10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x  Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the fiscal year ended
August 31, 2007

or

o  Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Commission File

Nos. 33-83868; 333-11693 and 333-32251

AMERICAN CRYSTAL SUGAR COMPANY

(Exact name of registrant as specified in its charter)

Minnesota	84-0004720
(State of incorporation)	(I.R.S. Employer Identification Number)
101 North Third Street
Moorhead, MN 56560	(218) 236-4400
(Address of principal executive offices)	(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o   No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o   No  x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

(Check one) Large accelerated filero Accelerated filero Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Act). Yes o No  x

As of November 15, 2007, 2,878 shares of the Registrant’s Common Stock and 498,570 shares of the Registrant’s Preferred Stock were outstanding. There is no established public market for the Registrant’s Common Stock or Preferred Stock. Although there is a limited, private market for shares of the Registrant’s stock, the Registrant does not obtain information regarding the transfer price in transactions between its members and therefore is unable to estimate the aggregate market value of the Registrant’s shares held by non-affiliates.

DOCUMENTS INCORPORATED BY REFERENCE

NONE 

PART I

This report contains forward-looking statements and information based upon assumptions by the American Crystal Sugar Company’s management, including assumptions about risks and uncertainties faced by the Company. These forward-looking statements can be identified by the use of forward-looking terminology such as “expects”, “believes”, “will” or similar verbs or expressions. If any of management’s assumptions prove incorrect or should unanticipated circumstances arise, the Company’s actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors, including, but not limited to, those factors influencing the Company and its business which are described in this report in the “Risk Factors” section below. Readers are urged to consider these factors when evaluating any forward-looking statement. The Company undertakes no obligation to update any forward-looking statements in this report to reflect future events or developments.

Item 1.BUSINESS

GENERAL

The Company is a Minnesota agricultural cooperative corporation owned by approximately 2,900 sugarbeet growers in the Minnesota and North Dakota portions of the Red River Valley. The Red River Valley is the largest sugarbeet growing area in the United States, forming a band approximately 35 miles wide on either side of the North Dakota and Minnesota border and extending approximately 200 miles south from the border of the United States and Canada. The Company was organized in 1973 by sugarbeet growers to acquire the business and assets of the American Crystal Sugar Company, then a publicly held New Jersey corporation in operation since 1899. The Company currently processes sugarbeets from a base level of approximately 500,000 acres in the Red River Valley (the Red River Valley Crop), subject to tolerances for over-planting and under-planting established by the Board of Directors each year. By owning and operating five sugarbeet processing facilities in the Red River Valley, the Company provides its shareholders with the ability to process their sugarbeets into sugar and agri-products such as: molasses; sugarbeet pulp; and by-products of the molasses desugarization process, betaine and concentrated separated by-product (CSB).

The Company, through its wholly-owned subsidiary, Sidney Sugars Incorporated (Sidney Sugars), owns two sugarbeet processing facilities. The Company processes the sugarbeets from approximately 35,000 acres grown by non-member growers at the Sidney, Montana, facility. The Torrington, Wyoming, facility has been leased on a long-term basis to another sugar producer.

 The Company, through its wholly-owned subsidiary, Crab Creek Sugar Company (Crab Creek), controls the long-term production of sugar at a sugarbeet processing facility at Moses Lake, Washington. Neither Crab Creek nor the Company currently operates or intends to operate the Moses Lake facility.

The Company is the controlling member of ProGold Limited Liability Company (ProGold), which owns a corn wet-milling plant in Wahpeton, North Dakota, that is currently being leased to Cargill, Incorporated (Cargill). On November 6, 2007, ProGold entered into an amended lease agreement with Cargill that supersedes and replaces the existing 10 year lease between ProGold and Cargill and provides that (1) Cargill will pay ProGold average annual rental payments equal to $21,900,000, and (2) that the term of the lease be extended until December 31, 2017.

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s  50 percent ownership interest in Crystech, LLC (Crystech) resulting in the Company’s 100 percent ownership of Crystech. Crystech owned the molasses desugarization facility adjacent to the Company’s processing facility in Hillsboro,

2

North Dakota. Effective May 31, 2007, Crystech was dissolved with all assets and liabilities transferred to the Company.

The Company’s sugar marketing agent, United Sugars Corporation (United), is a cooperative owned by the Company, Minn-Dak Farmers Cooperative and United States Sugar Corporation. The Company’s agri-products are marketed through a marketing agent, Midwest Agri-Commodities Company (Midwest). Midwest is a cooperative owned by the Company, Minn-Dak Farmers Cooperative, Southern Minnesota Beet Sugar Cooperative and Michigan Sugar Company.

Operating Segments

The Company has identified two reportable operating segments: Sugar and Leasing. The Sugar segment is engaged primarily in the production and marketing of sugar from sugarbeets. It also sells agri-products and sugarbeet seed. The Leasing segment is engaged in the leasing of a corn wet milling plant used in the production of high-fructose corn syrup. For financial information by segment see Note 12 of “Notes to the Consolidated Financial Statements.”

Principal Products Produced

The Company is engaged primarily in the production and marketing of sugar from sugarbeets. Total sugar sales accounted for 88.6 percent, 88.5 percent and 88.1 percent of the Company’s consolidated total revenues for the years ended August 31, 2007, 2006 and 2005, respectively. United Sugars Corporation, the Company’s sugar marketing agent, sells sugar primarily to industrial users such as confectioners, breakfast cereal manufacturers and bakeries. For the fiscal year ended August 31, 2007, 89.9 percent (by weight) of the sugar was sold to industrial users. The remaining portion is marketed by United Sugars Corporation through sugar brokers to wholesalers and retailers under the “Crystal Sugar” and various private labels for household consumption. With regard to brand name sales, the Company licenses the use of the “Crystal” trademark to United Sugars Corporation.

The majority of United Sugars Corporation’s sugar sales are contracted one or more quarters in advance.

The Company also sells agri-products such as: molasses; sugarbeet pulp; betaine and concentrated separated by-product (CSB), by-products of the molasses desugarization process; and sugarbeet seed. Substantially all of the Company’s agri-products are marketed through Midwest Agri-Commodities Company, a common marketing agency. Sugarbeet pulp is marketed to livestock feed mixers and livestock feeders in the United States and foreign markets. A large proportion of the Company’s pulp production is exported to Japan and Europe. The market for sugarbeet pulp is affected by the availability and quality of competitive feedstuffs and foreign exchange rates. Sugarbeet molasses is marketed primarily to yeast manufacturers, livestock feed mixers and livestock feeders. Total agri-product sales accounted for 8.8 percent of the Company’s consolidated total revenues during fiscal 2007, of which export agri-product sales accounted for 3.3 percent of such revenues. In the past, agri-products sales accounted for 8.2 percent and 8.2 percent of the Company’s consolidated total revenues in fiscal 2006 and fiscal 2005, respectively, while agri-product export sales accounted for 3.8 percent and 4.3 percent of the Company’s total revenues in fiscal 2006 and fiscal 2005, respectively.

There is no single customer of United Sugars Corporation or Midwest Agri-Commodities Company attributable to the Company that accounts for 10 percent or more of the revenues of the Company.

The Company’s total annual sugar and agri-product production is influenced by the amount and the quality of sugarbeets grown by its members and non-members, the processing capacity of the

3

Company’s plants, by its ability to store harvested sugarbeets and by government programs and regulations.

Raw Materials

The Company purchases all of its Red River Valley sugarbeets from members under contract with the Company. All members have five-year contracts with the Company covering the growing seasons of 2003 through 2007. In September 2007, the Board of Directors approved a new five year contract for the 2008 through 2012 crop years. These five-year contracts automatically renew for additional five-year terms unless terminated by one of the parties at the end of the current term. In addition, each member has an annual contract with the Company specifying the number of acres the member is obligated to grow during that year. Each share of Preferred Stock held by a member requires that member to grow one acre of sugarbeets for sale to the Company. The Company’s Board of Directors has the discretion to adjust the acreage that is required to be planted for each share of Preferred Stock held by the members. The Board of Directors has historically tried to maintain the relationship between shares of Preferred Stock and acres of sugarbeet production at a ratio as close to 1 to 1 as possible, subject to tolerances for over-planting and under-planting established by the Board each year and reductions or increases caused by the Company’s marketing allocations established by the United States Department of Agriculture (USDA). The Company announced to its shareholders on November 1, 2007, that the Company is currently anticipating that the Company shareholders will be authorized to plant between 400,000 and 450,000 acres for the 2008 sugarbeet crop or approximately .8 to .9 acres per share of Preferred Stock. The Board of Directors and management continue to review and determine the relationship between the ownership of Preferred Stock and acreage planting.

The gross beet payment is the value of recovered sugar from the sugarbeets a member delivers plus the member’s share of agri-product revenues, minus the member’s share of member business operating costs. The following allowances, costs and deductions, if applicable, are used to adjust the gross beet payment to arrive at the net beet payment: hauling program allowance and costs, pre-pile quality premium and costs, tare incentive premium/penalty program, late harvest program costs and unit retains. Members are paid a hauling allowance based on the distance they must transport sugarbeets for delivery to the Company and may also receive an allowance for early delivery of sugarbeets prior to the commencement of the stockpiling of harvested sugarbeets. The costs of these programs are shared among members on the basis of the net tonnage of sugarbeets delivered by each member.

Under the grower contracts, payments to members for sugarbeets must be made in at least three installments: (i) on or about November 15, the Company pays its members an amount equal to 65 percent of the Company’s estimate of the member’s net beet payment; (ii) on or about March 31, the Company pays an amount, which combined with the November payment, equals 90 percent of the member’s estimated net beet payment; (iii) and not more than 15 days after completion and acceptance of the audit of the Company’s annual consolidated financial statements, the Company pays the remainder of the member’s net beet payment. Except for unit retains, the Company must pay to its members for their sugarbeets all proceeds from the sale of the members’ sugar and agri-products in excess of related member business operating costs, as described above.

All of the sugarbeets processed at the Sidney, Montana, factory are purchased from non-member growers under contract with Sidney Sugars. Each non-member grower has an annual contract with Sidney Sugars specifying the number of acres the non-member grower is obligated to grow during each year.

The price per ton of sugarbeets paid to the growers who deliver to Sidney Sugars (the Scale Payment) is determined according to the sugarbeet payment scale contained in the grower contract and is calculated based on Sidney Sugars’ average net return for sugar from that year’s crop and the adjusted average sugar content of each grower’s sugarbeets.

4

Under grower contracts between Sidney Sugars and its growers, payments to these growers for sugarbeets must be made in three installments following delivery of the crop: (i) in November, Sidney Sugars pays the growers an amount equal to 65 percent of the estimated Scale Payment for that year’s crop; (ii) in April, Sidney Sugars pays an amount, which combined with the November payment, equals 90 percent of the estimated Scale Payment for that year’s crop; (iii) and in October, Sidney Sugars pays the remainder of the actual Scale Payment.

Seasonality

The period during which the Company’s plants are in operation to process sugarbeets into sugar and agri-products is referred to as the “campaign.”  During the campaign, the Company’s factories operate twenty-four hours per day, seven days per week. In the Red River Valley, the campaign typically begins in September and continues until the available supply of sugarbeets has been depleted, which generally occurs in May of the following year. Based on current processing capacity, an average campaign lasts approximately 260 days, assuming normal crop yields. In Sidney, Montana, the campaign also begins in September and lasts approximately 170 days.

The sales of sugar and agri-products occur ratably throughout the year with modest increases in sugar sales occurring prior to holiday seasons.

Sales Backlog

The backlog of any unfilled sales orders at August 31, 2007 and 2006, was not material to the Company.

Market and Competition

Current United States government statistics estimate total United States sugar consumption at approximately 188 million hundredweight for the year beginning October 1, 2006 and ending September 30, 2007. For the same period ending September 2006, total consumption was approximately 193 million hundredweight. Comparing the two years shows a decrease in demand of approximately three percent.

The United States refined sugar market has grown over the past twenty years, despite the demand lost to the substitution of high fructose corn syrups for sugar in beverages and certain food products. Non-nutritive sweeteners such as aspartame have also been developed to substitute for sugar. Corn sweeteners and non-nutritive sweeteners constitute a large portion of the overall sweetener market. The Company believes that the United States market for sugar will reflect minimal increases or be relatively flat in the near future.

The United States sugar industry has been subject to industry consolidation. Today there are fewer than 10 sugar sellers, with approximately 73 percent of United States sugar market share concentrated in the top three sellers. The Company’s sugar production and sales represent approximately 21 percent of the total domestic market for refined sugar in 2006/2007. The Company had the right to market, or to have marketed on its behalf, approximately 34 million hundredweight of sugar from the 2006 crop. Sugar sales by United Sugars Corporation, the Company’s marketing agent, represent approximately 27 percent of the United States sugar market.

United Sugars Corporation’s main competitors in the domestic market are Imperial Sugar Corporation, Amalgamated Sugar Company, The American Sugar Refining Company and Western Sugar Cooperative. Because sugar is a fungible commodity, competition in the United States industry is primarily based upon price, customer service and reliability as a supplier. United Sugars Corporation is currently the second largest marketer of sugar in the United States.

5

Government Programs and Regulations

Farm Security and Rural Investment Act of 2002

The Farm Security and Rural Investment Act of 2002 (the Farm Bill) was enacted on May 13, 2002. The Farm Bill contains several provisions related to the domestic sugar industry, with the ultimate goal of such provisions to achieve balance and stability in the U.S. sugar market while minimizing the cost to the Federal government. The Farm Bill applies to the 2002 through 2007 crop years. Generally, the Farm Bill restricts imports of foreign sugar, maintains a non-recourse loan program, and establishes a system of marketing allocations for sugarbeet and sugar cane producers in an attempt to balance the supply and demand for sugar in the U.S. domestic sugar market.

Under the Farm Bill, sugar processors can borrow funds on a non-recourse basis from the Commodity Credit Corporation (CCC), with repayment of such funds secured by sugar. If the price of sugar drops below the forfeiture price, the processors can forfeit the sugar securing the loans to the CCC in lieu of repayment. Processors may also obtain CCC loans for “in-process” sugar or syrups at 80 percent of the loan rate.

The USDA has historically maintained sugar prices above the forfeiture price without cost to the U.S. Treasury by regulating the supply of sugar in the U.S. market through regulating the quantity of sugar imports. Under the Tariff Rate Quota (TRQ) implemented October 1, 1990, sugar producing countries are allowed to export a fixed quantity of sugar into the United States duty-free or subject to minimal duties. Unlimited additional quantities may be exported to the United States upon payment of a tariff of 15.36 cents per pound prior to shipment. To date, only immaterial quantities of sugar have been imported under this higher tariff level.

The Farm Bill sets an 18 cent per pound loan rate for raw cane sugar and a 22.90 cent per pound loan rate for refined beet sugar. Both loan rates were effective for the 2006 year crop.

In order to reduce the risk of sugar forfeitures to the CCC and to provide balance in the marketplace, the Farm Bill establishes annual flexible marketing allotments for both cane and beet sugar processors. The USDA determines the overall allotment quantity (OAQ) for the U.S. domestic sugar market for each crop year by estimating sugar consumption, adding stocks expected to be carried into the succeeding year, and then subtracting 1,532,000 short tons, raw value of sugar (the maximum level of imports allowed before marketing allotments are expected to be suspended if the imports would lead to a reduction of the overall allotment quantity), and subtracting carry-in stocks of sugar, including CCC inventory. Once the USDA has determined the OAQ for a crop year, it then determines the allotment for beet and cane sugar by multiplying the OAQ by 54.35 percent for beet and 45.65 percent for cane. An individual processor’s allocation of the allotment for a crop year is determined by a formula set forth in the Farm Bill. Sugarbeet processor allocations are based on each sugar processor’s sugar production history, while sugar cane processor allocations are based on past marketings, ability to market and past processings. The USDA annually establishes individual processor’s allocations. The Company’s marketing allocations for the 2006, 2005 and 2004 crops were approximately 34 million hundredweight, 32 million hundredweight and 33 million hundredweight, respectively, while the marketing allocation for the 2007 crop is currently set at approximately 33 million hundredweight.

Under the Farm Bill, a processor may market sugar in excess of its allocation if such sales (i) enable another processor to meet its allocation, (ii) facilitate the export of sugar or (iii) are made for nonhuman consumption. The USDA can assess a penalty equal to three times the U.S. market value of any quantity of sugar marketed in excess of a processor’s allocation. The Farm Bill and its related

6

regulations do not allow marketing allocations to be traded among processors. The Farm Bill does, however, provide for the transfer of allocations associated with a particular processing facility in the event ownership of the facility is transferred.

The marketing allotments and allocations set forth under the Farm Bill affect the sugar processed from the 2002 crop through the 2007 crop. On an annual basis, the marketing allotments, and the corresponding allocation to the Company, will determine the amount of sugar the Company can sell into the domestic market. The Company’s allocation may reduce the amount of sugar the Company can market for a given year, thus reducing the number of acres of sugarbeets required for processing to produce that amount of sugar.

Currently Congress is considering language that will either extend or revise the Farm Security and Rural Investment Act of 2002. The Company has no way to predict the outcome, but the impact could be material and significant. Final language is expected prior to the 2008 crop planting.

North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) governs sweetener trade between the United States and Mexico.  Under an agreement reached between the two countries on July 27, 2006, Mexico is eligible to ship, tariff-free, 250,000 metric tons of raw sugar to the United States in fiscal year 2007 and up to an additional 250,000 metric tons in the first quarter of fiscal year 2008.  Reciprocal quantities of high fructose corn syrup may be shipped from the United States to Mexico during the respective time periods.  Under the NAFTA, tariffs on over-quota imports of sugar from Mexico are set to expire by January 1, 2008.  For 2007, the over-quota tariff for raw cane sugar stands at 1.51 cents per pound.  Depending on market conditions in Mexico and the United States, over-quota imports of Mexican sugar beyond the tariff-free amounts could be feasible in 2007 and beyond.  Excessive imports of Mexican sugar could cause material harm to the U.S. sugar market.  The Company has no way to predict the extent to which Mexico will fulfill its tariff-free or over-quota export opportunities.

Regional and Bilateral Free Trade Agreements

The United States government is pursuing an aggressive agenda on international trade. It is seeking to negotiate new free trade agreements with a number of countries and regions that are major producers of sugar. The Company believes these agreements, if they reach fruition, could negatively impact the Company’s profitability. If increases in guaranteed access or reductions in sugar tariffs are included in these agreements, excess sugar from these regions could enter the U.S. market and put pressure on domestic sugar prices.

Negotiations on some of these agreements have been completed. The U.S.-Colombian Free Trade Agreement was completed on February 27, 2006, the U.S.-Peru Free Trade Agreement was completed on April 12, 2006 and the U.S.-Panama Free Trade Agreement was completed on December 18, 2006. The Company expects that these trade agreements may be brought before Congress for a vote later in 2007. Quantities of sugar from these countries expected to be permitted into the United States if these agreements are approved by Congress and implemented are as follows:

•Colombia – the proposed agreement would allow Colombia to export to the U.S. an additional 50,000 metric tons of sugar in the first year of the agreement, rising to more than 60,000 tons in year 15, with the first-year increase tripling the duty-free sugar market access Colombia already enjoys.

7

•Peru – the proposed agreement establishes a duty-free TRQ, in addition to that provided under the World Trade Organization (WTO), for those sugar and sugar-containing products for which overall TRQ’s under the U.S. sugar import program are in operation. This TRQ is set at 9,000 metric tons in year 1 of the agreement and rises to 11,250 metric tons in year 15; after year 15 the in-quota quantity grows by 180 metric tons per year. Eligibility for this TRQ, however, is limited to the amount of Peru’s trade surplus in sugar. In addition to the TRQ described above, a duty-free TRQ of 2,000 metric tons has been established for specialty sugars. This TRQ does not increase and is not subject to the “net exporter” provision described above.

•Panama – the proposed agreement includes 7,000 metric tons of additional duty-free access to the U.S. sugar market and provides for duty-free access for U.S. sugar shipments into Panama and requires that at least 6,000 tons of the Panamanian sugar sent to the U.S. be in a raw form.

The Administration has indicated its interest in pursuing other bilateral or regional free trade agreements. These include the Free Trade Area of the Americas, the Association of Southeast Asian Nations, South Africa, Thailand, and others. Since these negotiations are in some cases stalled or at various stages of development the Company is unable to assess the risk associated with these potential agreements.

The Doha Round negotiations of the WTO continue to be pursued by the U.S. Administration and some of its international counterparts. It is unclear at this time whether negotiations will be completed. If the negotiations are completed, the outcome of any negotiated arrangement could have significant adverse consequences for the Company.

The U.S. sugar industry and the Company, as an influential member of such industry, recognize the potential negative impact that could result if these agreements are entered into by the United States and are taking steps to attempt to positively influence the outcome. The Company and the sugar industry intend to continue to focus significant attention on trade issues in the future.

The impact of the various trade agreements on the Company cannot be assessed at this time due to the uncertainty concerning the terms of the agreements and whether they will ultimately be implemented. It is possible, however, that the passage of various trade agreements could have a material adverse effect on the Company through a reduction in acreage that can be planted by the Company’s shareholders and by the growers for Sidney Sugars Incorporated, and/or a reduction in sugar selling prices, and a corresponding reduction in the beet payment to the shareholders and the Company earnings. Although the magnitude of the impact cannot be determined at this time, the Company estimates that for every additional 500,000 tons of sugar entering the U.S. market and therefore reducing the overall allotment quantity (and assuming no other variables change), the Company may need to reduce planted acres by approximately 40,000, which would negatively impact shareholder profits.

Employees

As of October 1, 2007, the Company had 1,380 full-time employees, of which 1,130 were hourly and 250 were salaried. The Company had 20 part-time employees. In addition, the Company employs approximately 782 hourly seasonal workers, approximately 435 during the sugarbeet harvest and approximately 347 during the remainder of the sugarbeet processing campaign. During the sugarbeet harvest, the Company also contracts with third party agencies for approximately another 1,300 additional workers.

8

Substantially all of the hourly employees at the Company’s factories, including full-time and seasonal employees, are represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) AFL-CIO, and are covered by collective bargaining agreements expiring July 31, 2011 for the Red River Valley factory employees and April 30, 2008 for the Sidney, Montana, factory employees. Office, clerical and management employees are not unionized, except for certain office employees at the Moorhead and Crookston, Minnesota, and Hillsboro, North Dakota, factories who are covered by the collective bargaining agreement with the BCTGM. The Company considers its employee relations to be good.

Environmental Matters

The Company is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control. The Company conducts an on-going program designed to meet these environmental laws and regulations. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. The Company cannot predict whether future changes in environmental laws or regulations might increase the cost of operating its facilities and conducting its business. Any such changes could have adverse financial consequences for the Company.

The Company’s Crookston, East Grand Forks and Moorhead, Minnesota factories have experienced hydrogen sulfide emissions from their water treatment ponds that have exceeded permissible limits. On July 19, 2007, the Company received a notice of violation from the Minnesota Pollution Control Agency (MPCA) related to emissions that occurred in fiscal 2005 and 2006. A penalty assessment is currently under consideration by the MPCA. The Company’s Crookston, East Grand Forks and Moorhead, Minnesota factories have also experienced hydrogen sulfide emissions from their water treatment ponds in fiscal 2007 that have exceeded permissible limits. While it is likely that the Company may be assessed penalties and/or fines related to these occurrences, as of the date of this report none have been assessed. Any potential penalties and/or fines are not expected to be material to the Company.

Capital expenditures will be required to prevent future occurrences of the emissions. The Company’s fiscal 2007 budget included capital appropriations of approximately $5.0 million for environmentally related projects at the Company’s factory locations. Expenditures in fiscal 2007 on these projects were approximately $1.0 million. The Company’s fiscal 2008 budget includes additional capital appropriations of approximately $1.0 million for environmentally related projects. The amount and timing of any additional capital expenditures that may be required is not currently known.

Harvesting, storing and processing recent large crops has also negatively impacted operating costs associated with compliance with federal and state environmental laws.

Two Administrative Penalty Orders were issued by the MPCA during 2007 for violation of the air emission permit at the Company’s East Grand Forks, Minnesota factory. The Orders required a total payment of $4,950. In July 2007, the Company also received a Compliance Monitoring Survey-Letter of Warning from the MPCA for the East Grand Forks and Moorhead, Minnesota factories. Corrective actions have been taken related these occurrences. A penalty may be assessed but is not expected to be substantial.

Available Information

The Company’s corporate headquarters are located at 101 North Third Street, Moorhead, Minnesota 56560, telephone number (218) 236-4400. The Company’s fiscal year ends August 31. The Company’s website is www.crystalsugar.com. The Company files annual, quarterly and periodic reports with the United States Securities and Exchange Commission (SEC). These reports can be accessed by selecting “Links” on the Company’s website or electronic or paper copies can be obtained free of charge

9

upon request. In addition, the Company’s reports may be read or copied at the SEC Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov that contains reports and other information filed electronically about the Company.

Item 1A.           RISK FACTORS

The risks described below together with all of the other information included in this Annual Report on Form 10-K should be considered carefully. The risks and uncertainties described below and elsewhere in this Annual Report on Form 10-K are not the only ones we face. If any of the following risks actually occur, our business, financial condition or results of operations would likely suffer. In that case, the beet payments made to our shareholders may decrease, the value of our Preferred Stock could fall, and a shareholder could lose all or part of their investment.

If we do not continue to minimize our operating expenses, we may not be able to compete effectively in our industry.

Our strategy involves, to a substantial degree, maximizing profitability by continuing to control operating expenses. In furtherance of this strategy, we have engaged in ongoing, company-wide efficiency activities intended to increase productivity and reduce costs. These activities have included realigning and streamlining our operations and optimizing the efficiency of our production facilities. We cannot assure you that our continued efforts will result in our continued or increased profitability.

While we believe that we currently have adequate internal control procedures in place, we are still exposed to potential risks from recent legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission adopted rules requiring us to include a report of management on our internal control over financial reporting in our annual reports on Form 10-K that contains an assessment by management of the effectiveness of our internal control over financial reporting. In addition, the independent registered public accounting firm auditing our financial statements must attest to and report on management’s assessment of the effectiveness of our internal control over financial reporting. When we are required to comply, management plans to conduct a rigorous review of our internal control over financial reporting in order to assure compliance with the Section 404 requirements. However, if our independent auditors interpret the Section 404 requirements and the related rules and regulations differently from us or if our independent auditors are not satisfied with our internal control over financial reporting or with the level at which it is documented, operated or reviewed, they may decline to attest to management’s assessment or issue a qualified report. Additionally, if we are not able to meet the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.

