MONSANTO'S SEEDS/TRAITS EXPECTED TO DRIVE MID-TERM GROWTH.

Significant growth in Monsanto's seeds and traits business is expected to drive the company's mid-term growth, according to Hugh Grant, chairman, president and chief executive officer. Grant underscored the company's expectation of compounded annual earnings-per-share (EPS) growth of 10 percent in 2005 and 2006. He said he believed the growth will be driven by the company's corn business and its next generation of biotechnology traits.

As a part of the business update, Grant confirmed the company's EPS guidance for fiscal year 2004, expected in the range of $1.40 to $1.50 on an ongoing basis. The company now expects to deliver roughly 45 percent of the fiscal year EPS in the first half of the year. Grant said favorable timing associated with sales of Monsanto's seed and trait products resulted in the decision to shift the quarterly EPS guidance outlook.

Additionally, Grant confirmed the company's free cash flow guidance, with free cash flow generation for fiscal year 2004 expected to be in the range of $350 million to $400 million. The company expects net cash provided by operations to be in the range of $540 million to $570 million and net cash required by investing activities to be in the range of $170 million to $190 million.

Grant indicated that the company's 2004 and mid-term growth expectations were achievable because of the success of the company's seeds and traits strategy.

"As our seeds and traits business increasingly takes the lead in our portfolio, the growth it delivers will propel the growth for all of Monsanto," said Grant. "Success in seeds and traits requires experience, access and execution, and Monsanto has the base and the strategy to lead this area of growth for the agricultural industry."

Successive Rounds of Growth From Seeds and Traits

In his presentation, Grant focused on Monsanto's seeds and traits strategy, explaining that the company has built its strategy on three successive rounds of seed and trait innovation. The first round was dominated by significant advancement in seed breeding and first-generation biotech products -- like Monsanto's portfolio of insect-protected and herbicide- tolerant crops.

With growth continuing in this first round, Monsanto has already seen initial business growth in the second round -- a round of innovation focused on second-generation biotech offerings and an increased emphasis on multiple stacked traits.

"Monsanto is already moving to second-generation products that give us a tremendous competitive advantage as other companies bring 'me-too' products to the market," said Grant.

Grant cited an "intensity index" of U.S. biotech traits that shows significant penetration of multiple Monsanto traits for key crops on each acre planted with biotech crops. For instance, in cotton, for the 2004 planting season, Monsanto estimates an intensity index of approximately 1.5 -- meaning Monsanto believes there are approximately 1.5 Monsanto traits being planted on every acre growing biotech cotton. Similarly, for 2004, the projected intensity index for corn is 1.2, with continued growth in 2005 and 2006 as a result of the introduction of second-generation traits and increased penetration of stacked traits.

Building on the foundation established in the first two rounds, Grant indicated that Monsanto's rich product pipeline offers new traits in the third round that will address new market needs and fuel longer-term growth for the company.

"Concepts that were just drawing-board ideas a few years ago are already being tested in the field," he said. "For instance, last year, Monsanto had good early field success with drought-tolerant corn that could eventually help farmers maintain yields in times of significant water shortage."

Update on Monsanto's Value-Capture System in Brazil

Grant also provided an update on Monsanto's initiatives in Brazil, where progress is being made on a value-capture system for Roundup Ready soybeans for the 2004 season.

"We've been able to check off a few of the first key milestones, including developing a grain-based value-capture concept and signing contracts with the major global grain handlers," said Grant. "But, there are still some important steps -- including completing enrollment of local elevators and processors -- before the system is fully instituted."

Even if all of milestones are successfully completed in the Brazil value- capture system, Grant indicated that the company expects the initial start-up costs associated with this program to offset any potential additional earnings for Monsanto in 2004.

Monsanto Company (NYSE:MON) is a leading provider of technology-based solutions and agricultural products that improve farm productivity.

For more information, http://www.monsanto.com or call 314/694-8387.