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Global Product Strategy The Future of the Seed Business Matthew Mouw Sr. Marketing Manager Pioneer Hi-Bred, International Inc. DuPont Agriculture & Nutrition.

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Presentation on theme: "Global Product Strategy The Future of the Seed Business Matthew Mouw Sr. Marketing Manager Pioneer Hi-Bred, International Inc. DuPont Agriculture & Nutrition."— Presentation transcript:

1 Global Product Strategy The Future of the Seed Business Matthew Mouw Sr. Marketing Manager Pioneer Hi-Bred, International Inc. DuPont Agriculture & Nutrition

2 Global Product Strategy Key Economic Factors Shaping Agriculture Population growth Rising incomes in developing countries Increased demand for higher value foods Yield growth Tighter supply and demand relationships North America is more dependent on changes in the global ag sector Brazil and China are major sources of uncertainty in world markets for many commodities Biotechnology

3 Global Product Strategy Population and Income Growth Population  Total (Million People) Percent Annual Change  Real GDP Per Capita  Total (Thousand 1990 US$) Percent Annual Change  Real GDP Per Capita  Total (Thousand 1990 US$) Percent Annual Change  Population  Total (Million People) Percent Annual Change  Real GDP  Total (Trillion 1990 US$) Percent Annual Change  Real GDP  Total (Trillion 1990 US$) Percent Annual Change  Source Information: Pioneer – Global Market Economics, PWAF

4 Global Product Strategy Per Capita Income and Meat Consumption Japan With Fish Income and Meat Consumption In general, countries with higher levels of per capita income, have higher levels of per capita meat consumption Source Information: USDA & GlobalInsight

5 Global Product Strategy Meat Consumption Increases with Income Growth Million Metric Tons US More meat is consumed in China than any other country Total meat consumption in the U.S. is expected to grow slightly faster than population, resulting in a small rise in per capita meat consumption As experienced in , animal disease outbreaks cause major disruptions in meat markets  BSE (“Mad Cow”)  Avian Influenza Source: USDA-PS&D Billion Pounds Brazi l EU-25RussiaUkraineChina

6 Global Product Strategy US Liquid Transportation Fuels 140 billion gallons of gasoline use on US roads 37.1 billion gallons of diesel used on highways 11.7 gallons of diesel used off-road (farmers use 3.2 billion gallons)  Current Ethanol production: 4.0 billion gallons (7.5 Renewable Fuel Standard by 2012)  Current estimated US biodiesel capacity: 100 million gallons per year A bag of Pioneer Seed…… Produces ~ 1,200 gals of fuel ethanol Makes 12,000 gals of E10 gasoline Biofuels: Putting the Market in Context

7 Global Product Strategy Ethanol: A major driver in new grain flow patterns # Bushels (mby)1, # Acres11,985,185 # Units4,438,957 Current MMGY3962 Potential MMGY1019 Current % of 05/06 corn production consumed: Iowa: 23% Nebraska: 21% Minnesota: 18% South Dakota: 40% 26% of US corn use by 2015

8 Global Product Strategy China and Brazil Changing the Global Soybean Market Global soybean production increased from 137 MMT to 217 MMT from 1994 to 2005  The U.S., Brazil and Argentina have led the production increases Commodity prices have not fallen due to the increase in production, as China has had to import more to meet their needs Brazilian surplus has been exported to the world market offsetting the increasing demand in China The U.S. (exporter) and the EU-25 (importer) have been relatively stable in the world soybean trade in the last decade Source Information: Pioneer – Global Market Economics, PWAF

9 Global Product Strategy Crop Demand Growth in Last Decade +12% The growth rate of world population over the last ten years+25% The growth rate of pork consumption over the last ten years+29% The growth rate of chicken consumption over the last ten years +23% The growth rate of world corn consumption over the last decade+39% The growth rate of world soybean consumption over the last decade+4% The growth rate of world crop area harvested Source: Pioneer Global Marketing - MREADS