An oversupply of sugar could adversely affect the price of sugar and our results of operations.

The domestic sugar market is reactive to any oversupply of refined sugar. Many factors can lead to an oversupply of sugar. Excess supply may result in a decline in domestic sugar prices. Lower sugar prices directly impact profitability of selling refined sugar in the United States. If the selling price of sugar decreases, our revenues will decrease which will result in a direct negative impact on our profitability.

10

Unregulated foreign competition could result in an oversupply of sugar which could decrease the price of sugar and impact our business.

Under the current terms of the NAFTA and other government regulations, imports of sugar from Mexico may enter the U.S. market. These imports could oversupply the U.S. market and negatively affect the price of sugar. We, along with the domestic sugar industry, are seeking improvements to NAFTA and are also pursuing legal remedies to address the matter. If the sugar industry is unsuccessful in these and any other endeavors it pursues to prevent the influx of Mexican sugar into the U.S. market, we could experience adverse financial consequences which would in turn be experienced by our members.

Regional and bilateral trade agreements could result in an increase in the amount of sugar available in the United States sugar market which may impact our business.

The United States government has been engaged in regional and bilateral trade negotiations with countries that produce sugar. If the United States government enters into bilateral trade agreements with sugar producing countries, the amount of sugar in the domestic sugar market could increase. A change in the supply of sugar could put pressure on the price of sugar, which would impact our profitability.

The success or failure of our business is linked to certain government programs, regulations and legislation that may change in the future.

The nature and scope of future legislation and regulation affecting the sugar market and industry cannot be predicted. The current price supports and market protections for sugar in place may not continue in their present forms. If the price support programs were eliminated in their entirety, or if certain protections the federal government provides from foreign competitors were materially reduced, the amount of sugar we can sell, the amount of sugarbeets we can process and the price for which we can sell our sugar may be impacted, which could reduce the profitability of our business. If legislation or government programs change, we may not be able to adopt strategies that would allow us to compete effectively in a greatly changed domestic market for sugar and the adverse effects could negatively impact the desirability of growing sugarbeets for delivery to us for processing, our financial results, and our continued viability.

Changes in the Farm Bill may change our results of operations or require a change in our strategic plans.

The impact of changes to the Farm Bill on our operations cannot be completely predicted. The long term ramifications of the current marketing allotment and allocation program depend on our ability to maintain our marketing allocation on an annual basis and to obtain access, if necessary, to additional allocations at a reasonable price. Any changes in the Farm Bill may impact our business. We cannot predict the changes to the Farm Bill or the impact such changes will have at this time.

If we are unable to compete in the sweetener market, our operating results may suffer.

Sugar is a fungible commodity with competition for sales volume based primarily upon customer service, price and reliability, though differences in proximity to various geographic markets within the United States result in differences in freight and shipping costs which in turn generally affect pricing and competitiveness. The overall sweetener market, in addition to sugar, includes corn-based sweeteners, such as regular and high fructose corn syrups, and non-nutritive, high-intensity sweeteners such as aspartame. Differences in functional properties and prices have tended to define the use of these various sweeteners. Although the various sweeteners are not interchangeable in all application, the substitution of other sweeteners for sugar has occurred in certain products, such as soft drinks. We cannot predict the availability, development or potential use of these and other alternative sweeteners and their possible

11

impact on us or our members. We believe that we possess the ability to compete successfully with other producers of sugar in the United States. In spite of this competitive advantage, substitute products and sugar imports could reduce the demand for sugar which could lower the price of sugar, resulting in a change to our operations in the future.

On June 27, 2007, our Board of Directors authorized the planting of Roundup Ready® sugarbeets for the 2008 crop year. Sugar and agri-products produced from Roundup Ready® sugarbeets have received regulatory approval in most of the countries in which we have direct or indirect sales of our products. While the sale of sugar and agri-products from Roundup Ready® sugarbeet seed has been approved in most markets, marketing risks still exist. United Sugars Corporation and Midwest Agri-Commodities, our sugar and agri-product marketing agents, respectively, feel they can successfully sell and distribute products from Roundup Ready® sugarbeets with minimal affect on our revenue. However, customers’ views on the use of products from biotechnology derived crops such as Roundup Ready® sugarbeets may change over time which could negatively impact our profitability.

Our operations are sensitive to energy prices.

The prices we pay for energy related products, such as natural gas, coal and coke, have been volatile and may continue to be volatile. We use substantial amounts of these products in our manufacturing process. We believe that the prices for energy related products including natural gas, coal and coke will continue to be volatile and higher than historical levels. Higher energy prices may also increase the costs of many goods and services we acquire. These higher prices may materially increase our cost of production, thus impacting our financial results.

Quantity and quality of sugarbeets is sensitive to weather and other factors such as seed varieties.

The sugarbeet, as with most other crops, is affected by many factors, including seed varieties and weather conditions during the growing season. Additionally, the quantity of sugarbeets to be processed and weather conditions during the processing season affect our ability to store sugarbeets held for processing. Growing and storage conditions different from what we predict or expect may change the quantity and quality of sugarbeets available for processing and therefore may affect the quantity of the sugar we produce.

A significant decrease in the quantity or quality of sugarbeets harvested due to poor weather conditions would result in higher operating costs and lower earnings.

A significant increase in the quantity or quality of sugarbeets harvested due to good weather conditions or improved seed varieties could result in an unpredictably large quantity of sugarbeets to be processed. If we are required to process a larger than anticipated quantity of sugarbeets we may experience increased per unit of sugar processing cost which in turn would have an adverse financial consequence to us and our members.

In order to manage the quantity and quality of sugarbeets that are harvested or available for processing, our Grower Contract allows for a reduction in the number of acres to be planted at the beginning of a crop year or harvested at the end of a crop year. Up through the 2005 crop year, we had not instituted or required a reduction in the number of acres harvested at the end of a crop year. Due to the large size of the 2006 Red River Valley crop, we instituted an eight percent, approximately 40,000 acres, reduction in the number of acres harvested by our members in order to manage the quantity and quality of the sugarbeets available for processing. The harvest of the 2006 Red River Valley crop resulted in a total of 11.9 million tons or an average of 25.4 tons per acre harvested. This represents the

12

largest Red River Valley crop and the highest tonnage per acre in our history. Also due to the large size of the 2006 Red River Valley crop, we commenced the harvest and processing of the crop in August 2006 as compared to a typical start-up in September. The processing of the 2006 Red River Valley crop was completed on June 7, 2007.

Adequate storage conditions during a processing campaign are critical to ensure that the quantity and quality of sugarbeets available for processing are maintained. If we are not able to obtain or maintain adequate storage conditions, the sugarbeets stored for processing at a later date may deteriorate, resulting in increased production costs, and decreased production which in turn would have an adverse financial consequence to us and our members.

Based on results of recent yield trials and crop results, we expect that new sugarbeet varieties, including Roundup Ready® varieties, may continue to result in significant increases in the average sugarbeet crop yields over the next five years. As a result, we anticipate that there may need to be a reduction in the number of acres of sugarbeets that can be planted by each shareholder in order to match the sugarbeet crop volume to our processing and marketing capacity. This reduction, if necessary, would be accomplished by reducing the per share planting tolerance by an amount that may be material. Assuming there are no changes in other variables, the increased yield per acre expected to result from the continued use of the new sugarbeet varieties would allow shareholders to deliver substantially the same number of tons of sugarbeets to us from fewer acres. Individual shareholder profitability will continue to depend on the circumstances unique to each shareholder. We announced to our shareholders on November 1, 2007, that we are currently anticipating that our shareholders will be authorized to plant between 400,000 and 450,000 acres for the 2008 sugarbeet crop or approximately .8 to .9 acres per Preferred Stock. The Board of Directors will continue to establish the planting tolerance on an annual basis based on the facts existing at that time.

If we are unable to manage the quantity and quality of sugarbeets available for processing, we could experience adverse financial consequences that would impact both us and our members.

Increased profitability of alternative crops could adversely affect the desirability of growing sugarbeets.

The prices growers receive from crops other than sugarbeets could impact their decisions as to which crop to plant and how much to plant. Higher prices and increased profitability for alternative crops could negatively impact the desirability of growing sugarbeets for delivery to us for processing, our financial results, and our continued viability.

Federal, state and local environmental laws and regulations may impact our operations.

We are subject to extensive federal and state environmental laws and regulations with respect to water and air quality and solid waste disposal. We conduct on-going programs designed to meet these environmental laws and regulations. Changes in environmental laws or regulations or complying with existing environmental laws and regulations or enforcement action brought under such environmental laws and regulations might increase the cost of operating our facilities or result in significant capital investment. Any such changes or compliance costs could have adverse financial consequences to our profitability.

13

Item 2.PROPERTY AND PROCESSING FACILITIES

The Company operates five sugarbeet processing factories in the Red River Valley and one in Sidney, Montana. The Company owns all of its factories and the land on which they are located. The factories range in size from 150,000 to 400,000 square feet. These properties are used in the Company’s sugar segment.

The location and processing capacity of the Company’s factories are:

Location	Approximate Daily Slicing Capacity (Tons of Sugarbeets)
Crookston, MN	5,900
East Grand Forks, MN	9,200
Moorhead, MN	5,900
Drayton, ND	7,000
Hillsboro, ND	9,000
Sidney, MT	6,400

Each of the processing factories includes the physical facilities and equipment necessary to process sugarbeets into sugar. Each factory has space for sugarbeet storage, including ventilated storage sites. The Red River Valley factories also have cold storage facilities. Each of these factories is currently operating at or near its capacity. The Company owns molasses desugarization (MDS) plants at its East Grand Forks and Hillsboro facilities. The MDS plants process molasses to extract additional sugar. The Company has sugar packaging facilities located at the Moorhead, Hillsboro, Crookston, East Grand Forks and Sidney factories.

The Company also owns a sugarbeet processing plant in Torrington, Wyoming. The Torrington, Wyoming, facility is leased on a long-term basis to another sugar company.

ProGold owns a corn wet-milling plant in Wahpeton, North Dakota, that is currently being leased to Cargill. The corn wet-milling plant is capable of processing corn to produce corn sweeteners (including high fructose corn syrups) and various agri-products. This property is used in the Company’s leasing segment. On November 6, 2007, ProGold entered into an amended lease agreement with Cargill that supersedes and replaces the existing 10 year lease between ProGold and Cargill and provides that (1) Cargill will pay ProGold average annual rental payments equal to $21,900,000, and (2) that the term of the lease be extended until December 31, 2017.

The Company’s corporate office is located in a 30,000 square foot, two-story office building in Moorhead, Minnesota. The Company also has a 100,000 square foot Technical Services Center situated on approximately 200 acres in Moorhead, Minnesota. The Company owns both facilities. The Company also owns numerous sites as sugarbeet receiving and storage stations located within proximity of their factories. Substantially all non-current assets are mortgaged or pledged as collateral for its indebtedness to various financial institutions.

Item 3.LEGAL PROCEEDINGS

From time to time and in the ordinary course of its business, the Company is named as a defendant in legal proceedings related to various issues, including worker’s compensation claims, tort claims and contractual disputes. The Company is currently involved in certain legal proceedings which have arisen in the ordinary course of the Company’s business. The Company is also aware of certain other potential claims which could result in the commencement of legal proceedings. The Company carries insurance which provides protection against certain types of claims. With respect to current

14

litigation and potential claims of which the Company is aware, the Company’s management believes that (i) the Company has insurance protection to cover all or a portion of any judgments which may be rendered against the Company with respect to certain claims or actions and (ii) any judgments which may be entered against the Company and which may exceed such insurance coverage or which may arise in actions involving potential liabilities not covered by insurance policies are not likely to have a material adverse effect upon the Company, or its assets or operations.

Four administrative proceedings have been brought against the United States Department of Agriculture (USDA) seeking reversal of prior decisions regarding the determination and transfer of sugar marketing allocations made by the USDA. While the Company was not a party to any of these administrative proceedings, it was, solely or in coordination with other sugar processors, an intervenor in these administrative proceedings. Each of the proceedings has completed the administrative process and the decisions by the chief judicial officer of the USDA in each were such that the Company would not experience a reduction in its marketing allocations. An appeal of one of the decisions was subsequently filed by another company. The decision by the chief judicial officer of the USDA was upheld in this appeal by a decision of the United States District Court. The decision of the United States District Court has been appealed to the Ninth Circuit Court of Appeals. If this case is overturned, it could result in the Company experiencing a reduction in marketing allocations equal to the loss of approximately 25,000 acres in future crop years assuming no other related factors were to change.

The outcome of any contested matter is never certain and the eventual decisions in the matters identified above may result in a reduction of the Company’s marketing allocations which would adversely impact the amount of sugar the Company could produce and market.

Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company’s shareholders during the quarter ended August 31, 2007.

PART II

Item 5.MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of August 31, 2007, the Company had 2,878 shares of the Common Stock and 498,570 shares of the Preferred Stock issued and outstanding. There is no established public market for the Company’s Common Stock or Preferred Stock, as such shares may be held only by farmer-producers who are eligible for membership in the Company. The Company’s shares are not listed for trading on any exchange or quotation system. Although transfers of the Company’s shares may occur only with the consent of the Board of the Directors, the Company does not obtain information regarding the transfer price in connection with such transfers. As a result, the Company is not able to provide information regarding the prices at which the Company’s shares have been transferred.

Because the number of acres of sugarbeets a member may grow for sale to the Company is directly related to the number of shares of Preferred Stock owned, a limited, private market for Preferred Stock exists. It is not anticipated that a general public market for the Company’s shares of Common Stock or Preferred Stock will develop due to the limitations on transfer and the various membership requirements which must be satisfied in order to acquire such shares.

A member desiring to sell his or her Common Stock or Preferred Stock must first offer them to the Company for purchase at par value. If the Company declines to purchase such shares, either class may be sold to a new member (i.e., another farm operator not already a member) and Preferred Stock may be sold to one or more existing members or farm operators approved for membership, in each case

15

subject to approval by the Board of Directors. To date, the Company’s Board of Directors has not exercised the Company’s right of first refusal to purchase preferred shares offered for sale by its members. Because the Company does not require parties seeking approval for transfers to provide information regarding the transfer price, the Company does not possess verifiable information regarding the transfer price involved in recent transfers of the Company’s Preferred Stock.

Item 6.SELECTED FINANCIAL DATA

The selected financial data of the Company should be read in conjunction with the consolidated financial statements and related notes included in Appendix A of this report.

	Fiscal Year Ended August 31, (In Thousands, except for ratios)
	2007		2006		2005		2004		2003
Net Revenues	$	1,222,170	$	1,005,716	$	965,474	$	1,033,088	$	829,246
Net Proceeds (1)	$	601,392	$	445,091	$	373,260	$	473,122	$	361,902
Total Assets	$	875,315	$	839,997	$	774,024	$	822,155	$	809,751
Long-Term Debt, Net of Current Maturities	$	157,974	$	200,037	$	216,842	$	250,086	$	286,922
Members’ Investments	$	333,885	$	323,256	$	315,698	$	303,426	$	270,346
Property and Equipment Additions, net of retirements	$	63,032	$	45,453	$	42,595	$	30,347	$	46,578
Working Capital	$	36,929	$	58,214	$	47,514	$	58,673	$	49,572
Ratio of Long-Term Debt to Equity (2)	.47:1		.62:1		.69:1		.82:1		1.06:1

	Fiscal Year Ended August 31, (In Thousands, except for Tons purchased per acre harvested and Sugar content of sugarbeets)
Crop Data (3)	2007		2006		2005		2004		2003
Acres harvested	509		507		526		537		546
Tons purchased	12,845		9,628		10,217		10,982		9,485
Tons purchased per acre harvested	25.3		19.0		19.4		20.4		17.6
Sugar Content of Sugarbeets	18.2	%	18.0	%	17.8	%	18.5	%	17.1	%
Sugar hundredweight
Produced	37,193		29,728		30,524		33,829		26,746
Sold, including purchased sugar	35,236		29,691		31,509		33,835		27,077
Purchased sugar sold	7		45		523		36		707
Agri-Products tons
Produced	930		717		732		876		760
Sold	898		721		761		864		718

(1) Net Proceeds are the Company’s gross revenues, less the costs and expenses of producing and marketing sugar, agri-products and sugarbeet seed, but before payments to members for sugarbeets. (For a more complete description of the calculation of the payment to members for sugarbeets, see “Item 1. Business – Raw Materials.”)

(2) Calculated by dividing the Company’s long term debt, exclusive of the current maturities of such debt, by members’ investments.

(3) Information for a fiscal year relates to the crop planted and harvested in the preceding calendar year (i.e., information for the fiscal year ended August 31, 2007 relates to the crop of 2006). Crop data for fiscal years 2003 through 2006 reflect the combined data of the Red River Valley crop and the Sidney crop.

16

Item 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial conditions and results of operations of the Company should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in Appendix A of this report.

Liquidity and Capital Resources

Under the Company’s Bylaws and Grower Contracts, payments for member delivered sugarbeets, the principal raw material used in producing the sugar and agri-products it sells, are subordinated to all member business expenses. In addition, the beet payment made to member growers and non-member growers are paid in three payments over the course of a year, and the payments are made net of any anticipated or declared unit retain for the crop. These procedures have the effect of providing the Company with an additional source of short-term financing. This financing arrangement may result in an additional source of liquidity and reduced need for outside financing in comparison to a similar business operated on a non-cooperative basis.

Because sugar is sold throughout the year (while sugarbeets are processed primarily in the fall, winter and spring) and because substantial amounts of equipment are required for its operations, the Company has utilized substantial outside financing on both a seasonal and long-term basis to fund its operations. The majority of such financing has been provided by a consortium of lenders led by CoBank, ACB.

The Company has long-term debt availability with CoBank, ACB of $202.2 million, of which $82.5 million in loans and $69.3 million in long-term letters of credit were outstanding as of August 31, 2007. The unused long-term line of credit as of August 31, 2007 was $50.4 million. In addition, the Company has long-term debt outstanding, as of August 31, 2007, of $50 million from a private placement of Senior Notes that occurred in September of 1998; $7.1 million from a private placement of Senior Notes that occurred in January of 2003; $47.9 million from ten separate issuances of Pollution Control and Industrial Development Revenue Bonds; and a term loan with Bank of North Dakota of $1.6 million.

The Company also has a seasonal line of credit with a consortium of lenders led by CoBank, ACB of $360 million, of which there was no outstanding balance as of August 31, 2007, and a line of credit with Wells Fargo Bank for $1 million, of which there was no outstanding balance as of August 31, 2007. The Company’s commercial paper program provides short-term borrowings of up to $325 million of which approximately $25.0 million was outstanding as of August 31, 2007. The Company had $2.2 million of short-term letters of credit outstanding as of August 31, 2007. The unused short-term line of credit as of August 31, 2007 was $333.8 million. Any borrowings under the commercial paper program along with outstanding short-term letters of credit will act to reduce the available credit under the CoBank, ACB seasonal line of credit by a commensurate amount.

The Company had outstanding commitments totaling $13.8 million as of August 31, 2007 for equipment and construction contracts related to various capital and maintenance projects.

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s 50 percent ownership interest in Crystech for $1.5 million. This acquisition resulted in the Company’s 100 percent ownership of Crystech. Effective May 31, 2007, Crystech was dissolved with all assets and liabilities transferred to the Company.

As of August 31, 2007, Midwest had outstanding short-term debt with CoBank, ACB of $5.6 million, of which $2.6 million was guaranteed by the Company.

17

The net cash provided by operations was $95.5 million for the year ended August 31, 2007, as compared to $105.3 million for the previous year. This decrease of $9.8 million was primarily due to changes in the amount due growers of $70.4 million and advances to related parties of $12.3 million, which were partially offset by the changes in receivables of $ 39.1 million, in accounts payable of $11.9 million, in inventories of $10.3 million and in unit retains withheld of $9.1. The change in the amounts due growers was primarily due to a much larger increase in the final actual grower payment in 2006 as compared to the previous year along with an increase in the current year final actual grower payment due to the larger Red River Valley crop. The change in receivables was due to the substantial increase in 2006 as compared to the previous year. The change in inventories was due primarily to an increase in the quantity of product inventories this year resulting from the larger Red River Valley crop. The change in unit retains withheld was also due to the larger Red River Valley crop this year.

The net cash used in investing activities was $64.2 million for the year ended August 31, 2007, as compared to $41.7 million for the previous year. The increase of $22.5 million was primarily related to increased purchases of property and equipment and the acquisition of CIT Capital USA Inc.’s 50 percent ownership interest in Crystech partially offset by lower equity distributions from CoBank, ACB.

The net cash used in financing activities was $31.4 million for the year ended August 31, 2007 as compared to $63.6 million for the previous year. This decrease of $32.2 million was primarily due to increased borrowings of short-term debt of $45.1 million, decreased unit retain payments of $2.1, partially offset by increased payments on long term debt of $11.2 million and decreased proceeds from the issuance of long-term debt of $3.8 million.

The Company anticipates that the funds necessary for working capital requirements and future capital expenditures will be derived from operations, short-term borrowings, depreciation, unit retains and long-term borrowings.

The following table provides information regarding the Company’s contractual obligations as of August 31, 2007:

(In Thousands)	Total		Less than One Year		One to Three Years		Four to Five Years		After Five Years
Long-Term Debt	$	189,201	$	31,227	$	48,950	$	42,476	$	66,548
Interest on Fixed Rate L-T Debt	73,897		8,076		17,390		7,631		40,800
Purchase Obligations	47,092		28,117		18,655		151		169
Operating Lease Obligations	52,370		1,598		15,947		11,284		23,541
Other Long-Term Obligations(1)	50,835		8,817		7,872		4,951		29,195
Pension Plan Contributions(2)	—		—
Total Contractual Obligations	$	413,395	$	77,835	$	108,814	$	66,493	$	160,253

(1) Accrued Employee benefits of $3.8 million with corresponding offsetting assets and requiring no future payments have been excluded from the amounts presented. Other Long-Term Liabilities of $1.7 million, which relate to deferred revenue and accrued liabilities also requiring no future payments, have also been excluded from the table.

(2) The Company does not expect to make any contributions to the pension plans during the next fiscal year. Contributions for future years are not known at this time and therefore are not included in the above table. The Company expects to make contributions in the next fiscal year of approximately $3.3 million related to Supplemental Executive Retirement Plans. This amount is reflected in Other Long-Term Obligations in the above table.

Critical Accounting Policies and Estimates

Preparation of the Company’s consolidated financial statements requires estimates and judgments to be made that affect the amounts of assets, liabilities, revenues and expenses reported.

18

Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates.  Management continually evaluates these estimates based on historical experience and other assumptions we believe to be reasonable under the circumstances.

The difficulty in applying these policies arises from the assumptions, estimates and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions.  As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated.

Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made, and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. The Company’s critical accounting estimates include the following:

 Inventory Valuation

Sugar, pulp, molasses and other agri-product inventories are valued at estimated net realizable value. The Company derives its estimates from sales contracts, recent sales and evaluations of market conditions and trends. Changes in market conditions may cause management’s estimates to differ from actual results.

Property and Equipment, Property and Equipment Held for Lease, and Depreciation

Property and equipment, and property and equipment held for lease are depreciated for financial reporting purposes principally using straight-line methods with estimated useful lives ranging from 4 to 40 years. Economic circumstances or other factors may cause management’s estimates of expected useful lives to differ from actual.

The Company reviews its property and equipment, and property and equipment held for lease for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. There were no impairment losses incurred during the fiscal year covered by this report. However, considerable management judgment is necessary to estimate future cash flows and may differ from actual results.

Pension Plan and Other Post-Retirement Benefits

Accumulated plan benefits are those future periodic payments, including lump-sum distributions, that are attributable under the Company’s Pension Plan and Post-Retirement Plan to the service employees have rendered. Accumulated plan benefits include benefits expected to be paid to retired or vested terminated employees or their beneficiaries; beneficiaries of employees who have died; and present employees or their beneficiaries.

The actuarial present value of accumulated plan benefits is determined by an actuary and is the amount that results from applying actuarial assumptions to adjust the accumulated plan benefits to reflect the time value of money and the probability of payment.

The significant actuarial assumptions used in the determination of the actuarial present value of accumulated pension plan benefits for fiscal 2007 were as follows: Valuation Funding Method - Entry age normal, frozen initial liability; Life Expectancy – RP-2000 Mortality Table; Retirement Age – graded

19

rates from 1 percent retiring at age 55 to 100 percent retired by age 70 ;  Investment Return - 8.00 percent compounded annually for funding;  Discount Rate- 6.37 percent compounded annually;  Salary Scale - 3.5 percent compounded annually (Plan A only).

The significant actuarial assumptions used in the determination of the actuarial present value of accumulated post-retirement benefits for fiscal 2007 were as follows: Healthcare Cost Trend - a 10.0 percent annual rate of increase in the per capita cost of covered healthcare benefits for participants under age 65 was assumed for 2007. The rate is assumed to decline to 5.0 percent over the next five years. For participants age 65 and older, an 11.0 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2007. The rate is assumed to decline to 6.0 percent over the next five years; Discount Rate- 6.37 percent compounded annually.

Actual events may differ from the assumptions used and may result in plan benefit payments differing significantly from these current estimates.

Results of Operations

The Company’s operational results and the resulting beet payment to members and growers are substantially dependent on market factors, including domestic prices for refined sugar. These factors are continuously influenced by a wide variety of market forces, including domestic sugarbeet and cane production, weather conditions and United States’ farm and trade policy, which the Company is unable to predict.

In addition, highly variable weather conditions during the growing, harvesting and processing seasons, as well as diseases and insects, may materially affect the quality and quantity of sugarbeets available for purchase as well as the unit costs of raw materials and processing.

Comparison of the Years Ended August 31, 2007 and 2006

Due to the large size of the 2006 Red River Valley crop, the Company instituted an eight percent reduction in the number of acres harvested by its members, approximately 40,000 acres, in order to manage the quantity and quality of the sugarbeets available for processing during fiscal 2007. Also due to the large size of the 2006 Red River Valley crop, the Company commenced the harvest and processing of the crop in August of 2006 as compared to a typical start-up in September. All the costs incurred prior to the beginning of the Company’s 2007 fiscal year that related to receiving and processing the 2006 sugarbeet crop were deferred in fiscal 2006 and recognized in fiscal 2007. Similarly, the net realizable values of products produced prior to the beginning of the Company’s 2007 fiscal year that related to the 2006 sugarbeet crop were deferred in fiscal 2006 and recognized in fiscal 2007.

