10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2017

or

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

Commission File No.:  000-53957

GOLDEN GROWERS COOPERATIVE

(Exact name of registrant as specified in its charter)

Minnesota	27-1312571
(State of incorporation)	(I.R.S. Employer Identification Number)

1002 Main Avenue W, Suite 5 West Fargo, ND 58078	701-281-0468
(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:  Units

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

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

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  ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒   No  ☐

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. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one)

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extension transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

As of March 08, 2018, the registrant had 15,490,480 Units issued and outstanding.  There is no established public market for the registrant’s Units.  Although there is a limited, private market for the registrant’s Units, 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 Units held by non-affiliates.

DOCUMENTS INCORPORATED BY REFERENCE:  NONE

TABLE OF CONTENTS

		Page
Item 1.	BUSINESS	1
Item 1A.	RISK FACTORS	5
Item 1B.	UNRESOLVED STAFF COMMENTS	8
Item 2.	PROPERTIES	8
Item 3.	LEGAL PROCEEDINGS	8
Item 4.	MINE SAFETY DISCLOSURES	8
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	8
Item 6.	SELECTED FINANCIAL DATA	9
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA	13
Item 9.	CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOCUNTING AND FINANCIAL DISCLOSURE	13
Item 9A.	CONTROLS AND PROCEDURES	14
Item 9B.	OTHER INFORMATION	14
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	15
Item 11.	EXECUTIVE COMPENSATION	18
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	20
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	21
Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	22
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	23
Item 16.	10-K SUMMARY	24

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PART I

This report contains forward-looking statements and information based upon assumptions by Golden Growers Cooperative (“we,” “us,” “our,” and the “Cooperative”), including assumptions about risks and uncertainties faced by the Cooperative.  These forward-looking statements can be identified by the use of forward-looking terminology such as “anticipates,” “expects,” “believes,” “will,” or the negative of these terms or similar verbs or expressions.  If any of management’s assumptions prove incorrect or should unanticipated circumstances arise, the Cooperative’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 Cooperative 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 and to read this report and the documents that referenced in this report and filed as exhibits completely.  The Cooperative undertakes no obligation to update any forward-looking statements in this report to reflect future events or developments.  The Cooperative qualifies all of its forward-looking statements by these cautionary statements.

Item 1.  BUSINESS

GENERAL

Golden Growers Cooperative is a value-added agricultural cooperative association owned by 1,546 members primarily from Minnesota, North Dakota and South Dakota, all of whom deliver corn to the Cooperative for processing into a value-added product.  The Cooperative was originally formed in 1994 as a North Dakota agricultural cooperative.  On September 1, 2009, by way of a series of mergers, the Cooperative changed its domicile and form of entity from a North Dakota cooperative to a Minnesota cooperative association governed under Minnesota Statutes Chapter 308B.  A Minnesota cooperative association formed under Minnesota Statutes 308B operates as a cooperative for state law purposes, but is taxed as a partnership under Subchapter K of the Internal Revenue Code for tax purposes.

History

The Cooperative was originally formed in 1994 as a North Dakota cooperative with the goal of allowing its members to receive additional value from the corn that they grow through the processing of that corn into value-added products, such as corn sweeteners.  The Cooperative accomplished this purpose by forming a joint venture with American Crystal Sugar Company (“American Crystal”) that formed ProGold Limited Liability Company (“ProGold”), a Minnesota limited liability company that designed and constructed a corn wet-milling facility in Wahpeton, North Dakota to process corn into high fructose corn syrup and related co-products.  The Cooperative’s membership in ProGold included a right and obligation for the Cooperative to deliver corn to the ProGold facility for processing.  The Cooperative’s members delivered corn to the ProGold facility on the Cooperative’s behalf to meet this delivery obligation.

On November 1, 1997, ProGold entered into an operating lease with Cargill Incorporated (“Cargill”) for the entire ProGold facility.  Cargill has operated the facility continually since this time.  On April 4, 2017, ProGold and Cargill entered into a Second Amended and Restated Facility Lease, which commenced on January 1, 2018 and continues through December 31, 2022. The lease will be automatically extended for one year in the event that either (i) Cargill has not, prior to December 31, 2021, exercised an option to purchase American Crystal’s 50% interest in ProGold pursuant to an Option Agreement between Cargill and American Crystal dated as of April 4, 2017 and effective as of January 1, 2018 or (ii) if the parties have not otherwise mutually agreed to extend or terminate the lease.  While ProGold no longer operates the wet-milling facility, the Cooperative, through its members, continues to have the obligation to deliver corn directly to Cargill at the wet-milling facility for processing into high fructose corn syrup and related co-products.  For more information regarding the Second Amended and Restated Facility Lease and the Option Agreement, see “Business Operations” and “Ownership in ProGold.”

The Cooperative’s ownership interest in ProGold creates a value-added relationship between the Cooperative’s members and the facility.  When members deliver corn to the Cooperative for processing at the facility, they are paid a market price for the corn that is delivered.  In addition, members have a right to receive added value for the efforts in the form of patronage based on each member’s proportionate share of the Cooperative’s income from ProGold that is derived primarily from Cargill’s lease of the facility.  For more details regarding the Cooperative’s ownership in ProGold, see “Ownership in ProGold.”

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Business Operations

The Cooperative is in the business of providing value to its members by facilitating their delivery of corn to the corn wet-milling facility owned by ProGold.  We accomplish our business on behalf of our members not through the ownership of assets such as a plant and equipment, but through our contract relationships with all of the parties involved in the ownership and operation of the facility.  From an income production perspective, our membership interest in ProGold is our primary asset that, in addition to giving the Cooperative the right to receive distributions from ProGold, also provides our members with additional value for the delivery of their corn for processing.  Annually, the Cooperative is required to deliver approximately 15,490,480 bushels of corn to Cargill for processing at the ProGold facility.  We meet this delivery obligation by having our members deliver their corn to the ProGold facility.

Since November 1997, ProGold has leased its corn wet-milling facility to Cargill.  Throughout the term of the lease between Cargill and ProGold, our members, on the Cooperative’s behalf, have delivered corn to the facility for processing into high fructose corn syrup and related co-products.  It is our ownership interest in ProGold that creates a value-added relationship between our growers and the facility.  Notwithstanding this cooperative arrangement, Cargill is an integral part of our financial success.  Separate from the lease, Cargill also provides the Cooperative services that allow us to facilitate corn delivery at little or no expense.  In addition, the lease payments Cargill makes to ProGold that are in turn distributed to the Cooperative provide us with the cash to make distributions to our members. Under the terms of the Second Amended and Restated Facility Lease, Cargill will pay ProGold annual lease payments of $17 million in 2018 and 2019, $16 million in 2020, $15.5 million in 2021 and 2022, and $14 million if the lease is extended through 2023.  In turn, ProGold has agreed to pay at least $750,000 annually throughout the term of the lease for infrastructure maintenance and may also be required to pay additional sums in order to make certain capital improvements.  The payments will reduce any income available for ProGold’s members at the time of such expenses.  The Cooperative and American Crystal would experience any such reduction in ProGold’s income proportionately based on their percentage ownership of ProGold.

Any person residing in the United States can own our Units as long as that person delivers or provides for the delivery of corn for processing at the ProGold facility.  Ownership of our Units requires our members to deliver corn to the Cooperative in proportion to the number of Units each member holds.  Currently 15,490,480 Units are issued and outstanding.  The Cooperative’s income and losses are allocated to our members based on the volume of corn a member delivers or has delivered.  Subject to certain limitations, as long as a member patronizes the Cooperative by delivering corn equal to the number of Units held by the member, the member will be allocated a corresponding portion of our income (or loss).  In this way, we operate on a cooperative basis.

To hold our Units a member is required to execute a Uniform Member Agreement that obligates the member to deliver corn to us and an Annual Delivery Agreement by which each member annually elects the member’s method to deliver corn — either Method A or Method B, or a combination of both.  Under Method A, a member is required to physically deliver the required bushels of corn to us either at the ProGold facility or another location designated by the Cooperative.  Under Method B, a member appoints us as its agent to arrange for the acquisition and delivery of the required bushels of corn on the member’s behalf.  Separate from leasing the facility from ProGold, Cargill is in the grain services business.  In order to most cost effectively provide delivery services to our members, the Cooperative has entered into an agreement with Cargill whereby we appoint Cargill as our agent to arrange for the delivery of the corn by our members who elect to deliver corn using Method A, and we appoint Cargill as our agent to acquire corn on our behalf for our members who elect to deliver corn using Method B.  If a member elects to deliver corn using Method B, the price per bushel the Cooperative pays to the member is equal to the price per bushel paid by Cargill to acquire the corn as our agent.  The Cooperative pays members who deliver corn under Method A the market price or contracted price for their corn at the time of delivery.  Members who deliver corn under Method A receive from the Cooperative an incentive payment of $.05 per bushel on the corn that they deliver while members who elect Method B to deliver corn pay to the Cooperative a $.02 per bushel agency fee for the cost of having us deliver corn on their behalf.  The incentive payment for Method A deliveries and the agency fee for Method B deliveries are subject to annual adjustment at the sole discretion of our Board of Directors. While the Cooperative is financially responsible for the various payments to the members for corn, Cargill, serving as the Cooperative’s administrative agent, issues payments to members for corn on the Cooperative’s behalf.

Annually, we notify Cargill of the number of bushels of Method A corn to be delivered by each member who has elected to deliver corn by Method A.  Once we provide notification to Cargill of the number of bushels of corn, Cargill then confirms the amount of corn with each member and notifies that member with respect to quality specifications, allowances, deductions and premiums to be applicable to that corn.  That Method A member then directly

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contracts with Cargill for the contract price agreed upon for the corn or, in the absence of an agreed upon price, the market price per bushel for corn delivered on the day on which the corn is delivered and accepted at the facility.  With respect to all corn that is delivered by Method A, Cargill pays to the Cooperative the aggregate purchase price for corn purchased from our members, and then, on our behalf, makes individual payments for corn directly to our members.  In the event a member who has elected to deliver corn by Method A delivers to Cargill more than its delivery commitment, any corn delivered in excess of that commitment is handled as a direct sale of corn to Cargill and is priced at the current closing delivery corn price established by Cargill at the facility on the day it is unloaded.  In the event a member who has elected to deliver corn by Method A delivers to Cargill less than its committed amount of corn, the quantity of the shortfall is then purchased and delivered by Cargill on our behalf.  Our reimbursement to Cargill for the purchased corn is calculated as the amount by which the underlying contracted corn price is less than the price of buying the corn that was due on the delivery date.  In addition, this purchased corn is not credited to such member’s account, meaning that member’s allocation of our profit or losses and any cash distributions are proportionately reduced and we may terminate the member’s membership.

Based on the corn to be delivered by our members using Method A, Cargill then purchases the remainder of the corn to be delivered by us on behalf of our Method B delivering members at such time and in such quantities and at such prices it deems appropriate and in the best interest of us and Cargill.  Because Cargill purchases the corn on our behalf for our members who elect to deliver using Method B, the purchase price for the corn that would be paid to our members if they actually delivered the corn is offset against the payment to be made by us to Cargill for the cost to purchase the corn, thus no payment is made from Cargill to us for corn delivered using Method B.

Our members can change their delivery method annually, so the mix of members delivering by Method A or Method B changes each year.

In exchange for the services set forth above with respect to handling our member’s delivery of corn to the wet-milling facility, we paid Cargill an annual fee of $70,000 in 2017. Commencing on January 1, 2018, we pay an annual fee of $60,000, which is paid in quarterly installments.  In addition, we also pay Cargill a per-bushel fee if a Method A member fails to deliver corn.  This amount is in addition to any reimbursement required by us to Cargill for a Method A member’s failure to deliver.

All of our agreements with Cargill terminate at the expiration of the lease between Cargill and ProGold.  We cannot predict if we will be able to continue on the same contract or economic terms with Cargill after December 31, 2022 if the lease is not extended or renewed.

Our Bylaws establish a Method A delivery pool and a Method B delivery pool.  Generally, our income and/or losses are allocated annually based on the percentage of bushels of corn our members elect to deliver using either Method A or Method B.  Regardless of the actual percentage allocation between our members who deliver bushels of corn using Method A or Method B, our Bylaws require us to annually allocate at least 25% of our income and/or losses to the Method A pool.  The amount of our income and/or losses actually allocated to the Method A pool is a percentage equal to the greater of 25% or the actual percentage of bushels of corn delivered by our members using Method A.

If less than 25% of the bushels of corn are delivered by members using Method A, the members who do use Method A will be allocated 25% of our income and/or losses even though they deliver less than 25% of the bushels of corn obligated to be delivered by us to Cargill.  As a result of this requirement, a Method A member may receive a greater proportionate allocation of our income and/or losses than a Method B member who contracted to have the same amount of corn delivered.

For the 2016 and 2017 fiscal years, our members elected to and delivered 28.7% and 28.6%, respectively, of the bushels of corn by Method A and 71.3% and 71.4%, respectively, of the bushels of corn by Method B.  This resulted in 28.7% and 28.6% of our income and/or losses and 28.7% and 28.6% of any cash distributions being allocated to the Method A pool, respectively, in fiscal years 2016 and 2017, which reflects the actual percentage of members who elected to deliver corn using Method A and does not result in reallocation to meet the 25% requirement set forth in our governing documents.

Ownership in ProGold

The Cooperative owns a 49% interest in ProGold, and American Crystal owns a 51% interest in ProGold.  American Crystal’s fiscal year ends on August 31 each year, so ProGold’s fiscal year aligns with American Crystal’s.

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In connection with its membership interest in ProGold, the Cooperative has the right and obligation to deliver corn to be processed at the wet-milling facility.  The Cooperative is also allocated 49% of the profits and losses of ProGold and is entitled to receive 49% of any cash that is distributed to ProGold’s members.

Currently, there are eleven members of ProGold’s board of governors and the Cooperative has the right to appoint five of these governors.  Members of the Cooperative’s Board of Directors occupy these seats and provide active oversight of the management of ProGold.  Based on percentage ownership in ProGold and representation on the ProGold board of governors the Cooperative does not control the operations of ProGold.  Extraordinary transactions such as a sale of ProGold or its assets, dissolution, as well as amendments to its operating agreement, approval of its strategic plan, approval of new members and approval of loans to ProGold by its members can be approved by American Crystal over the Cooperative’s objections.

Even though the Cooperative does not control ProGold, American Crystal cannot sell or transfer its interest in ProGold to any other party without the Cooperative’s consent.  The Cooperative also has a right of first refusal to purchase American Crystal’s interest in ProGold if it receives an offer for or desires to sell its interests in ProGold.  Neither the Cooperative nor American Crystal can transfer its interests in ProGold without Cargill’s consent as long as the lease between Cargill and ProGold is in effect.  American Crystal may buy the Cooperative’s interests in ProGold if any one person acquires more than 10% of the Cooperative’s Units or if the Cooperative changes its voting structure to anything other than one member one vote.

On April 4, 2017, the Cooperative, Cargill, and American Crystal entered into a Consent Agreement, effective on January 1, 2018, relating to the lease of ProGold’s wet-milling facility to Cargill and the Cooperative’s interest in ProGold. On the same day, Cargill and American Crystal entered into an Option Agreement, effective on January 1, 2018, detailing the price, term and other conditions under which American Crystal grants to Cargill an exclusive option to purchase a 50% interest in ProGold from American Crystal during the first four years of the lease. Under the Consent Agreement, the Cooperative approves and consents to the transfer of the 50% interest in ProGold from American Crystal to Cargill in the event Cargill exercises its option.  The Cooperative also secures the right to purchase American Crystal’s remaining 1% interest in ProGold for a base price ranging from $1.7 million to $1.3  million, depending on when Cargill notifies American Crystal of its intention to exercise its option.  The Cooperative would also be required to pay to American Crystal a capital adjustment in an amount equal to 1% of the portion of costs that have not been paid by Cargill to ProGold through additional rent with respect to certain projects at the facility.  In the event Cargill intends to exercise its option, before exercising such option, Cargill and the Cooperative will expeditiously and in good faith work together to finalize agreements for the structure, governance and operation of ProGold according to certain operational principles and other guideline terms as provided in a Memorandum of Understanding attached to the Consent Agreement.

The wet-milling facility was built in 1995.  As processing facilities age, more extensive maintenance becomes necessary to keep the facility in good working order.  ProGold has agreed to pay at least $750,000 annually throughout the term of the lease for infrastructure maintenance and may also be required to pay additional sums in order to make certain capital improvements.   The payments will reduce any income available for ProGold’s members at the time of such expenses.  The Cooperative and American Crystal would experience any such reduction in ProGold’s income proportionately based on their percentage ownership of ProGold.

Seasonality

Cargill operates the ProGold processing plant year-around but the facility only has enough corn storage on-site for approximately five days of operations.  Corn deliveries to the facility are typically required four or five days each week of the year.  Farmers harvest corn in October and November, although weather conditions have occasionally delayed harvest for some farmers into winter or spring.  Corn can be stored in storage facilities for a long period of time after it is harvested.

The Cooperative does not control when members deliver corn to Cargill for processing at the facility.  Some of members may elect to deliver higher volumes of corn immediately following harvest in October and November, while others prefer to deliver at times when local market prices are higher, typically in the spring and late summer months.  Corn price contracts that members and Cargill enter into each year typically anticipate these delivery trends and incent members to store their corn on their farms until fewer farmers wish to deliver to the plant.  As a result, while there is some seasonality to corn deliveries, members deliver corn every week of the year, and the Cooperative monitors and makes payments for those deliveries every week.

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Intellectual Property Rights

The Cooperative does not hold any patents.  To the extent it develops proprietary information or rights, the Cooperative will rely on a combination of trade secrets, trademarks, nondisclosure agreements and technical measures to establish and protect our proprietary rights.

Research and Development

As a commodity-based business, the Cooperative does not conduct any research and development activities associated with either the development of new products or the development of new technologies for use in producing those products.

Employees

As of December 31, 2017, the Cooperative had 1 full-time employee, Executive Vice President, Scott Stofferahn, who serves in the capacity of chief executive officer and chief financial officer.

Legal Proceedings

The Cooperative is not currently involved in any legal proceedings.  In addition, we are not aware of any potential claims that could result in the commencement of legal proceedings.  The Cooperative carries insurance that provides protection against certain types of claims, up to policy limits.

Competition

As a grower-owned cooperative whose members are contractually obligated to deliver corn, the Cooperative generally does not face competition in the market place for corn.  More importantly, its governing documents and contractual arrangements with Cargill contain contractual incentives for growers to deliver corn to the Cooperative and not to another processor.  Even if members do not fully satisfy their delivery commitments, there are sufficient supplies of corn to be purchased in the open market to meet any contract obligations to Cargill, with any costs to be charged to the defaulting member.

The Cooperative was formed in 1994 by a group of corn growers with a goal of adding value to the corn they delivered for processing.  Members invested in the Cooperative with the goal of creating a facility where they could not only find a certain market for their corn but where they could also benefit from a long term investment in a value added enterprise such as the ProGold facility.  There is no competition in attracting members to the Cooperative and its services.  Other grain shippers and corn processing facilities in the region provide competition for the purchase of corn from members, but most do not provide the opportunity for membership or partial ownership and any resulting additional profits from the operation or lease of their facilities.

Item 1A.  RISK FACTORS

The risks described below together with all of the other information included in this report should be considered carefully.  The risks and uncertainties described below and elsewhere in this Form 10-K are not the only ones we face.  If any of the following risks actually occur, our business’s financial condition or results of operations would likely suffer.  In that case, the distributions made to our members may decrease, the value of our Units could fall, and a member could lose all or part of his, her or its investment.

Risks Relating to the Units

There is no public market for our Units and no public market is expected to develop.

There is no established public trading market for our Units, and we do not expect one to develop in the foreseeable future.  To maintain our partnership tax status, we do not intend to list the Units on any stock exchange or automatic quotation system.  As a result, our Units may have to be held for an indefinite period of time because the Units are not readily re-sellable.

