<PAGE>

Financial Section CONTENTS
-------------------------------------------------------------------------

MANAGEMENT REPORT
Page 24

FINANCE COMMITTEE REPORT, INDEPENDENT AUDITORS' REPORT
Page 25

STATEMENT OF CONSOLIDATED INCOME (LOSS)
Page 26

STATEMENT OF CONSOLIDATED FINANCIAL POSITION
Page 38

STATEMENT OF CONSOLIDATED CASH FLOW
Page 40

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
Page 41

STATEMENT OF CONSOLIDATED SHAREOWNERS' EQUITY
Page 45

NOTES TO FINANCIAL STATEMENTS
Page 47

FINANCIAL SUMMARY
Page 61

"Monsanto" and "the company" are used interchangeably to refer to
Monsanto Company or to Monsanto Company and consolidated subsidiaries,
as appropriate to the context. Unless otherwise indicated, "earnings per
share" means diluted earnings per share. In tables, all dollars are in
millions, except per share data.

EBIT (earnings before interest expense and income taxes) and EBITDA
(earnings before interest expense, income taxes, depreciation and
amortization, and excluding unusual charges) are used as financial
performance measures throughout this publication. For Monsanto's
business segments, EBIT also excludes the effects of unusual charges.

MANAGEMENT REPORT

Monsanto Company's management is responsible for the fair presentation
and consistency, in accordance with generally accepted accounting
principles, of all the financial information included in this annual
report. Where necessary, the information reflects management's best
estimates and judgments.

     Management is also responsible for maintaining a system of
internal accounting controls with the objectives of providing reasonable
assurance that Monsanto's assets are safeguarded against material loss
from unauthorized use or disposition and that authorized transactions
are properly recorded to permit the preparation of accurate financial
information. An important consideration in this regard is the cost of
control vs. the risk of loss. The effectiveness of internal controls is
maintained by personnel selection and training, division of
responsibilities, establishment and communication of policies, and
ongoing internal review programs and audits.

     Management believes that Monsanto's system of internal accounting
controls as of Dec. 31, 1998, was effective and adequate to accomplish
the objectives described above.


/s/ Robert B. Shapiro

Robert B. Shapiro
Chairman and Chief Executive Officer



/s/ Gary L. Crittenden

Gary L. Crittenden
Senior Vice President and Chief Financial Officer

Feb. 26, 1999

24  1998 Monsanto Annual Report
<PAGE>
<PAGE>

------------------------------------------------------------------------

FINANCE COMMITTEE REPORT

The finance committee, composed of four nonemployee members of the board
of directors, reviews and monitors Monsanto's financial planning and
structure to ensure compatibility with the company's requirements for
growth and sound operations. This committee provides advice regarding
the worldwide financing programs of the company and specific financing
plans as requested by management. The finance committee makes
recommendations to the board of directors concerning the increase or
retirement of debt, issuance and repurchase of capital stock, foreign
currency management, dividend policy, and commercial and investment
banking relationships. The committee also oversees operation of the
company's pension and benefit plans, and monitors investment performance
of the plans.

     The finance committee met eight times during 1998. As part of its
duties, the committee reviews and monitors Monsanto's internal
accounting controls, financial reports, accounting practices, and the
scope and effectiveness of the audits performed by the independent
auditors and internal auditors. The committee also recommends to the
full board of directors the appointment of Monsanto's principal
independent auditors, and it approves in advance all significant audit
and nonaudit services provided by such auditors. As ratified by
shareowner vote at the 1998 annual meeting, Deloitte & Touche LLP was
appointed independent auditor to examine, and to express an opinion as
to the fair presentation of, the consolidated financial statements. This
report follows.

     The finance committee discusses audit and financial reporting
matters with representatives of the company's financial management, its
internal auditors, and Deloitte & Touche. The internal auditors and
Deloitte & Touche meet with the committee, with and without management
representatives present, to discuss the results of their examinations,
the adequacy of Monsanto's internal accounting controls, and the quality
of its financial reporting. The committee encourages the internal
auditors and Deloitte & Touche to communicate directly with the
committee.

     The finance committee has reviewed the financial section of this
annual report. Pursuant to the recommendation of the committee, the
board of directors has approved the financial section.


/s/ John S. Reed

John S. Reed
Chair, Finance Committee

Feb. 26, 1999

INDEPENDENT AUDITORS' REPORT

To the shareowners of Monsanto Company:

We have audited the accompanying statement of consolidated financial
position of Monsanto Company and subsidiaries as of Dec. 31, 1998 and
1997, and the related statements of consolidated income (loss), cash
flow, shareowners' equity and comprehensive income (loss) for each of
the three years in the period ended Dec. 31, 1998. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

     We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

     In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Monsanto
Company and subsidiaries as of Dec. 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the three years in
the period ended Dec. 31, 1998, in conformity with generally accepted
accounting principles.



/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
St. Louis, Missouri

Feb. 26, 1999

                                       1998 Monsanto Annual Report  25

<PAGE>
<PAGE>

<TABLE>
Statement of Consolidated INCOME (LOSS)
------------------------------------------------------------------------------------------------

<CAPTION>
(Dollars in millions, except per share amounts)                       Year Ended Dec. 31,
------------------------------------------------------------------------------------------------
                                                                 1998         1997         1996
------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>          <C>
NET SALES                                                      $8,648       $7,514       $6,348
Costs, expenses and other:
Cost of goods sold                                              3,593        3,091        2,684
Selling, general and administrative expenses                    2,421        2,023        1,860
Technological expenses                                          1,358        1,044          702
Acquired in-process research and development                      402          684
Amortization and adjustment of intangible assets                  487          173          151
Restructuring and special charges                                 272                       356
Interest expense                                                  312          170          119
Interest income                                                   (50)         (45)         (51)
Other expense (income) -- net                                      96            8          (26)
------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES     (243)         366          553
Income taxes                                                        7           72          140
------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM CONTINUING OPERATIONS                         (250)         294          413
------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                                     176          (28)
------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                              $ (250)      $  470       $  385
================================================================================================

BASIC EARNINGS (LOSS) PER SHARE:
  Continuing operations                                        $(0.41)      $ 0.50       $ 0.71
  Discontinued operations                                                     0.30        (0.05)
------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                                              $(0.41)      $ 0.80       $ 0.66
================================================================================================

DILUTED EARNINGS (LOSS) PER SHARE:
  Continuing operations                                        $(0.41)      $ 0.48       $ 0.69
  Discontinued operations                                                     0.29        (0.05)
------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                                              $(0.41)      $ 0.77       $ 0.64
================================================================================================
The above statement should be read in conjunction with
pages 47-57 of this report.

<CAPTION>
KEY FINANCIAL STATISTICS (Unaudited)                           1998         1997         1996
------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>          <C>
AS A PERCENT OF NET SALES:
Selling, General and Administrative Expenses                     28%          27%          29%
Technological Expenses                                           16           14           11
Research and Development Expenses <F1>                           15           12           10
Income from Continuing Operations <F2>                                         4            7
================================================================================================
<FN>
<F1> Research and development expenses are included in total
     technological expenses.
<F2> This financial statistic is not meaningful for 1998 because
     Monsanto reported a loss from continuing operations.
</TABLE>

26  1998 Monsanto Annual Report
<PAGE>
<PAGE>

Review of Consolidated RESULTS OF OPERATIONS
-----------------------------------------------------------------------

MONSANTO ACHIEVES RECORD SALES, BUT INCOME EXCLUDING UNUSUAL CHARGES
DECLINES

In 1998, Monsanto completed several critical steps in its life sciences
strategy. The company acquired three major seed companies -- Plant
Breeding International Cambridge Limited (PBIC), a leading European
plant breeder with an emphasis in wheat; certain international seed
operations of Cargill(R) Inc., which includes germplasm, and a broad
marketing and distribution network; and DEKALB(R) Genetics Corp., a
worldwide leader in agricultural genetics and biotechnology for corn and
soybeans. In addition, the company announced an agreement to merge Delta
and Pine Land Co. (D&PL), a leading breeder, producer and marketer of
cotton seed, with Monsanto. In December 1998, Monsanto's board of
directors approved a restructuring plan to continue the commitment to
life sciences, to exit from nonstrategic businesses and to reduce costs.
The company also issued debt and equity of approximately $4.5 billion in
1998.

     Sales reached a record in 1998, as sales of key products continued
to grow. However, the company recorded a loss from continuing operations
of $250 million, or $0.41 per share. Results included aftertax charges
of $830 million, or $1.33 per share, for restructuring charges, write-
offs of in-process research and development (R&D) related to
acquisitions, and other unusual charges. If these unusual charges were
excluded, income from continuing operations would have totaled
$580 million, or $0.93 per share. Income from continuing operations
totaled $294 million, or $0.48 per share, in 1997. Excluding unusual
aftertax charges of $455 million, or $0.75 per share, for write-offs of
in-process R&D, income from continuing operations in 1997 would have
been $749 million, or $1.23 per share. Without the unusual items in 1998
and 1997, income from continuing operations would have declined $169
million. The decrease in income from continuing operations, excluding
unusual items, was caused by increased selling, general and
administrative (SG&A) expenses, technological expenses and interest
costs, which more than offset the 15 percent increase in net sales.

SALES BOOSTED BY AGRICULTURAL AND PHARMACEUTICAL BUSINESSES

Net sales reached a record $8.6 billion in 1998, surpassing last year's
net sales of $7.5 billion by 15 percent. The sales increase came
primarily from continued strong performances by the Agricultural
Products and Pharmaceuticals segments. Net sales for Agricultural
Products set a record in 1998, led by significant sales volume increases
for the family of Roundup(R) herbicides. Volume gains for Roundup(R) of
more than 20 percent were driven by increased use of Roundup(R) for
conservation tillage and other applications, including the use of Roundup(R)
over the top of Roundup Ready(R) soybeans, canola, corn and cotton. The
increase in 1998 net sales for the Agricultural Products segment also
reflected higher technology fee revenues from crops developed through
biotechnology. Demand for Roundup Ready(R) soybeans, cotton and canola,
Bollgard(R) insect-protected cotton, and Yieldgard(R) insect-protected corn
rose substantially in 1998. In addition, record sales volumes of Posilac(R)
bovine somatotropin and the successful introduction of Roundup Ready(R)
corn in the United States in 1998 contributed to the sales increase. An
increase in seed sales was driven by higher sales at the company's
Asgrow subsidiary and by the inclusion of sales from seed companies
Monsanto acquired in 1998 and late 1997.

     Net sales for the Pharmaceuticals segment also grew to record
levels, increasing $451 million, or 18 percent, from 1997 net sales. The
increase was driven by significantly higher sales volumes of Arthrotec(R)
arthritis treatment, which was launched in the United States and France
in 1998. With Arthrotec(R) and Daypro(R) arthritis treatments, Searle ended
the year as the No. 1 provider of branded prescription arthritis
treatments in the United States. Sales of Ambien(R) short-term treatment
for insomnia also grew, holding 52 percent of the total U.S.
prescription market share at the end of 1998. Higher segment sales year-
to-year also came from increased licensing revenues from several
collaborative alliances. Lower sales of verapamil calcium channel
blockers and Cytotec(R) ulcer preventive drug partially offset these
increases.

     Net sales for the Nutrition and Consumer Products segment
decreased slightly in 1998 vs. sales in 1997, primarily because of lower
sales volumes of NutraSweet(R) brand sweetener, the company's trademark
aspartame product. This was partially offset by higher sales of tabletop
sweeteners, including Equal(R) and Canderel(R) brand sweeteners, and increased
revenues from lawn-and-garden products.

     Monsanto's net sales in markets outside the United States
represented 45 percent of 1998 net sales, compared with 44 percent in
1997.
<PAGE>
     An analysis of the company's sales change, along with comparative
data, follows:

<TABLE>
<CAPTION>
SALES ANALYSIS                                                 1998          1997
-----------------------------------------------------------------------------------
<S>                                                              <C>           <C>
Selling prices                                                   --%           (3)%
Sales volumes and mix                                            13             9
Acquisitions                                                      1            10
Pharmaceutical product rights sales and licensing revenues        4             2
Exchange rates                                                   (3)           --
-----------------------------------------------------------------------------------
TOTAL CHANGE                                                     15%           18%
===================================================================================
</TABLE>

EVENTS AFFECT COMPARABILITY

As part of the overall strategy to reduce costs and continue the
commitment to the core life sciences businesses, Monsanto's board of
directors approved a restructuring plan in December 1998. Pretax
restructuring charges and other unusual charges of $625 million ($446
million aftertax) were recorded to cover the costs of work force
reductions, the exit from nonstrategic businesses, the closure or
rationalization of certain facilities, and asset impairments.
Approximately 1,700 jobs are expected to be eliminated by these actions,
primarily in manufacturing and administrative functions. These actions
are expected to increase future net earnings and aftertax cash flows.

                                       1998 Monsanto Annual Report  27

<PAGE>
<PAGE>

REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS (continued)
-----------------------------------------------------------------------

     Also in 1998, Monsanto acquired several seed companies, including
PBIC, DEKALB, and certain international seed operations of Cargill. The
company recorded pretax charges of $422 million ($371 million aftertax)
related to these acquisitions, primarily for the write-off of acquired
in-process R&D. Management believes that the technological feasibility
of the acquired in-process R&D has not been established and that the
research has no alternative future uses. Accordingly, the amounts
allocated to in-process R&D are required to be expensed immediately
under generally accepted accounting principles.

     In May 1998 the board of directors approved a decision to exit 
Monsanto's optical products business, which included the Orcolite and 
Diamonex optical products businesses and the Diamonex performance
products business. Monsanto recognized a $20 million pretax gain on the
sale of the Orcolite business. The company recorded pretax charges of
$68 million for the rationalization of the Diamonex businesses,
primarily for severance costs and the write-off of manufacturing
facilities and intangible assets. Also during the second quarter of
1998, Monsanto recognized a pretax gain of $35 million ($21 million
aftertax) from the reversal of a restructuring reserve that was no
longer needed because of the decision not to rationalize a European
pharmaceutical production facility. The result of the actions was a net
pretax charge of $13 million ($13 million aftertax) in the second
quarter of 1998.

     During 1997, Monsanto acquired several seed companies that
specialize in various stages of seed production. These acquisitions
included the Asgrow Agronomics seed business, a global leader in soybean
research and seeds; Holden's Foundation Seeds Inc., a global leader in
the development and growth of corn germplasm and a supplier of parent
seed to retail seed companies; Corn States Hybrid Service Inc., the
exclusive marketer and distributor for Holden's products; and Sementes
Agroceres S.A., the leading seed corn company in Brazil. Monsanto also
acquired the remaining interest in Calgene Inc., which has done
significant biotechnology research in oils, cotton and produce. The
company recorded pretax charges of $684 million ($455 million aftertax)
for the write-off of acquired in-process R&D related to these
acquisitions.

ACQUISITIONS AND PRODUCT LAUNCH PREPARATIONS DRIVE EXPENSES HIGHER, EBIT
LOWER

EBIT was $69 million in 1998 vs. $536 million in 1997. EBIT for 1998
included $1.06 billion of restructuring and special charges, write-offs
for acquired in-process R&D, and charges for the cancellation of DEKALB(R)
stock options. EBIT for 1997 included unusual charges of $684 million
for in-process R&D write-offs. Excluding these unusual charges, EBIT
would have been $1.13 billion in 1998, vs. $1.22 billion in 1997. The
$91 million, or 7 percent, decrease in EBIT excluding unusual items was
caused by increased SG&A expenses, technological costs, and amortization
expense. These items were partially offset by the aforementioned growth
in sales. EBITDA grew to $1.77 billion in 1998, a $58 million, or 3
percent, increase from EBITDA of $1.71 billion in 1997.

     Total SG&A expenses increased $398 million, or 20 percent, in 1998
compared with expenses in 1997, principally because of increased
spending in the Agricultural Products and Pharmaceuticals segments. SG&A
expenses for Agricultural Products rose primarily because of the
inclusion in 1998 of SG&A expenses from the acquired seed companies, and
were partially offset by the effect of licensing fees for technical data
on glyphosate. SG&A expenses for Pharmaceuticals increased as Searle
expanded its sales infrastructure to accommodate the launch of Arthrotec(R)
in 1998 and the launch of Celebrex(TM) arthritis treatment in early 1999.

     Total technological expenses in 1998 grew $314 million, or 30 percent,
compared with those in 1997, primarily because of higher expenses in the
Agricultural Products and Pharmaceuticals segments. Technological
expenses for the Agricultural Products segment rose principally because
of higher spending on genomics and crop biotechnology initiatives, and
the inclusion of expenses from the acquired seed companies. Searle's
technological expenses increased markedly, as several product candidates
in the pipeline advanced through the later, more expensive phases of
development.

     Expenses for amortization and adjustment of intangible assets,
which are included in income from continuing operations and EBIT,
increased year-to-year because of the increase in intangible assets
related to seed company acquisitions made in 1998 and late 1997, and
because of the write-offs of goodwill related to the company's exit from
noncore businesses. Interest expense -- included in income (loss) from
continuing operations -- rose as the amount of debt outstanding
increased during 1998. Other expense (income) -- net increased
principally because of unusual charges, primarily for asset impairments
and lower income from equity affiliates in 1998. Income tax expense for
1998 of $7 million declined from income tax expense for 1997 of $72
million, primarily because of the decrease in pretax income caused by
restructuring charges and other unusual items. If the unusual items in
1998 and 1997 were excluded, the effective tax rate would have been 29
percent in both 1998 and 1997.

<PAGE>
COST SAVINGS CONTINUE

In prior years, Monsanto took steps to make its worldwide operations
more focused, productive and cost-effective. The effect of these actions
benefited EBIT by more than $400 million in 1998. The company invested
the savings in its core businesses, new product development, and
strategic acquisitions and investments to enhance its long-term
profitability. These savings are in line with management's original
expectations, and are expected to continue. These initiatives will
continue as Monsanto responds to increased global competition and higher
customer expectations.

28  1998 Monsanto Annual Report

<PAGE>
<PAGE>

-----------------------------------------------------------------------

DEVELOPMENT AND COMMERCIALIZATION 
OF NEW PRODUCTS REMAIN PRIORITIES

New product discovery, development and commercialization continue 
to be strategic priorities for Monsanto. Recent efforts include insect-
protected and herbicide-tolerant crops; Celebrex(TM), a new arthritis
treatment; and neotame, a new sweetener currently under development.
Monsanto's R&D expenditures were $1.26 billion in 1998, or 15 percent of
net sales, a level that reflects management's strong long-term 
commitment to research. The discovery and development of pharmaceutical,
agricultural and science-based nutritional products continue to be the
focus of most of these expenditures. Significant research and
development activity in existing product technologies and new product
applications also continues across all business sectors. Genomics is a
critical enabling technology for this effort, especially for
agricultural and nutritional products. Additionally, Monsanto's research
program includes new technologies and proprietary information obtained
through licensing and strategic acquisitions. As a result, Monsanto has
more than four dozen products in the R&D pipeline and expects many of
them to be commercialized in the next few years.

PRIOR YEAR REVIEW

Income from continuing operations in 1997 totaled $294 million, or $0.48
per share, vs. $413 million, or $0.69 per share, in 1996. Both years'
results, however, were affected by unusual items. Results for 1997
included pretax charges of $684 million ($455 million aftertax, or $0.75
per share) for the write-off of acquired in-process R&D related to the
acquisition of several seed companies, including Asgrow, Holden's, Corn
States, and Agroceres, and the remaining interest in Calgene. In
December 1996, the company recorded pretax restructuring charges
associated with the closure or rationalization of certain facilities,
asset write-offs, and work force reductions totaling $376 million ($257
million aftertax, or $0.43 per share).

     Without the unusual items in 1997 and 1996, income from continuing
operations would have been $749 million for 1997, compared with $670
million for the prior year, an increase of 12 percent. Earnings per
share from continuing operations would have been $1.23 in 1997, a 10
percent increase from comparable 1996 results of $1.12 per share. The
increases were driven by higher sales, which more than offset increased
expenses. Sales grew primarily because of higher sales volumes,
licensing revenues, and sales of product rights. These increases were
partially offset by increased SG&A expenses, higher technological
spending, additional intangible amortization expense, and increased
interest expense.

     EBIT totaled $536 million in 1997, compared with $672 million in
1996. EBIT for 1997 included pretax unusual charges of $684 million for
in-process R&D write-offs. EBIT for 1996 included pretax unusual charges
of $376 million for restructuring and other unusual items. EBITDA
totaled $1.71 billion in 1997 vs. $1.47 billion in 1996, an increase of
16 percent.

     Net sales were $7.5 billion in 1997, up $1.2 billion, or 18
percent, from sales in 1996. The increase came primarily from continued
strong performances by the Agricultural Products and Pharmaceuticals
segments. The $708 million increase in net sales for the Agricultural
Products segment was driven by significant sales volume increases for
the family of Roundup(R) herbicides; the inclusion of sales from Asgrow;
higher sales volumes of Posilac(R) bovine somatotropin and Harness(R)
herbicide; and increased demand for crops developed through
biotechnology -- including Roundup Ready(R) soybeans, cotton and canola;
Bollgard(R) insect-protected cotton; and Yieldgard(R) insect-protected corn.

