3. OVERVIEW
Opportunity in Vegetables Parallels Opportunity in
Corn Market a Decade Ago
CURRENT STATUS OF BUSINESS AND MARKET ENVIRONMENT IN KEY CATEGORIES
CORN VEGETABLES
Large-acre Opportunity Small-acre Opportunity
PRODUCTION VALUE
High Value per Acre
Medium Value per Acre
Consolidated to major agricultural
PRIMARY MARKETS Fragmented by crop and geography
countries
SEED VALUE
>20 percent <10 percent
(RELATIVE TO OTHER INPUT COSTS)
DOWNSTREAM VALUE Commodity-oriented High-value food-oriented
Advanced Infancy
APPLIED TECHNOLOGY Significant use of biotechnology Beginning application of advanced
and advanced breeding tools breeding tools
Prolific SKU profile reflecting wide-
Rationalized SKUs reflecting
PORTFOLIO COMPOSITION ranging product offering by crop
focused portfolio
and geography
Expanding Expanding
Driven by strong demand for Driven by demand of growing
biofuels and exports global incomes, growing
MARKET DEMAND
populations and focus on dietary
improvement
3
4. OVERVIEW
Reflecting Increasing Global Produce Demand, Vegetable
Seed CAGR Projected at 4 Percent through 2012
VEGETABLE SEED: GLOBAL MARKET SIZE
TOTAL INDUSTRY REVENUE PROJECTION (2006-2012)
$3,250
ANNUAL INDUSTRY REVENUE
$3,000
4 percent CAGR
(IN $ BILLIONS)
drives a seed market
$2,750
opportunity of more
than $3 billion
annually by 2012
$2,500
$2,250
$2,000
2006 2007F 2008F 2009F 2010F 2011F 2012F
MARKET BENCHMARKS
SEED MARKET $2.6B
RETAIL PRODUCE * $256B
PRODUCTION ACRES 96M
4
* Includes developed food retail, processed and food service
Source: Company estimates
5. OVERVIEW
Top 10 Vegetable Seed Companies Generate Vast Majority of
Industry Revenue; Market Highly Fragmented Thereafter
VEGETABLE SEED: GLOBAL MARKET COMPOSITION
TOP 10 VEGETABLE SEED COMPANIES BY REVENUE (2006)1
$600
$500
ANNUAL REVENUE
(IN US$ MILLIONS)
$400
$300
$200
$100
$0
Takii
Seminis
De Ruiter
Sakata
Nunhems
Syngenta
Vilmorin
Rijk Zwaan
Bejo
Enza
1. Source: Rabobank
5
6. OVERVIEW
Tomatoes, Peppers, Cucumbers and Melons Are Predominant
Revenue and Acreage Opportunities
INDUSTRY SALES: PRODUCT FAMILIES
PRODUCTION ACRES: PRODUCT FAMILIES
TOTAL INDUSTRY PROJECTION (2006)
TOTAL INDUSTRY PROJECTION (2006)
7% 15%
11%
28% 31%
8%
Solanaceous
Solanaceous
Cucurbits
Cucurbits
Brassica
13%
Brassica
Large Seed
Large Seed
15%
Leafy & Other
Leafy & Other
Root & Bulb
Root & Bulb
22% 19%
19% 12%
Product categories that Product categories that
include tomatoes, include tomatoes,
peppers, cucumbers and peppers, cucumbers and
melons represent 50% of melons represent 50% of
global vegetable seed global vegetable seed
production acres revenue
6
Source: Company estimates
7. OVERVIEW
Asia Represents Largest Current Production Acreage and
Source of Greatest Future Demand
REGIONAL BREAK OUT: INDUSTRY SALES
REGIONAL BREAK OUT: PRODUCTION ACRES
TOTAL INDUSTRY REVENUE PROJECTION (2006)
TOTAL INDUSTRY ACRES PROJECTION (2006)
2% 5% 12%
23%
Europe-Middle East
Europe-Middle East
42%
Asia
Asia
4%
South America
South America
North America
North America
31%
81%
Asia currently represents
Asia is a disproportionate
31% in annual sales, but is
representative of the
the source of greatest
production acreage, with
growth into the early next
low yields in lower value
decade as rising incomes
crops
are creating more demand
for vegetables
7
Source: Company estimates
8. OVERVIEW
Yield – and Protecting Yield – Drives Grower Spend on
Vegetable Seeds
EXAMPLE: MULTIPLE MARKET OPPORTUNITIES -- TOMATOES
YIELD/A SEED RATE/A SEED COST/A
INPUT COST/ A REVENUE/A
OPEN-FIELD DETERMINATE 32 tons $1.6K $2.4K 6Mx $42
PLASTIC HOUSE 57 tons $26K $32K 10Mx $1200
GREENHOUSE PROTECTED-
230 tons $180K $207K 14Mx $2600
CULTURE
PROTECTED-CULTURE VALUE CREATION
In protected culture cultivation,
growers raise crops indoors where
30
AVERAGE SEED VALUE PER ACRE
there is a controlled environment,
25
consistent quality and less
20
pressure from insects and disease.