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Our Units are subject to significant restrictions on transfer.

The ability to transfer our Units is restricted by our Bylaws.  A member must obtain the prior consent of our Board of Directors before making any transfer of Units.  Transferability of Units is restricted in part to ensure that we are not deemed a “publicly traded partnership” and thus taxed as a corporation.  The delivery obligations that accompany our Units also partially restrict the transferability of our Units.  As a result, a member may have to hold Units for an indefinite period of time because the Units may not be able to be readily resold.

Risks Related to Our Operations

We are required to allocate at least 25% of our income and/or losses to the Method A pool regardless of the percentage of bushels of corn actually delivered under Method A.

Our Bylaws require that our income and/or losses be allocated to the Method A pool in a percentage equal to the greater of 25% or the actual percentage of corn delivered under Method A.  If less than 25% of the corn is delivered by the members using Method A, the members who do use Method A will be allocated 25% of the income and/or losses even though they deliver less than 25% of the corn we are obligated to deliver.  As a result, the Method A member may receive a greater proportionate allocation of our income and/or losses than a Method B member who contracts to have the same amount of corn delivered.

A member electing to deliver corn under Method A who fails to deliver corn will not be allocated income and/or losses or receive cash distributions for that year in proportion to the shortfall.

If a member elects to deliver corn pursuant to Method A and then fails to deliver all of the bushels of corn he or she was obligated to deliver, his or her allocation of our income and/or losses and cash distributions will be proportionately reduced by the number of bushels of corn the member failed to deliver pursuant to the terms of our Bylaws and Annual Delivery Agreement.

Risk Factors Related to Our Ownership of ProGold

We do not own a controlling interest in ProGold.

Our primary source of income is from our ownership interest in ProGold.  ProGold’s primary asset is the facility that it leases to Cargill. We own only 49% of ProGold while American Crystal owns 51% of ProGold.  We do not have a controlling interest in ProGold and as a result, we have risks with respect to dealing with our minority interest in ProGold.  Generally, our business interests and American Crystal’s will be aligned with respect to decisions related to ProGold.  In the future, however, an issue could arise whereby we do not have the same interest and we would not have the ability to control ProGold.

In addition, if Cargill chooses to exercise its option to purchase a 50% interest in ProGold from American Crystal, and whether or not we purchased American Crystal’s remaining 1% interest in ProGold, we still would not own a controlling interest in ProGold. In the event Cargill intends to exercise its option, before exercising such option, Cargill and the Cooperative will expeditiously and in good faith work together to finalize agreements for the structure, governance and operation of ProGold according to certain operational principles and other guideline terms as provided in a Memorandum of Understanding attached to the Consent Agreement. Given our minority interest or potentially equal interest, we would not have the ability to control ProGold.

We may choose to exercise our right to purchase an additional interest in ProGold.

If Cargill exercises its exclusive option to purchase a 50% interest in ProGold from American Crystal during the first four years of the lease, the Cooperative has the right to purchase American Crystal’s remaining 1% interest in ProGold for a base price ranging from $1.7 million to $1.3 million, depending on when Cargill notifies American Crystal of its intention to exercise its option.  The Cooperative would also be required to pay to American Crystal a capital adjustment in an amount equal to 1% of the portion of costs that have not been paid by Cargill to ProGold through additional rent with respect to certain projects at the facility.  Although the Cooperative has considered the potential purchase in its determinations of member distributions and budgeting activities, the Cooperative may not have adequate capital to purchase the additional 1% interest in ProGold. In the event that the Cooperative is able to purchase the 1% interest, the expenditure may result in reduced distributions to our members.

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The lease with Cargill for the facility expires in December 2022.

The corn wet-milling facility has been leased to Cargill since 1997.  The lease term runs through December 31, 2022, but the lease will be automatically extended for one year in the event that either (i) Cargill has not, prior to December 31, 2021, exercised an option to purchase American Crystal’s 50% interest in ProGold pursuant to an Option Agreement between Cargill and American Crystal dated as of April 4, 2017 and effective as of January 1, 2018 or (ii) if the parties have not otherwise mutually agreed to extend or terminate the lease.  If Cargill does not continue to lease the facility at the termination of the lease, ProGold’s options are to lease the facility to a third party, to run the facility itself or to sell the facility to another party.  There can be no assurances that a third party willing to operate or purchase the facility exists or that the value of the facility at the end of the lease will be such that it will be a profitable sale for ProGold, us or our members.

The Cooperative’s contracts with Cargill are connected to the term of the lease between ProGold and Cargill.

The Cooperative’s various agreements with Cargill, including the Grain Services Agreement and the Corn Supply Agreement, terminate at the conclusion of the lease between Cargill and ProGold.  The Cooperative substantially relies on Cargill through these agreements to perform material functions for the Cooperative.  If these agreements terminate because the lease between ProGold and Cargill terminates, or if we are unable to renew the contracts with favorable terms, the Cooperative may not be able to provide these services on its own or find a vendor to provide these services (including Cargill) on the same advantageous economic terms.

ProGold may need to pay for maintenance to the facility.

The facility has been operated by Cargill since 1997.  While the facility has been maintained by Cargill pursuant to the terms of the lease, ProGold is responsible for the cost of any extraordinary capital expenditures.  Beginning in 2018, ProGold, LLC has agreed to pay at least $750,000 annually for infrastructure maintenance and may also be required to pay additional sums in order to make certain capital improvements.  In the event ProGold has to pay for any such capital improvement, the amount of income available for distribution to its members would be reduced, which would in turn reduce amounts paid to our members.

Tax Risks Related to Our Operation

We could lose our partnership income tax status if the IRS determines to treat the Cooperative as a publicly traded partnership.

We have elected to be treated as a partnership for federal income tax purposes.  This means that we will pay no federal or state income tax at an entity level, but our members will pay tax on their allocated share of our net income.  However, we could become taxable as a C corporation if we are treated as a publicly traded partnership because of the manner in which our Units are transferred.

The tax liability a member may be responsible for as a result of an allocation of income may exceed any cash distributions the member receives.

As described above, we do not expect to pay any federal income tax, and all of our income and/or losses will “pass through” to our members.  Members must pay tax on that allocated share of our taxable income every year.  Although we are required to make cash distribution of at least 30% of the allocated income each year, a member may not receive cash distributions from us sufficient to satisfy all of the member’s tax liabilities.  This may occur because of various factors, including accounting methodology, or if we decide to retain cash generated by the business to fund its activities or other obligations.

A member may not be able to fully deduct its share of our losses or its interest expense.

It is likely that most of our members’ interests in the Cooperative will be treated as a “passive activity.”  In the case of members who are individuals or personal services corporations, this means that a member’s share of any loss incurred by us will be deductible only against the member’s income or gains from other passive activities (e.g., S corporations and partnerships that conduct a business in which the holder is not an active or material participant).  Some closely held C corporations have more favorable passive loss limitations.  Passive activity losses that are disallowed in any taxable year are suspended and may be carried forward and used as an offset against passive activity income in

7

future years.  Upon disposition of a taxpayer’s entire interest in a passive activity to an unrelated person in a taxable transaction, suspended losses with respect to that activity may then be deducted.

Any audit of our tax returns resulting in adjustments could cause the IRS to audit our members’ tax returns, which could result in additional tax liability to our members.

The IRS may audit our tax returns and may disagree with the positions taken on those returns.  The tax rules regarding organizations like us are complex.  If challenged by the IRS, the courts may not sustain positions we took on our tax returns.  An audit of our tax returns could lead to separate audits of our members’ tax returns, especially if adjustments are required.  This could result in adjustments on our members’ tax returns and additional tax liabilities, penalties and interest to our members.

Changes in U.S. tax laws may require future organizational and tax structure changes for the Cooperative in order to benefit its members and ensure adequate corn supply.

The Tax Cuts and Jobs Act was signed into law on December 22, 2017 (“the Act”). The Act introduced Internal Revenue Code (“IRC”) Section 199A. Subject to certain requirements and limitations, the provisions under IRC Section 199A can provide for a tax deduction equal to 20% of a producer’s gross sales to a cooperative taxable under Subchapter T of the IRC. Golden Growers Cooperative is currently taxable under IRC Subchapter K, and accordingly, sales by producers to Golden Growers Cooperative do not meet the definition of qualifying cooperative receipts for purposes of the IRC Section 199A deduction. Alternately, a producer that sells to non-qualifying cooperatives will generally qualify for a deduction of 20% of the net farming income after production expense. IRC Section 199A in its current form is perceived to provide a significant advantage for producers to sell to qualifying cooperative buyers vs non-qualifying buyers. Legislative changes are currently under consideration in Congress to modify the potential tax benefit of selling to qualifying cooperative buyers. Management will monitor the current tax law and proposed legislative changes that may require future organizational and tax structure changes for Golden Growers Cooperative in order to benefit its members and ensure adequate corn supply. Notwithstanding changes in tax law, members of Golden Growers Cooperative remain contractually obligated to deliver corn to the Cooperative.

Item 1B.  UNRESOLVED STAFF COMMENTS

None

Item 2.  PROPERTIES

We lease executive office space at 1002 Main Avenue West, Suite 5, West Fargo, ND 58078.  The Cooperative’s office space needs are limited and easily met by a market rate lease.

Item 3.  LEGAL PROCEEDINGS

None

Item 4.  MINE SAFETY DISCLOSURES

None

PART II

Item 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

There is no established trading market for our Units.  To maintain our partnership tax status, members may not trade their Units on an established securities market or readily trade Units on a secondary market (or the substantial equivalent thereof).  All transfers are subject to approval by the Board of Directors and a determination that the transfer

8

will not cause us to be deemed a publicly traded partnership.  In accordance with the publicly traded partnership rules, the Cooperative has made arrangements with Alerus Financial to serve as a qualified matching service for our members.

Our Bylaws restrict the ability of our members to transfer their Units.  To help ensure that a secondary market does not develop, our Bylaws prohibit transfers without the approval of our Board of Directors.  The Board of Directors will not approve transfers unless they fall within “safe harbors” contained in the publicly traded partnership rules under the Code and the related rules and regulations, as amended.  Any transfers of Units in violation of the publicly traded partnership rules or without the prior consent of the Board of Directors will be invalid.

There are no outstanding warrants or options to purchase, or securities convertible into, our Units.  As of the date hereof, there are 15,490,480 Units that are eligible for sale pursuant to Rule 144.  We have not agreed to register any Units under the Securities Act for sale by members.

Holders

As of the date hereof, there are 1,546 holders of the Cooperative’s Units determined by an examination of the Cooperative’s equity records that the Cooperative maintains.  Our Units are uncertificated.

Distributions

The Cooperative, to the extent cash is available, generally plans to make distributions to its members.  The Cooperative may make cash distributions at such time and in such amounts as determined from time to time by our Board of Directors in its sole discretion; provided that the we must annually, on or before March 1 of each year, make a cash distribution to our then current members equal to at least thirty percent (30%) of the income allocated to members for the prior year.  Any such cash distributions shall be made in a uniform and equitable basis among the members within a particular allocation pool on the basis of patronage.  Such cash distributions will be reduced by any tax withholding payments that are made on the member’s behalf.  For the fiscal year ended December 31, 2016, the Cooperative made aggregate cash distributions to members of $9,449,000.  For the fiscal year ended December 31, 2017, the Cooperative made aggregate cash distributions to members of $6,552,000. For more information regarding factors considered by the Board of Directors in determining the amount of cash distributions, see the section entitled “Liquidity and Capital Resources” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Securities Authorized for Issuance under Equity Compensation Plans

The Cooperative currently has no equity compensation plan.

Purchases of Equity Securities by Golden Growers Cooperative

None

Recent Sales of Unregistered Securities

None

Item 6.  SELECTED FINANCIAL DATA

The following table presents our selected historical financial data.  We derived the selected income statement data from our audited financial statements for the fiscal years ended December 31, 2013, 2014, 2015, 2016 and 2017, which have been audited by Widmer Roel P.C., independent auditors.  The historical results are not necessarily indicative of the results that may be expected in the future.  You should read this data together with our financial statements and related notes included elsewhere in this report and the information in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

9

INCOME STATEMENT DATA:

(in thousands, except share and per unit data)

	Year Ended December 31,
	2013		2014		2015		2016		2017
Corn Revenue	$	82,925	$	61,130	$	56,370	$	52,135	$	49,890
Corn Expense		(83,016)		(61,219)		(56,475)		(52,240)		(49,960)
Net Income from ProGold Limited Liability Company		5,746		5,981		5,250		5,375		9,785
General & Administrative Expenses		(869)		(660)		(620)		(574)		(565)
Net Income from Operations		4,786		5,232		4,525		4,696		9,150
Interest Income		11		10		8		8		32
Net Income Before Income Tax		4,797		5,242		4,533		4,704		9,182
Income Tax Provision		—		—		—		—		—
Net Income	$	4,797	$	5,242	$	4,533	$	4,704	$	9,182
Weighted Average Shares/Units Outstanding		15,490,480		15,490,480		15,490,480		15,490,480		15,490,480
Primary and Fully Diluted Earnings Per Unit	$	0.31	$	0.34	$	0.29	$	0.30	$	0.59
BALANCE SHEET DATA:
Current Assets:
Cash and Cash Equivalents	$	3,154	$	2,483	$	2,272	$	2,792	$	6,261
Short-Term Investments		218		218		220		219		220
Other Current Assets		10		220		287		342		218
Total Current Assets		3,382		2,921		2,779		3,353		6,699
Investment in ProGold Limited Liability Company		35,032		31,344		25,831		20,484		19,773
Other Non-Current Assets		6		4		3		1		—
Total Assets	$	38,420	$	34,269	$	28,613	$	23,838	$	26,472
Current Liabilities	$	4	$	216	$	252	$	222	$	226
Non-Current Liabilities	$	—	$	—	$	48	$	—	$	—
Members’ Equity:
Membership Units		38,416		34,053		28,361		23,616		26,246
Accumulated Other Comprehensive Income		—		—		(48)		—		—
Total Members’ Equity		38,416		34,053		28,313		23,616		26,246
Total Liabilities and Members’ Equity	$	38,420	$	34,269	$	28,613	$	23,838	$	26,472

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

The following discussion should be read in conjunction with the Cooperative’s financial statements, the notes thereto and the other financial data included elsewhere in this Annual Report on Form 10-K.  The following discussion contains forward-looking statements.  Such statements are based on assumptions by the Cooperative’s management as of the date of this report and are subject to risks and uncertainties, including those under the heading entitled “Risk Factors,” that could cause actual results to differ materially from those anticipated.  Readers should not place undue reliance on such forward-looking statements.

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Results of Operations

Revenues

The Cooperative derives revenue from two sources:  operations related to the marketing of members’ corn and income derived from the Cooperative’s membership interest in ProGold.  The corn marketing operations generate revenue for the Cooperative equal to the value of the corn that is delivered to Cargill.  The Cooperative recognizes expense equal to this same amount which results in the corn marketing operations being revenue neutral to the Cooperative, except for revenue from the Method B agency fee and expenses related to the Method A incentive payments, required licensing and bonding expenses, and the service fee paid to Cargill. 

Comparison of Fiscal Years Ended December 31, 2017 and December 31, 2016. For the fiscal year ended December 31, 2017, the Cooperative sold approximately 15.5 million bushels of corn compared to 15.5 million bushels of corn sold during the fiscal year ended December 31, 2016.  For the fiscal periods ended December 31, 2017 and 2016, the Cooperative recognized corn revenue of $49,890,000 and $52,135,000 respectively, a decrease of 4% due primarily to the decrease of the price of corn sold.  The Cooperative recognized corn expense of $49,960,000 and $52,240,000 in 2017 and 2016 respectively, a decrease of 4% due primarily to decrease in the price of corn purchased.  For the fiscal year ended December 31, 2017, its members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility 4,425,235 bushels of corn using Method A and 11,065,246 bushels of corn using Method B resulting in incentive fee expense of $221,000 and agency fee income of $222,000 for this period while for the fiscal year ended December 31, 2016, its members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility 4,447,298 bushels of corn using Method A and 11,043,182 bushels of corn using Method B resulting in incentive fee expense of $221,000 and agency fee income of $221,000 for this period.  For the fiscal periods ended December 31, 2017 and 2016, the Cooperative recognized expense of $70,000 and $92,000, respectively, in connection with costs incurred to Cargill in connection with the Cooperative’s corn marketing operation. 

The Cooperative derived income from ProGold for the fiscal year ended December 31, 2017, of $9,785,000, an increase of $4,410,000 or 82% as compared to $5,375,000 for the period ended December 31, 2016. The increase in ProGold income was due primarily to decreased depreciation expense at ProGold, LLC in 2017 compared to 2016.

Comparison of Fiscal Years Ended December 31, 2016 and December 31, 2015. For the fiscal year ended December 31, 2016, the Cooperative sold approximately 15.5 million bushels of corn compared to 15.5 million bushels of corn sold during the fiscal year ended December 31, 2015.  For the fiscal periods ended December 31, 2016 and 2015, the Cooperative recognized corn revenue of $52,135,000 and $56,370,000 respectively, a decrease of 8% due primarily to the decrease of the price of corn sold.  The Cooperative recognized corn expense of $52,240,000 and $56,475,000 in 2016 and 2015 respectively, a decrease of 7% due primarily to decrease in the price of corn purchased.  For the fiscal year ended December 31, 2016, its members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility 4,447,298 bushels of corn using Method A and 11,043,182 bushels of corn using Method B resulting in incentive fee expense of $221,000 and agency fee income of $221,000 for this period while for the fiscal year ended December 31, 2015, its members, on the Cooperative’s behalf, delivered to Cargill for processing at the facility 4,453,298 bushels of corn using Method A and 11,037,184 bushels of corn using Method B resulting in incentive fee expense of $223,000 and agency fee income of $221,000 for this period.  For the fiscal periods ended December 31, 2016 and 2015, the Cooperative recognized expense of $92,000 and $92,000, respectively, in connection with costs incurred to Cargill in connection with the Cooperative’s corn marketing operation.

The Cooperative derived income from ProGold for the fiscal year ended December 31, 2016, of $5,375,000, an increase of $125,000 or 2% as compared to $5,250,000 for the period ended December 31, 2015.

General and Administrative Expenses

The Cooperative’s general and administrative expenses include salaries and benefits, professional fees and fees paid to our board of directors.  The general and administrative expenses for the fiscal year ended December 31, 2017, was $565,000 a decrease of $9,000 or 2% as compared to the fiscal year ended December 31, 2016.  The decrease was due primarily to decreased corn procurement expenses. The general and administrative expenses for the fiscal year ended December 31, 2016, was $574,000 a decrease of $46,000 or 7% as compared to the fiscal year ended December 31, 2015.  The decrease was due primarily to decreased legal and pension plan expenses.

11

Interest Income

Interest income for the fiscal year ended December 31, 2017, was $32,000 compared to $8,000 for the fiscal year ended December 31, 2016. The increase was due primarily to increased cash reserves.Interest income for the fiscal year ended December 31, 2016, was $8,000 compared to $8,000 for the fiscal year ended December 31, 2015.

Liquidity and Capital Resources

The Cooperative’s working capital at December 31, 2017, was $6,473,000, $3,131,000 at December 31, 2016, and $2,527,000 at December 31, 2015.  The increased working capital in 2017 as compared to 2016 and 2016 was a result of reduced distributions paid to the Cooperative’s members during 2017 as compared to 2016 and 2015.  

The Cooperative received cash distributions from ProGold totaling $10,496,000 for the fiscal year ended December 31, 2017, $10,721,000 for the fiscal year ended December 31, 2016 and $10,763,000 for the fiscal year ended December 31, 2015. The Cooperative paid cash distributions to its members totaling $6,552,000 for the fiscal year ended December 31, 2017, $9,449,000 for the fiscal year ended December 31, 2016 and $10,225,000 for the fiscal year ended December 31, 2015. Distributions in 2017 were reduced as compared to 2016 and 2015 as the Cooperative evaluated revenue and cash flows for the current year and through the end of the new lease, including the potential for reduced distributions from ProGold due to payments ProGold must make for infrastructure maintenance and certain capital improvements under the lease. The Cooperative also considered its potential purchase and payment obligations under the Consent Agreement.