     Net sales for the Pharmaceuticals segment in 1997 increased $428
million, or 21 percent, from 1996 net sales. The increase was
attributable primarily to higher sales volumes of Ambien(R) short-term
treatment for insomnia and Daypro(R) and Arthrotec(R) arthritis treatments.
Sales of these key growth products grew 26 percent from sales in the
prior year. Sales also benefited from licensing revenues of $75 million
related to a collaborative alliance, and from sales of product rights,
which totaled $117 million. Lower sales of verapamil calcium channel
blockers partially offset these increases.

     Lower net sales for the Nutrition and Consumer Products segment
partially offset the sales increases in the other segments. Nutrition
and Consumer Products sales declined 4 percent in 1997 vs. sales in
1996, primarily because of lower sales volumes of Equal(R) and Canderel(R)
tabletop sweeteners. These decreases were partially offset by higher
sales volumes of biogums and Roundup(R) herbicide for lawn-and-garden use.
Sales of NutraSweet(R), the company's trademark aspartame product, were
essentially flat compared with sales in the prior year.

     Total SG&A expenses increased $163 million, or 9 percent, in 1997
compared with expenses in 1996, principally because of spending
increases in the Agricultural Products and Pharmaceuticals segments.
Total technological expenses increased $342 million, or 49 percent,
compared with those in 1996. Technological expenses increased in all
segments because of new product development.
<PAGE>
     Amortization and adjustment of intangible assets increased in 1997
compared with amortization in the prior year, principally because of the
increase in intangible assets related to seed company acquisitions. The
increase in interest expense from that in 1996 was caused by a greater
amount of debt outstanding during 1997. If $31 million of unusual income
in 1996 were excluded, other expense (income) -- net would have shown a
small increase in 1997. This increase was caused by significantly higher
exchange losses, principally from Southeast Asia, partially offset by
increased income from equity affiliates, largely from European aspartame
joint ventures and DEKALB(R). The 1997 effective tax rate of 20 percent was
lower than the 1996 effective tax rate of 25 percent, primarily because
of the decrease in pretax income, which gave tax benefits a greater
relative effect in 1997. If the unusual items in 1997 and 1996 were
excluded, the effective tax rate would have been 29 percent in 1997 vs.
28 percent in 1996.

                                       1998 Monsanto Annual Report  29

<PAGE>
<PAGE>

REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS (continued)
-----------------------------------------------------------------------

ANALYSIS OF CHANGE IN EARNINGS (LOSS) PER SHARE FROM CONTINUING
OPERATIONS

<TABLE>
<CAPTION>
                                                                           BETTER (WORSE)
                                                                       ------------------------                          
                                                                       1998 VS.       1997 VS.
                                                                          1997           1996
-----------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>
SALES-RELATED FACTORS:
Selling prices                                                          $(0.02)        $(0.23)
Sales volumes and mix                                                     0.79           0.66
Pharmaceutical product rights sales and licensing revenues                0.31           0.14
-----------------------------------------------------------------------------------------------
TOTAL SALES-RELATED FACTORS                                               1.08           0.57
===============================================================================================
COST-RELATED FACTORS:
Raw material and manufacturing costs                                     (0.05)         (0.07)
Selling, general and administrative expenses                             (0.45)         (0.03)
Technological expenses                                                   (0.34)         (0.33)
Amortization of intangible assets                                        (0.07)            --
-----------------------------------------------------------------------------------------------
TOTAL COST-RELATED FACTORS                                               (0.91)         (0.43)
===============================================================================================
OTHER FACTORS:
Change in shares outstanding, taxes                                      (0.03)         (0.03)
Exchange rates                                                           (0.17)            --
Acquisitions and divestitures                                            (0.14)            --
Other expenses -- net                                                    (0.14)            --
-----------------------------------------------------------------------------------------------
TOTAL OTHER FACTORS                                                      (0.48)         (0.03)
===============================================================================================
Change in earnings (loss) per share before unusual items                 (0.31)          0.11
Unusual items                                                            (0.58)         (0.32)
-----------------------------------------------------------------------------------------------
CHANGE IN EARNINGS (LOSS) PER SHARE
  FROM CONTINUING OPERATIONS                                            $(0.89)        $(0.21)
===============================================================================================
</TABLE>


       
GEOGRAPHIC DATA

<TABLE>
<CAPTION>
                                        NET SALES TO
                                   UNAFFILIATED CUSTOMERS        
                                (Excluding Interarea Sales)                 TOTAL ASSETS
                           --------------------------------------------------------------------
                             1998           1997           1996           1998            1997
-----------------------------------------------------------------------------------------------
<S>                        <C>            <C>            <C>           <C>             <C>
United States              $4,975         $4,384         $3,648        $10,558         $ 7,286
Europe-Africa               1,621          1,425          1,345          2,796           1,826
Asia-Pacific                  621            655            569            564             455
Canada                        330            285            271            216             153
Latin America               1,101            765            515          2,590           1,054
-----------------------------------------------------------------------------------------------
TOTAL                      $8,648         $7,514         $6,348        $16,724         $10,774
===============================================================================================
</TABLE>

The data above are prepared on an "entity basis," which means that net
sales, and assets of each legal entity are assigned to the geographic
area where that legal entity is located. For example, a sale from the
United States to Latin America is reported as a U.S. export sale. Direct
export sales from the United States to third-party customers outside the
United States were $245 million for 1998, $200 million for 1997, and
$177 million for 1996. Net sales and assets attributable to an
individual country, other than the United States, were not material for
disclosure.

     The Brazilian economy continued to experience lower inflation
rates during 1997 and 1998. Monsanto designated the Brazilian economy as
nonhyperinflationary as of Jan. 1, 1998, and established the Brazilian
real as the functional currency for Monsanto's Brazilian operations. In
January 1999, Brazil devalued the real due to worsening economic
conditions. A continuing decline in value of the Brazilian real may
adversely affect future income. Monsanto could experience additional
foreign currency transactional losses from the area. Also, future sales
may decrease because the decline in the Brazilian economy could cause
customers to purchase fewer goods in general, and also because the
company's products may become more expensive for customers in that
region to purchase in their local currency. In addition, the economic
conditions could increase Monsanto's credit risk in Brazil.

30  1998 Monsanto Annual Report

<PAGE>
<PAGE>

<TABLE>
SEGMENT Data
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                              NET SALES                    EBIT<F1><F2>                   EBITDA<F2>
                                    -----------------------------------------------------------------------------------------
                                      1998       1997      1996        1998     1997     1996        1998      1997     1996
-----------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>        <C>       <C>        <C>        <C>      <C>        <C>       <C>      <C>
Agricultural Products               $4,032     $3,274    $2,566     $   737    $ 731    $ 671      $1,092    $  939   $  820
Nutrition and Consumer Products      1,533      1,552     1,613         278      322      365         405       440      490
Pharmaceuticals                      2,894      2,443     2,015         309      286      253         451       422      383
Corporate and Other                    189        245       154        (195)    (119)    (241)       (183)      (94)    (222)
Unusual                                                              (1,060)    (684)    (376)                      
-----------------------------------------------------------------------------------------------------------------------------
TOTAL                               $8,648     $7,514    $6,348     $    69    $ 536    $ 672      $1,765    $1,707   $1,471
=============================================================================================================================

<CAPTION>
                                                                                                           DEPRECIATION
                                           TOTAL ASSETS               CAPITAL EXPENDITURES               AND AMORTIZATION
                                      ---------------------------------------------------------------------------------------
                                         1998        1997           1998      1997       1996         1998     1997     1996
-----------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>               <C>       <C>        <C>          <C>      <C>      <C>
Agricultural Products                 $10,278     $ 4,308           $468      $315       $265         $355     $208     $149
Nutrition and Consumer Products         2,477       2,624            130        67         89          127      118      125
Pharmaceuticals                         2,778       2,668            236       175         81          142      136      130
Corporate and Other                     1,191       1,174            145        87         65           12       25       19
-----------------------------------------------------------------------------------------------------------------------------
TOTAL                                 $16,724     $10,774           $979      $644       $500         $636     $487     $423
=============================================================================================================================

<FN>
<F1> Reconciliation of EBIT to income (loss) from continuing operations 
     follows:

<CAPTION>
                                                    ------
                                                     1998              1997              1996
----------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>               <C>
EBIT                                                $  69             $ 536             $ 672
Less: Interest expense                               (312)             (170)             (119)
      Income taxes                                     (7)              (72)             (140)
----------------------------------------------------------------------------------------------
Income (Loss) from Continuing Operations            $(250)            $ 294             $ 413
==============================================================================================

<F2> The unusual charges in 1998, 1997 and 1996 included restructuring 
     and special charges, write-offs for acquired in-process research
     and development, and charges for the cancellation of DEKALB(R) stock
     options. The net total unusual items by segment were as follows:

<CAPTION>
                                                               INCOME (EXPENSE)
                                                 ---------------------------------------------
SEGMENT                                             1998              1997              1996
----------------------------------------------------------------------------------------------
<S>                                              <C>                 <C>               <C>
Agricultural Products                            $  (587)            $(633)            $(124)
Nutrition and Consumer Products                     (307)              (51)             (108)
Pharmaceuticals                                      (29)                               (125)
Corporate and Other                                 (137)                                (19)
----------------------------------------------------------------------------------------------
TOTAL                                            $(1,060)            $(684)            $(376)
==============================================================================================
</TABLE>

     In 1998, Monsanto changed its publicly reported measure of segment
profitability from operating income to EBIT excluding unusual items as a
result of adopting Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information."
In addition, various smaller businesses were transferred between
segments. Segment information for 1997 and 1996 has been restated to
conform to the current presentation.

     Although inflation is relatively low in most of Monsanto's major
markets, it continues to affect operating results. To mitigate the
effect of inflation, Monsanto has implemented measures to control costs,
to improve productivity, to manage new fixed and working capital, and to
raise selling prices when government regulations and competitive
conditions permit. In addition, the current costs of replacing certain
assets are estimated to be greater than the historical costs presented
in the financial statements. Accordingly, the depreciation expense
reported in the Statement of Consolidated Income (Loss) would be greater
if it were stated on a current-cost basis.

                            1998 Net Sales
                               [GRAPH]

<PAGE>
     Sales between segments were not significant. Certain corporate
expenses, primarily those related to the overall management of Monsanto,
were not allocated to the segments or geographic areas. Corporate assets
are primarily investments in affiliates.

     The principal factors that accounted for the segments'
performances in 1998 and 1997, along with the factors that are expected
to affect operating results in the near term, are described on the
following pages.

                                       1998 Monsanto Annual Report  31
<PAGE>
<PAGE>

AGRICULTURAL Products
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                              ------
                                               1998        1997        1996
----------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>
Net Sales                                    $4,032      $3,274      $2,566
EBIT (excluding unusual charges)                737         731         671
EBITDA (excluding unusual charges)            1,092         939         820
Capital Expenditures                            468         315         265
Depreciation and Amortization                   355         208         149
----------------------------------------------------------------------------
</TABLE>

THE AGRICULTURAL PRODUCTS SEGMENT IS A LEADING DEVELOPER, PRODUCER AND
MARKETER OF CROP PROTECTION PRODUCTS AND SEEDS. THIS GROUP ALSO DEVELOPS
AND MARKETS PRODUCTS ENHANCED BY BIOTECHNOLOGY. THESE PRODUCTS IMPROVE
THE EFFICIENCY OF FOOD PRODUCTION AND PRESERVE ENVIRONMENTAL QUALITY FOR
AGRICULTURAL AND INDUSTRIAL USES. MORE THAN HALF OF THE UNIT'S HERBICIDE
NET SALES ARE MADE OUTSIDE THE UNITED STATES. WEATHER CONDITIONS IN
AGRICULTURAL MARKETS WORLDWIDE AFFECT SALES VOLUMES.

Net sales for Agricultural Products set a record at $4 billion, an
increase of 23 percent vs. the previous sales record set in 1997. The
increase in net sales was led by the family of Roundup(R) herbicides, which
delivered volume growth in 1998 above the historical 20 percent
trendline. The United States, Argentina, Brazil and Australia posted
record sales volumes of Roundup(R). The large gains in volumes of Roundup(R)
were driven by continued adoption of conservation tillage (the practice
of substituting the judicious use of herbicides for mechanical tillage),
new applications, and increased use of Roundup(R) over the top of Roundup
Ready(R) canola, corn, cotton and soybeans. Poor economic conditions in
Asia limited liquidity and lessened the demand for herbicides,
especially in Southeast Asia, where volumes of Roundup(R) declined in 1998.
Lower selling prices, principally outside the United States, made
Roundup(R) more cost effective in a wide range of crop and industrial uses.
The effect of generic competition, especially in certain markets outside
the United States, dampened selling prices modestly. However, the effect
of lower selling prices was more than offset by the increased sales
volumes.

                 Agricultural Products Net Sales
                            [GRAPH]

     Increased demand for crops developed through biotechnology --
especially Roundup Ready(R) soybeans, canola and cotton, and Yieldgard(R)
insect-protected corn -- drove technology fee revenues from these crops
substantially higher. In addition, Roundup Ready(R) corn sold out in its
introductory year in the United States. Seed sales also were higher in
1998 as the company's Asgrow seed business enjoyed a strong year,
particularly with seed lines containing the Roundup Ready(R) gene. Sales
from Sementes Agroceres S.A. and Holden's Foundation Seeds Inc., which
both were acquired in late 1997, also added to revenues. Net sales for
the Agricultural Products segment also benefited from record sales of
Posilac(R) bovine somatotropin, which increased 26 percent from sales in
the prior year.

     EBIT for the Agricultural Products segment in 1998 was essentially
flat compared with 1997 EBIT, while EBITDA increased $153 million, or 
16 percent, from EBITDA in 1997. EBIT totaled $737 million in 1998,
compared with $731 million in 1997, as the growth in net sales was
nearly offset by increased operating expenses. Selling, general and
administrative (SG&A) expenses rose primarily because of a full-year of
inclusion of SG&A costs from the seed companies acquired in 1997, and
higher global development costs, including higher information technology
expenses. These increases were partially offset by $36 million of
licensing fees for technical data on glyphosate. Technological expenses
grew principally because of higher spending on crop biotechnology
development initiatives, inclusion of recently acquired seed company
technological spending, and additional genomics research. Depreciation
and amortization increased by $147 million, or 71 percent, primarily
because of the completion of additional manufacturing capacity for
Roundup(R) and because of 1997 seed company acquisitions.

             Agricultural Products Operating Measures
                            [GRAPH]

     Pretax unusual items in 1998 included: charges of $402 million for
the write-off of in-process research and development (R&D); a $20
million charge for the cancellation of stock options in exchange for
cash related to the acquisition of DEKALB Genetics Corp.; and a charge
of $165 million for restructuring and other actions, principally related
to the cost of work force reductions ($52 million) and asset impairments
($81 million). The in-process R&D charges were primarily associated with
the acquisitions of DEKALB, Plant Breeding International Cambridge
(PBIC) and certain international seed operations of Cargill Inc. In
1997, the unusual items included $633 million of pretax charges for in-
process R&D write-offs associated with several seed company
acquisitions.
<PAGE>
     In-process R&D charges for the seed company acquistions cover
numerous seed breeding projects, no single one of which was significant,
as is typical in the seed breeding industry. These projects consist of
conventional breeding programs for corn, wheat and other hybrids;
conventional breeding for soybean varieties; and the development of
transgenic crops. In-process R&D projects for the 1997 acquistion of
Calgene Inc. included a project to develop naturally colored cotton
fiber, and a project to control fatty acids in oil seeds. Successful
commercialization of products developed through these projects is
expected to occur five to nine years after program initiation. While
there are risks associated with the ultimate completion and
commercialization of

32  1998 Monsanto Annual Report

<PAGE>
<PAGE>

------------------------------------------------------------------------

these research projects (specific risks are discussed beginning on page
58), the failure of any one project would not materially affect the
total value of the overall research programs. The in-process projects
were at various stages of completion at the dates of acquisition. During
the next nine years, management expects to spend approximately $370
million to complete these in-process R&D projects. These costs consist
primarily of salary and benefit expenses for R&D employees. Revenues
from the in-process R&D projects related to the 1997 acquisitions began
in 1998. Revenues from the in-process R&D projects related to the 1998
acquisitions are expected to begin in 1999. In-process projects acquired
in connection with the 1997 purchases of Asgrow Agronomics, Holden's,
Calgene, and Agroceres have been progressing in line with original
expectations.

PRIOR YEAR REVIEW

Net sales were 28 percent higher in 1997 vs. 1996 net sales. The sales
increase in 1997 was the result of higher worldwide sales volumes for
the family of Roundup(R) herbicides, led by strong sales in Brazil,
Argentina, and the United States. Sales volumes of Roundup(R) herbicide
were driven to a new high by increases in the use of conservation
tillage, increases in planted acres and applications of Roundup(R) on
Roundup Ready(R) crops. Selling price reductions, principally in markets
outside the United States, made Roundup(R) more cost effective for weed
control in a broader range of uses. The effect of generic competition,
especially in certain markets outside the United States, dampened
selling prices modestly. However, the effect of increased sales volumes
more than offset the effect of lower selling prices. Sales from seed
companies acquired in 1997, particularly Asgrow, also added to segment
sales. Also contributing to sales increases were record sales of Posilac(R)
bovine somatotropin; increased demand for crop biotechnology traits,
including Roundup Ready(R) soybeans, canola and cotton, Bollgard(R) insect-
protected cotton, and Yieldgard(R) insect-protected corn; and higher sales
volumes of certain acetanilide-based herbicides, particularly Harness(R).

     EBIT for the Agricultural Products segment increased by $60
million from 1996 to 1997, and EBITDA grew $119 million in the same
period. The effect of sales volumes increases on 1997 EBIT and EBITDA
was partially offset by higher technology costs for crop biotechnology
initiatives, and by the inclusion of seed company SG&A expenses for the
full year. EBIT was also negatively affected by higher amortization
costs in 1997, principally from the acquisition of Holden's.

     In 1997, the unusual charges included $633 million of pretax
charges for the write-offs for in-process R&D associated with the
acquisition of various seed companies. In 1996, the net unusual items
included $124 million of pretax charges for restructuring and other
actions, principally related to the cost of work force reductions ($84
million) and asset impairments ($44 million).


OUTLOOK

AGRICULTURAL PRODUCTS

Monsanto's family of Roundup(R) herbicides continues to face competition
from generic producers in certain markets outside the United States.
Patents protecting Roundup(R) expired in several countries in 1991.
Compound per se patent protection for the active ingredient in Roundup(R)
herbicide continues in the United States through September 2000. During
1998, Monsanto further strengthened its branding  strategy for Roundup(R)
with new service and formulation offerings. The company also amended, or
entered into, several agreements to supply the active ingredient in
Roundup(R) to third parties. Several manufacturing process enhancements
were implemented in 1998 to further lower Monsanto's cost position, and
to increase its capacity. In the future, management expects rapidly
expanding production capacity and additional technological enhancements
in manufacturing and formulations, will continue to improve Monsanto's
cost structure and help maintain its leadership position.

     Significant growth potential remains for Roundup(R) in conservation
tillage applications worldwide and in applications over-the-top of crops
designed to tolerate Roundup(R). A planned price reduction for Roundup(R)
in the United States was implemented in the fall of 1998 to accelerate
volume growth, and to competitively position Roundup(R) long term. In
numerous markets worldwide during the past 15 years, management believes
that price reductions for Roundup(R) were an important factor in volume
growth via price elasticity in key market segments. At lower prices in
the past, more growers used more Roundup(R) in new applications (such as
conservation tillage and preharvest), treated more acres in existing
applications, and used higher rates per treated acre as Roundup(R) became
more economical.

<PAGE>
     As discussed in the Principal Acquisitions and Divestitures note
in the Notes to Financial Statements, Monsanto made several strategic
acquisitions of agricultural seed companies during the past two years.
In 1997, Monsanto acquired the Asgrow Agronomics seed business, Holden's
and Agroceres. In 1998, the company acquired PBIC, DEKALB and certain
international seed operations of Cargill. In addition, Monsanto
announced an agreement to merge Delta and Pine Land Company (D&PL) with
Monsanto in a stock swap transaction. This transaction, already approved
by D&PL shareowners, is subject to regulatory approvals and other
customary conditions. These acquisitions are expected to result in
earnings dilution over the next few years. Monsanto announced in January
1999 its intent to sell its Stoneville Pedigreed Seed Company. These
transactions will essentially complete the network Monsanto management
believes it needs in major crops to compete successfully in the global
agricultural marketplace. No additional major seed company acquisitions
are planned. The acquisition and successful

                                                  continued on page 34

                                       1998 Monsanto Annual Report  33

<PAGE>
<PAGE>

AGRICULTURAL PRODUCTS (continued)
------------------------------------------------------------------------

AGRICULTURAL OUTLOOK CONTINUED

continued from page 33

integration of these seed companies as members of Monsanto's life
sciences business, and partnerships such as the Monsanto/Cargill(R) joint
venture -- Renessen LLC -- are expected to enhance the company's ability
to bring new products to market by helping Monsanto commercialize and
distribute its own agronomic traits, and traits designed to improve the
quality of food or feed, as well as traits licensed from other
companies.

