3. Iberia is a very diverse agricultural market in a limited territory
SPANISH AGRONOMIC CROPS SURFACE'05*
k ha
Cereals 6527 75%
Wheat 2184 25%
Barley 3195 37%
Other small grains 591 7%
C orn 436 5%
Rice 121 1%
Legumes 574 7%
Potatoes 94 1%
Sugar beet 100 1%
C otton 86 1%
Sunflower 523 6%
Forrage crops 397 5%
Vegetables 444 5%
TOTAL AGRONOMICS CROPS 8745 100%
* Surface Estimate June'05 - MAFF
3 9/20/2005 Titre
4. Corn is the highest seed market value opportunity in Iberia
SEED MARKET VALUE by CROP
70
60
50
M $ of NS
40
30
20
10
0
Corn Sunflower Cotton
Source: Monsanto internal data. July’05
Sunflower reflects only the added value region of Andalusia
4 9/20/2005 Titre
5. CAP (European Common Agricultural Policy) review* in ‘06 will not have an
important impact on the Corn Market
FARMERS OPINION ON THE EFFECT OF CAP REVIEW
ON CORN SURFACE
80%
72%
60%
% interviews
40%
17%
20%
10%
1%
0%
Same Less More Don't know
* MARKin Spanish Corn Panel 2005 – July’05
5 9/20/2005 Titre
6. CAP review will change the “farming model”
Professional farmers with entrepreneurial mentality
Subsidies will have a “smaller role”
Looking for integrated farm management
Adoption of new technologies
Farming solutions vs. product use
Targeting agriculture as a long term & stable
business
With a bigger farm size
6 9/20/2005 Titre
7. Biotech market share increases and drives market value
IBERIA MARKET TREND'98-'05
800
Bt
Conventional
700
600
500
k ha
400
300
200
100
0
'98 '99 '00 '01 '02 '03 '04 '05*
Sources: Spanish MAFF, FAOSTAT, Monsanto internal assessment
* -> Estimate
7 9/20/2005 Titre
8. Corn seed decision is taken at farmer gate, and “value” factors have greater
weight than “price”.
25%
% of cultivated corn hectars
20%
15%
10%
5%
0%
Experience Maturity Recomendation Trial Seed quality Price
Resistance
to lodging
Source: Kleffmann panel ‘05. Yield, the first and “logical” reason from framers, is not included
8 9/20/2005 Titre
10. Focus on value farmers
STRUCTURE OF SPANISH CORN FARMS
35%
30% % of farms
% of surface
25%
20%
15%
10%
5%
0%
> = 100 ha
20 to <30
10 to <20
5 to <10
50 to <100
30 to <50
2 to <5
1 to <2
<1 ha
Corn farm size (ha)
Source: Survey of agricultural farms 1997 – Spanish MAFF
10 9/20/2005 Titre
11. The Bt corn market geographies suffered during the 2005 growing season a
severe drought (driest May-Sep period since 1947!)...
Bt areas
% of Cumulated Precipitation vs. Normal at April 30th, 2005
SOURCE: INM (Spanish National Meteorological Institute)
11 9/20/2005 Titre
12. However, Bt has been an important contributor to the corn business. New
variety approvals for ’06 will increase its relative weight.
Bt weight in the IBERIA market
700 10%
9%
600
8%
500
% vs. Total Market
7%
6%
400
k ha
5%
300
4%
3%
200
2%
100
1%
0 0%
'03 '04 '05*
Conventional Bt % Bt vs. Total Market
Sources: Spanish MAFF, FAOSTAT, Monsanto internal assessment
* -> Estimate
12 9/20/2005 Titre
14. Business integration, between Seeds & AgChem, offers a
competitive advantage through value added programs directed to
“new farming entrepreneurs”
14 9/20/2005 Titre
15. DEKALB re-launch has contributed to brand equity improvement
2005 Spain
Brand
Equity Score
0.93
Brand Share of Mind Brand Image Brand Loyalty
+ +
Unaided awareness – Image attributes (QS7) Usage (QS10/S14)
Overall
Top 5 brands (QS5)
Measures: DEKALB Likelihood to use again next
Aided awareness (QS6) season (QS13/S17)
Pioneer
Switching behavior (QS19/S25)
Likelihood to recommend (QS8)
0.29 0.54 0.10
2005 Score:
+ +
0.18 0.45 0.09
2003 Score:
+ +
0.67
Brand
Equity Score
2003 Spain
MARKETING HORIZONS INC.- 2005 DEKALB brand equity study - Spain
15 9/20/2005 Titre
16. Market value growth comes from Biotechnology
Farmers have to aim problems for crop management in
corn
Endemic areas for ECB (European Corn Borer)
Weeds is a major problem, specially in some
geographies
Solutions are very limited with traditional systems
Limited control by insecticides
Complex management for insect control
Ban of some herbicides (i.e.: Atrazine)
Bt & Roundup Ready technologies will fit the corn
farmer needs in the coming years
16 9/20/2005 Titre
18. Conclusions
Stable conventional market
Increasing value due to Biotech
Entrepreneurial farmers vs. subsidy driven
Bt has “revolutionized” the seed business
Integration of seed businesses has been successful
Value programs drive our growth
Seed & AgChem integration is a differentiated competitive
advantage
Brand equity has improved substantially
Roundup Ready and stack technologies (Roundup Ready +
YieldGard) will be the next leap in market value growth
18 9/20/2005 Titre
