monsanto/Cargill joint venture. Mavera™ is a trademark of Renessen

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Strong Pipeline Value Reflects Commercial Opportunity in Latter-Stage Projects and Emerging Value in Yield and Stress

R&D PIPELINE

DISCOVERY PHASE 1 PHASE 2 PHASE 3 PHASE 4

FAMILY TRAITS►Broad-Acre, Higher-Yielding Family

HIGHSOYBEANS:BROAD-ACRE YIELD

Broad-Acre, Higher-Yielding Family

Nitrogen-Utilization Family

FAMILY TRAITS►

FAMILY TRAITS► MEGA

HIGH

Drought-Tolerant Family

FAMILY TRAITS► HIGHCORN:BROAD-ACRE YIELD

YIE

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High-oil soybeans

Dicamba-tolerant soybeansVistive III

Improved-protein soybeans

Roundup RReady2Yield canola

Bollgard III

Insect-protected RR2Ysoybeans

Omega-3 soybeans

YieldGard VT PROcorn

Roundup RReady2Yieldsoybeans

MEGA>$1BM

HIGH$300M-$500M

MID$150M-$300M

Corn Soybeans Cotton Canola

2020 VALUE RANGES:

LOW<$150M

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Drought, Nitrogen Use and Intrinsic Yield Boosts Come Together In Broad-Acre Yield Value Opportunity for Corn

R&D PIPELINE

Sources of value can overlap,

depending on functionality; more overlap

between drought and yield

With continuing discovery, additional, unassigned value remains for broad-acre yield category

VALUE ANALYSIS

1. Acre opportunity reflects acres where technology fits at Monsanto's current 2007 market share in respective crops

DROUGHT-TOLERANT

FAMILY

HIGHER-YIELDING FAMILY

NITROGEN-UTILIZATION FAMILY

DROUGHT-TOLERANT FAMILY INTRODUCTION HORIZONNEW:

+1 +2 +3 +4 +5A

CR

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WINDOW FOR 2ND-GEN UPGRADE

Upgrade traits come on line before lead trait reaches targeted goal►

YEARS►

7-10 MACRE GOAL1:

U.S. drylandGEOGRAPHY:

Proof of commercial value

FOCUS:

LEAD DROUGHT

55 MACRE GOAL1:

Applicability across Corn Belt

GEOGRAPHY:

Expansion to broad-acre insurance

FOCUS:

UPGRADE 1

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R&D PipelineDrought-Tolerant Corn Family

HIT Project Phase 2

SOURCES OF VALUE:

1Improved yieldTargeting 8-10% yield improvement in water-stress environments

2Water substitutionVariable costs in pumped irrigation of >$100/ acre

PROJECT CONCEPT:

Drought-tolerance family aimed at providing consistent yield and buffering against effects of water limitationsVALUE:

LAUNCH-COUNTRY ACRES1: 55M

2020 VALUE2: $300-$500M

Drought Focuses First On Consistent Water Shortage Acres, Before Expanding to Broad-Acre Applicability

R&D PIPELINE

Initial trait commercial launch will focus on this segment, proving applicability in consistent water shortage

STABILITYWESTERN DRYLANDIRRIGATED

Value: Improved yields when moisture is less than optimal

Value: Improved yields annually

Value: Reducing the variable costs of irrigation

Non-irrigatedNon-irrigatedIrrigated17-19” precipitation14-18” precipitation14-18” precipitation55-65% of U.S. acres9-12% of U.S. acres8-12% of U.S. acres

Source: Spatial Climate Analysis Service, Oregon State University

High annual precipitation

Low annual precipitation

SEGMENTED VALUE OPPORTUNITY ACROSS MARKETS: U.S. EXAMPLE


2. 2020 value reflects gross sales opportunity in launch country in year 2020

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In Second Year of Off-Season Testing, Drought Lead Consistently Delivered Yield Advantages Under Water Stress

R&D PIPELINE

NEW: LATIN AMERICA: YIELD IMPROVEMENT OF LEAD EVENT UNDER DROUGHT STRESS

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2005U.S.