The Cooperative had no long-term debt as of December 31, 2017, December 31, 2016, and December 31, 2015.

The Cooperative used operating cash flows of $474,000 for the fiscal year ended December 31, 2017, $753,000 for the fiscal year ended December 31, 2016, and $747,000 for the fiscal year ended December 31, 2015. The reduced use of operating cash flows is primarily due to the reduction of prepaid expenses related to the Cooperative’s evaluation of revenue and cash flows for the current year and through the end of the ProGold lease.

Management believes that non-cash working capital levels are appropriate in the current business environment and does not expect a significant increase or reduction of non-cash working capital in the next 12 months.

Off-Balance Sheet Arrangements

The Cooperative is not a party to any off-balance sheet transactions, arrangements or obligations that have, or are reasonably likely to have, a current or future material effect on the Cooperative’s financial condition, changes in the financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

The following table provides information regarding the Cooperative’s contractual obligations as of December 31, 2017:

			Less than		One to
			One		Three		Four to		After Five
	Total		Year		Years		Five Years		Years
Purchase Obligations(1)	$	300,000	$	60,000	$	180,000	$	60,000	$	—
Operating Lease Obligations (2)	$	4,000	$	4,000	$	—	$	—	$	—
Total Contractual Obligations	$	304,000	$	64,000	$	180,000	$	60,000	$	—

(1) Includes payments due to Cargill under the Second Amended and Restated Grain Services Agreement that terminates December 31, 2022.

(2) Includes monthly office lease payments on a year to year contract.

Critical Accounting Estimates

Management’s estimate of the carrying value of the investment in ProGold is based on historical cost plus its pro-rata share of ProGold’s net income and additional paid-in capital less distributions received from ProGold.

12

The Cooperative does not pay out Method A incentive payments or collect Method B agency fees until the end of its fiscal year.  These amounts are accrued quarterly and then confirmed at the end of the fiscal year.  The total annual Method B agency fee was determinable once the members completed their delivery method determination prior to January 1, 2018.  The quarterly Method B bushel delivery and agency fee revenue was calculated by allocating the portion of the total annual agency fee for a particular quarter or cumulating it for the particular period.  The annual Method B bushel delivery and agency fee revenue is confirmed at the conclusion of the fiscal year.  The Cooperative tracks Method A corn deliveries throughout the year so it can report the bushels of corn delivered by its members as well as the corresponding Method A incentive fees earned.  The final amounts owed by or due to Cargill and/or the Cooperative’s members who elect to deliver using Method A is not calculated until after December 31 in order to account for any failures to deliver or over-deliveries of corn.

The Cooperative has determined corn revenue and corn expense for Method B deliveries based on the average annual cost per bushel paid by Cargill to the Cooperative’s members for Method A quarterly deliveries.

Recent Accounting Pronouncements

On January 1, 2018, the Cooperative will adopt ASU 2014-09, Revenues from Contracts with Customers. The core principle of the revenue guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Cooperative has determined that the timing, pattern and amount of revenue recognized under the new standard will be substantially the same as previously recognized by the Cooperative.

In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. The standard will be effective for us beginning January 1, 2018. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.

In January 2016, the FASB issued a new standard related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard will be effective for us beginning January 1, 2019. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.  

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 Cooperative 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 AND SUPPLEMENTAL DATA

The Cooperative’s financial statements for the fiscal years ended December 31, 2015, 2016 and 2017 have been audited to the extent indicated in this report by Widmer Roel PC, an independent registered public accounting firm.  The financial statements have been prepared in accordance with generally accepted accounting principles and are included in Appendix A of this report.

Item 9.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOCUNTING AND FINANCIAL DISCLOSURE

None

13

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, the person serving as the Cooperative’s chief executive officer and chief financial officer has reviewed and evaluated, as of the end of the period covered by this report, the effectiveness of the Cooperative’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act).  Based on that review and evaluation,  the chief executive officer and chief financial officer has concluded that the Cooperative’s current disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to the Cooperative required to be disclosed in the reports the Cooperative 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 Cooperative’s management, including the chief executive officer and the chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, because of changes in conditions, the effectiveness of internal control may vary over time.

Management assessed the effectiveness of the Cooperative’s internal control over financial reporting as of December 31, 2017, using criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework) and concluded that the Company maintained effective internal control over financial reporting as of December 31, 2017 based on these criteria.

This annual report does not include an attestation report of the Cooperative’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Cooperative’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Cooperative to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in the Cooperative’s internal control over financial reporting that occurred during the Cooperative’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.

Item 9B.  OTHER INFORMATION

None

14

PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Cooperative’s Board of Directors consists of three directors from each of five districts.  Directors are elected to serve three-year terms.  A director cannot serve more than four consecutive three-year terms.  One director is elected each year from each district at district meetings held in March each year.  Directors must hold Units of the Cooperative or must be representatives of such members belonging to the district they represent and are elected by the members of that district.  In the case of a holder of Units who is other than a natural person, a duly appointed or elected representative of such member may serve as a director.

In accordance with our Bylaws, all directors of the Cooperative are required to be members of the Cooperative, residence of the United States of America, and elected by a majority of the members from their district present at a members’ meeting for that purpose.  Each person’s experience, qualifications, attributes or skills to serve as a director are determined by the members voting in the district meetings at which the election occurs and not reviewed or otherwise considered by the Cooperative before any election.  The Cooperative does not have a nominating committee.  A qualified member indicates his or her interest to serve in advance of the meeting or candidates are nominated from the floor at the meetings.  If a member from a particular district does not come forward indicating a desire to run for election to serve as a director then that seat on the Board of Directors for that district becomes or remains unfilled.

The Cooperative’s board officers consist of a Chairman, First Vice Chairman, Second Vice Chairman, Treasurer and Secretary of the Board.  These board offices are populated by members of the Board of Directors who are elected by and at the discretion of the Board of Directors.  Each of these individual’s experience, qualifications, attributes and skills to serve in their capacity as a board officer are determined by the members of the Board of Directors who are voting to place these individuals in these offices.

The name, age, position, district and term details of each of the Directors and the Named Executive Officer are as follows:

Name and Position			Director	Term Expires
	Age	District	Since
Mark Harless (Chairman)	61	East Central	2011	2020
Nicolas Pyle (1st Vice Chairman)	38	Northwest	2010	2021
Shaun Beauclair (2nd Vice Chairman)	53	Northeast	2008	2020
David Benedict (Director)	51	East Central	2010	2021
Richard Bot (Director)	63	Southeast	2017	2020
Matthew Hasbargen (Secretary)	46	Southwest	2013	2021
Scott Jetvig (Director)	51	East Central	2015	2018
Gary L. Jirak (Director)	59	Northeast	2008	2018
Brett Johnson (Director)	50	Southwest	2013	2021
Chris A. Johnson (Director)	61	Southwest	2008	2020
Glenn Johnson (Director)	59	Northwest	2008	2020
Byron Koehl (Director)	52	Southeast	2010	2021
Leslie Nesvig (Treasurer)	78	Northwest	2008	2018
Bruce Speich (Director)	64	Southwest	2008	2018
Larry Vipond (Director)	67	Southeast	2015	2018
Executive Officer
Scott Stofferahn	60		—	—

Below is the biographical information of each Director and our Executive Officer.

Shaun Beauclair.  Mr. Beauclair has been a director since 2008 and Second Vice-Chair since March 2015.  Mr. Beauclair farms in the Stephen, Minnesota area, and has been a Farm Operation instructor at Northland Community College in East Grand Forks, Minnesota.  He has served on the Stephen, Minnesota School Board and his church board.  Mr. Beauclair was a director of the Gold Energy ethanol project start-up board. Mr. Beauclair received his Bachelor of

15

Science Degree in Agronomy and completed graduate courses in Agricultural Economics from North Dakota State University.

David Benedict.    Mr. Benedict has been a director since 2010.  Mr. Benedict farmed in the Sabin, Minnesota area between 1987 to 2014.  Mr. Benedict is employed with Steffes Group Auction Service.  Mr. Benedict took accounting classes at Moorhead State University and later received a Farm Business Management Degree from Minnesota State Community and Technical College.

Richard Bot.    Mr. Bot has been a director since 2017. Mr. Bot farms in partnership with his brother near Minneota, MN where he raises feed grains and feeder lambs. From 1990 to 1996, Mr. Bot served on the Yellow Medicine Watershed board.  Mr. Bot has been a clerk of the Westerheim Township Board since 2002.  Mr. Bot is currently a member of the of the Minnesota Rotary Club where he has served as President and as Assistant District Governor.  Mr. Bot has a Bachelor of Science degree in Animal Science from South Dakota State University.

Mark L. Harless.  Mr. Harless has been a director since March of 2011 and Chairman since March 2015.  He previously served as Vice Chairman from March 2013 to March 2015. Mr. Harless has farmed near Moorhead, Minnesota, since 1985.  Mr. Harless serves as President of the Lee Bean and Seed, Inc., an edible bean elevator located in Borup, Minnesota, where he has been employed since 1985.  Mr. Harless received his Bachelor of Science degree in Communications from Concordia College.

Matt Hasbargen.  Mr. Hasbargen has been a director since March 2013 and Secretary since March 2015.  He farms near Breckenridge, Minnesota with his father and brother.  In the winter months he works for AgCountry Farm Credit Services as a Senior Insurance Specialist, Trainer.  Prior to returning home to farm in 1999, Mr. Hasbargen worked for Minnesota Life in St. Paul, Minnesota where he managed life insurance accounts for Farm Credit districts throughout the United States.  Mr. Hasbargen holds an Economics degree from Concordia College.

Scott Jetvig.  Mr. Jetvig has been a director since March 2015.  Mr. Jetvig has farmed near Hawley, Minnesota since 1989. In addition to his individual farming operation, Mr. Jetvig is President of SKJ Investments, Inc., an incorporated farming operation.  Mr. Jetvig served on Halstad Mutual Fire Insurance Company and Hawley Lutheran Church boards. Mr. Jetvig holds Business Administration and Economics degrees from Moorhead State University.

Gary L. Jirak.  Mr. Jirak has been a director since 2008.  Mr. Jirak has farmed in the Breckenridge, Minnesota area for since 1983.

Brett Johnson.  Mr. Johnson has been a director since March 2013.  He farms in partnership with his brother near Mooreton, ND where they raise corn, soybeans, and sunflowers.  Mr. Johnson previously served twenty one years as a Township Officer, twelve years on the Wyndmere, ND School Board, and six years on the North Dakota Soybean Council. He holds a Bachelor of Science degree in Agricultural Economics from North Dakota State University. 

Chris A. Johnson.  Mr. Johnson has been a director since 2008.  Mr. Johnson has farming operations located near Great Bend, North Dakota, and has been farming since 1974.  Mr. Johnson is the owner/operator of C and S Farms, Inc.  Mr. Johnson served on the Board of Directors for Farmers Elevator Co. of Hankinson, Great Bend, & Mantador.  Mr. Johnson has a Bachelor of Science Degree in Agricultural Economics from North Dakota State University.

Glenn H. Johnson.  Mr. Johnson has been a director since 2008.  Mr. Johnson has managed a farming operation in the Mayville, North Dakota area since 1981.

Byron Koehl.  Mr. Koehl has been a director since March 2010.  Mr. Koehl has been a partner in his family’s farming operation near Hancock, Minnesota, since 1984.  Mr. Koehl serves as President of Outback Five, Inc., of Hancock, Minnesota.  Mr. Koehl is past President of the Stevens County Pork Producers.

Leslie O. Nesvig.  Mr. Nesvig has been a director since 2008 and Treasurer since 2017.  Mr. Nesvig has farming interests in LaMoure and Ranson Counties in North Dakota and Polk County in Minnesota.  He has forty years of experience the banking industry including serving as President of the First State Bank of LaMoure from 1973 to 2009.  Mr. Nesvig is currently retired.   Mr. Nesvig served as Chairman of the Gold Energy ethanol plant start-up project.  Mr. Nesvig currently serves as a Director for Nored, Inc. and for Bancinsure. Mr. Nesvig has a Bachelor of Science Degree in Agricultural Economics and Business from North Dakota State University.

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Nicolas A. Pyle.  Mr. Pyle has been a director since 2010 and First Vice-Chair since March 2015.  He previously served as Secretary from March 2013 to March 2015.  He has been farming since 2002 near Casselton, North Dakota.  Mr. Pyle serves as a director of McIntyre-Pyle, Inc.  Mr. Pyle is President and serves as a director of Unity Seed Company, a member of Global Soy Genetics LLC and Director of McIntyre Farms Partnership.  Mr. Pyle holds a Bachelor of Science in Business degree in finance from the University of Minnesota Carlson School of Management. 

Bruce K. Speich.  Mr. Speich has been a director since 2008.  Mr. Speich has farming/ranching operations located in Milnor, North Dakota, and has been farming since 1975.  Mr. Speich currently serves as director for North Dakota Beef Cattle Improvement Association and director for Wild Rice Soil Conservation District.

Lawrence A. Vipond. Mr. Vipond has been a director since March 2015. Mr. Vipond has been farming since 1971 and is a partner in Vipond Farms of Norcross, MN.  Mr. Vipond previously served on the New Horizons Board of Directors and the St. Charles Church Board. Mr. Vipond also served as Chairman of the Herman Community Center Capital Fund Drive. Mr. Vipond attended Fergus Falls Community College.

Scott Stofferahn.  Mr. Stofferahn was elected Executive Vice President, Chief Executive Officer and Chief Financial Officer of the Cooperative effective October 15, 2012.  Starting in March 2001, Mr. Stofferahn worked as State Director for North Dakota Senator Kent Conrad.  Prior to that, he was the State Executive Director for the North Dakota Farm Service Agency from 1993 to 2001.  Mr. Stofferahn has extensive public service experience including serving in the North Dakota State House of Representatives from 1982 to 1992.  Mr. Stofferahn received his Bachelor of Science Degree from North Dakota State University.

Audit Committee and Audit Committee Financial Expert

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the Cooperative’s financial reporting and controls, the annual independent audit of the Cooperative’s 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 and approves the fees, scope and procedural plans of the audits of the Cooperative’s financial statements.  The Audit Committee administers the Cooperative’s employee complaint program and handles, on behalf of the full Board of Directors, any issues that arise under the Cooperative’s Code of Ethics.  The Audit Committee has a charter that is available from the Cooperative upon request.

As of December 31, 2017, the Board of Directors of the Cooperative has determined that there is no audit committee financial expert serving on the Audit Committee.  The Cooperative is a cooperative association formed in accordance with the Minnesota cooperative law of the State of Minnesota.  In accordance with the Minnesota cooperative association law, and the Cooperative’s Amended and Restated Bylaws, the Board of Directors must be composed of members of the Cooperative.   Based on the state law requirements for both membership and board service, the Cooperative 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 Cooperative 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.”

The Audit Committee has reviewed and discussed with management and Widmer Roel our audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The Audit Committee also discussed with Widmer Roel the matters required to be discussed pursuant to SAS No.114 (Codification of Statements of Auditing Standards, AU Section 380), which includes, among other items, matters related to the conduct of the audit of the Cooperative’s financial statements.

The Audit Committee has received and reviewed the written disclosures and the letter from Widmer Roel required by the applicable requirements of the Public Company Accounting Oversight Board regarding Widmer Roel’s communications with the Audit Committee concerning its independence from the Cooperative and has discussed with Widmer Roel its independence from the Cooperative.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for our fiscal year ended December 31, 2017 for filing with the Securities and Exchange Commission.

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The members of the Audit Committee at the time of the foregoing review, discussions and recommendation were Nicolas Pyle, chair, Gary Jirak, Shaun Beauclair, Leslie Nesvig, Glenn Johnson, Brett Johnson, and Mark Harless.

Code of Ethics

The Cooperative has adopted a code of ethics that applies to its principal executive officer and principal financial officer as well as all employees and Directors of the Cooperative.  The Cooperative’s code of ethics is posted on its website. The Cooperative intends to include on its website, within the time period required by Form 8-K, any amendment to, or waiver from, a provision of our Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions, that relates to any element of the Code of Ethics definition enumerated in Item 406(b) of Regulation S-K.

Item 11.  EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The Cooperative only has a single employee who serves in the capacity of its chief executive officer and chief financial officer (our Named Executive Officer).  The primary objective of the Cooperative’s executive compensation program is to maintain a compensation program that will fairly compensate the Named Executive Officer.  In determining the compensation of the Named Executive Officer, the Personnel and Compensation Committee of the Board of Directors considers the financial condition and operational performance of the Cooperative during the prior year.

The Personnel and Compensation Committee may review the compensation practices of other companies, based in part on market survey data and other statistical data relating to executive compensation obtained through industry publications and other sources.  The Personnel and Compensation Committee does not intend to benchmark executive compensation directly with other publicly traded companies or other companies with which we may compete for potential executives since some of these competitors are privately held companies for which executive compensation information may not be available.  However, the Personnel and Compensation Committee may compare executive compensation as a whole with the compensation packages of other companies for which survey data is available, and may also compare the pay of individual executives if the jobs are sufficiently similar to make the comparison meaningful.

Perquisites and Other Benefits

401(k) Plan

The Cooperative makes available a 401(k) plan for its Named Executive Officer.  The Cooperative pays four percent (4%) of employee’s annual salary into the plan, and the employee may make additional contributions up to the lawful limits.

Employment Agreements

Mr. Stofferahn is not party to an employment agreement with the Cooperative.

Deferred Compensation Agreement

The Cooperative has not adopted any bonus, profit sharing, or deferred compensation plans other than a pension plan for which accruals were frozen as of January 1, 2013 and under which one former employee receives benefits.

Compensation Policies and Practices and Risk Management

Mr. Stofferahn’s compensation is set by the Board.  In the event it is modified, such a modification is based on a performance evaluation conducted by our Personnel and Compensation Committee that consists solely of members of the Board.  As discussed throughout this report, the revenue and expenses of the Cooperative directly relate to the price of corn as well as the rental income received by ProGold for the facility.  Mr. Stofferahn has no control over these two factors.  Based on this reality, no risks arise from the Cooperative’s compensation policies and practices that are reasonably likely to have a material adverse effect on its business operations.

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Summary Executive Compensation Table

The following table sets forth, for the last three calendar years, the dollar value of all compensation awarded to, earned by or paid to Mr. Stofferahn.

Name and			All Other
Principal		Salary	Compensation	Total
Position	Year	($)	($) (1)	($)
Scott Stofferahn, Executive Vice President**	2017	159,260	16,900	176,160
	2016	156,730	17,177	173,907
	2015	150,504	17,033	167,537

** Mr. Stofferahn commenced his employment on October 15, 2012.

(1) All Other Compensation is comprised of premiums paid for life and disability insurance, company contributions to the 401(k) plan and reimbursements from the health reimbursement account.

Director Compensation

The Cooperative reimburses our Directors for expenses incurred in connection with board service.  The Cooperative’s Directors are paid $150 per month and the Chairman is paid $375 per month.  In addition, Directors and the Chairman receive a per diem of:

· $300 per meeting they attend when the meeting plus their travel time exceeds 4 hours;

· $150 per meeting they attend when the meeting plus their travel time is more than 2 but less than 4 hours;

· $100 per meeting they attend when the meeting plus their travel time is more than 1 but less than 2 hours.

The following table sets forth for the year ending December 31, 2017 the dollar value of all cash and non-cash compensation paid to individuals serving as Directors of the Cooperative during fiscal year 2017.