The harvest of the sugarbeet crop (Red River Valley crop and Sidney crop) grown during 2006 and processed during fiscal 2007 produced a total of 12.8 million tons of sugarbeets, or approximately 25.3 tons of sugarbeets per acre from approximately 507,000 acres. This represents an increase in total tons harvested of approximately 33.4 percent compared to the 2005 crop. The sugar content of the 2006 crop was 18.2 percent as compared to the 18.0 percent sugar content of the 2005 crop. The Company produced a total of approximately 37.2 million hundredweight of sugar from the 2006 crop, an increase of approximately 25.1 percent compared to the 2005 crop. The Company experienced higher sales volumes for most of its products this fiscal year as compared to the previous fiscal year and the average selling prices for most of these products increased due to supply and demand factors. Net Proceeds from Member and Non-Member Business for fiscal 2007 were 35.1 percent higher than in fiscal 2006. This increase is primarily the result of the increased size and quality of the crop harvested and processed in 2007.

20

Revenue for the year ended August 31, 2007, was $1.2 billion, an increase of $216.5 million from 2006. The table below reflects the percentage changes in product revenues, prices and volumes for the year ended August 31, 2007, as compared to the previous year.

Product	Revenue		Selling Price		Volume
Sugar	21.8	%	2.6	%	18.7	%
Pulp	20.1	%	-0.7	%	20.9	%
Molasses	167.5	%	15.0	%	132.7	%
CSB	25.5	%	22.7	%	2.3	%
Betaine	-13.9	%	11.4	%	-22.7	%

The substantial increase in the volume of molasses sold was a result of the increased amount of molasses available from the larger crop this year exceeding the ability to process the molasses through the desugarization facilities. The decrease in the volume of betaine sold was primarily a result of the timing of sales this year as compared to last year.

Rental revenue on the ProGold operating lease was $24.9 million and $25.1 million for the years ended August 31, 2007 and 2006, respectively.

Cost of sales for the year ended August 31, 2007, exclusive of payments to members for sugarbeets, increased $19.6 million as compared to fiscal 2006. Operating costs increased $41.5 million primarily as a result of harvesting 33.4 percent more sugarbeets and processing 29.4 percent more sugarbeets during fiscal 2007 as compared to the previous year. Improved factory slice efficiencies, lower coal costs and reduced energy usage partially offset the impact of the volume increases. The costs associated with sugar purchased to meet customer needs decreased by $1.7 million from 2006 due to an earlier campaign start-up this year and increased sugar production. At the end of each reporting period, product inventories are recorded at their net realizable value. The change in the net realizable value of the product inventories from the beginning of the reporting period is recorded on the balance sheet as either an increase or decrease to inventories with a corresponding dollar for dollar adjustment to cost of sales on the statement of operations. The increase in the net realizable value of product inventories for the year ended August 31, 2007 was $40.4 million as compared to an increase of $21.0 million for the year ended August 31, 2006 resulting in a $19.4 million favorable change in the cost of sales between the two years as shown in the table below:

Change in the Net Realizable Value of Product Inventories

	For the Years Ended August 31
(In Millions)	2007			2006			Change
Beginning Product Inventories at Net Realizable Value	$	116.0		$	95.0		$	21.0	(1)
Ending Product Inventories at Net Realizable Value	(156.4		)	(116.0		)	(40.4		)(2)
Increase in the Net Realizable Value of Product Inventories	$	(40.4	)	$	(21.0	)	$	(19.4	)

(1) The change is primarily due to a 21 percent increase in the per hundredweight net realizable value of sugar inventory as of August 31, 2006 as compared to August 31, 2005.

(2) The change is primarily due to a 47 percent increase in the hundredweight of sugar inventory as of August 31, 2007 as compared to August 31, 2006 partially offset by a 10 percent decrease in the per hundredweight net realizable value of sugar inventory as of August 31, 2007 as compared to August 31, 2006.

21

Selling, general and administrative expenses increased $35.6 million from 2006. Selling expenses increased $34.3 million primarily due to an increase in the volume of sugar, pulp and molasses sold resulting in increased shipping and handling expenses. General and Administrative expenses increased $1.3 million due to general cost increases.

Interest expense increased $1.2 million in 2007 as compared to the previous year. This reflects an increased average borrowing level and a higher average interest rate for short-term debt partially offset by a lower average balance and a lower average interest rate for long-term debt.

The decrease of $3.4 million in Other, Net was primarily the result of the receipts of sales tax and property tax refunds of $3.0 million in 2006.

Non-member business activities resulted in a gain of $2.3 million in 2007, as compared to a gain of $2.2 million in 2006. The slight increase was primarily due to increased earnings from the activities of ProGold partially offset by reduced income from Sidney Sugars.

Payments to members for sugarbeets, net of unit retains declared, increased by $147.0 million from $416.4 million in 2006 to $563.4 million in 2007. This was primarily due to the increased size and quality of the crop harvested and processed in 2007.

Comparison of the Years Ended August 31, 2006 and 2005

The harvest of the sugarbeet crop grown during 2005 and processed during fiscal 2006 produced a total of 9.6 million tons of sugarbeets, or 19.0 tons of sugarbeets per acre from 507,000 acres. This represents a decrease in total tons harvested of 5.8 percent compared to the 2004 crop. The sugar content of the 2005 crop was 18.0 percent as compared to the 17.8 percent sugar content of the 2004 crop. The Company produced a total of 29.7 million hundredweight of sugar from the 2005 crop, a decrease of 2.6 percent compared to the 2004 crop. While the Company experienced lower sales volumes for most of its products for the 2006 fiscal year as compared to the previous fiscal year, the average selling prices for most products increased due to supply and demand factors. Net Proceeds from Member and Non-Member Business for fiscal 2006 were 19.2 percent higher than in fiscal 2005. This increase was primarily the result of the increase in average selling prices being partially offset by lower production volumes, higher processing costs and selling expenses.

Revenue for the year ended August 31, 2006, was $1.0 billion, an increase of $40.2 million from 2005. The table below reflects the percentage changes in product revenue, prices and volumes for the year ended August 31, 2006 as compared to the previous year.

Product	Revenue		Selling Price		Volume
Sugar	4.5	%	10.9	%	-5.8	%
Pulp	6.6	%	3.5	%	3.0	%
Molasses	-18.2	%	22.4	%	-33.2	%
CSB	3.0	%	19.6	%	-13.9	%
Betaine	4.6	%	19.8	%	-12.7	%

Rental revenue on the ProGold operating lease was $25.1 million and $26.1 million for the years ended August 31, 2006 and 2005, respectively.

Cost of sales for the year ended August 31, 2006, exclusive of payments to members for sugarbeets, decreased $35.9 million as compared to fiscal 2005. At the end of each reporting period, product inventories are recorded at their net realizable value. The change in the net realizable value of the product inventories from the beginning of the reporting period is recorded on the balance sheet as

22

either an increase or decrease to inventories with a corresponding dollar for dollar adjustment to cost of sales on the statement of operations. The increase in the net realizable value of product inventories for the year ended August 31, 2006 was $21.0 million as compared to a decrease of $12.0 million for the year ended August 31, 2005 resulting in a $33.0 million favorable change in the cost of sales between the two years as shown in the table below.

Change in the Net Realizable Value of Product Inventories

	For the Years Ended August 31
(In Millions)	2006			2005			Change
Beginning Product Inventories at Net Realizable Value	$	95.0		$	107.0		$	(12.0	)(1)
Ending Product Inventories at Net Realizable Value	(116.0		)	(95.0		)	(21.0		)(2)
(Increase) Decrease in the Net Realizable Value of Product Inventories	$	(21.0	)	$	12.0		$	(33.0	)

(1) The change is primarily due to a 10 percent decrease in the hundredweight of sugar inventory as of August 31, 2005 as compared to August 31, 2004.

(2) The change is primarily due to a 21 percent increase in the per hundredweight net realizable value of sugar inventory as of August 31, 2006 as compared to August 31, 2005.

The costs associated with sugar purchased to meet customer needs decreased by $12.5 million resulting from an earlier campaign start-up. The cost recognized associated with the non-member sugarbeets increased $4.7 million for the year ended August 31, 2006, when compared to the previous year. This increase was primarily due to higher sugar net selling prices and more sugarbeets harvested at Sidney Sugars. Operating costs increased $5.0 million due in part to higher prices related to energy products and major supplies partially offset by harvesting 5.8 percent fewer sugarbeets and processing 4.8 percent fewer sugarbeets than in the previous year.

Selling, general and administrative expenses increased $7.5 million from 2005. Selling expenses increased $6.3 million primarily due to higher freight, warehousing and packaging costs. General and Administrative expenses increased $1.2 million due to general cost increases.

Lower average long-term debt borrowing levels partially offset by higher average short-term interest rates resulted in interest expense, net remaining relatively level between the fiscal years ended August 31, 2006 and 2005.

Non-member business activities resulted in a gain of $2.2 million in 2006, as compared to a gain of $2.5 million in 2005. The gain in both years was due primarily to activities related to Sidney Sugars.

Payments to members for sugarbeets, net of unit retains declared, increased by $64.5 million from $351.9 million in 2005 to $416.4 million in 2006. This was primarily due to the increased net selling prices for sugar and agri-products in 2006.

2007 Crop and Estimated Fiscal Year 2008 Information

This discussion contains the Company’s current estimate of the results to be obtained from the Company’s processing of the 2007 sugarbeet crop. This discussion includes forward-looking statements regarding the quantity of sugar to be produced from the 2007 sugarbeet crop. These forward-looking statements are based largely upon the Company’s expectations and estimates of future events; as a result, they are subject to a variety of risks and uncertainties. The actual results experienced by the Company could differ materially from the forward-looking statements contained herein.

23

The harvest of the Red River Valley and the Sidney sugarbeet crops grown during 2007 is estimated to produce a total of 12.3 million tons of sugarbeets, or approximately 23.2 tons of sugarbeets per acre from approximately 529,000 acres. This represents a decrease in total tons harvested of approximately 4.5 percent compared to the 2006 crop. The sugar content of the 2007 crop is estimated to be 18.0 percent as compared to the 18.2 percent sugar content of the 2006 crop. The Company expects to produce a total of approximately 34.9 million hundredweight of sugar from the 2007 crop, a decrease of approximately 6.3 percent compared to the 2006 crop.

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market-risk sensitive financial instruments, including long term debt.

The Company does not believe that it is subject to any material market risk exposure with respect to interest rates, exchange rates, commodity prices, equity prices and other market changes that would require disclosure under this item.

Item 8.FINANCIAL STATEMENTS

The consolidated financial statements of the Company for the fiscal years ended August 31, 2007, 2006 and 2005 have been audited by Eide Bailly LLP, an independent registered public accounting firm. Such consolidated financial statements have been included herein in reliance upon the report of Eide Bailly LLP. The consolidated financial statements of the Company are included in Appendix A to this annual report.

Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

Item 9A.CONTROLS AND PROCEDURES

The Company’s chief executive officer and chief financial officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of August 31, 2007. Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the chief executive officer and chief financial officer have concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to the Company required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Security and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to the Company’s management, including the chief executive officer and the chief financial officer, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal controls over financial reporting that occurred during the Company’s most recent fiscal quarter that may have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

24

PART III

Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors

The Board of Directors of the Company consists of three directors from each of the five Red River Valley factory districts. Directors must hold common stock of the Company or must be representatives of such shareholders belonging to the district they represent and are elected by the members of that district. In the case of a holder of common stock who is other than a natural person, a duly appointed or elected representative of such shareholder may serve as a director. The directors were elected to serve three-year terms expiring in December of the years indicated in the table below. One director is elected each year from each Red River Valley factory district. A director cannot serve more than four consecutive three-year terms.

The table below lists certain information concerning current directors of the Company.

Name and Address	Age	Factory District	Director Since	Term Expires December
David J. Kragnes (Chairman)  10600 60th St. N.  Felton, MN 56536	55	Moorhead	1995	2007
Michael A. Astrup (Vice-Chairman)  PO Box 219  Dilworth, MN 56529	54	Moorhead	1996	2008
William Baldwin  8244 144th Ave. NE  St Thomas, ND 58276	61	Drayton	2004	2007
Richard Borgen  1544 Co. Highway 39  Perley, MN 56574	58	Moorhead	1997	2009
John Brainard  204 6th St. W  Ada, MN 56510	47	Hillsboro	2005	2008
Brian R. Erickson  824 James Ave. S.E.  East Grand Forks, MN 56721	59	East Grand Forks	2005	2008
Robert M. Green  220 Park St.  Saint Thomas, ND 58276	52	Drayton	2005	2008
John F. Gudajtes  15363 County Road 15  Minto, ND 58261	58	East Grand Forks	2003	2009

25

Curtis E. Haugen  45508 300th St. NW  Argyle, MN 56713	46	East Grand Forks	2001	2007
Francis L. Kritzberger  RR 1, Box 22  Hillsboro, ND 58045	62	Hillsboro	1996	2009
Jeff D. McInnes  RR 2 Box 140  Hillsboro, ND 58045	50	Hillsboro	2001	2007
Ronald E. Reitmeier  30928 220th St. S.W.  Fisher, MN 56723	62	Crookston	1996	2008
Jim A. Ross  25669 328th Ave. S.W.  Fisher, MN 56723	57	Crookston	1998	2007
Neil C. Widner  PO Box 47  Stephen, MN 56757	56	Drayton	2000	2009
Steve Williams 515 Thompson Ave. Fisher, MN 56723	56	Crookston	2006	2009

Below is the biographical information on each Director.

David J. Kragnes. Mr. Kragnes has been a director since 1995 and has served as Chairman since 2005. Mr. Kragnes has been a farmer since 1972, with his farming operation located near Felton, Minnesota. Mr. Kragnes serves as Chairman of the Board of Directors of United Sugars Corporation. Mr. Kragness also serves on the Board of Directors of Midwest Agri-Commodities Company, the Board of Governors of ProGold Limited Liability Company and is a director for the American Sugarbeet Growers Association.

Michael A. Astrup. Mr. Astrup has been a director since 1996 and has served as Vice-Chairman since 2005. Mr. Astrup has been a farmer since 1976, with his farming operations located near Dilworth, Minnesota. Mr. Astrup serves on the Board of Directors of United Sugars Corporation, the Board of Governors of ProGold Limited Liability Company and is a director of the American Sugarbeet Growers Association.

William Baldwin. Mr. Baldwin has been a director since 2004. Mr. Baldwin has been farming in the Drayton Factory District since 1966 and is the President of Baldwin Farms Incorporated. Mr. Baldwin is the past President of the Red River Valley Sugarbeet Growers Association, served on the American Sugarbeet Growers Executive Committee and is currently serving on the Farm Service Agency, State Committee.

Richard Borgen. Mr. Borgen has been a director since 1997. Mr. Borgen has farmed east of Perley, Minnesota, since 1967 and has served as a director on the Perley Co-op Elevator Board for nine years and the Norman County West school board for 10 years.

26

John Brainard. Mr. Brainard has been a director since 2005. Mr. Brainard has been a sugarbeet grower since 1998. Mr. Brainard is a past director of the Minnesota Farm Bureau and has served on the executive committee of the Red River Valley Sugarbeet Growers Association. Mr. Brainard currently serves as a director of the American Sugarbeet Growers Association.

Brian R. Erickson. Mr. Erickson has been a director since 2005. Mr. Erickson has been a sugarbeet grower for over 20 years. Mr. Erickson has served as a director and Chairman of the East Grand Forks Economic Development and Housing Authority. Mr. Erickson currently serves on the Board of Directors of Midwest Agri-Commodities Company.

Robert M. Green. Mr. Green has been a director since 2005. Mr. Green has been a sugarbeet grower since 1976. Mr. Green served 12 years as a director of the Red River Valley Sugarbeet Growers Association and is currently a director of the Wells Fargo Bank in Grafton, ND. Mr. Green serves as a director for the American Sugarbeet Growers Association.

John F. Gudajtes. Mr. Gudajtes has been a director since 2003. Mr. Gudajtes has farmed in the Minto, North Dakota area since 1967 and is the President of Gudajtes Farms. Mr. Gudajtes has been the President of the Walsh County Historical Society for three years.

Curtis E. Haugen. Mr. Haugen has been a director since 2001. Mr. Haugen has been a farmer since 1981 and farms near Argyle, Minnesota. Mr. Haugen is serving as a director and President of the Farmer’s Union Oil Company, Oslo, Minnesota.

Francis L. Kritzberger. Mr. Kritzberger has been a director since 1996. Mr. Kritzberger has previously served as a director with the Company, from July 30, 1989 until July 30, 1993. Mr. Kritzberger has been a farmer since 1964. Mr. Kritzberger serves on the Board of Directors of the North Dakota Council of Cooperatives.

Jeff D. McInnes. Mr. McInnes has been a director since 2001. Mr. McInnes co-manages a 4,000 acre farming operation near Hillsboro, North Dakota. Mr. McInnes is the founder and manager of the Basement Traders Marketing Club, a grain marketing association in Hillsboro. Mr. McInnes serves on the Board of Governors of ProGold Limited Liability Company.

Ronald E. Reitmeier. Mr. Reitmeier has been a director since 1996, and has been a farmer since 1968. Mr. Reitmeier is the President of R&J Crop Production Inc. Mr. Reitmeier has served as a member of the Board of Directors of PKM Electric Co-op of Warren, Minnesota, for 19 years and as its Chairman of the Board since 2004. Mr. Reitmeier previously served on the Fisher, Minnesota, School Board for 18 years, as President of the Polk County Farmers Union and Chairman of the Minnesota Farmers Union Executive Committee of County Chairpersons.

Jim A. Ross. Mr. Ross has been a director since 1998. Mr. Ross has farmed near Fisher, Minnesota, since 1971. Mr. Ross also serves on the Board of Governors of ProGold Limited Liability Company.

Neil C. Widner. Mr. Widner has been a director since 2000. Mr. Widner has farmed near Stephen, Minnesota, since 1973. Mr. Widner serves on the Board of Directors of United Sugars Corporation and as a Director for the American Sugarbeet Growers Association.

Steve Williams. Mr. Williams was elected as a director in 2006. Mr. Williams has farmed near Fisher, Minnesota since 1987. Mr. Williams has served as a director of the Red River Valley Sugarbeet Growers Association since 1998, and has served as its chairman since 2003. Mr. Williams resigned as president of the Red River Valley Sugarbeet Growers Association effective as of the commencement of his term as a director of the Company. Mr. Williams also serves on the board of directors and as president of the American Sugarbeet Growers Association; and as director of the Sugar Association, the Halstad Cooperative Telephone Company, and the Eldred Farmers Elevator.

27

Audit Committee and Audit Committee Financial Expert

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the Company’s financial reporting and controls, the annual independent audit of the Company’s consolidated financial statements and the legal compliance and ethics programs as established by management and the Board of Directors. The Audit Committee selects the independent public accountants, approves the fees and the scope and procedural plans of the audits of the Company’s consolidated financial statements. The Audit Committee administers the Company’s employee complaint program and handles, on behalf of the full Board of Directors, any issues that arise under the Company’s Code of Ethics. On August 31, 2007, the members of the Audit Committee were Neil C. Widner (Committee Chair), William Baldwin, Brian R. Erickson, Robert M. Green and Curtis E. Haugen.

As of August 31, 2007, the Board of Directors of the Company has determined that there is no audit committee financial expert serving on the Audit Committee. The Company is a cooperative formed in accordance with the Minnesota cooperative law of the State of Minnesota. In accordance with the Minnesota cooperative law, the Amended and Restated Articles of Incorporation of the Company and the Amended and Restated Bylaws of the Company, the Board of Directors must be composed of members of the Company (the holders of common stock). Membership in the Company is limited to agricultural producers who are actively involved in the production of sugarbeets. Based on the state law requirements for both membership and board service, the Company is unable to recruit outside of its membership to elect to its Board of Directors and its audit committee an individual that possesses the attributes of an “audit committee financial expert” as defined by the SEC. To date, the Company has been unable to recruit from its membership an individual to serve on the Board of Directors that possesses the attributes of an “audit committee financial expert.”

Executive Officers

The table below lists the principal officers of the Company, none of whom owns any shares of Common Stock or Preferred Stock. Officers are elected annually by the Board of Directors.

Name	Age	Position
David A. Berg	53	President and Chief Executive Officer
James J. Horvath	62	President and Chief Executive Officer (retired)
Thomas S. Astrup	39	Vice President-Finance and Chief Financial Officer
Joseph J. Talley	47	Chief Operating Officer
Brian F. Ingulsrud	44	Vice President-Administration
Daniel C. Mott	48	Secretary
Samuel S. M. Wai	53	Treasurer and Assistant Secretary
Mark L. Lembke	51	Finance Administration Manager, Assistant Secretary and Assistant Treasurer
David L. Malmskog	50	Director - Economic Analysis and Business Development, Assistant Secretary and Assistant Treasurer
Ronald K. Peterson	52	Accounting & Systems Manager, Assistant Secretary and Assistant Treasurer
Lisa M. Maloy.	43	Treasury Operations Manager and Assistant Secretary

28

David A. Berg. Mr. Berg was named President in March 2007 and assumed the role as Chief Executive Officer in October 2007. Mr. Berg served as Vice President-Operations and Chief Operations Officer from January 2004 to March 2007. Mr. Berg was Vice President-Agriculture during the period December 2000 to January 2004 and Vice President-Administration during the period from October 1998 to December 2000. During the period from 1994 to 1998, Mr. Berg served as the Company’s Vice President-Business Development, Vice President-Strategic Planning, Director-Market Information, Manager of Marketing and Analysis and Manager-Economic Research. Mr. Berg currently serves on the Boards of Directors of United Sugars Corporation, Midwest Agri-Commodities Company and Sidney Sugars Incorporated.

James J. Horvath. Mr. Horvath served as President and Chief Executive Officer from May 1998 until his retirement in October 2007. Mr. Horvath served as Chief Financial Officer from 1996 to 1998. From 1994 to 1996, Mr. Horvath served as the Company’s Vice President-Joint Ventures as well as Chief Manager and Chief Operating Officer of ProGold Limited Liability Company. Mr. Horvath also served as the Company’s Vice President-Finance from 1985 to 1994.

Thomas S. Astrup. Mr. Astrup was named the Company’s Vice President-Finance and Chief Financial Officer in May 2007. Mr. Astrup was named the Chief Operating Officer and Chief Financial Officer of Sidney Sugars Incorporated in May 2007. Mr. Astrup served as the Company’s Vice President-Agriculture from 2004 to 2007. Mr. Astrup was the Company’s Vice President-Administration from 2000 to 2004 and the Company’s Corporate Controller, Assistant Treasurer and Assistant Secretary from 1999 to 2000. From 1997 until 1999, Mr. Astrup held the position of Controller for Midwest Agri-Commodities Company. Mr. Astrup was the Corporate Accountant for ProGold Limited Liability Company from 1994 to 1997. Mr. Astrup currently serves on the Board of Directors for Sidney Sugars Incorporated and on the ProGold Limited Liability Company Board of Governors.

Joseph J. Talley. Mr. Talley was named the Company’s Chief Operating Officer in May 2007. Mr. Talley was named as the Chairman of the Board and Chief Executive Officer of Sidney Sugars Incorporated in May 2007. Mr. Talley served as Vice President-Finance and Chief Financial Officer of the Company from 2003 to 2007. Mr. Talley was the Company’s Vice President-Finance from 1998 to 2003. Mr. Talley also served as Chief Operating Officer of Sidney Sugars Incorporated from 2002 to 2007. Mr. Talley served as the Company’s Treasurer and Finance Director, Assistant Treasurer and Assistant Secretary from 1996 until his appointment as Vice President-Finance in 1998. Mr. Talley served as Finance Director of ProGold Limited Liability Company from 1994 through 1996. He currently serves on the Board of Governors for ProGold Limited Liability Company.

Brian F. Ingulsrud. Mr. Ingulsrud was named Vice President-Administration in February 2004. From 2000 to 2004, he served as the Corporate Controller, Assistant Secretary and Assistant Treasurer. Mr. Ingulsrud served as Director of Agriculture Strategy and Development from 1999 to 2000, Financial Planning Manager from 1997 until 1998, and Factory Offices Manager from 1995 until 1997.

Daniel C. Mott. Mr. Mott became the Company’s Secretary in 1999. Previously, he had served as Assistant Secretary since 1995. Mr. Mott also serves as the Company’s General Counsel. He is a Shareholder in the law firm of Fredrikson & Byron, P.A. Mr. Mott is not an employee of the Company.

Samuel S. M. Wai. Mr. Wai was named the Company’s Treasurer and Assistant Secretary in 1999. He served as the Company’s Corporate Controller from 1996 until 1999 and was the Company’s Treasurer from 1985 to 1996. He held various financial positions with the Company from 1979 to 1985. Mr. Wai also serves as Treasurer of the American Crystal Sugar Political Action Committee and on the Board of Directors of the Institute of Cooperative Financial Officers.

Mark L. Lembke. Mr. Lembke was named Assistant Secretary and Assistant Treasurer in 1996. He currently serves as Finance Administration Manager. Mr. Lembke served as the Company’s Corporate

29

Accounting Manager from 1995 to 1999. From 1987 through 1995, Mr. Lembke served as Factory Accounting Supervisor.

Ronald K. Peterson. Mr. Peterson has served as Assistant Treasurer and Assistant Secretary since 1993. He currently holds the position of Accounting and Systems Manager. From 1996 to 1999 Mr. Peterson was the Financial Systems Manager and from 1991 to 1995 served as the Company’s Corporate Accounting Manager. Mr. Peterson has held various financial positions with the Company since 1979.

David L. Malmskog. Mr. Malmskog currently serves as Director-Economic Analysis and Business Development and was appointed Assistant Secretary and Assistant Treasurer in 1998. Mr. Malmskog has held various financial positions with the Company since 1980.

Lisa M. Maloy. Ms. Maloy currently serves as Treasury Operations Manager and was appointed Assistant Secretary in 2002. Prior to joining the Company in 1997, Ms. Maloy was a tax attorney with Ernst & Young LLP in Minneapolis, Minnesota.

Code of Ethics

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller and certain other senior financial personnel. The Company will provide at no charge a copy of the code of ethics to any person who requests a copy by sending a written request to the Company’s headquarters, attention of the Chief Executive Officer of the Company.

