Monsanto is the leader in developing cotton technologies. It introduced its first biotech traits, Bollgard and Roundup Ready, in the 1990s which were widely adopted. Monsanto has a first-mover advantage with its proven technologies and established brands. It plans to continue growing its cotton business through second generation traits with improved characteristics and global expansion. Monsanto's Cotton States initiative will provide farmers additional seed varieties with Monsanto's traits and give the company access to new germplasm. Competition exists but Monsanto is well positioned due to its pipeline of superior products and established market approach.

1. Monsanto Cotton Business
Investor’s Tour
June 25, 2004
Dr. Randy Deaton
Director, Global Cotton Business

2. Key Messages
• Leader in developing technology for cotton farmers
• First-mover advantage
– Proven technology
– Established brands/market approach
– Knowledge of market needs
• Strategies in place to continue growth of business
– Second generation products
– Introduction of germplasm component thru Cotton States
– Continued global expansion
– Future products in development

3. Product Offerings Through 2002
• Introduced in 1996
• Largest agricultural product introduction ever
• Planted on 5.7M* acres in 2003 (43% of total)
• Introduced in 1997
• Planted on 9.9M acres in 2003 (74% of total)
• The “standard” in herbicide tolerance traits
– future Monsanto and competitive products must consider
stacking with Roundup Ready® to succeed
• Introduced in 1997
Represents 95% of Bollgard® sales and 55%
•
of Roundup Ready® sales in 2003
*Source: Monsanto estimates

4. Market Approach
• Open architecture - licenses with almost all cotton
seed companies
• Thorough distribution/dealer coverage using agency
approach
– No inventory costs
– Grower fee set by Monsanto
• Grower licenses
– Detailed information on product sales and customers
– Market value pricing
No one has been able to duplicate Monsanto’s success in marketing cotton traits.

5. Second generation products
• Advantages over Bollgard®
– Improved control of target insects
– Improved spectrum of insects controlled
– Improved IRM characteristics – could lead to improved
refuge requirements for growers
• Introduced in 2003 with premium pricing
• Expect most growth to occur as second-generation
Roundup Ready® is introduced

6. Second Generation Products
• Advantages over Roundup Ready®
– Wider window in which Roundup® can be applied over-the-top
– Improved weed control and flexibility
• Planned introduction as early as 2006 pending
regulatory approvals
• Anticipate rapid adoption

7. is highly anticipated:
• By cotton growers
• By the cotton industry
• By Monsanto

8. Cotton States
Monsanto’s Germplasm Initiative
• Provides growers additional, innovative sources for seed with
Monsanto traits
• Provides independent and university breeders opportunity to
access market and to do so with Monsanto’s traits
• Provides germplasm licensees the opportunity for new revenue
in seed and traits without large R&D investment
• Provides Monsanto new outlets for our traits and gives us
access to germplasm for future R&D innovations

9. Cotton States
Business Model
• Modeled after Monsanto’s Corn States business
• How business works
– Access germplasm
• License from third parties
• Develop in-house
– Identify “winners” through extensive testing program
– Introduce Monsanto traits
– License germplasm with Monsanto traits to third-parties on
“win-win” terms
– Third-parties licensees create their own seed brands,
inventory and sales
• Established practice for corn and soy, but new for
cotton

10. Cotton States
2003 Trial Results (top 11 of 29 tested)
1400
CS1
CS2
1200
CS3
CS4
Yield (lb lint/acre)
1000
CS5
800 CS6
CS7
600 CS8
CS9
400
CS10
CS11
200
DP 555 BR
ST 4892 BR
0
FM 966
Varieties

11. Cotton States
Planned Timeline
First sales of Commercialize -
Cotton States BGII/RRF
material in CA products
2004 2005 2006 2007
Seed production Increase
of broad-acre share
germplasm

12. Rapid Market Share Gains
Not Uncommon - e.g. FiberMax® Market Share
Conventional w/MON traits
16%
14%
12%
10%
8%
6%
4%
2%
0%
1999 2000 2001 2002 2003
*Source: USDA

13. Existing Markets
United States
Bollgard 1996
RR 1997
China
Bollgard II 2003
Bollgard 1997
Mexico
Bollgard 1996
RR 2000
Colombia India
Bollgard 2001
Bollgard 2002
RR 2004
South Africa
Australia
Argentina
Bollgard 1998
Bollgard 1998 Ingard 1996
RR 2000
RR 2001
RR 2000
Bollgard II 2003

14. New Markets
Egypt
Brazil
Pakistan
French
West
Africa
Future opportunities pending in next 4+ years.

15. New Innovations
• QTL’s – “mining nature’s genes”
– Yield
– Quality
– Abiotic and biotic tolerances
• Drought tolerance
• Lygus/stinkbug resistance

16. Strong IP Position in Key Markets
• Existing patents give substantial IP protection to
existing/future products
• Patents pending for Bollgard II® and Roundup Ready®
Flex that would provide protection through 2020+ in
key markets
– Notable decision recently with synthetic Bt patent by U.S.
PTO

17. Competition
• Bollgard® competitors
– WideStrike™ by Dow in 2005?
– VipCot™ by Syngenta in 2006+?
– DeltaMax in ???
• Roundup Ready® competitors
– BXN® by Bayer in 1995
• Stoneville dropping BXN® after this year
– Liberty Link™ by Bayer in 2004
– Glyphosate tolerance by Syngenta/Dupont/DeltaMax in
2008+?
• Monsanto pipeline products – none as visible as
these

18. Hurdles for “Me-Too” Competitors
• Monsanto’s:
– second gen products with superior performance and value
– established brands and market approach
• Regulatory uncertainties (esp. IRM disadvantages)
• IP uncertainties
• Lack of interest by seed companies
– Limited R&D dollars to invest in new traits
– Aversion to inventory risk
– Lack of financial incentives

19. Summary
• Planned growth through:
– continued innovation
– capitalizing on first-mover
advantage
• Cotton States key component
of business strategy
• Well positioned to manage
future business uncertainties