July 15 th , 2010 | ASSOCHAM l New Delhi

1. July 15th, 2010 | ASSOCHAM l New Delhi Bayer CropScience Child Care Program From Challenge to Opportunity Suhas Joshi Strategic Projects & CSR Bayer CropScience

2. The Essence of the Story Content • Bayer CropScienceOur business and commitment • The Challenge of Child Labor A pressing issue still in many industries • The Bayer CropScience Child Care Program A unique model with comprehensive measures

3. Bayer CropScience: One of Three Strategic Subgroups of Bayer Bayer BusinessServices Bayer Technology Services Currenta Management Holding Company Bayer AG Board of Management Bayer HealthCare Bayer CropScience Bayer MaterialScience Sales 2009:€ 16.0 bn Sales 2009:€ 6.5 bn Sales 2009:€ 7.5 bn Business Area Companies Service Companies

4. Bayer CropScience: Our Business Groups Crop Protection Environmental Science BioScience • Insecticides • Fungicides • Herbicides • Seed treatment • Products forprofessional users(green industry and pest control) • Products for consumers (home and garden use) • Vegetable seed • Seed for agriculturalcrops - cotton - canola - rice

5. Bayer Human Rights Position • Bayer is a founding member of the UN Global Compact • Zero Tolerance to Child Labor policy • Full Bayer Human Rights position published in Sustainable Development Report 2006 • Mandatory as a management regulation worldwidethroughout the Group • Integral part of employee orientation trainings • Implementation supported by BayerCorporate Compliance Policy …Child LaborWe follow a clear “zero tolerance to child labor” policy in our business operations worldwide. We do not tolerate child labor in our supply chain either, where we take action against known cases of violations. Our efforts to fight against child labor are consistent with the ILO’s* (International Labor Organization) core labor standards and the United Nations Global Compact principles. … *Minimum Age Convention 1973; (No. 138); Worst Forms of Child Labor Convention, 1999, (No. 182) Source: Bayer Human Rights Position Bayer Sustainable Development Report 2006

6. The Essence of the Story Content • Bayer CropScienceOur business and commitment • The Challenge of Child Labor A pressing issue still in many industries • The Bayer CropScience Child Care Program A unique model with comprehensive measures

7. Hybrid cottonseed production requires hand pollination What is hybrid cotton seed production ? • Female and male parent plants are grown in separate plots. Production requires emasculation and crossing during season • Emasculation is a process of removing the anthers of the female parent to avoid self pollination. Anthers from the male parent are used to cross pollinate the female parent • Hybridization • seasonal • manual work • labor intensive

8. Child Labor in Cotton Seed Production in India Challenges unlimited • In 2002, Bayer acquires Aventis CropScience, along comes a seed business in India • Bayer realizes the challenge of child labour in hybrid seed supply chain • A clear policy of the Bayer Group: ‘Zero Tolerance to Child Labour‘ • However, no successful example available anywhere which can be replicated • Bayer initiates steps in 2003 to combat against child labor in seed supply chain. Continuous improvisation of the programme based on the field experiences

9. Probable reasons for child labor employment in cotton seed production Causes for Child Labor in Seed Production • Child labor is deeply pervades the agricultural sector • Poor school infrastructure • Labor intense crop (e.g., cotton, vegetables, manual pollination of hybrids required) • Better fit for manual labor • Perceived easier management of children Further challenges • No closed factory buildings • Decentralized production spread over hundreds of farms at great distances • No replicable blue print or successful example available

10. The Essence of the Story Content • Bayer CropScienceOur business and commitment • The Challenge of Child Labor A pressing issue still in many industries • The Bayer CropScience Child Care Program A unique model with comprehensive measures

11. Bayer CropScience Child Care Program:Core Elements SUCCESS achieved through continual improvement Promoting school attendance Creating awareness & acceptance Incentives, sanctions, monitoring Technical & economic support Clear company policy

12. Creating awareness about child labor Awareness program since 2003: • Frequent meetings with company staff,farmers and local politicians in villages • Poster & flyers,media & radio campaigns • Labels on seed packaging • Community involvement through formation of ‘Village Committees‘ against child labor

13. Promoting school attendance Creating awareness & acceptance Incentives, sanctions, monitoring Technical & economic support Clear company policy Bayer CropScience Child Care Program:Core Elements SUCCESS achieved through continual improvement

14. Steering Com Steering Com E & Y Audit Internal Audit Internal Audit Internal Audit Internal Audit MM MM MM MM MM MM MM MM MM MM MM MM May June July August Sept Oct Nov Dec Jan Feb March April Reporting Preparations Assessment Visits V & VI Assessment Visits III & IV Assessment Visits I&II Follow- up Follow - up Follow - up Follow - up Follow - up Follow - Up Follow - up Follow - up Follow - up Bayer CropScience Child Care Program:Strong Management System driven approach The Program Manual delineates theconceptual approach & organizational set-up

15. Monitoring production in rural India

16. Standardized Monitoring Format

17. Signing the field monitoring documents … everyone to his or her ability

18. The purpose of Assessment and Follow-up monitoring visits Assessment visits for the review of the situation and progress Follow-up visitsto persuade the farmers towards attitudinal change

19. System of tiered incentives and sanctions If contract is fulfilled: • 5 % bonus in 2005/06 • 7.5 % bonus or lump sumfrom 2006/07 onwards • Verbal Warning • Written Warning • Loss of bonus • 10 % cut in procurement price • Contract cancelled and seed notaccepted If contract is infringed:

20. Promoting school attendance Creating awareness & acceptance Incentives, sanctions, monitoring Technical & economic support Clear company policy Bayer CropScience Child Care Program:Core Elements SUCCESS achieved through continual improvement

21. The Bayer CropScience Child Care Program – Promoting School Attendance Convincing farmers not to use child labor is key to success • Bayer CropScience‘s Initiative covers everything from reintegration into the regular school system to vocational education measures: • Cooperation with Naandi Foundation in Andhra Pradesh • (Early Childhood Education Centers, Creative Learning Centers and Academic Learning Centers) • Basic vocational education in schools “Introduction to Basic Technology“ in Karnataka in cooperation with local NGOs • Bayer - Ramanaidu Vignana Jyothi School of Agriculture • a vocational education center nearby Hyderabad • „Learning for Life“ Initiative

22. The Essence of the Story Content • Bayer CropScienceOur business and commitment • The Challenge of Child Labor A pressing issue still in many industries • The Bayer CropScience Child Care Program A unique model with comprehensive measures

23. The Essence of the Story The Child Care Program is in a Win-Win Situation for all involved No more systematic child labor in the Bayer CropScience supply chain for cotton seed in India. Isolated cases of child labor are immediately addressed. • Supporting education • Children rehabilitated into formal school: 1,402 • “Introduction to Basic Technology“-Program reached more than1000 students • 44 students graduated in two years from the Bayer- Ramanaidu Vignana Jyothi School of Agriculture

24. The Essence of the Story (III) –Enhancing Farmer’s Productivity The Bayer CropScience Child Care Program is a Business Case No more systematic child labor in the Bayer CropScience supply chain for cotton seed in India. Isolated cases of child labor are immediately addressed. • Cotton seed productivity up by ca. 20%, income situation for farmers improved. • Seed Quality increased. • Farmer retention increased significantly. • Strong orientation in cottonseed supply chain towards a systems driven approach of doing business. 106 100* 119 132 100* 147 * Normalized figures

25. Thanks for your kind attention.