     The company marketed more than 10 biotechnology-related plant
sciences products during 1998 with its licensing partners, including:
Roundup Ready(R) corn, canola, cotton and soybeans; corn, cotton and
potatoes protected from certain insects; and cotton that is both insect-
protected and Roundup Ready(R). These products were developed by Monsanto
either alone or in partnership with biotechnology and seed production
companies. Although demand for biotechnology-related plant sciences
products remains strong among growers, Monsanto continues to address
concerns of consumers, public interest groups, and government
regulators, particularly outside the United States. Such concerns are
not uncommon as new technologies are commercialized. The company also is
involved in intellectual property disputes with several parties.
Management expects that such disputes will continue to occur as the
agricultural biotechnology industry evolves.

NUTRITION AND CONSUMER Products
------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                         -------
                                           1998        1997        1996
------------------------------------------------------------------------

<S>                                      <C>         <C>         <C>
Net Sales                                $1,533      $1,552      $1,613
EBIT (excluding unusual charges)            278         322         365
EBITDA (excluding unusual charges)          405         440         490
Capital Expenditures                        130          67          89
Depreciation and Amortization               127         118         125
------------------------------------------------------------------------
</TABLE>

THE NUTRITION AND CONSUMER PRODUCTS SEGMENT MANUFACTURES AND MARKETS
SWEETENERS (INCLUDING NUTRASWEET(R) BRAND SWEETENER AND EQUAL(R) AND CANDEREL(R)
TABLETOP SWEETENERS), ALGINS, BIOGUMS AND OTHER FOOD INGREDIENTS. IT
ALSO DEVELOPED, PRODUCED AND MARKETED ORTHO BRAND LAWN-AND-GARDEN
PRODUCTS, AND ROUNDUP(R) HERBICIDE FOR RESIDENTIAL USE IN 1998. THE ORTHO
PRODUCTS HAVE SUBSEQUENTLY BEEN SOLD.

            Nutrition and Consumer Products Net Sales
                             [GRAPH]

Net sales for the Nutrition and Consumer Products segment decreased
slightly in 1998 vs. net sales in 1997. Sales of NutraSweet(R), the
company's trademark aspartame product, decreased 17 percent in 1998 vs.
sales in 1997, because of lower sales volumes. Sales of tabletop
sweeteners rose modestly in 1998, reflecting market share gains in the
United States and higher sales of sweetener products in Latin America.
Biogum sales rose from sales of xanthan and gellan gum products to food
manufacturers and to industrial customers. Revenues from lawn-and-garden
products rose modestly in 1998, reflecting higher sales of the Ortho
line of lawn-and-garden products and $32 million in payments associated
with an agreement signed with The Scotts Company to be the marketing
partner for Roundup(R) herbicide. In 1999, Roundup(R) for residential use will
be marketed through Scotts along with its own broad line of residential
lawn-and-garden products. In early 1999, the company sold its lawn-and-
garden products business, exclusive of Roundup(R), to Scotts. In January
1999, Monsanto announced its intent to divest its algins business. These
actions will result in reduced Nutrition and Consumer sector sales in
1999.

     EBIT for the Nutrition and Consumer Products segment decreased by
$44 million, or 14 percent, in 1998 vs. 1997 EBIT, and EBITDA decreased
by $35 million, or 8 percent, primarily because of the lower aspartame
sales and increased technological spending.

           Nutrition and Consumer Products Operating Measures
                             [GRAPH]

34  1998 Monsanto Annual Report

<PAGE>
<PAGE>
------------------------------------------------------------------------

This increase was the result of late-stage development spending on
neotame, a new no-calorie sweetener for which a general use petition was
filed with the U.S. Food and Drug Administration (FDA) in late 1998, and
of increased spending on other nutrition pipeline products.

     In 1998, unusual charges included pretax restructuring charges of 
$307 million, principally for the cost of asset impairments ($84
million) and facility shutdowns ($186 million). Unusual items in 1997
included $51 million of pretax charges for in-process research and
development (R&D) related to the acquisition of the Calgene oils
business.

PRIOR YEAR REVIEW

In 1997, net sales for the Nutrition and Consumer Products segment
declined 4 percent from 1996 results, primarily because of lower sales
volumes of tabletop sweeteners. The sales decrease was the result of a
continued decline in market share in the United States and Europe
because of lower-priced generic competition as well as a decline in the
overall U.S. grocery market for tabletop sweeteners. Sales of NutraSweet(R)
were essentially flat. Higher sales volumes of biogums and lawn-and-
garden products partially offset the lower tabletop sweetener sales.

     EBIT for the Nutrition and Consumer Products segment decreased by
$43 million, or 12 percent, in 1997 vs. 1996 EBIT, and EBITDA declined
$50 million, or 10 percent. The decrease in both EBIT and EBITDA was
caused primarily by lower sales volumes and increased technological
expenses related to the development of neotame and other nutrition
products. These effects were partially offset by selling expenses that
were lower in 1997 than in 1996.

     Unusual charges in 1997 included $51 million of pretax charges for
in-process R&D related to the acquisition of the Calgene oils business.
In 1996, the unusual items included pretax restructuring charges of $108
million, principally for the cost of work force reductions ($88
million).


OUTLOOK

NUTRITION AND CONSUMER PRODUCTS 

In January 1999, the company sold its lawn-and-garden business,
exclusive of Roundup(R), to The Scotts Company for $300 million. Monsanto
also announced its intent to sell its algins business.

     Worldwide demand for aspartame continues to increase. Monsanto is
maintaining its leading market share of aspartame sales while
aggressively pursuing growth opportunities. NutraSweet(R) brand sweetener
has several competitive advantages, including a low-cost position and
superior quality. Other sweeteners also compete with NutraSweet(R) in
markets outside the United States, and in 1998, two of these sweeteners
were approved for use by the FDA. These competitive products are
expected to adversely affect Monsanto's future sales of NutraSweet(R).
Increased competition from lower-priced generic producers of tabletop
sweeteners, a declining U.S. grocery market for tabletop sweeteners, and
increased competition in the United States and Europe may adversely
affect future sales and profits from tabletop sweeteners.

     Monsanto has filed both a limited-use food additive petition and a
general-purpose use petition with the FDA for neotame, a new no-calorie
sweetener. Monsanto has exclusive rights to patents covering neotame,
its manufacturing processes, and its uses in food and beverages.
Management expects technological and selling expenses to increase in the
next few years as Monsanto continues its commitment to discovering and
developing nutrition products, and as it commercializes products now in
the R&D pipeline. R&D activity for the segment is geared primarily
toward leveraging Monsanto's capabilities in genomics, plant
biotechnology, and food technology to improve the quality and nutritive
value of food. The segment is developing products to enhance human
cardiovascular health, as well as new generation antioxidants. Synergies
between biogums and grain-based ingredients also are being explored.

                                       1998 Monsanto Annual Report  35


<PAGE>
<PAGE>

PHARMACEUTICAL Products
-----------------------------------------------------------------------

<TABLE>
<CAPTION>
                                        -------
                                          1998        1997        1996
-----------------------------------------------------------------------
<S>                                     <C>         <C>         <C>
Net Sales                               $2,894      $2,443      $2,015
EBIT (excluding unusual charges)           309         286         253
EBITDA (excluding unusual charges)         451         422         383
Capital Expenditures                       236         175          81
Depreciation and Amortization              142         136         130
-----------------------------------------------------------------------
</TABLE>

THE PHARMACEUTICALS SEGMENT REFLECTS THE OPERATIONS OF SEARLE, WHICH
DEVELOPS, PRODUCES AND MARKETS PRESCRIPTION PHARMACEUTICALS. ITS MAJOR
PRODUCTS INCLUDE MEDICATIONS TO RELIEVE THE SIGNS AND SYMPTOMS OF
ARTHRITIS, TO CONTROL HIGH BLOOD PRESSURE, TO RELIEVE INSOMNIA, TO
PREVENT THE FORMATION OF ULCERS, AND TO PROVIDE BETTER HEALTH CARE FOR
WOMEN.

In 1998, net sales for Pharmaceuticals grew to a record $2.9 billion,
$451 million, or 18 percent, higher than 1997 net sales. Sales of
Arthrotec(R) arthritis treatment more than tripled to $346 million, aided
by launches in the United States and France and increased volume growth
in other key countries. Searle ended the year as the No. 1 provider of
branded arthritis treatments in the United States, as Arthrotec(R) and
Daypro(R) arthritis treatments combined for 13 percent branded market
share. Ambien(R) short-term treatment for insomnia grew in market share; by
year-end it held 52 percent share of total U.S. prescriptions. Sales
increased by 16 percent, to a record $458 million. Segment net sales
also benefited from licensing revenues totaling $335 million associated
with several collaborative alliances, and from revenues from the sale of
product rights of $128 million. This compares with $75 million of
licensing revenues and $117 million of revenues from the sale of product
rights in 1997. Partially offsetting these higher revenues were lower
sales of verapamil calcium channel blockers and Cytotec(R) ulcer preventive
drug. 

                     Pharmaceuticals Net Sales
                              [GRAPH]

     EBIT for the Pharmaceuticals segment totaled $309 million in 1998
compared with $286 million in 1997, an increase of $23 million, or 8
percent. EBITDA totaled $451 million in 1998 vs. EBITDA of $422 million
in 1997, an increase of $29 million, or 7 percent. The improvements in
EBIT and EBITDA in 1998 resulted primarily from higher volumes of key
products and from licensing revenues, partially offset by increased
selling, general and administrative (SG&A) and technological expenses.
SG&A expenses rose primarily because of the launches of Arthrotec(R) and
the preparations for the launch of Celebrex(TM) arthritis treatment. On Dec.
31, 1998, the U.S. Food and Drug Administration (FDA) approved Celebrex(TM)
for the treatment of the signs and symptoms of osteoarthritis and adult
rheumatoid arthritis. Technological cost increases were driven by late-
stage, more expensive clinical trials. 

                 Pharmaceuticals Operating Measures
                              [GRAPH]

     Pretax net unusual charges in 1998 totaled $29 million and
included a gain of $35 million for the reversal of a prior year
restructuring reserve; and $64 million of charges, primarily for asset
impairments ($42 million) and work force reductions ($22 million).

PRIOR YEAR REVIEW

Net sales for the Pharmaceuticals segment in 1997 totaled $2.4 billion,
a $428 million, or 21 percent, increase vs. 1996 net sales. The sales
growth was fueled by higher sales volumes, led by strong performances
from Daypro(R), Arthrotec(R) and Ambien(R). In 1997, sales of these products
increased 26 percent from sales in the prior year. Segment sales also
benefited from $192 million of licensing revenues associated with a
collaborative alliance and product rights sales. Lower sales of
verapamil calcium channel blockers partially offset these increases.

     EBIT for the Pharmaceuticals segment in 1997 increased $33
million, or 13 percent, compared with EBIT in 1996. EBITDA totaled $422
million in 1997, an increase of $39 million, or 10 percent, from EBITDA
of $383 million in 1996. The improvements in EBIT and EBITDA resulted
primarily from the sales increases in key products, which was partially
offset by increased technological and selling expenses. Technological
expenses increased as new product candidates advanced to later, more
expensive phases of development. Selling expenses rose because of
expansions in Searle's sales force and new product launch preparations.

     In 1996, unusual charges included pretax restructuring charges 
of $125 million, principally for the cost of work force reductions 
($77 million) and facility rationalizations ($36 million).

36  1998 Monsanto Annual Report

<PAGE>
<PAGE>

------------------------------------------------------------------------

OUTLOOK

PHARMACEUTICALS

On Dec. 31, 1998, Searle received clearance from the FDA to market
Celebrex(TM) for the signs and symptoms of osteoarthritis and adult
rheumatoid arthritis. Celebrex(TM) was launched in the United States in
February 1999. It is expected to be launched in more than a dozen other
countries during 1999. In early 1999, Searle also received approval to
market the drug in Brazil and Mexico. Registration applications are
being submitted in various European and Asia-Pacific markets. Searle and
Pfizer Inc. will co-promote Celebrex(TM) in all countries except Japan,
where Searle has formed an alliance with Yamanouchi Pharmaceutical Co.
Ltd. to develop and commercialize the drug. The addition of Celebrex(TM)
further strengthens the company's presence in the arthritis market,
which was built on products such as Daypro(R), and Arthrotec(R) and Condrotec
-- two therapies that each combine a nonsteroidal anti-inflammatory drug
(NSAID) and an ulcer preventive drug.

     Ambien(R) continues as the leader in the U.S. hypnotic market with a
52 percent share of total prescriptions. Ambien(R) is licensed to a joint
venture in which Searle is a general partner. Under the joint venture
agreement amended in 1998, Searle's share of profits will be gradually
reduced from 90 percent in 1998 to 51 percent in early 2002. The partner
is expected to purchase Searle's interest in the joint venture in April
2002.

     Searle has Phase III product candidates in each of its four
therapeutic areas: arthritis/pain and inflammation, cardiovascular
disease, women's health care, and oncology. The Phase III arthritis/
pain and inflammation candidates are valdecoxib, which is being
developed for the management of pain and arthritis; and parecoxib, which
is an injectable COX-2 inhibitor for the management of acute pain. COX-2
is an enzyme which plays a role in pain and inflammation.

     In cardiovascular Phase III trials, eplerenone is being developed
for the treatment of congestive heart failure and high blood pressure.

     In women's health care, Searle is funding and participating in
research to develop hormone replacement therapy patches designed to
treat menopausal symptoms and to prevent osteoporosis. These multiple
product candidates are also in Phase III clinical trials.

     Searle also has two compounds in its Phase III oncology pipeline. 
Celecoxib, a COX-2 inhibitor, is in Phase III trials as a preventive
drug for certain types of cancer; and leridistim is being developed to
stimulate the replenishment of white blood cells and platelets in
chemotherapy patients.

     Searle announced in January 1999 that it was no longer pursuing
development of two other cardiovascular candidates -- the anti-platelet
aggregation compounds orbofiban and xemilofiban -- because they were not
as efficacious in long-term therapy as expected. Searle discontinued
development of a second-generation blood cell growth factor,
promegapoietin, after a small number of patients on the drug developed
low platelet counts during clinical trials. Development of PluriStem
(formerly daniplestim), a blood cell growth factor, was discontinued to
focus on leridistim and progenipoietin, which are more promising
alternatives.

     Searle's investment in R&D spending increased to 26 percent of
segment sales vs. 25 percent of sales in 1997. Management expects
technological expenses and selling expenses to increase in the next few
years as Searle continues to discover and develop new products and as it
commercializes products now in the pipeline. The company expects that
new alliances, similar to those forged with Pfizer and Yamanouchi, could
offset some of the costs associated with developing and marketing new
pharmaceuticals. Such alliances will accelerate development and broaden
the geographic reach of Searle products commercialized during the next
several years.


CORPORATE and Other
------------------------------------------------------------------------

The Corporate and Other segment comprises various smaller businesses, as
well as certain corporate items that are not allocated to the segments.
This segment's sales decreased in 1998 from 1997 levels by $56 million.
This change was primarily driven by lower sales of Enviro-Chem's
environmental abatement products. The divestiture of the Orcolite
opthalmics business in the second quarter of 1998 also contributed to
the sales decline. Monsanto shut down the Diamonex optical products
division in 1998. It also expects to divest its interests in the health
and wellness area in the first half of 1999. On an EBIT basis, the
corporate and other segment recorded a loss of $195 million in 1998 vs.
a loss of $119 million in 1997. The segment loss increased principally
because of the sales decline in the segment and because of higher
selling, general and administrative (SG&A) and technological spending,
primarily related to incentive compensation and information technology
expenses. The segment's loss, on an EBIT basis, decreased in 1997 from
that in 1996 primarily because of increased sales at Enviro-Chem and the
opthalmics business.
<PAGE>
     In 1998, unusual charges included pretax restructuring and other 
special charges of $137 million, principally for the cost of facility
shutdowns ($63 million) and asset impairments ($67 million). In 1996,
unusual items included pretax restructuring charges of $19 million, 
primarily for the cost of work force reductions ($6 million) and asset
impairments ($6 million).

                                       1998 Monsanto Annual Report  37

<PAGE>
<PAGE>

<TABLE>
Statement of Consolidated FINANCIAL POSITION
----------------------------------------------------------------------------------------------

<CAPTION>
(Dollars in millions, except share amounts)                               As of Dec. 31,
----------------------------------------------------------------------------------------------
                                                                       1998              1997
----------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>
ASSETS
----------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents                                           $    89           $   134
Trade receivables, net of allowances of $91 in 1998 and 
  $63 in 1997                                                         2,404             1,823
Miscellaneous receivables, prepaid expenses and other                 1,126               692
Deferred income tax asset                                               567               243
Inventories                                                           2,004             1,374
----------------------------------------------------------------------------------------------
  TOTAL CURRENT ASSETS                                                6,190             4,266
----------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land                                                                    150                99
Buildings                                                             1,213               914
Machinery and equipment                                               3,840             3,359
Construction in progress                                                819               329
----------------------------------------------------------------------------------------------
Total property, plant and equipment                                   6,022             4,701
Less accumulated depreciation                                         2,768             2,301
----------------------------------------------------------------------------------------------
  NET PROPERTY, PLANT AND EQUIPMENT                                   3,254             2,400
----------------------------------------------------------------------------------------------
INTANGIBLE ASSETS, net of accumulated amortization of $758 
  in 1998 and $853 in 1997                                            6,047             2,837
OTHER ASSETS                                                          1,233             1,271
----------------------------------------------------------------------------------------------
TOTAL ASSETS                                                        $16,724           $10,774
==============================================================================================
LIABILITIES AND SHAREOWNERS' EQUITY
----------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Account payable                                                     $   918           $   480
Wages and benefits                                                      444               251
Restructuring reserves                                                  273               176
Miscellaneous accruals                                                1,348               906
Short-term debt                                                       1,069             1,726
----------------------------------------------------------------------------------------------
  TOTAL CURRENT LIABILITIES                                           4,052             3,539
==============================================================================================
LONG-TERM DEBT                                                        6,259             1,979
POSTRETIREMENT LIABILITIES                                              848               735
OTHER LIABILITIES                                                       579               417
SHAREOWNERS' EQUITY:                                                                         
Common stock (authorized: 1,000,000,000 shares, par value $2)                                
  Issued: 846,927,220 shares in 1998 and 821,970,970 shares 
    in 1997                                                           1,694             1,644
  Additional contributed capital                                      1,389               321
  Treasury stock, at cost (217,632,240 shares in 1998 and 
    226,686,302 shares in 1997)                                      (2,508)           (2,570)
Reinvested earnings                                                   4,652             4,973
Reserve for ESOP debt retirement <F1>                                  (106)             (123)
Accumulated other comprehensive loss                                   (135)             (141)
----------------------------------------------------------------------------------------------
  TOTAL SHAREOWNERS' EQUITY                                           4,986             4,104
----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY                           $16,724           $10,774
==============================================================================================
<FN>
The above statement should be read in conjunction with pages
47-57 of this report.

<F1> ESOP stands for Employee Stock Ownership Plan. 
</TABLE>

38  1998 Monsanto Annual Report

<PAGE>
<PAGE>

Review of Changes in FINANCIAL POSITION
------------------------------------------------------------------------

FINANCIAL POSITION REMAINS STRONG

During 1998, Monsanto acquired several seed companies at a cost of $4.2
billion. These acquisitions included DEKALB Genetics Corp., Plant
Breeding International Cambridge Limited, and certain international seed
operations of Cargill Inc. Monsanto issued $944 million of common stock,
net of issuance costs, and $3.3 billion of long-term debt in 1998, to
fund these acquisitions. Monsanto's financial position remained strong
following the debt and common stock issuances, as evidenced by the
company's "A" debt rating. The ratio of total debt to total
capitalization was 60 percent at year-end 1998, compared with 47 percent
at year-end 1997. Various alternatives that the company is considering
for several of its nonstrategic businesses may result in cash proceeds
to reduce the company's debt.

     At the end of 1998, working capital was $1.4 billion higher than
at the end of 1997, primarily because of increases in inventories, trade
receivables, and other current assets, and decreases in short-term debt 
levels. These were partially offset by increases in other short-term 
liabilities, primarily accounts payable and miscellaneous accruals.
Inventories at year-end 1998 increased, principally in the Agricultural
Products segment because of seed company acquisitions. Trade receivables
at year-end 1998 increased compared with those at the prior year-end,
primarily because of seed company acquisitions, higher sales levels, and
changes in credit terms for the Agricultural Products segment.
Miscellaneous receivables, prepaid expenses, and other assets increased
because the net assets of businesses held for sale at year-end 1998 were
classified as a single amount in other current assets rather than in
various categories of assets and liabilities at year-end 1997. During
1998, Monsanto refinanced a portion of its short-term debt with long-
term debt, which resulted in lower short-term debt outstanding at year-
end 1998 than at year-end 1997.

     The amount of net property, plant and equipment at year-end 1998
was higher than the comparable 1997 amount, as $979 million in capital
additions and the effects of acquisitions exceeded 1998 depreciation
expense and divestitures. The increase in intangible assets was
attributable primarily to the seed acquisitions.

