What Should An Agricultural Company Do for Agriculture?

Remarks by Carl Casale, Executive Vice President, North America/Latin America North, Monsanto Company, at American Farm Bureau Federation Annual Meeting, Nashville, TN, Jan. 9, 2006

Bob (Stallman, AFBF President), thank you for that gracious introduction and I'm very pleased to have the opportunity to speak to this group today.

I was told that there are about 1000 people attending this luncheon today, which is a tribute to the Secretary of Agriculture. If anyone wants to know what it is like to be the warm up for the main act, please come see me after lunch.

Before I begin my comments today, I'd like to recognize two of the people here today. The Farm Bureau president from my home county in Oregon is here. He's also my dad Joe Casale Jr. Attending with him is his wife and better half, Gerry.

I'd like to start by not talking my company but by talking about the people I work with. I'm fortunate to work with 17,000 colleagues from around the world with diverse backgrounds. Some come from farming backgrounds and some didn't gain exposure to agriculture until they came to Monsanto.

However, the 17,000 employees at Monsanto share something in common with the 1000 people in this room. We have all chosen agriculture as our profession.

This common bond creates mutual dependence. American farmers can only be successful if companies like Monsanto continue to bring you innovative new products.

Likewise, as a company that is solely involved in agriculture, Monsanto can only be successful if American farmers are profitable.

Now while this relationship may seem obvious, it doesn't make it easy. But as with any relationship, it all starts with communication.

We now bring 10-15 farmers to St. Louis almost every day in the winter to tour our facilities and meet with management. I attend one or two of these sessions every week.

Rule number one of feedback is that it needs to be candid and I am pleased to report that farmers don't disappoint.

Sometimes we hear things that are quite positive and sometimes we don't. Not surprisingly we learn the most from honest and candid feedback.

It takes time and energy to provide this and we greatly appreciate it.

I'll never forget a call from an irate customer that I received 10 years ago. I was sitting in my office in Roseville, California when he called about a pricing issue. It wasn't a pleasant call.

I listened quietly as he vented for about 10 minutes. When he exhausted himself, he paused and said, "I doubt that you enjoyed this call."

I told him that he was correct. He then pointed out that he cared enough about our relationship to call. He also pointed out that the day he didn't call, was the day I'd lost a customer.

That point has never left me. If someone cares enough about our relationship that they take the time to give me honest feedback, then I care enough to listen.

As we have received feedback and it has become apparent there is a difference between how we have seen ourselves and how farmers see us.

We viewed ourselves as just an agricultural company from St. Louis bringing new products to market that were based on sound science and customer benefits. If our new products provided value, farmers would buy them, we would have more money to invest in new technology, and our owners would get a fair return. This model had worked well for almost 50 years.

It was a pretty simple world.

Unfortunately, that is not how farmers and perhaps some of you saw us. They saw us as an agricultural leader with revolutionary technology that was changing the way they farmed.

Clearly there were expectations of us that we needed to understand better.

So we decided to take the next step and conducted a survey to further understand these expectations. Perhaps some of you in this room actually participated in this survey. We asked a simple question. "What can we do to meet your needs?"

The feedback from the survey centered on three key themes:

  • Concern about our pricing policies
  • The need for continued investment in new products, and
  • The expectation that Monsanto should invest more to enhance the image of American farmers.

So in summary we heard that farmers want us to charge less for our technology while investing more in research and development for new products. In addition, they would like us to invest in championing agriculture and the American farmer.

This "ask" highlights our dilemma and that is - how do we balance competing needs. The result of lower revenue will be less money to invest in research. And investing less in agricultural research is against both of our best interests.

Here is what we are committed to:

  • We are committed to pricing our products to allow US farmers to capture a significant portion of the value created by our technology and products.
  • We are committed to investing in new technologies that will make farmers more profitable.

In a recent study published in a scientific journal, Ag Bio Forum, researchers found that for the years 1996-2004, biotech crops increased US farmer income by 10.8 billion dollars cumulatively.

We believe this is a strong demonstration of the benefits that our products have brought American producers.

While we may not always agree on pricing, I do believe we have a shared vision on the future of agriculture in America.

This is evidenced by the second theme that emerged in the survey. Farmers want additional innovative products to increase productivity. They also want the opportunity to grow value added crops.

It is your vision and it is our vision.

Agricultural innovation is who we are and what we do. We are very proud of our history of our technological innovation. This has been true since the 1950s, when we pioneered the field of pre-emergence herbicides and saw Lasso become the largest selling herbicide in the U.S. for several years. In the 1970s, we introduced Roundup, which has become the cornerstone of weed control programs.

Each of these new products was a breakthrough innovation and each innovation provided the resources and funding to create the next.