	Fees
	Earned or
	Paid in
Name	Cash		Total
Shaun Beauclair	$	6,800	$	6,800
David Benedict	$	4,450	$	4,450
Bernie DeCock	$	1,150	$	1,150
Richard Bot	$	2,250	$	2,250
Mark Harless	$	9,350	$	9,350
Matt Hasbargen	$	4,650	$	4,650
Scott Jetvig	$	3,500	$	3,500
Gary L. Jirak	$	3,600	$	3,600
Brett Johnson	$	4,050	$	4,050
Chris Johnson	$	3,400	$	3,400
Glenn Johnson	$	3,300	$	3,300
Byron Koehl	$	3,500	$	3,500
Leslie Nesvig	$	4,900	$	4,900
Nicolas A. Pyle	$	4,600	$	4,600
Bruce Speich	$	3,300	$	3,300

Personnel and Compensation Committee Interlocks and Insider Participation

During fiscal 2017, the members of the Personnel and Compensation Committee were Messrs. Chris Johnson, chair, Richard Bot, Mark Harless, Matt Hasbargen, Bruce Speich, and Larry Vipond. None of the members of the Committee was an officer or employee of the Cooperative during fiscal 2017, or was formerly an officer of the Cooperative. None of the members of the Committee had any relationship requiring disclosure under Item 404 of Regulation S-K.  Our Named Executive Officer during fiscal 2017 did not serve on the compensation committee or the board of any company that employed any member of the Cooperative’s Committee or Board.

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Personnel and Compensation Committee Report on Executive Compensation

The Personnel and Compensation Committee of the Board of Directors is responsible for reviewing and recommending to the Board of Directors for its approval compensation levels for the Company’s Named Executive Officer. The Committee’s responsibilities are specified in the Personnel and Compensation Committee Charter, available from the Cooperative upon request. The Committee and Board of Directors have reviewed and discussed the compensation discussion and analysis set forth in this report with management and, based on this review and discussion, the Board of Directors has approved the inclusion of the compensation discussion analysis in this report.

Chris Johnson (Chair)

Richard Bot

Mark Harless

Matt Hasbargen

Bruce Speich

Larry Vipond

   Members of the Personnel and

   Compensation Committee

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of February 23, 2018 the number of Units beneficially owned and the percent so owned by (1) each of our directors as of such date, (2) Scott Stofferahn, our Executive Vice President (our Named Executive Officer) and (4) all of our Directors and the Named Executive Officer as a group.  The number of Units owned by each person are those beneficially owned, as determined under the rules of the SEC, and such information is not necessarily indicative of beneficial ownership for any other purpose.  Under such rules, beneficial ownership includes any Units as to which a person has sole or shared voting power or investment power and any Units which the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement.  The applicable percentage ownership is based on 15,490,480 Units outstanding held by 1,546 members.  Each member of the Cooperative is allowed to cast one vote at any meeting of the members, regardless of the number of Units actually held by that member.  Some of our directors hold their Units through more than one entity which allows those directors to cast a vote for each one of those members.  The address of each director and our Named Executive Officer is 1002 Main Avenue W, Suite 5, West Fargo, ND 58078.

	Amount and Nature of
	Beneficial Ownership
			Number of
	Number of		Membership	Percentage
Name of Beneficial Owner	Units (1)		Votes(2)	of Class
Beauclair, Shaun	148,000	(3)	3	0.96	%
Benedict, David	15,000		1	0.10	%
Bot, Richard	200,450	(4)	1	1.29	%
Harless, Mark	28,000	(5)	1	0.18	%
Hasbargen, Matt	8,000	(6)	1	0.05	%
Jetvig, Scott	30,000		1	0.19	%
Jirak, Gary	40,000	(7)	2	0.26	%
Johnson, Brett	15,000		1	0.10	%
Johnson, Chris	18,000	(8)	1	0.12	%
Johnson, Glenn	50,703		1	0.33	%
Koehl, Byron	16,000	(9)	2	0.10	%
Nesvig, Les	4,000		1	0.03	%
Pyle, Nicolas	57,000	(10)	3	0.37	%
Speich, Bruce	4,000		1	0.03	%
Vipond, Larry	69,000	(11)	1	0.45	%
Stofferahn, Scott	16,667	(12)	1	0.11	%
All directors and executive officers as a group (16 people)	719,820			4.67	%

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(1) Membership interests are measured Units which equal the holder’s proportionate financial right but not a governance right.

(2) Voting rights are based on one member one vote.  Each person or entity that holds units is a member for voting purposes.  Some officers and directors own their units through multiple entities resulting in multiple membership votes. 

(3) Includes 20,000 Units owned directly by Mr. Beauclair’s spouse and 88,000 Units Mr. Beauclair owns in joint tenancy with his spouse.

(4) Includes 100,225 Units owned directly by Mr. Bot’s Revocable Living Trust and 100,225 Units owned by Mr. Bot’s spouse’s Revocable Living Trust.

(5) Includes 28,000 Units owned jointly with his spouse.

(6) Included 8,000 Units owned by Matthew Hasbargen Farm LLC of which Mr. Hasbargen is President.

(7) Includes 30,000 Units owned by Jirak Brothers Farming Partnership of which Mr. Jirak is a partner and 10,000 Units owned by Triple J. Ranch, Inc. of which Mr. Jirak is a shareholder. 

(8) Includes 13,000 Units owned by C and S Farms, Inc. of which Mr. Johnson is the President and 5,000 owned directly by Mr. Johnson’s Spouse.

(9) Includes 4000 Units as of C R Koehl & Sons, Inc. of which Mr. Koehl is a 8.75% owner, and 8,000 Units held by two dependent sons.

(10) Includes 40,000 Units held by McIntyre Farms of which Mr. Pyle is a 25% owner, 10,000 Units held by HarMar LLC of which Mr. Pyle is a 33% owner, and 7,000 Units held jointly with his spouse.

(11) Includes 69,000 Units owned by Vipond Farms of which Mr. Vipond is a 20% owner.

(12) Includes indirect interest in 16,667 Units owned by his spouse.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act, as amended, requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, and based solely on a review of the copies of such reports furnished to us and written representations from our officers and directors, all directors and officers filed timely reports of ownership and changes in ownership with the SEC.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

In accordance with the Cooperative’s Bylaws, only people who are members of the Cooperative or representatives of members can serve on our Board of Directors.  As members of the Cooperative (or representatives of members), all of our Directors have a contractual patronage relationship with the Cooperative that obligates them to deliver or contract to deliver corn to the Cooperative for processing.  As a result of this patronage relationship, the Cooperative’s Directors, like all other member of the Cooperative, receive allocations of profit/loss and cash distributions.

The Cooperative has developed its own definition of “Independent Director” that takes into account the patronage relationship that exists between the Cooperative and each Director.  Under the Cooperative’s definition, the patronage relationship is not considered for purposes of determining “independence.”  However, other relevant relationships between the Cooperative and the Directors, and certain family members, are considered in assessing “independence.”  Except with respect to the patronage relationship that exists, the Cooperative’s definition is consistent with the definition of an independent director found in Section 303A.02 of the New York Stock Exchange Listed Company Manual.  Below please find the Cooperative’s definition of an independent director:

A  director of the Cooperative shall be considered an “Independent Director” unless:

· The director has a material financial relationship with the Cooperative (either directly or as a partner, shareholder or officer of an organization that has a relationship with a company) other than the patronage relationship that exists between the Cooperative and each of its members.

· The director is, or has been within the last 3 years, an employee of the Cooperative; or immediate family member is, or has been within the last 3 years, an employee, of the Cooperative.

· The director has received, or an immediate family member has received, during any 12-month period within the last 3 years, more than $120,000 in direct compensation from the Cooperative, other than director or committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).

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· (i) the director is a current partner or employee of a firm that is the Cooperative’s internal or external auditor; (ii) the director has an immediate family member who is a current partner of such firm; (iii) the director has an immediate family member who is a current employee of such a firm and personally works on the Cooperative’s audits; or (iv) the director or an immediate family member was, within the last 3 years, a partner or employee of such a firm and personally worked on the Cooperative’s audit within that timeframe.

· The director or an immediate family member is, or has been within the last 3 years, employed as an executive officer of another company, or any of the Cooperative’s present executive officers, at the same time serves or served on that company’s compensation committee.

· The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Cooperative for property or services in an amount which, in any of the last 3 fiscal years, exceeds the greater of $1,000,000 or 2% of such company’s consolidated gross revenues, other than as a result of such person’s patronage relationship with the Cooperative.

Based on the above definition, all of our Directors are independent of management and of the Cooperative.

Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table presents fees for professional audit services rendered by Widmer Roel for the audits of the Cooperative’s annual financial statements for the years ended December 31, 2017 and 2016 and fees, if any, for other services rendered by Widmer Roel during those periods.

	2017		2016
Audit Fees	$	37,765	$	33,405
Audit-Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—
Total	$	37,765	$	33,405

Audit Fees.  The Audit Fees set forth above include the aggregate fees billed by Widmer Roel to the Cooperative for audit services related to the audit of the Cooperative’s annual financial statements and review of the statements included in the Cooperative’s quarterly reports on Form 10-Q for fiscal 2017 and 2016.

Audit-Related Fees.  No additional Audit-Related Fees were billed by Widmer Roel to the Cooperative for assurance and related services provided by Widmer Roel related to the performance of the audit or review of the Cooperative’s financial statements for fiscal 2017 and 2016.

Tax Fees.  No Tax Fees were billed by Widmer Roel to the Cooperative for professional services rendered by Widmer Roel for tax compliance, tax advice and tax planning for fiscal 2017 and 2016.

All Other Fees.  No Other Fees were billed by Widmer Roel to the Cooperative for professional services provided by Widmer Roel to the Cooperative for fiscal 2017 and 2016.

The Cooperative’s Audit Committee would pre-approve all professional services provided by Widmer Roel to the Cooperative.  The Audit Committee approved all of the services and the fees billed for such services to the Cooperative.  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 2017 financial statements were attributed to work performed by persons who were not employed full time on a permanent basis by Widmer Roel.

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PART IV

Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)  Documents filed as part of this report.

1.Financial Statements

Report of Independent Registered Public Accounting Firm.

Balance Sheets as of December 31, 2017 and 2016.

Statements of Operations and Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015.

Statements of Changes in Members’ Equity for the Years Ended December 31, 2017, 2016 and 2015.

Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015.

Notes to the Financial Statements.

2.Financial Statement Schedules

Not applicable.

3.Exhibits.

Exhibit No.	Exhibit Description
2.1	Articles of Merger of Golden Growers Cooperative and Golden Growers Cooperative is incorporated by reference to Exhibit 2.1 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.
2.2	Certificate of Conversion of Golden Growers Cooperative is incorporated by reference to Exhibit 2.2 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.
3.1	Amended and Restated Articles of Organization of Golden Growers Cooperative is incorporated by reference to Exhibit 3.1 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.
3.2	Amended and Restated Bylaws of Golden Growers Cooperative dated September 1, 2009 is incorporated by reference to Exhibit 3.2 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.
10.1	Form of Uniform Member Agreement is incorporated by reference to Exhibit 10.2 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.
10.2	Form of Annual Delivery Agreement is incorporated by reference to Exhibit 10.3 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.
10.3	ProGold Limited Liability Company Amended and Restated Member Control Agreement between Golden Growers Cooperative and American Crystal Sugar Company dated September 1, 2009 is incorporated by reference to Exhibit 10.4 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.
10.4	Operating Agreement of ProGold Limited Liability Company is incorporated by reference to Exhibit  10.5 from the Cooperative’s Registration Statement on Form 10 (File No. 10783579) filed April 30, 2010.

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Exhibit No.	Exhibit Description
10.5	Amendment to ProGold Limited Liability Company Member Control Agreement between Golden Growers Cooperative and American Crystal Sugar Company dated April 4, 2017 is incorporated by reference to Exhibit 10.7 from the Cooperative’s Form 10-Q (File No. 17836300) filed May 12, 2017.
10.6	Second Amended and Restated Grain Services Agreement between Golden Growers Cooperative and Cargill, Incorporated dated July 1, 2017 – filed herewith.
10.7	Second Amended and Restated Corn Supply Agreement between Golden Growers Cooperative and Cargill, Incorporated dated July 1, 2017 – filed herewith.
10.8	Consent Agreement among Golden Growers Cooperative, Cargill Incorporated, and American Crystal Sugar Company dated April 4, 2017 is incorporated by reference to Exhibit 10.1 from the Cooperative’s Current Report on Form 8-K (File No. 17753203) filed April 10, 2017.
31.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act Rule 17 CFR 13a-14(a) – filed herewith.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 – filed herewith.
99.1	Audited Financial Statements of ProGold Limited Liability Company for the years ended August 31, 2017 and August 31, 2016 is incorporated by reference to Exhibit 99.1 from the Cooperative’s Quarterly Report on Form 10-Q (File No. 171193272) filed on November 13, 2017.
101	The following materials from this report, formatted in Extensible Business Reporting Language (XBRL), are filed herewith: (i) Balance Sheets at December 31, 2017 and December 31, 2016; (ii) Statements of Operations for the years ended December 31, 2017, 2016 and 2015; (iii) Statements of Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015; (iv) Statement of Changes in Members’ Equity and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015; (v) Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015; and (vi) Notes to Financial Statements.

Item 16.  FORM 10-K SUMMARY

None

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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 March 9, 2018.

GOLDEN GROWERS COOPERATIVE
By:	/S/ Scott Stofferahn
	Scott Stofferahn
Dated: March 9, 2018

Power of Attorney

Each person whose signature appears below appoints Scott Stofferahn as their true and lawful attorney-in fact and agent, with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place and stead, to perform all acts and execution of all documents which such attorney and agent may deem necessary or desirable to enable Golden Growers Cooperative to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, in connection with filing with the Commission the Annual Report on Form 10-K of Golden Growers Cooperative for the fiscal year ended December 31, 2017 and any and all amendments and exhibits thereto, and other documents in connection therewith, including specifically, but without limiting the generality of the foregoing, power and authority to sign the names of the undersigned to the Form 10-K and to any instruments and documents filed as part of or in connection with the Form 10-K or any amendments thereto; and the undersigned hereby ratify and confirm all actions taken and documents signed by said attorney and agent as provided herein.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and as of March 9, 2018.

/S/ Mark Harless	/S/ Nicolas Pyle
Mark Harless (Chairman)	Nicolas Pyle (1st Vice Chairman)
/S/ Shaun Beauclair	/S/ David Benedict
Shaun Beauclair (2nd Vice Chairman)	David Benedict (Director)
/S/ Richard Bot	/S/ Matthew Hasbargen
Richard Bot (Director)	Matthew Hasbargen (Director, Secretary)
/S/ Scott Jetvig	/S/ Gary L. Jirak
Scott Jetvig (Director)	Gary L. Jirak (Director)
/S/ Brett Johnson	/S/ Chris A. Johnson
Brett Johnson (Director)	Chris A. Johnson (Director)
/S/ Glenn Johnson	/S/ Byron Koehl
Glenn Johnson (Director)	Byron Koehl (Director)
/S/ Leslie Nesvig	/S/ Bruce Speich
Leslie Nesvig (Director, Treasurer)	Bruce Speich (Director)
/S/ Larry Vipond	/S/ Scott Stofferahn
Larry Vipond (Director)	Scott Stofferahn (principal executive, financial and accounting officer)

25

APPENDIX A

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

GOLDEN GROWERS COOPERATIVE FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	A-1
Balance Sheets as of December 31, 2017 and 2016	A-2
Statements of Operations and Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015	A-3
Statements of Changes in Members’ Equity for the Years Ended December 31, 2017, 2016, and 2015	A-5
Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015	A-6
Notes to the Financial Statements	A-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee and Board of Directors

Golden Growers Cooperative

West Fargo, North Dakota

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Golden Growers Cooperative (the Cooperative) as of December 31, 2017 and 2016, and the related statements of operations, comprehensive income, changes in members’ equity and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Cooperative as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Cooperative’s management. Our responsibility is to express an opinion on the Cooperative’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Cooperative in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Cooperative is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Cooperative’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Cooperative’s auditor since 2008.

Fargo, North Dakota

March 8, 2018

A-1

GOLDEN GROWERS COOPERATIVE

BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

(Dollars In Thousands)

	December 31,
ASSETS	2017		2016
Current Assets:
Cash and Cash Equivalents	$	6,261	$	2,792
Short-Term Investments		220		219
Prepaid Expenses		218		342
Total Current Assets		6,699		3,353
Furniture and Equipment, Net		—		1
Investment in ProGold Limited Liability Company		19,773		20,484
Total Assets	$	26,472	$	23,838
LIABILITIES AND MEMBERS’ EQUITY
Current Liabilities
Accounts Payable	$	6	$	1
Accrued Liabilities		220		221
Total Current Liabilities		226		222
Members' Equity:
Members’ Equity		26,246		23,616
Membership Units, Authorized 60,000,000 Units, Issued and Outstanding 15,490,480 as of December 31, 2017 and December 31, 2016
Accumulated Other Comprehensive Income (Loss)		—		—
Total Members’ Equity		26,246		23,616
Total Liabilities and Members’ Equity	$	26,472	$	23,838

See accompanying Report of Independent Registered Public Accounting Firm and Notes to the Financial Statements.

A-2

GOLDEN GROWERS COOPERATIVE

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(Dollars In Thousands)

	December 31,		December 31,		December 31,
	2017		2016		2015
OPERATIONS
Corn Revenue	$	49,890	$	52,135	$	56,370
Corn Expense		(49,960)		(52,240)		(56,475)
Net Income from ProGold Limited Liability Company		9,785		5,375		5,250
General & Administrative Expenses		(565)		(574)		(620)
Net Income from Operations		9,150		4,696		4,525
Interest Income		32		8		8
Net Income Before Income Tax	$	9,182	$	4,704	$	4,533
Income Tax Provision		—		—		—
Net Income	$	9,182	$	4,704	$	4,533
Weighted Average Shares/Units Outstanding		15,490,480		15,490,480		15,490,480
Earnings per Share/Membership Unit
Primary and Fully Diluted	$	0.59	$	0.30	$	0.29

See accompanying Report of Independent Registered Public Accounting Firm and Notes to the Financial Statements.

A-3

GOLDEN GROWERS COOPERATIVE

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015

(Dollars In Thousands)

	December 31,		December 31,		December 31,
	2017		2016		2015
COMPREHENSIVE INCOME
Net Income	$	9,182	$	4,704	$	4,533
Pension Liability Adjustment		—		48		(48)
Comprehensive Income	$	9,182	$	4,752	$	4,485

See accompanying Report of Independent Registered Public Accounting Firm and Notes to the Financial Statements.

A-4

GOLDEN GROWERS COOPERATIVE

STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(Dollars In Thousands)

	Accumulated
	Other				Total
	Comprehensive		Members’		Members’
	Income		Equity		Equity
BALANCE December 31, 2014	$	—	$	34,053	$	34,053
Net income		—		4,533		4,533
Member distributions		—		(10,225)		(10,225)
Pension liability adjustment		(48)		—		(48)
BALANCE December 31, 2015	$	(48)	$	28,361	$	28,313
Net income		—		4,704		4,704
Member distributions		—		(9,449)		(9,449)
Pension liability adjustment		48		—		48
BALANCE December 31, 2016	$	—	$	23,616	$	23,616
Net income		—		9,182		9,182
Member distributions		—		(6,552)		(6,552)
Pension liability adjustment		—		—		—
BALANCE December 31, 2017	$	—	$	26,246	$	26,246

See accompanying Report of Independent Registered Public Accounting Firm and Notes to the Financial Statements.

A-5

GOLDEN GROWERS COOPERATIVE

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(Dollars In Thousands)

	December 31,		December 31,		December 31,
	2017		2016		2015
Cash Flows from Operating Activities
Net Income	$	9,182	$	4,704	$	4,533
Net (Income) from ProGold Limited Liability Company		(9,785)		(5,375)		(5,250)
Depreciation		1		2		1
Changes in assets and liabilities
Prepaid Expenses		124		(55)		(67)
Accrued liabilities and payables		4		(29)		36
Net cash used in operating activities		(474)		(753)		(747)
Cash Flows from Investing Activities
(Purchase) Sale of investments		(1)		1		(2)
Distribution received from ProGold LLC		10,496		10,721		10,763
Net cash Provided in Investing Activities		10,495		10,722		10,761
Cash Flows from Financing Activities
Member distributions paid		(6,552)		(9,449)		(10,225)
Net Cash Used by Financing Activities		(6,552)		(9,449)		(10,225)
Increase (Decrease) in Cash and Cash Equivalents		3,469		520		(211)
Cash and Cash Equivalents, Beginning of Period		2,792		2,272		2,483
Cash and Cash Equivalents, End of Period	$	6,261	$	2,792	$	2,272

See accompanying Report of Independent Registered Public Accounting Firm and Notes to the Financial Statements.

