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7-Business: Monsanto struggles even as it dominates

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                                  PART I
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TITLE:  Monsanto Struggles Even as It Dominates
SOURCE: The New York Times, USA, by David Barboza
DATE:   May 31, 2003

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Monsanto Struggles Even as It Dominates

Monsanto should be thriving.

The company has helped develop most of the world's biotech crops; it
produces the best-selling agricultural chemical of all time; and after a
series of huge acquisitions, it can now call itself the world's No. 2
agricultural seed company, behind the Pioneer Hi-Bred unit of DuPont.

Yet profits are in a slump, its shares have tumbled nearly 50 percent in
two years, and the company continues to take a beating over the
introduction of genetically altered crops.

In all the turmoil, the Monsanto Company even lost its second chief
executive in three years, Hendrik A. Verfaillie, who stepped down in
December. Only this week did it name a successor - Hugh Grant, a longtime
company executive who most recently has been chief operating officer.

Despite all the company's advantages, analysts say, its progress has been
impeded by heavy spending, management shake-ups and the unexpected costs
of trying to win the world over to those altered crops.

"Europe is really the stumbling block for global acceptance, and that's a
problem," said Leslie Ravitz, an analyst at Morgan Stanley.

And Andrew Cash, an analyst at UBS Warburg, noted that "part of the
problem was their infrastructure is for a global market." He added, "If
the world market had accepted biotech two years ago, or even now, they'd
be much more profitable."

Monsanto executives, for their part, say they are right on course. While
Mr. Grant, on his promotion, acknowledged that "we're at an important
crossroads," he stressed his longstanding belief that altered crops "have
great potential."

The company has successfully moved away from a dependence on chemicals,
and biotech profits are growing, top executives say. Indeed, this year,
for the first time, Monsanto predicts that over half of its agricultural
profits will come from something other than chemicals.

Biotech genes, one of Monsanto's newest businesses, are expected to
produce about $600 million in gross profits this year, analysts say.

Chemicals - a mainstay since the company's founding in 1901 - are in
sharp decline.

"Fifteen years ago, we were digging holes in the ground, extracting oil,"
Mr. Grant said in a recent interview at company headquarters in St.
Louis, before his elevation to chief executive. "We were making nylon. We
were a fibers company. Then we were a fine-chemicals company. Now we're a
seeds and biotechnology company."

This is what Monsanto wanted to become, not an aging chemical concern but
a new-age biotech company that would use the tools of genetic engineering
to help transform the world of food and agriculture.

But Monsanto spent dearly to get here, investing billions in the last
decade to acquire huge seed companies and to develop genetically altered

The new Monsanto essentially has two main products: genetically altered
seeds and Roundup, the herbicide that works in tandem with some of the
company's most popular biotech crops. Roundup now commands a remarkable
90 percent of the world's herbicide market. And because Monsanto was a
pioneer in genetically manipulating plants, it controls over 90 percent
of the market for biotech "traits," the genes that transform ordinary
seeds into new types of crops.

Still, profits have been lackluster for two years, analysts say, partly
because of weakness in Latin America, where inventory and management
problems have taken a toll.

Investors say Monsanto has also been weighed down by its heavy cost
structure. Return on equity is weak, analysts say, because of the roughly
$10 billion the company spent in the last decade to acquire seed
companies and market about a dozen varieties of genetically altered crops.

"They don't even make their cost of capital, so that means every quarter
they're actually destroying value," Mr. Cash, the analyst, said. "They
introduced biotech traits in '95, and now there are 140 million acres.
That's astounding. So it must be costs; it can't be sales."

Weak profits have sent Monsanto shares down, to $20.05 at the close of
business yesterday from a peak of $38 in June 2001.

Still, most analysts agree that Monsanto has no real peer in biotech
crops. "There's nobody else in the input traits that's competitive," Mr.
Ravitz of Morgan Stanley said. "They are way ahead there."

Monsanto's biggest rivals - DuPont, Syngenta and Bayer - are working to
develop their own biotech crops, but only a handful of products have
reached the market. Some of the best prospects are two to seven years
away, the companies say.