(INDEXED)
15
Because of the added value from
10 increased yield and quality, the
premium on greenhouse tomato
5
seed is 26X seed for open-field
0
cultivation
OPEN-FIELD PLASTIC HOUSE GREENHOUSE
TOMATOES
8
9. SEMINIS GROWTH
Since Joining Monsanto, Seminis Has Refocused on Gross
Profit Growth, Leveraging Portfolio, Pricing and Breeding
SEMINIS VALUE CREATION
STAGED OPPORTUNITIES FOR INCREASING BUSINESS VALUE
Seminis
SITUATION:
Significant use of
• In 2006, narrowed
molecular markers
commercial and
VALUE CREATION OPPORTUNITY
research focus to 25 Aggressively make hybrid
crops that generate the
conversions in strategic crops
most profit
• Began application of Identify and implement opportunities
breeding technology, to price products to value
with a target of 1,000+
markers each for 9
Assemble genetic maps for key crops
crops by 2009
OUTLOOK:
• Use of molecular Focus on 25 most-profitable key crops
markers and conversion
to hybrids should allow 2005 2006 2007 2008 2009 2010
for new products with
PIPELINE
OPERATIONAL EXCELLENCE NEW VALUE CREATION
improved value and ADVANCEMENT
margins
9
10. SEMINIS GROWTH
Four Growth Drivers Enrich Seminis Gross Profit Contribution
Through 2012
SEMINIS GROWTH DRIVERS
Seminis
SITUATION:
Four growth drivers build on the strength of the existing business and begin
to leverage the capability Monsanto brings to Seminis to generate growth
• In 2006, narrowed commercial
through the end of the decade
and research focus to 25 crops
that generate the most profit
Increase price of existing portfolio and
• Began application of breeding
PRICE new products launched on basis of value
technology, with a target of
created and shared with the grower
1,000+ markers each for 9
crops by 2009
Increase share in higher value segments
OUTLOOK:
MARKET SHARE via shifts to protected culture and
• Through end of decade,
MIX disease resistance products post 2010
Seminis grows through current
offerings – via price and
improved market share mix – Develop and launch products into high
NEW PRODUCT
and pipeline opportunity – with value segments with a focus on disease
LAUNCHES
new product launches resistance, protected cultures and yield
Accelerate pipeline product launches
PIPELINE through the use of new molecular
ACCELERATION breeding tools
10
11. OVERVIEW
Path Set to Improve Global Market Share Mix in Core
Crop Areas
CURRENT STATUS AND OPPORTUNITY: SEMINIS FOCUS CROPS IN PROFESSIONAL MARKETS
CURRENT VALUE
MARKET WEIGHTED
VALUE SHARE OPPORTUNITY
OPPORTUNITY AVERAGE GLOBAL TOP TWO
(M ACRES) PRICE (ANNUALSALES $M)
(percent) MARKETS
SOLANACEOUS
TOMATOES 7.9 $700/kg 20% $425-$475 Spain, U.S.
PEPPERS 7.6 $1,200/kg 30% $275-$325 Spain, Mexico
ROOT & BULB
ONION $150-$200 U.S., Mexico
3.7 $100/kg 20%
CUCURBITS
CUCUMBERS 2.9 $125/kg 30% $150-$200 U.S., Mexico
Spain, Central
MELON $100-$150
1.3 $550/kg 15%
America
11
12. SEMINIS GROWTH
Market Capabilities to be Enhanced with Strategic Acquisitions
in Key Markets, Crops
CORN VEGETABLES
In 2004, Monsanto established a new model Last month, Seminis announced a model
with American Seeds, Inc. (ASI) – an for vegetables based on the success of ASI
umbrella of companies that retain their in corn – establishing the International
local brand equity and specialization, but Seed Group (ISG) to more directly connect
with an added degree of back-end support vegetable customers to significant
to speed innovation innovations in breeding while continuing to
operate locally and building the value of
brands
INTERNATIONAL SEED GROUP
LOCAL LOCAL LOCAL LOCAL
SEED SEED SEED SEED
COMPANY COMPANY COMPANY COMPANY
WESTERN SEED POLONI SEMENCES
BASED IN FRANCE,
BASED IN HOLLAND,
WITH STRENGTH IN
SPECIALIZING IN
MELON BREEDING
PROTECTED
CULTURE TOMATOES
12
13. OVERVIEW
Research and Development Focused on High Value Crops
and Improved Quality and Disease Resistance
R & D SPEND
TECHNOLOGY FOCUS:
SEMINIS 2006 R&D SPEND SEMINIS 2006 R&D SPEND
TOTAL ALLOCATION BY TECHNOLOGY SEGMENT TOTAL ALLOCATION BY CROP SEGMENT
• R & D spend
balanced between
quality, disease and
agronomic
16% 11%
improvements
28%
CROP FOCUS:
10% 34%
• Spend by family Solanaceous
aligned well with Cucurbits
highest value crop Brassica
9%
Large Seed
families in the
30% Leafy & Other
industry
Root & Bulb
• Focused on high
26% 14%
value tomatoes,
23%
peppers,
cucumbers, onions
Yield Disease
and melons.