30

Item 11.EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

This compensation discussion and analysis addresses the compensation paid to the individuals who served as our Chief Executive Officer, President and Chief Financial Officer for fiscal year 2007, as well as our Chief Operating Officer and Vice President of Administration who were all serving as executive officers as of August 31, 2007, all of whom are identified on the Summary Compensation Table immediately following this report (“Named Executive Officers”). Immediately following this compensation discussion and analysis is the Compensation Committee Report of the Board of Directors (the “Committee Report”). Members of the Compensation Committee were in their role for fiscal year 2007.

Purpose and Philosophy

We believe that strong leadership is a key component of success. To be successful, we must be able to attract, retain and motivate leaders with the skills necessary to excel in an integrated cooperative environment and understand key business and technical matters related to the diverse business influences that result from growers and owners, marketing partnerships and activities, technical manufacturing processes, and government policy. Our goal is to provide a competitive compensation package to our Named Executive Officers combining total direct compensation, retirement income and other benefits.

Total direct compensation, which includes base salary, short-term cash incentive compensation and long-term incentive compensation, is measured against comparable companies in the market in which we compete.

We believe the market in which we compete for executive talent consists of companies of a similar size, generally $500 million to $2 billion in annual revenue, in the North Central United States with an emphasis on companies with manufacturing operations. We further believe that the market also includes privately owned businesses in general and exclusively as it relates to long-term incentive compensation because of the structure and nature of our business. Therefore, we have compared our compensation versus compensation data points for these types of companies (our market).

We engaged Hay Group, Inc. in 2006 to provide compensation market information for our Named Executive Officers for fiscal year 2007. In 2007, our management, on behalf of the Compensation Committee and Board of Directors retained Towers Perrin, an outside compensation consultant (“Compensation Consultant”), to prepare market-based compensation data comparing compensation information for our Named Executive Officers with that of executive officers in our market. This analysis used market data from published national survey sources, including Towers Perrin and Watson Wyatt. In addition, pay data from the proxy materials from a group of comparative companies was referenced. This group of companies, together with the survey sources, was intended to represent the market in which we believe we compete for executive talent and includes:

31

•Actuant Corporation
•Ameron International Corp.
•Arctic Cat Inc.
•Barnes Group Inc.
•Brady Corporation
•Constar International Inc.
•Donaldson Company, Inc.
•Gardner Denver, Inc.
•Graco Inc.
•Herman Miller, Inc.
•IDEX Corporation
•Imperial Sugar Company
•JLG Industries, Inc.
•Magellan Midstream Partners, L.P.
•Milacron Inc.
•Mine Safety Appliances Co
•Minn-Dak Farmers Cooperative
•MSC Industrial Direct Co.
•OMNOVA Solutions Inc.
•Packaging Corporation of America
•Rayonier Inc.
•Schweitzer-Mauduit International, Inc.
•Stewart & Stevenson Services, Inc.
•Sybron Dental Specialties
•The Toro Company
•Thomas & Betts Corporation

This data was provided to the Compensation Committee in early 2007, and was utilized to establish market based pay practices for each of the Named Executive Officer positions.

Our base pay midpoint for our Chief Executive Officer and President is projected to represent less than the median of the market and total direct compensation is projected to be near the lower quartile of the market. Currently, we target our other Named Executive Officers’ base pay midpoint near the median of the market and total direct compensation near the lower quartile of our market. The Compensation Committee determined that total direct compensation as established was appropriate and reflects the compensation principles outlined in this report.

While market based information is important in terms of setting pay practices, it is not the only factor considered when making individual executive compensation decisions. Other factors considered when making individual executive compensation decisions include individual roles and responsibilities, performance, reporting structure and internal pay relationships.

Process

The Compensation Committee of the Board of Directors is responsible for annually reviewing and recommending to the Board of Directors the base salary and performance objectives for the incentive compensation (both short-term and long-term) of the Chief Executive Officer and President, as well as the performance objectives for long-term incentive compensation for all Named Executive Officers. Board action on recommendations is taken by a vote of all of the directors, none of whom are members of management. Decisions on executive compensation made by the Compensation Committee, the Board or the President or Chief Executive Officer have been guided by our compensation philosophy discussed above.

Our Chief Executive Officer and President set base salary and the annual performance objectives for the short-term incentive compensation for the other Named Executive Officers. The prospective base salary and annual performance objectives for the other Named Executive Officers are reviewed with the Board of Directors prior to being finalized by the Chief Executive Officer and President.

On March 21, 2007, our Board of Directors elected David Berg as President and determined his base salary for the remainder of fiscal year 2007. Prior to this election, James Horvath served as our

32

Chief Executive Officer and President. Mr. Horvath’s base salary and objectives for incentive compensation were set by the Board of Directors for fiscal year 2007 at the beginning of the fiscal year. Mr. Horvath will continue to serve as our Chief Executive Officer until he retires. Upon Mr. Horvath’s retirement, Mr. Berg will continue to be President and will also assume the position of Chief Executive Officer. In connection with his election, Mr. Berg was given responsibility for reviewing and determining the base salary for the other Named Executive Officers (excluding the Chief Executive Officer) for the remainder of 2007.

Elements of Compensation

The elements of compensation paid to our Named Executive Officers for 2007 are as follows:

•Base salary

•Short-term cash incentive compensation

•Long-term incentive compensation

•Retirement and other benefits

•Perquisites

•Severance for our Chief Executive Officer and President

Each of the above are more completely described below.

Base Salary

The objective of the level of base salary paid to our Named Executive Officers is to reflect individual roles and responsibilities, performance, reporting structure, and internal pay relationships with respect to market competitiveness. All established base salaries for fiscal year 2007 for our Named Executive Officers were in accordance with our compensation philosophy described earlier in this report.

The base salary for our Chief Executive Officer, Mr. Horvath, was approved by the Board of Directors on September 27, 2006. At the same time, the Chief Executive Officer determined the initial base salaries for the other Named Executive Officers for the first part of fiscal year 2007.

The base salary of our President, Mr. Berg, was set by the Board of Directors in March 2007 based on the comparable market data provided by our Compensation Consultant. The Chief Executive Officer, Mr. Horvath’s, salary remained the same.

In connection with the election of the President, the duties, responsibilities and titles of our Named Executive Officers changed. Joseph Talley, who served as Chief Financial Officer until May 7, 2007, became our Chief Operating Officer, a newly created executive officer position that combined the responsibility of Vice President of Operations and Vice President of Agriculture. Thomas Astrup, who served as our Vice President of Agriculture until May 7, 2007, became our Chief Financial Officer. Our President, Mr. Berg, determined the base salary for our other Named Executive Officers for the remainder of fiscal year 2007.

33

Short-Term Cash Incentive Compensation

Our short-term cash incentive compensation is designed to reward the Named Executive Officers for their individual performance and our financial performance for the most recently completed fiscal year. Short-term cash incentive compensation is paid in cash following the close of the fiscal year.

Short-term cash incentive compensation provides an annual cash incentive opportunity, expressed as a percent of base salary, for our Named Executive Officers who meet performance objectives. For fiscal year 2007, our Chief Executive Officer had an opportunity to receive an additional 45% of his base salary, and the other Named Executive Officers had an opportunity to receive an additional 35% of their base salary, by meeting “target” performance levels. Actual awards are determined based on the different performance levels achieved by the Named Executive Officers. The potential for short-term cash incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 90% for outstanding performance for the Chief Executive Officer. The potential for short-term cash incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 70% for outstanding performance for our other Named Executive Officers.

The Chief Executive Officer’s performance objectives were weighted with 50% of the potential award based on our overall financial performance and 50% of the potential award based on the Chief Executive Officer’s individual performance objectives as established by the Board of Directors. For the other Named Executive Officers, annual performance objectives were determined by the Chief Executive Officer at the beginning of fiscal year 2007, with 40% based on our overall financial performance and 60% based on the achievement of individual performance objectives, including personal effectiveness. Our overall financial performance objectives are based on the final gross beet payment for the fiscal year and total on-farm profits. Total on farm profits are equal to total gross beet payment minus the product of Total Harvested Acres multiplied by On-Farm Costs per Acre. On-Farm Cost per Acre is based on the Red River Valley Report from the Minnesota and North Dakota Farm Business Management Education Program.

The individual performance objectives of our Named Executive Officers are derived primarily from our strategic initiatives, which are comprised of ten general strategies:

•Trade and policy leadership

•Cost and revenue management

•Agricultural gold standards

•Beet storage excellence

•Balanced and maximized slice and recovery

•Maintenance excellence

•Product quality

•Safety

•Training

•Technology and automation

Each Named Executive Officer, based on his area of responsibility, is tasked with objectives based on our strategies. As indicated above, Mr. Horvath’s performance objectives for fiscal year 2007 were set by the Board of Directors. Prior to being elected President, Mr. Berg served as Vice President

34

of Operations. In connection with that position, his performance objectives for 2007 were set by Mr. Horvath. The performance objectives for fiscal year 2007 for our other Named Executive Officers were set by Mr. Horvath at the beginning of fiscal year 2007 based on the positions then held by such executive officers.

The Board of Directors rated the Chief Executive Officer at the end of the fiscal year with respect to his achievement of his performance objectives, and his short-term cash incentive compensation for fiscal year 2007 is based on this rating. The President rated the other Named Executive Officers with respect to their individual achievement of their performance objectives and each of them received a short-term cash incentive compensation award based on that rating.

Long-Term Incentive Compensation

Long-term incentive compensation provides an incentive opportunity, expressed as a percent of base salary, for our Named Executive Officers as a group who meet performance objectives. For fiscal year 2007, our Chief Executive Officer had an opportunity to receive an additional 40% of his base salary and the other Named Executive Officers had an opportunity to receive an additional 20% of their base salary assuming target performance levels. Actual awards are determined based on the performance level achieved by the Named Executive Officers as a group. The potential for long-term incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 80% for outstanding performance for the Chief Executive Officer. The potential for long-term incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 40% for outstanding performance for our other Named Executive Officers. Unlike our short-term cash incentive compensation, long-term incentive compensation awards are based on the performance level of our Named Executive Officers as a group. Forty-five percent (45%) of the performance objectives were based on the fiscal year’s actual on-farm profits as compared to historical profit levels while the other 55% was based on an assessment made by the Board of Directors regarding achievement of specific long-term performance objectives as established by the Board of Directors.

Our 2005 Long-Term Incentive Plan (2005 Plan) sets forth long-term incentive compensation available to our Named Executive Officers. Our 2005 Plan is designed to provide financial incentive awards through deferred compensation to reward the Named Executive Officers for long-term strategic performance and to encourage long-term commitment to our organization. Originally, our long-term incentive compensation was set forth in our 1999 Long-Term Incentive Plan (1999 Plan) which has been replaced by our 2005 Plan. Even though the 2005 Plan replaced the 1999 Plan, vested awards under the 1999 Plan are still governed by the 1999 Plan. The 1999 Plan and the 2005 Plan are substantially similar.

Under the 2005 Plan, a long-term incentive award may be granted to a Named Executive Officer in the form of contract rights, cash, or in a combination of both cash and contract rights (incentive awards). The value of any contract rights granted is determined by our Board of Directors. To date, all incentive awards granted have been in the form of contract rights. Incentive awards vest over a three-year period, with the first vesting occurring one year after the grant. Vested incentive awards may be redeemed at the discretion of the Named Executive Officer and must be redeemed upon certain other events causing a termination of employment. Redemptions are in the form of cash payments that may be deferred by the Named Executive Officer. Named Executive Officers receive a profit per acre payment for vested contract rights based on the average profit per acre paid to our shareholders. Profit per acre payments are made to the Named Executive Officers in the same manner as our shareholders receive their crop payments. Profit per acre payments can be taken in cash or deferred until a later date.

35

The Board of Directors retains the discretion to determine the amount of any incentive awards to be made available to the Named Executive Officers with respect to a given fiscal year.

On September 26, 2007, 329.71 contract rights were granted to Named Executive Officers with respect to performance for the fiscal year ended August 31, 2007 at a value of $2,100 per contract right. Correspondingly, the redemption value of the contract rights previously granted to the Named Executive Officers under the 1999 and 2005 Plans were increased from $1,900 to $2,100 per contract right. Effective as of August 31, 2007, there were a total of 1,750.75 contract rights issued and outstanding to the Named Executive Officers under the 1999 and 2005 Plans, of which 1,177 were vested.

Retirement and other benefits

Retirement benefits are an important tool in achieving overall compensation objectives because they provide a financial security component and promote retention. Our Named Executive Officers participate in our retirement plans like any other employee. In addition, we provide a Supplemental Executive Retirement Plan (SERP) for our Named Executive Officers, which is a non-qualified defined contribution and defined benefit plan designed to replace benefits executives would have received if not for limits imposed by Code Section 401(a)(17) and 402(g). The Named Executive Officers may elect to defer a portion of base salary by regular payroll deductions under the SERP, and may also defer 100% of all short-term incentive compensation and long-term incentive compensation awards or payments related to any such awards. All amounts contributed to the SERP are held in a trust with two investment options and are subject to the claims of our creditors. The pension component of the SERP is “unfunded” with all amounts to be paid from our general assets, to the extent available, when due.

Our Named Executive Officers participate in our fully insured long-term disability program for all nonunion employees to provide income protection in the event of permanent disability. The long-term disability plan is part of the core benefits we provide. The long-term disability plan provides a benefit equal to 60% of base pay with a maximum monthly benefit of $10,000. The Named Executive Officers pay tax on the value of the long-term disability premium, and as a result if they become disabled their benefit will not be taxable. Other nonunion employees are not taxed on the value of their long-term disability premium; therefore if they become disabled their benefit will be taxable. For the Named Executive Officers we began imputing the value of the premium to provide a tax-free benefit to partially offset the impact of receiving a disability benefit less than 60% of base pay because of the $10,000 monthly benefit limitation.

Perquisites

Our Compensation Committee and the Board of Directors believe perquisites should be modest, reasonable in terms of cost, and aligned with business needs and comparative to other salaried employees. Named Executive Officers may receive some or all of the following perquisites while employed: car allowance, cell phone, minimum of 4 weeks annual vacation accrual, reimbursement for income tax preparation and executive physicals. Additionally, the Chief Executive Officer and President are provided with a country club membership. The above-described perquisites cease upon retirement or separation of service with us.

Severance

If we terminate Mr. Horvath without cause he is entitled to receive a post-termination severance payment equal to three years of his base salary in effect on the date of termination. If we terminate Mr. Berg without cause he is entitled to receive a post-termination severance payment equal to two years

36

of his base salary in effect on the date of termination. There are no compensatory plans or arrangements providing for payments to any of the other Named Executive Officers in conjunction with any termination of employment with us, including without limitation resignation, severance, retirement or constructive termination of employment by the Company. Furthermore, there are no such plans or arrangements providing for payments to any of the Named Executive Officers in conjunction with a change of control or change in such Named Executive Officer’s responsibilities.

Employment Agreements

We entered into an employment agreement with Mr. Horvath effective May 15, 1998. The agreement provides that Mr. Horvath shall serve as an “at will” employee at the pleasure of the Board of Directors. The agreement also includes a three-year non-compete/non-solicitation agreement with Mr. Horvath, grants the Board of Directors the authority to establish Mr. Horvath’s base salary each year, and provides that he may participate in other benefit plans offered to employees.

On September 28, 2005, Mr. Horvath’s employment agreement was amended. Prior to this amendment, the employment agreement contained certain provisions that were a disincentive to Mr. Horvath continuing his employment with us beyond September 30, 2005 and other provisions that required amendment as a result of recent changes in the tax laws. The amendment: (1) eliminated the disincentive to Mr. Horvath to continue his employment with the Company; (2) changed certain vacation accruals so that Mr. Horvath accrues additional vacation days; and (3) made certain other changes required to comply with the recent changes to the tax laws.

If Mr. Horvath’s employment terminates due to retirement, a termination without cause, or disability, Mr. Horvath is entitled to receive:

•Reimbursement for the cost of medical and dental coverage for himself and his spouse from the date of termination through their respective deaths;

•Life insurance coverage equal to his base salary on the date of termination until he attains age 65, from age 65 to 70 equal to 50 percent of his base salary on the date of termination, and after age 70 equal to 25 percent of his base salary on the date of termination; and

•Supplemental pension benefits equal to the difference between the cumulative amount of the retirement benefit he would have received computed as though he continued his employment to age 65 assuming compensation equal to or greater of: (1) the actual compensation paid twelve months immediately preceding termination (including annual short-term incentive compensation paid in only the most recently completed fiscal year) to be applied for the years remaining to age 65 (with actual compensation to be used for the years prior to the date of termination); or (2) the compensation paid for the period beginning October 1, 2004, and ending September 30, 2005, to be applied for each of the five years from age 60 to age 65, and in each case assuming 30 years of service actually attained as of the date of termination of employment or the date on which he attains age 65, with no reduction in benefits on account of an election by Mr. Horvath for any death benefit to be paid to his spouse and the cumulative amount of the retirement benefits actually paid to Mr. Horvath.

37

If Mr. Horvath dies prior to terminating his employment with us, Mr. Horvath’s spouse is entitled to receive generally the same benefits that would have been provided to Mr. Horvath described above for the remainder of her life.

The present value, as of August 31, 2007, of providing medical and dental coverage to Mr. Horvath per the employment agreement was approximately $105,000. The present value of the supplemental pension benefits provided per the employment agreement and the present value of the SERP were approximately $1,600,000 and $1,500,000, respectively, as of August 31, 2007. Mr. Horvath has elected to receive lump-sum payouts of the supplemental pension benefits provided under the employment agreement and the benefits provided by the SERP. The lump-sum payouts will occur in January of the year following Mr. Horvath’s retirement.

We entered into an employment agreement with Mr. Berg effective March 21, 2007. The agreement provides that Mr. Berg shall serve as an “at will” employee at the pleasure of the Board of Directors. The agreement also includes a two-year non-compete/non-solicitation agreement with Mr. Berg. Mr. Berg will receive a gross base salary for serving as President with this base salary to increase at the time Mr. Berg assumes the position of Chief Executive Officer and President. Thereafter, the agreement grants the Board of Directors the authority to establish Mr. Berg’s base salary each year, and also provides that he may participate in other benefit plans offered to all employees.

Compensation Committee Report

The Compensation Committee of the Company’s Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Form 10-K.

Members of the Compensation Committee:

Jeff McInnes

John Gudajtes

Brian Erickson

John Brainard

Steve Williams

Summary Compensation Table

The following table summarizes the compensation of the Named Executive Officers for the fiscal year ended August 31, 2007. The Named Executive Officers are the Company’s Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers of the Company.

38

2007 SUMMARY COMPENSATION TABLE

Name and  Principal Position	Year	Salary (1)		Non-Equity Short- Term Incentive  Plan  Compensation (1)		Non-Equity Long- Term Incentive Plan Compensation (1),(2)		Non-Equity Long- Term Incentive  Plan  Compensation  (1),(3)		Change in Pension  Value and  Nonqualified  Deferred  Compensation  (NQDC) Earnings  (4)		All Other  Compensation (5)		Total
James J. Horvath - Chief Executive Officer	2007	$	509,308	$	388,616	$	523,210	$	263,156	$	441,113	$	48,738	$	2,174,141
David A. Berg - President	2007	$	278,308	$	147,744	$	141,049	$	69,123	$	60,817	$	24,705	$	721,746
Thomas S. Astrup - Vice President-Finance and Chief Financial Officer	2007	$	227,769	$	123,058	$	113,271	$	50,872	$	23,052	$	13,693	$	551,715
Joseph J. Talley - Chief Operating Officer	2007	$	267,308	$	123,917	$	117,372	$	24,599	$	47,562	$	24,762	$	605,520
Brian F. Ingulsrud - Vice President-Administration	2007	$	200,769	$	108,956	$	81,703	$	6,585	$	28,455	$	13,925	$	440,393

(1)Amounts shown are not reduced to reflect the Named Executive Officers’ elections, if any, to defer compensation into the Supplemental Executive Retirement Plan (SERP).

(2)Represents the stated value of contract rights that were earned in fiscal year 2007, which was the year performance targets were achieved. Amounts also reflect the increase in value of the contract rights granted to the executives in prior years. At August 31, 2007, the Board of Directors increased the value of previously granted contract rights from $1,900 to $2,100. Contract rights vest equally over a three year period. For further information regarding the Long-Term Incentive Plan, see “Compensation Discussion and Analysis” within this Form 10-K.

(3)Represents the Profit-Per-Acre payments that were earned in fiscal year 2007, which was the year performance targets were achieved.

(4)Components of Change in Pension Value and NQDC Earnings. See table below for details:

Change in Pension Value and Nonqualified Deferred Compensation Earnings

Name and Principal Position	Pension (A)		SERP-(Pension)  (A)		Special  Employment  Agreement (A)		Preferential  Interest on Non- Qualified  Deferred  Compensation (B)		Total
James J. Horvath - Chief Executive Officer	$	69,779	$	185,521	$	148,461	$	37,352	$	441,113
David A. Berg - President	$	39,956	$	17,496	N/A		$	3,365	$	60,817
Thomas S. Astrup - Vice President- Finance and Chief Financial Officer	$	15,623	$	6,584	N/A		$	845	$	23,052
Joseph J. Talley - Chief Operating Officer	$	22,129	$	15,976	N/A		$	9,457	$	47,562
Brian F. Ingulsrud - Vice President- Administration	$	26,852	$	1,585	N/A		$	18	$	28,455

(A)  Represents the change in the present value of the accumulated benefits provided by the plan or agreement.

(B)  Interest is considered to be preferential if the rate paid to the executive exceeds 120% of the applicable long-term federal rate under the Interal Revenue Code. Amounts reported reflect only the interest that exceeds 120% of the applicable long-term federal rate.

(5)Includes the cost of additional life insurance coverage, imputed value of long-term disability insurance, car allowance, reimbursement of health club dues, costs of tax return preparation, Company 401(k) matching contributions, Company matching SERP contributions, flexible spending taxable cash and flexible spending dollars into 401(k).

39

Grants of Plan-Based Awards

The following table discloses the grants of plan-based awards to each of the Company’s Named Executive Officers for the current year related to the 2005 Long-Term Incentive Plan (LTIP). The amounts of these awards that were expensed are shown in the Summary Compensation Table. The table below also discloses the estimated future payouts related to contract rights under the 2005 LTIP, Short-Term Incentive Plan (STIP) and the Profit-Per-Acre (PPA) payment under the 2005 LTIP.

Grants of Plan-Based Awards Table

Name and Principal			Units	Estimated Future Payouts Under Non-Equity Incentive Plan Awards - LTIP - Contract Rights (1)				Estimated Future Payouts Under Non- Equity Incentive Plan - STIP (2)						Estimated Future Payouts Under Non- Equity Incentive Plan Awards - PPA (3)
Position	Grant Date	Action Date	Granted	Threshold	Target		Maximum	Threshold		Target		Maximum		Threshold	Target		Maximum
James J. Horvath - Chief Executive Officer (4)	8/31/2007	9/26/2007	167.90		$	352,590		$	0	$	229,950	$	459,900		$	79,753
David A. Berg - President	8/31/2007	9/26/2007	46.23		$	97,089		$	0	$	145,800	$	291,600		$	21,959
Thomas S. Astrup - Vice President- Finance and Chief Financial Officer	8/31/2007	9/26/2007	37.75		$	79,281		$	0	$	83,650	$	167,300		$	17,931
Joseph J. Talley - Chief Operating Officer	8/31/2007	9/26/2007	44.40		$	93,242		$	0	$	105,980	$	211,960		$	21,090
Brian F. Ingulsrud - Vice President- Administration	8/31/2007	9/26/2007	33.43		$	70,196		$	0	$	76,440	$	152,880		$	15,879

(1)	The “Target” amounts represent contract rights at the 8/31/2007 stated value of $2,100 per contract right. These rights vest to the executive over three years. Theoretically the minimum received for these contract rights could be $0 and there is no maximum.
(2)	The amounts indicated represent future potential payments under the Short-Term Incentive Plan (STIP) based on the executives’ salary as of August 31, 2007.
(3)	The “Target” amount represents future Profit Per Acre (PPA) annual payments that will be paid to executives upon vesting and assuming a similar beet payment and on-farm costs to that experienced in fiscal year 2007. PPA payments are only paid on vested contract rights. Theoretically the minimum payment could be $0 and there is no maximum.
(4)	Mr. Horvath retired from the Company in October 2007 and as a result, he will not be eligible to receive future contract right grants, payments under the Short-Term Incentive Plan or Profit-Per Acre payments associated with the contract rights granted on August 31, 2007.

40

Pension Benefits

The table below reflects information for the Named Executive Officers pertaining to the Company’s Pension Plan, Supplemental Executive Retirement Plan and Special Employment Agreements.

Name and Principal Position	Plan Name	Number of  Years Credited Service	Present Value of  Accumulated Benefit (1)		Payments During Last Fiscal Year
James J. Horvath - Chief Executive Officer	Retirement Plan A For Employees of ACSC (2)	22	$	549,590	—
	Supplemental Executive Retirement Plan (3)	22	$	1,513,981	—
	Mr. Horvath Employment Agreement (4)	30	$	1,555,102	—
David A. Berg - President	Retirement Plan A For Employees of ACSC (2)	20	$	275,370	—
	Supplemental Executive Retirement Plan (3)	20	$	163,370	—
Thomas S. Astrup - Vice President- Finance and Chief Financial Officer	Retirement Plan A For Employees of ACSC (2)	13	$	66,642	—
	Supplemental Executive Retirement Plan (3)	13	$	17,437	—
Joseph J. Talley - Chief Operating Officer	Retirement Plan A For Employees of ACSC (2)	13	$	122,936	—
	Supplemental Executive Retirement Plan (3)	13	$	82,135	—
Brian F. Ingulsrud - Vice President- Administration	Retirement Plan A For Employees of ACSC (2)	16	$	111,104	—
	Supplemental Executive Retirement Plan (3)	16	$	2,188	—

(1)Footnote (10), “Employee Benefit Plans”, of the Company’s Notes to the Consolidated Financial Statements discloses the significant assumptions used in calculating this benefit.

(2)Refer to the Compensation, Discussion and Analysis (CD&A) section within this Form 10-K for a description of this benefit plan.

(3)Refer to the Compensation, Discussion and Analysis (CD&A) section within this Form 10-K for a description of this benefit plan.

(4)Refer to the Compensation, Discussion and Analysis (CD&A) section within this Form 10-K for a description of this benefit plan.

