---

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UNITED STATESSECURITIES AND EXCHANGE COMMISSION WASHINGTON,
D. C. 20549


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FORM 10-Q

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xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE 
SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended: May 31, 2011

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 AND
15(d) OF THE 
SECURITES EXCHANGE ACT OF 1934

Commission file: No. 33-94644

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MINN-DAK FARMERS COOPERATIVE(Exact named of
Registrant as specified in its charter)

|                                 |  |                     
|-------------------------------- |  | --------------------
|North Dakota                     |  | 23-7222188          
|(State
 or other jurisdiction of |  | (I.R.S.
 Employer   
|Incorporation
 or organization)  |  | Identification
 No.)
|                                 |  |                     
|7525 Red River Road              |  |                     
|Wahpeton, North Dakota           |  | 58075               
|(Address
 of principal           |  | (Zip
 Code)         
|executive
 offices)              |  |                     

(701) 642-8411
(Registrants telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)

---

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, and (2) has been subject to such filing requirements for the past 90
days.

|      |    
|----- | ---
|YES x | NOo

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 during the preceding 12 months.

|     |    
|---- | ---
|YESo | NOo

Indicate by check mark
whether the Registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company
in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o      Accelerated
Filer o
     Non-Accelerated Filer x      Smaller
Reporting Co o

Indicate by check mark
whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).

|     |     
|---- | ----
|YESo | NO x

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Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest
practicable date.

|                      |  |                              
|--------------------- |  | -----------------------------
|Class of Common Stock |  | Outstanding at
 June 23, 2011
|$250
 Par Value       |  | 476                          

Minn-Dak Farmers Cooperative
(The Company or the Registrant) has previously registered securities for
offer and sale pursuant to the Securities Act of 1933, as amended (the
Securities Act). As a result of that previous registration under the
Securities Act, under Sections 15(d) and 13 of the Securities Exchange Act of
1934, as amended (the Exchange Act), the Company is obligated to file
quarterly reports on form 10-Q, annual reports on Form 10-K and supplemental
reports on Form 8-K. However, the Company has not registered any of its
securities under Section 12(g) of the Exchange Act. The Company is exempt from
any obligation to register its securities under the Exchange Act due to the
provisions of Section 12(g)(2)(E), which exempts from Exchange Act registration
any security of an issuer, such as the Company, which is a cooperative
association as defined in the Agricultural Marketing Act of 1929. As a result,
those provisions of the Exchange Act, which are applicable only to securities
registered under Section 12 of that act, do not apply to shares issued by the
Company. The provisions, which do not apply to the Companys shares, include
the regulation of proxies under Section 14 of the Exchange Act and the
reporting and other obligations of directors, officers and principal
stockholders under Section 16 of the Exchange Act.

This report contains
forward-looking statements and information based upon assumptions by the
Companys management, including assumptions about risks and uncertainties faced
by the Company. Any statements regarding future market prices, anticipated
costs, agricultural results, operating results and other statements that are
not historical facts contained in this annual report are considered
forward-looking statements. The words expect, project, estimate,
believe, anticipate, plan, intend, could, may, predict, and
similar expressions are also intended to be identified as forward-looking
terminology. Such statements involve risks, uncertainties and assumptions,
including, without limitation, market factors, the effect of weather and
economic conditions, farm and trade policy, the available supply of sugar,
available quantity and quality of sugarbeets and other factors detailed
elsewhere in this and other Company filings with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual outcomes may vary
materially from those indicated.

