Financial Times (London)
August 19, 2002,

Monsanto scales down hopes on GM foods: Company assumes no progress on approval before 2005

By CAROLINE DANIEL

Monsanto has dealt a blow to the biotech industry by accepting that it
could take at least until 2005 to gain regulatory approval in either Europe
or Brazil for its genetically modified products.

In an interview with the Financial Times, Hendrik Verfaillie, chief
executive, said Monsanto needed to be more transparent about its growth
assumptions.

"We are assuming no progress in Europe until 2005 . . . We are trying to be
conservative. It is better to under-promise than under-deliver, I have
learned. I don't like earnings revisions, they are painful," he said.
Although Monsanto has not given up hope of eventual approvals and will
continue to press for GM crops, its decision not to include progress in
Europe and Brazil in its forecasts to 2005, marks an admission that it
underestimated the depth of hostility from environmental groups to GM foods
and the pressures on governments to stop their production.

Monsanto had been unique in the industry in betting that biotechnology
would take off quickly. Its admission could prompt rivals such as DuPont
and Syngenta to rethink plans for expansion outside the US.

Although Monsanto's rivals are starting to be more active in biotechnology,
Mr Verfaillie said he was surprised they hadn't been quicker to do so, as
growth is expected to slow for agricultural chemicals. "I'm somewhat
surprised. They have access to the same data as we do."

The company has become more vulnerable to investor pressure since
Pharmacia, the US drugs company that merged with Monsanto in April 2000,
last week spun out its 84 per cent stake in the group to its shareholders.
Management credibility was dented by a profits warning in June.

Mr Verfaillie is pinning his hopes on a change of heart in Europe. "We like
what has happened with elections in Denmark, France and Holland and
hopefully in Germany, which will lead to more science-based decisions," he
said.

The company must also manage the decline of its flagship product, RoundUp
herbicide, which dominates profits. It warned that if the price or volume
falls of RoundUp "deviate significantly from our previous experience, we
will need to consider additional changes to our business model".

Mr Verfaillie also addressed fears of a further writedown of its Latin
American operations. "We have taken very aggressive actions and believe
these will be sufficient. I don't think there will be any further
writedowns. There is no second shoe to drop."