     Total deferred tax assets, both current and noncurrent, of $892
million at year-end 1998 were related primarily to U.S. operations,
which generally have a strong earnings history.

     Monsanto uses financial markets worldwide for its financing needs.
It has available various short- and medium-term bank credit facilities,
which are discussed in the Short-Term Debt and Credit Arrangements note
under the Notes to Financial Statements. These credit facilities give
Monsanto the financing flexibility it needs to satisfy future short- and
medium-term funding requirements. To maintain adequate financial
flexibility and access to debt markets worldwide, Monsanto management
intends to maintain an "A" debt rating.

     Monsanto's commitments and contingencies are described in the
Commitments and Contingencies note under the Notes to Financial
Statements.

<TABLE>
<CAPTION>
                                                                ------
KEY FINANCIAL STATISTICS                                         1998        1997        1996
----------------------------------------------------------------------------------------------
<S>                                                               <C>         <C>         <C>
CURRENT RATIO (Current assets divided by current liabilities)     1.5         1.2         1.3
TRADE RECEIVABLES -- DAYS SALES OUTSTANDING                       104          95          99
  (Fourth-quarter trade receivables divided by fourth-quarter
    net sales times 30 days)
INVENTORY TURNOVER RATIO (Cost of goods sold divided by 
  inventory)                                                      1.8         2.2         2.3
INTEREST COVERAGE<F1>                                             0.2         2.9         5.3
  (Income (Loss) from continuing operations before interest
    expense and income taxes divided by total interest cost)
CASH PROVIDED BY CONTINUING OPERATIONS/TOTAL DEBT                   6%         10%         42%
TOTAL DEBT/TOTAL CAPITALIZATION<F2>                                60%         47%         38%
==============================================================================================
<FN>
<F1> If the effects of the restructuring, in-process research and 
     development (R&D) write-offs, and other unusual charges were
     excluded in 1998, the interest coverage ratio would have been 3.5.
     If the effects of the in-process R&D write-offs were excluded in
     1997, the interest coverage ratio would have been 6.6. If the
     effects of the restructuring and other unusual charges were
     excluded in 1996, the interest coverage ratio would have been 8.2.

<F2> Total capitalization is the sum of short-term debt, long-term debt 
     and shareowners' equity.
</TABLE>

                                       1998 Monsanto Annual Report  39
<PAGE>
<PAGE>

<TABLE>
Statement of Consolidated CASH FLOW
-------------------------------------------------------------------------------------------------

<CAPTION>
(Dollars in millions)                                                   Year Ended Dec. 31,
-------------------------------------------------------------------------------------------------
                                                                    1998        1997        1996
-------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>        <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
-------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Income (loss) from continuing operations                         $  (250)    $   294     $   413
Add income taxes -- continuing operations                              7          72         140
-------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes        (243)        366         553
Adjustments to reconcile to Cash Provided by Continuing
 Operations:
  Income tax refunds (payments)                                       44        (134)       (308)
  Items that did not use cash:
    Depreciation and amortization                                    636         487         423
    Acquired in-process research and development expenses            402         684
    Restructuring and special charges                                638                     376
    Other                                                             58         (16)         50
  Working capital changes that provided (used) cash:
    Accounts receivable                                             (652)       (268)       (330)
    Inventories                                                     (282)       (113)        (86)
    Accounts payable and accrued liabilities                        (288)       (288)        198
    Receivables from asset sales and licensing arrangements          180        (232)         (9)
    Other                                                            (63)        (81)         12
  Other items                                                          2         (51)         61
-------------------------------------------------------------------------------------------------
CASH PROVIDED BY CONTINUING OPERATIONS                               432         354         940
CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS                              (138)        263
-------------------------------------------------------------------------------------------------
TOTAL CASH PROVIDED BY OPERATIONS                                    432         216       1,203
-------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Property, plant and equipment purchases                             (979)       (644)       (500)
Seed company acquisitions and investments                         (4,061)     (1,325)       (470)
Other acquisitions and investments                                  (254)       (618)       (250)
Investment and property disposal proceeds                            199          88         165
Discontinued operations -- other                                                 (44)       (200)
-------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES                                 (5,095)     (2,543)     (1,255)
-------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net change in short-term financing                                  (282)      2,372         297
Long-term debt proceeds                                            3,878         208         122
Long-term debt reductions                                            (85)       (142)       (177)
Common stock issuance                                                944                     
Treasury stock purchases                                                                    (253)
Dividend payments                                                    (73)       (294)       (343)
Common stock issued under employee stock plans                        62          91         142
Cash transferred to Solutia Inc.                                                 (75)
Other financing activities                                           174         135         133
-------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                    4,618       2,295         (79)
-------------------------------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS                                (45)        (32)       (131)
CASH AND CASH EQUIVALENTS:
  Beginning of year                                                  134         166         297
-------------------------------------------------------------------------------------------------
  END OF YEAR                                                    $    89     $   134     $   166
=================================================================================================
</TABLE>

The above statement should be read in conjunction with pages 47-57 of
this report.

The effect of exchange rate changes on cash and cash equivalents was not
material.

Cash payments for interest (net of amounts capitalized) were $331
million in 1998, $210 million in 1997, and $195 million in 1996.


40  1998 Monsanto Annual Report

<PAGE>
<PAGE>

Review of CASH FLOW
------------------------------------------------------------------------ 

CASH FLOW REMAINS STRONG

Cash provided by continuing operations totaled $432 million in 1998,
compared with $354 million in 1997. EBITDA excluding unusual charges was
slightly higher in 1998 than in 1997, and cash flow benefited from the
collection in 1998 of amounts related to 1997 Pharmaceutical licensing
and product rights sales. Working capital needs were higher in 1998,
primarily because of seed company acquisitions, higher sales levels, and
changes in credit terms for the Agricultural Products segment. Working
capital as a percent of net sales was 25 percent in 1998, compared with
10 percent in 1997. Higher interest payments in 1998 were partially
offset by the collection of income tax refunds. Cash provided by
continuing operations in 1997 included higher employee incentive payouts
for the final payment of certain deferred amounts in a three-year
incentive plan.

              Cash Provided by Continuing Operations
                            [GRAPH]

   Monsanto's operations have historically generated sufficient cash 
to fund both its existing businesses and its research and development
expenses.

   In 1998, 1997 and 1996, investment and property disposal proceeds
came primarily from sales of nonstrategic properties and investments.
Major uses of cash in 1998, 1997 and 1996 included investments, capital
expenditures and dividends. Major investments in 1998 included the
acquisitions of DEKALB Genetics Corp., Plant Breeding International
Cambridge Limited, and certain international seed operations of Cargill
Inc. Major investments in 1997 were the acquisitions of the Asgrow
Agronomics seed business, Holden's Foundation Seeds Inc., Corn States
Hybrid Service Inc., and Sementes Agroceres S.A. seed companies, and the
remaining interest in Calgene Inc. Major investments in 1996 were an
equity investment in DEKALB, an investment in Calgene, and the
acquisition of the plant biotechnology assets of Agracetus. Monsanto's
capital expenditures, which focused on improved technology and capacity
expansions, totaled $979 million in 1998.

   To the extent the company's cash provided by operations was not
sufficient to fund its cash needs during 1998, debt and common stock
were issued to finance these requirements. Significant debt issuances
included $2.5 billion of long-term debt with various maturities issued
in December 1998, and 17,500,000 units of 6.5 percent Adjustable
Conversion-rate Equity Security (ACES) units with a public offering
price of $40 per unit (stated value), or $700 million total, issued in
November 1998. The company issued 25 million shares of common stock for
$944 million in November 1998.

DIVIDEND POLICY IS UNCHANGED

Monsanto has paid quarterly dividends on its common shares without
interruption since 1928. Throughout 1998, the quarterly dividend paid
was $0.03 per share. The dividend rate reflects a policy set by the
board of directors following the spinoff of the company's chemical
businesses in 1997. That policy was adopted in order to fund
appropriately the company's growth opportunities and to create long-term
economic value for shareowners. Monsanto's dividend policy also reflects
the company's expectations of future growth, profitability, financial
position, the need to finance acquisitions, working and fixed capital
needs, scheduled debt repayments, and economic conditions, including
inflation.

   Monsanto's common stock is traded principally on the New York
Stock Exchange. The number of shareowners of record as of Feb. 12, 1999,
was 63,013. The high and low common stock prices on that date were
48 7/8 and 46 15/16, respectively.
<PAGE>
<TABLE>
Statement of Consolidated COMPREHENSIVE INCOME (LOSS)
-----------------------------------------------------------------------------------------------

<CAPTION>
(Dollars in millions)                                                 Year Ended Dec. 31,
-----------------------------------------------------------------------------------------------
                                                                 1998        1997         1996
-----------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>          <C>
NET INCOME (LOSS)                                               $(250)      $ 470        $ 385
-----------------------------------------------------------------------------------------------
Other Comprehensive Income (Loss):
  Foreign currency translation adjustments                         12        (138)         (91)
  Unrealized net gains (losses) on investments:
    Unrealized net holding gains (losses) arising during
      period, before tax                                           (1)        (12)         (37)
    Related income tax benefit                                      2           4           14
    Reclassification adjustments for losses included in
      net income                                                   16
    Related income tax expense                                     (6)                         
  Additional minimum pension liability adjustment, before tax     (24)        (27)             
    Related income tax benefit                                      7          11
-----------------------------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)                             6        (162)        (114)
-----------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS)                                     $(244)      $ 308        $ 271
===============================================================================================
</TABLE>

The above statement should be read in conjunction with pages 47-57 of
this report.

                                       1998 Monsanto Annual Report  41


<PAGE>
<PAGE>

Additional FINANCIAL INFORMATION
------------------------------------------------------------------------

RISK MANAGEMENT

Monsanto continually evaluates risk retention and insurance levels for
product liability, property damage and other potential risk areas. The
company devotes significant efforts to maintaining and improving safety
and internal control programs, which reduce its exposure to certain
risks. Management's decision about the amount of insurance coverage to
purchase from unaffiliated companies and the appropriate amount of risk
to retain is based on the cost and availability of insurance and the
likelihood of a loss. Since 1986, Monsanto's liability insurance has
been a "claims made" policy form. Management believes that the current
levels of risk retention are consistent with those of comparable
companies in the various industries in which Monsanto operates, and are
reasonable for Monsanto. There can be no assurance that the company will
not incur losses beyond the limits of, or outside the coverage of, its
insurance. Monsanto's liquidity, financial position and profitability
are not expected to be materially affected by the levels of risk
retention that the company accepts.

COMPANY PREPARES FOR YEAR 2000

Beginning in 1996, the company initiated the Global Year 2000 program
(Y2K program) to ensure that its business would not be adversely
affected by the inability of many existing computer systems to
distinguish between the year 1900 and the year 2000. The Y2K program
covers more than 100 company sites in 33 countries.

DESCRIPTION AND STATUS OF THE Y2K PROGRAM
INTERNAL SYSTEMS: The company's Y2K program encompasses all internal
systems, including conventional information technology (IT) business
applications, IT infrastructure and embedded systems. Embedded systems
include process control and manufacturing, and laboratory automation
systems, as well as site-specific facility management systems, such as
elevator service and heating and cooling equipment. The remediation
process applied to each area consists of four-steps: identification of
the systems or components that need to be replaced or fixed, assessment
of the work required, prioritization of the work, and successful
completion of the required remediation activity. The target date for
completion of all remediation work for internal systems is the third
quarter of 1999.

   The following list summarizes the status of the Y2K program with
respect to internal systems:

<TABLE>
<CAPTION>
IT APPLICATIONS PORTFOLIO:         
--------------------------------------------------------------------------------------------
                                                           AS OF DEC. 31,    AS OF SEPT. 30,
                                                                1998              1998
--------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>
Number of applications identified                              1,280             1,260
   Applications assessed for 
     Y2K compliance                                              100%              100%
   Applications compliant                                         55%               43%
   Applications to be remediated 
     through replacements and upgrades                            23%               27%
   Anticipated retirements                                         3%                3%
   Applications at various stages of 
     renovation, redevelopment or testing                         19%               27%
                                                           --------------

<CAPTION>
IT INFRASTRUCTURE PRODUCTS:
--------------------------------------------------------------------------------------------
                                                            AS OF DEC. 31,   AS OF SEPT. 30,
                                                                1998              1998
--------------------------------------------------------------------------------------------
<S>                                                              <C>               <C>
Number of products identified                                    530               530
   Products researched for compliance                             93%               43%
   Products compliant                                             56%               18%
   Products to be remediated with 
     minor upgrades                                               10%                1%
   Noncompliant products to be 
     remediated or retired                                        27%               24%
                                                           --------------

<PAGE>
<CAPTION>
EMBEDDED SYSTEMS:
--------------------------------------------------------------------------------------------
                                                            AS OF DEC. 31,   AS OF SEPT. 30,
                                                                1998              1998
--------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>
Number of process control 
 products identified                                           7,600             4,600
   Products researched for compliance                             66%               31%
   Products compliant                                             54%               24%
   Products application dependent                                  4%                4%
   Noncompliant products to be 
     remediated or retired                                         8%                3%

Number of laboratory automation 
 products identified                                           5,000             3,900
   Products researched for compliance                             75%                0%
   Products compliant                                             52%                  
   Products application dependent                                 10%                  
   Noncompliant products to be 
     remediated or retired                                        13%                  

Number of site facilities products identified                    700               300
   Products researched for compliance                             69%                9%
   Products compliant                                             56%                7%
   Products application dependent                                  7%                2%
   Noncompliant products to be 
     remediated or retired                                         6%
                                                           --------------
</TABLE>

42  1998 Monsanto Annual Report



<PAGE>
<PAGE>

------------------------------------------------------------------------

SUPPLIERS: Monsanto has contacted its major suppliers to assess their
preparations for the year 2000. More than 650 key corporate suppliers
have been identified and contacted in addition to numerous suppliers
critical to individual locations. Approximately 50 percent of the
company's key corporate suppliers have been identified as likely to be
Y2K compliant. The status of another 24 percent of these key suppliers
is of concern and further action is being taken by managers responsible
for these suppliers or supplier contracts. Approximately 26 percent of
the key suppliers have not informed the company of their compliance
status or plans. Where appropriate, Monsanto representatives will
conduct in-depth investigations or make on-site visits to determine the
ability of certain suppliers to be Y2K compliant.

CONTINGENCY PLANS: The company's contingency plans are evolving as it
proceeds with the Y2K program. Monsanto began a major initiative in
November 1998 with the establishment of the Y2K business continuity
team. The team's assignment is to clearly define critical, global
infrastructure components and failure modes; to assume Y2K related
failure or a high risk of critical failure; and to draft appropriate
contingency plans. The team will expand existing contingency plans as
appropriate. Its goal is to have all plans in place no later than the
third quarter of 1999. Where a supplier's performance is in doubt,
Monsanto's contingency plans may include the stockpiling of raw
materials or obtaining supplies from a different vendor. The company
will increase the number of tests for pharmaceutical and nutrition
products as the year 2000 nears, and it also may increase production of
critical product inventory.

COSTS
The costs associated with Y2K compliance for Monsanto are currently
projected at approximately $30.5 million. Through Dec. 31, 1998, the
company spent $15.3 million. The remaining estimated costs are expected
to be funded from ongoing operations. These costs encompass only the
company's Y2K remediation efforts and do not include expenses such as
overtime wages, additional warehouse space, or increased finance costs
that may be incurred upon implementation of the company's contingency
plans. Monsanto does not expect the costs associated with its year 2000
efforts to be materially adverse to the company's business operations,
financial position, profitability or liquidity.


RISKS
Monsanto believes that the Y2K program follows both prudent and best
demonstrated practices (including contingency planning) and makes use of
appropriate internal and external skills to minimize the effect of any
failures. However, because the year 2000 problem is unprecedented in
scope and complexity, no complete assurance of risk avoidance can be
given. Failure to correct a material year 2000 problem could result in
lost profits or breach of contract claims if the company is unable to
deliver its products pursuant to the terms of its agreements, or if such
products fail to meet contract specifications, or if claims for personal
injury or property damage at its facilities are made and upheld.
Monsanto also may experience lost revenues if any of its customers
experience Y2K problems which cause them to order less product, or
otherwise causes them financial difficulties that result in a breach of
their payment obligations.

   Readers are cautioned that forward-looking statements contained in
this section should be read in conjunction with the company's
disclosures under the heading "Disclosure of Forward-Looking
Statements."

EURO CONVERSION

On Jan. 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between their national currencies and
the euro. During the transition period, from Jan. 1, 1999, until June
30, 2002, both the national currencies and the euro will be legal
currencies. Beginning July 1, 2002, the national currencies of the
participating countries no longer will be legal tender for any
transactions.

   In September 1997, Monsanto formed a cross-functional team and
engaged a consultant to prepare for the euro conversion. As of Jan. 1,
1999, Monsanto began to engage in euro-denominated transactions and was
legally compliant. Monsanto expects to have all affected information
systems fully converted by April 2001. Monsanto does not expect the euro
conversion to have a material effect on its competitive position,
business operations, financial position or results of operations.


                                       1998 Monsanto Annual Report  43



<PAGE>
<PAGE>

FINANCIAL Instruments
------------------------------------------------------------------------

MARKET RISK MANAGEMENT

Monsanto is exposed to market risk, including changes in interest rates,
currency exchange rates, and commodity prices. To manage the volatility
relating to these exposures, the company enters into various derivative
transactions. Monsanto does not hold or issue derivative financial
instruments for trading purposes. For more information about how
Monsanto manages specific risk exposures, see the Currency Translation
note, the Inventories note, and the Long-Term Debt note in Notes to
Financial Statements.

   The tables below provide information about the company's
derivative instruments and other financial instruments that are
sensitive to changes in interest rates, currency exchange rates, and
commodity prices. The financial instruments are grouped by market risk
exposure category. Instrument denominations are indicated in
parentheses. For instruments denominated in currencies other than the
U.S. dollar, the information is presented by its equivalent in U.S.
dollars, the company's reporting currency.

------------------------------------------------------------------------
Significant interest rate risk sensitive instruments as of Dec. 31,
1998, were:

<TABLE>
<CAPTION>
                                                                         EXPECTED MATURITY DATE
                                     --------------------------------------------------------------------------------------------
(Dollars in millions, 
except average interest rate)         1999        2000        2001        2002        2003  THEREAFTER       TOTAL  FAIR VALUE
---------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>       <C>           <C>         <C>       <C>         <C>         <C>
LONG-TERM DEBT:
  Fixed rate ($US)
    Principal amount                              $164      $  543        $ 33        $797      $2,813      $4,350      $4,632
    Average interest rate                          6.1%        5.6%        7.5%        6.1%        6.6%        6.5%
  Fixed rate (Japanese yen)
    Principal amount                                                                            $   86      $   86      $  125
    Average interest rate                                                                          5.6%        5.6%
  Variable rate ($US)
    Principal amount<F1>                          $  8      $1,009        $ 16        $575      $  208      $1,816      $1,816
    Average interest rate<F2>                      4.3%        5.3%        4.2%        4.3%        4.4%        4.8%

SHORT-TERM DEBT:
  Fixed rate ($US)
    Principal amount                  $276                                                                  $  276      $  277
    Average interest rate              7.5%                                                                    7.5%
  Variable rate ($US)
    Principal amount                  $542                                                                  $  542      $  542
    Average interest rate<F2>          5.3%                                                                    5.3%
---------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Includes $1.0 billion of commercial paper that is assumed to be 
     renewed through 2001, when the company's $1.0 billion credit
     facility expires.
<F2> Average variable rates are based on 1998 year-end variable rates. 
     Actual rates may be higher or lower.
</TABLE>


----------------------------------------------------------------------
Significant currency exchange rate risk sensitive instruments as of 
Dec. 31, 1998 (dollars in millions, except average exchange rate):

<TABLE>
<CAPTION>
                                                           AVERAGE
                                        NOTIONAL          EXCHANGE         FAIR
EXPECTED MATURITY 1999                    AMOUNT              RATE<F1>    VALUE
--------------------------------------------------------------------------------
<S>                                         <C>            <C>             <C>
FORWARD CONTRACTS:
  Sale of British pound                     $381             0.600         $379
  Sale of Brazilian real                     128             1.254          125
  Sale of Canadian dollar                     64             1.542           64
  Sale of Australian dollar                   42             1.562           40
  Sale of South African rand                  30             5.900           29
  Sale of Mexican peso                        15            10.430           15
  Sale of Polish zloty                        21             3.532           21
  Sale of Czech crown                         11            30.130           11
  Sale of Philippine peso                      4            46.880            5
  Purchase of Japanese yen                    26           117.560           27
--------------------------------------------------------------------------------
<FN>
<F1> Average contract exchange rates are stated in currency units per 
     U.S. dollar.
</TABLE>
<PAGE>
Significant commodity price risk sensitive instruments as of Dec. 31,
1998:

<TABLE>
<CAPTION>                     
                                                           EXPECTED
                                                           MATURITY        FAIR
                                                               1999       VALUE
--------------------------------------------------------------------------------
<S>                                                           <C>          <C>
CORN FUTURES CONTRACTS:
  Contract volumes (million bushels)                            16.4
  Weighted average price (per bushel)                         $  2.31
  Contract amount ($US in millions)                           $ 38         $ 35

SOYBEAN FUTURES CONTRACTS:
  Contract volumes (million bushels)                            24.0
  Weighted average price (per bushel)                         $  5.64
  Contract amount ($US in millions)                           $135         $132
--------------------------------------------------------------------------------
</TABLE>

     Contract amounts are used to calculate the contractual payments
and quantity of the commodity to be exchanged.