41

Non-Qualified Deferred Compensation

The table below reflects information for the Named Executive Officers pertaining to non-qualified deferred compensation. All non-qualified deferred compensation listed below is subject to claims of the Company’s creditors.

Name and  Principal Position	Executive  Contributions in  Last Fiscal Year (1)		Registrant  Contributions in  Last Fiscal Year (2)		Aggregate Earnings  in Last Fiscal Year  (3)		Aggregate  Withdrawals/  Distributions (4)	Aggregate Balance  at Last Fiscal Year  End
James J. Horvath - Chief Executive Officer	$	257,301	$	23,882	$	149,600	—	$	2,078,519
David A. Berg - President	$	11,882	$	5,831	$	56,859	—	$	539,276
Thomas S. Astrup - Vice President-Finance and Chief Financial Officer	—		$	3,568	$	3,679	—	$	47,129
Joseph J. Talley - Chief Operating Officer	$	30,372	$	5,626	$	38,573	—	$	525,807
Brian F. Ingulsrud - Vice President-Administration	—		$	2,078	$	405	—	$	4,182

(1)Executives may defer from 2% to 20% of eligible earnings above the limit for a qualified plan and up to 100% of incentive compensation (which includes short-term incentive comp, profit per acre payments and proceeds from the sale of contract rights). These amounts are included in the Summary Compensation Table.

(2)Represents Company 401k matching above the IRS limit for a qualified plan. These amounts are included in the “All Other Compensation” column of the Summary Compensation Table.

(3)Preferential interest included here as well as in the NQDC column of the Summary Compensation Table are as follows: Mr. Horvath - $37,352, Mr. Berg - $3,365, Mr. Astrup - $845, Mr. Talley - $9,457, and Mr. Ingulsrud - $18. Executives have the option of investing funds in an S&P 500 index fund or in a money market fund guaranteeing interest at prime as of January 2 of each calendar year. The 2007 and 2006 calendar year rates were 8.25% and 7.25%, respectively.

(4)Distributions occur upon termination of employment and can be in a lump sum or in equal installments over a period not to exceed ten years.

Potential Payments upon Termination or Change-In-Control

The Company and Mr. Horvath entered into an agreement regarding Mr. Horvath’s employment by the Company. The agreement provides that Mr. Horvath shall serve as an “at will” employee at the pleasure of the Board of Directors. The agreement also contains the provision of a three-year non-compete/non-solicitation agreement with Mr. Horvath, grants the Board of Directors the authority to establish Mr. Horvath’s base compensation each year, and also provides that he may participate in other benefit plans offered by the Company.

If Mr. Horvath’s employment terminates due to retirement, a termination without cause, or disability, Mr. Horvath is entitled to receive:

•Reimbursement for the cost of medical and dental coverage for himself and his spouse from the date of termination through their respective deaths;

•Life insurance coverage equal to his base salary on the date of termination until he attains age 65, from age 65 to 70 equal to 50 percent of his base salary on the date of

42

termination, and after age 70 equal to 25 percent of his base salary on the date of termination; and

•Supplemental pension benefits equal to the difference between the cumulative amount of the retirement benefit he would have received computed as though he continued his employment to age 65 assuming compensation equal to or greater of: (1) the actual compensation paid twelve months immediately preceding termination (including annual short-term incentive compensation paid in only the most recently completed fiscal year) to be applied for the years remaining to age 65 (with actual compensation to be used for the years prior to the date of termination); or (2) the compensation paid for the period beginning October 1, 2004, and ending September 30, 2005, to be applied for each of the five years from age 60 to age 65, and in each case assuming 30 years of service actually attained as of the date of termination of employment or the date on which he attains age 65, with no reduction in benefits on account of an election by Mr. Horvath for any death benefit to be paid to his spouse and the cumulative amount of the retirement benefits actually paid to Mr. Horvath.

If Mr. Horvath dies prior to terminating his employment with us, Mr. Horvath’s spouse is entitled to receive generally the same benefits that would have been provided to Mr. Horvath described above for the remainder of her life.

The present value, as of August 31, 2007, of providing medical and dental coverage to Mr. Horvath per the employment agreement was approximately $105,000. The present value of the supplemental pension benefits provided per the employment agreement and the present value of the SERP were approximately $1,600,000 and $1,500,000, respectively, as of August 31, 2007. Mr. Horvath has elected to receive lump-sum payouts of the supplemental pension benefits provided under the employment agreement and the benefits provided by the SERP. The lump-sum payouts will occur in January of the year following Mr. Horvath’s retirement.

As of the filing of this report, Mr. Horvath’s retirement has become effective and the above described change-of-control payments are no longer applicable.

On March 21, 2007, the Company and Mr. Berg entered into an agreement regarding Mr. Berg’s employment by the Company. The agreement provides that Mr. Berg shall serve as an “at will” employee at the pleasure of the Board of Directors. The agreement also contains the provision of a two-year non-compete/non-solicitation agreement with Mr. Berg, grants the Board of Directors the authority to establish Mr. Berg’s base compensation each year, and also provides that he may participate in other incentive compensation and benefit programs available to the Company’s executive officers.

If Mr. Berg is terminated without cause he will be eligible for severance pay equal to two times his then current base salary. The present value of Mr. Berg’s Supplemental Executive Retirement Plan was approximately $163,000 as of August 31, 2007.

Compensation of Directors

The Board of Directors meets monthly. For fiscal year 2007, the Company provided its directors with compensation consisting of (i) a payment of $550 per month, (ii) a per diem payment of $250 for each day spent on Company activities, including board meetings and other Company functions, and (iii) reimbursement of expenses associated with director responsibilities. The Chairman of the Board of Directors receives a payment of $1,050 per month, rather than $550 per month; the Chairman also

43

receives a per diem in the amount of $250 for each day spent on Company activities. The monthly compensation paid to directors and the Chairman increases by $25 per month each fiscal year.

Under the terms of the Board of Directors Deferred Compensation Plan, members of the Board of Directors can elect to defer receipt of their monthly and per diem compensation. This is an annual irrevocable election made prior to January 1 of each calendar year the fees are to be paid. The amounts are deferred until either withdrawal from the Board of Directors by a member or until retirement from the member’s regular employment or business, but not beyond age 65. Two payment options are available at the election of the participant. Payments can be received in a single lump sum or in equal installments over a period of up to ten years. The Board of Directors, at its discretion, can elect to distribute the remaining balance at any time. Interest is earned on the amounts deferred based on the five year Treasury bond rate. Currently, there is one member who has elected to participate in this plan. The amount deferred, as of August 31, 2007, was approximately $54,000.

The table below reflects director compensation for the year ended August 31, 2007.

Name	Fees Earned (1)		Non-Equity  Incentive Plan  Compensation	Change in Pension  Value and NQDC  Earnings	All Other  Compensation	Total
David J. Kragnes, Director, Chairman of the Board	$	32,300	N/A	N/A	N/A	$	32,300
Michael A. Astrup, Director, Vice-Chairman of the Board	$	23,300	N/A	N/A	N/A	$	23,300
William Baldwin, Director	$	20,800	N/A	N/A	N/A	$	20,800
Rick Borgen, Director	$	19,550	N/A	N/A	N/A	$	19,550
John Brainard, Director	$	25,425	N/A	N/A	N/A	$	25,425
Brian Erickson, Director	$	24,800	N/A	N/A	N/A	$	24,800
Robert Green, Director	$	22,550	N/A	N/A	N/A	$	22,550
John Gudajtes, Director	$	22,800	N/A	N/A	N/A	$	22,800
Curtis Haugen, Director	$	19,800	N/A	N/A	N/A	$	19,800
Lonn Kiel, Director (2)	$	6,000	N/A	N/A	N/A	$	6,000
Francis Kritzberger, Director	$	19,800	N/A	N/A	N/A	$	19,800
Jeff McInnes, Director	$	24,050	N/A	N/A	N/A	$	24,050
Ronald Reitmeier, Director	$	14,925	N/A	N/A	N/A	$	14,925
Jim Ross, Director	$	19,800	N/A	N/A	N/A	$	19,800
Neil Widner, Director	$	26,050	N/A	N/A	N/A	$	26,050
Steve Williams, Director (3)	$	25,100	N/A	N/A	N/A	$	25,100

(1)	Consists of fees of $550 per month to Directors and $1,050 to the Chairman of the Board. The Chairman and Directors also receive a per diem fee of $250 for each day spent on Company activities.
(2)	Term expired in December of 2006.
(3)	Term began in December of 2006.

44

Item 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Under state law and the Company’s Bylaws, each member of the cooperative is entitled to one vote, regardless of the number of shares the member holds. The Common Stock of the Company is voting stock and each member of the Company holds one share of Common Stock. The Preferred Stock of the Company is non-voting stock. The Company’s stock can only be held by individuals who are sugarbeet growers. None of the officers or executives of the Company hold stock of the Company. As members of the cooperative, each director owns one share of Common Stock and is entitled to one vote. As a group, the directors generally own approximately 2 to 3 percent of the outstanding Preferred Stock.

Item 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Each of the Company’s directors is also a sugarbeet farmer and a shareholder member or representative of a shareholder member of the Company. By virtue of their status as such members of the Company, each director or the member he represents sells sugarbeets to the Company and receives payments for those sugarbeets. Such payments for sugarbeets often exceed $60,000. Such payments, however, are received by the directors or the entities they represent on exactly the same basis as payments received by other members of the Company for the delivery of their sugarbeets. Except for the sugarbeet sales described in the preceding sentences, none of the directors or executive officers of the Company have engaged in any other transactions with the Company involving amounts in excess of $60,000.

Item 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents fees for professional audit services rendered by Eide Bailly LLP for the audits of the Company’s and consolidated companies’ annual financial statements for the years ended August 31, 2007 and 2006 and fees for other services rendered by Eide Bailly LLP during those periods.

(In Thousands)	2007		2006
Audit Fees	$	128	$	125
Audit-Related Fees	41		23
Tax Fees	52		31
All Other Fees	—		—
Total	$	221	$	179

Audit Fees. The Audit Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company for audit services related to the audit of the Company’s and consolidated companies’ annual financial statements and review of the statements included in the Company’s quarterly reports on Form 10-Q for fiscal 2007 and fiscal 2006.

Audit-Related Fees. The Audit-Related Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company and consolidated companies for assurance and related services provided by Eide Bailly LLP related to the performance of the audit or review of the Company’s financial statements for fiscal 2007 and fiscal 2006. These services included Benefit Plan audits.

Tax Fees. The Tax Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company and consolidated companies for professional services rendered by Eide Bailly for tax compliance, tax advice and tax planning for fiscal 2007 and fiscal 2006. These services include tax return preparation, tax planning and tax research.

45

All Other Fees. The All Other Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company and consolidated companies for professional services provided by Eide Bailly LLP to the Company and consolidated companies. There were no other fees paid to Eide Bailly LLP for fiscal 2007 or fiscal 2006.

The Company’s Audit Committee pre-approves all professional services provided by Eide Bailly LLP to the Company. The Audit Committee approved all of the services and the fees billed for such services to the Company that are included above. The Audit Committee makes its decisions on the approval of services with due consideration given to maintaining the independence of the principal accountant. None of the hours expended on the audit of the 2007 financial statements were attributed to work performed by persons who were not employed full time on a permanent basis by Eide Bailly LLP.

46

PART III

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)Documents filed as part of this report

1.Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the Years Ended August 31, 2007, 2006 and 2005

Consolidated Balance Sheets as of August 31, 2007 and 2006

Consolidated Statements of Changes in Members’ Investments and Comprehensive Income for the Years Ended August 31, 2007, 2006 and 2005

Consolidated Statements of Cash Flows for the Years Ended August 31, 2007, 2006 and 2005

Notes to the Consolidated Financial Statements

2.Financial Statement Schedules

None

3.The exhibits to this Annual Report on Form 10-K are listed in the Exhibit Index on pages E-1 to E-4 of this report

(b)Exhibits

The response to this portion of Item 15 is included as a separate section of this Annual Report on Form 10-K.

47

SIGNATURES

Pursuant to the requirements of Section 13 or 15 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 29, 2007.

AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ DAVID A. BERG
	President and Chief Executive Officer
Dated: November 29, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ DAVID A. BERG	President and Chief Executive Officer	November 29, 2007
	(Principal Executive Officer)
/s/ THOMAS S. ASTRUP	Vice President-Finance and Chief Financial	November 29, 2007
	Officer (Principal Financial Officer)
/s/ DAVID J. KRAGNES	Director (Chairman)	November 29, 2007
/s/ MICHAEL A. ASTRUP	Director (Vice-Chairman)	November 29, 2007
/s/ WILLIAM BALDWIN	Director	November 29, 2007
/s/ RICHARD BORGEN	Director	November 29, 2007
/s/ JOHN BRAINARD	Director	November 29, 2007
/s/ BRIAN R. ERICKSON	Director	November 29, 2007
/s/ ROBERT M. GREEN	Director	November 29, 2007
/s/ JOHN F. GUDAJTES	Director	November 29, 2007
/s/ CURTIS E. HAUGEN	Director	November 29, 2007
/s/ FRANCIS L. KRITZBERGER	Director	November 29, 2007
/s/ JEFF D. MCINNES	Director	November 29, 2007
/s/ RONALD E. REITMEIER	Director	November 29, 2007
/s/ JIM A. ROSS	Director	November 29, 2007
/s/ NEIL C. WIDNER	Director	November 29, 2007
/s/ STEVE WILLIAMS	Director	November 29, 2007

48

APPENDIX A

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

AMERICAN CRYSTAL SUGAR COMPANY

CONSOLIDATED FINANCIAL STATEMENTS:

A-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of American Crystal Sugar Company

Moorhead, Minnesota

We have audited the accompanying consolidated balance sheets of American Crystal Sugar Company and Subsidiaries as of August 31, 2007 and 2006, and the related consolidated statements of operations, changes in members’ investments and comprehensive income, and cash flows for the years ended August 31, 2007, 2006, and 2005. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we do not express such an opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Crystal Sugar Company and Subsidiaries as of August 31, 2007 and 2006, and the results of their operations and their cash flows for the years ended August 31, 2007, 2006, and 2005, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 10 to the accompanying financial statements, the Company has adopted Statement of Financial Accounting Standards No. 158 (FASB 158) “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R)” as of August 31, 2007.

/s/ EIDE BAILLY LLP

Sioux Falls, South Dakota

October 10, 2007

A-2

American Crystal Sugar Company

Consolidated Statements of Operations

For the Years Ended August 31

(In Thousands)

	2007			2006			2005
Net Revenue	$	1,222,170		$	1,005,716		$	965,474
Cost of Sales	348,382			328,767			364,687
Gross Proceeds	873,788			676,949			600,787
Selling, General and Administrative Expenses	246,835			211,188			203,663
Operating Proceeds	626,953			465,761			397,124
Other Income (Expense):
Interest Income	781			397			529
Interest Expense, Net	(20,281		)	(19,096		)	(19,170		)
Other, Net	878			4,283			201
Total Other Expense	(18,622		)	(14,416		)	(18,440		)
Proceeds Before Minority Interest and Income Tax Expense	608,331			451,345			378,684
Minority Interest	(5,636		)	(4,567		)	(4,169		)
Income Tax Expense	(1,303		)	(1,687		)	(1,255		)
Net Proceeds Resulting from Member andNon-Member Business	$	601,392		$	445,091		$	373,260
Distributions of Net Proceeds:
Credited to Members’ Investments:
Non-Member Business Income	$	2,286		$	2,246		$	2,475
Unit Retains Declared to Members	35,705			26,417			18,840
Net Credit to Members’ Investments	37,991			28,663			21,315
Payments to Members for Sugarbeets,
Net of Unit Retains Declared	563,401			416,428			351,945
Total	$	601,392		$	445,091		$	373,260

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-3

American Crystal Sugar Company

Consolidated Balance Sheets

August 31

(In Thousands)

Assets

	2007			2006
Current Assets:
Cash and Cash Equivalents	$	222		$	345
Receivables:
Trade	77,010			78,242
Members	2,746			3,383
Other	5,532			4,036
Advances to Related Parties	7,796			4,737
Inventories	216,563			174,761
Prepaid Expenses	1,204			4,390
Total Current Assets	311,073			269,894
Property and Equipment:
Land and Land Improvements	57,738			55,808
Buildings	109,123			102,986
Equipment	846,467			799,175
Construction in Progress	23,513			11,754
Less Accumulated Depreciation	(672,896		)	(637,583		)
Net Property and Equipment	363,945			332,140
Net Property and Equipment Held for Lease	129,795			140,041
Other Assets:
Investments in CoBank, ACB	11,627			13,138
Investments in Marketing Cooperatives	5,659			5,638
Investments in Crystech, LLC	—			15,399
Pension Asset	37,400			45,425
Other Assets	15,816			18,322
Total Other Assets	70,502			97,922
Total Assets	$	875,315		$	839,997

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-4

American Crystal Sugar Company

Consolidated Balance Sheets

August 31

(In Thousands)

Liabilities and Members' Investments

	2007			2006
Current Liabilities:
Short-Term Debt	$	24,980		$	5,300
Current Maturities of Long-Term Debt	31,227			20,962
Accounts Payable	38,998			27,120
Advances Due to Related Parties	2,874			7,033
Other Current Liabilities	32,805			27,617
Amounts Due Growers	143,260			123,648
Total Current Liabilities	274,144			211,680
Long-Term Debt, Net of Current Maturities	157,974			200,037
Accrued Employee Benefits	39,337			40,987
Other Liabilities	8,240			7,938
Total Liabilities	479,695			460,642
Commitments and Contingencies
Minority Interest in ProGold Limited Liability Company	61,735			56,099
Members’ Investments:
Preferred Stock	38,275			38,275
Common Stock	29			29
Additional Paid-In Capital	152,261			152,261
Unit Retains	170,363			153,961
Equity Retention	2,687			2,694
Accumulated Other Comprehensive Income (Loss)	(8,552		)	(500		)
Retained Earnings (Accumulated Deficit)	(21,178		)	(23,464		)
Total Members’ Investments	333,885			323,256
Total Liabilities and Members’ Investments	$	875,315		$	839,997

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-5

American Crystal Sugar Company

Consolidated Statements of Changes in Members' Investments and Comprehensive Income

For the Years Ended August 31

(In Thousands)

													Accumulated			Retained
					Additional								Other			Earnings						Annual
	Preferred		Common		Paid-In		Unit			Equity			Comprehensive			(Accumulated						Comprehensive
	Stock		Stock		Capital		Retains			Retention			Income (Loss)			Deficit)			Total			Income (Loss)
Balance, August 31, 2004	38,275		29		152,261		138,714			2,708			(376		)	(28,185		)	303,426
Non-Member Business Income	—		—		—		—			—			—			2,475			2,475			$	2,475
Pension Minimum Liability Adjustment	—		—		—		—			—			(456		)	—			(456		)	(456		)
Unit Retains Withheld from Members	—		—		—		18,840			—			—			—			18,840			—
Payments of Unit Retains and Equity Retention to Members	—		—		—		(8,582		)	(5		)	—			—			(8,587		)	—
Stock Issued, Net	—		—		—		—			—			—			—			—			—
Balance, August 31, 2005	38,275		29		152,261		148,972			2,703			(832		)	(25,710		)	315,698			$	2,019
Non-Member Business Income	—		—		—		—			—			—			2,246			2,246			$	2,246
Pension Minimum Liability Adjustment	—		—		—		—			—			332			—			332			332
Unit Retains Withheld from Members	—		—		—		26,417			—			—			—			26,417			—
Payments of Unit Retains and Equity Retention to Members	—		—		—		(21,428		)	(9		)	—			—			(21,437		)	—
Stock Issued, Net	—		—		—		—			—			—			—			—			—
Balance, August 31, 2006	38,275		29		152,261		153,961			2,694			(500		)	(23,464		)	323,256			$	2,578
Non-Member Business Income	—		—		—		—			—			—			2,286			2,286			$	2,286
Pension Minimum Liability Adjustment	—		—		—		—			—			500			—			500			500
SFAS 158 Adjustment	—		—		—		—			—			(8,583		)	—			(8,583		)	(8,583		)
Forward Contract Foreign Currency Gain	—		—		—		—			—			31			—			31			31
Unit Retains Withheld from Members	—		—		—		35,705			—			—			—			35,705			—
Payments of Unit Retains and Equity Retention to Members	—		—		—		(19,303		)	(7		)	—			—			(19,310		)	—
Stock Issued, Net	—		—		—		—			—			—			—			—			—
Balance, August 31, 2007	$	38,275	$	29	$	152,261	$	170,363		$	2,687		$	(8,552	)	$	(21,178	)	$	333,885		$	(5,766	)

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-6

American Crystal Sugar Company

Consolidated Statements of Cash Flows

For the Years Ended August 31

(In Thousands)

	2007			2006			2005
Cash Provided By (Used In) Operating Activities:
Net Proceeds Resulting from Member and Non-Member Business	$	601,392		$	445,091		$	373,260
Payments To/Due Members for Sugarbeets, Net of Unit Retains Declared	(563,401		)	(416,428		)	(351,945		)
Add (Deduct) Non-Cash Items:
Depreciation and Amortization	57,481			56,753			59,558
Income from Equity Method Investees	(443		)	(537		)	(1,402		)
Loss on the Disposition of Property and Equipment	995			835			2,386
Non-Cash Portion of Patronage Dividend from CoBank, ACB	(182		)	(218		)	(447		)
Deferred Gain Recognition	(197		)	(197		)	(197		)
Minority Interest in ProGold Limited Liability Company	5,636			4,567			4,169
Changes in Assets and Liabilities:
Receivables	373			(38,736		)	40,970
Inventories	(41,802		)	(52,134		)	6,665
Prepaid Expenses	3,251			1,192			(736		)
Non-Current Pension Asset	(3,757		)	(1,636		)	(13,855		)
Advances To/Due to Related Parties	(2,916		)	9,373			(1,433		)
Accounts Payable	11,878			(45		)	102
Other Liabilities	7,541			7,183			4,530
Amounts Due Growers	19,612			90,214			(37,053		)
Net Cash Provided By Operating Activities	95,461			105,277			84,572
Cash Provided By (Used In) Investing Activities:
Purchases of Property and Equipment	(63,256		)	(46,154		)	(43,758		)
Purchases of Property and Equipment Held for Lease	(859		)	(382		)	(1,332		)
Proceeds from the Sale of Property and Equipment	88			248			109
Investments in Crystech, LLC	(1,539		)	1,044			1,044
Equity Distribution from CoBank, ACB	1,693			3,796			2,800
Investments in Marketing Cooperatives	(76		)	62			(1,067		)
Changes in Other Assets	(207		)	(271		)	(885		)
Net Cash (Used In) Investing Activities	(64,156		)	(41,657		)	(43,089		)
Cash Provided By (Used In) Financing Activities:
Net Proceeds from (Payments on) Short-Term Debt	19,680			(25,385		)	486
Proceeds from Issuance of Long-Term Debt	20,897			24,674			5,203
Long-Term Debt Repayment	(52,695		)	(41,464		)	(38,432		)
Payment of Unit Retains and Equity Retention	(19,310		)	(21,437		)	(8,587		)
Net Cash (Used In) Financing Activities	(31,428		)	(63,612		)	(41,330		)
Increase (Decrease) In Cash and Cash Equivalents	(123		)	8			153
Cash and Cash Equivalents, Beginning of Year	345			337			184
Cash and Cash Equivalents, End of Year	$	222		$	345		$	337

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-7

American Crystal Sugar Company

Notes to the Consolidated Financial Statements

(1) PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES:

Organization

American Crystal Sugar Company (the Company) is a Minnesota agricultural cooperative corporation which processes and markets sugar as well as sugarbeet pulp, molasses, concentrated separated by-product (CSB), betaine (collectively, agri-products) and sugarbeet seed. Business done with its shareholders (members) constitutes “patronage business” as defined by the Internal Revenue Code, and the net proceeds therefrom are credited to members’ investments in the form of unit retains or distributed to members in the form of payments for sugarbeets. Members are paid the net amounts realized from the current year’s production less member operating costs determined in conformity with accounting principles generally accepted in the United States of America.

Basis of Presentation

The Company’s consolidated financial statements are comprised of American Crystal Sugar Company, its wholly-owned subsidiaries Sidney Sugars Incorporated (Sidney Sugars) and Crab Creek Sugar Company (Crab Creek), and ProGold Limited Liability Company (ProGold), a limited liability company in which the Company holds a 51 percent ownership interest.

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s  50 percent ownership interest in Crystech, LLC (Crystech) resulting in the Company’s 100 percent ownership of Crystech. Due to the Company’s resulting controlling ownership interest in Crystech, effective May 1, 2007, the Company began to include Crystech in its consolidated financial statements. Effective May 31, 2007, Crystech was dissolved with all assets and liabilities transferred to the Company.

All material inter-company transactions have been eliminated.

Revenue Recognition

Revenue from the sale of sugar, agri-products and seed is recorded when the product is delivered to the customer. Operating lease revenue is recognized as earned ratably over the term of the lease.

Operating Lease

ProGold owns a corn wet milling facility which it leases under an operating lease. Payments are to be received monthly under the lease, which originally was scheduled to run through December 31, 2007. An extension of the lease term through December 31, 2008 has been implemented under the provisions of the lease. The lease contains provisions for extension or modification of the lease terms at the end of the lease period. The lease also contains provisions for increased payments to be received during the lease period related to the facility’s profitability and capital additions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company places its temporary cash investments with high credit quality financial institutions. At times, such investments may be in excess of the applicable insurance limit.

A-8

Accounts Receivable and Credit Policies

The Company grants credit, individually and through its marketing cooperatives, to its customers, which are primarily companies in the food processing industry located throughout the United States.

Trade receivables are uncollateralized customer obligations due under normal trade terms requiring payment within 15 to 90 days from the invoice date. The receivables are non-interest bearing. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

Ongoing credit evaluations of customers’ financial condition are performed and the Company maintains a reserve for potential credit losses. The carrying amount of trade receivables is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected.

Inventories

Sugar, pulp, molasses and other agri-products inventories are valued at estimated net realizable value. Maintenance parts and supplies and sugarbeet seed inventories are valued at the lower of average cost or market. Sugarbeets are valued at the projected gross per-ton beet payment related to that year’s crop.

Net Property and Equipment

Property and equipment are recorded at cost. Indirect costs and construction period interest are capitalized as a component of the cost of qualified assets. Property and equipment are depreciated for financial reporting purposes principally using straight-line methods with estimated useful lives ranging from 4 to 33 years.

