Monsanto 1Q17 Earnings Call Notes

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10x as much VC investment in Ag as 5 years ago

“Our desire to expand the strong innovation core also stems from the myriads of game changing opportunities that we see in the horizon. We are very clearly entering a new era in agriculture. Hundreds of new entrants invested more than $4.5 billion of venture capital in agriculture in 2015, which is more than 10x the investment from just 5 short years ago. More players than ever are seeking to provide new technologies to growers to enhance productivity, both profitably and sustainably”

Brett Begemann

Growth in planted corn acres in Brazil and Arg

“n the first quarter, we saw greater than 25% increase in planted corn acres in Argentina and more than a 10% increase in corn acres planted in Brazil. This was accompanied by double-digit price increases and corn germplasm and local currency in both countries.”

Able to take price to offset some currency losses

” the change in the currency relationship created part of the opportunity to reach for some of the pricing improvements around double-digits. And by all means even double-digit did not bring back everything that we lost from the past with the currencies. So there is potential opportunity as we continue to look to the future there. At the same time what I think just are more important is the continued performance of our products down there. Intacta continues to do incredibly well.”

Pierre Courduroux

Strength in Southern Hemisphere business

” ongoing results came in better than the prior year on the strength of our Southern Hemisphere business. Our soybean gross profit is up by approximately 50% in the first quarter with 6 points of gross margin improvements, led by Intacta penetration and currency benefits. Corn gross profit grew by more than 30% due primarily to double-digit price mix lift in local currency in both Brazil and Argentina and from strong growth in acres planned in both countries.”

Robb Fraley

Should see gene edited products com into the market place by the middle of the next decade

“Sure, thanks. And it’s great question, PJ. So, may be just a little bit of background on the gene editing commentary. So, I think first of all as you recognize there is a variety of gene editing tools. There is protein base. There is nucleic acid base. And just in the last few weeks, there has been a couple of publications on two brand new gene editing systems that have been discovered. In any case, what these tools allow you to do is to go in and precisely change basically any base pair or any gene in the crop. And so there are very powerful tool for making precise changes. I think the other thing that’s important to highlight is you still need a world class breeding engine, a testing network in order to identify and evaluate the best combinations and those gene-editing traits are going to be introduced into corn and soybean and cotton stacked with the biotech traits that are defining the marketplace today. So, we see them very complementary to the breeding and trait engines that we have developed. And I think they will allow us to further accelerate that rate of gain. And I think the fact that we have now concluded licensing agreements with some of the major players and innovative technologies puts us in a great position to take advantage of these products. I mean some of the first gene editing products and some of the smaller crops are working their way through the regulatory system. As I indicated in my comments, we are now fully utilizing these tools and certainly by the beginning or middle of the next decade we will see these gene-editing products work their way into the marketplace. Really an exciting technology and I think we have created a strong position moving forward into the space.”