44  1998 Monsanto Annual Report

<PAGE>
<PAGE>

<TABLE>
Statement of Consolidated SHAREOWNERS' EQUITY
--------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
(Dollars in millions)                                                                                 Year Ended Dec. 31,
--------------------------------------------------------------------------------------------------------------------------------
                                                                                               1998           1997         1996
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>            <C>          <C>
COMMON STOCK:
Balance, Jan. 1                                                                             $ 1,644        $ 1,644      $   329
Issuance of shares (24,956,250 shares in 1998)                                                   50
Par value of stock issued in five-for-one stock split                                                                     1,315
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                            $ 1,694        $ 1,644      $ 1,644
--------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL CONTRIBUTED CAPITAL:
Balance, Jan. 1                                                                             $   321        $    65      $   902
Employee stock plans and ESOP<F1>                                                               174            135          133
Issuance of shares                                                                              894
Par value of stock issued in five-for-one stock split                                                                      (970)
Spinoff of chemical businesses                                                                                 121
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                            $ 1,389        $   321      $    65
--------------------------------------------------------------------------------------------------------------------------------
TREASURY STOCK:
Balance, Jan. 1                                                                             $(2,570)       $(2,661)     $(2,550)
Shares purchased (8,244,500 shares in 1996)                                                                                (253)
Net shares issued under employee stock plans (9,054,062 shares in 1998; 
  10,908,529 shares in 1997; and 15,269,164 shares in 1996)                                      62             91          142
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                            $(2,508)       $(2,570)     $(2,661)
--------------------------------------------------------------------------------------------------------------------------------
REINVESTED EARNINGS:
Balance, Jan. 1                                                                             $ 4,973        $ 4,795      $ 5,097
Net income (loss)                                                                              (250)           470          385
Dividends (net of ESOP<F1> tax benefits)                                                        (71)          (292)        (342)
Par value of stock issued in five-for-one stock split                                                                      (345)
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                            $ 4,652        $ 4,973      $ 4,795
--------------------------------------------------------------------------------------------------------------------------------
RESERVE FOR ESOP DEBT RETIREMENT:
Balance, Jan. 1                                                                             $  (123)       $  (174)     $  (181)
Allocation of ESOP<F1> shares                                                                    17             20            7
Spinoff of chemical businesses                                                                                  31
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                            $  (106)       $  (123)     $  (174)
================================================================================================================================
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
--------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED CURRENCY ADJUSTMENT:
Balance, Jan. 1                                                                             $  (128)       $    10      $   101
Translation adjustments                                                                          12           (127)         (91)
Spinoff of chemical businesses                                                                                 (11)
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                               (116)          (128)          10
--------------------------------------------------------------------------------------------------------------------------------
UNREALIZED NET GAINS ON INVESTMENTS:
Balance, Jan. 1                                                                                   3             11           34
Unrealized net gains (losses) on investments, net of reclassification adjustment                 11             (8)         (23)
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                                 14              3           11
--------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL MINIMUM PENSION LIABILITY:
Balance, Jan. 1                                                                                 (16)               
Additional minimum pension liability adjustment                                                 (17)           (16)
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                                (33)           (16)             
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
--------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31                                                                            $  (135)       $  (141)     $    21
================================================================================================================================
<FN>
The above statement should be read in conjunction with
pages 47-57 of this report.

<F1> ESOP stands for Employee Stock Ownership Plan.
</TABLE>

                                       1998 Monsanto Annual Report  45

<PAGE>
<PAGE>

QUARTERLY Data (unaudited)
------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  FIRST      SECOND       THIRD      FOURTH       TOTAL
                                                                QUARTER     QUARTER     QUARTER     QUARTER        YEAR
(Dollars in millions, except share amounts)
------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>         <C>         <C>         <C>         <C>
NET SALES
==============================================================================================================================
1998                                                             $2,044      $2,470      $1,986      $2,148      $8,648
1997                                                              1,875       2,095       1,724       1,820       7,514
1996                                                              1,612       1,847       1,442       1,447       6,348
------------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM CONTINUING OPERATIONS
==============================================================================================================================
1998                                                                196         257        (100)       (603)       (250)
1997                                                                206         250        (167)          5         294
1996                                                                222         316         107        (232)        413
------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)
==============================================================================================================================
1998                                                                196         257        (100)       (603)       (250)
1997                                                                274         324        (133)          5         470
1996                                                                260         365         170        (410)        385
------------------------------------------------------------------------------------------------------------------------------

DILUTED EARNINGS (LOSS) PER SHARE -- CONTINUING OPERATIONS<F1>
==============================================================================================================================
1998                                                               0.32        0.41       (0.17)      (1.00)      (0.41)
1997                                                               0.34        0.41       (0.28)       0.01        0.48
1996                                                               0.37        0.53        0.18       (0.39)       0.69
------------------------------------------------------------------------------------------------------------------------------

DILUTED EARNINGS (LOSS) PER SHARE<F1>
==============================================================================================================================
1998                                                               0.32        0.41       (0.17)      (1.00)      (0.41)
1997                                                               0.45        0.54       (0.23)       0.01        0.77
1996                                                               0.43        0.62        0.28       (0.69)       0.64
------------------------------------------------------------------------------------------------------------------------------

DIVIDENDS PER SHARE
==============================================================================================================================
1998                                                              0.030       0.030       0.030       0.030       0.120
1997                                                              0.150       0.160       0.160       0.030       0.500
1996                                                              0.138       0.150       0.150       0.150       0.588
------------------------------------------------------------------------------------------------------------------------------

COMMON STOCK PRICE<F2>
==============================================================================================================================
1998
HIGH                                                                53 1/16     60 3/8       63 15/16    55 7/8      63 15/16
LOW                                                                 38 5/16     51 5/16      50 1/2      33 3/4      33 3/4
------------------------------------------------------------------------------------------------------------------------------
1997
High                                                                42 1/4      46 1/2       52 5/16     45 3/4      52 5/16
Low                                                                 34 3/4      37           36 3/8      38          34 3/4
------------------------------------------------------------------------------------------------------------------------------
1996
High                                                                31 3/4      34 1/2       37 7/8      43 1/4      43 1/4
Low                                                                 23          28 1/8       26 1/8      36 1/2      23
------------------------------------------------------------------------------------------------------------------------------

<FN>
<F1> Because Monsanto reported a loss from continuing 
     operations for the fourth quarter and the year ended Dec. 31,
     1998, generally accepted accounting principles require diluted
     loss per share to be calculated using weighted average common
     shares outstanding, excluding common stock equivalents. As a
     result, the quarterly earnings (loss) per share do not total to
     the full year amount.

<F2> Stock prices were not restated to reflect the spinoff of the 
     chemical businesses on Sept. 1, 1997.
</TABLE>

Historically, Monsanto's income from continuing operations has been
higher during the first half of the year, primarily because of the
concentration of generally more profitable sales by the Agricultural
Products segment during that part of the year.
<PAGE>
     Income from continuing operations for the second quarter of 1998
included a net aftertax charge of $13 million, or $0.02 per share, for
the cost of exiting the company's optical products business offset by a
restructuring reserve reversal. Income from continuing operations for
the third quarter of 1998 included an aftertax charge of $187 million,
or $0.30 per share, for the write-off of in-process research and
development (R&D) for the acquisition of Plant Breeding International 
Cambridge Limited (PBIC). Income from continuing operations for the
fourth quarter of 1998 included an aftertax charge of $630 million, or
$1.01 per share, for restructuring and special charges, write-offs for
acquired in-process R&D, and charges for the cancellation of DEKALB
stock options. The write-off of in-process R&D in the fourth quarter of
1998 was for the acquisition of DEKALB Genetics Corp. and certain
international seed operations of Cargill Inc., net of a revision of the
amount of in-process R&D written off in the third quarter related to the
PBIC acquisition. A revision in the estimate was made in accordance with
the U.S. Securities and Exchange Commission's (SEC) recently clarified
guidance on in-process R&D. This revision was made as an adjustment to
the initial purchase price allocation, which was not yet finalized
because of outstanding information, primarily related to intangible
asset valuations and liabilities assumed.

     Income from continuing operations for each quarter in 1997 was
affected by the write-off of in-process R&D from acquisitions. First-
quarter 1997 included an aftertax charge of $63 million, or $0.11 per
share, principally for the acquisition of the Asgrow Agronomics seed
business. Second-quarter 1997 included an aftertax charge of $72
million, or $0.11 per share, for the Calgene Inc. acquisition. Third-
quarter 1997 included an aftertax charge of $270 million, or $0.45 per
share, for the Holden's Foundation Seeds Inc. acquisition. Fourth-
quarter 1997 included $50 million, or $0.08 per share, for the Sementes
Agroceres S.A. acquisition.

     Net income for the fourth quarter of 1996 included an aftertax
charge of $500 million, or $0.84 per share, associated with the
company's spinoff of the chemical businesses and other unusual items.
The aftertax expense related to continuing operations for these actions
was $257 million, or $0.43 per share.

46  1998 Monsanto Annual Report



<PAGE>
<PAGE>

NOTES to Financial Statements 
------------------------------------------------------------------------

SIGNIFICANT ACCOUNTING POLICIES

Monsanto's significant accounting policies are italicized in the
following Notes to Financial Statements.

BASIS OF PRESENTATION

Previously reported amounts have been reclassified to make them
consistent with the current presentation. 

BASIS OF CONSOLIDATION

The consolidated financial statements include the company and its
majority-owned subsidiaries. Intercompany transactions have been
eliminated in consolidation. Other companies in which Monsanto has a 
significant ownership interest (generally greater than 20 percent) are
included in other assets in the Statement of Consolidated Financial
Position. Monsanto's share of these companies' net earnings or losses is
included in other expense (income) -- net in the Statement of
Consolidated Income (Loss).

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements and that affect revenues and expenses during
the period reported. Estimates are adjusted to reflect actual experience
when necessary. Significant estimates are used to account for
restructuring reserves, self-insurance reserves, employee benefit plans,
asset impairments, in-process research and development (R&D), business
acquisitions, and contingencies.

NEW ACCOUNTING STANDARDS

Effective Jan. 1, 1998, Monsanto adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS
130). FAS 130 establishes standards for the reporting and display of
comprehensive income and its components in financial statements.
Comprehensive income includes all nonshareowner changes in equity, and
consists of net income, foreign currency translation adjustments,
unrealized gains and losses on available-for-sale securities, and
additional minimum pension liability adjustments.

     Effective Jan. 1, 1998, Monsanto adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (FAS 131). FAS 131 establishes
standards for defining operating segments and for reporting information
about operating segments in financial statements. It also establishes
standards for related disclosures about products, geographic areas, and
major customers. Monsanto's reportable operating segments did not change
as a result of adopting FAS 131. However, Monsanto changed its publicly
reported measure of segment profitability from operating income to EBIT
excluding unusual items to make it consistent with its internally
reported measure of segment profitability.

     Effective Jan. 1, 1998, Monsanto adopted the American Institute of
Certified Public Accountants' Statement of Position 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal
Use" (SOP 98-1). SOP 98-1 provides guidance about when to capitalize
costs incurred for internal-use computer software. Monsanto's previous
accounting policies were essentially in compliance with the provisions
of this statement, therefore adoption of SOP 98-1 did not have a
material effect on the company's results of operations.

     In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). FAS 133
requires all derivatives to be recognized as assets or liabilities on
the balance sheet and measured at fair value. Changes in the fair value
of derivatives should be recognized in either net income or other
comprehensive income, depending on the designated purpose of the
derivative. This statement is effective for Monsanto on Jan. 1, 2000.
Because of the effect of recent acquisitions, Monsanto is reassessing
its position and has not yet determined the effect this statement will
have on its consolidated financial position or results of operations.

CURRENCY TRANSLATION

The financial statements for most of Monsanto's entities outside 
the United States are translated into U.S. dollars at current exchange
rates. Unrealized currency translation adjustments in the Statement of
Consolidated Financial Position are accumulated in shareowners' equity
as a component of Accumulated Other Comprehensive Loss. The financial
statements of entities outside the United States that operate in highly
inflationary economies are translated at either current or historical
exchange rates, as appropriate. These currency adjustments are included
in net income.

<PAGE>
     Currencies in which Monsanto has significant exposures are the
euro (which, as of Jan. 1, 1999, replaced the Belgian franc, German
mark, Italian lira and eight other European currencies), Japanese yen
and U.K. pound sterling. Other currency exposures include the Argentine
peso, Brazilian real, and Canadian dollar. Currency restrictions are not
expected to have a significant effect on Monsanto's cash flow, liquidity
or capital resources.

     Currency option contracts are purchased to manage currency
exposure for anticipated transactions (for example, expected export
sales in the following year denominated in foreign currencies). Currency
option and forward contracts are used to manage other currency
exposures, primarily for receivables and payables denominated in
currencies other than the entities' functional currencies. This hedging
activity is intended to protect the company from adverse fluctuations in
foreign currencies vs. the entities' functional currencies.

                                       1998 Monsanto Annual Report  47





<PAGE>
<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued)
------------------------------------------------------------------------

     As of Dec. 31, 1998, Monsanto had currency forward contracts to
purchase $26 million and to sell $697 million of other currencies, and
purchased currency option contracts to sell $85 million of other
currencies. Gains and losses on contracts that are designated and
effective as hedges are deferred and are included in the recorded value
of the transaction being hedged. Net deferred hedging losses as of Dec.
31, 1998, were not material. Gains and losses on other currency forward
and option contracts are included in net income immediately. Monsanto is
subject to loss if the counterparties to these contracts do not perform.

PRINCIPAL ACQUISITIONS AND DIVESTITURES

In 1998, the company made strategic acquisitions of several seed
companies. In July 1998, Monsanto acquired Plant Breeding International
Cambridge Limited (PBIC) for approximately $525 million. In October
1998, Monsanto announced the acquisition of certain international seed
operations of Cargill Inc. in Asia, Africa, Central and South America,
and Europe, excluding certain operations in the United Kingdom, for
approximately $1.4 billion. In December 1998, Monsanto completed its
acquisition of DEKALB Genetics Corp. for approximately $2.3 billion.
Monsanto recorded the following pretax charges in 1998 for the write-off
of acquired in-process research and development (R&D) related to these
acquisitions: approximately $60 million for PBIC, approximately $150
million for DEKALB and approximately $190 million for certain Cargill
seed operations. The amounts of these write-offs were determined by an
independent valuation. Management believes that the technological
feasibility of the acquired in-process R&D has not been established and
that it has no alternative future uses. Accordingly, the amounts
allocated to in-process R&D are required to be expensed immediately
under generally accepted accounting principles. 

     In 1997, Monsanto also acquired several other seed companies. In
February 1997, the company completed its acquisition of the Asgrow
Agronomics seed business for approximately $250 million. In May 1997,
the company completed its acquisition of the remaining shares of Calgene
Inc. that the company did not already own for approximately $270
million. In September 1997, Monsanto completed the acquisitions of
Holden's Foundation Seeds Inc. and Corn States Hybrid Service Inc. for
approximately $1.0 billion. In December 1997, the company acquired
controlling interest in Sementes Agroceres S.A., a Brazilian seed
company, for approximately $160 million. Monsanto recorded the following
pretax charges in 1997 for the write-off of acquired in-process R&D
related to these acquisitions:  approximately $60 million for Asgrow,
approximately $70 million for Calgene, approximately $270 million for
Holden's and Corn States, and approximately $50 million for Agroceres.

     The in-process R&D charges for the 1998 and 1997 seed company
acquisitions cover numerous seed breeding projects, no single one of
which was significant, as is typical in the seed industry. These
projects consist of conventional breeding programs for corn, wheat and
other hybrids; conventional breeding for soybean varieties; and the
development of transgenic crops. In-process R&D charges for the Calgene
acquisition included a project to develop naturally colored cotton fiber
($25 million) and a project to control fatty acids in oil seeds ($34
million). The in-process R&D projects were valued using a discounted
cash flow method with risk-adjusted discount rates ranging from 12
percent to 17 percent, which took into account the stage of completion
and the appropriate development cycle of each in-process R&D category.

     These 1998 acquisitions were accounted for as purchases.
Accordingly, the results of operations for these companies were included
in the Statement of Consolidated Income (Loss) from the dates of
acquisition. The excess of the purchase price over the estimated fair
value of net assets acquired was recorded as goodwill and is being
amortized over periods ranging from 20 to 30 years. The purchase price
allocations are based on preliminary assumptions and are subject to
revision, pending final appraisal and valuation studies. Monsanto
financed these acquisitions by issuing debt, common stock, and hybrid
securities.

     In connection with the 1998 acquisitions, Monsanto established a
plan in 1998 to integrate the acquired businesses as members of the
company's life sciences business. Monsanto plans to close or rationalize
certain assets or facilities and eliminate approximately 1,300 jobs as
part of the integration plan. The costs of these actions, estimated at
$78 million, were recognized as liabilities in connection with the
business combinations. This plan is expected to be completed by the
second quarter of 2000. As this integration plan is completed,
additional liabilities may be recognized.

     The following unaudited pro forma information combines the
consolidated results of operations of Monsanto with those of PBIC,
DEKALB, and certain Cargill operations as if these acquisitions had
occurred at the beginning of each period presented: 

<PAGE>
<TABLE>
<CAPTION>
                                                           --------
                                                              1998         1997
--------------------------------------------------------------------------------
<S>                                                         <C>          <C>
Sales                                                       $9,346       $8,208
Income (loss) from continuing operations                       (78)          42
Earnings (loss) per share -- continuing operations           (0.12)        0.07
--------------------------------------------------------------------------------
</TABLE>

     The pro forma results give effect to certain purchase accounting
adjustments, including additional amortization expense from goodwill and
other identified intangible assets, and increased interest expense and
additional shares outstanding related to debt and common stock issued to
finance the acquisitions. Pro forma loss from continuing operations for
1998 excludes unusual aftertax charges of $351 million, primarily for
the write-offs of in-process R&D related to these acquisitions, and $20
million for the cancellation of stock options in exchange for cash
related to the DEKALB acquisition. These charges were excluded because
of their nonrecurring nature.

     This pro forma financial information is presented for comparative
purposes only. It is not necessarily indicative of the operating results
that actually would have occurred had the acquisitions occurred on the
earliest day of the periods presented. In addition, these results are
not intended to be a projection of future results. Pro forma loss from
continuing operations for 1998 includes aftertax restructuring and
special charges of $459 million. Pro forma income from continuing
operations for 1997 includes aftertax unusual charges of $455 million
related to in-process R&D.

48  1998 Monsanto Annual Report



<PAGE>
<PAGE>
------------------------------------------------------------------------

     In 1998, Monsanto announced that it had entered into a definitive
agreement with Delta and Pine Land Company (D&PL) to merge it with
Monsanto. Under terms of the agreement, D&PL shareowners would be
entitled to receive 0.8625 shares of Monsanto's common stock in exchange
for each share of D&PL they hold. Approximately 33 million shares of
Monsanto common stock would be issued to D&PL shareowners. Based on
Monsanto's closing stock price of $53 1/2 per common share on May 8,
1998, the date of the merger agreement, this would result in a purchase
price of approximately $1.8 billion. The merger, already approved by
D&PL shareowners, is subject to regulatory approvals and other customary
conditions. This transaction would be accounted for as a purchase.

     In September 1997, the company spun off its chemical businesses to
shareowners by distributing shares of a newly formed company called
Solutia Inc. Monsanto's financial statements present the results of
operations and cash flow of the chemical businesses as discontinued
operations.

     In March 1996, Monsanto acquired significant equity positions in
Calgene and DEKALB(R). In November 1996, Monsanto acquired a controlling
interest in Calgene. In May 1996, Monsanto acquired the plant
biotechnology assets of Agracetus.

