New Product Opportunities: Future Growth of Crop Biotechnology Biotechnology & Crop Production Agriculture – Background on Sector Impacts Eric S. Sachs, Ph.D. Monsanto Company At the End of the First Decade: In 2006, farmers around the world harvested biotech crops for the 11th year 11 years of commercial experience on over 1.4 billion acres demonstrates – Proven economic and environmental benefits – Solid record of safety – Promising future benefits from new products 2 Biotech Crops Can Help to Address Urgent Global Challenges Lack of reliable food Insufficient Limited source, malnutrition fresh water arable land Soil Demand for food, Biological degradation feed and fuel competition 3 Agriculture’s Imperatives FOOD: Deliver twice as much food in 2050 as is produced today. ENVIRONMENT: Reduce environmental impacts by getting more from each unit of land, water and energy devoted to crop production. CLIMATE CHANGE: Adapt to climate change by improving yield stability in the face of climate stress. ECONOMIC SUCCESS: Deliver economic benefits for all farmers, small and large. 4 The Environmental Challenge: The Role of GM Crops 53rd Brazilian Congress of Genetics, Águas de Lindóia, S.P., Brazil, September 2, 2007 “Producing the food for the world’s 6.6 billion people on 20% less land than when the world population was 2.5 billion has, as we have seen, been possible though a combination of selection, breeding, improved irrigation systems, soil conservation, and the judicious application of fertilizers.” “Certainly the more productive the lands devoted to agriculture may be, the less pressure will be felt on the remainder – high agricultural productivity in this sense leads directly to the preservation of biodiversity.” “Rational approaches to agriculture and food technology should lead gradually to the acceptance of GM and other technologies and to their widespread use to help solve the many problems of agriculture.” Peter H. Raven, President, Missouri Botanical Garden, St. Louis [email protected] 5 of BreedingandBiotech DevelopmentPathways Success willDepend onaContinuedApplication Germplasm Genes DISCOVERY GENOMICS MARKERS PHASE I BIOTECHNOLOGY ELITE GERMPLASM BREEDING PHASE II IT PLATFORM PHAS ANALYTICS E III PHASE IV COMMERCIAL Seed SoldToFar m ers 6 Future Products from Ag Biotech OmniSoy CRWIII HBC a’ Bt/RR2 SCN Yield I YGVT PRO Stacks Soy Protein High Processing: Rust Stearate High Oil Soy RR2Y Drought II Feed: HVS Dicamba Disease Mavera™ high-value corn with lysine Cold 2008 2009+ Yield Nitrogen YGVT Stacks Drought I Lygus Omega-3 BG3 Water usage efficiency Germplasm Gains Dicamba Extrax™ corn processing system* RR2+ Yield HS Canola Modified Oil Canola CORN OILSEEDS COTTON Commercialization dependent on many factors, including successful conclusion of regulatory process7 * Renessen product; Renessen is a Monsanto/Cargill joint venture Innovations in Ag Technology Will Continue to Increase Yield Productivity Advances Assisting in Protecting and Boosting Yields 300 ) e 250 200 150 Average U.S. 100 Corn Yield in Average Corn Yield 50 (in bushels per acr 2007 was 151 Bushels Per 0 1970 1990 2010 2030 Acre Historical Yield Data 30-Year Trend, Based on Historical Yield Data INNOVATIONS IN AG TECHNOLOGY THROUGHOUT THE VALUE CHAIN CONTRIBUTE TO YIELD GAIN 8 Innovations in Ag Technology Will Continue to Increase Yield Productivity Advances Assisting in Protecting and Boosting Yields 300 ) e 250 Sizable Gains 200 Will Be Realized 150 From Marker- Assisted 100 Breeding Average Corn Yield 50 (in bushels per acr 0 1970 1990 2010 2030 Historical Yield Data 30-Year Trend, Based on Historical Yield Data Molecular Breeding Benefit INNOVATIONS IN AG TECHNOLOGY THROUGHOUT THE VALUE CHAIN CONTRIBUTE TO YIELD GAIN 9 Innovations in Ag Technology Will Continue to Increase Yield Productivity Advances Assisting in Protecting and Boosting Yields 300 ) Grain Yield e 250 Potential in 200 2030 150 100 Average Corn Yield 50 (in bushels per acr 0 1970 1990 2010 2030 Historical Yield Data 30-Year Trend, Based on Historical Yield Data Molecular Breeding Benefit Biotechnology Yield Benefit INNOVATIONS IN AG TECHNOLOGY THROUGHOUT THE VALUE CHAIN CONTRIBUTE TO YIELD GAIN 10 Driving Yield Higher Depends on Stacking Traits Rain Shelter Trial Corn Plot at A Monsanto Research Site Soil-applied RW Protection RW Protection HT CB Protection +CB Protection +CB Protection Yield = 94 bu/ac +HT +HT +HT Yield = 113.7 bu/ac Yield = 150 bu/ac Yield = 198.1 bu/ac Roundup YieldGard® Corn Borer YieldGard Corn Borer with YieldGard Plus with Ready® with Roundup Ready Roundup Ready Corn 2 Roundup Ready Corn 2 Corn 2 + Force® insecticide Corn 2 11 Corn Rootworm Protected The drought of 2002 Corn is Helping to Maximize reduced the value of US Yield Under Drought