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VIEW FROM THE TOP
MONSANTO CONTINUES TO EXPAND ITS SEED BUSINESS
Name: Dennis Plummer
Title: President, American Seeds
Inc., subsidiary of Monsanto, St. Louis, MO. Started his career with Butler Manufacturing Co. then moved to Pfizer Genetics before joining Monsanto in 1980.
Education: B.A. from Monmouth College (IL), M.S. from St. Louis University.
Responsibilities: Oversees the seed companies owned by Monsanto's American Seeds Inc. subsidiary.

AM: Why did Monsanto form its new American Seeds Inc. (ASI) subsidiary?
DP: ASI was a means to provide regional seed companies with capital and to directly connect their product development efforts with Monsanto's technology pipeline. In turn, these regional seed companies will provide more growers with improved products and more choices.

What started out as an idea just 18 months ago has become a $200 million business unit for Monsanto.

AM: What have been its activities to date?

DP: ASI acquired Channel Bio (Crows, Wilson, Midwest) in November 2004, NC+ in March 2005, "Core Group" companies (Fontanelle, Stewart, Trelay, Stone); Specialty Hybrids in September 2005; and Gold Country Seed and Heritage Seeds on March 1, 2006.

AM: How is a seed company managed following its purchase by ASI?

DP: ASI retains the management team of the acquired company. The management team of the regional seed company collaborates with ASI management to develop a budget and business plan and then executes that plan. ASI works to provide the regional seed company with the best possible germplasm and biotechnology traits, along with any corporate services that improve business performance.

AM: What does ASI look for when considering the purchase of a seed company?

DP: We have a set of criteria that are important to us which would include geographical footprint, sales/marketing capabilities, financial performance and management culture/talent.

Each acquisition is different because of the unique circumstances of how companies are organized and the goals of its owners. For example, in some acquisitions, we purchased only the commercial operations, the brand name and sales/marketing organizations. Some owners prefer to retain the production facilities and in those cases we have contracted our seed production with them.

AM: How does ASI determine a value of a seed company?

DP: We use all the standard financial metrics, ratios and multiples. It is important that we develop a realistic business plan to use the acquired company to grow earnings and make the investment accretive to shareholders.

AM: What are ASI's measure(s) of success?

DP: Monsanto wants ASI and its regional seed companies to reach more farmers with more new products. In doing so, farmers can be more profitable and Monsanto earns a better return on its significant investment in R&D.

We want the businesses to grow, but don't have unreasonable expectations. As a guideline, we want them to keep pace with Monsanto's overall growth rate over recent years. (Note: Monsanto top line growth in the past two years has averaged 13 percent).

AM: Two of Monsanto's other brands, Dekalb and Asgrow, are also active in the marketplace where ASI companies are operating. How is that handled?

DP: On occasion, the brands will run into each other. However, we believe the national and regional brand approach is more complimentary than competitive. Dekalb is Monsanto's largest brand and even though it has nearly doubled its share in the past five years, it still has only 16 percent of the U.S. seed corn market. So there are still many more acres that we can be serving.

The marketing activities of ASI and Monsanto's other brands are completely separate. The directors that run Monsanto's major business units meet monthly, but individual seed company marketing programs are not discussed.

AM: Going forward, what does it take to be successful in today's seed business?

DP: Seed is a local business and in most cases based on trust between the farmer and the seed provider. ASI is a vehicle to link the strengths of the local market approach of the regional seed company with the new products and technology coming from the Monsanto pipeline.

Seed choice is considered by growers to be their most important crop decision. It is analogous to how one invests money. Like the individual investor who chooses a financial advisor he/she can trust, we believe farmers rely on their seed suppliers for the brands/hybrids in which they should invest. It is our intention to provide the farmer with that trusted advice and the products they need to remain competitive in our global ag economy.


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