RESTRUCTURING AND SPECIAL CHARGES

In 1998, the company recorded net restructuring and other unusual
charges of $638 million ($459 million aftertax) as part of the company's
overall strategy to reduce costs and continue the commitment to life
sciences. The 1998 net restructuring and unusual charges were recorded
in the Statement of Consolidated Income (Loss) in the following
categories: 

<TABLE>
<CAPTION>
                                                    FACILITY 
                                                    CLOSURES         OTHER
                                   WORK FORCE      AND ASSET       EXPENSE
                                   REDUCTIONS    IMPAIRMENTS       (INCOME)          TOTAL
-------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>             <C>
Cost of goods sold                       $  6           $112                          $118
Amortization and adjustment 
  of intangible assets                                   217                           217
Restructuring and
  special charges                         130            156          $(14)            272
Other expense (income) -- net                             51           (20)             31
-------------------------------------------------------------------------------------------
TOTAL INCREASE IN LOSS FROM
  CONTINUING OPERATIONS
  BEFORE INCOME TAXES                    $136           $536          $(34)           $638
===========================================================================================
</TABLE>

     In December 1998, the board of directors approved a plan  to close
certain facilities, exit nonstrategic businesses and reduce the current
work force. The company recorded pretax restructuring charges and other
unusual items of $625 million ($446 million aftertax) to cover the costs
associated with these actions. Approximately 1,700 jobs are expected to
be eliminated by these actions by the end of 1999. Included in these
actions are approximately 240 positions that had been part of the 1996
restructuring plan. The affected employees are entitled to receive
severance benefits based on established severance policies or by
governmentally mandated employment regulations. The charges also reflect
pretax amounts for asset impairments, primarily for property, plant and
equipment; intangible assets; and certain investments, totaling
$214 million. The asset impairments were recorded primarily because of
the company's decision to sell certain nonstrategic businesses. As a
result, the net assets of these businesses have been classified as
assets held for sale and are carried at their net realizable value,
estimated to be approximately $51 million ($33 million in the
Agricultural Products segment, $15 million in the Nutrition and Consumer
Products segment and $3 million in the Corporate and Other segment).
These businesses are expected to be sold by the end of 1999. They
produced net income of $2 million in 1998, a net loss of $12 million in
1997, and a net loss of $26 million in 1996. The aftertax effect of
suspending depreciation on assets held for sale was not material. Other
impairment charges totaling $40 million were recorded because of
management's decision to exit certain long-term investments. Fair values
of the impaired assets and the businesses held for sale were recorded at
their current market values or on estimated sale proceeds, based on
either discounted cash flows or sales contracts. The December
restructuring amounts also included pretax charges of $286 million for
the shutdown or rationalization of certain production and administrative
facilities. Charges for these shutdowns included $63 million for
property, plant and equipment, $117 million for intangible assets, $29
million for miscellaneous investments, and $23 million for inventories.
Leasehold termination costs of $18 million are also included in the
shutdown charges. The closure or rationalization of these facilities is
expected to be completed by the end of 1999.

<PAGE>
    In May 1998, the board of directors approved a decision to exit
Monsanto's optical products business, which included the Orcolite and
Diamonex optical products businesses and the Diamonex performance
products business, and recorded net pretax charges of $48 million ($34
million aftertax). Monsanto recognized a $20 million pretax gain on the
sale of the Orcolite business and recorded pretax charges of $68 million
for the rationalization of the Diamonex businesses, primarily for
severance costs and the write-off of manufacturing facilities and
intangible assets. In connection with the shutdown of the Diamonex
businesses approximately 200 jobs were eliminated at a total cost of $6
million. These work force reductions were completed (including payment
of severance) by Dec. 31, 1998. Net income generated by the optical
products businesses in 1998, 1997 and 1996 totaled $2 million, $5
million and $2 million, respectively. Also during the second quarter of
1998, Monsanto recognized a pretax gain of $35 million ($21 million
aftertax) from the reversal of a restructuring reserve that was no
longer needed because of a decision not to rationalize a European
pharmaceutical production facility. There were approximately 70 jobs
scheduled to be eliminated as part of this rationalization plan. The
decision was driven by changes in the business and regulatory
environment and successes in the R&D pipeline.

                                       1998 Monsanto Annual Report  49




<PAGE>
<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued)
------------------------------------------------------------------------

     In December 1996, the company recorded pretax restructuring
charges and other unusual items related to continuing operations of $376
million ($257 million aftertax) to cover the closure or rationalization
of certain facilities, asset write-offs, and work force reductions. The
1996 net restructuring and unusual charges were recorded in the
Statement of Consolidated Income (Loss) in the following categories: 

<TABLE>
<CAPTION>
                                                       FACILITY
                                                       CLOSURES
                                      WORK FORCE      AND ASSET          OTHER
                                      REDUCTIONS    IMPAIRMENTS          COSTS        TOTAL
--------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>          <C>
Cost of goods sold                                         $ 28                        $ 28
Amortization and adjustment 
  of intangible assets                                       23                          23
Restructuring and
  special charges                           $255             57           $ 44          356
Other expense (income) -- net                                              (31)         (31)
--------------------------------------------------------------------------------------------
TOTAL DECREASE IN INCOME FROM
  CONTINUING OPERATIONS
  BEFORE INCOME TAXES                       $255           $108           $ 13         $376
============================================================================================
</TABLE>

     Approximately 1,520 jobs were expected to be eliminated by these
actions. The affected employees were entitled to receive severance
benefits based on established severance policies or by governmentally
mandated employment regulations. As of June 30 ,1998, the company had
eliminated approximately 1,020 jobs associated with these actions. In
addition, approximately 140 jobs to be eliminated in the original plan
were accomplished through attrition, business divestitures, employee
outsourcing arrangements, or normal retirements. The original plan
approved by the board of directors called for completion of
substantially all of the work force reductions during 1998. However,
implementation of the plan was delayed during 1998 due to the
contemplated merger between the company and American Home Products Corp.
(AHP), which was announced on June 1, 1998. The anticipated
organizational changes required to integrate these two companies caused
management to delay the timing of the original 1996 plan. Following the
termination of the proposed merger agreement with AHP on Oct. 13, 1998,
management reconsidered the remaining actions originally contemplated in
the December 1996 plan, and resumed implementation of the plan with
approximately 240 jobs to be eliminated by the end of 1999. Included in
the shutdown charges for 1996 were asset impairments of $40 million for
property, plant and equipment, and leasehold termination costs of $8
million. Pretax charges for asset impairments of $51 million were
related to write-offs for intangible assets for products no longer
marketed and for certain rights to production capacity that will not be
used. Assets were written down to their estimated fair values, using
appropriate discounted cash flows and appropriate discount rates.

     Activity in the restructuring and other expense reserve balances
were as follows: 

<TABLE>
<CAPTION>
                                                       FACILITY
                                                       CLOSURES
                                      WORK FORCE      AND ASSET          OTHER
                                      REDUCTIONS    IMPAIRMENTS          COSTS        TOTAL
--------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>          <C>
Reserve balance
  as of Jan. 1, 1996                       $ 141          $  52                       $ 193
Establishment of reserves,
  net of reversals                           255            108           $ 13          376
Write-offs of assets 
  against reserves                                         (128)            31          (97)
Costs charged
  against reserves                           (12)                                       (12)
--------------------------------------------------------------------------------------------
Reserve balance
  as of Dec. 31, 1996                        384             32             44          460
Costs charged
  against reserves                          (168)           (28)           (29)        (225)
--------------------------------------------------------------------------------------------
Reserve balance
  as of Dec. 31, 1997                        216              4             15          235
Establishment of reserves,
  and special charges,
  net of reversals                           136            536            (34)         638
Write-offs of assets
  against reserves                                         (475)            34         (441)
Costs charged
  against reserves                          (133)                           (4)        (137)
--------------------------------------------------------------------------------------------
RESERVE BALANCE
  AS OF DEC. 31, 1998                      $ 219          $  65           $ 11        $ 295
============================================================================================
</TABLE>
<PAGE>
     The restructuring and special charges established in 1998 and 1996
were based on estimates prepared at the time the actions were approved
by the board of directors. Management believes that the balance of these
reserves as of Dec. 31, 1998, is adequate for completion of the actions.
In December 1996, $21 million of restructuring reserves were reversed
due to the successful completion of actions at costs less than
originally estimated. In May 1998, $35 million of restructuring reserves
were reversed because of a decision not to rationalize a European
pharmaceutical production facility. In December 1998, $33 million of
restructuring reserves were reversed due to changes in estimates in the
fourth quarter of 1998. These reversals have been reported as a
reduction to the new reserves established in each year. 


50  1998 Monsanto Annual Report



<PAGE>
<PAGE>

----------------------------------------------------------------------------

DEPRECIATION AND AMORTIZATION

<TABLE>
<CAPTION>
                                        ------
                                         1998           1997           1996
----------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>
Depreciation                             $335           $299           $276
Amortization of intangible assets         270            173            128
Obsolescence                               31             15             19
----------------------------------------------------------------------------
TOTAL                                    $636           $487           $423
============================================================================
</TABLE>

     Property, plant and equipment is recorded at cost. The cost of
plant and equipment is depreciated over weighted average periods of 18
years for buildings and 10 years for machinery and equipment, by the
straight-line method. Intangible assets are recorded at cost less
accumulated amortization.

     Total amortization and adjustment of intangible assets reflected
in the Statement of Consolidated Income (Loss) includes $217 million of
charges for asset impairments in 1998 and $23 million of charges for
asset impairments in 1996.

     The components of intangible assets were:

<TABLE>
<CAPTION>
                                            --------
                                               1998              1997
----------------------------------------------------------------------
<S>                                          <C>               <C>
Goodwill                                     $5,102            $1,835
Patents and other intangible assets             945             1,002
----------------------------------------------------------------------
TOTAL                                        $6,047            $2,837
======================================================================
</TABLE>

     Goodwill is the cost of acquired businesses in excess of the fair
value of their identifiable net assets and is amortized over the
estimated periods of benefit (five to 40 years). Patents obtained in a
business acquisition are recorded at the present value of estimated
future cash flows resulting from patent ownership. The cost of patents
is amortized over their legal lives. The cost of other intangible assets
(principally seed germplasm, product rights and trademarks) is amortized
over their estimated useful lives.

     Impairment tests of long-lived assets are made when conditions
indicate a possible loss. Such impairment tests are based on a
comparison of undiscounted cash flows to the recorded value of the
asset. If an impairment is indicated, the asset value is written down to
its discounted cash value, using an appropriate discount rate.

INVESTMENTS

Certain investments in equity securities, other than investments in
equity affiliates, are classified as available-for-sale securities, and
are recorded at their market values. When a decline in market value is
deemed other than temporary, the reduction to the investment in a
security is charged to expense. As of Dec. 31, these equity securities
were detailed as follows:

<TABLE>
<CAPTION>
                                               ------
                                               1998        1997
-----------------------------------------------------------------
<S>                                             <C>         <C>
Aggregate fair value                            $75         $72
Gross unrealized holding:
  Gains                                          36          27
  Losses                                         14          20
-----------------------------------------------------------------
</TABLE>

     Debt securities held are recorded at amortized cost, because the
company has the ability and intent to hold these securities to their
maturity date. These securities mature in less than five years. As of
Dec. 31, 1998 and 1997, the total amortized cost of these securities was
$90 million and $116 million, respectively.

<PAGE>
NVENTORIES

Inventories are stated at lower of cost or market. Actual cost is used
to value raw materials and supplies. Standard cost, which approximates
actual cost, is used to value finished goods and goods in process.
Standard cost includes direct labor and raw materials, and manufacturing
overhead based on practical capacity. The cost of certain inventories
(33 percent as of Dec. 31, 1998) is determined by using the last-in,
first-out (LIFO) method, which generally reflects the effects of
inflation or deflation on cost of goods sold sooner than other inventory
cost methods do. The cost of other inventories generally is determined
by the first-in, first-out (FIFO) method. Inventories at FIFO
approximate current cost.

     The components of inventories were:

<TABLE>
<CAPTION>
                                         --------
                                            1998           1997
----------------------------------------------------------------
<S>                                       <C>            <C>
Finished goods                            $1,179         $  762
Goods in process                             561            265
Raw materials and supplies                   298            390
----------------------------------------------------------------
Inventories, at FIFO cost                  2,038          1,417
Excess of FIFO over LIFO cost                (34)           (43)
----------------------------------------------------------------
TOTAL                                     $2,004         $1,374
================================================================
</TABLE>

     Commodity futures and options contracts are used to hedge the
price volatility of certain commodities, primarily soybeans and corn.
This hedging activity is intended to manage the price paid to production
growers for corn and soybean seeds. Gains and losses on contracts that
are designated and effective as hedges are deferred and are included in
cost of goods sold when the underlying seeds are sold. As of Dec. 31,
1998, Monsanto had futures contracts to purchase $173 million of corn
and soybeans.

INCOME TAXES

The components of income (loss) from continuing operations before income
taxes were:

<TABLE>
<CAPTION>
                                         -------
                                           1998            1997           1996
-------------------------------------------------------------------------------
<S>                                       <C>              <C>            <C>
United States                             $(149)           $(55)          $313
Outside United States                       (94)            421            240
-------------------------------------------------------------------------------
TOTAL                                     $(243)           $366           $553
===============================================================================
</TABLE>

     The components of income tax expense charged to operations were:

<TABLE>
<CAPTION>
                                          -------
                                            1998           1997           1996
-------------------------------------------------------------------------------
<S>                                        <C>            <C>             <C>
Current:
  U.S. federal                             $ 278          $ 138           $ 42
  U.S. state                                  31             20             14
  Outside United States                       16            124             91
-------------------------------------------------------------------------------
                                             325            282            147
-------------------------------------------------------------------------------
Deferred:
  U.S. federal                              (301)          (194)            10
  U.S. state                                 (10)           (17)            (6)
  Outside United States                       (7)             1            (11)
-------------------------------------------------------------------------------
                                            (318)          (210)            (7)
-------------------------------------------------------------------------------
TOTAL                                      $   7          $  72           $140
===============================================================================
</TABLE>


                                       1998 Monsanto Annual Report  51




<PAGE>
<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------

     Factors causing Monsanto's income taxes to differ from the U.S.
federal statutory rate were:

<TABLE>
<CAPTION>
                                                       ------
                                                        1998           1997           1996
-------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>            <C>
U.S. federal statutory rate                             $(85)          $128           $194
U.S. export earnings                                     (29)           (26)           (32)
Puerto Rican operations                                  (16)           (14)           (20)
U.S. R&D tax credit                                      (35)           (25)            (8)
Higher (lower) rates outside the United States            42            (12)            (5)
Nondeductible goodwill                                    40             11             12
Other nondeductible expenses                               6              4              6
Valuation allowances                                                    (15)            (8)
Acquired in-process R&D                                   71             25
Equity income                                              5             (6)            13
Other                                                      8              2            (12)
-------------------------------------------------------------------------------------------
INCOME TAXES                                             $ 7           $ 72           $140
===========================================================================================
</TABLE>

     Deferred income tax balances were related to:

<TABLE>
<CAPTION>
                                                                     -------
                                                                       1998           1997
-------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>
Property                                                              $(286)         $(180)
Pension and postretirement benefits                                     267            231
Restructuring reserves                                                  232             71
Inventories                                                              86              6
Net operating tax loss and tax credit carryforwards                     282            138
Acquired in-process R&D                                                 233            207
Other                                                                    14            (53)
Valuation allowances                                                    (13)           (22)
-------------------------------------------------------------------------------------------
NET DEFERRED TAX ASSETS                                               $ 815          $ 398
===========================================================================================
</TABLE>

     Deferred tax balances were:

<TABLE>
<CAPTION>
                                                                      ------
                                                                       1998           1997
-------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>
Deferred tax assets                                                    $892           $495
Deferred tax liabilities                                                 77             97
-------------------------------------------------------------------------------------------
NET DEFERRED TAX ASSETS                                                $815           $398
===========================================================================================
</TABLE>

     The change in valuation allowances in 1998 was primarily related
to the utilization of the state net operating loss carryforwards. As of
Dec. 31, 1998, Monsanto had available approximately $400 million in
remaining net operating loss carryforwards in the United States. These
expire from 1999 through 2012. As of Dec. 31, 1998, Monsanto also had
available roughly $110 million in remaining net operating loss
carryforwards outside the United States, which do not expire.

     Income taxes and remittance taxes have not been recorded on $1.4
billion in undistributed earnings of subsidiaries, either because any
taxes on dividends would be offset substantially by foreign tax credits
or because Monsanto intends to reinvest those earnings indefinitely. It
is not practical to estimate the income tax liability that might be
incurred if such earnings were remitted to the United States.


<PAGE>
SHORT-TERM DEBT AND CREDIT ARRANGEMENTS

Short-term debt was:
<TABLE>
<CAPTION>
                                                        --------
                                                           1998           1997
-------------------------------------------------------------------------------
<S>                                                      <C>            <C>
Notes payable to banks                                   $  328         $  312
Commercial paper                                            541          1,200
Bank overdrafts                                             134            126
Current portion of long-term debt                            66             88
-------------------------------------------------------------------------------
TOTAL                                                    $1,069         $1,726
===============================================================================

Weighted average interest rates of notes payable 
 as of Dec. 31:
  Banks<F1>                                                 9.5%           8.5%
  Commercial paper                                          5.3%           5.9%
-------------------------------------------------------------------------------
<FN>
<F1> Includes the effect of notes in certain countries that have 
     interest rates higher than those in the United States.
</TABLE>

     Monsanto had aggregate short-term loan facilities of $533 million,
under which loans totaling $328 million were outstanding as of Dec. 31,
1998. Interest on these loans is related to various bank rates. Monsanto
has a $1.0 billion credit facility, expiring in 2001, that allows the
company to request that lenders increase their commitments up to an
aggregate of $1.6 billion. In November 1998, Monsanto entered into a
$2.0 billion, 364-day credit facility. There were no borrowings under
these credit facilities as of Dec. 31, 1998. These facilities are used
to support the issuance of commercial paper. Interest on amounts
borrowed under these agreements is expected to be at money market rates.
Covenants under these credit facilities restrict maximum borrowings. The
company does not anticipate that future borrowings will be limited by
the terms of these agreements. 

LONG-TERM DEBT

Long-term debt (exclusive of current maturities) was:

<TABLE>
<CAPTION>
                                                                 --------
                                                                    1998              1997
-------------------------------------------------------------------------------------------
<S>                                                               <C>               <C>
Industrial revenue bond obligations,
  5.5% average rate at Dec. 31, 1998,
  due 1999 to 2028                                                $  337            $  338
Medium-term notes, 7.5% average rate
  at Dec. 31, 1998, due 2000 to 2005                                 165                90
Commercial paper                                                   1,000               625
6% notes due 2000                                                    150               150
7.09% and 8.13% amortizing ESOP<F1>
  notes and debentures due 2000 and
  2006, guaranteed by the company                                     91               101
5 3/8% notes due 2001                                                498
Adjustable conversion-rate equity security units due 2003            700
Variable-rate notes due 2003                                         575
5.75% notes due 2005                                                 596
5 7/8% notes due 2008                                                199
8 7/8% debentures due 2009                                            99                99
5.6% yen note due 2016                                                86                77
6.5% debentures due 2018                                             496
8.7% debentures due 2021                                             100               100
8.2% debentures due 2025                                             150               150
6.75% debentures due 2027                                            198               198
6.6% debentures due 2028                                             694
Other                                                                125                51
-------------------------------------------------------------------------------------------
TOTAL                                                             $6,259            $1,979
===========================================================================================

<FN>
<F1> ESOP stands for employee stock ownership plan.
</TABLE>

52  1998 Monsanto Annual Report
<PAGE>
<PAGE>
------------------------------------------------------------------------

     Maturities and sinking-fund requirements on long-term debt,
excluding commercial paper, are $66 million in 1999, $208 million in
2000, $561 million in 2001, $92 million in 2002, and $1.3 billion in
2003. The weighted average maturity of long-term debt as of Dec. 31,
1998, was approximately 11 years.

     Commercial paper balances of $1.0 billion and $625 million as of 
Dec. 31, 1998 and 1997, respectively, were classified as long-term debt.
Monsanto has the ability and intent to renew these obligations beyond
1999.

     In November 1998, the company issued 17,500,000 units of 6.5
percent Adjustable Conversion-rate Equity Security (ACES) units at a
stated value of $40 per unit, for an aggregate initial offering price of
$700 million. Each unit consists of a purchase contract for the
company's common stock and a junior subordinated deferrable debenture.
Under the purchase contracts, in November 2001, the unit holders will
purchase for $40 not more than one share and not less than 0.8197 of one
share of the company's common stock per unit, depending on the average
trading price of the common stock during a specified period in November
2001. In addition, the company pays quarterly deferrable contract fees
to the unit holders at 0.55 percent of the stated amount. The junior
subordinated deferrable debentures have a principal amount equal to the
stated amount of the units and an interest rate of 5.95 percent. They
mature in 2003.

     Interest-rate swap agreements are used to reduce interest rate risks
and to manage interest expense. By entering into these agreements, the
company changes the fixed/variable interest-rate mix of its debt
portfolio. As of Dec. 31, 1998, Monsanto was party to interest-rate swap
agreements with an aggregate notional principal amount of $145 million
related to existing debt. The agreements effectively convert floating-
rate debt into fixed-rate debt. This reduces the company's risk of
incurring higher interest costs in periods of rising interest rates.
Monsanto is subject to loss if the counterparties to these agreements do
not perform. Interest differentials to be paid or received because of
swap agreements are reflected as an adjustment to interest expense over
the related debt period. 


FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of Monsanto's financial instruments were:

<TABLE>
<CAPTION>
                                       -------------------------
                                                   1998                          1997
                                       -------------------------------------------------------
                                        Recorded           Fair       Recorded           Fair
                                          Amount          Value         Amount          Value
----------------------------------------------------------------------------------------------
<S>                                       <C>            <C>            <C>            <C>
Long-term debt                            $6,259         $6,579         $1,979         $2,053
----------------------------------------------------------------------------------------------
</TABLE>

     The recorded amounts of cash, trade receivables, investments in
securities, discounted receivables, third-party guarantees, commodity
futures contracts, currency forward contracts and swaps, accounts
payable, interest-rate swaps, and short-term debt approximate their fair
values.