"Part of it was our late entry into the biotech arena," said Richard L.
McConnell, the president of Pioneer Hi-Bred, DuPont's seed unit.

DuPont and Syngenta, however, are about to release products that go head-
to-head with some of Monsanto's best-selling biotech traits. And some
analysts predict that those two companies will capture a significant
share of the market - and perhaps pressure Monsanto to lower its prices.

In the meantime, the competitors are content to profit from Monsanto's
biotech traits, which are licensed to most of the world's major seed

Sales of soybeans are growing because of Monsanto's biotech traits, said
John Sorenson, the president of Syngenta Seeds North America, referring
to the growth of Monsanto's popular Roundup Ready soybeans, which are
genetically altered to withstand being sprayed by Roundup. "It's been a
very profitable segment for us."

When biotech crops were first planted commercially in the United States,
in 1996, Monsanto was not the first to market them, but it was the most

That year, about 2 million acres of biotech crops were planted
nationwide; today over 100 million acres are.

Roundup has been one of the biggest beneficiaries of this boom. Although
it was already a blockbuster product, sales soared to over $2.4 billion
in 2001, making it the best-selling agricultural chemical ever.

More than 80 percent of the soybeans in the United States and Argentina,
the world's biggest exporters, are now genetically altered. And much of
the land they are grown on is sprayed with Roundup.

To compete, other seed companies plan to introduce a series of "output"
traits, or genes that could improve the quality or taste of crops like
corn, soybeans, canola and tomatoes.

Competitors say output traits will be even more profitable, and experts
say that contest will inaugurate the real biotech race.

"It's like a game of Monopoly," said Tray Thomas, the president of the
Context Network, an agribusiness consulting group in West Des Moines,
Iowa. "Monsanto has hotels on Boardwalk and Park Place. But a lot of the
game is yet to be played."

Monsanto says it plans to maintain its lead by devoting nearly 80 percent
of its more than $500 million in annual research and development spending
to biotech traits. Its rivals, by their own estimates, devote closer to
20 percent.

But therein lies a problem, analysts say: Monsanto's research spending
has held down profitability. "They're generating gross profits, but they
invest it back into the business," Mr. Ravitz said.

Monsanto also faces problems abroad, where genetically altered crops are
sometimes scorned. Europe is showing no signs of easing its restrictions,
and is in fact considering tightening some of them, which would make it
more difficult to export biotech crops there. "Europe has been a major
problem," Mr. Thomas said. "A lot of farmers are worried that they'll
plant things they won't be able to sell in Europe."

Problems like that have inflated the cost of commercializing biotech
crops, not just in Europe, but in other nations that follow Europe's lead.

In the United States, the biotech industry abandoned altered potatoes and
delayed the marketing of altered wheat because of consumer health
concerns. Monsanto says the crops have been properly tested and pose no
threat to humans or the environment.

Monsanto has also drawn government scrutiny. According to a regulatory
filing in March, the Justice Department was investigating whether the
company engaged in anticompetitive conduct in the herbicide market. And
lawyers are pressing forward with a class-action lawsuit that accuses
Monsanto of conspiring with competitors to control the world's biotech
seed market.

Monsanto said yesterday that it was cooperating with the Justice
Department investigation. The company said it acted properly and denied
that it engaged in any conspiracy to control the seed market.

Monsanto executives say they gained dominance with pioneering research
and by getting some of the first products to market. "The bets we made
really started in the 1980's," said Mr. Grant, the chief executive. "We
really stopped on chemical R&D, and we focused on biotechnology."

Having proved that biotech traits can be profitable, Monsanto said it was
moving into another phase: stacking genetically altered traits in seeds,
one on top of another.

The company is also preparing to introduce consumer traits, like a
biotech seed that will be fortified with omega-3, a fatty acid considered
beneficial to human health.

"We're starting to populate our pipeline with consumer traits," said
Robert T. Fraley, Monsanto's chief technology officer. "Now, we'll have
oil, corn and canola with omega-3."

