Elevating Precision Agriculture to Decision Agriculture: Unlocking Yield Through Information KERRY PREETE. Executive Vice President, Global Strategy

Transcription

1 Elevating Precision Agriculture to Decision Agriculture: Unlocking Yield Through Information KERRY PREETE Executive Vice President, Global Strategy

2 Forward-Looking Statements Certain statements contained in this presentation are "forward-looking statements," such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied by such forwardlooking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of biotechnology products; the success of the company's research and development activities; the outcomes of major lawsuits and the previously announced SEC investigation; developments related to foreign currencies and economies; successful operation of recent acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the company's ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and other risks and factors detailed in the company's most recent periodic report to the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this presentation. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results. Trademarks Trademarks owned by Monsanto Company and its wholly-owned subsidiaries are italicized in this presentation. All other trademarks are the property of their respective owners Monsanto Company 2

3 Next-Generation Precision Ag: Unique Fit of Monsanto and The Climate Corporation Creates Significant Opportunity THE OPERATIONAL PLATFORM: NEXT-GENERATION PRECISION AGRICULTURE AT MONSANTO Establish Capability and Early- Mover Advantage Calibrate how Monsanto s structured data approach and The Climate Corporation's hyper-local data create unique capability and new products Identify Product Portfolio Translate Capability in Products Create Value for Farmers Outline Near-Term Go-to-Market Path Define Long-Term Runway of Opportunity Specify suite of products and continuing pipeline that Monsanto will take to farmers beginning in 2014 Determine system for creating and sharing value with farmers and partners in platform Translate first-generation product plan to detailed rampup plan Expand first-generation ramp to multi-year view of opportunity as platform expands crops and geographies 3

4 DEPLOY DEPLOY Monsanto Technology Hubs: With Capability in Products and Information, Monsanto Best Positioned to Drive Yield and Productivity R&D ENGINE DATA INSIGHT DEPLOYMENT STRATEGY Innovation hub positions Monsanto to drive on-farm productivity across more platforms than anyone in the industry Multiple components come together to drive yield, with more platforms coming together in more ways than ever PRODUCTS MONSANTO INDUSTRY S LEADING R&D ENGINE R&D COLLABORATION CENTRAL POINT FOR BUILDING TECNOLOGY COMBINATIONS INNOVATION HUB Convergence DATA BUILT FOR YIELD & PRODUCTIVITY: TWO HUBS Monsanto has two hubs from its R&D engine traditional product development and applied information that offer the best total solution to drive yield and productivity With The Climate Corporation, Monsanto is able to provide the industry s most complete predictive algorithm decision-driven field dashboard to support farmers through the full-growing cycle from planting to harvest INFORMATION BENEFIT OF INFORMATION Monsanto initially provided the most complete system built around seed; Now with information tools like The Climate Corporation s inseason decision tools there is expanded opportunity to benefit acres even beyond those where Monsanto seed is used YIELD IS A IN-THE-BAG Seed & traits establish foundation for yield + OUTSIDE-THE-BAG Chemistry & treatment protect & drive productivity + INFORMATION Informed decision-making used to maximize system ON-FARM YIELD & PRODUCTIVITY 4

5 COMBINED ADVANTAGE Power of Combined Capability: Platform Delivers First Comprehensive Set of Tools for Full-Season Precision Agriculture Hyper-Local Data at Global Scale The Climate Corporation brings together highresolution agronomic, environmental and weather data sets at massive scale, coupled with distributed computing capabilities to power leading-edge research and products Hyper-local weather monitoring including largest proprietary library of micro-climate environmental data Applied weather simulations ability to model simulations on mass scale for predictive power Predictive agronomic models with unique algorithms for weather analytics modeling tied to predictive crop impacts Scalability of data sets to drive widespread application Sub-Field Structured Data Industry s largest field-testing system produces largest amount of yield-correlation data as backbone of structured proprietary database Industry s largest database of crop genetics, crop agronomy, and abiotic and biotic stress Global presence with commercial-scale footprint Strong retail presence retail partners that provide fullservice support for farmer-customers FieldScripts demonstrated capability in delivering Integrated Farming Systems (IFS) FieldScripts capability as a planting blueprint 1. Important early-mover advantage in establishing a Big Data applications for agriculture 2. Comprehensive platform, with a next-generation approach to precision agriculture opportunity as the platform the industry can build around 3. Immediate and Unique Commercial Platform spanning both: Products tied specifically to Monsanto s genetics, and Broader applications that apply to any acre, any farmer 5