     Fair values are estimated by the use of quoted market prices,
estimates obtained from brokers, and other appropriate valuation
techniques based on information available as of year-end. The fair-value
estimates do not necessarily reflect the values Monsanto could realize
in the current market. 

<PAGE>
POSTRETIREMENT BENEFITS -- PENSIONS

Most Monsanto employees are covered by noncontributory pension plans.
The components of pension cost were:

<TABLE>
<CAPTION>
                                                   -------  
                                                     1998              1997              1996<F1>
-------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>               <C>
Service cost for benefits earned during the year    $  58             $  61             $  83
Interest cost on benefit obligation                   170               148               287
Assumed return on plan assets                        (156)             (167)             (322)
Amortization of unrecognized net loss                  22                13                 9
-------------------------------------------------------------------------------------------------
TOTAL                                               $  94             $  55             $  57
=================================================================================================
Continuing operations                               $  94             $  55             $  54
Discontinued operations                                                                     3
-------------------------------------------------------------------------------------------------
TOTAL                                               $  94             $  55             $  57
=================================================================================================
<FN>
<F1> In connection with the spinoff of the company's chemical 
     businesses as Solutia Inc., Solutia assumed the pension
     liabilities and received related assets for its active employees
     and for certain former employees of the chemical businesses. The
     components of pension cost for 1996 have not been restated for
     amounts related to continuing and discontinued operations as no
     detailed information was available.
</TABLE>

     Pension benefits are based on an employee's years of service
and/or compensation level. Pension plans are funded in accordance with
the company's long-range projections of the plans' financial conditions.
These projections take into account benefits earned and expected to be
earned, anticipated returns on pension plan assets, and income tax and
other regulations.

                                       1998 Monsanto Annual Report  53
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
------------------------------------------------------------------------

     Pension costs were determined through the use of the preceding
year-end rate assumptions. Assumptions used as of Dec. 31 for the
principal plans were:

<TABLE>
<CAPTION>
                                                   ------
                                                    1998           1997           1996
----------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>
Discount rate                                       6.75%          7.00%          7.50%
Assumed long-term rate of 
  return on plan assets                             9.50%          9.50%          9.50%
Annual rates of salary increase (for plans that
  base benefits on final compensation level)        4.00%          4.00%          4.50%
----------------------------------------------------------------------------------------
</TABLE>

     The funded status of Monsanto's pension plans at year-end was:

<TABLE>
<CAPTION>
                                                       ---------
                                                           1998              1997
----------------------------------------------------------------------------------
<S>                                                     <C>               <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year                 $ 2,483           $ 4,026
Service cost                                                 58                61
Interest cost                                               170               148
Amendments                                                   11                77
Actuarial loss                                              146               376
Acquisitions/divestitures                                     9            (1,759)
Benefits paid                                              (222)             (446)
----------------------------------------------------------------------------------
Benefit obligation at end of year                         2,655             2,483
----------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year            2,029             3,817
Actual return on plan assets                                310               350
Employer contributions                                       17                (3)
Plan participants' contributions                              3                 3
Acquisitions/divestitures                                     9            (1,603)
Fair value of benefits paid                                (222)             (535)
----------------------------------------------------------------------------------
Plan assets at end of year                                2,146             2,029
----------------------------------------------------------------------------------
Unfunded status                                             509               454
Unrecognized initial net gain                                15                27
Unrecognized prior service cost                             (94)             (106)
Unrecognized subsequent loss                                (22)              (70)
----------------------------------------------------------------------------------
ACCRUED NET PENSION LIABILITY                           $   408           $   305
==================================================================================
</TABLE>

     Amounts recognized in the Statement of Consolidated Financial
Position were:

<TABLE>
<CAPTION>
                                                          ------
                                                           1998              1997
----------------------------------------------------------------------------------
<S>                                                        <C>               <C>
Postretirement liabilities:
  Accrued pension liability                                $433              $357
  Additional minimum pension liability                       61                33
Other assets                                                (25)              (52)
Intangible asset                                            (10)               (6)
Accumulated other comprehensive loss                        (51)              (27)
----------------------------------------------------------------------------------
ACCRUED NET PENSION LIABILITY                              $408              $305
==================================================================================
</TABLE>

     As a result of employment reductions from the 1996 restructuring
program, $36 million of restructuring reserves was transferred to
accrued net pension liability during 1997.

     The accumulated benefit obligation (ABO) and fair value of plan
assets for pension plans with ABOs in excess of plan assets were $1.9
billion and $1.6 billion, respectively, as of Dec. 31, 1998; and $1.8
billion and $1.6 billion, respectively, as of Dec. 31, 1997. Plan assets
consist principally of common stocks and U.S. government and corporate
obligations. Contributions to qualified plans were neither required nor
made in 1998, 1997 and 1996 because the company's principal pension
plans are adequately funded, based on the indicated assumed returns.

<PAGE>
POSTRETIREMENT BENEFITS -- HEALTH CARE AND OTHER

Monsanto provides certain health care and life insurance benefits for
retired employees. Substantially all of Monsanto's regular, full-time
U.S. employees and certain employees in other countries may become
eligible for these benefits if they reach retirement age while employed
by Monsanto. These postretirement benefits are unfunded and generally
are based on employees' years of service and/or compensation levels. The
costs of postretirement benefits are accrued by the date the employees
become eligible for the benefits.

     The components of the cost of these postretirement benefits,
principally health care and life insurance, were:

<TABLE>
<CAPTION>
                                                       ------
                                                        1998           1997           1996<F1>
-----------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>            <C>
Service cost for benefits earned during the year        $ 13           $ 10           $ 25
Interest cost on benefit obligation                       27             27             88
Amortization of unrecognized net (gain) loss              (1)            (3)             2
-----------------------------------------------------------------------------------------------
TOTAL                                                   $ 39           $ 34           $115
===============================================================================================
Continuing operations                                   $ 39           $ 34           $ 33
Discontinued operations                                                                 82
-----------------------------------------------------------------------------------------------
TOTAL                                                   $ 39           $ 34           $115
===============================================================================================
<FN>
<F1> In connection with the spinoff of the company's chemical 
     businesses as Solutia Inc., Solutia assumed the postretirement
     benefit liabilities for its active employees and for former
     employees who last worked at a chemical facility. The components
     of the cost of postretirement benefits for 1996 have not been
     restated for amounts related to continuing and discontinued
     operations as no detailed information was available.
</TABLE>

     Postretirement costs were determined by using the preceding year-
end rate assumptions. Assumptions used as of Dec. 31 for the principal
plans were:

<TABLE>
<CAPTION>
                                                      -------
                                                       1998           1997           1996
-------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>            <C>
Discount rate                                          6.75%          7.00%          7.50%
Initial trend rate for health care costs<F1>           5.75%          7.00%          8.00%
Ultimate trend rate for health care costs              4.75%          5.00%          5.00%
-------------------------------------------------------------------------------------------
<FN>
<F1> The initial trend rate for health care costs declines by 1 percent 
     per year, to 4.75 percent for years after the year 1999.
</TABLE>

     A 1 percent increase in the assumed trend rate for health care
costs would have increased the cost of 1998 postretirement health care
benefits by $1 million and the accumulated postretirement benefit
obligation by $15 million as of Dec. 31, 1998. A 1 percent decrease in
the assumed trend rate for health care costs would have decreased the
cost of 1998 postretirement health care benefits by $1 million and the
accumulated postretirement benefit obligation by $16 million as of Dec.
31, 1998.

54  1998 Monsanto Annual Report



<PAGE>
<PAGE>
-----------------------------------------------------------------------

     As of Dec. 31, the status of Monsanto's postretirement health care
and life insurance benefit plans and of its employee disability benefit
plans was:

<TABLE>
<CAPTION>
                                                                ------
                                                                 1998              1997
----------------------------------------------------------------------------------------
<S>                                                              <C>             <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year                          $383            $1,249
Service cost                                                       13                10
Interest cost                                                      27                27
Actuarial (gain)/loss                                               6                (1)
Acquisitions/divestitures                                                          (830)
Benefits paid                                                     (26)              (72)
----------------------------------------------------------------------------------------
Benefit obligation at end of year                                 403               383
----------------------------------------------------------------------------------------
Unfunded status                                                   403               383
Unrecognized prior service cost                                    10                12
Unrecognized subsequent loss                                      (31)              (26)
----------------------------------------------------------------------------------------
ACCRUED POSTRETIREMENT LIABILITY                                 $382            $  369
========================================================================================
</TABLE>

     Amounts recognized in the Statement of Consolidated Financial
Position were:

<TABLE>
<CAPTION>
                                                                ------
                                                                 1998              1997
----------------------------------------------------------------------------------------
<S>                                                              <C>               <C>
Miscellaneous accruals                                           $ 28              $ 24
Postretirement liabilities                                        354               345
----------------------------------------------------------------------------------------
Accrued postretirement liability                                 $382              $369
----------------------------------------------------------------------------------------
</TABLE>

     The assumptions used to compute the accumulated benefit obligation
of the principal plans were changed as of Dec. 31, 1997. That resulted
in a decrease of approximately $26 million in the accrued postretirement
liability.

EMPLOYEE SAVINGS PLANS

For some company employee savings plans, employee contributions are
matched in part by Monsanto. The value of the company's contributions to
such plans was $45 million in 1998, $39 million in 1997, and $30 million
in 1996.

     Monsanto has established an Employee Stock Ownership Plan (ESOP),
which held 14.7 million shares of Monsanto common stock as of Dec. 31,
1998. At its inception, the ESOP acquired shares by using proceeds from
the issuance of long-term notes and debentures guaranteed by Monsanto,
and the ESOP also borrowed $50 million from Monsanto. A portion of the
ESOP shares are allocated each year to employee savings accounts as
matching contributions. Also, in 1998, a portion of the ESOP shares were
allocated to employees in connection with a change in vacation policy.
In 1998, 944,215 shares were allocated to participants under the plan,
leaving 9.2 million unallocated shares as of Dec. 31, 1998. Unallocated
shares held by the ESOP are considered outstanding for earnings-per-
share calculations. Compensation expense is equal to the cost of the
shares allocated to participants, less cash dividends paid on the shares
held by the ESOP. Dividends on the common stock owned by the ESOP are
used to repay the ESOP borrowings, which were $129 million as of Dec.
31, 1998. 


     In September 1997, the ESOP received Solutia shares in connection
with the spinoff of the company's chemical businesses. These shares were
exchanged for Monsanto shares.

<TABLE>
<CAPTION>
                                                 ------
                                                  1998              1997           1996
----------------------------------------------------------------------------------------
<S>                                                <C>               <C>            <C>
Total ESOP expense                                 $21               $18            $14
Interest portion of total ESOP expense              10                12             12
Cash contribution                                   14                 6             16
Dividends paid on ESOP shares held                   2                 8             11
----------------------------------------------------------------------------------------
</TABLE>

<PAGE>
STOCK OPTION PLANS
------------------------------------------------------------------------

The company grants stock options under two fixed plans. Under the
company's Management Incentive Plan of 1996, the company may grant key
officers and management employees stock-based awards, including stock
options, of up to 71.6 million shares of common stock. Under this plan,
the exercise price of each option equals not less than the market price
of the company's stock on the date of grant. An option's maximum term is
10 years. Options are granted at the discretion of the board of
directors' people committee or its delegate. Options generally vest upon
the achievement of business performance targets or the ninth anniversary
of the option grant date, whichever comes first. Certain options granted
to senior management vest upon the attainment of pre-established prices
within specified time periods. Under the company's Shared Success Stock
Option Plan, most regular full-time and regular part-time employees of
the company were granted options on 200 shares of common stock in 1996,
330 shares in 1997, and 500 shares in 1998. The maximum number of shares
for which stock options may be granted under this plan is 26.8 million.
The exercise price of each option is determined by the committee and
generally equals the market price of the company's stock on the date of
grant. An option's maximum term is 10 years.

     As permitted by Statement of Financial Accounting Standards 
No. 123, "Accounting for Stock-Based Compensation," (FAS 123), the
company has elected to continue following the guidance of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," for measurement and recognition of stock-based transactions
with employees. Accordingly, no compensation cost has been recognized
for the company's option plans. Had the determination of compensation
cost for these plans been based on the fair value at the grant dates for
awards under these plans, consistent with the method of FAS 123, the
company's income (loss) from continuing operations and earnings (loss)
per share from continuing operations would have been reduced to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
                                              --------
                                                 1998               1997           1996
----------------------------------------------------------------------------------------
<S>                                            <C>                 <C>            <C>
Income (loss) from continuing operations:
    As reported                                $ (250)             $ 294          $ 413
    Pro forma                                    (458)               206            331

Earnings (loss) per share -- 
  continuing operations:
    As reported                                $(0.41)             $0.48          $0.69
    Pro forma                                   (0.75)              0.34           0.57
----------------------------------------------------------------------------------------
</TABLE>

     The pro forma compensation expense may not be representative of
pro forma compensation expense that would be incurred in future years.

                                       1998 Monsanto Annual Report  55



<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
------------------------------------------------------------------------

     In computing the pro forma compensation expense, the fair value of
each option grant was estimated on the date of grant by using the Black-
Scholes option-pricing model. The following weighted-average assumptions
were used for grants:

<TABLE>
<CAPTION>
                                         -------
                                          1998          1997          1996
----------------------------------------------------------------------------
<S>                                      <C>           <C>            <C>
Expected dividend yield                   0.25%         0.29%          1.5%
Expected volatility                      30.0 %        27.0 %         25.0%
Risk-free interest rates                  5.6 %         6.4 %          6.0%
Expected option lives (years)             4.0           4.3            4.0 
----------------------------------------------------------------------------
</TABLE>

     A summary of the status of the company's stock option plans for
the three-year period ended Dec. 31, 1998, follows:

<TABLE>
<CAPTION>
                                                                     OUTSTANDING
                                                          ---------------------------------
                                     EXERCISABLE                          WEIGHTED-AVERAGE
                                          SHARES               SHARES       EXERCISE PRICE
-------------------------------------------------------------------------------------------
<S>                                   <C>                 <C>                       <C>
DEC. 31, 1995                         45,383,790           55,269,310               $12.63
-------------------------------------------------------------------------------------------
1996:
  Granted                                                  25,004,150                33.38
  Exercised                                               (16,327,617)               11.93
  Expired                                                    (801,605)               22.59
-------------------------------------------------------------------------------------------
DEC. 31, 1996                         38,362,943           63,144,238               $20.90
-------------------------------------------------------------------------------------------
1997:
  Granted                                                  27,740,275                37.98
  Exercised                                               (12,002,286)               13.64
  Expired                                                  (3,476,815)               34.71
-------------------------------------------------------------------------------------------
DEC. 31, 1997                         45,257,512           75,405,412               $25.22
-------------------------------------------------------------------------------------------
1998:
  Granted                                                  42,132,104                50.23
  Exercised                                               (10,770,147)               17.76
  Expired                                                  (2,932,138)               45.38
-------------------------------------------------------------------------------------------
DEC. 31, 1998                         51,055,016          103,835,231               $26.21
===========================================================================================
</TABLE>

     The weighted-average fair values of options granted during 1998,  
1997 and 1996, were $16.51, $10.01 and $8.86, respectively.

     The following table summarizes information about stock options
outstanding as of Dec. 31, 1998:

OPTIONS OUTSTANDING

<TABLE>
<CAPTION>
                                               WEIGHTED-AVERAGE                  
                                                      REMAINING         WEIGHTED-
RANGE OF                                       CONTRACTUAL LIFE           AVERAGE
EXERCISE PRICES                     SHARES            (IN YEARS)   EXERCISE PRICE
----------------------------------------------------------------------------------
<S>                            <C>                          <C>            <C>
$ 7.00 to  9.99                  6,206,664                  4.0            $ 9.31
 10.00 to 14.99                 40,260,354                  7.5             12.32
 15.00 to 19.99                    329,343                  6.5             16.78
 20.00 to 29.99                  8,773,867                  7.2             26.24
 30.00 to 39.99                 31,182,304                  7.9             34.18
 40.00 to 54.99                 13,544,604                  9.0             49.01
 55.00 to 80.00                  3,538,095                  9.5             57.26
----------------------------------------------------------------------------------
$ 7.00 to 80.00                103,835,231                  8.1            $26.21
==================================================================================
</TABLE>

<PAGE>
OPTIONS EXERCISABLE

<TABLE>
<CAPTION>
                                                                        WEIGHTED- 
RANGE OF                                                                  AVERAGE
EXERCISE PRICES                                          SHARES    EXERCISE PRICE
----------------------------------------------------------------------------------
<S>                                                  <C>                   <C>
$ 7.00 to  9.99                                       6,206,664            $ 9.31
 10.00 to 14.99                                      14,253,619             13.32
 15.00 to 19.99                                         319,343             16.72
 20.00 to 29.99                                       4,442,467             24.90
 30.00 to 39.99                                      22,975,859             34.32
 40.00 to 55.00                                       2,857,064             43.66
----------------------------------------------------------------------------------
$ 7.00 to 55.00                                      51,055,016            $25.01
==================================================================================
</TABLE>

EARNINGS PER SHARE

Basic earnings (loss) per share from continuing operations were computed
using the weighted average number of common shares outstanding each year
(603.5 million in 1998, 590.2 million in 1997, and 581.2 million in
1996). In 1998, 23.5 million dilutive common share equivalents were not
included in computing the diluted per share amounts because Monsanto
recognized a loss from continuing operations. The computation of diluted
earnings per share from continuing operations in 1997 and 1996 took into
account the effect of dilutive common share equivalents totaling 20.3
million in 1997 and 17.7 million in 1996. Dilutive common share
equivalents consisted of outstanding stock options. Other common share
equivalents also were not included in the computation of 1998 diluted
loss per share because the effect of their exercise or conversion is not
dilutive, when based on the average market price of Monsanto common
stock for the period. These included approximately 103.8 million of
outstanding stock options and 17.5 million shares of common stock to be
issued under the ACES described in the Long-Term Debt note. These
options and ACES units expire from 2002 through 2008.

CAPITAL STOCK

In January 1990, the company's board of directors declared a dividend of
one preferred stock purchase right on each then-outstanding share of the
company's common stock. If a person or group acquires beneficial
ownership of 20 percent or more, or announces a tender offer that would
result in beneficial ownership of 20 percent or more of the company's
outstanding common stock, the rights become exercisable. As a result of
two subsequent stock splits, for every 10 rights held, the owner will be
entitled to purchase one one-hundredth of a share of a new series of
preferred stock for $450. If Monsanto is acquired in a business
combination transaction while the rights are outstanding, for every 10
rights held, the holder will be entitled to purchase, for $450, common
shares of the acquiring company having a market value of $900. In
addition, if a person or group acquires beneficial ownership of 20
percent or more of the company's outstanding common stock, for every 10
rights held, the holder (other than such person or members of


56  1998 Monsanto Annual Report


<PAGE>
<PAGE>

----------------------------------------------------------------------

such group) will be entitled to purchase, for $450, a number of shares
of the company's common stock having a market value of $900.
Furthermore, at any time after a person or group acquires beneficial
ownership of 20 percent or more (but less than 50 percent) of the
company's outstanding common stock, the board of directors may, at its
option, exchange part or all of the rights (other than rights held by
the acquiring person or group) for shares of the company's common stock
on a one-share-for-every-10-rights basis. At any time prior to the
acquisition of such a 20 percent position, the company can redeem each
right for $0.001. The board of directors also is authorized to reduce
the aforementioned 20 percent thresholds to not less than 10 percent.
The rights expire in the year 2000.

     As of Dec. 31, 1998, 120.7 million common shares were reserved for
employee stock options. In November 1998, the company issued 17,500,000
units of 6.5 percent ACES at a stated value of $40 per unit. For further
information, see the Long-Term Debt note.

COMMITMENTS AND CONTINGENCIES

Commitments, principally in connection with uncompleted additions to
property, were approximately $51 million as of Dec. 31, 1998. Excluding
the ESOP notes and debentures, Monsanto was contingently liable as a
guarantor for bank loans and for discounted customers' receivables
totaling approximately $158 million as of Dec. 31, 1998, and $123
million as of Dec. 31, 1997. Future minimum payments under noncancelable
operating leases, unconditional inventory purchases, and R&D alliances
are $117 million for 1999, $76 million for 2000, $54 million for 2001,
$43 million for 2002, $16 million for 2003, and $58 million thereafter.

     The more significant concentrations in Monsanto's trade
receivables at year-end were:

<TABLE>
<CAPTION>
                                                          ------
                                                           1998           1997
-------------------------------------------------------------------------------
<S>                                                        <C>            <C>
U.S. agricultural product distributors                     $388           $359
European agricultural product distributors                  284            203
Pharmaceutical distributors worldwide                       351            435
Customers in the former Soviet Union                        100             75
Customers in Southeast Asia                                  64             31
Customers in Latin American southern cone countries         568            340
-------------------------------------------------------------------------------
</TABLE>

     Management does not anticipate losses on its trade receivables in
excess of established allowances.