Net Property and Equipment Held for Lease

Net property and equipment held for lease are stated at cost. Depreciation on assets placed in service is provided using the straight-line method with estimated useful lives ranging from 5 to 40 years.

Impairment of Long Lived Assets

The Company reviews its long lived assets for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. There were no impairment losses incurred during the year.

Related Parties

The following organizations are considered related parties for financial reporting purposes: United Sugars Corporation (United) and Midwest Agri-Commodities Company (Midwest).

Investments

Investments in CoBank, ACB are stated at cost plus unredeemed patronage refunds received in the form of capital stock. Investments in marketing cooperatives are accounted for using the equity method. Investments in Crystech, prior to its dissolution (see note 7), were accounted for using the equity method.

A-9

Members’ Investments

Preferred and Common Stock - The ownership of common and preferred stock is restricted to a “farm operator” as defined by the bylaws of the Company. Each shareholder may own only one share of common stock and is entitled to one vote in the affairs of the Company. Each shareholder is required to grow a specified number of acres of sugarbeets in proportion to the shares of preferred stock owned. The preferred shares are non-voting. All transfers of stock must be approved by the Company’s Board of Directors and any shareholder desiring to sell stock must first offer it to the Company for repurchase at its par value. The Company has never exercised this repurchase option for preferred stock. The Company’s articles of incorporation do not allow dividends to be paid on either the common or preferred stock.

Unit Retains - The bylaws authorize the Company’s Board of Directors to require additional direct capital investments by members in the form of a variable unit retain per ton of up to a maximum of 10 percent of the weighted average gross per ton beet payment. All refunds and retirements of unit retains must be approved by the Board of Directors.

Equity Retention – The Payment-In-Kind (PIK) Certificate Purchase Agreement authorizes the Company to require additional direct capital investments by members participating in the PIK program. The amount of the equity contribution is calculated per hundredweight of PIK certificates and is approximately equivalent (on a Company-wide average basis) to the unit retain declared by the Company on the corresponding year’s sugarbeet crop. All refunds and retirements of equity retains must be approved by the Board of Directors.

Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) represents the cumulative net increase (decrease) in equity related to the recording of the overfunded or underfunded status of defined benefit postretirement plans and the gain or loss related to foreign currency forward contracts. Consistent with the Company’s treatment of income taxes related to member-source income and expenses, accumulated other comprehensive income (loss) does not include any adjustment for income taxes. For years prior to August 31, 2007, Accumulated Other Comprehensive Income (Loss) represented the cumulative net increase (decrease) in equity related to the recording of the minimum pension liability adjustment.

Retained Earnings (Accumulated Deficit) - Retained earnings represents the cumulative net income (loss) resulting from non-member business and, for years prior to 1996, the difference between member income as determined for financial reporting purposes and for federal income tax reporting purposes.

Interest Expense, Net

The Company earns patronage dividends from CoBank, ACB based on the Company’s share of the net income earned by CoBank, ACB. These patronage dividends are applied against interest expense.

Income Taxes

The Company is a non-exempt cooperative for federal income tax purposes. As such, the Company is subject to corporate income taxes on its net income from non-member sources. The provision for income taxes relates to the results of operations from non-member business, state income taxes and certain other permanent differences between financial and income tax reporting. The Company also has various temporary differences between financial and income tax reporting, most notable of which is depreciation.

A-10

Deferred tax assets, less any applicable valuation allowance, and deferred tax liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Business Risk

The financial results of the Company’s operations may be directly and materially affected by many factors, including prevailing prices of sugar and agri-products, the Company’s ability to market its sugar competitively, the weather, government programs and regulations, and costs and expenses.

Shipping and Handling Costs

The costs incurred for the shipping and handling of products sold are classified in the consolidated financial statements as a selling expense on the Consolidated Statements of Operations. Shipping and handling costs were $166.0 million, $130.9 million and $127.5 million for the years ended August 31, 2007, 2006 and 2005, respectively.

Deferred Costs and Product Values

All costs incurred prior to the end of the Company’s fiscal year that relate to receiving and processing the subsequent year’s sugarbeet crop are deferred. Similarly, the net realizable values of products produced prior to the end of the Company’s fiscal year that relate to the subsequent year’s sugarbeet crop are deferred. The net result of these deferred costs and product values are recorded in the Company’s consolidated balance sheet in “Other Current Liabilities.”  Deferred costs and product values were $4.1 million and $2.9 million as of August 31, 2007 and 2006, respectively.

Recently Issued Accounting Pronouncements

The Financial Accounting Standards Board (FASB) has issued Statement No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement becomes effective for the Company in the first quarter of fiscal 2009. The Company does not expect that the adoption of this statement will have a material effect on the Company’s financial statements.

The Financial Accounting Standards Board has also issued Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R). This Statement requires the Company to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. This requirement became effective and was adopted by the Company as of August 31, 2007. This Statement will also require the Company to measure the funded status of a plan as of the date of its year-end statement of financial position. This requirement becomes effective for the Company as of August 31, 2009.

The Financial Accounting Standards Board has also issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109. This Interpretation

A-11

clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This interpretation becomes effective for the Company in the first quarter of fiscal 2008. The Company does not expect that the adoption of this interpretation will have a material effect on the Company’s financial statements.

(2) RECEIVABLES:

There was no single customer attributable to the Company that accounted for 10 percent or more of the Company’s total receivables as of August 31, 2007 or that accounted for 10 percent or more of the revenues of the Company for the years ended August 31, 2007, 2006 or 2005. There were two customers attributable to the Company that accounted for 13 percent and 16 percent, respectively, of the Company’s total receivables as of August 31, 2006.

(3) INVENTORIES:

The major components of inventories as of August 31, 2007 and 2006 are as follows:

(In Thousands)	2007		2006
Refined Sugar, Pulp, Molasses, Other Agri-Products and Sugarbeet Seed	$	178,078	$	134,211
Unprocessed Sugarbeets	9,231		8,721
Maintenance Parts and Supplies	29,254		31,829
Total Inventories	$	216,563	$	174,761

(4) NET PROPERTY AND EQUIPMENT:

Indirect costs capitalized were $1.2 million, $1.1 million and $1.0 million in 2007, 2006 and 2005, respectively. Construction period interest capitalized was $ 1.1 million, $ .8 million and $ .6 million in 2007, 2006 and 2005, respectively. Depreciation expense was $43.6 million, $42.9 million and $41.9 million in 2007, 2006 and 2005, respectively. The Company had outstanding commitments totaling $13.8 million as of August 31, 2007, for equipment and construction contracts related to various capital projects.

(5) NET PROPERTY AND EQUIPMENT HELD FOR LEASE:

ProGold owns a corn wet-milling facility that it leases under an operating lease which runs through December 31, 2008. Under the terms of the operating lease, the lessee manages all aspects of the operations of the ProGold corn wet-milling facility.

Net Property and Equipment Held for Lease are stated at cost, net of accumulated depreciation. Depreciation expense was $11.1 million for each of the years ended August 31, 2007, 2006 and 2005. The components of Net Property and Equipment Held for Lease as of August 31, 2007 and 2006 are shown below:

(In Thousands)	2007			2006
Land and Land Improvements	$	7,937		$	7,937
Buildings	41,193			41,193
Equipment	201,243			200,485
Construction in Progress	245			160
Less Accumulated Depreciation	(120,823		)	(109,734		)
Net Property and Equipment Held for Lease	$	129,795		$	140,041

A-12

Future minimum payments to be received under the lease are as follows:

Fiscal year ending August 31, (In Thousands)
2008	$	24,827
2009	8,367
Total	$	33,194

(6) INVESTMENTS IN MARKETING COOPERATIVES:

The Company has a 66 percent ownership interest and a 33 1/3 percent voting interest in United. The investment is accounted for using the equity method. All sugar products produced are sold by United as an agent for the Company. The amount of sales and related costs to be recognized by each owner of United is allocated based on its pro rata share of sugar production for the year. The owners provide United with cash advances on an ongoing basis for operating and marketing expenses incurred by United. The Company had outstanding advances to United of $7.6 million and $4.3 million as of August 31, 2007 and 2006, respectively. The Company provides administrative services for United and is reimbursed for costs incurred. The Company was reimbursed $1.2 million, $1.2 million and $1.1 million for services provided during 2007, 2006 and 2005, respectively.

The Company has a 52 percent ownership interest and a 25 percent voting interest in Midwest. The investment is accounted for using the equity method. Substantially all sugarbeet pulp, molasses and other agri-products produced are sold by Midwest as an agent for the Company. The amount of sales and related costs to be recognized by each owner of Midwest is allocated based on its pro rata share of production for each product for the year. The owners provide Midwest with cash advances on an ongoing basis for operating and marketing expenses incurred by Midwest. The Company had outstanding advances from Midwest of $2.9 million and $2.7 million as of August 31, 2007 and 2006, respectively. The Company provides administrative services for Midwest and is reimbursed for costs incurred. The Company was reimbursed $129,000, $121,000 and $95,000 for services provided during 2007, 2006 and 2005, respectively. The owners of Midwest are guarantors of the short-term line of credit Midwest has with CoBank, ACB. As of August 31, 2007, Midwest had outstanding short-term debt with CoBank, ACB of $5.6 million, of which $2.6 million was guaranteed by the Company.

The Company has performed a complete analysis of the conditions set forth in FIN 46(R) and has determined that its investments in United and Midwest do not meet the criteria of Variable Interest Entities and therefore such entities are not consolidated in the Company’s Consolidated Financial Statements.

(7) CRYSTECH, LLC:

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s 50 percent ownership interest in Crystech for $1.5 million. This acquisition resulted in the Company’s 100 percent ownership of Crystech. Due to the Company’s resulting controlling ownership interest in Crystech, effective May 1, 2007, the Company began to include Crystech in its consolidated financial statements. Effective May 31, 2007, Crystech was dissolved with all assets and liabilities transferred to the Company. As a result of the dissolution, the Company eliminated its investment of $17.6 million in Crystech, recorded the value of the buildings and equipment acquired of $2.7 million and $10.6 million, respectively, and settled an inter-company payable of $4.3 million.

Crystech was a special purpose entity that operated a molasses desugarization facility at the Company’s Hillsboro, North Dakota, sugar factory together with certain sugar processing equipment located at the Hillsboro, North Dakota, and Moorhead, Minnesota, sugar factories. Prior to May 31,

A-13

2007, the Company controlled 50 percent of Crystech and accounted for its investment using the equity method.

The Company performed a complete analysis of the conditions set forth in FIN 46(R) and determined that its investment in Crystech, LLC did not meet the criteria of a Variable Interest Entity and therefore, prior to May 1, 2007, Crystech, LLC was not consolidated in the Company’s Consolidated Financial Statements.

The Company had a tolling services agreement with Crystech whereby the Company paid for tolling services for processing sugarbeet molasses delivered to Crystech with title and risk of loss throughout the process maintained by the Company.

On a cumulative basis, the Company received an annual allocation of Crystech’s net income equal to 7.5 percent of the initial value of the Preferred Equity contribution by the Company. As of August 31, 2006, the Company had outstanding payables to Crystech of approximately $4.3 million related to the tolling services agreement. Following is summary financial information for Crystech:

As of August 31, (In Thousands)	2006
Current Assets	$	4,348
Long-Term Assets	18,665
Total Assets	$	23,013
Current Liabilities	$	6,143
Long-Term Liabilities	—
Total Liabilities	6,143
Members’ Equity	16,870
Total Liabilities and Members’ Equity	$	23,013

	For the Eight Months Ended April		For the Years Ended August 31
(In Thousands)	30, 2007		2006		2005
Revenue	$	9,841	$	20,582	$	21,186
Operating Expenses	8,624		18,006		17,727
Other Expenses	455		1,432		2,315
Net Income	$	762	$	1,144	$	1,144

A-14

(8) LONG-TERM AND SHORT-TERM DEBT:

The long-term debt outstanding as of August 31, 2007 and 2006 is summarized below:

(In Thousands)	2007			2006
Term Loans from CoBank, ACB, due in varying amounts through 2011, interest at fixed rates of 5.35% to 8.57%, with senior lien on substantially all non-current assets	$	82,543		$	116,276
Term Loans from Insurance Companies, due in varying amounts from 2010 through 2028, interest at fixed rates of 4.78% to 7.42%, with senior lien on substantially all non-current assets	57,143			60,000
Pollution Control and Industrial Development Revenue Bonds, due in varying amounts through 2021, interest at fixed rates of 5.0% to 5.40% and varying rates of 3.78% to 3.89% as of August 31, 2007, substantially secured by letters of credit	47,915			42,323
Term Loan from the Bank of North Dakota, due in equal amounts through 2009, interest at a fixed rate of 3.30%, unsecured	1,600			2,400
Total Long-Term Debt	189,201			220,999
Less Current Maturities	(31,227		)	(20,962		)
Long-Term Debt, Net of Current Maturities	$	157,974		$	200,037

Minimum annual principal payments for the next five years are as follows:

(In Thousands)
2008	$	31,227
2009	$	21,242
2010	$	14,470
2011	$	13,056
2012	$	36,446

The Company has a long-term debt line of credit with CoBank, ACB of $202.2 million, of which $82.5 million in loans and $69.3 million in long-term letters of credit were outstanding as of August 31, 2007. The unused long-term line of credit as of August 31, 2007 was $50.4 million.

The short-term debt outstanding as of August 31, 2007 and 2006 is summarized below:

(In Thousands)	2007		2006
Commercial Paper, at fixed interest rates of 6.2% and 6.3%, due 9/4/07 and 9/5/07	$	24,980	$	5,300

During the year ended August 31, 2007, the Company borrowed from CoBank, ACB, the Commodity Credit Corporation (CCC) and issued commercial paper to meet its short-term borrowing requirements. As of August 31, 2007, the Company had available short-term lines of credit totaling $361.0 million, of which $25.0 million in commercial paper and $2.2 million in short-term letters of credit were outstanding. The unused short-term line of credit as of August 31, 2007 was $333.8 million.

A-15

Maximum borrowings, average borrowing levels and average interest rates for short-term debt for the years ended August 31, 2007 and 2006, follow:

(In Thousands, Except Interest Rates)	2007			2006
Maximum Borrowings	$	298,456		$	216,055
Average Borrowing Levels	$	167,532		$	118,553
Average Interest Rates	5.71		%	5.16		%

The terms of the loan agreements contain prepayment penalties along with certain covenants related to, among other matters, the: level of working capital; ratio of term liabilities to members’ investments; current ratio; level of term debt to net funds generated; and investment in CoBank, ACB stock in amounts prescribed by the bank. Substantially all non-current assets are pledged to the senior lenders to provide security to support the Company’s seasonal and long-term financing. As of August 31, 2007, the Company was in compliance with the terms of the loan agreements.

Interest paid, net of amounts capitalized, was $20.7 million, $19.6 million and $20.0 million for the years ended August 31, 2007, 2006 and 2005, respectively.

(9) OPERATING LEASES:

The Company is party to operating leases for such items as rail cars, computer hardware and vehicles. Cargill, Incorporated has assumed responsibility for the payments on a rail car lease for the duration of the operating lease with ProGold, described in Note 1. After the lease with Cargill, Incorporated expires, responsibility for the rail car lease payments reverts back to ProGold. The Company was also a party to an operating lease for product storage tanks, which expired in April 2007. The product storage tanks were purchased upon expiration of the lease. Operating lease expense was $2.6 million, $ 2.1 million and $ 1.9 million for years ended August 31, 2007, 2006 and 2005, respectively. Future minimum payments under these obligations are as follows:

Fiscal year ending August 31, (In Thousands)
2008	$	1,599
2009	4,457
2010	5,826
2011	5,663
2012	5,642
Thereafter	29,183
Total	$	52,370

A-16

(10) EMPLOYEE BENEFIT PLANS:

Company-Sponsored Defined Benefit Pension and Other Post-Retirement Benefit Plans

Substantially all employees who meet eligibility requirements of age, date of hire and length of service are covered by a Company-sponsored retirement plan. As of August 31, 2007, the pension plans were funded as required by the funding standards set forth by the Employee Retirement Income Security Act (ERISA). The Company also has non-qualified supplemental executive retirement plans for certain employees.

Employees of the Company who are not members of a collective bargaining unit and who are newly hired, or rehired, and employees who transfer from a union position to a nonunion position on or after September 1, 2007 will no longer be eligible for participation in the defined benefit pension plan. These employees will participate in a defined contribution plan as described later in this note.

The following schedule reflects the percentage of pension plan assets by asset class as of the latest measurement date, May 31, 2007:

Percentage of Pension Plan Assets by Asset Class as of May 31, 2007

Asset Class	Target Range	Actual Allocation
Large U.S. Stocks	20.0%-40.0%	29.8	%
Small U.S. Stocks	17.5%-27.5%	22.2	%
Non-U.S. Stocks	17.5%-27.5%	24.6	%
U.S. Bonds	15.0%-35.0%	23.2	%
Cash	0.0%-5.0%	0.2	%

The Investment Committee has the responsibility of managing the operations and administration of American Crystal Sugar Company’s retirement plans and trust. The Investment Committee has an investment policy for the pension plan assets that establishes target asset allocations as shown above. The Investment Committee is committed to diversification to reduce the risk of large losses. To that end, the Investment Committee has adopted policies requiring that each asset class will be diversified and equity exposure will be limited to 85% of the total portfolio value. The stated goal is for each component of the plan to earn a rate of return greater than its corresponding benchmark. Progress of the plan against its return objectives will be measured over a full market cycle.

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as, the target asset allocation of the pension portfolio. This resulted in the selection of the 8.0% long-term rate of return on assets assumption.

The development of the discount rate was based on a bond matching model whereby a hypothetical portfolio of bonds with an “AA” or better rating by a nationally recognized debt rating agency was constructed to match the expected benefit payments under the Company’s pension plans through the year 2036. The reinvestment rate for benefit cash flow occurring after 2036 was discounted back to the year 2036 at a rate consistent with the yields on long-term zero-coupon bonds. The resulting present value was treated as additional benefit cash flow for the year 2036 and consistently applied as any other benefit cash flow during the bond matching process.

The Company has a medical plan and a Medicare supplement plan which are available to union retirees and certain non-union retirees. The costs of these plans are shared by the Company and plan participants. The Company’s post-retirement plan for certain non-union employees currently coordinates with Medicare’s medical coverage and provides tiered prescription drug coverage. The Company has determined that this plan is actuarially equivalent to Medicare Part D and therefore

A-17

qualifies for the Federal subsidy provision in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. This provision allows the Company to receive a subsidy of 28 percent of the dollars spent providing prescription drug coverage beginning in calendar year 2006. In accordance with FASB Staff Position (FSP) FAS-106-2, the Company recognized a reduction in the accumulated post-retirement benefit obligation in fiscal 2005 of approximately $4.6 million due to the effect of the subsidy.

The following schedule reflects the expected pension and post-retirement benefit payments during each of the next five years and the aggregate for the following five years:

	Expected Benefit Payments
(In Thousands)	Pension		Post-Retirement
2008	$	8,009	$	703
2009	5,140		870
2010	5,533		1,127
2011	6,010		1,409
2012	6,474		1,717
2013-2017	41,729		12,123
Total	$	72,895	$	17,949

The Company does not expect to make any contributions to the pension plans during the next fiscal year. The Company expects to make contributions in the next fiscal year of approximately $3.3 million related to Supplemental Executive Retirement Plans. The Company also expects to contribute approximately $700,000 to the post-retirement plans during the next fiscal year.

A-18

The following schedules provide the components of the Net Periodic Pension and Post-Retirement Costs for the years ended August 31, 2007, 2006 and 2005:

Components of Net Periodic Pension Cost

(In Thousands)	2007			2006			2005
Service Cost	$	3,533		$	4,222		$	3,383
Interest Cost	7,907			7,185			7,075
Expected Return on Plan Assets	(10,908		)	(9,856		)	(8,062		)
Multiple Employer Adjustment	(131		)	(69		)	(348		)
Amortization of Net Transition Assets	—			—			(21		)
Amortization of Prior Service Costs	2,912			1,126			1,428
Amortization of Net Loss	433			2,992			2,197
Net Periodic Pension Cost	$	3,746		$	5,600		$	5,652

Components of Net Periodic Post-Retirement Cost

(In Thousands)	2007			2006		2005
Service Cost	$	1,102		$	1,411	$	1,099
Interest Cost	1,923			2,088		2,172
Amortization of Net (Gain) Loss	(19		)	387		287
Net Periodic Post-Retirement Cost	$	3,006		$	3,886	$	3,558

In fiscal 2007, the Company changed the estimated amortization period for prior service costs. It was determined that the period in which the Company expects to realize economic benefits from plan amendments granting retroactive benefits was shorter than the remaining service period of active employees. Therefore, the amortization period was changed from the remaining service period of active employees to the lesser of seven years or the length of the union contract that included the benefit change.

For measurement purposes, a 10.0 percent annual rate of increase in the per capita cost of covered healthcare benefits for participants under age 65 was assumed for 2007. The rate is assumed to decline to 5.0 percent over the next five years. For participants age 65 and older, an 11.0 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2007. The rate is assumed to decline to 6.0 percent over the next five years.

Assumed healthcare trends can have a significant effect on the amounts reported for healthcare plans. A one percent change in the assumed healthcare trend rates would have the following effects:

(In Thousands)	1% Increase		1% Decrease
Effect on total service and interest cost components of net periodic post-retirement benefit costs	$	457	$	(380	)
Effect on the accumulated post-retirement benefit obligation	$	3,844	$	(3,321	)

A-19

The following schedules set forth a reconciliation of the changes in the plans’ benefit obligation and fair value of assets for the years ending August 31, 2007 and 2006 and a statement of the funded status and amounts recognized in the Balance Sheets and Accumulated Other Comprehensive Income as of August 31, 2007 and 2006:

	Pension						Post-Retirement
(In Thousands)	2007			2006			2007			2006
Change in Benefit Obligation
Obligation at the Beginning of the Year	$	122,413		$	130,647		$	29,430		$	37,660
Service Cost	3,533			4,222			1,102			1,411
Interest Cost	7,907			7,185			1,923			2,088
Plan Participant Contributions	—			—			488			508
Medicare Part D Subsidy	—			—			48			34
Actuarial (Gain) Loss	3,528			(15,454		)	(1,985		)	(10,821		)
Benefits Paid	(4,530		)	(4,187		)	(1,363		)	(1,450		)
Obligation at the End of the Year	$	132,851		$	122,413		$	29,643		$	29,430
Change in Plan Assets
Fair Value at the Beginning of the Year	$	138,597		$	121,553		$	—		$	—
Actual Return on Plan Assets	25,192			15,939			—			—
Plan Participant Contributions	—			—			488			508
Medicare Part D Subsidy	—			—			48			34
Employer Contributions	5,354			5,292			827			908
Benefits Paid	(4,530		)	(4,187		)	(1,363		)	(1,450		)
Fair Value at the End of the Year	$	164,613		$	138,597		$	—		$	—
Funded Status
Funded Status as of August 31,	$	31,762		$	16,184		$	(29,643	)	$	(29,430	)
Unrecognized Actuarial (Gain) Loss			*	18,289					*	(1,818		)
Unrecognized Prior Service Cost			*	8,178			—			—
Net Amount Recognized	$	31,762		$	42,651		$	(29,643	)	$	(31,248	)
Amounts Recognized in the Balance Sheets
Noncurrent Assets	$	37,400		$		*	$	—		$	—
Current Liabilities	(3,791		)			*	706					*
Noncurrent Liabilities	(1,847		)			*	28,937					*
Prepaid Pension Cost			*	48,773			—			—
Accrued Benefit Liability			*	(6,622		)			*	(31,248		)
Accumulated Other Comprehensive Loss			*	500					*	—
Net Amount Recognized	$	31,762		$	42,651		$	(29,643	)	$	(31,248	)
Amounts Recognized in Accumulated Other Comprehensive Income
Prior Service Cost	$	(5,266	)	$		*	$	—		$		*
Accumulated Gain (Loss)	(7,100		)			*	3,783					*
Net Amount Recognized	$	(12,366	)	$		*	$	3,783		$		*

* Not applicable due to change in accounting standard.

A-20

The estimated amounts that will be amortized from Accumulated Other Comprehensive Income at August 31, 2007 into net periodic benefit cost in fiscal 2008 are as follows:

	Pension			Post- Retirement
Prior Service (Cost)	$	(1,317	)	$	—
Accumulated Gain (Loss)	(59		)	225
Total	$	(1,376	)	$	225

The assumptions used in the measurement of the Company’s benefit obligations are shown below:

Weighted Average Assumptions as of August 31,

	Pension				Post-Retirement
	2007		2006		2007		2006
Discount Rate	6.37	%	6.62	%	6.37	%	6.62	%
Expected Return on Plan Assets	8.00	%	8.25	%	N/A		N/A
Rate of Compensation Increase (Non-Union Plan Only)	3.5	%	3.5	%	N/A		N/A

1999 Long-Term Incentive Plan

During 2005, the granting of additional contract rights under the 1999 Long-Term Incentive Plan (1999 Plan) was discontinued with the adoption of the 2005 Long-Term Incentive Plan (2005 Plan). All vested contract rights as of December 31, 2004, remained in the 1999 Plan while all unvested contract rights were transferred to the 2005 Plan. The value of the contract rights remaining in the 1999 Plan is determined by the Board of Directors. As of August 31, 2007, there were 455.07 vested contract rights remaining in the 1999 Plan. At August 31, 2007, the Board of Directors increased the value of these contract rights from $1,900 to $2,100 per contract right.

2005 Long-Term Incentive Plan

The 2005 Long-Term Incentive Plan provides deferred compensation to certain key executives of the Company. The plan creates financial incentives that are based upon contract rights which are available to the executive under the terms of the plan, the value of which is determined by the Board of Directors. No vested contract rights were exercised during 2007. In 2007, 329.71 contract rights were granted at a stated value of $2,100 per contract right. At August 31, 2007, the Board of Directors increased the value of the 965.97 contract rights previously granted from $1,900 to $2,100 per contract right. As of August 31, 2007, there were 1,295.68 contract rights issued and outstanding at a stated value of $2,100 per contract right, of which 721.26 were vested.