---

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MINN-DAK FARMERS COOPERATIVE 
CONSOLIDATED BALANCE SHEETS
ASSETS 
(In Thousands)

|                                                                                                |  |              |          |              |   |          |  
|----------------------------------------------------------------------------------------------- |  | ------------ | -------- | ------------ | - | -------- | -
|                                                                                                |  | May 31, 2011 |          | Aug 31, 2010 |  
|ASSETS                                                                                          |  | (Unaudited)  |          | (Audited)    |  
|                                                                                                |  |              |          |              |   |          |  
|CURRENT ASSETS                                                                                  |  |              |          |              |   |          |  
|Cash                                                                                            |  | $            | 277      |              | $ | 129      |  
|                                                                                                |  |              |          |              |   |          |  
|Current bond trust                                                                              |  |              | 4,845    |              |   | 4,731    |  
|                                                                                                |  |              |          |              |   |          |  
|Receivables                                                                                     |  |              |          |              |   |          |  
|Trade accounts                                                                                  |  |              | 18,684   |              |   | 12,731   |  
|Growers                                                                                         |  |              | 16,998   |              |   | 13,763   |  
|Receivable from affiliates                                                                      |  |              | 9,642    |              |   |         |  
|Other receivables                                                                               |  |              | 3        |              |   | 3        |  
|Total Receivables                                                                               |  |              | 45,327   |              |   | 26,496   |  
|                                                                                                |  |              |          |              |   |          |  
|Inventories                                                                                     |  |              |          |              |   |          |  
|Refined sugar, in-process sugar, pulp and molasses to be sold on a
 pooled basis                |  |              | 100,732  |              |   | 29,770   |  
|Non-member refined sugar                                                                        |  |              | 9,446    |              |   | 1,717    |  
|Sugarbeet inventory                                                                             |  |              |         |              |   | 3,121    |  
|Yeast                                                                                           |  |              | 217      |              |   | 237      |  
|Beet chemicals                                                                                  |  |              | 4,063    |              |   |         |  
|Materials and supplies                                                                          |  |              | 13,966   |              |   | 13,403   |  
|Total Inventories                                                                               |  |              | 128,424  |              |   | 48,249   |  
|                                                                                                |  |              |          |              |   |          |  
|Deferred charges                                                                                |  |              | 1,138    |              |   |         |  
|Prepaid expenses                                                                                |  |              | 2,510    |              |   | 2,039    |  
|Prepaid beet seed                                                                               |  |              |         |              |   | 8        |  
|Other current assets                                                                            |  |              | 870      |              |   |         |  
|Current deferred income tax asset                                                               |  |              | 11       |              |   |         |  
|                                                                                                |  |              |          |              |   |          |  
|Total
 Current Assets                                                                           |  |              | 183,402  |              |   | 81,653   |  
|                                                                                                |  |              |          |              |   |          |  
|PROPERTY, PLANT AND EQUIPMENT                                                                   |  |              |          |              |   |          |  
|Land and land improvements                                                                      |  |              | 28,164   |              |   | 28,164   |  
|Buildings                                                                                       |  |              | 37,883   |              |   | 37,883   |  
|Factory/Agricultural equipment                                                                  |  |              | 153,199  |              |   | 152,493  |  
|Other equipment                                                                                 |  |              | 5,294    |              |   | 5,301    |  
|Capitalized leases                                                                              |  |              | 3,353    |              |   | 3,353    |  
|Construction in progress                                                                        |  |              | 16,694   |              |   | 5,214    |  
|Total Property, Plant and Equipment                                                             |  |              | 244,587  |              |   | 232,408  |  
|Less accumulated depreciation                                                                   |  |              | (142,121 | )            |   | (135,638 | )
|Net Property, Plant and Equipment                                                               |  |              | 102,466  |              |   | 96,769   |  
|                                                                                                |  |              |          |              |   |          |  
|OTHER ASSETS                                                                                    |  |              |          |              |   |          |  
|Investment in other cooperatives, unconsolidated marketing
 subsidiaries and other corporations |  |              | 11,342   |              |   | 11,116   |  
|Bond trust and financing costs                                                                  |  |              | 4,899    |              |   | 2,493    |  
|Other long-term assets                                                                          |  |              | 3,110    |              |   | 5,035    |  
|Total Other Assets                                                                              |  |              | 19,351   |              |   | 18,643   |  
|                                                                                                |  |              |          |              |   |          |  
|TOTAL ASSETS                                                                                    |  | $            | 305,219  |              | $ | 197,065  |  

See Notes to Consolidated
Financial Statements.

