Agro Perspectiva

Monsanto's Enhanced Product Strategy Creates Momentum; Industry-Leading Products Poised to Deliver for Farmers, Company

06.05.2010 11:32 "Agro Perspectiva" (Kyiv) — Monsanto Company’s (NYSE: MON) enhanced product strategy will serve as the backbone of expected unit volume growth to drive its mid-teens earnings growth opportunity, Chief Financial Officer Carl Casale will tell investors today at the UBS Global Agricultural Chemicals and Seed/Biotech Conference in New York. In discussing last month’s announcement that Monsanto expects to emerge from the current fiscal year positioned for annual earnings per share growth in the mid-teen percentages, Casale will say the company’s customer-centered product strategy is designed to enable volume growth through both upgrades on existing acres and by winning new customers. Together with a new pricing approach, the company expects this to deliver a positive mix effect across Monsanto’s U.S. branded corn portfolio that will increase the average gross profit per acre and improve profit margins. «We’ve listened to farmers and they’ve spoken clearly: they want the best-in-class technologies Monsanto delivers but they need us to minimize their risk. We are making strong moves to address that need, which is in the best interest of our business and theirs,» Casale said. «Our strongest competitive advantage lies in our products, and when we give our products the opportunity to shine on farm, we see significant opportunity.» The lynchpin of Monsanto’s product strategy revolves around offering a broader range of products and price points, supported by a pricing approach that encourages early adoption and creates significant new opportunity. Delivering the right technology fit for farmers will create the penetration Monsanto expects across its product line, spurring momentum and supporting unit-volume growth, Casale will say. «The power of trial is critical, whether introducing traits or new products as we are this year,» Casale will say. «The seed investment is one of the most important choices a farmer makes. We want to enable farmers to experience what our products can do on their farms, because we’re confident that when they do, they’ll also see more profit potential.» The key elements of Monsanto’s new product strategy are: Monsanto will offer the top-performing, lowest-refuge product in each segment, creating more choices for farmers. Monsanto’s corn product line-up features the industry’s only reduced refuge family of products. That family will be led by the flagship Genuity® SmartStax™, which will be deployed in the highest-yielding core of the Corn Belt, maximizing farmers’ returns with elite genetics and a 5 percent refuge. Outside of the high-yielding core, the strategy will be led by Genuity® VT Double PRO™ and Genuity® VT Triple PRO™, both delivering superior genetics and reduced refuge, maximizing plant protection and yield. Monsanto’s industry-leading technology will be priced to support trial and adoption. Monsanto is using a proven pricing strategy that creates the opportunity for farmers to plant its newest biotech traits on more acres while reducing the upfront risk. This creates more price points and gives farmers the opportunity to see product performance on their farm. Casale will note that the strategy also aligns well with Monsanto’s gross margin priorities by aligning the incremental cost of goods for the company’s newest technologies with the incremental value they deliver in each geographic segment.