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DHybrid 1: 2004, 4 locs; 2005 5 locs; 2006, 1 loc (20 reps)

Percent yield difference vs. control7.3% 10.5% 10.9% 23.2% 9.0%

2006/07LAS

7.6%

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2006U.S.

• Yield benefit of up to 12 bu/ac in water-stress conditions


HIT Project Phase 2

SOURCES OF VALUE:

1Improved yieldTargeting 8-10% yield improvement in water-stress environments

2Water substitutionVariable costs in pumped irrigation of >$100/ acre

PROJECT CONCEPT:

Drought-tolerance family aimed at providing consistent yield and buffering against effects of water limitationsVALUE:


2020 VALUE2: $300-$500M

Hybrid 2: 2004, not tested; 2005, 5 locs, 2006, 3 locs, LAS 2006 3 locs (20 reps)

In second-year South American trials, lead drought gene tested in variable environmental conditions across 3 locations



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Second-Generation Drought-Tolerant Corn Continues to Deliver Consistent Performance Under Drought Conditions

R&D PIPELINE

NEW: EARLY RESULTS ON SECOND-GENERATION DROUGHT-TOLERANT CORN

CONTROL WITH GENE

Lead gene increases photosynthesis and water relations, suggesting improved source performance under drought


HIT Project Phase 1

• Second-generation lead has been in field testing for last 3 years

• Consistent yield benefits observed under drought stress

PROJECT CONCEPT:

Drought-tolerance family aimed at providing consistent yield and buffering against effects of water limitationsPROJECT UPDATE:

Increased pollination success under flowering

stress observed

CONTROL WITH GENE

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R&D PipelineBroad-Acre, Higher-Yielding Corn Family

LEAD STATUS: Phase 2

2020 VALUE2: >$1BSOURCES OF VALUE:

1Improved yieldTargeting incremental yield to U.S. average of 150 bu/ac

PROJECT CONCEPT:

Broad-acre, higher-yielding corn aimed at boosting intrinsic yield potential of corn hybrids through insertion of key genesVALUE:


R&D PIPELINE

Broad-Acre, Higher-Yielding Corn Focused on Relative Yield Gains, Rather Than Acreage Expansion

BROAD-ACRE, HIGHER-YIELDING FAMILY INTRODUCTION HORIZONNEW:

+1 +2 +3 +4 +5

AC

RE

AG

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Upgrade traits target same acres

with incremental yield►

YEARS►

55 MACRE GOAL:

U.S. broad-acreGEOGRAPHY:

Boost intrinsic yield per acre

FOCUS:

LEAD HIGHER-YIELD

55 MACRE GOAL:


Incremental yield over lead trait

FOCUS:

UPGRADE 1



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R&D PIPELINE

Broad-Acre, Higher-Yielding Soybeans Combine Benefits of Intrinsic Yield Gains and Water-Use Efficiency

NEW: BROAD-ACRE, HIGHER-YIELDING FAMILY INTRODUCTION HORIZON

+1 +2 +3 +4 +5

AC

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AG

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Upgrade traits target same acres

with incremental yield►

YEARS►

LEAD HIGHER-YIELD

FOCUS: Boost intrinsic yield per acre

GEOGRAPHY: U.S. broad-acreACRE GOAL: 45 M 45 MACRE GOAL:


Incremental yield over lead traitFOCUS:

UPGRADE 1

Discovery In Soybean Broad-Acre Yield

INTRINSIC YIELD

WATER-UTILIZATION

DISCOVERY: Discovery investigates intrinsic yield and water use efficiencyA trait offering benefits to all acres from water utilization is a broad-acre yield trait

$300-$500M2020 VALUE2:

Improved yieldTargeting incremental yield to U.S. average of 42 bu/ac

1

SOURCES OF VALUE:

Phase 2LEAD STATUS:

PROJECT CONCEPT:

Higher-yielding soybeans aimed at boosting intrinsic yield potential of soybeans through insertion of key genesVALUE:

45MLAUNCH-COUNTRY ACRES1:

Higher-Yielding Soybeans Family

R&D Pipeline



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First Round of Phase 2 Testing Continues to Validate Commercial-Track Events for Higher-Yielding Soybeans

R&D PIPELINE

NEW: LATIN AMERICA: HIGHER-YIELDING SOYBEAN PERFORMANCE

0

1

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7

8

AV

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AG

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AD

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AG

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U/A

IN

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OV

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10 Locations

Percent yield difference vs. control10.5% 7.8% 7.5%

EVENT 1 EVENT 2 EVENT 3



R&D PipelineHigher-Yielding Soybeans Family


2020 VALUE2: $300-$500MSOURCES OF VALUE:

1Improved yieldTargeting incremental yield to U.S. average of 42 bu/ac

PROJECT CONCEPT:

Higher-yielding soybeans aimed at boosting intrinsic yield potential of soybeans through insertion of key genesVALUE:


• Recently completed testing of additional 60 events in U.S. during the 2007 growing season

First of new Phase 2 commercial-track events demonstrates up to 10% increase in yield across 10 environments in Argentina

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R&D PipelineInsect-Protected Soybeans with Roundup RReady2Yield

STATUS: Phase 2

2020 COMMERCIAL VALUE2: $150-$300M

SOURCES OF VALUE:

1Insecticide substitutionBased on 2 current sprays costing almost $6/application

2 Improved yieldTargeting 7-11% increase

PROJECT CONCEPT:

Insect-protected soybeans use Bt technology widely adopted in corn and cotton to control insect pests especially economically important for South American farmersVALUE:

LAUNCH-COUNTRY: BrazilLAUNCH-COUNTRY

ACRE OPPORTUNITY1: 50M

Insect-Protected Soybeans Are First-Ever Trait Developed Exclusively for Non-U.S. Opportunity

R&D PIPELINE

INITIAL PERFORMANCE OF INSECT-PROTECTED SOYBEANSNEW:

First Monsanto trait product developed exclusively for non-U.S. market – Brazil and Argentina – where farmers spray 2 times annually at a cost of $5.70/acre to control insect pests



CONTROL(NO INSECTICIDE)

WITH GENE(NO INSECTICIDE)

MONMOUTH, IL SCREENHOUSE – 2007

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R&D PipelineVistive III Soybeans

HIT Project Phase 2

2020 VALUE2: <$150MSOURCES OF VALUE:

1Oil replacement valueFit for frying applications and oil blends for baking, roughly 20M of oil for food uses

PROJECT CONCEPT:

Combining both breeding and biotechnology, Vistive III trait designed to lower linolenic and saturate content while boosting oleic content for an oil profile similar to olive oil with processing and economic advantagesVALUE:


Vistive III Positions Significant Portion of U.S. Soybean Crop For Higher-Value Food-Grade Oil Opportunity

R&D PIPELINE

LINOLENIC18:3

LINOLEIC18:2

OLEIC18:1

SATS18:0 / 16:0

Applicable uses ideal for Vistive III

MAJOR MARKET SEGMENTS FOR U.S. SOYBEAN OILHYDROGENATED-BAKINGHYDROGENATED-

FRYINGNON-HYDROGENATED

Uses 25% of total crushing

(~10M acres)

Uses 25% of total crushing (~10M acres)

Uses 50% of total crushing

(~20M acres)

For various baking applications

For various frying

applicationsFor salad oils, household use

Source: Soyatech, USDA

Standard Soybean

Target:Vistive III

IMPROVING NUTRITIONAL PROFILE OF SOYBEAN OIL



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Roundup RReady2Yield and Molecular Breeding Rewrite Historic Soybean Yield Trends

SOYBEAN BREEDING

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2009-2010Roundup RReady2Yieldcontrolled commercial release + commercial launch

MAB-ROUNDUP RREADY2YIELDPLATFORM

2006First varieties from MAB

enter commercial portfolioVarieties show >3 bu/ac yield

advantage over commercial checks

Roundup RReady2Yield creates step change of 7-11% across portfolio

AV

ER

AG

E Y

IELD

(B

U/A

CR

E)