3

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MINN-DAK FARMERS COOPERATIVE 
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND MEMBERS INVESTMENT
(In Thousands)

|                                                                                                                                           |  |                           |         |                         |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- | ------- | ----------------------- | - | ------- | -
|                                                                                                                                           |  | May 31, 2011
 (Unaudited) |         | Aug 31, 2010
 (Audited) |  
|LIABILITIES
 AND MEMBERS INVESTMENT                                                                                                       |  |                           |         |                         |   |         |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|CURRENT LIABILITIES                                                                                                                        |  |                           |         |                         |   |         |  
|Short-term notes payable                                                                                                                   |  | $                         | 61,276  |                         | $ | 27,558  |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|Current portion of long-term debt, capital leases and bonds payable                                                                        |  |                           | 3,007   |                         |   | 2,977   |  
|Accounts payable:                                                                                                                          |  |                           |         |                         |   |         |  
|Trade                                                                                                                                      |  |                           | 27,710  |                         |   | 10,144  |  
|Checks outstanding                                                                                                                         |  |                           | 859     |                         |   | 1,008   |  
|Deferred liabilities                                                                                                                       |  |                           |        |                         |   | 8,825   |  
|Growers                                                                                                                                    |  |                           | 37,735  |                         |   | 13,874  |  
|Total
 Accounts Payable                                                                                                                    |  |                           | 66,304  |                         |   | 33,851  |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|Income tax                                                                                                                                 |  |                           | 1       |                         |   | 195     |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|Payable to affiliates                                                                                                                      |  |                           |        |                         |   | 283     |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|Accrued liabilities                                                                                                                        |  |                           | 5,902   |                         |   | 3,101   |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|Total Current Liabilities                                                                                                                  |  |                           | 136,490 |                         |   | 67,965  |  
|LONG-TERM DEBT, CAPITAL LEASES, AND BONDS PAYABLE, NET OF CURRENT
 PORTION                                                                 |  |                           | 43,861  |                         |   | 37,930  |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|LONG-TERM DEFERRED INCOME TAX LIABILITY                                                                                                    |  |                           | 199     |                         |   | 266     |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|LONG-TERM PENSION LIABILITY                                                                                                                |  |                           | 21,064  |                         |   | 19,630  |  
|                                                                                                                                           |  |                           |         |                         |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                                                                              |  |                           |         |                         |   |         |  
|                                                                                                                                          
|Total Liabilities                                                                                                                          |  |                           | 201,614 |                         |   | 125,791 |  
|MEMBERS INVESTMENT                                                                                                                        |  |                           |         |                         |   |         |  
|Preferred stock:                                                                                                                           |  |                           |         |                         |   |         |  
|Class A - 100,000 shares authorized, $105 par value; 72,200 shares
 issued and outstanding                                                 |  |                           | 7,581   |                         |   | 7,581   |  
|Class B - 100,000 shares authorized, $75 par value; 72,200 shares
 issued and outstanding                                                  |  |                           | 5,415   |                         |   | 5,415   |  
|Class C - 100,000 shares authorized, $76 par value; 72,200 shares
 issued and outstanding                                                  |  |                           | 5,487   |                         |   | 5,487   |  
|Total
 Preferred stock                                                                                                                     |  |                           | 18,483  |                         |   | 18,483  |  
|Common stock, 600 shares authorized, $250 par value; issued and
 outstanding, 476 shares at May 31, 2011 and 477 shares at August 31, 2010 |  |                           | 119     |                         |   | 119     |  
|Paid in capital in excess of par value                                                                                                     |  |                           | 32,094  |                         |   | 32,094  |  
|Unit retention capital                                                                                                                     |  |                           | 3,104   |                         |   |        |  
|Nonqualified allocated patronage                                                                                                           |  |                           | 57,881  |                         |   | 28,299  |  
|Accumulated other comprehensive loss                                                                                                       |  |                           | (19,262 | )                       |   | (18,837 | )
|Retained earnings                                                                                                                          |  |                           | 11,186  |                         |   | 11,116  |  
|Total
 Members Investment                                                                                                                 |  |                           | 103,605 |                         |   | 71,274  |  
|                                                                                                                                          
|TOTAL LIABILITIES AND MEMBERS INVESTMENT                                                                                                  |  | $                         | 305,219 |                         | $ | 197,065 |  