6 The Product Portfolio: Beginning in 2014, Suite of Products Touches All Aspects of Key On-Farm Decisions 40+ DECISIONS a farmer makes that influence on-farm yields and productivity CROP-SEASON CYCLE PLANNING PRE-PLANTING PLANTING IN-SEASON HARVEST Integrated Farming Systems (IFS) FIELDSCRIPTS OFFERINGS IN-SEASON DECISION TOOLS INSURANCE OFFERINGS CONCEPT: Products that correlate Monsanto s genetic insight with key variables to improve in-field performance, improving yield, efficiency and productivity Online decision-support tools that use real-time, in-season information to make recommendations for daily and seasonal production decisions Supplemental insurance offering that uses insight on in-season risks for insurance above traditional government offerings MARKET OPPORTUNITY: LEAD PRODUCT: Monsanto Seed Footprint: Focused on products where Monsanto s seed and genetic insight exists Broad Acre: Applies to any acre, any farmer CLIMATE PRO CLIMATE BASIC Broad Acre: Applies to any acre, any farmer COMMERCIAL LAUNCH: FY2014 FY VALUE CONCEPT: Per-acre fee for annual prescription Per-acre fee for annual subscription Dynamic pricing on premium based on insurance level STACKED OPPORTUNITY Much like biotech traits, farmers can stack multiple products to provide additive yield, risk management and profitability tools on each acre 6

7 Translating Big Data to Meaningful Tools at The Climate Corporation DAVID FRIEDBERG Founder and CEO, The Climate Corporation

8 The Climate Corporation

9 The Bike Hut 9

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13 The Climate Corporation The Climate Corporation aims to help farmers around the world protect and improve their farming operations & profitability. We achieve this through our unique and proprietary Climate Technology Platform that powers our software and insurance products to deliver value for growers. 13

14 Areas of Expertise Computer Science Physical Sciences Distributed computing Large-scale computing Data integration Rapid iteration Data visualization Statistics Agronomy Climatology Atmospheric science Soil science Hydrology Remote sensing Spatio-temporal modeling Multivariate time series forecast Bayesian statistics Machine learning 14

15 Our Culture Climate DNA Collectively and individually, we strive to: Leave a mark on the world Inspire one another Innovate in all we do Find the possible in the impossible Be direct and transparent 15

16 16 Our Products

17 TWI Provides Several Value Propositions to Growers Yield+ Field+ Self-Insure Target Yield Total Weather Insurance (TWI) Operating Costs Multi-Peril Crop Insurance (MPCI) Optional Units 85% Enterprise Units 85% $35/acre $17/acre Premium = $35,000 Premium = $17,000 Input Increase of $18,000 Moving to Optional $40/acre TWI policy on 200 high value acres provides field-level protection Total Premium = $17,000 (MP Enterprise Units) + $8,000 (TWI) = $25,000 Savings of $10,000 over Multi-Peril Optional Units 17

18 Multi Peril Crop Insurance is a Growing Market 95%+ of acres insured under the program in US Protects against low yields and commodity price fluctuations Public-private partnership 17 competitors with little innovation or differentiation $12B+ market in US Coverage Levels + Acres + Commodity price driven 18

19 19 CLIMATE: Built on the Climate Technology Platform

20 Going beyond data to deliver value for growers RECOMMENDATIONS INSIGHTS ANALYTICS DATA 20

21 Hear what growers are saying... John Jackle 21

22 Accurate weather, soil and crop data at a field level More efficient tracking and scouting tools Real-time, hyper-local weather and forecasts improve production and operational decisions Easy to use, available on any device 22

23 Field Workability - Mobile 23

24 Climate Basic Demo 24

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26 Climate Basic Demo 26

27 Climate Basic Demo 27

28 Climate Pro Overview 28

29 Climate Pro Benefits For only $15/ acre, increase average profit by $100/ acre: by increasing yield, decreasing cost and saving time, CLIMATE Pro increases each acre s bottom line. (Above example for corn. Soybeans are $7.50 for $50/ acre avg. profit increase) Anticipate problems before they impact yield: identify crop stress from lack of nitrogen, pests, and other causes and evaluate possible responses before stress reduces yields Optimize responsiveness to events as they happen: get the information and decision tools to make adjustments that maximize acre profitability for each challenge Mother Nature brings Maximize efficiency of Farmer s time and budget: save time gathering data, driving to fields, and scouting crops to spend more time farming 29

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36 How much can Planting Advisor improve yield? Based on statistical analysis of field-level yield improvement Compare localized Planting Date and RM vs. common practices Average improvement: 4.9 bu/acre ($24.50/acre) 36