10 Global Product Strategy Growth in Total Grain Production World Grain Consumption: Crop yields need to continue to increase to keep pace with increasing incomes, population and demand for meat If yields don’t keep pace, more area will be pulled into production Global corn area increased 4.8% since 1980; production increased 45.0% in that same time More than 130 million “virtual acres” have been created since 1980 Source Information: USDA & GlobalInsight

11 Global Product Strategy Biotechnology Acreage Increasing 4 Major Crops

12 Global Product Strategy Ag Biotechnology is Delivering Across the Board Food Sales 1st Generation Pest and Weed Control Crop Protection 2nd Generation Pest and Weed Control Multiple Pest/Weed Control Traits Offer Agronomic Traits Stress Reduction, Yield Increase Improved Feed Quality Improved Food Quality and Taste Input Providers Growers Food Mfg. Grain Processors Impact Commercial

13 Global Product Strategy Positioned to Capture Value Consumers : Solid top line and bottom line growth : Pipeline delivers expanded market, value and growth Food Feed Bio-fuels Bio-materials Value Capture Pioneer: $2.8B Revenue Solae: $1.1B Revenue Crop Protection: $2.3B Revenue Input Providers Growers Grain Processors End User Mfg. Market Insight

14 Global Product Strategy IndustrySelect® – Linking Seed to Need 2006 IndustrySelect Products by Category Strong pipeline of transgenic trait solutions for all food, feed and fuel targets Improved Animal Feed  Specific feed hybrids for faster weight gain  Targets: increased nutrient density and availability, oil modification, balanced amino acids and improved digestion  $2 billion opportunity per year Improved Food  Optimizing taste and health benefits of soybeans  High performance corn grain characteristics to meet/exceed processor specifications Increased Ethanol Production  Processors realize 2-4% ethanol yield gain More than 100 end-use account projects and $100 million in Pioneer sales

15 Global Product Strategy Bio-Based Economy Value Chain Fuels Chemicals Materials Biomass Feedstock Growth markets New products Oil Chemistry Metabolic Engineering

16 Global Product Strategy Aggressive R&D Strategy + + Elite Genetics Most extensive elite genetics pedigrees Elite Genetics Most extensive elite genetics pedigrees Rich, Balanced Pipeline Providing game changing solutions for the entire food and energy value chain Rich, Balanced Pipeline Providing game changing solutions for the entire food and energy value chain Technology Foundation for Growth Biotechnology Proprietary traits and Genomic tools Biotechnology Proprietary traits and Genomic tools Chemistry Complimentary and high value solutions Chemistry Complimentary and high value solutions + +

17 Global Product Strategy Anthracnose Stalk Rot Resistance Fungal Disease Resistance Drought Tolerance I Glyphosate Resistance Corn Rootworm Resistance II Herculex RW Herculex RW + RR2 Herculex XTRA Herculex XTRA + RR2 YGCB + YGRW + RR YGCB + YGRW + RR2 Nitrogen Use Efficiency Increased Yield I Increased Yield II Increased Ethanol Production I Increased Ethanol Production II Improved Feed I Improved Feed II Seed Production Technology Asian Soybean Rust Resistance Glyphosate + SU Resistance I Glyphosate + SU Resistance II Cyst Nematode Resistance Increased Yield I Improved Feed I High Oleic Acid Oil Omega-3 Oil Drought Tolerance II Glyphosate + SU Resistance Drought Tolerance III Corn Borer Resistance II Herculex ® I Increased Ethanol Production III Improved Feed III Improved Processing Nutrium  Low Linolenic Oil Corn Soybeans High Oleic + High Stearic Acid Oil Phase 1 Proof of Concept Phase 2 Early Development Phase 3 Advanced Development Phase 4 Pre-Launch Discovery Gene/Trait Identification Launch Farmer Processor Consumer Enabling Technology Target Markets 2005 Rich Crop Genetics Pipeline

18 Global Product Strategy 2006 Rich Crop Genetics Pipeline

19 Global Product Strategy


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