See Notes to Consolidated Financial
Statements.

4

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MINN-DAK FARMERS COOPERATIVE
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)

|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------------- | - | ------------- | ------- | - | - | ------- | -
|                                                                                 |  | Three-Months Ended |        | Nine-Months Ended |  
|                                                                                 |  | May 31,
 2011      |        | May 31,
 2010     |   | May 31,
 2011 |   | May 31,
 2010 |        
|REVENUE:                                                                         |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Sales of sugar, co-products and yeast, net
 of discounts                         |  | $                  | 84,021 |                   | $ | 54,926        |   | $             | 241,388 |   | $ | 167,394 |  
|Changes in finished goods inventory and
 in-process sugar at NRV                 |  |                    | 8,390  |                   |   | 8,989         |   |               | 78,253  |   |   | 34,911  |  
|Total Revenue                                                                    |  |                    | 92,411 |                   |   | 63,915        |   |               | 319,641 |   |   | 202,305 |  
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|EXPENSES:                                                                        |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Production costs of sugar, in-process
 sugar, co-products and yeast sold         |  |                    | 20,092 |                   |   | 17,198        |   |               | 73,472  |   |   | 59,632  |  
|Sales and distribution costs                                                     |  |                    | 12,272 |                   |   | 8,670         |   |               | 40,595  |   |   | 30,576  |  
|General and administrative                                                       |  |                    | 1,948  |                   |   | 1,618         |   |               | 6,040   |   |   | 5,033   |  
|Interest                                                                         |  |                    | 645    |                   |   | 485           |   |               | 1,985   |   |   | 1,500   |  
|(Gain) on disposition of property and
 equipment                                 |  |                    |       |                   |   |              |   |               | (1      | ) |   | (122    | )
|Total Expenses                                                                   |  |                    | 34,957 |                   |   | 27,971        |   |               | 122,091 |   |   | 96,619  |  
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|TOLLING & OTHER REVENUE                                                          |  |                    | 873    |                   |   | 536           |   |               | 1,064   |   |   | 7,624   |  
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND
 NON-MEMBER BUSINESS BEFORE INCOME TAXES  |  |                    | 58,327 |                   |   | 36,480        |   |               | 198,614 |   |   | 113,310 |  
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|INCOME TAX BENEFIT (EXPENSE)                                                     |  |                    | 22     |                   |   | (484          | ) |               | 61      |   |   | (612    | )
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|NET PROCEEDS
 RESULTING FROM MEMBER AND NON-MEMBER BUSINESS                      |  | $                  | 58,349 |                   | $ | 35,996        |   | $             | 198,675 |   | $ | 112,698 |  
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|DISTRIBUTION OF NET PROCEEDS                                                     |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Credited to members investment                                                  |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Components of net income                                                         |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Income from non-member business                                                  |  | $                  | 27     |                   | $ | 1,266         |   | $             | 70      |   | $ | 1,510   |  
|Patronage income                                                                 |  |                    | 9,795  |                   |   | 4,938         |   |               | 29,606  |   |   | 21,485  |  
|Net income credited to members investment                                       |  |                    | 9,821  |                   |   | 6,204         |   |               | 29,676  |   |   | 22,995  |  
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Allocated costs of sugarbeets paid or
 payable to growers for production to date |  | $                  | 48,528 |                   | $ | 29,792        |   | $             | 168,999 |   | $ | 89,703  |  
|                                                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND
 NON-MEMBER BUSINESS                      |  | $                  | 58,349 |                   | $ | 35,996        |   | $             | 198,675 |   | $ | 112,698 |  

See Notes to Consolidated
Financial Statements.