A-6

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

NOTE 1 — NATURE OF OPERATIONS

Organization - Golden Growers Cooperative was initially organized as a North Dakota member-owned cooperative incorporated on January 19, 1994 (“GG-ND”).  GG-ND and two other partners, one of whom was American Crystal Sugar Company (“ACSC”) entered into a joint venture that formed ProGold Limited Liability Company, a Minnesota limited liability company (“ProGold”) which designed and constructed a corn wet-milling facility in Wahpeton, North Dakota (the “Facility”).  Under the joint venture, GG-ND (and indirectly its members) had the right and obligation to deliver corn to be processed at the Facility.  After it was constructed and operated briefly by its members, the Facility was leased to Cargill Incorporated (“Cargill”) who continues to operate the Facility under a lease that runs through December 31, 2022 and which will be automatically extended through 2023 in the event that either (i) Cargill has not, prior to December 31, 2021, exercised an option to purchase ACSC’s 50% interest in ProGold pursuant to an Option Agreement between Cargill and ACSC dated as of April 4, 2017 and effective as of January 1, 2018 or (ii) if the parties have not otherwise mutually agreed to extend or terminate the lease.  Golden Growers Cooperative and ACSC are the current members of ProGold, with Golden Growers Cooperative holding a 49% interest and ACSC holding the remaining 51% interest.

On July 29, 2009 GG-ND formed a wholly owned cooperative subsidiary in the state of Minnesota (GG-MN), organized under Minnesota Statutes chapter 308A, solely for the purpose of reincorporating into the state of Minnesota.  On September 1, 2009, GG-ND merged into GG-MN and reincorporated into the state of Minnesota.  Immediately after the merger, GG-MN statutorily converted into a cooperative association governed under Minnesota Statutes 308B.  As a result of its reincorporation and reorganization Golden Growers — North Dakota, a North Dakota cooperative association historically taxed as a tax-exempt cooperative under Subchapter T of the Internal Revenue Code, became Golden Growers Cooperative, a Minnesota cooperative association governed by Minnesota Statutes chapter 308B as a cooperative for state law purposes but taxed as a partnership under Subchapter K of the Internal Review Code for tax purposes.  Golden Growers Cooperative succeeded to the business of Golden Growers — North Dakota and except for changes to the structure and operations as a result of the reincorporation and statutory conversion, continues to operate the business of Golden Growers — North Dakota.

As part of the Conversion, GG-ND’s members exchanged their shares of Class A Common Voting Membership Stock and Class B Non-Voting Equity Stock for identical and equal shares of such stock in GG-MN.  Each member’s single share of Class A Common Voting Membership Stock was redeemed for $150 and each member received membership units in GG-MN equal to the number of shares of Class B Non-Voting Equity Stock each member held in GG-ND prior to the Merger.

Prior to September 1, 2009, ownership of membership stock, which signified membership in the Cooperative, was restricted to producers of agricultural products.  The ownership of equity stock was restricted to members of the Cooperative.  Preferred stock could be held by persons who were not members of the Cooperative.  At August 31, 2009 and 2008, the Cooperative had 10,000 shares of non-voting, $1,000 par-value preferred stock authorized, of which none were issued or outstanding.  Equity requirements, as determined by the board of directors, could be retained from amounts due to patrons and credited to members’ equity in the form of unit retains or allocated patronage.

The Cooperative reserved the right to acquire any of its stock offered for sale and the right to recall the stock of any member.  In the event this right was exercised, the consideration paid for such stock was 25% of its book value.

Beginning September 1, 2009, ownership of membership units is available to any person or entity residing in the Unites States of America.  Net proceeds or losses will be allocated to members on the basis of their patronage of the Cooperative.

In connection with the Conversion, the Cooperative changed its fiscal year end to December 31.

A-7

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Pronouncements:

Revenue Recognition - Effective January 1, 2018, the Cooperative will adopt ASU 2014-09, Revenues from Contracts with Customers. The core principle of the revenue guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Cooperative determined that the timing, pattern and amount of revenue recognized under the new standard will be substantially the same as previously recognized by the Cooperative.

Leases - In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. The standard will be effective fir us beginning January 1, 2018. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.

Financial Instruments – Recognition, Measurement, Presentation, and Disclosure - In January 2016, the FASB issued a new standard related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard will be effective for us beginning January 1, 2019. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.

Significant Accounting Policies:

Investments — The Cooperative’s investment securities are held to maturity and recorded at amortized cost.  The Cooperative’s investment in ProGold is recorded at historical cost plus its pro-rata share of ProGold’s net income and additional paid-in capital less distributions received from ProGold.  Unrealized gains or losses are recorded in accumulated other comprehensive income within members’ equity.  Gains and losses are determined using the specific identification method.

Cash and Cash Equivalents — The Cooperative considers all demand accounts to be cash equivalents and overnight sweep accounts.  Cash equivalents do not include money market accounts maintained by the Cooperative’s investment managers.  Cash equivalents do not include any investment with a stated maturity date, regardless of the term to maturity.

Income Taxes – Since September 1, 2009, Golden Growers Cooperative has been taxed as a limited liability company under Subchapter K of the Internal Revenue Code.  As such, the Cooperative is generally not subject to income taxes.  Instead, net income is reported by its members who will be responsible for any income taxes which may be due.  Prior to September 1, 2009, Golden Growers Cooperative was an exempt cooperative for federal income tax purposes.  As such, the cooperative was generally not subject to income taxes.  Instead, net proceeds were allocated to the Cooperative's patrons who were responsible for any income taxes which may have been due. The Cooperative’s net financial basis in its assets and liabilities exceeded its tax basis by approximately $8.5 million and $8 million as of December 31, 2017 and 2016, respectively.

Property and Equipment — Property and equipment are stated at cost.  Depreciation on assets placed in service is provided using the straight-line method over estimated useful lives ranging from 5 to 10 years.

Accounting Estimates — The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and

A-8

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

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.

Revenue Recognition —The Cooperative’s members are contractually obligated to annually deliver corn to the Cooperative by either Method A or Method B or a combination of both.  Under Method A, a member is required to physically deliver corn to the cooperative and under Method B a member appoints the cooperative as its agent to arrange for the acquisition and delivery of corn on the member’s behalf.  The Cooperative contractually appoints Cargill as its agent to arrange for the delivery of the corn by its members who elect to deliver corn using Method A and to acquire corn on its behalf for its members who elect to deliver corn using Method B.  In exchange for these services, the Cooperative paid Cargill an annual fee of $70,000 in 2017. Commencing on January 1, 2018, the Cooperative will pay an annual fee of $60,000, paid in quarterly installments.  The price per bushel paid to the member who elects to deliver corn using Method B is equal to the price per bushel paid by Cargill to acquire the corn as the Cooperative’s agent.  Members who deliver corn under Method A are paid the market price or contracted price for their corn at the time of delivery.  The Cooperative pays members who deliver corn under Method A an incentive payment of $.05 per bushel while members who elect Method B to deliver corn pay the Cooperative a $.02 per bushel agency fee for the cost of having the Cooperative deliver corn on their behalf.  The board has the discretion to change the incentive fee and the agency fee based on the Cooperative’s corn delivery needs.  The incentive fee and agency fee are a component of Corn Expense.

With respect to all Method A corn that is delivered, Cargill pays the aggregate purchase price for corn purchased from the Cooperative’s members to the Cooperative and then, on the Cooperative’s behalf, makes individual payments for corn directly to its members.  If a Method A member fails to fully satisfy the corn delivery requirement, Cargill purchases replacement corn for which the Cooperative reimburses Cargill the amount by which the underlying contracted corn price is less than the price of buying the replacement corn that was due on the delivery date.  The Method A member who fails to deliver corn is then invoiced by the Cooperative for the price of the corn.

Based on what is to be delivered by its members using Method A, Cargill then purchases the remainder of the corn to be delivered by the Cooperative on behalf of its Method B delivering members.  Because Cargill purchases the corn on the Cooperative’s behalf of Method B delivering members, the purchase price for the corn that would be paid to the Cooperative’s members if they actually delivered the corn offsets against the payment to be made by the Cooperative to Cargill for the cost to purchase the corn, thus no payment is made from Cargill to the Cooperative for corn delivered using Method B.  The Cooperative has determined Corn Expense for Method B deliveries based on the average quarterly cost per bushel paid by Cargill to the Cooperative’s members for Method A quarterly deliveries.

Concentrations - Several times during the year, the Cooperative maintained a cash balance in excess of the Federal Deposit Insurance Corporation (“FDIC”) limits.  At December 31, 2017, the Cooperative’s cash balance exceeded the FDIC insurance limits by approximately $6.5 million.

Fair Value Measurements - The Cooperative has determined the fair value of certain assets and liabilities in accordance with the provisions of Accounting Standards Codification (“ASC”) 820-10, which provides a framework for measuring fair value under generally accepted accounting principles.

ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC 820-10 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.  ASC 820-10 also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

A-9

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.  Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the related asset or liability.  Level 3 inputs are unobservable inputs related to the asset or liability.

NOTE 3 — PROGOLD LIMITED LIABILITY COMPANY

The Cooperative has a 49% ownership interest in ProGold Limited Liability Company.  Following is summary financial information for ProGold Limited Liability Company:

	December 31,
(In Thousands)	2017		2016		2015
Current Assets	$	514	$	125	$	133
Long-Term Assets		39,843		42,086		53,386
Total Assets	$	40,357	$	42,211	$	53,519
Current Liabilities	$	5	$	407	$	404
Long-Term Liabilities		—		—		400
Total Liabilities		5		407		804
Members’ Equity		40,352		41,804		52,715
Total Liabilities and Members’ Equity	$	40,357	$	42,211	$	53,519
Rent Revenue on Operating Lease	$	22,873	$	22,837	$	23,106
Expenses		2,905		11,866		12,392
Net Income	$	19,968	$	10,971	$	10,714

NOTE 4 — INVESTMENTS

The Cooperative has determined fair value of its investments held to maturity based on Level 1 inputs.

The Cooperative’s investments held to maturity are as follows as of December 31, 2017 and 2016 (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
December 31, 2017:
Money Market & CD’s	$	220	$	—	$	—	$	220
December 31, 2016:
Money Market & CD’s	$	219	$	—	$	—	$	219

NOTE 5 — INCOME TAXES

The Cooperative follows the provisions of ASC 740-10 related to accounting for uncertainty in income taxes.

A-10

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

The Cooperative had no unrecognized tax benefits on December 31, 2017 and 2016. No interest or penalties are recognized in the statements of operations or in the balance sheets. 

The Cooperative recognized no income tax expense for the years ended December 31, 2017, 2016 and 2015.

NOTE 6 — EMPLOYEE BENEFIT PLANS

Pension Plan — In December 2012, the Cooperative approved a change to freeze the Cooperative’s defined benefit pension plan as of January 1, 2013. As a result, no additional benefits will accrue to participants in the plan and no new employees are eligible for the plan.  During the year ended December 31, 2017, 2016 and 2015, the pension expenses were $6,000, $12,000, and $25,000, respectively.

As of December 31, 2017, the pension plans were funded as required by the funding standards set forth by the Employee Retirement Income Security Act (ERISA).

The Cooperative’s Compensation Committee has the responsibility of managing the operations and administration of the Cooperative’s retirement plans.  The Cooperative has an investment policy that establishes target asset allocations to reduce the risk of large losses.  Asset classes are diversified to reduce risk, and equity exposure is limited to 50% of the total portfolio value. The investment objectives is to achieve a rate of return sufficient to fully fund the pension obligation of the plan without assuming undue risk through investment vehicles with no greater than average variability of the markets themselves.

Substantially all of the Plan’s assets consist of Collective Investment Trusts or Mutual Funds (Fund) and are valued based on Level I or Level II inputs, as determined from the Fund’s ASC 715-30 footnote included in the Fund’s audited financial statements. The Fund’s valuation techniques include market matrix pricing and market inputs, including bench mark yields, reported trades, broker/dealer quotes and others. There has been no changes in valuation techniques and inputs in 2017, 2016 and 2015.

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

	2017		2016
Discount Rate	4.50	%	5.00	%
Expected Return on Plan Assets	6.32	%	6.25	%
Rate of Compensation Increase	4.73	%	4.73	%

A-11

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

The following schedule reflects the expected pension benefit payments during each of the next five years and the aggregate for the following five years (in thousands):

	Expected
	Benefit
	Payments
2018	$	54
2019		54
2020		54
2021		54
2022		50
2023-2027		244
Total	$	510

The Cooperative expects to make contributions of approximately $6,000 to the defined benefit pension plan during the next fiscal year.

The following schedules provide the components of the Net Periodic Pension Costs for the periods ended December 31, 2017, 2016 and 2015 (in thousands):

	2017		2016		2015
Service Cost	$	—	$	—	$	—
Interest Cost		33		34		37
Expected Return on Plan Assets		(52)		(48)		(44)
Amortization of Net (Gain) Loss		4		5		11
Net Periodic Pension Cost	$	(15)	$	(9)	$	4

A-12

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

The following schedules set forth a reconciliation of the changes in the plan’s benefit obligation and fair value of assets for the periods ending December 31, 2017 and 2016 and a statement of the funded status and amounts recognized in the Balance Sheets and Accumulated Other Comprehensive Income as of December 31, 2017 and 2016 (in thousands):

	December 31,		December 31,
	2017		2016
Change in Benefit Obligation
Obligation at the Beginning of the Period	$	772	$	775
Service Cost		—		—
Interest Cost		33		37
Actuarial (Gain) Loss		9		15
Benefits Paid		(55)		(55)
Obligation at the End of the Period	$	759	$	772
Change in Plan Assets
Fair Value at the Beginning of the Period	$	791	$	727
Actual Returns on Plan Assets		95		107
Employer Contributions		6		12
Benefits Paid		(55)		(55)
Fair Value at the End of the Period	$	837	$	791
Funded Status
Funded Status as of Period Ended	$	78	$	19
Net Amount Recognized	$	—	$	—

	December 31,		December 31,
	2017		2016
Amounts Recognized in the Balance Sheets
Noncurrent Assets	$	—	$	—
Current Liabilities		—		—
Noncurrent Liabilities		—		—
Net Amount Recognized	$	—	$	—
Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income
Accumulated Gain (Loss) Beginning of the Period	$	—	$	(48)
Recognized in Periodic Cost		—		—
Amount Arising During the Period		—		48
Accumulated Gain (Loss) End of the Period	$	—	$	—

A-13

GOLDEN GROWERS COOPERATIVE

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017, 2016 AND 2015

401(k) Plan — The Cooperative has a 401(k) plan that covers employees that meet eligibility requirements. The Cooperative’s contributions to the plan totaled $4,604, $7,489 and $7,123 for the years ended December 31, 2017, 2016 and 2015, respectively.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

The Cooperative contracted with Cargill, Incorporated in connection with the procurement of corn which includes payments of $70,000 in 2017. Commencing on January 1, 2018, the Cooperative will pay an annual fee of $60,000, paid in quarterly installments payments. The contract continues until the termination of the second amended and restated facility lease agreement between ProGold and Cargill, which was effective as of January 1, 2018

On April 4, 2017, the Cooperative, Cargill, and American Crystal entered into a Consent Agreement, effective on January 1, 2018, relating to the lease of ProGold’s wet-milling facility to Cargill and the Cooperative’s interest in ProGold. On the same day, Cargill and American Crystal entered into an Option Agreement, effective on January 1, 2018, detailing the price, term and other conditions under which American Crystal grants to Cargill an exclusive option to purchase a 50% interest in ProGold from American Crystal during the first four years of the lease. Under the Consent Agreement, the Cooperative approves and consents to the transfer of the 50% interest in ProGold from American Crystal to Cargill in the event Cargill exercises its option.  The Cooperative also secures the right to purchase American Crystal’s remaining 1% interest in ProGold for a base price ranging from $1.7 million to $1.3  million, depending on when Cargill notifies American Crystal of its intention to exercise its option.  The Cooperative would also be required to pay to American Crystal a capital adjustment in an amount equal to 1% of the portion of costs that have not been paid by Cargill to ProGold through additional rent with respect to certain projects at the facility.  In the event Cargill intends to exercise its option, before exercising such option, Cargill and the Cooperative will expeditiously and in good faith work together to finalize agreements for the structure, governance and operation of ProGold according to certain operational principles and other guideline terms as provided in a Memorandum of Understanding attached to the Consent Agreement.

NOTE 8 - SUBSEQUENT EVENTS

In February of 2018, the Cooperative declared a distribution of $2,493,967, or $0.161 per outstanding membership unit.

Management has reviewed subsequent events through March 2, 2018 the date to which the financial statements were available to be issued and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

A-14

EX-10.6

Exhibit 10.6

SECOND AMENDED AND RESTATED

GRAIN SERVICES AGREEMENT

THIS SECOND AMENDED AND RESTATED GRAIN SERVICES AGREEMENT (The “Agreement”) is made and entered into effective as of July 1, 2017 by and between CARGILL, INCORPORATED, a Delaware business corporation (“Cargill”) and GOLDEN GROWERS COOPERATIVE, a Minnesota cooperative association (the “Cooperative”).

WHEREAS, Cargill is a licensed grain buyer in various states, including but not limited to Minnesota, North Dakota, and South Dakota; and

WHEREAS, the Cooperative is a member of ProGold Limited Liability Company (the “LLC”); and the LLC owns a corn wet milling facility located in Wahpeton, North Dakota (the “Facility”) which Facility was originally leased to Cargill pursuant to that Facility Lease dated November 1, 1997, is currently leased pursuant to that Amended and Restated Facility Lease effective as of January 1, 2008, and will be leased pursuant to that Second Amended and Restated Facility Lease effective as of January 1, 2018 (as amended and restated, the “Lease Agreement”); and

WHEREAS, the Cooperative has entered into, or will enter into, a Uniform Member Agreement and related Annual Delivery Agreement (“Member Agreement”) with each member of the Cooperative (each, a “Member” and collectively, the “Members”) which provides, among other things, for each Member to deliver the amount and quality of corn (such corn shall be consistent with the corn quality standards and quantity requirements set forth in the Second Amended and Restated Corn Supply Agreement of even date herewith by and between Cargill and the Cooperative) to the Cooperative that is requested by the Cooperative during each calendar year of the Lease Agreement; and

WHEREAS, Cargill and the Cooperative previously entered into an original Grain Services Agreement dated January 1, 2008 (the “2008 Grain Services Agreement”) and an Amended and Restated Grain Services Agreement dated September 1, 2009 (the “2009 Amended Grain Services Agreement”); and

WHEREAS, Cargill and the Cooperative desire to make certain changes and modifications to the services provided by Cargill to the Cooperative pursuant to the 2009 Amended Grain Services Agreement, in order to provide for enhanced efficiencies and cost savings for both parties with respect thereto, as provided herein; and

WHEREAS, the Cooperative desires to engage Cargill to act as the Cooperative’s agent for (i) coordinating the delivery of and payment for corn to be directly delivered by or on behalf of certain Members under the Member Agreements to the Facility, or any alternative delivery point as Cargill, on behalf of the Cooperative, and the Members may agree, and (ii) purchasing corn for the account of the Cooperative on behalf of those Members who elect to fulfill their delivery obligation to the Cooperative by appointing the Cooperative as their agent to deliver said corn.

NOW, THEREFORE, in consideration of the foregoing, and the respective covenants and agreements of the parties contained in this Agreement, and for other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.         MANAGEMENT OF DIRECT METHOD A CORN TO COOPERATIVE.

