Africa Cotton Opportunities & Challenges. Natalia Voruz, Monsanto

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1 Africa Cotton Opportunities & Challenges Natalia Voruz, Monsanto

2 Agenda Who we are Monsanto in Africa Region Macro Overview & Market dynamics What we can offer the farmers Bt cotton Experience 2

3 A COMPANY 100% FOCUSED ON AGRICULTURE Monsanto Company is a leading global provider of technology-based tools and agricultural products that improve farm productivity and food quality. Our Mission We work to deliver agricultural products and solutions to: Meet the world s growing food needs Conserve natural resources Protect the environment Improve Lives When the farmer succeeds, we succeed. 3 Monsanto Company Confidential

4 A Global Company: Diverse in People, Products, Geographies Headquarters St. Louis, MO Total employees 21,183 Global facilities 404 Countries 66 R&D expenses FY14 $ 1,725 M (+13%) Net Sales FY14 $15,855 M (+7%) North America Latin America North Brazil Argentina Europe India Corn Soybeans Cotton Vegetables OSR Roundup Asia Africa 4 Monsanto Company Confidential

5 WHATEVER YOUR NEEDS, WE CAN SUPPLY Conventional / Biotech / Organic Depending on farmers needs and where they have a choice. P5 Monsanto in EMEA

6 Monsanto active in Africa for more than 40 years Burkina Faso Operated since HC s Nigeria Operated since HC s Zambia Operated since HC s South Africa Operated since HC s 350,000 Farmers who grow our cotton seeds 1.3 million farmers who grow our maize seeds Ethiopia Operated since HC s Kenya Operated since HC s Tanzania Operated since HC s Malawi Operated since HC s 200,000 farmers who grow our vegetable seeds

7 1,000 MT Price per MT 1,000 MT Cotton Macro Economics Head Winds Largest stock level after 2011 pick weighting on the prices Commodity Prices go down (appx. 25% to compare to FY13) Global acreages is predicted to decline by 10% (US -20%) World Cotton Demand Long-Term Upward Demand Trend The A-Index and spot prices have shown a slight recovery on market Yield Gains Remain Critical 30,000 25,000 20,000 15,000 10,000 5,000 - Ending Stocks and Price RO W $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

8 SSA Cotton Major drivers for growth: - Strong governmental focus to support cotton sector (cash crop) - Cotton is major source for GDP (Burkina Faso, Togo, Benin) - Increased guaranteed by government prices for farmers - Rebuilding local textile industry (Nigeria, Ethiopia, Kenya) - Strong role of state cotton companies which continue to control the local cotton market (BF, Togo, Benin) Cotton Production Africa % 7% Potential (KHa) Tech hectares (Kha) Tech adoption % 80% 70% 60% 50% 40% 30% 20% 10% 0% West Africa 15% 13% 12% 60% South Africa Egypt East Africa Total cotton acreage: 4.1Mha, 38% Average seed cotton yield : 1 t/ha

9 Bollgard Cotton: Improving cotton and lives around the world * 15 YEARS AGO, BOLLGARD TECHNOLOGY BECAME THE FIRST PRODUCT IN THE MARKETPLACE TO PROVIDE BUILT-IN PROTECTION AGAINST BOLLWORM PESTS. THIS MEANS REDUCED PESTICIDE SPRAYS, REDUCED COSTS AND INCREASED YIELDS FOR FARMERS * 7 YEARS LATER, MONSANTO INTRODUCED BOLLGARD II TECHNOLOGY (THE SECOND GENERATION PRODUCT) WHICH PROVIDES ADDED PROTECTION AGAINST BOLLWORMS AND CATERPILLARS. * WITH BOLLGARD II, FARMERS GET BETTER BOLL RETENTION, MAXIMUM YIELD, REDUCED PESTICIDE COSTS AND INCREASED PROTECTION AGAINST INSECT RESISTANCE. * RAPIDLY ADOPTED BY FARMERS GLOBALLY, BOLLGARD II TECHNOLOGY HAS BENEFITED MORE THAN 6 MILLION INDIAN FARMERS, US FARMERS AND MANY MORE AROUND THE WORLD

10 BT Cotton in India, a POSSIBLE model? In the last decade in India, over 6 million farmers created India s cotton revolution by doubling cotton production using higher-yielding hybrid cotton seeds with in-the-seed insect protection Bt cotton technologies making India the world s second largest producer and exporter of cotton. From 8M ha to 12M ha+ / from net importer to net exporter Cotton provides livelihood to over 60 million people 25% of the global cotton area Bt penetration: 80% of the cotton area 60% Yield increase Indian textile industry consumes 60 % of lint cotton as raw material 600 BT cotton hybrids 45 seeds companies Transformation of the Indian textile industry which generates significant revenue and employment increase. Poverty index divided by % in early 2000s to 24% today 7.4 billion USD incremental income from 2002 to 2010

11 SSA - moving with biotech cotton Countries that have biotech cotton cultivated: South Africa Burkina Faso Countries that have workable biotech framework and have BGII cotton applications / trials pending: Malawi Kenya Nigeria Ghana Countries that are progressing to build workable biotech framework: Mozambique Togo Ethiopia

12 Bollgard II in Burkina 10 years success for agriculture transformation and fight against poverty 700,000 ha cotton planted in 2014 Cotton provides livelihood to over 350,000 farmers. 10 million people an activity related to the cotton industry and represents more than 65% of household income Cotton main export income (43% of total export) The largest cotton producer in Africa The Burkinabe textile industry consumes 5% fiber, 95% of the fiber is exported as raw material, the main source of foreign currency.