37 Placeholder For Press, insert: Nitrogen Pest and Disease Variable Rate 37

38 Placeholder For Press, insert: Nitrogen Pest and Disease Variable Rate 38

39 Variable Rate Advisor 39

40 $30+/acre gross profit opportunity helping farmers protect and grow their profits Per acre economics for a typical central IL corn grower PLEASE CHANGE CLIMATE.COM to $15 AND CHANGE CLIMATE.COM TO CLIMATE PRO Tjarko to fix Protect Profits Grow Profits *MP Crop Ins displayed as full premium, grower pays only $28 in this example because of government premium subsidies Note: Input costs from Univ. IL farmdoc 40

41 Where do we go from here? Crops Geographies 41

42 How we Accelerate with Monsanto Agronomic Research Collaboration Field-Trial Data International Distribution & Partnerships Deep Production Agriculture Experience Shared Culture of Innovation 42

43 Operational Milestones KERRY PREETE Executive Vice President, Global Strategy

44 Go-To-Market Strategy: Ramp Up to Commercial Platform Begins in FY2014, Expanding Penetration in 2-4 Years COMMERCIAL MILESTONES PRODUCT VALUE PROFILE FY2013 FY YEAR RAMP FIELDSCRIPTS OFFERINGS Planting density prescription Based on per-acre fee Targeting 5-10 bu/ac yield benefit Introductory price point: $10/ac In Ground Breakers program with 150+ growers, ~40K acres Consistent yield performance in 5-10 bu/ac range Initial commercial roll-out Target of hundreds of thousands of acres in four key states: IA, IL, IN, MN Establishment as broad offering across Monsanto s branded and licensed U.S. footprint + INT L OPPORTUNITY IN-SEASON DECISION TOOLS CLIMATE PRO CLIMATE BASIC Suite of decision-support recommendation tools Web-based portal with per-acre subscription In trial-type program with non-commercial offering by The Climate Corporation 10,000 registered users Initial commercial roll-out Target initial experience base and baseline commercial sales Established as broad market offering with significant presence in conjunction with FieldScripts and as independent offering + INT L OPPORTUNITY INSURANCE OFFERINGS Supplemental insurance coverage, underwritten by insurance carriers Per-acre premium priced dynamically Current commercial offering used on >1M acres in U.S. Continued expansion of U.S. offering through established agent network Initial expansion of offering to more distribution points Steady continued growth in offering opportunity + INT L OPPORTUNITY 44

45 FINANCIAL CONTRIBUTION PROFILE: Go-To-Market Strategy: Ramp Up to Commercial Platform Begins in FY2014, Expanding Penetration in 2-4 Years COMMERCIAL MILESTONES: RELATIVE FINANCIAL CONTRIBUTION PROGRESSION OF PRODUCT PORTFOLIO 1 RELATIVE EVOLUTION OF PLATFORM CONTRIBUTION 1 FY14 FOCUS: ESTABLISHMENT OF NEW OFFERINGS Incremental revenue in FY14 comes from some expansion of insurance offerings and early revenue from initial commercial roll-out of FieldScripts offering and Climate Basic and Pro CLIMATE PRO CLIMATE BASIC 2-4 YEAR FOCUS: SIGNIFICANT STEP UP IN EARNINGS CONTRIBUTION In 2-4 year period, total platform financial contribution from multiple sources in total portfolio: FieldScripts Offerings In-Season Decision Tools Insurance Offerings Additional Platform Licensing FY2013 FY YEAR PRE-COMMERCIAL TESTING PRODUCT ESTABLISHMENT BROAD-SCALE COMMERCIAL CONTRIBUTION 1. Directional financial contribution of key platform representing significant drivers, not specific financial projections 45

46 Long-Term Growth Opportunity: With Global Expansion and More Crops, Opportunity on More Than One Billion Acres ADDRESSABLE MARKET MONSANTO S CURRENT FOOTPRINT FIRST-WAVE IFS LONG-TERM OPPORTUNITY: MULTI-PHASE EXPANSION PRIORITY OPPORTUNITY: Leverage unique genetic insight to provide products on Monsanto s seed-and-trait footprint 400M ACRES TARGET OPPORTUNITY: Begins with 150M+ acres where Monsanto has direct genetic insight reflecting branded and licensed seed share of corn, soybean and cotton opportunities Monsanto s current seed and trait footprint touches corn, soybeans and cotton on ~400M acres 150M+ ACRES Through brands and licensees, Monsanto has genetic insight and footprint across >150M acres of corn, soybeans and cotton OPPORTUNITY: PROOF OF CONCEPT VARIABLE RATE PLANTING Validates that information can drive productivity PRODUCT SEQUENCE: COMPETITIVE ADVANTAGE: Initial product offering focused on U.S. corn Expansion of portfolio offering within corn to Latin America in addition to next-step crops, including soybeans By applying The Climate Corporation s analytical work on micro-climate variables, progression of upgrades of initial FieldScripts offerings to improve precision of prescription, bolster ability to unlock yield and improve performance win-rates Unique genetic database and insight NEAR TERM NEAR-TO-MID TERM MID-TO-LONG TERM TECHNOLOGY PROGRESSION FieldScripts 46