Cargill shall perform or supervise the performance of the following services as agent for the Cooperative in connection with all corn to be directly delivered by the Members or a qualifying affiliate (“Affiliated Person”) to the Facility, or any alternative delivery point mutually agreed on by Cargill and a Member, for the account of the Cooperative pursuant to the Member Agreements (such corn hereinafter referred to as “Method A Corn” and such Members hereinafter referred to as “Method A Members”). An Affiliated Person may only deliver Method A Corn on behalf of a Method A Member if such person (1) has a familial relationship to such Method A Member, (2) owns or controls more than 50% or has management rights over such Method A Member, (3) shares farming resources with such Method A Member, or (4) is an entity in which 50% ownership is by an immediate family member or members of the Method A Member.  For purposes of this Section 1, “familial relationship” and “immediate family member” includes brothers, sisters, spouse, parents, ancestors (i.e., parents, grandparents) and lineal descendants (i.e., children, grandchildren).  Cargill is appointed by the Cooperative as its exclusive grain buying agent to receive, make payment for and report Method A Corn deliveries.  As such, the Cooperative shall have no obligations of, and shall not be considered as, a grain buyer under this Agreement:

(a)        Notification. The parties acknowledge that for the 2017 calendar year, the Cooperative previously notified Cargill of the volume of Method A corn to be delivered by each Method A Member.  While this Agreement remains in effect, as the term may be extended as provided in Section 9, the Cooperative shall annually notify Cargill of the volume of Method A Corn to be delivered by each Method A Member and the identity of any Method A Member’s Affiliated Persons. Each year, such advance notice shall be given by December 20.  The Cooperative may notify Cargill in writing of additional Affiliated Persons. In addition, a Method A Member may provide Cargill with a written certification that a person delivering Method A Corn on its behalf qualifies as an Affiliated Person.

(b)        Scheduling and Delivery. Cargill will schedule and establish reasonable logistical requirements for delivery of the Method A Corn to the Facility consistent with the following:

(i)        Inspection, Acceptance, and Grading of Corn. Cargill shall cause all Method A Corn to be inspected and graded according to the quality specifications, allowances, premiums, and discounts which Cargill has established. The Cooperative acknowledges and agrees that Cargill will collect all inspection, checkoff and other fees applicable to the Method A Corn.  All nonconforming Method A Corn is subject to rejection or discount. Upon acceptance of Method A Corn, Cargill shall issue a scale ticket to the Method A Member or an Affiliated Person in receipt of such Method A Corn.

(ii)       Overfills. All corn delivered by a Method A Member and an Affiliated Person to Cargill and the Facility shall first be applied to fulfill the Method A Corn delivery commitment as set forth on the Member Statement. Any deliveries of corn by a Method A Member and an Affiliated Person in excess of the amount established in the Member Statement

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shall be handled as a direct sale of corn to Cargill (an “Overfill”). Overfills that are not subject to an existing grain sale contract between the Member and Cargill shall be priced at the then current closing delivered cash corn price established by Cargill at the Facility on the day of unload or with respect to any alternative delivery point mutually agreed to by the Member and Cargill.  If a Method A Member has an unfilled corn sale contract with Cargill, covering the same shipment period, any Overfill will be applied to said contract.

(iii)      Underfills. If the full amount of Method A Corn due for delivery as set forth in the notification from the Cooperative to Cargill is not delivered by or on behalf of Method A Members during the annual delivery period, the shortfall shall be referred to as the “Underfill.” The quantity of the Underfill will be purchased and delivered by Cargill on behalf of the Method A Member and credited to the Method A Member’s Account.  Cargill will notify Golden Growers of the Underfill amount.  The provisions of this paragraph shall be effective for 2017 deliveries and throughout the remaining term of this Agreement.

(iv)       Member Contract Shortfalls. In the event a Method A Member fails to deliver corn as provided in an underlying corn pricing contract with Cargill, then Cargill shall invoice such Method A Member for the Equity Due (as defined below) with respect to such failure to deliver. The Cooperative will reimburse Cargill for any Equity Due that has not been paid by the underfilling Method A Members as of December 31 of any Annual Delivery Period. The “Equity Due” shall be the amount by which the underlying contracted corn price is less than the price of buying the replacement corn as of the date the delivery was due. Cargill agrees that it will use reasonable efforts to minimize the Equity Due amounts from the respective Method A Members.

(v)        Bookkeeping and Payment. On a monthly basis, or at such other intervals as may otherwise be agreed between Cargill and Cooperative, Cargill shall provide the Cooperative with quantity and average monthly price for all Method A Corn delivered by or on behalf of the Method A Members during the prior month in the form of a Microsoft Excel spreadsheet or other mutually acceptable format (the “Monthly Reports”). Cargill shall apply deliveries of all Method A Corn first to the sale and delivery obligation of the Method A Members. As the Cooperative’s appointed grain buyer, Cargill shall make payment by checks or drafts issued directly by Cargill to:  (1) the Method A Members for the Method A Corn delivered, it being the mutual intent of the parties that such direct payment is specifically made on behalf of and for the account of the Cooperative with respect to the Method A Corn delivered by the Method A Members; or (2) the Affiliated Person delivering on behalf of the Method A Members for the Method A Corn delivered, it being the mutual intent of the parties that such direct payment is specifically made on behalf of and for the account of the Cooperative with respect to the Method A Corn delivered by the Affiliated Person.

(c)        Security Interests. As the Cooperative’s appointed grain buying agent, Cargill will follow all regular procedures established by Cargill for purchase of corn delivered to the Facility relative to the recognition of security interests and other liens filed against the Method A Corn delivered to the Facility.  Notwithstanding the foregoing, provided that Cargill has performed the appropriate searches as of the payment date in accordance with accepted industry practice, then Cooperative shall defend and indemnify Cargill in connection with any liability or damages relating to the presence of a security interest against Method A Corn but only to the extent

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caused by the Cooperative’s failure to provide accurate information regarding the identify of its members to Cargill.

2.         MANAGEMENT OF METHOD B CORN DELIVERIES.

Cargill shall perform or supervise the performance of the following services as agent for the Cooperative in connection with all corn to be delivered by Members who have appointed the Cooperative as their agent to deliver corn under the Member Agreements (such corn hereinafter referred to as “Method B Corn” and such Members hereinafter referred to as “Method B Members”):

(a)        Notification and Appointment of Agent. The Cooperative shall annually notify Cargill of the volume of Method B Corn to be delivered by the Cooperative on behalf of its Method B Members. Such notice shall be given by December 20 of each year during the term hereof. The Cooperative hereby appoints Cargill as its agent to procure the Method B Corn on terms Cargill deems to be in the mutual best interest of the parties. Cargill hereby accepts such appointment and agrees to act as the Cooperative’s agent to procure the Method B Corn as provided herein.

(b)        Method B Corn Purchases. Cargill will procure the Method B Corn at such times, in such quantities, and at such price as it deems appropriate and in the best interest of Cargill and the Cooperative. As the Cooperative’s grain buying agent, corn expense shall offset corn revenue related to procurement of Method B Corn.  Cargill will report expense and revenue associated with the procurement of Method B Corn on a quarterly basis.

(c)        No Overfills/Underfills. Cargill will manage the annual volume of Method B Corn to be delivered by the Cooperative such that there are no Overfills or Underfills. Any corn acquired by Cargill in excess of the volume of Method B Corn specified by the Cooperative in its annual notice to Cargill shall be for the account of Cargill.

3.         PAYMENT FOR SERVICES.

(a)        Services Fee. The 2017 annual fee is $70,000 on account of the services provided by Cargill to the Cooperative.  Commencing on January 1, 2018, in consideration of the services to be provided hereunder by Cargill, the Cooperative agrees to pay Cargill an annual fee of $60,000 (the “Services Fee”). The Services Fee shall be paid by the Cooperative in quarterly installments of $15,000, with such quarterly payment due on or before January 1 each year during the term (and any extensions of the term) hereof, and thereafter on or before the first day of each subsequent calendar quarter.  The Cooperative and Cargill agree to periodically review the Services Fee, it being the intent of the parties that the Service Fee should fairly represent Cargill’s administrative costs and expenses in providing services under this Agreement.  In the event that Cargill is able to automate processes that are currently done manually such that its administrative costs and expenses are materially decreased, the parties shall enter into good faith negotiations to arrive at a mutually acceptable adjustment to the Services Fee.  Any adjustment to the Services Fee shall be reduced to writing, executed by authorized representatives of both Cooperative and Cargill, and attached as an addendum to this Agreement.

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(b)        Purchased Corn Fee. The Cooperative agrees to pay Cargill a fee of $0.10 per bushel for the remaining Underfill bushels to be purchased by Cargill on the Member’s behalf as of December 31 of each Annual Delivery Period (the “Purchased Corn Fee”). The Cooperative will pay the Purchased Corn Fee, together with any remaining Equity Due as provided in Section 1(b)(iv): (i) by check if the amount due is $2,000 or less; or (ii) by wire transfer to Cargill if the amount due is greater than $2,000. This wire transfer or check payment will occur on the next Tuesday following the close of the Annual Delivery Period, which shall be defined for purposes hereof as each January 1 through December 31 period during the term hereof. The maximum amount of the transfer shall be $500,000.00 per day. To the extent additional amounts are owing a wire transfer shall be made from Cooperative to Cargill every other business day thereafter up to a maximum amount of $500,000.00 per day, until obligations owing hereunder are paid in full.

4.         BOOKS AND RECORDS.

Cargill shall maintain adequate accounting records which in reasonable detail fairly reflect the receipts and disbursements received and made by Cargill on behalf of the Cooperative under this Agreement. Cargill shall also maintain a system of internal controls sufficient to provide reasonable assurances that the services are provided in accordance with the terms of this Agreement. All books and accounts maintained by Cargill applicable to the performance of its obligations under this Agreement shall be available for inspection by the Cooperative’s independent auditors and other representatives on a quarterly basis or as otherwise agreed by the Cooperative and Cargill. All such books and records are Cargill’s proprietary and confidential information. Cooperative agrees that it shall keep all such information strictly confidential and that it shall limit access to such information to only those of its employees with a need to know. Cooperative further agrees to bind its independent auditors to the same standard of confidentiality.

5.         STANDARD OF CARE.

In performing the services hereunder, Cargill and its employees shall perform their duties in a manner reasonably believed by them to be in the best interest of the Cooperative and with such care as an ordinarily prudent person in a like position would use under similar circumstances.

6.         MANAGEMENT POLICY.

Notwithstanding the services provided hereunder, the property, funds, affairs, and business of the Cooperative shall continue to be managed by the officers and the Board of Directors of the Cooperative.

7.         INDEPENDENT CONTRACTOR STATUS.

Cargill and its employees shall be deemed to be independent contractors with full control over the manner and method of performance under this Agreement, but subject to Section 6 of this Agreement. During the term of this Agreement, any of the employees of Cargill which are rendering services on behalf of the Cooperative hereunder, shall remain employees of Cargill and shall continue to be paid by Cargill and to enjoy the benefits to which they are entitled as employees of Cargill unless otherwise provided in any separate agreement covering the services of such employee.

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8.         SEPARATE ENTITIES.

The Cooperative and Cargill are separate entities, and nothing in this Agreement or otherwise shall be construed to create any rights or liabilities of any party to this Agreement for any rights, privileges, duties or liabilities of any other party to this Agreement, except to the extent otherwise provided in this Agreement or in any other agreement among the parties to this Agreement.

9.         TERM AND TERMINATION.

(a)        Term. Subject to Section 9(b), the term of this Agreement shall commence on the date hereof and shall continue until the termination of the Lease Agreement, at which time it shall terminate without further notice; unless the term of the Lease Agreement is renewed or extended, in which case the term of this Agreement shall be renewed or extended for the same period of time.

(b)        Termination. The Cooperative may terminate this Agreement for any reason upon 90 days written notice to Cargill.

10.       MISCELLANEOUS.

Neither party may assign or transfer all or any part of their rights or obligations under the Agreement without the prior written consent of the other. The Agreement shall be governed by the internal laws of the State of North Dakota, without regard to its choice of law provisions. The Agreement may only be modified or amended by an instrument in writing duly executed and delivered by all parties. The terms and conditions set forth above constitute the complete and exclusive statement of the Agreement between the parties relating to the subject matter hereof, superseding all previous agreements, negotiations and understandings; including, but not limited to the 2008 Grain Services Agreement and the 2009 Amended Grain Services Agreement.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the duly authorized officers or representatives of each of the parties hereto, as of the date set forth above.

[signature page follows]

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CARGILL, INCORPORATED
By:	/s/ Rich Torres
Name:	Rich Torres
Its:	VP, Trading
GOLDEN GROWERS COOPERATIVE
By:	/s/ Scott Stofferahn
Name:	Scott Stofferahn
Its:	Executive Vice President

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EX-10.7

Exhibit 10.7

SECOND AMENDED AND RESTATED

CORN SUPPLY AGREEMENT

THIS SECOND AMENDED AND RESTATED CORN SUPPLY AGREEMENT is made and entered into effective as of July 1, 2017 by and between GOLDEN GROWERS COOPERATIVE, a Minnesota cooperative association (“the Cooperative”), and CARGILL, INCORPORATED, a Delaware business corporation (“Cargill”).

WHEREAS, the Cooperative owns a 49% interest in ProGold Limited Liability Company, a Minnesota limited liability company (“ProGold”) and ProGold owns a corn wet milling facility located in Wahpeton, North Dakota (the “Facility”) which Facility was originally leased to Cargill pursuant to that Facility Lease dated November 1, 1997, is currently leased pursuant to that Amended and Restated Facility Lease effective as of January 1, 2008, and will be leased pursuant to that Second Amended and Restated Facility Lease effective as of January 1, 2018 (as amended and restated, the “Lease Agreement”); and

WHEREAS, Cargill desires to have access to and receive an adequate supply of corn at the Facility; and

WHEREAS, the Cooperative desires to facilitate the lease of the Facility to Cargill by facilitating the supply of corn to Cargill at the Facility pursuant to the terms and conditions of this Agreement; and

WHEREAS, the Cooperative intends to meet its delivery obligations hereunder through delivery of corn by its members on behalf of the Cooperative;

WHEREAS, the Cooperative and Cargill previously entered into an original Grain Services Agreement dated January 1, 2008 (the “2008 Grain Services Agreement”) and an Amended and Restated Grain Services Agreement dated September 1, 2009 (the “2009 Amended Grain Services Agreement”) pertaining to delivery of corn to Cargill by members of the Cooperative or on their behalf; and

WHEREAS, the Cooperative and Cargill are concurrently entering into a Second Amended and Restated Grain Services Agreement of even date herewith (the “2017 Amended Grain Services Agreement”); and

WHEREAS, in conjunction with the parties entering into the 2017 Amended Grain Services Agreement, the parties desire to further amend and restate the Corn Supply Agreement between the parties, dated January 1, 2008 (the “2008 Corn Supply Agreement”) and the Amended and Restated Corn Supply Agreement between the parties, dated September 1, 2009 (the “2009 Amended Corn Supply Agreement”), as provided herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual terms and conditions set forth herein, Cargill and the Cooperative agree as follows:

1.         COMMITMENT TO SELL AND DELIVER CORN.  The Cooperative shall cause to be delivered, through its members, and Cargill agrees to purchase, the following quantities of corn during the term of this Agreement, which corn will either be delivered on behalf of the

Cooperative by its members or their agents, or by the Cooperative or its agents, to the extent of the delivery obligations of any member who fails to fulfill its obligation to the Cooperative to deliver corn:  One bushel of corn annually for each outstanding unit of the Cooperative held by the Cooperative’s members at the end of such period, for each 12-month period beginning effective January 1 and ending on December 31 of each such period, as long as this Agreement remains in effect.

2.         DELIVERY OF CORN. The Cooperative shall cause to be delivered by its members, or delivered on their behalf, the corn committed to Cargill under Section 1 as follows:

(a)        Direct Deliveries by Member Producers of the Cooperative.  The amount of corn committed to Cargill under Section 1 shall be delivered to Cargill at the Facility by members of the Cooperative or their agents, in fulfillment of such member’s delivery obligation to the Cooperative, whether such obligation is fulfilled by the member through “Method A” or through “Method B” described in the 2017 Amended Grain Services Agreement.

(b)       Delivery Timing and Procedures.  Delivery of all corn committed to Cargill under this Agreement shall be made annually.  Deliveries of the quantities of corn may occur at any time during the year.  Except as otherwise provided for herein, delivery of the corn committed to Cargill under this Agreement shall be deemed to have occurred upon the delivery of corn by members of the Cooperative or their agents, at the Facility (or at another location mutually agreed upon by Cargill and the member or agent) in fulfillment of such member’s delivery obligation to the Cooperative, whether such obligation is fulfilled by Method A or Method B, or delivery made by the Cooperative or its agents, to the extent of the delivery obligations of any member who fails to fulfill its delivery obligation.  Cargill shall provide the Cooperative monthly reports of all corn credited against the Cooperative’s delivery obligations under this Agreement.  All costs and risk of loss prior to delivery of the corn to Cargill shall not be the responsibility of Cargill, unless otherwise agreed to by Cargill and the Cooperative’s member.

3.         ACCEPTANCE OF CORN; PRODUCT QUALITY STANDARDS.  The Cooperative and Cargill have set forth the terms and conditions governing inspection, acceptance and the grading of corn in the 2017 Amended Grain Services Agreement.  The Cooperative agrees that the risk of loss for the corn shall not pass to Cargill until the corn is delivered to and accepted by Cargill pursuant to this Agreement.  Cargill shall be deemed to have accepted the corn delivered hereunder upon its unload at Cargill’s receiving site.

4.         PURCHASE TERMS AND PAYMENT.

(a)       Cargill Payment.

(1)       The price per bushel of all corn delivered to Cargill through Method A shall be the contract price agreed to between a member and Cargill, or in the absence, of such a contract, the market price per bushel at the delivery location on the day on which the corn is delivered to and accepted by Cargill, less applicable discounts and inspection fees.

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(2)       The price per bushel of all corn delivered to Cargill under Method B shall be equal to the price per bushel paid by Cargill to acquire said corn as the Cooperative’s agent as set forth in the 2017 Amended Grain Services Agreement.

(3)       Cargill will pay the purchase price for Method A corn as set forth in the 2017 Amended Grain Services Agreement.  The purchase price for Method B corn shall be offset against the payment to be made by the Cooperative to Cargill for the cost of Cargill purchasing said corn as the agent for the Cooperative under the 2017 Amended Grain Services Agreement, such that no payment shall be due by either party with respect to the Method B corn.

(b)       Other Terms.  The terms and conditions of Cargill’s standard corn purchase contract then in effect and which are consistent with industry standards and practices shall govern all purchases of corn by Cargill hereunder, except those that are inconsistent with the express provisions of this Agreement.

5.         TERM AND TERMINATION.

(a)        Term.  Subject to Section 5(b), the term of this Agreement shall commence on the date hereof and shall continue until the termination of the Lease Agreement, at which time it shall terminate without further notice; unless the term of the Lease Agreement is renewed or extended, in which case the term of this Agreement shall be renewed or extended for the same period of time.

(b)       Termination.  The Cooperative may terminate this Agreement for any reason upon 90 days written notice to Cargill.

(c)        Effect of Termination.  Upon termination of this Agreement, all obligations of the Cooperative to sell and deliver corn to Cargill shall cease, regardless of whether the Cooperative has delivered a pro rata quantity of the corn committed for the period, up to the termination date.  Provided, however, that the rights and obligations of the parties with respect to corn delivered to Cargill by the Cooperative prior to such termination date shall continue and be unaffected by the termination.