Quality Agronomic
13
14. SEMINIS GROWTH
Five New Products Identified As Key Product Launches By
End of the Decade
NEW PRODUCT OPPORTUNITY: PRODUCTS TO BE LAUNCHED BY END OF DECADE
MARKET
PRODUCT TYPE OF VALUE PER
KEY MARKETS
OPPORTUNITY
CONCEPT BENEFIT ACRE
(TOTAL ACRES)
SOLANACEOUS
Disease,
Multiple agronomic nematode
SWEET PEPPER $1,600 26,000 U.S.
improvements and virus
resistance
BRASSICA
Enabled
RAISED HEAD Labor
Up to $600 200,000 U.K., Spain, U.S.
mechanical
BROCCOLI savings
harvest
CUCURBITS
$80-$100
50,000 pickling
pickling
Disease Disease
CUCUMBER U.S., Mexico
resistance resistance 100,000 slicers
$150-$170
slicers
$160 NA
Enhanced
WATERMELON Ultra firm flesh 100,000 U.S., Mexico, Europe
processing $260 EA
LEAFY
Processor Extended
RUGBY LETTUCE $160 40,000 U.S., Mexico
Quality shelf life
14
15. SEMINIS GROWTH
Raised Head Broccoli Brings Cost of Harvesting Into
Value of Seed
KEY REGIONS Spain, U.K., Mexico, U.S.
AVAILABLE ACRES 200K Acres
Raised-Head Broccoli PERCENT PENETRATED 0%
VALUE OPPORTUNITY: RAISED HEAD BROCCOLI
Seminis
Raised Head Broccoli
PROJECT CONCEPT:
Mechanical
• Raised head broccoli enables mechanical
harvesters can
harvest with improved quality
move through
2007 PERFORMANCE UPDATE: fields, more
easily
• Breeding and mechanical harvester
removing
prototypes developed
individual
• Commercial varieties under development broccoli heads
• Demonstration trials planted from raised-
head varieties
Labor for traditional broccoli harvesting costs roughly $200-$400 an acre
Targeting the increased use of mechanization for harvesting, the cost savings per
acre could be up to 80% of the labor savings
Reduced cooling/warehousing costs and greater harvest flexibility provide
additional $200/acre of savings
Raised-head on broccoli
Market delivery improvement leads to enhanced quality
plants
15
16. SEMINIS GROWTH
Genetic Mapping Timetable Supports Commercial
Launches of Molecular Breeding Hybrids by End of Decade
MARKER PLATFORMS
MARKER APPLICATION FOR KEY CROPS (2006-2009)
Seminis
SITUATION:
5,000 SWEET CORN
• Began application of
NUMBER OF MARKERS DEVELOPED
breeding technology,
with genome-wide
marker platform for
tomatoes and peppers
• Melons, watermelons TARGET:
1,000
and brassica family of 1,000 markers
cabbage, broccoli and
cauliflower next
OUTLOOK:
BRASSICA
• By 2009, Seminis 500 TOMATO
should have 1,000+
markers for each of the MELON
9 crops
PEPPER
EXPLORATORY:
ONION, CUCUMBER,
LETTUCE, BEAN
WATERMELON
2009F
2007F 2008F
Current
Status
16
17. SEMINIS GROWTH
Breeding Transfers Value of Virus Protection From Fungicide
Into Seed KEY REGIONS Europe, U.S., Mexico
AVAILABLE ACRES 120K Acres
PERCENT PENETRATED 0%
Tomato Yellow Leaf Curl – 2ND GENERATION
Virus
VALUE OPPORTUNITY:
TOMATO YELLOW LEAF CURL VIRUS SECOND GENERATION
Seminis
Tomato Yellow Leaf Curl Virus
FIRST GENERATION:
• The first generation of resistance to
tomato yellow leaf curl is in the
marketplace and is increasing in
penetration with profound effects on
grower returns vs. susceptible
varieties
SECOND GENERATION:
• Second generation resistance
identified and working aggressively to
bring to the marketplace
Yield losses from areas affected by tomato yellow leaf curl virus
range from 50%-90%. Value creation is $1000-$3250 per acre.
Disease is prevalent in most tropical climates where tomatoes are
grown, including Florida, Mexico, Southern Europe, Northern
Africa, Australia and Japan
17
18. SUMMARY
Seminis One of Six Gross Profit Drivers for Monsanto,
Reflecting Growth Opportunity Through End of Decade
MONSANTO’S OPPORTUNITY SEMINIS CONTRIBUTION
By the end of the decade, Monsanto projects a Seminis’ core business is currently a 60%
gross margin in the range of 51-53%, reflecting margin business. That margin mix should
growth opportunity in six areas of seeds and further improve by the end of the decade
traits as Seminis continues to focus on its four
key growth drivers:
54%
PRICE
GROSS MARGIN ‘PULL’
52%
MARKET SHARE
MIX
50%
NEW PRODUCT
LAUNCHES
48%
CURRENT LEVEL
PIPELINE
46%
ACCELERATION
44%
2003 2004 2005 2006 2007F 2008F 2009F 2010F
18