corn harvest by over $2 b Conditions Av Yield = 129 bu/A 2002 Harvest value = $10.32 b Rootworm-Protected Corn Av Yield = 160 bu/A 2004 Soil Insecticide Harvest value = $12.8 b 12 Corn Drought Event Offers Visual Evidence of Increased Yield in Stressed Conditions DROUGHT-TOLERANT CORN FAMILY: Lead Project COLLABORATION WITH Drought-tolerance family aimed at providing consistent yield and buffering against effects of water limitations Targeting 8-10% yield improvement in water-stress environments SUPERIOR, NE FIELD TRIALS – 2007 2007 FIELD TESTING SHOWS VISUAL PROOF OF YIELD IMPROVEMENT Water stress exposure during different stages of development can have significant effect on corn yield; Monsanto’s lead drought-tolerance trait shows a significant yield advantage compared with controls under CONTROL HYBRID WITH GENE drought stress (76 BU/AC) (94 BU/AC) Discovery Phase 1 Phase 2 Phase 3 Phase 4 Launch Proof of Concept Early Development Adv. Development Pre-Launch 13 Second-Generation Corn Leads Advancing Rapidly COLLABORATION Phase 2 Gene Leads Work To Improve Ways Plants Use Water WITH POLLEN GROWTH CONTROL Neg PLANT + GENE C Pos 0 0.5 1 1.5 2 2.5 GROWTH 1 2 UNDER SILK POLLEN - SILK DATES DROUGHT EXPANSION PHOTOSYNTHESIS EFFICIENCY + GENE A CONTROL Efficiency, LIGHT ENERGY in Drought LOSS 0.3 25% + GENE B 0.25 0.2 0.15 ROOT 0.1 MASS 0.05 IMPROVEMENT, 0 LEADING TO BETTER WATER UPTAKE ENERGY CONTROL + GENE D BUILDING A FAMILY OF GENES CONVEYING DROUGHT TOLERANCE 14 Drought Tolerant Cotton is in Early Development Drought Tolerant Cotton • Drought leads advancing to greenhouse screens • First leads in field testing are showing promise • Up next: Continued evaluation to assess drought performance GENE 1 GENE 2 WITH GENE CONTROL WITH GENE CONTROL AS PHASE 1 PROJECT, TESTING MULTIPLE GENES FOR IN-FIELD PROOF OF CONCEPT Discovery Phase 1 Phase 2 Phase 3 Phase 4 Launch Proof of Concept Early Development Adv. Development Pre-Launch 15 Nitrogen Use Efficiency Leads Show Yield Improvement Under Normal Nitrogen COLLABORATION •Targets ways to WITH use nitrogen more efficiently, LEAD PERFORMANCE UNDER NORMAL NITROGEN CONDITIONS exploring potential to boost yield 12 10 (bu/A) * under normal e 8 * * * s * * * nitrogen conditions a 6 4 cre or stabilize it in n 2 low nitrogen 0 -2 environments Yield I TRIALS IN MULTIPLE TRIALS IN MULTIPLE HYBRID BACKGROUNDS HYBRID BACKGROUNDS •Under normal (16 LOC) (15 LOC) nitrogen 2005 YIELD 2006 YIELD TRIALS: 2007 YIELD TRIALS: conditions, lead TRIALS: SUFFICIENT N LEVELS SUFFICIENT N LEVELS (23 LOC trait has TOTAL) (37 LOC TOTAL) (20 LOC TOTAL) demonstrated yield 2005 2006 2007 advantages in Statistically significant @ p≤0.10 multiple *Bar color correlates with the specific hybrid background tested. Same bar color in backgrounds over different tests and different years indicates same hybrid was used. multiple years All trials conducted under sufficient nitrogen application levels. Discovery Phase 1 Phase 2 Phase 3 Phase 4 Launch Proof of Concept Early Development Adv. Development Pre-Launch 16 2nd Generation RR Soybean Offers Yield Advantage Roundup RReady2Yield™ Soybeans Near-Isoline Comparisons: RR2Y vs. 12% Roundup Ready® ease 10% r 11% 8% • Compared with Roundup Ready® 9% 9% 6% soybeans, this new technology along with 7% 7% conventional and molecular breeding is 4% expected to deliver increased yield 2% • Roundup RReady2Yield™ soybeans offer Over Roundup Ready 0% Percent Yield Inc 7% - 11% yield advantage based on three 2004 2005 2006 2007 4-YEAR years of field comparisons* AVG Roundup RReady2Yield soybeans yield 7 to 11 percent • Four years of data continue to validate higher than Roundup Ready® soybeans based on 73 7-11% yield advantage Monsanto field trials from 2004 to 2007. Discovery Phase 1 Phase 2 Phase 3 Phase 4 Launch Proof of Concept Early Development Adv. Development Pre-Launch See notes on Roundup RReady2Yield on slide 24. Yield estimates based on average yields of 64 bu/a obtained in 2004. Lower yielding environments may not see the same level of yield increase. 17 * This range represents a 95% statistical confidence interval. Individual results may vary, and performance may vary from location to location and from year to year. Intrinsic Yield Soybeans Aimed at an Additional Yield Boost COLLABORATION Higher-Yielding Soybeans WITH 2007 HIGHER YIELDING SOYBEAN • Higher-yielding soybeans AGRONOMIC TESTING VERSUS CONTROLS aimed at boosting Percent yield difference vs. control 6.0 intrinsic yield rol) 7.1% 6.2% 6.2% 6.2% 6.1% potential of 5.0 soybeans Product through 4.0 Concept insertion of Target Range key genes 3.0 • Trait will be 2.0 stacked on top 1.0 of RR2Y and other soybean- Average Yield Advantage 0.0 pipeline traits (Bu/A Increase Over Cont EVENT 1 EVENT 2 EVENT 3