6.         FORCE MAJEURE.

In case of fire, explosions, interruption of power, strikes or other labor disturbances, lack of transportation facilities, shortage of labor or supplies, floods, action of the elements, riot, interference of civil or military authorities, enactment of legislation or any unavoidable casualty or cause beyond the control of Cargill affecting the conduct of Cargill’s business at the Facility to the extent of preventing or unreasonably restricting the receiving, handling, production, marketing, or other operations at the Facility, Cargill shall be excused from performance during the period that Cargill’s business or operations are so affected.  Cargill in its judgment may, during such period, accept such portion of corn as Cargill has informed the Cooperative it can economically handle.  Cargill shall give written notice to the Cooperative of its inability to perform and the

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specific cause or causes for the nonperformance.  In any event, Cargill shall pay for all corn it accepts pursuant to this Agreement.

7.         MISCELLANEOUS PROVISIONS.

(a)        Assignment.  Neither The Cooperative nor Cargill may assign this Agreement without the prior written consent of the other party.

(b)       Waiver of Breach.  No waiver of a breach of any of the agreements or provisions contained in this Agreement shall be construed to be a waiver of any subsequent breach of the same or of any other provision of this Agreement

(c)        Notices.  Whenever notice is required by the terms hereof, it shall be given in writing by facsimile, delivery or by certified or registered mail addressed to the other party at address noted in the caption of this Agreement or such other address as a party shall designate by appropriate notice.  If notice is given by mail, it shall be effective five (5) days after mailing.

(d)       Construction of Terms of Agreement; Modification. The language in all parts of this Agreement shall be constructed as a whole according to its fair meaning and not strictly for or against any party hereto.  Headings in this Agreement are for convenience only and are not construed as a part of this Agreement or in any defining, limiting or amplifying the provisions hereof.  This Agreement and the 2017 Amended Grain Services Agreement contains the entire agreement, and supersedes and replaces any prior agreements (either written or oral), between the parties with respect to the subject matter hereof including, but not limited to, the 2008 Corn Supply Agreement and the 2009 Amended Corn Supply Agreement.  This Agreement shall not be modified in any manner except by an instrument in writing executed by the parties hereto.  In the event any term, covenant or condition herein contained is held to be invalid or void by any court of competent jurisdiction, the invalidity of any such term, covenant or condition shall in no way affect any other term, covenant or condition herein contained.

(e)        Successors and Assigns.  Subject to the other provision of this Agreement, all of the terms, covenants and conditions of this Agreement shall inure to the benefit of and shall bind the parties hereto and their permitted successors and assigns.

(f)        Dispute Resolution. The parties agree that the sole remedy for resolution of all disagreements or disputes between the parties arising under this Agreement shall be arbitration proceedings under NGFA Arbitration Rules.  The decision and award determined by such arbitration shall be final and binding upon both parties.

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IN WITNESS WHEREOF, Cargill and the Cooperative have executed this Agreement effective the day and year first above written.

GOLDEN GROWERS COOPERATIVE		CARGILL, INCORPORATED
By	/s/ Scott Stofferahn	By	/s/ Rich Torres
Its	Executive Vice President	Its	VP, Trading

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Scott Stofferahn, certify that:

1.I have reviewed this annual report on Form 10-K of Golden Growers Cooperative (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.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my 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

d)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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and.

5.I have disclosed, based on my 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 (or persons performing the equivalent functions):

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.

March 09, 2018	/s/ Scott Stofferahn
	Scott Stofferahn
	Executive Vice President, Chief Executive Officer and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 10-K of Golden Growers Cooperative, (the “Cooperative”) for the fiscal year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Stofferahn, as the Executive Vice President, serving as Chief Executive Officer and Chief Financial Officer of the Cooperative, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. 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. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Cooperative.

Date:	March 09, 2018	/s/ Scott Stofferahn
		Scott Stofferahn
		Executive Vice President, Chief Executive Officer and Chief Financial Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 08, 2018
Document and Entity Information
Entity Registrant Name	Golden Growers Cooperative
Entity Central Index Key	0001489874
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Public Float	$ 0
Entity Common Stock, Shares Outstanding		15,490,480
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY

XML

CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current Assets:
Cash and Cash Equivalents	$ 6,261	$ 2,792
Short-Term Investments	220	219
Prepaid Expenses	218	342
Total Current Assets	6,699	3,353
Furniture and Equipment, Net		1
Investment in ProGold Limited Liability Company	19,773	20,484
Total Assets	26,472	23,838
Current Liabilities:
Accounts Payable	6	1
Accrued Liabilities	220	221
Total Current Liabilities	226	222
Members' Equity
Membership Units, Authorized 60,000,000 Units, Issued and Outstanding 15,490,480 as of December 31, 2017 and December 31, 2016	26,246	23,616
Total Members' Equity	26,246	23,616
Total Liabilities and Members' Equity	$ 26,472	$ 23,838

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CONDENSED BALANCE SHEETS (Parenthetical) - shares	Dec. 31, 2017	Dec. 31, 2016
BALANCE SHEETS
Membership Units, Authorized	60,000,000	60,000,000
Membership Units, Issued	15,490,480	15,490,480
Membership Units, Outstanding	15,490,480	15,490,480

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CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
OPERATIONS
Corn Revenue	$ 49,890	$ 52,135	$ 56,370
Corn Expense	(49,960)	(52,240)	(56,475)
Net Income from ProGold Limited Liability Company	9,785	5,375	5,250
General & Administrative Expenses	(565)	(574)	(620)
Net Income from Operations	9,150	4,696	4,525
Interest Income	32	8	8
Net Income Before Income Tax	9,182	4,704	4,533
Income Tax Provision	0	0	0
Net Income	$ 9,182	$ 4,704	$ 4,533
Weighted Average Shares/Units Outstanding	15,490,480	15,490,480	15,490,480
Earnings per Share/Membership Unit
Primary and Fully Diluted (In dollars per share)	$ 0.59	$ 0.30	$ 0.29

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CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
COMPREHENSIVE INCOME
Net income	$ 9,182	$ 4,704	$ 4,533
Pension Liability Adjustment		48	(48)
Comprehensive Income	$ 9,182	$ 4,752	$ 4,485

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STATEMENTS OF CHANGES IN MEMBERS' EQUITY - USD ($) $ in Thousands	Accumulated Other Comprehensive Income	Members' Equity	Total
BALANCE at Dec. 31, 2014		$ 34,053	$ 34,053
Increase (Decrease) in Stockholders' Equity
Net income		4,533	4,533
Member distributions		(10,225)	(10,225)
Pension Liability Adjustment	$ (48)		(48)
BALANCE at Dec. 31, 2015	(48)	28,361	28,313
Increase (Decrease) in Stockholders' Equity
Net income		4,704	4,704
Member distributions		(9,449)	(9,449)
Pension Liability Adjustment	$ 48		48
BALANCE at Dec. 31, 2016		23,616	23,616
Increase (Decrease) in Stockholders' Equity
Net income		9,182	9,182
Member distributions		(6,552)	(6,552)
BALANCE at Dec. 31, 2017		$ 26,246	$ 26,246

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CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash Flows from Operating Activities
Net income	$ 9,182	$ 4,704	$ 4,533
Net (Income) from ProGold Limited Liability Company	(9,785)	(5,375)	(5,250)
Depreciation	1	2	1
Changes in assets and liabilities
Prepaid Expenses	124	(55)	(67)
Accrued liabilities and payables	4	(29)	36
Net cash used in operating activities	(474)	(753)	(747)
Cash Flows from Investing Activities
(Purchase) Sale of Investments	(1)		(2)
(Purchase) Sale of investments		1
Distribution Received from ProGold LLC	10,496	10,721	10,763
Net cash Provided in Investing Activities	10,495	10,722	10,761
Cash Flows from Financing Activities
Member Distributions Paid	(6,552)	(9,449)	(10,225)
Net Cash Used by Financing Activities	(6,552)	(9,449)	(10,225)
Increase (Decrease) in Cash and Cash Equivalents	3,469	520	(211)
Cash and Cash Equivalents, Beginning of Period	2,792	2,272	2,483
Cash and Cash Equivalents, End of Period	$ 6,261	$ 2,792	$ 2,272

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NATURE OF OPERATIONS

12 Months Ended

Dec. 31, 2017

BASIS OF PRESENTATION

NATURE OF OPERATIONS

NOTE 1 — NATURE OF OPERATIONS

Organization - Golden Growers Cooperative was initially organized as a North Dakota member-owned cooperative incorporated on January 19, 1994 (“GG-ND”).  GG-ND and two other partners, one of whom was American Crystal Sugar Company (“ACSC”) entered into a joint venture that formed ProGold Limited Liability Company, a Minnesota limited liability company (“ProGold”) which designed and constructed a corn wet-milling facility in Wahpeton, North Dakota (the “Facility”).  Under the joint venture, GG-ND (and indirectly its members) had the right and obligation to deliver corn to be processed at the Facility.  After it was constructed and operated briefly by its members, the Facility was leased to Cargill Incorporated (“Cargill”) who continues to operate the Facility under a lease that runs through December 31, 2022 and which will be automatically extended through 2023 in the event that either (i) Cargill has not, prior to December 31, 2021, exercised an option to purchase ACSC’s 50% interest in ProGold pursuant to an Option Agreement between Cargill and ACSC dated as of April 4, 2017 and effective as of January 1, 2018 or (ii) if the parties have not otherwise mutually agreed to extend or terminate the lease.  Golden Growers Cooperative and ACSC are the current members of ProGold, with Golden Growers Cooperative holding a 49% interest and ACSC holding the remaining 51% interest.

On July 29, 2009 GG-ND formed a wholly owned cooperative subsidiary in the state of Minnesota (GG-MN), organized under Minnesota Statutes chapter 308A, solely for the purpose of reincorporating into the state of Minnesota.  On September 1, 2009, GG-ND merged into GG-MN and reincorporated into the state of Minnesota.  Immediately after the merger, GG-MN statutorily converted into a cooperative association governed under Minnesota Statutes 308B.  As a result of its reincorporation and reorganization Golden Growers — North Dakota, a North Dakota cooperative association historically taxed as a tax-exempt cooperative under Subchapter T of the Internal Revenue Code, became Golden Growers Cooperative, a Minnesota cooperative association governed by Minnesota Statutes chapter 308B as a cooperative for state law purposes but taxed as a partnership under Subchapter K of the Internal Review Code for tax purposes.  Golden Growers Cooperative succeeded to the business of Golden Growers — North Dakota and except for changes to the structure and operations as a result of the reincorporation and statutory conversion, continues to operate the business of Golden Growers — North Dakota.

As part of the Conversion, GG-ND’s members exchanged their shares of Class A Common Voting Membership Stock and Class B Non-Voting Equity Stock for identical and equal shares of such stock in GG-MN.  Each member’s single share of Class A Common Voting Membership Stock was redeemed for $150 and each member received membership units in GG-MN equal to the number of shares of Class B Non-Voting Equity Stock each member held in GG-ND prior to the Merger.

Prior to September 1, 2009, ownership of membership stock, which signified membership in the Cooperative, was restricted to producers of agricultural products.  The ownership of equity stock was restricted to members of the Cooperative.  Preferred stock could be held by persons who were not members of the Cooperative.  At August 31, 2009 and 2008, the Cooperative had 10,000 shares of non-voting, $1,000 par-value preferred stock authorized, of which none were issued or outstanding.  Equity requirements, as determined by the board of directors, could be retained from amounts due to patrons and credited to members’ equity in the form of unit retains or allocated patronage.

The Cooperative reserved the right to acquire any of its stock offered for sale and the right to recall the stock of any member.  In the event this right was exercised, the consideration paid for such stock was 25% of its book value.

Beginning September 1, 2009, ownership of membership units is available to any person or entity residing in the Unites States of America.  Net proceeds or losses will be allocated to members on the basis of their patronage of the Cooperative.

In connection with the Conversion, the Cooperative changed its fiscal year end to December 31.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Pronouncements:

Revenue Recognition - Effective January 1, 2018, the Cooperative will adopt ASU 2014-09, Revenues from Contracts with Customers. The core principle of the revenue guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Cooperative determined that the timing, pattern and amount of revenue recognized under the new standard will be substantially the same as previously recognized by the Cooperative.

Leases - In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. The standard will be effective fir us beginning January 1, 2018. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.

Financial Instruments – Recognition, Measurement, Presentation, and Disclosure - In January 2016, the FASB issued a new standard related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard will be effective for us beginning January 1, 2019. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.

Significant Accounting Policies:

Investments — The Cooperative’s investment securities are held to maturity and recorded at amortized cost.  The Cooperative’s investment in ProGold is recorded at historical cost plus its pro-rata share of ProGold’s net income and additional paid-in capital less distributions received from ProGold.  Unrealized gains or losses are recorded in accumulated other comprehensive income within members’ equity.  Gains and losses are determined using the specific identification method.

Cash and Cash Equivalents — The Cooperative considers all demand accounts to be cash equivalents and overnight sweep accounts.  Cash equivalents do not include money market accounts maintained by the Cooperative’s investment managers.  Cash equivalents do not include any investment with a stated maturity date, regardless of the term to maturity.

Income Taxes – Since September 1, 2009, Golden Growers Cooperative has been taxed as a limited liability company under Subchapter K of the Internal Revenue Code.  As such, the Cooperative is generally not subject to income taxes.  Instead, net income is reported by its members who will be responsible for any income taxes which may be due.  Prior to September 1, 2009, Golden Growers Cooperative was an exempt cooperative for federal income tax purposes.  As such, the cooperative was generally not subject to income taxes.  Instead, net proceeds were allocated to the Cooperative's patrons who were responsible for any income taxes which may have been due. The Cooperative’s net financial basis in its assets and liabilities exceeded its tax basis by approximately $8.5 million and $8 million as of December 31, 2017 and 2016, respectively.

Property and Equipment — Property and equipment are stated at cost.  Depreciation on assets placed in service is provided using the straight-line method over estimated useful lives ranging from 5 to 10 years.

Accounting Estimates — The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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.

Revenue Recognition —The Cooperative’s members are contractually obligated to annually deliver corn to the Cooperative by either Method A or Method B or a combination of both.  Under Method A, a member is required to physically deliver corn to the cooperative and under Method B a member appoints the cooperative as its agent to arrange for the acquisition and delivery of corn on the member’s behalf.  The Cooperative contractually appoints Cargill as its agent to arrange for the delivery of the corn by its members who elect to deliver corn using Method A and to acquire corn on its behalf for its members who elect to deliver corn using Method B.  In exchange for these services, the Cooperative paid Cargill an annual fee of $70,000 in 2017. Commencing on January 1, 2018, the Cooperative will pay an annual fee of $60,000, paid in quarterly installments.  The price per bushel paid to the member who elects to deliver corn using Method B is equal to the price per bushel paid by Cargill to acquire the corn as the Cooperative’s agent.  Members who deliver corn under Method A are paid the market price or contracted price for their corn at the time of delivery.  The Cooperative pays members who deliver corn under Method A an incentive payment of $.05 per bushel while members who elect Method B to deliver corn pay the Cooperative a $.02 per bushel agency fee for the cost of having the Cooperative deliver corn on their behalf.  The board has the discretion to change the incentive fee and the agency fee based on the Cooperative’s corn delivery needs.  The incentive fee and agency fee are a component of Corn Expense.

With respect to all Method A corn that is delivered, Cargill pays the aggregate purchase price for corn purchased from the Cooperative’s members to the Cooperative and then, on the Cooperative’s behalf, makes individual payments for corn directly to its members.  If a Method A member fails to fully satisfy the corn delivery requirement, Cargill purchases replacement corn for which the Cooperative reimburses Cargill the amount by which the underlying contracted corn price is less than the price of buying the replacement corn that was due on the delivery date.  The Method A member who fails to deliver corn is then invoiced by the Cooperative for the price of the corn.

Based on what is to be delivered by its members using Method A, Cargill then purchases the remainder of the corn to be delivered by the Cooperative on behalf of its Method B delivering members.  Because Cargill purchases the corn on the Cooperative’s behalf of Method B delivering members, the purchase price for the corn that would be paid to the Cooperative’s members if they actually delivered the corn offsets against the payment to be made by the Cooperative to Cargill for the cost to purchase the corn, thus no payment is made from Cargill to the Cooperative for corn delivered using Method B.  The Cooperative has determined Corn Expense for Method B deliveries based on the average quarterly cost per bushel paid by Cargill to the Cooperative’s members for Method A quarterly deliveries.

Concentrations - Several times during the year, the Cooperative maintained a cash balance in excess of the Federal Deposit Insurance Corporation (“FDIC”) limits.  At December 31, 2017, the Cooperative’s cash balance exceeded the FDIC insurance limits by approximately $6.5 million.

Fair Value Measurements - The Cooperative has determined the fair value of certain assets and liabilities in accordance with the provisions of Accounting Standards Codification (“ASC”) 820-10, which provides a framework for measuring fair value under generally accepted accounting principles.

ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC 820-10 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.  ASC 820-10 also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.  Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the related asset or liability.  Level 3 inputs are unobservable inputs related to the asset or liability.

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PROGOLD LIMITED LIABILITY COMPANY

12 Months Ended

Dec. 31, 2017

PROGOLD LIMITED LIABILITY COMPANY

PROGOLD LIMITED LIABILITY COMPANY

NOTE 3 — PROGOLD LIMITED LIABILITY COMPANY

The Cooperative has a 49% ownership interest in ProGold Limited Liability Company.  Following is summary financial information for ProGold Limited Liability Company:

	December 31,
(In Thousands)	2017		2016		2015
Current Assets	$	514	$	125	$	133
Long-Term Assets		39,843		42,086		53,386
Total Assets	$	40,357	$	42,211	$	53,519
Current Liabilities	$	5	$	407	$	404
Long-Term Liabilities		—		—		400
Total Liabilities		5		407		804
Members’ Equity		40,352		41,804		52,715
Total Liabilities and Members’ Equity	$	40,357	$	42,211	$	53,519
Rent Revenue on Operating Lease	$	22,873	$	22,837	$	23,106
Expenses		2,905		11,866		12,392
Net Income	$	19,968	$	10,971	$	10,714

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INVESTMENTS

12 Months Ended

Dec. 31, 2017

INVESTMENTS

INVESTMENTS

NOTE 4 — INVESTMENTS

The Cooperative has determined fair value of its investments held to maturity based on Level 1 inputs.

The Cooperative’s investments held to maturity are as follows as of December 31, 2017 and 2016 (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
December 31, 2017:
Money Market & CD’s	$	220	$	—	$	—	$	220
December 31, 2016:
Money Market & CD’s	$	219	$	—	$	—	$	219

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INCOME TAXES

12 Months Ended

Dec. 31, 2017

INCOME TAXES

INCOME TAXES

NOTE 5 — INCOME TAXES

The Cooperative follows the provisions of ASC 740-10 related to accounting for uncertainty in income taxes.

The Cooperative had no unrecognized tax benefits on December 31, 2017 and 2016. No interest or penalties are recognized in the statements of operations or in the balance sheets. 

The Cooperative recognized no income tax expense for the years ended December 31, 2017, 2016 and 2015.

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EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2017

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

NOTE 6 — EMPLOYEE BENEFIT PLANS

Pension Plan — In December 2012, the Cooperative approved a change to freeze the Cooperative’s defined benefit pension plan as of January 1, 2013. As a result, no additional benefits will accrue to participants in the plan and no new employees are eligible for the plan.  During the year ended December 31, 2017, 2016 and 2015, the pension expenses were $6,000,  $12,000, and $25,000, respectively.

As of December 31, 2017, the pension plans were funded as required by the funding standards set forth by the Employee Retirement Income Security Act (ERISA).

The Cooperative’s Compensation Committee has the responsibility of managing the operations and administration of the Cooperative’s retirement plans.  The Cooperative has an investment policy that establishes target asset allocations to reduce the risk of large losses.  Asset classes are diversified to reduce risk, and equity exposure is limited to 50% of the total portfolio value. The investment objectives is to achieve a rate of return sufficient to fully fund the pension obligation of the plan without assuming undue risk through investment vehicles with no greater than average variability of the markets themselves.