13 Bollgard II in Burkina Evolution of total cotton acreage and Bt cotton adoption Cotton acreage (Kha) Bt cotton acreage (Kha) Bollgard II since 2009 Authorisation: 10 years from 2013 License Agreement : INERA- SOFITEX-MONSANTO Research cooperation with INERA BGII boost the total cotton area growth : 700Kha in 2014 (58% growth in total) Bollgard II in 2014 reached 480,000ha, representing 72.7% of the total area 20,5 % average yield increase 327M USD additional income generated for country by BGII in 2014

14 Since the introduction of BollgardII cotton in Burkina Faso, it has systematically created more value (per ha) to the Burkinabe economy than conventional cotton $300 $3.00 $250 $200 $150 $81 $1.82 $187 $93 $2.48 $226 $87 $204 $1.82 $259 $2.02 $138 $176 $1.58 $67 $2.50 $2.00 $1.50 $100 $50 $67 $99 $81 $84 $78 $1.00 $0.50 $- $39 $34 $36 $37 $ $- Monsanto share ($/ha) Cotton companies share ($/ha) Commodity price ($/kg) Farmers share ($/ha) Incremental Technology Value ($/ha) The additional value created by BollgardII cotton has been shared between the farmers, the cotton stakeholders and Monsanto (Monsanto part <20% in total value created) INERA report December 2014: 74% of the farmers find the price acceptable and are willing to pay the price for seed

15 Bollgard II in Burkina Economical, Environmental, Social and Health Benefits USD $ Income USD/ha per type of farm Number of cases of poisining recorded in health center Faso Coton Socoma Sofitex

16 Key benefits for the farmers for the last 5 years after the introduction of Bollgard II cotton in Burkina Faso have been confirmed by multiple studies

17 Burkina Faso 2015 Farmers communication platform What: Implementation of a communication platform to cotton growers in BF Why: How: Improve agronomic practices in cotton production by following Itineraire Technique, and as a result to allow farmers to benefit more from technology Increase the retention of existing customers via continuous contact and receiving useful information, recruit new technology adopters Advice on IRM and monitoring of refuge implementation, Measure the success of enable best practices advice and understand opportunities for new communication platform in phase 2 (Call center) Up to 200,000 farmers (Sofitex area) will receive 12 Voice SMS messages each scheduled at different intervals during the growing season beginning in May One way communication. Farmer database will be provided by Sofitex Y+1 to extend to Faso Cotton & Socoma area to cover up to 300,000 farmers Future possibilities: Short term (FY16): Provide support service «Call center» (customized technical diagnostic)/ Increase level of services eg weather forecast Mid/long term (FY17/18): support BIIRRflex launch as well as Corn launch 17

18 Burkina Faso Next steps : second year of BGII/RRFlex trials Greater number of trials performed with cotton Approved in all major markets Flexibility and easy in weed management Protection against the means cotton caterpillars Reduction of work hardness and use of insecticide 5% ou 20% refuge area Over 10 years of researches Special relationship program with farmers Yield potencial protection, providing more gains

19 Thank you!

20 Back Up Slides P20 INSERT TITLE ON MASTER SLIDE (CALIBRI 14PT

21 New Bollgard II brochure (1) P21 INSERT TITLE ON MASTER SLIDE (CALIBRI 14PT

22 New Bollgard II brochure (2) P22 INSERT TITLE ON MASTER SLIDE (CALIBRI 14PT

23 ECONOMICAL, ENVIRONMENTAL, SOCIAL AND HEALTH BENEFITS Net increase revenue US$ 132 versus non Bt / hectare +209% Number of sprays 3 time less/ hectare, 56% less insecticide 53% attached labour reduction Frequent health hazards such as giddiness, nausea, itching, etc experienced by farmers/farm workers were reduced considerably by cultivating Bt cotton 85% of farmers have invested in better education for children. 77% reported intake of high value and nutritious food. 75% an improvement in health of their family members. 64% an improvement on health of livestock» Associated Chambers of Commerce and Industry of India and Indian Market Research Bureau, The Bharat Krushak» Samaj (BKS) and Council for Social Development (CSD), University of Agricultural Sciences, Dharwad, Karnataka