5

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MINN-DAK FARMERS COOPERATIVE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

|                                                                         |  |                   |         |               |   |         |  
|------------------------------------------------------------------------ |  | ----------------- | ------- | ------------- | - | ------- | -
|                                                                         |  | Nine-Months Ended |        
|                                                                         |  | May 31,
 2011     |         | May 31,
 2010 |  
|OPERATING ACTIVITIES                                                     |  |                   |         |               |   |         |  
|Net income credited to members investment                               |  | $                 | 29,676  |               | $ | 22,995  |  
|Add (deduct) noncash items:                                              |  |                   |         |               |   |         |  
|Depreciation                                                             |  |                   | 6,505   |               |   | 6,617   |  
|Amortization                                                             |  |                   | 389     |               |   | 290     |  
|(Gain) on property and equipment disposals                               |  |                   | (1      | )             |   | (122    | )
|Loss allocated from unconsolidated
 marketing subsidiaries               |  |                   | (4      | )             |   | 1       |  
|Noncash portion of patronage capital
 credits                            |  |                   | (584    | )             |   | (735    | )
|Deferred income taxes                                                    |  |                   | (77     | )             |   | (40     | )
|Changes in operating assets and liabilities                              |  |                   |         |               |   |         |  
|Accounts receivable and advances                                         |  |                   | (18,830 | )             |   | (1,613  | )
|Inventory and prepaid expenses                                           |  |                   | (81,507 | )             |   | (33,639 | )
|Deferred charges and other assets                                        |  |                   | 651     |               |   | 1,088   |  
|Accounts payable, accrued liabilities and other liabilities              |  |                   | 43,018  |               |   | 10,394  |  
|Net cash (used in)/provided by operating
 activities                     |  |                   | (20,764 | )             |   | 5,236   |  
|                                                                         |  |                   |         |               |   |         |  
|INVESTING ACTIVITIES                                                     |  |                   |         |               |   |         |  
|Proceeds from disposition of property,
 plant and equipment              |  |                   | 1       |               |   | 123     |  
|Change in other assets                                                   |  |                   |        |               |   | (4,400  | )
|Tax exempt bond draw                                                     |  |                   | 6,782   |               |   |        |  
|Capital expenditures                                                     |  |                   | (12,204 | )             |   | (2,797  | )
|Net proceeds from patronage refunds and
 equity revolvements             |  |                   |        |               |   | 1,135   |  
|Patronage received from other coops                                      |  |                   | 412     |               |   |        |  
|Net cash (used in)/provided by investing
 activities                     |  |                   | (5,009  | )             |   | (5,939  | )
|                                                                         |  |                   |         |               |   |         |  
|FINANCING ACTIVITIES                                                     |  |                   |         |               |   |         |  
|Net proceeds from issuance of short-term
 debt                           |  |                   | 33,718  |               |   | 9,045   |  
|Checks outstanding                                                       |  |                   | (149    | )             |   | 102     |  
|Payment of long-term debt and capital
 leases                            |  |                   | (2,854  | )             |   | (4,082  | )
|Payment of financing fees                                                |  |                   | (750    | )             |   | (743    | )
|Equity payment to estate                                                 |  |                   | (24     | )             |   |        |  
|Payment of allocated patronage                                           |  |                   | (4,020  | )             |   | (3,626  | )
|Net cash (used in)/provided by financing
 activities                     |  |                   | 25,921  |               |   | 696     |  
|                                                                         |  |                   |         |               |   |         |  
|NET
 INCREASE/(DECREASE) IN CASH                                         |  |                   | 148     |               |   | (7      | )
|                                                                         |  |                   |         |               |   |         |  
|CASH,
 BEGINNING OF YEAR                                                 |  |                   | 129     |               |   | 94      |  
|                                                                         |  |                   |         |               |   |         |  
|CASH, END OF
 PERIOD                                                     |  | $                 | 277     |               | $ | 87      |  
|                                                                         |  |                   |         |               |   |         |  
|SUPPLEMENTAL
 DISCLOSURES OF CASH FLOW INFORMATION                       |  |                   |         |               |   |         |  
|Cash payments for (Receipts from)                                        |  |                   |         |               |   |         |  
|Interest                                                                 |  | $                 | 1,477   |               | $ | 1,352   |  
|                                                                         |  |                   |         |               |   |         |  
|Income taxes, net of refunds                                             |  | $                 | 361     |               | $ | 68      |  
|                                                                         |  |                   |         |               |   |         |  
|SUPPLEMENTAL DISCLOSURES OF NON-CASH
 INVESTING AND FINANCING ACTIVITIES |  |                   |         |               |   |         |  
|                                                                         |  |                   |         |               |   |         |  
|Unit retain deductions from grower payable                               |  | $                 | 3,104   |               |   |        |  
|                                                                         |  |                   |         |               |   |         |  
|Proceeds for bond issuance transferred to
 restricted investment         |  | $                 | 8,815   |               |   | 7,000   |  
|                                                                        
|Equipment purchased by issuance of capital
 lease                        |  | $                 |        |               | $ | 392     |  