The problem is that competitors are coming out with new products that
will challenge Monsanto's dominance of biotech corn and cotton. And
Monsanto also faces declining profits from Roundup; its patent expired in
2000, and its price continues to drop.

"There are a lot of risks," Mr. Cash, at UBS, said. "The market is
worried about competition. The market is worried about costs. The market
is worried about them getting paid for their traits. They've got a big
hill to climb."

                                  PART II
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TITLE:  Hugh Grant Is Elected President And Chief Executive Officer Of
        Monsanto Company
SOURCE: Monsanto, USA, Media Release
DATE:   May 29, 2003

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Hugh Grant Is Elected President And Chief Executive Officer Of Monsanto

ST. LOUIS (May 29, 2003) - Monsanto Company (NYSE: MON) announced today
that its board of directors has elected Hugh Grant, 45, as president and
chief executive officer (CEO) of the company, effective immediately. In
addition, he was elected to the company's board of directors. Grant, a
22-year veteran of Monsanto, served as the company's chief operating
officer for the past three years.

In making the announcement, Monsanto Chairman Frank AtLee said, "Hugh
Grant has been an integral part of Monsanto's strategic transition from a
chemistry-based company to a company based largely on seeds and
biotechnology traits. Hugh's strong operational background, coupled with
his keen knowledge of the business and his ability to earn the trust of a
wide range of stakeholders in challenging situations, made him the
board's choice to lead Monsanto going forward."

"We're at an important crossroads for our business," Grant said.
"Agricultural biotechnology and genomics have great potential, and
Monsanto remains at the forefront of these technologies. However, we will
continue to balance this longer-term potential by maintaining our
cautiously optimistic approach as we focus on delivering near-term results.

"We are continually looking for ways to create longer-term value for our
shareowners, our customers, and our employees," Grant said. "The next
three-to-five years are especially important to our company as we
continue on our journey of becoming the high-tech solutions provider to
farmers, agricultural retailers and distributors, grain handlers, food
processors, food companies, and all those interested in agriculture
around the globe."

AtLee said the selection of Grant as Monsanto's president and CEO
followed a five-month search conducted by the global executive search
firm Spencer Stuart. "We were in the fortunate position of having a
highly qualified candidate within the company," AtLee said. "Even so, the
board of directors agreed that we had the responsibility to interview
external candidates. Several excellent and qualified candidates were

"But in the end, our conclusion is that Hugh Grant is extremely qualified
and the best person for this job. He has done an exceptional job of
building trust internally and externally during a challenging period for
Monsanto," AtLee said. AtLee, who served as interim president and CEO
since December, will continue to serve as chairman of the board of the

The company also reconfirmed its full-year 2003 earnings per share (EPS)
guidance in the range of $1.25 to $1.40, and its second-quarter 2003 EPS
guidance in the range of $0.91 to $1.05. The full-year EPS guidance
excludes a 5-cent per share cumulative effect of adopting the asset
retirement obligations accounting standard.

Management also reiterated its expectation of generating free cash flow
in 2003 in the range of $350 million to $400 million. Management
anticipates cash from operating activities will be in the range of $530
million to $560 million, and that cash used in investing activities will
be in the range of $160 million to $180 million. For a reconciliation of
projected free cash flow for 2003, see the company's first-quarter 2003
financial results news release issued April 30, 2003.

AtLee and Grant will host a brief conference call at 8 a.m. central (9
a.m. eastern) tomorrow, Friday, May 30, to introduce Grant as Monsanto's
CEO. Those interested in hearing the call may visit the company's web
site at and click on "Investors." Visitors may need to
download Windows Media Player(TM) prior to listening to the webcast.
Following the live broadcast, a replay of the webcast will be available
on the Monsanto web site for two weeks.

Monsanto Company is a leading global provider of technology-based
solutions and agricultural products that improve farm productivity and
food quality.

