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1.Drought in Brazil Could Dry Up Monsanto's Sales
2.US Cotton Farmers Subsidize Monsanto's Market Expansion in India

COMMENT

With Monsanto reporting a third-quarter net income fall of 81 percent and its shares sliding on declining revenues, the news from Brazil is the last thing its share holders will want to hear. (item 1)

Meanwhile North American farmers are likely to grow increasingly bitter at the high technology fees Monsanto is levying and the company's heavy- handed enforcement practices against farmers, compared to what the company is doing to desperately push adoption in other parts of the world. (item 2)
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1.Drought in Brazil Could Dry Up Monsanto's Sales
Media Release
For immediate release
29th June, 2005

Drought in Brazil has caused a severe 72% drop in soybean yields in the heaviest Round-Up Ready soy using state. The Polaris Institute calls on the company to review its FY06 earnings estimates that include new Brazilian sales that will begin this fall. In particular, what pricing changes should investors expect to address this crisis and how will those changes affect next year's EPS estimates?

Rio Grande do Sul the biggest adopter of Monsanto technology has been the hardest hit by the drought. The state is also home to Monsanto's fledgling royalty collection system. Brazil’s agricultural department estimates that yields are down 72% in Rio Grande do Sul. Monsanto representative Ricardo Miranda concedes that yield losses are 80% in some areas. Soy exports from Rio Grande do Sul are expected to drop 95%.

The effects of such a severe drought are predictable. In some cases, soy crushers are halving their staff. Cargill is even closing a processing plant for a month for lack of inputs. Farmers have defaulted on one-third of the government loans so far this year.

Farmers are taking notice. The president of the Rio Grande do Sul seed association sites 25% higher crop losses in GE soy crops as compared with conventional ones. Governor of Mato Grosso (25% of national soy production) has publicly stated that he will not plant genetically modified soy next year.

"Farmers and farm groups are only now realizing the full financial impact of this drought," said Etienne Vernet, South American Research Director of the Polaris Institute. "Many Brazilian farmers who use Round-Up Ready soy will be thinking twice about it next year."

"Despite the distressing facts of a severe drought, which some farmers are blaming on Round-Up Ready soy, Monsanto has been consistently optimistic about its prospects for Brazil in FY06," said David Macdonald, Analyst with the Polaris Institute.

The Polaris Institute calls on the Monsanto to review what pricing changes investors should expect in the Brazilian market and how those changes will affect next year's EPS estimates.

Contact: David Macdonald, Tel: 613-237-1717 Cell: 613-725-7606
Etienne Vernet, This email address is being protected from spambots. You need JavaScript enabled to view it., Tel: +011 55 21 22 25 67 39
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3.US Cotton Farmers Subsidize Monsanto's Market Expansion in India
For immediate release
June 30th, 2005

Many US cotton farmers are paying a high price for Monsanto's Bt cotton technology, while the biotech giant fails to collect revenues for pirated Bt cotton varieties in India. The Polaris Institute asks if US farmers are picking up the tab for Monsanto's market expansion in India.

According to the United States Department of Agriculture (USDA), illegal Bt cotton is planted on an estimated 600,000 hectares in India, that is more than half of the country's entire area planted to Bt cotton. Approved varieties are planted on 525,000 hectares. The USDA predicts that the plantings of illegal Bt varieties will jump to 700,000 hectares for the next growing season. In 2004/05 the area of illegal Bt planted in India is equivalent to 12% of the total US cotton hectares planted.

In the US, farmers must pay a 'technology fee' when purchasing the seed from authorized Monsanto seed dealers. If they are found violating their contract with Monsanto, whether for saving seed or supplying seed to someone else, they must pay 120 times the technology fee, in addition to the St. Louis company’s legal fees.

According to an article in Nature Biotechnology (2001) illegal Bt cotton containing Monsanto's gene began to spread even before the government had approved the variety for commercial use. At the time, Monsanto's Indian director of government and public affairs, stated that the company could not take action against Navbharat Seeds the company alleged to be developing and selling the seed illegally because the Bt gene was not patent-protected in India. Monsanto gained patent protection for its Bt cotton in India in December 2004.

But this year, even with the patent protection in place, illegal varieties are spreading. The USDA reports that as many as 50 unapproved Bt varieties are being developed and sold by farmers and private seed companies, and cultivated in the country's South, Central and Northern regions.

"The pattern of profitless adoption seems to be one that Monsanto cannot avoid," said David Macdonald, Analyst with the Polaris Institute. "The company attempted this same strategy in South American with soy to the detriment of investors and farmers alike."