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OPERATOR: Ladies and gentlemen, thank you for standing by. Welcome to the second quarter 2009 results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded Thursday, April 2nd, 2009.
I would now like to turn the conference over to Scarlett Foster, Vice President, Investor Relations. Please go ahead, ma'am.
SCARLETT FOSTER, VP, IR, MONSANTO COMPANY: Thank you Charlene, and good morning to everybody on the line. I would like to welcome to you Monsanto's second quarter earnings conference call. I am joined this morning by Hugh Grant, our Chairman and CEO, and by Terry Crews, our CFO. Also with me are Laura Meyer, Manny Cruz, and Reuben Maya, who are my colleagues in Investor Relations.
Before we begin, I would like to remind you that we are webcasting this call, and you can access it at Monsanto's website at Monsanto.com. The replay is also available at that address. For those of you who would like to go to our website, the slides for this call are posted on the Investor information page.
I need to remind you that this call will include statements concerning future events and financial results. Because these statements are based on assumptions and factors that involve risks and uncertainty, the Company's actual performance and results may vary in a material way, from those expressed or implied in any forward-looking statements. A description of the factors that may cause such a variance is included in the Safe Harbor language contained in our most recent 10-Q, and today's press release.
In addition, we are providing you with measures both on a GAAP basis, and on an ongoing business basis. In those cases where we refer to non-GAAP financial measures, we have provided with you the reconciliation to the GAAP measures in the slides, and in the earnings press release.
Our press release highlights are reported in-process R&D charge this quarter for our recent sugar cane acquisition, totaling $162 million pretax, or $0.19 per share after tax. Please recall that Monsanto reported a gain of $210 million pretax, or $0.23 per share after tax, from the cash and stock settlement, resulting from Solutia's emergence from bankruptcy in the second quarter of 2008. Both items were non-recurring, and are excluded from our conversation today about Monsanto's ongoing EPS.
I would like to start with a brief review of our second quarter and first half results. Terry will cover our guidance, and the outlook for the remainder of fiscal year 2009. Finally, Hugh will provide a strategic view to our 2012 commitments, with a focus on some milestones to watch for in fiscal year 2010. These include news about our launch plans for Roundup Ready 2 Yield , and the trait penetration targets for our Latin-American corn seed businesses.
To start, let's take a closer look at the results that are shown on slides four and five. On the heels of a record first quarter, our ongoing EPS in the second quarter grew by 22% over last year's second quarter results of $2.16 per share. This was driven by a 14% lift in gross profit, and an approximate 3 point increase to a 62% margin.
Breaking gross profit down by segment, we saw a 21% increase in seeds and traits, offset by a 6% drop for Ag productivity, which included a 9% decline in Roundup. Within seeds and traits, corn gross profit increased 20% in the quarter, and gross margins improved by 1 percentage point. Most importantly, we held the value of our high yielding corn seed and triple-stack traits in the US. Some 70% of the mix sold in our DEKALB and American seed brands this year will be top tier triple-stack products.
These gains were partially offset by a $42 million pretax charge, or $0.05 per share after tax, for payments to growers in South Africa, who are experiencing pollination and yield concerns, with three white corn hybrids grown solely in that country. In a nutshell, these three hybrids appear to produce less than optimal amounts of pollen. Fortunately, this hybrid issue was isolated to less than 4% of the roughly six million acres of corn planted there. We consider this charge part of our ongoing earnings, as working with growers on production challenges is part and parcel is doing business in this industry.
Soybean seeds and traits likewise saw a lift in gross profit and gross margin in the quarter, with gross profit growing 39%, and margins improving by nearly 2 percentage points. Growers have steadily been buying our higher performing higher value soybean products, in a year when we expect more acres of soybeans to surpass last year's record setting crop. With that acreage growth comes a larger number of acres using the Roundup Ready trait, and hence higher trait fees. For both corn and soybeans, the margin improvement was somewhat dampened by greater cost of goods sold in the United States, as we paid higher commodity prices last fall to our contract growers for our seed production.
Gross profit for our vegetable business was up 2%, with margins level with the prior year. These numbers include the acquisition of the De Ruiter protective culture business, the benefit of which was partially offset by $18 million of inventory step-up in the first half of the year. The vegetable segment, which derives the majority of it's income outside the United States, is also sensitive to currency fluctuations, as was the case this quarter.
As I just noted, the gain on seeds and traits more than offset a 9% decline in the gross profit from Roundup in the second quarter. As we had discussed previously, this is partially a timing effect, as US customers pulled forward branded volumes into the second quarter in 2008, ahead of a preannounced price increase in mid-February last year.
We are now on a more normal shipping pattern for the US business in 2009. This means that the majority of our US branded Roundup volume will move in the third and fourth quarters. That said, we anticipate that as we optimize value for Roundup in the United States, we will give up branded volume for the full year, in favor of maintaining our price leadership.
Branded volumes also were affected by the drought conditions in Latin America, and nonbranded volumes declined as third-party customers with businesses in Asia and Argentina, chose to take less volume for inventory, or other reasons specific to their own strategic choices. Roundup prices were up versus prices in the second quarter last year, both for the branded and supply sides of the business. Prices were particularly strong for the brand at levels higher than $20 per gallon. They were up significantly in the US and Europe, both of which are entering their peak selling seasons.
Overall, while gross profit for Roundup declined 41 million in the quarter, gross margins increased by 7 percentage points, led by the greater value afforded to the branded business. Year-to-date, our very strong first quarter results for Roundup in Latin America overcame the effect of the timing difference for US volumes in the second quarter, as Roundup gross profit for the half increased by 29%, and margins expanded by 10 percentage points to 58% of sales. Seeds and traits gross profit in the first half of the year increased 25% with a 1 percentage point lift in margins. For the Company as a whole, gross profit increased by 25% and margins improved by 5 percentage points for the first six months of the year.
SG&A as a percent of sales in the quarter and for the first half was down by 1 percentage point. R&D as a percent of sales was up, given increased activity as we advance our rich pipeline, and bring multiple new products to launch simultaneously, plus integrate the R&D from De Ruiter vegetable seeds.
In total, ongoing EPS for the first half of the year increased 41%, to $3.13 per share. The tax rate was 29% compared with 33% in the prior year's second quarter. The second quarter included several discrete tax …