Substantially all of the Plan’s assets consist of Collective Investment Trusts or Mutual Funds (Fund) and are valued based on Level I or Level II inputs, as determined from the Fund’s ASC 715-30 footnote included in the Fund’s audited financial statements. The Fund’s valuation techniques include market matrix pricing and market inputs, including bench mark yields, reported trades, broker/dealer quotes and others. There has been no changes in valuation techniques and inputs in 2017, 2016 and 2015.

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

	2017		2016
Discount Rate	4.50	%	5.00	%
Expected Return on Plan Assets	6.32	%	6.25	%
Rate of Compensation Increase	4.73	%	4.73	%

The following schedule reflects the expected pension benefit payments during each of the next five years and the aggregate for the following five years (in thousands):

	Expected
	Benefit
	Payments
2018	$	54
2019		54
2020		54
2021		54
2022		50
2023-2027		244
Total	$	510

The Cooperative expects to make contributions of approximately $6,000 to the defined benefit pension plan during the next fiscal year.

The following schedules provide the components of the Net Periodic Pension Costs for the periods ended December 31, 2017, 2016 and 2015 (in thousands):

	2017		2016		2015
Service Cost	$	—	$	—	$	—
Interest Cost		33		34		37
Expected Return on Plan Assets		(52)		(48)		(44)
Amortization of Net (Gain) Loss		4		5		11
Net Periodic Pension Cost	$	(15)	$	(9)	$	4

The following schedules set forth a reconciliation of the changes in the plan’s benefit obligation and fair value of assets for the periods ending December 31, 2017 and 2016 and a statement of the funded status and amounts recognized in the Balance Sheets and Accumulated Other Comprehensive Income as of December 31, 2017 and 2016 (in thousands):

	December 31,		December 31,
	2017		2016
Change in Benefit Obligation
Obligation at the Beginning of the Period	$	772	$	775
Service Cost		—		—
Interest Cost		33		37
Actuarial (Gain) Loss		9		15
Benefits Paid		(55)		(55)
Obligation at the End of the Period	$	759	$	772
Change in Plan Assets
Fair Value at the Beginning of the Period	$	791	$	727
Actual Returns on Plan Assets		95		107
Employer Contributions		6		12
Benefits Paid		(55)		(55)
Fair Value at the End of the Period	$	837	$	791
Funded Status
Funded Status as of Period Ended	$	78	$	19
Net Amount Recognized	$	—	$	—

	December 31,		December 31,
	2017		2016
Amounts Recognized in the Balance Sheets
Noncurrent Assets	$	—	$	—
Current Liabilities		—		—
Noncurrent Liabilities		—		—
Net Amount Recognized	$	—	$	—
Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income
Accumulated Gain (Loss) Beginning of the Period	$	—	$	(48)
Recognized in Periodic Cost		—		—
Amount Arising During the Period		—		48
Accumulated Gain (Loss) End of the Period	$	—	$	—

401(k) Plan — The Cooperative has a 401(k) plan that covers employees that meet eligibility requirements. The Cooperative’s contributions to the plan totaled $4,604,  $7,489 and $7,123 for the years ended December 31, 2017, 2016 and 2015, respectively.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

NOTE 7 — COMMITMENTS AND CONTINGENCIES

The Cooperative contracted with Cargill, Incorporated in connection with the procurement of corn which includes payments of $70,000 in 2017. Commencing on January 1, 2018, the Cooperative will pay an annual fee of $60,000, paid in quarterly installments payments. The contract continues until the termination of the second amended and restated facility lease agreement between ProGold and Cargill, which was effective as of January 1, 2018

On April 4, 2017, the Cooperative, Cargill, and American Crystal entered into a Consent Agreement, effective on January 1, 2018, relating to the lease of ProGold’s wet-milling facility to Cargill and the Cooperative’s interest in ProGold. On the same day, Cargill and American Crystal entered into an Option Agreement, effective on January 1, 2018, detailing the price, term and other conditions under which American Crystal grants to Cargill an exclusive option to purchase a 50% interest in ProGold from American Crystal during the first four years of the lease. Under the Consent Agreement, the Cooperative approves and consents to the transfer of the 50% interest in ProGold from American Crystal to Cargill in the event Cargill exercises its option.  The Cooperative also secures the right to purchase American Crystal’s remaining 1% interest in ProGold for a base price ranging from $1.7 million to $1.3  million, depending on when Cargill notifies American Crystal of its intention to exercise its option.  The Cooperative would also be required to pay to American Crystal a capital adjustment in an amount equal to 1% of the portion of costs that have not been paid by Cargill to ProGold through additional rent with respect to certain projects at the facility.  In the event Cargill intends to exercise its option, before exercising such option, Cargill and the Cooperative will expeditiously and in good faith work together to finalize agreements for the structure, governance and operation of ProGold according to certain operational principles and other guideline terms as provided in a Memorandum of Understanding attached to the Consent Agreement.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2017

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 8 - SUBSEQUENT EVENTS

In February of 2018, the Cooperative declared a distribution of $2,493,967, or $0.161 per outstanding membership unit.

Management has reviewed subsequent events through March 2, 2018 the date to which the financial statements were available to be issued and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements:

Revenue Recognition - Effective January 1, 2018, the Cooperative will adopt ASU 2014-09, Revenues from Contracts with Customers. The core principle of the revenue guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Cooperative determined that the timing, pattern and amount of revenue recognized under the new standard will be substantially the same as previously recognized by the Cooperative.

Leases - In February 2016, the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. The standard will be effective fir us beginning January 1, 2018. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.

Financial Instruments – Recognition, Measurement, Presentation, and Disclosure - In January 2016, the FASB issued a new standard related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard will be effective for us beginning January 1, 2019. We anticipate that the standard will not have a significant impact on the Cooperative’s financial statements.

Investments

Investments — The Cooperative’s investment securities are held to maturity and recorded at amortized cost.  The Cooperative’s investment in ProGold is recorded at historical cost plus its pro-rata share of ProGold’s net income and additional paid-in capital less distributions received from ProGold.  Unrealized gains or losses are recorded in accumulated other comprehensive income within members’ equity.  Gains and losses are determined using the specific identification method.

Cash and Cash Equivalents

Cash and Cash Equivalents — The Cooperative considers all demand accounts to be cash equivalents and overnight sweep accounts.  Cash equivalents do not include money market accounts maintained by the Cooperative’s investment managers.  Cash equivalents do not include any investment with a stated maturity date, regardless of the term to maturity.

Income Taxes

Income Taxes – Since September 1, 2009, Golden Growers Cooperative has been taxed as a limited liability company under Subchapter K of the Internal Revenue Code.  As such, the Cooperative is generally not subject to income taxes.  Instead, net income is reported by its members who will be responsible for any income taxes which may be due.  Prior to September 1, 2009, Golden Growers Cooperative was an exempt cooperative for federal income tax purposes.  As such, the cooperative was generally not subject to income taxes.  Instead, net proceeds were allocated to the Cooperative's patrons who were responsible for any income taxes which may have been due. The Cooperative’s net financial basis in its assets and liabilities exceeded its tax basis by approximately $8.5 million and $8 million as of December 31, 2017 and 2016, respectively.

Property and Equipment

Property and Equipment — Property and equipment are stated at cost.  Depreciation on assets placed in service is provided using the straight-line method over estimated useful lives ranging from 5 to 10 years.

Accounting Estimates

Accounting Estimates — The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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.

Revenue Recognition

Revenue Recognition —The Cooperative’s members are contractually obligated to annually deliver corn to the Cooperative by either Method A or Method B or a combination of both.  Under Method A, a member is required to physically deliver corn to the cooperative and under Method B a member appoints the cooperative as its agent to arrange for the acquisition and delivery of corn on the member’s behalf.  The Cooperative contractually appoints Cargill as its agent to arrange for the delivery of the corn by its members who elect to deliver corn using Method A and to acquire corn on its behalf for its members who elect to deliver corn using Method B.  In exchange for these services, the Cooperative paid Cargill an annual fee of $70,000 in 2017. Commencing on January 1, 2018, the Cooperative will pay an annual fee of $60,000, paid in quarterly installments.  The price per bushel paid to the member who elects to deliver corn using Method B is equal to the price per bushel paid by Cargill to acquire the corn as the Cooperative’s agent.  Members who deliver corn under Method A are paid the market price or contracted price for their corn at the time of delivery.  The Cooperative pays members who deliver corn under Method A an incentive payment of $.05 per bushel while members who elect Method B to deliver corn pay the Cooperative a $.02 per bushel agency fee for the cost of having the Cooperative deliver corn on their behalf.  The board has the discretion to change the incentive fee and the agency fee based on the Cooperative’s corn delivery needs.  The incentive fee and agency fee are a component of Corn Expense.

With respect to all Method A corn that is delivered, Cargill pays the aggregate purchase price for corn purchased from the Cooperative’s members to the Cooperative and then, on the Cooperative’s behalf, makes individual payments for corn directly to its members.  If a Method A member fails to fully satisfy the corn delivery requirement, Cargill purchases replacement corn for which the Cooperative reimburses Cargill the amount by which the underlying contracted corn price is less than the price of buying the replacement corn that was due on the delivery date.  The Method A member who fails to deliver corn is then invoiced by the Cooperative for the price of the corn.

Based on what is to be delivered by its members using Method A, Cargill then purchases the remainder of the corn to be delivered by the Cooperative on behalf of its Method B delivering members.  Because Cargill purchases the corn on the Cooperative’s behalf of Method B delivering members, the purchase price for the corn that would be paid to the Cooperative’s members if they actually delivered the corn offsets against the payment to be made by the Cooperative to Cargill for the cost to purchase the corn, thus no payment is made from Cargill to the Cooperative for corn delivered using Method B.  The Cooperative has determined Corn Expense for Method B deliveries based on the average quarterly cost per bushel paid by Cargill to the Cooperative’s members for Method A quarterly deliveries.

Concentrations

Concentrations - Several times during the year, the Cooperative maintained a cash balance in excess of the Federal Deposit Insurance Corporation (“FDIC”) limits.  At December 31, 2017, the Cooperative’s cash balance exceeded the FDIC insurance limits by approximately $6.5 million.

Fair Value Measurements

Fair Value Measurements - The Cooperative has determined the fair value of certain assets and liabilities in accordance with the provisions of Accounting Standards Codification (“ASC”) 820-10, which provides a framework for measuring fair value under generally accepted accounting principles.

ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC 820-10 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.  ASC 820-10 also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.  Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the related asset or liability.  Level 3 inputs are unobservable inputs related to the asset or liability.

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PROGOLD LIMITED LIABILITY COMPANY (Tables)

12 Months Ended

Dec. 31, 2017

PROGOLD LIMITED LIABILITY COMPANY

Schedule of financial information for ProGold LLC

	December 31,
(In Thousands)	2017		2016		2015
Current Assets	$	514	$	125	$	133
Long-Term Assets		39,843		42,086		53,386
Total Assets	$	40,357	$	42,211	$	53,519
Current Liabilities	$	5	$	407	$	404
Long-Term Liabilities		—		—		400
Total Liabilities		5		407		804
Members’ Equity		40,352		41,804		52,715
Total Liabilities and Members’ Equity	$	40,357	$	42,211	$	53,519
Rent Revenue on Operating Lease	$	22,873	$	22,837	$	23,106
Expenses		2,905		11,866		12,392
Net Income	$	19,968	$	10,971	$	10,714

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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2017

INVESTMENTS

Schedule of investments held to maturity

The Cooperative’s investments held to maturity are as follows as of December 31, 2017 and 2016 (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
December 31, 2017:
Money Market & CD’s	$	220	$	—	$	—	$	220
December 31, 2016:
Money Market & CD’s	$	219	$	—	$	—	$	219

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EMPLOYEE BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2017

EMPLOYEE BENEFIT PLANS

Schedule of assumptions used in the measurement of the entity's benefit obligations

	2017		2016
Discount Rate	4.50	%	5.00	%
Expected Return on Plan Assets	6.32	%	6.25	%
Rate of Compensation Increase	4.73	%	4.73	%

Schedule of expected pension benefit payments

The following schedule reflects the expected pension benefit payments during each of the next five years and the aggregate for the following five years (in thousands):

	Expected
	Benefit
	Payments
2018	$	54
2019		54
2020		54
2021		54
2022		50
2023-2027		244
Total	$	510

Components of Net Periodic Benefit Cost

	2017		2016		2015
Service Cost	$	—	$	—	$	—
Interest Cost		33		34		37
Expected Return on Plan Assets		(52)		(48)		(44)
Amortization of Net (Gain) Loss		4		5		11
Net Periodic Pension Cost	$	(15)	$	(9)	$	4

Schedule Of Funded Status And Amount Recognized In Balance Sheet And Accumulated Other Comprehensive Income

	December 31,		December 31,
	2017		2016
Change in Benefit Obligation
Obligation at the Beginning of the Period	$	772	$	775
Service Cost		—		—
Interest Cost		33		37
Actuarial (Gain) Loss		9		15
Benefits Paid		(55)		(55)
Obligation at the End of the Period	$	759	$	772
Change in Plan Assets
Fair Value at the Beginning of the Period	$	791	$	727
Actual Returns on Plan Assets		95		107
Employer Contributions		6		12
Benefits Paid		(55)		(55)
Fair Value at the End of the Period	$	837	$	791
Funded Status
Funded Status as of Period Ended	$	78	$	19
Net Amount Recognized	$	—	$	—

	December 31,		December 31,
	2017		2016
Amounts Recognized in the Balance Sheets
Noncurrent Assets	$	—	$	—
Current Liabilities		—		—
Noncurrent Liabilities		—		—
Net Amount Recognized	$	—	$	—
Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income
Accumulated Gain (Loss) Beginning of the Period	$	—	$	(48)
Recognized in Periodic Cost		—		—
Amount Arising During the Period		—		48
Accumulated Gain (Loss) End of the Period	$	—	$	—

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NATURE OF OPERATIONS (Details)	Sep. 01, 2009 $ / shares	Jan. 01, 2018	Dec. 31, 2017	Aug. 31, 2009 $ / shares shares	Aug. 31, 2008 $ / shares shares	Jan. 19, 1994 Partnership
Nature of operations
Number of other partners to ProGold joint venture | Partnership						2
Redemption price of Class A Common Voting Membership Stock (in dollars per share) | $ / shares	$ 150
Non-voting preferred stock, authorized (in shares)				10,000	10,000
Non-voting preferred stock, authorized, par value (in dollars per share) | $ / shares				$ 1,000	$ 1,000
Non-voting preferred stock, issued (in shares)				0	0
Non-voting preferred stock, outstanding (in shares)				0	0
Progold Limited Liability Company
Nature of operations
Ownership percentage in joint venture			49.00%
Progold Limited Liability Company | Co Venturer
Nature of operations
Ownership percentage in joint venture			51.00%
Ownership percentage available to be purchased under Option Agreement		50.00%	50.00%

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NATURE OF OPERATIONS - Percentage of book value of stock (Details)	Aug. 31, 2009
BASIS OF PRESENTATION
Percentage of book value of stock, paid as a consideration, in the event of right to recall stock of any member was exercised	25.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)		12 Months Ended
	Jan. 01, 2018 USD ($) installment	Dec. 31, 2017 USD ($) $ / bu	Dec. 31, 2016 USD ($)
Income Taxes
Excess of net financial basis over tax basis		$ 8,500,000	$ 8,000,000
Revenue Recognition
Annual contractual payments to Cargill to arrange for the delivery of the corn and other agency services	$ 60,000	$ 70,000
Number of installments | installment	4
Incentive paid per bushel to members who deliver corn under Method A | $ / bu		0.05
Agency fee paid per bushel by the members who elect Method B | $ / bu		0.02
Payment made by Cargill for corn delivered using Method B		$ 0
Concentrations
Cash balance in excess of the FDIC insurance limits		$ 6,500,000
Minimum
Property and equipment
Estimated useful lives		5 years
Maximum
Property and equipment
Estimated useful lives		10 years

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PROGOLD LIMITED LIABILITY COMPANY (Details) - Progold Limited Liability Company - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
ProGold Limited Liability Company
Ownership percentage in joint venture	49.00%
Financial information for ProGold LLC
Current Assets	$ 514	$ 125	$ 133
Long-Term Assets	39,843	42,086	53,386
Total Assets	40,357	42,211	53,519
Current Liabilities	5	407	404
Long-Term Liabilities			400
Total Liabilities	5	407	804
Members' Equity	40,352	41,804	52,715
Total Liabilities and Members' Equity	40,357	42,211	53,519
Rent Revenue on Operating Lease	22,873	22,837	23,106
Expenses	2,905	11,866	12,392
Net Income	$ 19,968	$ 10,971	$ 10,714

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INVESTMENTS (Details) - Money Market & CD’s - Fair Value Inputs Level1 - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Investments held to maturity
Amortized Cost	$ 220	$ 219
Fair Value	$ 220	$ 219

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INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
INCOME TAXES
Unrecognized tax benefits	$ 0	$ 0
Interest or penalties related to unrecognized tax benefits	0	0
Recognized income tax expenses	$ 0	$ 0	$ 0

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EMPLOYEE BENEFIT PLANS - Net Periodic Pension Cost (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
EMPLOYEE BENEFIT PLANS
Anticipated contributions	$ 0
Pension expenses	$ 6,000	$ 12,000	$ 25,000
Maximum equity exposure as a percentage of total portfolio value	50.00%

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EMPLOYEE BENEFIT PLANS - Payments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Assumptions used in measurement of benefit obligations
Discount Rate (as a percent)	4.50%	5.00%
Expected Return on Plan Assets (as a percent)	6.32%	6.25%
Rate of Compensation Increase (as a percent)	4.73%	4.73%
Expected pension benefit payments
2018	$ 54,000
2019	54,000
2020	54,000
2021	54,000
2022	50,000
2023-2027	244,000
Total	510,000
Expected contributions to the defined benefit pension plan during the next fiscal year	6,000
Components of Net Periodic Benefit Cost
Interest Cost	33,000	$ 34,000	$ 37,000
Expected return on plan assets	(52,000)	(48,000)	(44,000)
Amortization of net (gain) loss	4,000	5,000	11,000
Net periodic pension cost	(15,000)	(9,000)	4,000
Change in Benefit Obligation
Obligation at the Beginning of the Period	772,000	775,000
Interest Cost	33,000	37,000
Actuarial (Gain) Loss	(9,000)	(15,000)
Benefits Paid	(55,000)	(55,000)
Obligation at the End of the Period	759,000	772,000	775,000
Change in Plan Assets
Fair Value at the Beginning of the Period	791,000	727,000
Actual Returns on Plan Assets	95,000	107,000
Employer Contributions	6,000	12,000
Benefits Paid	(55,000)	(55,000)
Fair Value at the End of the Period	837,000	791,000	727,000
Funded Status
Defined Benefit Plan, Funded Status of Plan	$ 78,000	19,000
Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income
Accumulated Gain (Loss) Beginning of the Period		(48,000)
Amount Arising During the Period		$ 48,000
Accumulated Gain (Loss) End of the Period			$ (48,000)

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EMPLOYEE BENEFIT PLANS - Contributions (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
401(k) Plan
Contributions to the plan	$ 4,604	$ 7,489	$ 7,123

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)		12 Months Ended
	Jan. 01, 2018	Dec. 31, 2017
Annual contractual payments to Cargill for procurement of corn	$ 60,000	$ 70,000
Progold Limited Liability Company
Ownership percentage remaining for purchase under Consent Agreement	1.00%
Portion of costs that have not been paid and the Cooperative would be required to pay	1.00%
Co Venturer | Progold Limited Liability Company
Ownership percentage available to be purchased under Consent Agreement	50.00%	50.00%
Number of years interest is available for purchase	4 years
Minimum | Progold Limited Liability Company
Purchase price	$ 1,300,000
Maximum | Progold Limited Liability Company
Purchase price	$ 1,700,000

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SUBSEQUENT EVENTS (Details) - Subsequent Event	1 Months Ended
	Feb. 28, 2018 USD ($) $ / shares
SUBSEQUENT EVENTS
Authorized distribution | $	$ 2,493,967
Distribution declared (in dollars per unit) | $ / shares	$ 0.161