SOYBEAN YIELD PROGRESSION: 2000-2012

MAB gains set new trajectory on top of Roundup RReady2Yield step change

All breeding going forward is built on Roundup RReady2Yieldfoundation and uses applied MAB technology

HISTORIC GAIN: 0.50 BU/AC

SOYBEAN YIELD AT HISTORIC RATE GAIN

EXPECTED TREND WITH APPLIED MOLECULAR BREEDING (MAB)

USDA AVERAGE YIELD/AC1

TREND LINE OF USDA YIELD

1. USDA NASS: http://www.nass.usda.gov/QuickStats/

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R&D PipelineDrought-Tolerant Cotton


• Building a portfolio of genes that confer drought tolerance in cotton

• Initial field results show positive phenotypes for multiple genes in water-stressed conditions

PROJECT CONCEPT:

Drought-tolerant cotton designed to minimize risk in cotton farming by providing yield stability in environments experiencing sporadic or consistent water stress and by reducing water needs on irrigated acresPROJECT UPDATE:

U.S. Field Trials Continuing to Test Drought-Tolerance Proof of Concept in Cotton

R&D PIPELINE

EARLY RESULTS ON DROUGHT-TOLERANT COTTON TESTING IN U.S.NEW:

CONTROLWITH GENECONTROLWITH GENE

2008 2009 2010 2011 2012 2013 2014 2015

GENE 1 GENE 2

NU

MB

ER

OF

FIE

LD T

RIA

LS►As Phase 1 project,

testing multiple genes for in-field proof of concept

Field testing will ►expand significantly as drought-tolerant cotton leads continue through pipeline evaluation and development

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Strong Pipeline Reflects Growing Innovation, Opportunity in Latter-Stage Projects and Emerging Value in Yield and Stress

R&D PIPELINE

PHASE2020

COMMERCIAL VALUE

COUNTRY OF

LAUNCH

ADDITIONAL GEOGRAPHIC OPPORTUNITY

SOURCES OF VALUE

Drought-Tolerant Corn Family

Insect Protected + Roundup RReady2Yield Soybeans 2 MID Brazil ARGENTINA

• Improved yield• Improved insect protection

Dicamba-Tolerant Soybeans 2 LOW U.S. BRAZILARGENTINA • Durable weed control

Bollgard III Cotton 2 MID U.S.INDIA

AUSTRALIABRAZIL

• Improved insect protection

Vistive III Soybeans 2 LOW U.S. N/A • Food industry functionality

Roundup RReady2Yield Canola 2 LOW Canada U.S.EU 27 • Improved yield

2 LEAD HIGH U.S.BRAZIL

ARGENTINAEU 27

• Improved yield• Water replacement

Nitrogen-Utilization Corn Family 1 LEAD HIGH U.S.BRAZIL

ARGENTINAEU 27

• Improved yield• Nitrogen replacement

Broad-Acre, Higher-Yielding Corn Family 2 LEAD MEGA U.S.BRAZIL

ARGENTINAEU 27

• Improved yield

Broad-Acre, Higher-Yielding Soybean Family 2 LEAD HIGH U.S. BRAZIL

ARGENTINA • Improved yield

Roundup RReady2Yield Soybeans 4 HIGH U.S. BRAZILARGENTINA • Improved yield

YieldGard VT PRO 4 HIGH U.S.BRAZIL

ARGENTINAEU 27

• Improved yield• Improved insect protection

Improved-Protein Soybeans 4 LOW U.S. N/A • Food industry functionality

High-Oil Soybeans 3 LOW U.S. BRAZILARGENTINA • Food industry functionality

Omega-3 Soybeans 3 HIGH U.S. N/A • Food industry functionality

YE

ILD

& S

TR

ES

S

<$150MLOW $150-$300MMID $300-$500MHIGH >$1BMEGA

COMMERCIAL VALUE RANGES AT 2020:

For further valuation information and valuation definitions, see “Valuing the R&D Pipeline” backgrounder, available at: http://www.monsanto.com/investors

monsanto 11-08-07-5_v2

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