Defined Contribution Plans

The Company has qualified 401(k) plans for all eligible employees. The plans provide for immediate vesting of benefits. Participants may contribute a percentage of their gross earnings each pay period as provided in the participation agreement. The Company matches the non-union and eligible union year-round participants’ contributions up to 4 percent and 2 percent, respectively, of their gross earnings. The Company’s contributions to these plans totaled $2.0 million, $1.8 million and $1.7 million for the years ended August 31, 2007, 2006 and 2005, respectively.

Employees of the Company who are not members of a collective bargaining unit and who are newly hired, or rehired, and employees who transfer from a union position to a nonunion position on or

A-21

after September 1, 2007 will no longer be eligible for participation in the defined benefit pension plan but will receive a 4% non-elective Company Contribution to a defined contribution plan. The Company Contribution will have a six year vesting schedule.

(11) MEMBERS’ INVESTMENTS:

The following schedule details the Preferred Stock and Common Stock as of August 31, 2007, 2006 and 2005:

	Par		Shares	Shares Issued
	Value		Authorized	& Outstanding
Preferred Stock:
August 31, 2007	$	76.77	600,000	498,570
August 31, 2006	$	76.77	600,000	498,570
August 31, 2005	$	76.77	600,000	498,570
Common Stock:
August 31, 2007	$	10.00	4,000	2,878
August 31, 2006	$	10.00	4,000	2,874
August 31, 2005	$	10.00	4,000	2,904

(12) SEGMENT REPORTING:

The Company has identified two reportable segments: Sugar and Leasing. The sugar segment is engaged primarily in the production and marketing of sugar from sugarbeets. It also sells agri-products and sugarbeet seed. The leasing segment is engaged in the leasing of a corn wet milling plant used in the production of high-fructose corn syrup. The segments are managed separately. There are no inter-segment sales. The leasing segment has a major customer that accounts for all of that segment’s revenue.

Summarized financial information concerning the Company’s reportable segments is shown below:

	For the Year Ended August 31, 2007
(In Thousands)	Sugar		Leasing			Consolidated
Net Revenue from External Customers	$	1,197,227	$	24,943		$	1,222,170
Gross Proceeds	$	860,591	$	13,197		$	873,788
Depreciation and Amortization	$	46,384	$	11,097		$	57,481
Interest Income	$	745	$	36		$	781
Interest Expense	$	18,680	$	1,601		$	20,281
Income from Equity Method Investees	$	367	$	—		$	367
Other Income/(Expense), Net	$	519	$	(8	)	$	511
Net Proceeds	$	595,526	$	5,866		$	601,392
Capital Expenditures	$	63,256	$	859		$	64,115

A-22

	For the Year Ended August 31, 2006
(In Thousands)	Sugar		Leasing			Consolidated
Net Revenue from External Customers	$	980,615	$	25,101		$	1,005,716
Gross Proceeds	$	663,909	$	13,040		$	676,949
Depreciation and Amortization	$	45,637	$	11,116		$	56,753
Interest Income	$	357	$	40		$	397
Interest Expense	$	15,565	$	3,531		$	19,096
Income from Equity Method Investees	$	537	$	—		$	537
Other Income/(Expense), Net	$	3,216	$	(115	)	$	3,101
Net Proceeds	$	440,337	$	4,754		$	445,091
Capital Expenditures	$	46,154	$	382		$	46,536

	For the Year Ended August 31, 2005
(In Thousands)	Sugar			Leasing			Consolidated
Net Revenue from External Customers	$	939,424		$	26,050		$	965,474
Gross Proceeds	$	586,754		$	14,033		$	600,787
Depreciation and Amortization	$	48,486		$	11,072		$	59,558
Interest Income	$	512		$	17		$	529
Interest Expense	$	13,982		$	5,188		$	19,170
Income from Equity Method Investees	$	1,402		$	—		$	1,402
Other Income/(Expense), Net	$	(863	)	$	(11	)	$	(874	)
Net Proceeds	$	368,920		$	4,340		$	373,260
Capital Expenditures	$	43,758		$	1,332		$	45,090

	As of August 31, 2007
(In Thousands)	Sugar		Leasing		Consolidated
Property and Equipment, Net	$	363,945	$	—	$	363,945
Assets Held for Lease, Net	$	—	$	129,795	$	129,795
Segment Assets	$	737,576	$	137,739	$	875,315

	As of August 31, 2006
(In Thousands)	Sugar		Leasing		Consolidated
Property and Equipment, Net	$	332,140	$	—	$	332,140
Assets Held for Lease, Net	$	—	$	140,041	$	140,041
Segment Assets	$	690,638	$	149,359	$	839,997

(13) FAIR VALUE OF FINANCIAL INSTRUMENTS:

The fair value of financial instruments is generally defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale. Quoted market prices are generally not available for the Company’s financial instruments. Fair values are based on judgments regarding anticipated cash flows, future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These

A-23

estimates involve uncertainties and matters of judgment, and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Long-Term Debt, Inclusive of Current Maturities - - Based upon current borrowing rates with similar maturities, the fair value of the long-term debt is approximately $210.9 million in comparison to the carrying value of $189.2 million.

Investments in CoBank, ACB and Investments in Marketing Cooperatives - The Company believes it is not practical to estimate the fair value of these investments without incurring excessive costs because there is no established market for these securities and equity interests, and it is inappropriate to estimate future cash flows which are largely dependent on future earnings of these organizations.

(14) INCOME TAXES:

Total income tax payments (refunds) were ($119,000); $290,000; and $336,000 for the years ended August 31, 2007, 2006 and 2005, respectively.

As of August 31, 2007, the Company had accumulated approximately $23.9 million of net operating loss carry-forwards for income tax reporting purposes. The net operating loss carry-forwards expire in the years 2012 through 2023. The Company’s net deferred tax liability included in Other Liabilities on the Company’s Balance Sheets as of August 31, 2007 and 2006 is reflected below:

(In Thousands)	2007		2006
Deferred Tax Assets related to non- patronage source temporary differences	$	13,600	$	14,100
Deferred Tax Liability related to non- patronage source temporary differences	19,600		19,200
Net Deferred Tax Liability	$	6,000	$	5,100

Income tax expense for the years ended August 31, 2007, 2006 and 2005 is as follows:

(In Thousands)	2007		2006		2005
Current Income Taxes	$	403	$	687	$	355
Deferred Income Taxes	900		1,000		900
Total Income Tax Expense	$	1,303	$	1,687	$	1,255

A reconciliation of the Company’s effective tax rates for the years ended August 31, 2007, 2006 and 2005 is shown below:

	2007		2006		2005
Federal tax expense at statutory rate	35.0	%	35.0	%	35.0	%
State tax expense at statutory rate	6.0	%	6.0	%	6.0	%
Payments to members	(40.8	)%	(40.7	)%	(40.5	)%
Other, net	—		—		(0.2	)%
Effective tax rate	0.2	%	0.3	%	0.3	%

A-24

(15) ENVIRONMENTAL MATTERS:

The Company is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control. The Company conducts an ongoing compliance program designed to meet these environmental laws and regulations. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. From time to time, however, the Company may be involved in investigations or determinations regarding non-material matters that may arise.

The Company’s Crookston, East Grand Forks and Moorhead, Minnesota factories have experienced hydrogen sulfide emissions from its water treatment ponds that have exceeded permissible limits. On July 19, 2007, the Company received a notice of violation from the Minnesota Pollution Control Agency (MPCA) related to emissions that occurred in fiscal 2005 and 2006. A penalty assessment is currently under consideration by the MPCA. The Company’s Crookston, East Grand Forks and Moorhead, Minnesota factories have also experienced hydrogen sulfide emissions from its water treatment ponds in fiscal 2007 that have exceeded permissible limits. While it is likely that the Company may be assessed penalties and/or fines related to these occurrences, as of the date of this report none have been assessed. Any potential penalties and/or fines are not expected to be material to the Company.

Capital expenditures will be required to prevent future occurrences of the emissions. The Company’s fiscal 2007 budget included capital expenditures of approximately $5.0 million for environmentally related projects at the Company’s factory locations. Expenditures in fiscal 2007 on these projects were approximately $1.0 million. The Company’s fiscal 2008 budget includes additional capital expenditures of approximately $1.0 million for environmentally related projects. The amount and timing of any additional capital expenditures that may be required is not currently known.

Two Administrative Penalty Orders were issued by the MPCA during 2007 for violation of the air emission permit at the Company’s East Grand Forks, Minnesota factory. The Orders required a total payment of $4,950. In July 2007, the Company also received a Compliance Monitoring Survey-Letter of Warning from the MPCA for the East Grand Forks and Moorhead, Minnesota factories. Corrective actions have been taken related these occurrences. A penalty may be assessed but is not expected to be substantial.

(16) LEGAL MATTERS:

Four administrative proceedings have been brought against the United States Department of Agriculture (USDA) seeking reversal of prior decisions regarding the determination and transfer of sugar marketing allocations made by the USDA. While the Company was not a party to any of these administrative proceedings, it was, solely or in coordination with other sugar processors, an intervenor in these administrative proceedings. Each of the proceedings has completed the administrative process and the decisions by the chief judicial officer of the USDA in each were such that the Company would not experience a reduction in its marketing allocations. An appeal of one of the decisions was subsequently filed by another company. The decision by the chief judicial officer of the USDA was upheld in this appeal by a decision of the United States District Court. The decision of the United States District Court has been appealed to the Ninth Circuit Court of Appeals. If this case is overturned, it could result in the Company experiencing a reduction in marketing allocations equal to the loss of approximately 25,000 acres in future crop years assuming no other related factors were to change.

A-25

EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
FOR FISCAL YEAR ENDED AUGUST 31, 2007

Item No.		Method of Filing
3.1	Restated Articles of Incorporation of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(i) from the Company’s Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
3.2	Restated By-laws of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(ii) from the Company’s Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
4.1	Restated Articles of Incorporation of American Crystal Sugar Company	See Exhibit 3.1
4.2	Restated By-laws of American Crystal Sugar Company	See Exhibit 3.2
10.1	Form of Operating Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(u) from the Company’s Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.2	Form of Member Control Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(v) from the Company’s Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.3	Registrant’s Senior Note Purchase Agreement	Incorporated by reference to Exhibit 10.24 from the Company’s Annual Report on Form 10-K for the year ended August 31, 1999
10.4	Registrant’s Senior Note Inter-creditor and Collateral Agency Agreement	Incorporated by reference to Exhibit 10.25 from the Company’s Annual Report on Form 10-K for the year ended August 31, 1999

E-1

10.5	Registrant’s Senior Note Restated Mortgage and Security Agreement	Incorporated by reference to Exhibit 10.26 from the Company’s Annual Report on Form 10-K for the year ended August 31, 1999
++10.6	Employment Agreement between the Registrant and James J. Horvath	Incorporated by reference to Exhibit 10.28 from the Company’s Annual Report on Form 10-K form the year ended August 31, 1999
10.7	Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency, dated April 4, 2000	Incorporated by reference to Exhibit 10.28 from the Company’s Form 10-Q for the quarter ended May 31, 2000
++10.8	Board of Directors Deferred Compensation Plan, dated June 30, 1994	Incorporated by reference to Exhibit 10.29 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2000
++10.9	Long Term Incentive Plan, dated June 23, 1999	Incorporated by reference to Exhibit 10.31 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2000
10.10	Uniform Member Sugar Marketing Agreement between the Registrant and United Sugars Corporation dated September 1, 2001.	Incorporated by reference to Exhibit 10.27 from the Company’s Form 10-Q for the quarter ended November 30, 2001
10.11	Uniform Member Marketing Agreement between the Registrant and Midwest Agri-Commodities Company dated September 1, 2001.	Incorporated by reference to Exhibit 10.28 from the Company’s Form 10-Q for the quarter ended November 30, 2001
10.12	Registrant’s Senior Note Purchase Agreement dated January 15, 2003	Incorporated by reference to Exhibit 10.29 from the Company’s Form 10-Q for the quarter ended February 28, 2003
10.13	Growers’ Contract (5-year Agreement) for the crop years 2003 through 2007	Incorporated by reference to Exhibit 10.30 from the Company’s Form 10-Q for the quarter ended February 28, 2003

E-2

+10.14	Beet Loading and Hauling Agreement between the Registrant and Transystems LLC for the crop years 2003 through 2007	Incorporated by reference to Exhibit 10.31 from the Company’s Form 10-Q for the quarter ended May 31, 2003
10.15	Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency, dated August 5, 2003	Incorporated by reference to Exhibit 10.30 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2003
10.16	Crop year 2005, 2006 and 2007 Sugarbeet Delivery Agreements between Sidney Sugars Incorporated and Growers	Incorporated by reference to Exhibit 10.25 from the Company’s Form 10-Q for the quarter ended May 31, 2005
++10.17	Amendment to Employment Agreement dated September 28, 2005 between the Company and James J. Horvath	Incorporated by reference to Exhibit 10.1 from the Company’s Form 8-K dated September 30, 2005
++10.18	Long Term Incentive Plan, dated August 24, 2005	Incorporated by reference to Exhibit 10.25 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2005
10.19	Term and Seasonal Loan Agreements between the Registrant and CoBank, ACB dated July 31, 2006	Incorporated by reference to Exhibit 10.24 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2006
10.20	Second Amendment to Amended and Restated Loan Agreement between the Registrant and CoBank, ACB dated November 3, 2006.	Incorporated by reference to Exhibit 10.25 from the Company’s Form 10-Q for the quarter ended November 30, 2006.
++10.21	Employment Agreement dated March 21, 2007 between the Registrant and David A. Berg.	Incorporated by reference to Exhibit 10.26 from the Company’s Form 10-Q for the quarter ended February 28, 2007.
10.22	Third Amendment to Amended and Restated Loan Agreement between the Registrant and CoBank, ACB dated April 2, 2007.	Incorporated by reference to Exhibit 10.22 from the Company’s Form 10-Q for the quarter ended May 31, 2007
10.23	Fourth Amendment to Amended and Restated Loan Agreement between the Registrant and CoBank, ACB dated July 25, 2007.	Filed herewith electronically.

E-3

10.24	Growers’ Contract (5-year Agreement) for the crop years 2008 through 2012	Filed herewith electronically.
21.1	List of Subsidiaries of the Registrant	Filed herewith electronically
31.1	Rule 13a-14(a)/15(d)-14(a) Certification of the Chief Executive Officer	Accompanying herewith electronically
31.2	Rule 13a-14(a)/15(d)-14(a) Certification of the Chief Financial Officer	Accompanying herewith electronically
32.1	Section 1350 Certification of the Chief Executive Officer	Accompanying herewith electronically
32.2	Section 1350 Certification of the Chief Financial Officer	Accompanying herewith electronically

+              Confidential treatment under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended, has been granted with respect to designated portions of this document.

++           A management contract or compensatory plan required to be filed with this report.

E-4

EX-10.23

Exhibit 10.23

FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT

between

AMERICAN CRYSTAL SUGAR COMPANY,

as Borrower,

and

CoBANK, ACB,

as Lender,

dated July 31, 2006

THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this “Fourth Amendment”) is dated to be effective as of July 25, 2007, and is by and between AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (“Borrower”), and CoBANK, ACB (“Lender”), and amends that certain Amended and Restated Loan Agreement dated July 31, 2006, as amended from time to time (the “Loan Agreement”). All capitalized terms not defined herein shall have the meanings set forth in the Loan Agreement.

RECITALS

The parties have agreed to modify certain terms and provisions of the Loan Agreement as more fully set forth in this Fourth Amendment.

NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party, the parties agree to amend the Loan Agreement in the following respects:

1.Defined Terms.

The following terms set forth in Section 1.1 of the Loan Agreement shall be amended and restated in their entirety:

“Existing Term Loan T04”:  As defined in Section 2.1(e).

“Revolving Loan Amount”:  An amount which shall not at any time be greater than Three Hundred Sixty Million Dollars ($360,000,000), as determined from time to time according to the terms of the Loan Agreement, or such lesser amount that may be designated by the Borrower in a written notice to the Lender, which lesser amount will be effective seven (7) days after the Lender’s receipt of such written notice.

“Term Letter of Credit Commitment Amount”:  Twenty Million Dollars ($20,000,000).

“Term Loan Availability Period”:  The period beginning on the Closing Date and ending on August 1, 2009.

“Term Loan T01 Amount”:  An amount which shall not at any time be greater than (i) Fifty-Eight Million Two Hundred Seventy-Six Thousand Seven Hundred Two Dollars ($58,276,702) through December 31, 2007, (ii) Forty-Eight Million Seven Hundred Seven Thousand Four Hundred Two Dollars ($48,707,402) effective as of January 1, 2008 through December 31, 2008; or (iii) Forty-One Million Nine Hundred Fifty-Two Thousand Six Hundred Two Dollars ($41,952,602) effective as of January 1, 2009, as determined from time to time according to the terms of the Loan Agreement.

“Term Loan T01NP Amount”:  An amount which shall not at any time be greater than (i) Seventeen Million Six Hundred Seventy-Five Thousand Nine Hundred Dollars ($17,675,900) through December 31, 2007, or (ii) Ten Million Two Hundred Forty-Five Thousand Two Hundred Dollars ($10,245,200) effective as of January 1, 2008, as determined from time to time according to the terms of the Loan Agreement.

“Term Loan T06 Amount”:  An amount which shall not at any time be greater than Fifty-Five Million Dollars ($55,000,000), as determined from time to time according to the terms of the Loan Agreement.

“Termination Date”:  The earliest of (a) August 1, 2009, or (b) the date on which the Revolving Commitments are terminated pursuant to Section 7.2 of the Loan Agreement.

The following terms set forth in Section 1.1 of the Loan Agreement shall be amended:

“Capitalization Ratio”:  When calculating the Capitalization Ratio, the cumulative non-cash Other Comprehensive Income (“OCI”) (determined in accordance with GAAP) effect of pension plan accounting on equity, not to exceed $25,000,000, may be excluded.

The following terms shall be added to Section 1.1 of the Loan Agreement:

“Term Loan T01NP Maturity Date”:  December 31, 2008.

“Term Loan T04 Amount”:  An amount which shall not at any time be greater than Sixty-One Million Dollars ($61,000,000), as determined from time to time according to the terms of the Loan Agreement.

“Term Note T04”:  The promissory note of the Borrower in the form of Exhibit A-5 hereto, evidencing the obligation of the Borrower to repay the Term Loan T04.

2.Section 2.1(c) of the Loan Agreement, Term Loan T01NP, shall be amended in the following respect:  As of the date of this Fourth Amendment, no further Advances will be made

2

under Term Loan T01NP, and any amounts repaid on Term Loan T01NP may not be reborrowed. The remaining provisions of Section 2.1(c) shall continue in full force and effect.

3.A new subsection (e) shall be added to Section 2.1 of the Loan Agreement as follows:

(e)Term Loan T04. The Lender has previously extended to the Borrower Term Loan T04 pursuant to that certain Non-Revolving Credit Supplement dated as of December 12, 2005, and numbered Z269T04B, in the original principal amount of $36,000,000, which has an unpaid principal balance of $36,000,000, and a maturity date of April 30, 2013. Term Loan T04 is subject to all of the terms and conditions of the Loan Agreement, except to the extent any provision of the Loan Agreement is in conflict with any provision of the Non-Revolving Credit Supplement, in which event the applicable Non-Revolving Credit Supplement shall control with respect to such provision. Subject to such terms and conditions, Term Loan T04 shall be increased up to the Term Loan T04 Amount, for the purpose of transferring Borrower’s Obligations under all outstanding Term Letters of Credit issued under Term Loan T06 to Term Loan T04, and for the purpose of issuing additional Term Letters of Credit from time to time in accordance with the Loan Agreement.

4.A new subsection (f) shall be added to Section 2.1 of the Loan Agreement as follows:

(f)Increase in Loans. At any time prior to the Termination Date, the Borrower may request that a Loan be increased by up to the aggregate amount of $100,000,000. Such request shall be made in a written notice given to the Lender by the Borrower not less than twenty (20) Banking Days prior to the proposed effective date of such increase, which notice (a “Loan Increase Notice”) shall specify the amount of the proposed increase in the Loan and the proposed effective date of such increase. The proposed increase shall be in an amount not less than $25,000,000. The Lender shall have no obligation to increase a Loan pursuant to a Loan Increase Notice. The Lender shall notify the Borrower on or before the Banking Day immediately prior to the proposed effective date to confirm the amount of the increase in a Loan. Any increase in a Loan shall be subject to the following conditions precedent:  (i) as of the date of the Loan Increase Notice and as of the proposed effective date of the increase in the Loan, all representations and warranties of the Borrower in the Loan Agreement shall be true and correct in all material respects as though made on such date and no event shall have occurred and then be continuing which constitutes a Default or an Event of Default; (ii) the Borrower and the Lender shall have executed a Commitment and Acceptance (“Commitment and Acceptance”) substantially in the form of Exhibit F hereto; and (iii) the Borrower and the Lender shall otherwise have executed and delivered such other instruments and documents as may be required hereunder or that the Lender shall have reasonably requested in connection with such increase. In the event any provision of a Commitment and Acceptance shall be inconsistent with any provisions of the Loan Agreement, the Loan Agreement shall govern. Upon satisfaction of the conditions precedent to any increase in a Loan, the Lender shall promptly advise the Borrower of

3

the effective date of such increase. Nothing contained herein shall constitute, or otherwise be deemed to be, a commitment on the part of the Lender to increase a Loan.

5.Section 2.2 of the Loan Agreement, Existing Loans, shall be amended in the following respect:  All references in Section 2.2 to “Term Loan T04” shall be deleted, it being understood and agreed that Term Loan T04 shall hereafter be defined as set forth in Section 2.1(e) of the Loan Agreement. The remaining provisions of Section 2.2 shall continue in full force and effect.

6.Section 2.7(b) of the Loan Agreement, Repayment; Term Loan T01, shall be amended and restated to read in full as follows:

(b)Term Loan T01. The principal of Term Loan T01 shall be payable as follows:  On December 31, 2007, a principal payment shall be due in the amount of $9,569,300; on December 31, 2008, a principal installment shall be due in the amount of $6,754,800; on December 31, 2009, a principal payment shall be due in an amount equal to one-third (1/3) of the outstanding principal balance of Term Loan T01 as of the last day of the Term Loan Availability Period; the remaining principal balance shall be payable in two equal annual installments due on December 31, 2010 and December 31, 2011, and any amount of principal or interest remaining unpaid with respect to Term Loan T01 on the Term Loan Maturity Date shall be immediately due and payable on such date.

7.Section 2.7(c) of the Loan Agreement, Repayment; Term Loan T01NP, shall be amended and restated to read in full as follows:

(c)Term Loan T01NP. The principal of Term Loan T01NP shall be payable in one annual installment in the amount of $7,430,700 on December 31, 2007, and any amount of principal or interest remaining unpaid with respect to Term Loan T01NP on the Term Loan T01NP Maturity Date shall be immediately due and payable on such date.

8.Section 2.7(d) of the Loan Agreement, Repayment; Term Loan T06, shall be amended and restated to read in full as follows:

(d)Term Loan T06. The unpaid principal of Term Loan T06 shall be payable as follows:  On December 31, 2009, a principal payment shall be due in an amount equal to one-third (1/3) of the outstanding principal balance of Term Loan T06 as of the last day of the Term Loan Availability Period; the remaining principal balance shall be payable in two equal annual installments due on December 31, 2010 and December 31, 2011, and any amount of principal or interest remaining unpaid with respect to Term Loan T06 on the Term Loan Maturity Date shall be immediately due and payable on such date.

9.Clause (iv) of Section 2.9 of the Loan Agreement, Letters of Credit, shall be amended and restated to read in full as follows:  (iv) the aggregate amount of all issued and outstanding Term

4

Letters of Credit shall not exceed $20,000,000. The remaining provisions of Section 2.9 shall continue in full force and effect.

10.Section 2.14(a) of the Loan Agreement, Loan Fees, shall be amended by adding the following:

The Borrower shall pay to the Lender (i) additional Revolving Loan Fees in the amount of $180,000.00 with respect to the Revolving Loan Amount, and (ii) additional Term Loan Fees in the amount of $29,138.00 with respect to the Term Loan T01, in the amount of $13,000.00 with respect to the Term Loan T04, and in the amount of $27,500.00 with respect to the Term Loan T06. Such fees are payable on the date of this Fourth Amendment and are not refundable to the Borrower.

11.Section 2.14(c) of the Loan Agreement, Letter of Credit Fees, shall be amended by adding the following:

Notwithstanding the provisions of Section 2.1(e) of the Loan Agreement, it is hereby understood and agreed that Letter of Credit Fees set forth in Section 2.14(c) shall apply to all Letters of Credit issued and outstanding under Term Loan T04, including Letters of Credit originally issued under Term Loan T04 pursuant to the Non-Revolving Credit Supplement and Letters of Credit originally issued under Term Loan T06 which have been transferred to Term Loan T04.

12.Section 5.1(g) of the Loan Agreement shall be deleted, eliminating the requirement to provide periodic financial statements of Crystech.

13.Section 6.15, Net Working Capital, Section 6.16, Capitalization Ratio, and Section 6.17, Interest Coverage Ratio, shall be amended as follows:  For purposes of calculating Net Working Capital, the Capitalization Ratio and the Interest Coverage Ratio, amounts attributable to Crystech shall no longer be excluded.

14.Representations and Warranties. The Borrower restates, represents and warrants the representations and warranties set forth in Article IV of the Loan Agreement as of the date of this Fourth Amendment.

15.Miscellaneous. All references in the Loan Agreement to “Required Lender” shall be understood to mean “Lender”.

16.Compliance Certificate. The form of Compliance Certificate shall be replaced by Exhibit D-1 attached hereto and made a part hereof.

17.Incorporation of Loan Agreement. This Fourth Amendment shall be an integral part of the Loan Agreement, and all terms of the Loan Agreement are hereby incorporated in this Fourth Amendment by reference, and all terms of this Fourth Amendment are hereby incorporated into the Loan Agreement as if made an original part thereof. Except as modified herein, all terms and

5

provisions of the Loan Agreement shall continue in full force and effect, but to the extent the terms of this Fourth Amendment conflict with the Loan Agreement, the terms of this Fourth Amendment shall control.

IN WITNESS WHEREOF, the parties have executed this Fourth Amendment to be effective as of the day and year first above written.

