BRAZIL OVERVIEW April 10, 2013 Mike Stern Vice President, Americas Row Crops
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. 2013 Monsanto Company 2
Brazil Agriculture: Among the Most Prominent Industries with Strong Opportunity from Export Markets MILLION METRIC TONS 35 30 25 20 15 10 5 0 CROP VALUE (IN USD BILLIONS) BRAZIL AGRICULTURE EXAMPLE: 2012 KEY EXPORTS Brazil Ag Exports Soybeans Sugar Corn Soy Meal Chicken Alcohol Soy Oil Beef Pork ~$17 ~$13 ~$5 ~$7 ~$8 ~$2.5 ~$2 ~$6 ~$1.5 Brazil s Agriculture Expansion Being Fueled by Exports BRAZIL AGRICULTURE KEY FACTORS AGRICULTURE IS AN IMPORTANT PART OF THE BRAZIL ECONOMY 1 22% of GDP 39% of Exports 39% of Work Force BRAZIL HAS MANY ADVANTAGES, SOME WHICH CANNOT BE REPLICATED Technology Human Resources & Capabilities Weather Available Land Water Biofuels Potential Competitive Costs BRAZIL IS DEVELOPING ITS POLICIES AND INFRASTRUCTURE TO ADDRESS THE CHALLENGES FACING THE AG INDUSTRY Institutional Framework Credit & Grower Income Policies Trade Agreements Infrastructure and Logistics 1. Confederacao da Agricultura e Pecuaria do Brasil (CNA), Instituto Brasileiro de Geografia e Estatistica( IBGE) 3
Emerging Growth: Brazil is Poised for Rapid Growth in Ag, Creating Opportunity for Monsanto CERRADOS Soy and Safrinha Corn Dealers are the main customer access Large/Mega growers SOUTH EAST NORTH EAST Perennial crops Mainly Summer corn Dealers are the main customer access Small to medium growers SOUTH Soybean and Summer corn Cooperatives and dealers are the main customer access Small growers Cerrados South East-North East South 4
Monsanto Brazil Business: Net Sales Growth Reflects Emergence of Seed-and-Traits Business BRAZIL NET SAL LES (IN USD BILLION S) BRAZIL NET SALES 1 $2.0 Chart Title $1.5 $1.0 $0.5 Percent of Int l Sales $1.1B FY2010-FY2012 $1.3B $1.6B FY2010 FY2011 FY2012 23.7% 23.4% 25.9% FY2012 NET SALES: MONSANTO BRAZIL $1.6 B NUMBER OF FULL TIME EMPLOYEES: 2,500 KEY BUSINESS MODELS CORN: #1 germplasm share position Biotech adoption and upgrade New genetics and germplasm refresh provide pricing opportunity SOY: Anticipate high demand for Intacta RR2 PRO with established point-of-delivery system (POD) License genetics and traits through Monsoy Brazil Alone Represents approximately 26 Percent of International Company Sales 1. Monsanto 2012 10-K 5
Brazil s Expanding Corn Market: Monsanto s Corn Genetics Poised Well for Growing Safrinha Season BRAZIL S TWO COMPLEMENTARY SEASONS: SUMMER AND SAFRINHA ANNUAL CROPS AC AM RO RR MT MS PA RS AP PR GO SP SC TO MA PI MG BA RJ ES CE RN PB PE AL SE BRAZIL CORN MACRO DATA 2012 COMBINED SEASONS HYBRID PLANTED ACRES: AVERAGE HYBRID-ACRE YIELD: STATUS AND OUTLOOK ~31M 90-100 BU/AC Safrinha season realized record planted corn acres in 2013, with growth of more than 15 percent year-over-year From 2010 2013F Safrinha planted acres have grown by nearly 7 million acres BRAZIL GERMPLASM OPPORTUNITY GROWTH DRIVER Monsanto is rapidly refreshing the germplasm portfolio with higher yielding genetics driving pricing premium opportunity due to added value SUMMER PLANTING AREA (MAY NOVEMBER) SAFRINHA PLANTING AREA (DECEMBER APRIL) SUMMER AND SAFRINHA OVERLAPPING PLANTING AREA 6
