monsanto 09-20-05a
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Transcript of monsanto 09-20-05a
DEKALB, give wings to your growth
CORN SEED BUSINESS IN IBERIACarlos Vicente
Lérida, September 20th. 2005
9/20/2005 Titre2
The market frame
9/20/2005 Titre3
Iberia is a very diverse agricultural market in a limited territory
SPANISH AGRONOMIC CROPS SURFACE'05*
k haCereals 6527 75%Wheat 2184 25%Barley 3195 37%Other small grains 591 7%Corn 436 5%Rice 121 1%Legumes 574 7%Potatoes 94 1%Sugar beet 100 1%Cotton 86 1%Sunflower 523 6%Forrage crops 397 5%Vegetables 444 5%TOTAL AGRONOMICS CROPS 8745 100%
* Surface Estimate June'05 - MAFF
9/20/2005 Titre4
Corn is the highest seed market value opportunity in Iberia
SEED MARKET VALUE by CROP
0
10
20
30
40
50
60
70
Corn Sunflower Cotton
M $
of
NS
Source: Monsanto internal data. July’05
Sunflower reflects only the added value region of Andalusia
9/20/2005 Titre5
* MARKin Spanish Corn Panel 2005 – July’05
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
72%
17%
1%
10%
0%
20%
40%
60%
80%
Same Less More Don't know
% i
nte
rvie
ws
9/20/2005 Titre6
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
9/20/2005 Titre7
Biotech market share increases and drives market value
Sources: Spanish MAFF, FAOSTAT, Monsanto internal assessment
* -> Estimate
IBERIA MARKET TREND'98-'05
0
100
200
300
400
500
600
700
800
'98 '99 '00 '01 '02 '03 '04 '05*
k h
a
BtConventional
9/20/2005 Titre8
Corn seed decision is taken at farmer gate, and “value” factors have greater weight than “price”.
0%
5%
10%
15%
20%
25%
Experience Maturity Recomendation Trial Seed quality Resistance to lodging
Price
% o
f cu
ltiv
ate
d c
orn
hect
ars
Source: Kleffmann panel ‘05. Yield, the first and “logical” reason from framers, is not included
9/20/2005 Titre9
Business drivers
9/20/2005 Titre10
Focus on value farmers
STRUCTURE OF SPANISH CORN FARMS
0%
5%
10%
15%
20%
25%
30%
35%<
1 h
a
1 t
o <
2
2 t
o <
5
5 t
o <
10
10
to
<2
0
20
to
<3
0
30
to
<5
0
50
to
<1
00
> =
10
0 h
a
Corn farm size (ha)
% of farms
% of surface
Source: Survey of agricultural farms 1997 – Spanish MAFF
9/20/2005 Titre11
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, 2005SOURCE: INM (Spanish National Meteorological Institute)
9/20/2005 Titre12
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
0
100
200
300
400
500
600
700
'03 '04 '05*
k ha
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
% v
s. T
otal
Mar
ket
Conventional Bt % Bt vs. Total Market
Sources: Spanish MAFF, FAOSTAT, Monsanto internal assessment
* -> Estimate
9/20/2005 Titre13
Key initiatives
9/20/2005 Titre14
Business integration, between Seeds & AgChem, offers a competitive advantage through value added programs directed to “new farming entrepreneurs”
9/20/2005 Titre15
DEKALB re-launch has contributed to brand equity improvement
OverallMeasures:
Unaided awareness –Top 5 brands (QS5)Aided awareness (QS6)
Image attributes (QS7)DEKALBPioneer
Likelihood to recommend (QS8)
Usage (QS10/S14)Likelihood to use again next season (QS13/S17)Switching behavior (QS19/S25)
2005 Score: 0.29
2005 Spain Brand
Equity Score
0.54 0.10
Brand Share of Mind Brand Image Brand Loyalty+ +
++2003 Score: 0.18 0.45 0.09++
BrandEquity Score2003 Spain
0.67
0.93
MARKETING HORIZONS INC.- 2005 DEKALB brand equity study - Spain
9/20/2005 Titre16
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 systemsLimited control by insecticidesComplex management for insect controlBan of some herbicides (i.e.: Atrazine)
Bt & Roundup Ready technologies will fit the corn farmer needs in the coming years
9/20/2005 Titre17
Conclusions
9/20/2005 Titre18
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