     Costs for remediation of waste disposal sites are accrued in the
accounting period in which the responsibility is established and when
the cost is estimable. Postclosure and remediation costs for hazardous
and other waste facilities at operating locations are accrued over the
estimated life of the facility as part of its anticipated closure cost. 
Monsanto's Statement of Consolidated Financial Position included accrued
liabilities of $21 million as of Dec. 31, 1998, and $19 million as of
Dec. 31, 1997, for the remediation of identified waste disposal sites.

     Monsanto's future remediation expenses for waste disposal sites
are affected by a number of uncertainties. These uncertainties include,
but are not limited to, the method and extent of remediation, the
percentage of material attributable to Monsanto at the sites relative to
that attributable to other parties, and the financial capabilities of
the other potentially responsible parties (PRPs). The company does not
expect the resolution of such uncertainties to have a material effect on
profitability.

     On March 20, 1998, a jury verdict was returned against Monsanto in
a lawsuit filed in the California Superior Court. The lawsuit was
brought by Mycogen Corp., Agrigenetics Inc., and Mycogen Plant Sciences
Inc. claiming that Monsanto delayed providing access to certain gene
technology under a 1989 agreement with Lubrizol Genetics Inc., a company
which Mycogen Corp. subsequently purchased. The jury awarded $174.9
million in future damages. Monsanto has filed an appeal of the verdict
with the California Court of Appeals for the Fourth Judicial District.
No provision has been made in Monsanto's consolidated financial
statements with respect to this verdict. The company intends to
vigorously pursue all available means to have this verdict set aside.

     Monsanto is a party to a number of lawsuits and claims, which it
is vigorously defending. Such matters arise in the normal course of
business and relate to a variety of issues. Certain of the lawsuits and
claims seek damages in very large amounts or seek to restrict the
company's business activities.

     Although the results of litigation cannot be predicted with
certainty, management's belief is that the final outcome of such
litigation will not have a material adverse effect on Monsanto's
consolidated financial position, profitability or liquidity in any one
year.

<PAGE>
SUPPLEMENTAL DATA

Supplemental income statement data were:

<TABLE>
<CAPTION>
                                                  --------
                                                     1998           1997           1996
----------------------------------------------------------------------------------------
<S>                                                <C>            <C>              <C>
Rent expense                                       $  113         $  130           $111
========================================================================================      
Technological expenses:
  Research and development                         $1,263         $  939           $647
  Engineering, commercial development 
    and patent                                         95            105             55
----------------------------------------------------------------------------------------
Total technological expenses                       $1,358         $1,044           $702
========================================================================================
Interest expense:
  Total interest cost                              $  327         $  184           $128
  Less capitalized interest                           (15)           (14)            (9)
----------------------------------------------------------------------------------------
Net interest expense                               $  312         $  170           $119
========================================================================================
Currency losses including equity in affiliates'
  currency gains and losses                        $   24         $   68           $  6
========================================================================================
</TABLE>

SEGMENT INFORMATION

Certain segment data and geographic data for 1998, 1997 and 1996 that
appear on pages 30 and 31 are integral parts of the accompanying
financial statements. The company's principal product lines are
discussed in the segment data.

                                       1998 Monsanto Annual Report  57



<PAGE>
<PAGE>

Disclosure of FORWARD-LOOKING STATEMENTS
-----------------------------------------------------------------------

Under the Private Securities Litigation Reform Act of 1995, companies
are provided with a "safe harbor" for making forward-looking statements
about the potential risks and rewards of their strategies. Monsanto
believes it's in the best interest of its shareowners to use these
provisions in discussing future events. Forward-looking statements
include Monsanto's plans for growth; the potential for the development,
regulatory approval and public acceptance of new products; and other
factors that could affect Monsanto's future operations or financial
position. Such statements often include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates," or similar expressions.

     Monsanto's ability to achieve its goals depends on many known and
unknown risks and uncertainties, including changes in general economic
and business conditions. These factors could cause the anticipated
performance and results of the company to differ materially from those
described or implied in forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to,
those discussed below.

FACTORS AFFECTING THE AGRICULTURAL PRODUCTS SEGMENT

GENERIC COMPETITION: The family of Roundup(R) herbicides is a major product
line for Monsanto's Agricultural Products segment. These herbicides are
likely to face increasing competition from generic products. Patents
protecting Roundup(R) in several countries expired in 1991. Compound per se
patent protection for the active ingredient in Roundup(R) herbicide expires
in the United States in September 2000.

     Monsanto believes its pricing strategy will help it compensate for
increased generic competition in the United States. Monsanto recently
significantly reduced the price of Roundup(R) in the United States. This
price elasticity strategy is expected to result in increased demand for
Roundup(R) in the United States because the lower prices will make Roundup(R)
more economical, encouraging both new uses of the product and expansion
of the number of acres treated. Monsanto's experience in numerous
markets worldwide has been that price reductions have stimulated volume
growth. However, the volume increases in the other countries also may
have been influenced by a variety of other factors, such as weather; the
increased use of conservation tillage practices; development of other
new markets or applications for Roundup(R); launch of new products
including Roundup Ready(R) crops; competitive products and practices; and
an increase in agricultural acres planted. Conditions, and therefore
volume trends, in one country may or may not be duplicated in other
world areas. As a result, Monsanto's experience with price elasticity in
markets outside the United States may or may not be replicated in the
United States.

     Monsanto also believes that increased volumes and technological
innovations will lead to efficiencies that will reduce the production
cost of glyphosate. Such cost reductions will depend on realizing such
increased volumes and innovations, and securing the resources required
to expand production of Roundup(R).

GOVERNMENTAL AND CONSUMER ACCEPTANCE: The commercial success of
agricultural and food products developed through biotechnology will
depend in part on government and public acceptance of their cultivation,
distribution and consumption. Monsanto continues to work with consumers,
customers and regulatory bodies to encourage understanding of
nutritional and agricultural biotechnology products. However, public
attitudes may be influenced by claims that genetically modified plant
products are unsafe for consumption or pose unknown risks to 
the environment or to traditional social or economic practices. Securing 
governmental approvals for, and consumer confidence in, such products
poses numerous challenges, particularly outside the United States. For
instance, France has instituted a moratorium on the planting of certain
genetically modified seeds, and consumer groups have brought lawsuits in
various countries seeking to halt industry activities with respect to
products developed through biotechnology. Some countries also have
labeling requirements. In some markets, because these crops are not yet
approved for import, growers in other countries may be restricted from
introducing or selling their grain. In these cases, the grower may have
to arrange to sell the grain only in the domestic market or to use the
grain for feed on his or her farm. The market success of Monsanto's
products developed through biotechnology could be delayed or impaired in
certain geographical areas because of such factors. 

TECHNOLOGICAL CHANGE AND COMPETITION: A number of companies are engaged
in plant biotechnology research. Technological advances by others could
render Monsanto's products less competitive. Monsanto believes that
competition will intensify, not only from agricultural biotechnology
firms but from major agrichemical, seed and food companies with
biotechnology laboratories. Some of Monsanto's agricultural competitors
have substantially greater financial, technical and marketing resources
than Monsanto does.

<PAGE>
SUCCESSFUL INTEGRATION OF RECENT TRANSACTIONS: Monsanto has made
significant acquisitions, mergers and joint ventures involving seed,
agricultural biotechnology and grain processing companies. These
transactions are designed to strengthen Monsanto's capability to bring
important new life sciences products to customers worldwide, and to
contribute to the company's long-term growth. The Delta and Pine Land
Co. (D&PL) transaction is subject to regulatory approval and other
customary conditions. It is anticipated that the pending D&PL
transaction, when final, and the recently completed acquisitions of
DEKALB Genetics Corp., Plant Breeding International Cambridge, and
certain international seed operations of Cargill Inc., will
significantly dilute Monsanto's financial results for the next several
years. Long term, Monsanto must integrate these companies into its
business to realize projected synergies. It also must fit such
acquisitions, mergers and joint ventures into its growth strategy to
generate sufficient value to justify their cost. Mergers, acquisitions,
and joint ventures also present other challenges, including geographical
coordination, personnel integration, and the reconciliation of corporate
cultures. This integration could cause a temporary interruption of or
loss of momentum in Monsanto's business and the loss of key personnel
from the acquired company. There can be no


58  1998 Monsanto Annual Report


<PAGE>
<PAGE>
------------------------------------------------------------------------

assurance that the diversion of management's attention to such matters
or the delays or difficulties encountered in connection with integrating
these operations will not have an adverse effect on Monsanto's business,
results of operations, or financial condition.

PLANTING DECISIONS AND WEATHER: The company's agricultural products
business is highly seasonal. It is subject to weather conditions and
natural disasters that affect commodity prices, seed yields, and
decisions by growers regarding purchases of seed and herbicides.
Commodity prices also affect growers' decisions about the types and
amounts of crops to plant. All of these factors influence sales of
Monsanto's herbicide and seed products.

FACTORS AFFECTING THE PHARMACEUTICALS SEGMENT 

ABILITY TO REALIZE POTENTIAL OF EXISTING PIPELINE PRODUCTS:
Pharmaceutical research and development (R&D) is subject to inherent
uncertainty, difficulties and delays. These include, but are not limited
to, successful completion of clinical trials and the ability to obtain
regulatory approval for the compounds worldwide. Failure to receive
government approvals as anticipated could preclude or substantially
delay commercialization of products in the company's R&D programs. 

DEVELOPMENT AND COMMERCIALIZATION OF NEW PRODUCTS: The Pharmaceuticals
segment's long-term success will depend in great part on its ability to
commercialize new products. Such efforts require substantial funding of
R&D and launch expenses. If Monsanto is unable to earn or borrow
sufficient resources to fund such expenses, its ability to develop new
products will suffer. Further, the outcome of R&D is inherently
difficult to predict. Anticipated results may never materialize, or they
may not be promising enough. Even when new pharmaceutical products are
marketed, there can be no guarantees of their commercial success.
Consumer demand and competitive factors, including the availability and
price of treatment alternatives, influence sales. In addition, timing is
crucial. The results of R&D for new pharmaceutical products are
difficult to forecast, and new products must be carefully deployed, with
resources sufficient to realize the full value of the products.

PRODUCT LIABILITY AND CONSUMER ACCEPTANCE: The sale of pharmaceutical
products always involves a risk of product liability claims and
associated adverse publicity. Substantial damage awards for injuries
allegedly caused by the use of pharmaceuticals have been made against
certain companies in past years. In addition, unexpected safety or
efficacy concerns can arise with respect to marketed products. Whether
or not they are scientifically justified, such concerns could lead to
product recalls, withdrawals, or declining sales.

COMPETITION: The pharmaceutical business is intense and highly
competitive. It is characterized by rapid technological change.
Depending on the product involved, competition may be encountered in
price, delivery, service, performance, innovation, brand recognition and
quality. Many of Monsanto's pharmaceutical competitors have greater
research, financial, marketing and other resources than Monsanto does.
Some of Monsanto's trademarked pharmaceutical products also face
increasing pressures from producers of lower-priced generic products and
from new products entering the marketplace. 

PRICING: Managed care groups, health care organizations and government
agencies worldwide actively seek discounts and lower prices on
pharmaceutical products. Monsanto's challenge is to provide overall
economic benefits to health care providers and negotiate prices for
specific products that will allow it to profit at acceptable levels.

FACTORS AFFECTING THE NUTRITION AND CONSUMER PRODUCTS SEGMENT

Monsanto's Nutrition and Consumer Products segment faces many challenges
similar to those faced by the Agricultural Products and Pharmaceuticals
segments. These challenges include increased competition from generic
substitutes for its aspartame-based tabletop and ingredient sweeteners,
rapid technological changes, the ability to realize the potential of its
pipeline products, the development of new products, and the ability to
negotiate favorable pricing terms with its major customers. Each of
these challenges is subject to risks and uncertainties comparable to
those described above.

FACTORS AFFECTING ALL SEGMENTS

FINANCIAL REQUIREMENTS: Monsanto's recent and planned acquisitions will
require a significant commitment of the company's financial resources.
In addition, new technological innovations generally require a
significant investment for R&D and product launch. Lack of funds for
investment in these areas could hinder the company's ability to make
technological innovations and to introduce and distribute new products.
Monsanto expects to generate the required capital by maintaining the
revenues of its core businesses, by seeking sufficient outside
financing, and by containing costs. The company's ability to do so will
depend upon a variety of specific factors listed elsewhere in this
report and upon general capital market conditions. 


                                       1998 Monsanto Annual Report  59



<PAGE>
<PAGE>

DISCLOSURE OF FORWARD-LOOKING STATEMENTS (continued)
------------------------------------------------------------------------

INTELLECTUAL PROPERTY: Monsanto has devoted significant resources to
obtaining and maintaining patent protection worldwide for its products.
It seeks to preserve its trade secrets and to operate without infringing
the proprietary rights of third parties. Monsanto's patents and
trademarks are of material importance in the operation of its business,
particularly in the Agricultural Products and Pharmaceuticals segments.
Intellectual property positions are becoming increasingly important
within the agricultural biotechnology and pharmaceutical industries, as
products developed through biotechnology become a larger part of the
product landscape. 

     Monsanto generally relies upon patent and trademark laws worldwide
to establish and maintain its proprietary rights in its technology and
products. There is some uncertainty about the value of available patent
protection in certain countries outside the United States. Moreover, the
patent positions of biotechnology and pharmaceutical companies involve
complex legal and factual questions. Rapid technological advances and
the number of companies performing such research can create an uncertain
environment. Patent applications in the United States are kept secret:
outside the United States, patent applications are published 18 months
after filing. Accordingly, competitors may be issued patents from time
to time without any prior warning to the company. That could decrease
the value of similar technologies under development at Monsanto. Because
of this rapid pace of change, some of the company's products may
unknowingly rely on key technologies developed by others. If that
occurs, the company must obtain licenses to such technologies in order
to continue to use them. 

     Certain of Monsanto's germplasm and other genetic material,
patents, and licenses are currently the subject of litigation and
additional future litigation is anticipated. Although the outcome of
such litigation cannot be predicted with certainty, Monsanto will
continue to defend and litigate its positions vigorously. The company
believes it has meritorious defenses and claims in the pending suits.

MARKETS OUTSIDE THE UNITED STATES: Sales outside the United States made
up approximately 45 percent of the company's 1998 revenues and Monsanto
intends to continue to actively explore international sales
opportunities. Challenges the company may face in international markets
include changes in foreign currency exchange rates, changes in a
specific country's or region's political or economic conditions, trade
protection measures, import or export licensing requirements, and
unexpected changes in regulatory requirements. In particular, the
decline in the value of Southeast Asia and Brazilian currencies may, if
not reversed, adversely affect future income. Also, future sales may
decrease because the decline in such economies could cause customers to
purchase fewer goods in general, and also because imported Monsanto
products could become more expensive for customers to purchase in their
local currency.

JOINT VENTURES AND DIVESTITURES: The company plans to continue to
frequently explore the potential benefits of possible strategic
alliances, joint ventures, and divestitures. However, despite its
efforts, the company may be unable to divest assets at an acceptable
price or to reach agreement with third parties with whom it desires to
enter into a joint venture or other alliance. 

YEAR 2000 READINESS: The dates on which Monsanto believes the Year 2000
(Y2K) program will be completed are based on management's best
estimates, which include numerous assumptions about future events. There
can be no guarantee that these estimates will be achieved, or that there
will not be a delay in, or increased costs associated with, the
implementation of the Y2K program. Factors that may cause delays in the
Y2K program or increased costs in connection with it include, but are
not limited to, the continued availability and cost of experts trained
in these areas, the ability to locate and correct all relevant computer
code and embedded systems, and the success of similar programs conducted
by suppliers and other third parties. 


60  1998 Monsanto Annual Report



<PAGE>
<PAGE>

<TABLE>
Financial SUMMARY
---------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
(Dollars in millions, except per share 
and share amounts)                                  1998<F1>      1997<F2>      1996<F3>     1995<F4>      1994<F5>     1993<F6>
---------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>           <C>           <C>          <C>          
OPERATING RESULTS
Net Sales                                        $ 8,648       $ 7,514       $ 6,348      $ 5,410       $ 4,679      $ 4,304
Income (Loss) from Continuing Operations            (250)          294           413          461           454          298
  As a Percent of Net Sales<F7>                                      4%            7%           9%           10%           7%
Income (Loss) from
  Discontinued Operations<F8>                                      176           (28)         278           168          196
Net Income (Loss)                                   (250)          470           385          739           622          494
---------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE:
Income (Loss) from Continuing Operations         $ (0.41)      $  0.48       $  0.69      $  0.79       $  0.78      $  0.50
Net Income (Loss)                                  (0.41)         0.77          0.64         1.27          1.06         0.82
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YEAR-END FINANCIAL POSITION
Total Assets                                     $16,724       $10,774       $11,237      $10,731       $ 9,103      $ 8,788
Working Capital                                    2,138           727           939        1,493         1,448        1,377
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Property, Plant and Equipment:
  Gross                                          $ 6,022       $ 4,701       $ 4,428      $ 4,111       $ 3,748      $ 3,687
  Net                                              3,254         2,400         2,095        1,893         1,673        1,669
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Long-Term Debt                                   $ 6,259       $ 1,979       $ 1,608      $ 1,667       $ 1,405      $ 1,502
Shareowners' Equity                                4,986         4,104         3,690        3,732         2,948        2,855
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Current Ratio                                        1.5           1.2           1.3          1.5           1.6          1.6
Percent of Total Debt to Total Capitalization         60%           47%           38%          35%           37%          38%
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OTHER DATA
Stock Price:<F9>
  High                                           $    63 15/16     $52 15/16     $43 1/4      $25           $17 3/8      $15 
  Low                                                 33 3/4        34 3/4        23           13 3/4        13 3/8        9 7/8
  Year-End                                            47 1/2        42            38 7/8       24 1/2        14 1/8       14 3/4
Price/Earnings Ratio on Year-End Stock Price<F7>                    55            60           19            13           18 
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PER SHARE:
  Dividends<F10>                                 $ 0.120       $ 0.500       $ 0.588      $ 0.540       $ 0.494      $ 0.460
  Shareowners' Equity                               7.93          6.89          6.31         6.46          5.29         4.92
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Shareowners (year-end)                            62,769        61,265        54,828       50,745        53,694       56,601
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Shares Outstanding (year-end, in millions)           629           595           584          575           560          580
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Employees (year-end)<F9>                          31,800        21,900        28,000       28,500        29,400       30,000
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<FN>
<F1>  Loss from continuing operations for 1998 included $830 million, or 
      $1.33 per share, for restructuring and special charges, write-offs
      for acquired in-process research and development (R&D), and 
      charges for the cancellation of DEKALB(R) stock options.

<F2>  Income from continuing operations for 1997 included $455 million, 
      or $0.75 per share, for the write-off of acquired in-process R&D.

<F3>  Income from continuing operations for 1996 included restructuring 
      and other unusual charges of $257 million, or $0.43 per share,
      associated with the closure or rationalization of certain
      facilities, asset write-offs, and work force reductions.

<F4>  Income from continuing operations for 1995 included net 
      restructuring expenses and other unusual items of $63 million, or
      $0.11 per share.

<F5>  Income from continuing operations for 1994 included a net aftertax 
      gain for restructuring and other unusual items of $20 million, or
      $0.03 per share.

<F6>  Income from continuing operations for 1993 included a net aftertax 
      loss for restructuring and other unusual items of $11 million, or
      $0.02 per share.

<F7>  This financial statistic is not meaningful for 1998 because 
      Monsanto reported a loss from continuing operations.

<F8>  Includes sale of styrenics plastics business in 1995 and spinoff 
      of the chemicals businesses in 1997.

<F9>  Amounts prior to 1997 were not restated to reflect the spinoff of 
      the chemical businesses.

<F10> The quarterly common stock dividend was reduced from $0.16 per 
      share to $0.03 per share in the fourth quarter of 1997.
</TABLE>


                                       1998 Monsanto Annual Report  61
<PAGE>
<PAGE>

                          APPENDIX

1.  In Exhibit 13 to the printed Form 10-K, the following graph 
    appears on page 31: a pie-chart graph entitled "1998 Net Sales"
    appears, depicting a percentage breakdown of Monsanto's 1998 net
    sales by segment.  The following bar graphs depict segment net
    sales, EBIT and EBITDA for 1996, 1997 and 1998: on page 32, bar
    graphs entitled "Agricultural Products Net Sales" and "Agricultural
    Products Operating Measures"; on page 34, bar graphs entitled
    "Nutrition and Consumer Products Net Sales" and "Nutrition and
    Consumer Products Operating Measures"; on page 36, bar graphs entitled
    "Pharmaceuticals Net Sales" and "Pharmaceuticals Operating Measures".
    On page 41, a bar graph entitled "Cash Provided by Continuing Operations"
    depicts information for 1996, 1997 and 1998.

2.  Throughout the electronic submission, trademarks are designated on 
    each page by the letter "R" in parentheses or the letters "TM" in
    parentheses; whereas in the printed copy of the Form 10-K, all
    trademarks are indicated by special type.