Brazil Corn Opportunity: Long Runway for Continued Trait- Upgrade Opportunity BRAZIL CORN GROWTH DRIVERS H RIVERS MENTAL GROWTH Y GROWTH DR URCES OF INCREM KEY STRATEGIC SO FY2012 BRAZIL CORN SEEDS & GENOMICS GROSS PROFIT Seed GERMPLASM 1 ST WAVE BIOTECH NEXT GENERATION UPGRADES UPGRADES BIOTECH UPGRADES GERMPLASM #1 Share Position NEAR-TERM GROWTH Biotech TRAIT ADOPTION YieldGard Corn Borer, YieldGard VT PRO, VT PRO 2 NEAR-TERM GROWTH GROWTH DRIVER ROLL OUT OVER TIME New Growth TRAIT LAUNCHES VT PRO MAX VT PRO 3 FUTURE GROWTH BRAZIL EMERGING GROWTH MODEL #1 hybrid corn seed share position with rapid product refresh First biotech trait launches in FY09 rapidly adopted New layers of growth added as additional traits come on line 7
Brazil Focuses on Soybeans: Creating Significant Opportunity With Growing Acreage and Appetite for Technology BRAZIL S SOYBEAN PLANTING: SOYBEAN DENSITY BY REGION BRAZIL SOYBEAN MACRO DATA 2012 PLANTED ACRES: ~62M AVERAGE HYBRID-ACRE YIELD: 39 BU/AC STATUS AND OUTLOOK High insect pressure in Brazil s tropical climate creates significant demand for Intacta License germplasm through Monsoy multipliers 89% trait share with first generation Roundup Ready Fewer Growers and Large Farms Drive Technology Adoption in the Cerrados Soybean Density by Municipality From 0% to 2% From 2% to 5% From 5% to 10% From 10% to 20% From 20% to 50% Greater than 50% 55% CERRADOS SOUTH 38% SOUTHEAST 7% High Insect Pressure Expected to Drive Intacta RR2 PRO Penetration in the South TRAIT UPGRADE OPPORTUNITY GROWTH DRIVER Significant Value Opportunity Exists as Growers Upgrade from Roundup Ready to Intacta RR2 PRO 8
Brazil s Intacta RR2 PRO Trials: Second Year of Ground Breakers Showing Game-Changing Performance Again BRAZIL ARGENTINA INTACTA RR2 PRO UPDATE Expanded Ground 65 INTACTA RR2 PRO Breakers trials in Roundup Ready FY2013 On track for Brazil 60 commercial launch in FY2014 1 57.2 Ground Breakers trials expected in FY2014 Commercial launch expected in FY2015 in Argentina BUSHELS/AC CRE 55 50 45 BRAZIL INTACTA RR2 PRO TRIALS GROUND BREAKERS YIELD DATA 2 51.0 53.9 NEW Significant yield advantage of greater than 4 bu/ac 48.7 40 No. of Ground Breakers Growers 2011/2012 2012/2013 2011/2012 2012/2013 500 1,000 GROUND BREAKERS INTACTA RR2 PRO EXPECTED TO OUTPACE PREVIOUS SOYBEAN TRAIT LAUNCHES Results from Intacta RR2 PRO Ground Breakers translate to a grower value creation of ~$80/ac, depending on currency exchange rate and commodity prices 3 Second year of Ground Breakers involving 2X the number of growers with more than 1000, growers demonstrating the efficacy and yield enhancement of the Roundup Ready 2 Yield and Bt Insect control stack 1. Received Brazil in-country regulatory approvals. Full scale launch pending import approvals in key export markets. 2. Preliminary data based on approximately 50% of the harvest data and more than 1700 comparisons from the 2012/2013 on-farm Ground Breakers trials across Brazil. 3. Expected value created through yield gains, reduced use of insecticides, and less use of machinery (based on an exchange rate $1US Dollar = 2.00 Brazilian Reals 9
Monsanto s Business Focus: Turning Yield Into Growth Key take-aways: aways: Brazil is poised for Rapid Growth in Ag, Creating Opportunity for Monsanto Brazil Corn is at the leading edge of upgrades with latest genetics and trait products like VT PRO MAX Intacta RR2 PRO provides a step-change in soybean productivity for growers Expected to be the fastest soybean trait ramp up in Monsanto s history 10