47 Long-Term Growth Opportunity: With Global Expansion and More Crops, Opportunity on More Than One Billion Acres ADDRESSABLE MARKET MONSANTO S CURRENT FOOTPRINT FIRST-WAVE IFS LONG-TERM OPPORTUNITY: MULTI-PHASE EXPANSION PRIORITY OPPORTUNITY: Establish platform for decisionsupport tools that apply to any acre, any farmer 400M ACRES Monsanto s current seed and trait footprint touches corn, soybeans and cotton on ~400M acres 150M+ ACRES Through brands and licensees, Monsanto has genetic insight and footprint across >150M acres of corn, soybeans and cotton OPPORTUNITY: FARMER DECISION MAKING TOOLS OPPORTUNITY: PROOF OF CONCEPT KEY CROPS Corn Soybeans Cotton VARIABLE RATE PLANTING Validates that information can drive productivity PREDICTIVE FIELD DASHBOARD By allowing farmers to actively manage real-time decisions tied directly to yield and productivity, new tools are able to provide recommendations on specific elements throughout the growing cycle OPPORTUNITY AREAS: Planting planning and implementation In-season pest and disease control In-season input management Harvest planning Risk mitigation via supplemental insurance TARGET OPPORTUNITY: PRODUCT SEQUENCE: COMPETITIVE ADVANTAGE: Broad market offering, in current commercial markets, expanding globally Built around decisionsupport tools: Climate Basic and Climate Pro Suite of decision tools covering multiple decision points Continued upgrade cycle with added features and capability Unique algorithms Proprietary microclimate database system Broad market access with distribution partners NEAR TERM NEAR-TO-MID TERM MID-TO-LONG TERM TECHNOLOGY PROGRESSION FieldScripts Integrated Data-Driven Decision Tools 47

48 Long-Term Growth Opportunity: With Global Expansion and More Crops, Opportunity on More Than One Billion Acres ADDRESSABLE MARKET MONSANTO S CURRENT FOOTPRINT MARKET OPPORTUNITY FIRST-WAVE IFS LONG-TERM OPPORTUNITY: MULTI-PHASE EXPANSION 1B ACRES Deployed globally and across crops, technology platform can reach a market opportunity of >1B acres PRIORITY OPPORTUNITY OPPORTUNITY: CROP & GEOGRAPHIC EXPANSION PREDICTIVE FIELD DASHBOARD Expansion beyond existing seed and trait footprint into new crops and geographies as data analysis and recommendation tools provide predictive insight on in-season conditions regardless of crop OPPORTUNITY: FARMER DECISION MAKING TOOLS KEY CROPS Corn Soybeans Cotton PREDICTIVE FIELD DASHBOARD By allowing farmers to actively manage real-time decisions tied directly to yield and productivity, new tools are able to provide recommendations on specific elements throughout the growing cycle OPPORTUNITY AREAS: Yield enhancement Cost management and productivity enhancement Risk mitigation KEY CROPS All major global row crops OPPORTUNITY: PROOF OF CONCEPT VARIABLE RATE PLANTING Validates that information can drive productivity OPPORTUNITY AREAS: Planting planning and implementation In-season pest and disease control In-season input management Harvest planning Risk mitigation via supplemental insurance NEAR TERM NEAR-TO-MID TERM MID-TO-LONG TERM TECHNOLOGY PROGRESSION FieldScripts Integrated Data-Driven Decision Tools Global Offering PRIORITY OPPORTUNITY: INDUSTRY COLLABORATION OPPORTUNITY Platform provides significant opportunity to create truly integrated offering with multiple products, multiple services and multiple companies across the agriculture industry 48

49 Next-Wave Precision Ag: Unlocking Yield Through Information MONSANTO BIENNIAL INVESTOR EVENT KEY TAKE-AWAYS: Through the combination of Monsanto and The Climate Corporation, Monsanto has an important early-mover advantage in establishing a Big Data applications for agriculture Monsanto establishes an immediate commercial platform built around products that tie specifically to Monsanto s genetics and a new set of tools that can apply to any acre and any farmer The next-generation approach to precision agriculture creates opportunity as the platform the industry can build around 49