Certain statements contained in this release, such as statements
concerning the company's anticipated financial results, current and
future product performance, regulatory approvals, currency impact,
business and financial plans and other non-historical facts are "forward-
looking statements." These statements are based on current expectations
and currently available information. However, since these statements are
based on factors that involve risks and uncertainties, the company's
actual performance and results may differ materially from those described
or implied by such forward-looking statements. Factors that could cause
or contribute to such differences include, among others: fluctuations in
exchange rates and other developments related to foreign currencies and
economies; increased generic and branded competition for the company's
Roundup herbicide; the accuracy of the company's estimates and
projections, for example, those with respect to product returns and
grower use of our products and related distribution inventory levels; the
effect of weather conditions and commodity markets on the agriculture
business; the success of the company's research and development
activities and the speed with which regulatory authorizations and product
launches may be achieved; domestic and foreign social, legal and
political developments, especially those relating to agricultural
products developed through biotechnology; the company's ability to
continue to manage its costs; the company's ability to successfully
market new and existing products in new and existing domestic and
international markets; the company's ability to obtain payment for the
products that it sells; the company's ability to achieve and maintain
protection for its intellectual property; the effects of the company's
accounting policies and changes in generally accepted accounting
principles; the company's exposure to lawsuits and other liabilities and
contingencies, including those related to intellectual property,
regulatory compliance (including seed quality), environmental
contamination and antitrust; the company's ability to fund its short-term
financing needs; general economic and business conditions; political and
economic conditions due to threat of future terrorist activity and
related military action; and other risks and factors detailed in the
company's filings with the U.S. Securities and Exchange Commission. Undue
reliance should not be placed on these forward-looking statements, which
are current only as of the date of this release. The company disclaims
any current intention to revise or update any forward-looking statements
or any of the factors that may affect actual results, whether as a result
of new information, future events or otherwise.

                                  PART III
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TITLE:  Hugh Grant - President And Chief Executive Officer Monsanto Company
SOURCE: Monsanto, USA, Media Release
DATE:   May 29, 2003

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Hugh Grant - President And Chief Executive Officer Monsanto Company

Hugh Grant was born March 23, 1958, in Larkhall, Scotland. He earned a
bachelor's of science degree in agricultural zoology with honors at
Glasgow University. Grant also earned a post-graduate degree in
agriculture at Edinburgh University, and a master's of business
administration at the International Management Centre in Buckingham,
United Kingdom.

He joined the former Monsanto Company in 1981 as a product development
representative in Scotland, and spent the first 10 years of his career
with Monsanto's agricultural business in a variety of European sales,
product development and management responsibilities. In 1991, Grant
relocated to St. Louis as global strategy director of the agriculture
division and was responsible for global management of the Roundup
herbicide franchise. In 1995, he was named Monsanto's managing director
for the Asia-Pacific region, where he had responsibility for the
company's agriculture, nutrition and pharmaceutical businesses in
Southeast Asia.

In 1998, Grant was named co-president of the company's agriculture
division. In this position, he jointly oversaw global business operations
and led the business and product strategy. As the co-president, he
reported to the president of Monsanto and was responsible for the
operational and commercial performance of all agriculture division
business units and brands worldwide. In this role, he also formulated the
long-term business strategy that led to an integrated product portfolio
platform of chemistry, seeds and biotechnology traits.

Since 2000, Grant served as the company's executive vice president and
chief operating officer with overall responsibility for leading the
operations and performance of the commercial seed, chemistry and
biotechnology traits businesses inclusive of sales and marketing,
information technology, distribution and manufacturing worldwide. During
this time, Grant regularly represented the company to the financial
community and with the media.

Grant is a board member of the International Policy Council (IPC) on
Agriculture, Food and Trade; a member of the executive committee of the
Microcredit Summit Campaign; an international advisory board member of
the Scottish Enterprise; and a 2001-2003 board member of The United Way
of Greater St. Louis.


European NGO Network on Genetic Engineering

Hartmut MEYER (Mr)
Kleine Wiese 6
D - 38116 Braunschweig

phone:  +49-531-5168746
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