AMERICAN CRYSTAL SUGAR COMPANY,
a Minnesota cooperative corporation
By	/s/ Samuel S. M. Wai
Name	Samuel S. M. Wai
Title	Treasurer
CoBANK, ACB
By	/s/ Michael Tousignant
Name	Michael Tousignant
Title	Vice President

6

Exhibit A-5

Form of Term Note T04

Attached

TERM NOTE T04

$61,000,000.00	July 25, 2007
	Denver, Colorado

FOR VALUE RECEIVED, AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (the “Borrower”), hereby promises to pay to the order of CoBANK, ACB (the “Lender”), in lawful money of the United States of America in Immediately Available Funds (as such term and each other capitalized term used herein are defined in the Loan Agreement hereinafter referred to), the principal amount of Sixty-One Million and 00/100 Dollars ($61,000,000.00), or such lesser amount as has actually been advanced under the Term Loan T04, and interest in like funds on the unpaid principal amount hereof from time to time outstanding, at the rates and time set forth in that certain Amended and Restated Loan Agreement dated July 31, 2006, by and between the Borrower and the Lender, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time (the “Loan Agreement”).

Principal and interest shall be payable as set forth in the Loan Agreement, and all principal and interest remaining unpaid on the Term Loan Maturity Date shall be immediately due and payable.

This note is one of the Notes referred to in the Loan Agreement and is subject to and governed by the Loan Agreement. This note is secured, and its maturity is subject to acceleration, in each case upon the terms provided in the Loan Agreement.

Should any Event of Default occur as provided for in the Loan Agreement, all principal and interest outstanding hereunder may be declared immediately due and payable in accordance with the Loan Agreement. The Borrower and all guarantors and endorsers, for themselves, their legal representatives, successors and assigns, hereby severally waive presentment for payment, protest and demand, notice of protest, demand and dishonor and nonpayment of this note, and consent that the holder may extend the time of payment or otherwise modify the terms of payment of any part or the whole of the indebtedness evidenced by this note, and such consent shall not alter or diminish the liability of the Borrower or said guarantors or endorsers. The undersigned agrees to pay all costs and expenses of collection, including reasonable attorney’s fees.

The interest rate shall at no time exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved in accordance with applicable law, and the rate of interest payable hereunder shall be limited to the Maximum Rate.

THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF COLORADO WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

THE UNDERSIGNED AND THE HOLDER (BY ITS ACCEPTANCE HEREOF) IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

AMERICAN CRYSTAL SUGAR COMPANY,
a Minnesota cooperative corporation
By:	/s/ Samuel S.M. Wai
Its:	Treasurer

2

Exhibit D-1

Form of Compliance Certificate

Attached

CoBANK, ACB

COMPLIANCE CERTIFICATE – CERTIFIED INTERIM FINANCIALS

This certificate is being furnished to CoBANK, ACB (“CoBank”) to induce CoBank to make and/or continue to make advances to the Company and to comply with and demonstrate compliance with the terms, covenants, and conditions of the Company’s Master Loan Agreement and all Promissory Note and Supplements thereto. The undersigned hereby certifies that: (i) this certificate was prepared from the books and records of the Company, is in agreement with them, and is correct to the best of the undersigned's knowledge and belief;  (ii) no “Event of Default” (as defined in the Master Loan Agreement) or event which, with the giving of notice and/or the passage of time and/or the occurrence of any other condition, would ripen into an Event of Default (a “Potential Default”) shall have occurred and be continuing, except as disclosed below; and (iii) based upon the undersigned ‘s review of the attached interim financial statement(s) dated as of                                           , to the best of the undersigned’s  knowledge, the attached financial statement(s) are accurate and complete for the period reflected.

This certificate is attached to and made a part of the Company’s interim financial statements for the reporting period ending                 .

	Required	Actual
Net Working Capital 1.Current Assets as measured in accordance with GAAP 2.Current Liabilities as measured in accordance with GAAP 3.Net Working Capital (1. minus 2.)	Minimum Net Working Capital required for fiscal quarters other than fiscal year end = $15,000,000 Minimum Net Working Capital required for fiscal year end = $35,000,000	1. 2. 3.
Interest Coverage Ratio 1.Average Net Funds Generated which is the sum of the following for the most recent 12 Fiscal Quarters. ·Add: Unit Retains; Depreciation and amortization; Net income from non-member business and Member business tax timing differences; Decrease in investments in other cooperatives (excluding subsidiaries); and Net revenue from sale of stock. ·Minus: Increase in investments in other cooperatives (excluding subsidiaries); Net loss from non-member business and member business tax timing differences; Provision for income tax; and Members’ investment retirements. 2.Average Interest Expense defined as the total interest expense of the Company and its Subsidiaries (including, without limitation, interest expense on capital leases) and fees and other charges payable with respect to all Debt, all determined on a consolidated basis in accordance with GAAP for the most recent 12-Fiscal Quarters. 3.Interest Coverage Ratio (Sum of 1. and 2., divided by 2.)	Maintain at all times, and measured as of the end of each Fiscal Quarter, a minimum ratio of Average Net Funds Generated plus Average Interest Expense to Average Interest Expense of at least 2.5:1.0.	1. 2. 3.

	Required	Actual
Long Term Debt to Capitalization 1.Long Term Debt (excluding current maturities) calculated in accordance with GAAP 2.The sum of Long Term Debt plus Equity as determined in accordance with GAAP 3.Long Term Debt to Capitalization (1. divided by 2.) Note:  For purposes of this calculation the long term debt and equity associated with the consolidation of Pro Gold LLC  are to be excluded.	Maintain at all times and measured as of the end of each Fiscal Quarter the ratio of Long Term Debt divided by the sum of Long Term Debt plus Equity of no greater than fifty-five percent (55%).	1. 2. 3.
Leverage Ratio ( and Term Performance Pricing) 1.Long Term Debt (excluding current maturities) calculated in accordance with GAAP 2.Plus or minus the difference between actual working capital and $35,000,000 3.Total members investments 4.Estimated unit retains 5.Leverage Ratio (The sum of 1. plus or minus 2. divided by the sum of 3. plus 4. )		1. 2. 3. 4. 5. Based upon the previous fiscal quarter’s Leverage Ratio, the Company is entitled to the following change in the LIBOR and TREASURY Margins:

The above calculations and ratios are to be determined on a consolidated basis in accordance with Section 10 of the Master Loan Agreement (which excludes the financial results of ProGold from such calculations and ratios).

AMERICAN CRYSTAL SUGAR COMPANY
(“Company”)

  Authorized Signature

  Title

  Date

Exhibit F

Commitment and Acceptance

To be provided

EX-10.24

Exhibit 10.24

FIVE YEAR AGREEMENT

BETWEEN

(Shareholder)
Growing Unit:	and	Shareholder:
AMERICAN CRYSTAL SUGAR COMPANY
(Company)

1.PLANTING AND DELIVERY OBLIGATIONS.  Shareholder agrees during the Initial Term and any Renewal Term hereof to prepare land, plant, replant, cultivate, harvest and deliver, the number of acres of sugarbeets equal to the number of Preferred Shares of Company then owned by Shareholder, subject to the provisions of Sections 2 and 3 of this Agreement. Shareholder agrees to replant any sugarbeets that are lost due to flooding, weather conditions or any other cause, provided that such replanting can be reasonably accomplished on or before June 10 of the then current crop year. Land to be used for sugarbeet production, cultural and harvest practice requirements, and other matters shall be specified by annual contract to be entered into between Company and Shareholder as a supplement to this Agreement (the “Annual Contract”). Company shall not be obligated to purchase sugarbeets, and Shareholder agrees to destroy prior to August 15, or such other date specified by the Company and communicated to Shareholder, sugarbeets from all acres planted in excess of that contracted pursuant to this Agreement. Company hereby reserves the right to disapprove of any field proposed to be used by a shareholder to grow sugarbeets if in the judgment of Company the field is not appropriate for sugarbeets due to disease, soil type, drainage conditions, or other factors. Shareholder agrees to abide by any policies that may be established from time to time by Company related to rotation, destruction of damaged or diseased sugarbeets, and/or other agronomic and operational matters.

2.TOLERANCES.  The total number of acres of sugarbeets to be planted by Shareholder shall be subject to overplant and underplant tolerances as established from time to time by Company pursuant to this Agreement. Shareholder hereby acknowledges and agrees that said tolerances may be established and/or modified from time to time by Company as determined to be appropriate to respond to planting, crop conditions, and/or government imposed marketing allocations. The initial tolerance and any modification thereof shall be effective upon communication of the same to Shareholder by Company, and the Annual Contract shall be deemed amended to the extent of the modified tolerance.

3.PRORATION.  Company hereby reserves the right to prorate delivery rights with regard to any crop to be delivered hereunder. Any such proration shall be made by Company after a determination by the Board of Directors that Company may not be able to economically process the entire crop for any reason, including, but not limited, to government imposed marketing allocations or a larger than anticipated crop yield. A proration may be accomplished on the basis of a percentage of stock acres, planted acres or any other means determined by the Board of Directors to be fair and equitable. Any proration shall be communicated to, and applied against, all shareholders of Company on a uniform and equitable basis as determined by the Board of Directors. The Annual Contract shall be deemed modified to the extent of any such proration.

4.PREVENTED PLANTING.  Shareholder shall be unconditionally obligated to plant the sugarbeet crop unless such planting is prevented as a result of acts of God or other causes beyond the reasonable control of Shareholder, as provided in Section 15 of this Agreement. If, after making all reasonable efforts, Shareholder has been prevented from planting the sugarbeet crop on or before June 1 of the applicable crop year, or such later date as may be established from time to time under federal crop insurance policies to enable a sugarbeet grower to receive prevented planting coverage at an unreduced level, (the “Prevented Planting Date”), Shareholder shall be relieved of its obligation to plant such sugarbeet crop. Shareholder may elect to plant the sugarbeet crop at any time after the Prevented Planting Date. A determination as to whether Shareholder is prevented from planting shall be mutually determined by Shareholder and a representative of Company based on Shareholder’s planting conditions for the period leading up to and including the Prevented Planting Date.

5.TERM.  The initial term of this Agreement shall be for the crops to be planted in 2008, 2009, 2010, 2011 and 2012 (the “Initial Term”). This Agreement shall automatically renew for successive five (5) crop year terms (“Renewal Terms”) unless one party provides written notice to the other party on or before August 31 of the final crop year of the then current Initial or Renewal Term, of such party’s intent to terminate this Agreement. The provisions of this Agreement that are applicable to the final crop year of the then current Initial or Renewal Term shall remain in effect following notice of termination until performance has been completed by both parties with respect to such final crop year.

6.PAYMENT FOR SUGARBEETS.  Payment for sugarbeets delivered each crop year shall be made as set forth in this Section 6 (using the definitions set forth in Section 18).

(a)The Gross Beet Payment for sugarbeets delivered shall be the “per hundredweight value of recovered sugar” multiplied by the number of hundredweight of “recovered sugar” contained in the sugarbeets delivered by Shareholder. Shareholder’s share of “agri-products revenue” will be added while Shareholder’s share of “operating costs” will be subtracted, both allocated on a per “net ton of sugarbeets delivered” basis. Company reserves the right to establish a marketing allocation adjustment program to provide for equitable treatment among shareholders from year to year as a result of limitations on production due to government imposed marketing allocations. The costs and/or adjustments associated with this program will be used to determine the Gross Beet Payment in a manner consistent with the program, as approved by the Board of Directors.

(b)The following allowances, costs and deductions, if applicable, will be used in adjusting Shareholder’s Gross Beet Payment to Shareholder’s Net Beet Payment:

(i)	Hauling Allowance Program: Company reserves the right to establish a hauling allowance program and in connection therewith to allocate the cost of the hauling allowance program among shareholders of Company in a manner consistent with the program as approved from time to time by the Board of Directors.
(ii)	Pre-Pile Quality Premium Program: Company reserves the right to establish a pre-pile quality premium program as partial compensation to shareholders for the delivery of sugarbeets prior to the commencement of the piling campaign. The cost of this program will be shared equally each crop year on a per “net ton of sugarbeets delivered” basis by all shareholders who have delivered sugarbeets to Company.
(iii)	Minimum Payment Allowance Program: Company reserves the right to establish a minimum payment allowance program. The cost of this program will be shared equally each crop year on a per “net ton of sugarbeets delivered” basis by all shareholders who have delivered sugarbeets to Company.
(iv)	Tare Incentive Program: Company reserves the right to establish a tare incentive program to encourage growers to reduce tare. The cost of this program will be allocated among shareholders of Company in a manner consistent with the program, as approved by the Board of Directors.
(v)	Unit Retain: A unit retain may be declared by the Board of Directors and the amount of such unit retain shall be deducted from the final payment to be made for sugarbeets, and Company may deduct the estimated unit retain from the periodic payments to be made pursuant to Section 7 of this Agreement. Company reserves the right to determine the tax treatment of any unit retain at a date subsequent to the date that the amount of the unit retain is declared by the Board of Directors.

(c)Company reserves the right to establish a program to encourage timely harvest by shareholders. The charges associated with this program will be allocated among shareholders in a manner consistent with the program, as approved by the Board of Directors, and will be reflected as an adjustment to one or more of the payments to be made to Shareholder under this Agreement.

(d)Company reserves the right to establish a freight charge program to recover certain charges associated with the transportation of sugar beets. The freight adjustment shall be charged to shareholders of Company in a manner consistent with the program as approved from time to time by the Board of Directors and, will be reflected as an adjustment to one or more of the payments to be made to Shareholder under this Agreement.

(e)Company reserves the right to establish a program to encourage shareholders to comply with pre-pile delivery policies. The charges associated with this program will be allocated among shareholders in a manner consistent with the program, as approved by the Board of Directors, and will be reflected as an adjustment to one or more of the payments to be made to Shareholder under this Agreement.

7.PAYMENT SCHEDULE. Payment for sugarbeets delivered shall be made as follows:

(a)An initial payment shall be made on or about November 15. Such payment shall be sixty-five percent (65%) of Company’s then current estimate of Shareholder’s Net Beet Payment for that crop year.

(b)A second payment will be made on or about March 31. Such payment shall be an amount which will bring that payment plus the November payment to ninety percent (90%) of Company’s then current estimate of Shareholder’s Net Beet Payment for that crop year.

(c)The final payment, including any portion thereof designated as a patronage dividend, which together with the prior payments shall equal one hundred percent (100%) of the Net Beet Payment, shall be made no later than 15 days after the approval of the Company’s audited financial statements for the fiscal year during which the crop was processed.

Shareholder may from time to time request that Company deduct certain amounts from the payments to be made hereunder to satisfy payment obligations to third parties. Company, at its sole discretion, reserves the right to approve the form and content of such requests. To the extent Company elects to honor such request(s), Shareholder shall indemnify and hold the Company harmless from all losses, costs, and damages (including attorneys’ fees and costs) incurred by Company as a result of payments to a third party.

THE UNDERSIGNED REPRESENTS THAT HE/SHE IS AN AUTHORIZED REPRESENTATIVE OF SHAREHOLDER AND THAT HE/SHE HAS THE AUTHORITY TO BIND SHAREHOLDER TO THE TERMS OF THIS AGREEMENT.

Dated this        day of                                       ,
AMERICAN CRYSTAL SUGAR COMPANY
By:	By:
Its:	By:
	Its:

Shareholder hereby acknowledges and agrees that Company may issue patronage distributions and/or unit retains pursuant to the provisions of the Company’s Bylaws, which patronage distributions and unit retains may be qualified or nonqualified pursuant to 26 U.S.C. 1388 (Internal Revenue Code) for regular and/or alternative minimum tax purposes. Shareholder hereby agrees that the amount of any qualified patronage distribution and/or unit retain will be taken into account by Shareholder at its stated dollar amount in the manner provided in 26 U.S.C. 1385 for regular and alternative minimum tax purposes, and will be reported on Shareholder’s income tax return for the taxable year in which the qualified written notice of such distribution or unit retain is received, all as more particularly described in the Company’s Bylaws.

8.BREACH AND REMEDIES.  Shareholder agrees to abide by the Articles of Incorporation and the Bylaws of Company, to comply with all applicable federal, state and local laws, ordinances, regulations and rulings, as well as Company’s operational and agricultural regulations and policies (collectively referred to herein as “Applicable Law and Policy”). Shareholder acknowledges and agrees that Shareholder is required, pursuant to this Agreement, the Annual Contract, and the Bylaws of Company, to grow and deliver the sugarbeet crop to Company in each year at the times specified by Company. Any one or more of the following shall constitute a breach of this Agreement by Shareholder: (i) the failure of Shareholder to plant, grow and deliver said crop to Company; (ii) the failure of Shareholder to comply with Applicable Law and Policy, (iii) the failure of Shareholder to comply with any provision of this Agreement, or (iv) the breach by Shareholder of any other agreement with Company. Upon a breach of this Agreement, the Shareholder may be subject to one or more of the following remedies as determined by Company:

(a)Expulsion as a member of Company;

(b)Forfeiture of Shareholder’s Common Stock in Company and qualification to be a preferred shareholder of Company;

(c)Termination of this Agreement and the right to deliver sugarbeets to Company for processing;

(d)Payment of liquidated damages to Company, which liquidated damages are hereby declared and stated to be an amount equal to Shareholder’s share of Company fixed costs for processing of the crop; and

(e)Any other legal or equitable remedy that may be available to Company under applicable law or as otherwise mutually agreed upon by Shareholder and Company.

9.SOIL TESTS.  Shareholder agrees to undertake and conduct soil testing on an annual basis on all land Shareholder utilizes for growing of sugarbeets pursuant to this Agreement. Shareholder further agrees to report and make available the results of said soil tests to the agricultural department of Company, together with information as to the amounts and kinds of fertilizer applied to the soil tested.

10.AGRICULTURE PRACTICES.  Shareholder agrees to plant only those seed varieties that have been approved by Company for the then current crop year. Shareholder agrees that it shall use no pesticide, chemical or other substances in a manner inconsistent with product labels; or that could result in any residue in or on sugarbeets grown for Company under this Agreement, or in any sugar or by-products produced from such sugarbeets, beyond the limits permitted by law or governmental regulations. Shareholder acknowledges and agrees that Company shall have the right to reject and refuse delivery of any sugarbeets to which have been applied, or which have been grown on ground to which has been applied, any unauthorized, non-registered, non-approved or prohibited pesticide, chemical or other substance. Shareholder further acknowledges and agrees that Company’s right to reject or refuse delivery of any of said sugarbeets may be invoked by Company at its sole option, regardless of whether or not use of, or application of, an unauthorized, non-registered, non-approved, or prohibited pesticide, chemical or other substance results in, or may result in, a residue in or on the sugarbeets grown, or sugar or by-products produced from such sugarbeets. Shareholder hereby grants Company (and its employees and agents) the right to enter the land upon which sugarbeets are being grown for the purpose of inspecting and taking samples of such sugarbeets to verify compliance with the terms of this Agreement.

11.INDEMNIFICATION.  Shareholder agrees to hold harmless and indemnify Company and all shareholders of Company from any and all losses, costs, or damages (including attorneys’ fees and costs) Company or its shareholders may incur as a result of Shareholder (i) delivering sugarbeets to Company grown from non-approved seed varieties, or to which have been applied, or which have been grown on ground upon or to which any unauthorized, non-registered, non-approved or prohibited pesticide, chemical or other substance has been applied; or (ii) breaching any provision of this Agreement.

12.DELIVERY OF SUGARBEETS.  Delivery of sugarbeets shall be made by Shareholder at such times, in such quantities, and to such receiving stations as may be designated by Company.

(a)Title and all risk of loss to said sugarbeets shall be and remain with Shareholder until such time as Shareholder completes delivery to Company at the designated receiving station, at which time title and risk of loss shall pass to Company. The sugarbeets shall be protected from sun and frost between the time of harvest and the time of delivery, including sugarbeets that are loaded on truck. Company has the option of rejecting any diseased, frozen or damaged sugarbeets, sugarbeets having less than 12% sugar or less than 80% purity, sugarbeets that, in Company’s opinion, are not suitable for storage or for the manufacture of sugar, sugarbeets as to which, in Company’s opinion, the terms and conditions of this Agreement have not been properly complied with, or for any other bona fide reason.

(b)All sugarbeets delivered shall be properly defoliated and free from excess dirt, stones, trash and other foreign substances of any kind which might interfere with handling and processing at Company’s factories. All sugarbeets shall be subject to a deduction for tare. Tare determination, sugar percentage, and sugar loss to molasses shall be determined at quality laboratories operated by Company.

(c)Notwithstanding anything to the contrary herein, the representations and warranties made by Shareholder relative to the sugarbeets shall continue following the delivery of the sugarbeets and the resulting transfer of the risk of loss to Company.

13. SHAREHOLDER INDEBTEDNESS TO COMPANY.  It is agreed that liquidated damages arising under Section 8 of this Agreement, the amount charged for all sugarbeet seed purchased from Company by Shareholder together with any related technology fees, and any and all other indebtedness to Company by Shareholder, whether due or not, shall constitute a debt which Company shall have the right to collect as it would any other contractual obligation. Any such amount or indebtedness that is due and payable or that hereafter may become due and payable to Company from Shareholder shall become and remain a first priority lien on the crop of sugarbeets to be grown and may, if not previously paid by Shareholder, be deducted by Company from any payments from Company to Shareholder that shall become due under this Agreement or any subsequent agreement between Company and Shareholder. Shareholder agrees to repay Company, at the time of Shareholder’s initial beet payment for each crop year, all such amounts or indebtedness, together with interest at a rate to Shareholder as may be set by Company, but not to exceed the highest rate allowed by law. Shareholder hereby grants Company a security interest in any beet payments to be made to, or unit retains held in the name of Shareholder, for purposes of securing payment of such indebtedness. Notwithstanding any other remedy which may be available, Company shall have the right, exercisable at its sole option, to offset any indebtedness to Company against the beet payments to be made to Shareholder hereunder and/or unit retains held in the name of Shareholder. Company may terminate this Agreement upon ten (10) days written notice in the event Shareholder is, as of April 1 of any crop year during the term hereof, in default on any payment obligation owed to Company

14.NO LIABILITY.  In no event shall Company be liable to Shareholder for partial or complete failure of crop or for any injury or damage to sugarbeets prior to the time of delivery to Company.

15.FORCE MAJEURE.  Fire, strikes, accidents, acts of God and the public enemy, or other causes beyond the reasonable control of the parties which prevent Shareholder from the performance of this Agreement, or Company from utilizing the sugarbeets contracted for in the manufacture of sugar, shall excuse the respective parties from the performance of this Agreement.

16.BINDING EFFECT.  Subject to the limitations set forth in the Articles of Incorporation and Bylaws of Company, this Agreement shall be binding upon Shareholder, its heirs, legal representatives, successors and permitted assigns; and upon Company, its successors and assigns. This Agreement shall not be transferred or assigned by Shareholder without written consent of Company. No agent of Company has any authority to change, waive, or modify any of the terms or provisions of this Agreement.

17.AMENDMENT.  Company reserves the right to amend any provisions of this Agreement as follows:

(a)This Agreement may be amended by a resolution approved by the Board of Directors to the extent that such amendment does not have material adverse effect on the shareholders of Company, taken as a whole. Such amendment shall be effective upon written notice to Shareholder.

(b)This Agreement may be amended by a resolution approved at any regular or special meeting of shareholders of Company at which a quorum is registered as being present or represented by mail vote, by a majority of shareholders so present or represented by mail vote, where the notice of such meeting contains a statement of the proposed amendment.

18.DEFINITIONS.  The following definitions shall apply with respect to terms used herein:

(a)The “per hundredweight value of recovered sugar” shall be the “net selling price per hundredweight of sugar”, as hereinafter defined, recovered from that year’s crop, adjusted for the difference between the opening inventory book value and its actual net selling price, and adjusted by valuing the closing inventory at its estimated net realizable value.

(b)“Recovered sugar” contained in the sugarbeets delivered by Shareholder shall be determined by Company deducting  from gross sugar (i) sugar loss to molasses on a fresh beet basis as determined by Company, and (ii) Shareholder’s share of other sugar losses incurred in the storage and processing of the sugarbeets, allocated on a per “net ton of sugarbeets delivered” basis, and increased by (iii) Shareholder’s share of additional sugar recovered through the molasses desugarization process on a per “net ton of sugarbeets delivered” basis.

(c)The “net selling price per hundredweight of sugar” sold shall be determined by deducting from the gross sales price all such charges and expenditures as are regularly and customarily deducted from such gross sales price of sugar in accordance with Company’s system of accounting used to determine the “net selling price of sugar” sold.

(d)“Agri-products revenue” shall be determined by using the net selling price of pulp, molasses, and any other by-product produced by Company, of that crop year, as determined in accordance with Company’s system of accounting.

(e)Operating costs shall be determined in accordance with Company’s system of accounting, and shall include all costs and expenses not otherwise accounted for with respect to business done with members, and shall be net of results from beet seed and other miscellaneous member business.

(f)“Net ton of sugarbeets delivered” shall mean a gross ton of sugarbeets delivered, less the tare weight of dirt, rocks, weeds, and other foreign materials, as determined by Company.

2

EX-21.1

Exhibit 21.1

List of Subsidiaries of the Company:

Name of Entity	State of Incorporation
United Sugars Corporation	Minnesota
Midwest Agri-Commodities Company	Minnesota
ProGold Limited Liability Company	Minnesota
Sidney Sugars Incorporated	Minnesota
Crab Creek Sugar Company	Minnesota

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, David A. Berg, certify that:

1.I have reviewed this report on Form 10-K of American Crystal Sugar Company (the registrant);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)all significant deficiencies and material weaknesses in the design or operation of the internal controls over financial reporting which are likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 29, 2007	/s/ DAVID A. BERG
	David A. Berg
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Thomas S. Astrup, certify that:

1.I have reviewed this report on Form 10-K of American Crystal Sugar Company (the registrant);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)all significant deficiencies and material weaknesses in the design or operation of the internal controls over financial reporting which are likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 29, 2007	/s/ Thomas S. Astrup
	Thomas S. Astrup
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATE PURSUANT TO SECTION 906

OF SARBANES – OXLEY ACT OF 2002

The undersigned, David A. Berg, Chief Executive Officer of American Crystal Sugar Company, (the “Company”), does hereby certify that to his knowledge:

1.The Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2007 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 29th day of November, 2007.

By:		/s/ David A. Berg
	Name: David A. Berg
	Title: Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATE PURSUANT TO SECTION 906

OF SARBANES – OXLEY ACT OF 2002

The undersigned, Thomas S. Astrup, Chief Financial Officer of American Crystal Sugar Company, (the “Company”), does hereby certify that to his knowledge:

1.The Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2007 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 29th day of November, 2007.

By:		/s/ Thomas S. Astrup
	Name: Thomas S. Astrup
	Title: Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.