Research is a risky business - just like farming. And like farming your best efforts are not always rewarded.

The uncertainty of agricultural research was most evident in the early 1980s, when some brave (some said foolish) people at Monsanto made the commitment to invest heavily in plant biotechnology.

They believed that it could bring significant value to farmers by reducing costs and increasing yields. However, the only challenge was that it had never been done before and there was no certainty that a product would ever be introduced.

Fortunately, the first biotech products were very successful. They also funded the development of the next generation. Improvements of our weed control and insect protection technologies are underway.

New generations of Roundup Ready traits are in development, along with a dicamba-tolerant trait we are developing with the University of Nebraska.

Likewise, our YieldGard and Bollgard insect protection have been improved. We are adding new generations of those products to expand the spectrum of pests that can be controlled without chemicals.

In fact, Monsanto has introduced at least one new product each year for the last eight years. This is a trend that we see continuing into the future. For example, fundamentally new technologies such as drought tolerance may even the odds for farmers against Mother Nature.

While it's still relatively early in our research pipeline, we are seeing some very promising results. Field trials under severe drought conditions showed that our drought tolerant corn varieties produced double digit yield advantages compared to conventional varieties.

As I said earlier, we can't be successful if you are not successful. Therefore, helping you reduce your production risk by investing in drought tolerance only makes sense.

In addition, at Monsanto we are working hard to develop value-added corn and soybeans that deliver benefits desired by processors and consumers. Already we have developed our Vistive brand of low-linolenic soybeans that provide food companies an alternative to trans fats. Products made with this oil are hitting the grocery shelves as we speak.

Furthermore, because of the value manufacturers and processors see, these improved soybeans have resulted in a premium to growers who produce them.

We expect an increase to 500,000 planted acres in 2006 from 100,000 acres planted in 2005.

American farmers are working to decrease our dependence on foreign by producing corn for ethanol and soybeans for bio-diesel. We are contributing by breeding corn that produces more ethanol and these corn hybrids are already available. We have a similar research effort underway in soybeans.

As strong supporters of bio-fuels we have partnered with your commodity groups to promote these new products.

These new products are made possible by a patent system that encourages and rewards innovation. Intellectual property rights protection ensures that there is incentive to take the risk necessary to invent breakthrough new products.

Earlier, I mentioned that the third theme that emerged from our survey was your desire to see Monsanto step up and advocate for agriculture. You have very high expectations of us in this area. We're glad that you do. Again, we've also chosen agriculture as our profession and thus we're proud to promote the American farmer.

We have committed major financial support to the America's Heartland TV series and we also have increased our support to Ag in the Classroom.

Today's schoolchildren are now five generations removed from actually seeing the production of the food that they eat and the fiber that their clothes are made from. Each generation knows less and less about what it takes to grow food and fiber. That makes them more and more likely to support political programs that adversely affect your ability to succeed.

Many of them still have images of farmers in bibbed overalls holding a pitchfork. Even more don't even know what a pitchfork is. They need to know how innovative and efficient that America's farmers really are today. It's an important message that we care about and I know all of you here at American Farm Bureau also care.

We really wanted to help tell your story so we turned over development of the editorial content for America's Heartland to some of the major commodity groups in the US who represent you. And then we stepped away.

Since then, the series has been very positively received by the farming community and has even been described by some farm leaders as "ground-breaking."

A vital component of advocating for American agriculture is working to ensure the future of our industry. I know you are concerned that young people are choosing to leave the farm.

I am happy to tell you that Monsanto has been supporting youth in agriculture for decades. We have long had a scholarship program to encourage careers in agriculture and we have recently increased our scholarship fund. We have also increased our level of support for FFA, 4-H, AFA and other youth oriented programs.

I started my talk today by telling you that communication is a vital part of any relationship.

We asked - and we heard loud and clear - that farmers want us to continue to invest in their future success. We also heard them say that they want us to become a stronger advocate for US agriculture.

We are willing to embrace this as a shared vision. However, as with any relationship, both parties have responsibility if it is to be successful.

My personal commitment to you here today is that Monsanto will continue to aggressively invest to make American farmers more productive and add value to what they grow.

I also commit to you today that our increased advocacy for American agriculture will continue.

What I ask of you is to continue to provide us with candid and direct feedback. If there's something on your mind, I want you to be willing to call on me or one of my 17,000 colleagues so we can talk it through.

With all of the options for communication today, the simple conversation is rapidly becoming a lost art. It's unfortunate because it's the most effective form, especially on the tough issues.

If we can effectively communicate we can be successful in achieving our shared vision. And when we have achieved that, American consumers will appreciate that they enjoy the safest, most affordable food supply on earth. But most importantly, we will have created a positive future for the next generation of farmers.

Thank you.