See Notes to Consolidated
Financial Statements.

6

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MINN-DAK FARMERS COOPERATIVE 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
FOR THE NINE MONTHS ENDED 
MAY 31, 2011 and 2010 
(Unaudited)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The
 consolidated financial statements of the Company and that of its wholly owned
 subsidiary companies Minn-Dak Yeast Company (Minn-Dak Yeast) and Link
 Acquisition Company LLC (Link) for the three-month and nine-month periods
 ended May 31, 2011 and 2010 are unaudited and reflect all adjustments
 consisting of normal recurring adjustments which are, in the opinion of
 management, necessary for a fair presentation of the financial position and
 operating results for the interim period. The condensed consolidated
 financial statements should be read in conjunction with the consolidated
 financial statements and notes thereto, contained in the Companys Annual
 Report on Form 10-K for the fiscal year ended August 31, 2010. The results of
 operations for the three-month and nine-month periods ended May 31, 2011 are
 not necessarily indicative of the results for the entire fiscal year ending
 August 31, 2011.                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | Inventories
 of refined sugar, in-process sugar, pulp and molasses to be sold on a pooled
 basis are valued at net realizable value, while third-party purchased refined
 sugar to be sold on a pooled basis is valued at the lower of cost or market.
 Third-party refined sugar costs include product, delivery, poll adjustment,
 and refining fee costs. Inventory of yeast is valued at the lower of average
 cost or market. Materials and supplies are valued at most recent purchase price
 that approximates cost. During the periods when sugarbeets are purchased from
 shareholder/growers and/or non-members, but not yet converted into refined
 sugar or in-process sugar, that sugarbeet inventory is valued at grower
 and/or non-members payment cost. In valuing inventories at Net Realizable
 Value (NRV), the Company, in effect sells the remaining inventory to the
 subsequent periods sugar and co-product pool. Pooled product inventories
 will normally increase to a peak valuation at the end of the processing
 campaign and decrease to a low point of valuation at or near fiscal year end.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | In September
 2010, and effective as of August 31, 2010, the Company declared a revolvement
 of the remaining 66 percent of the allocated patronage for the 2003-crop
 totaling $2.9 million and 31 percent of the allocated patronage for the
 2004-crop totaling $1.1 million. These amounts were accrued as of August 31,
 2010 and paid to the shareholders on September 17, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | In November
 2010, the Company allocated to shareholders $4.0 million of patronage from
 the 2009-crop in the form of non-qualified allocated patronage credits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | The
 Companys Board of Directors authorized a $3.1 million per unit retain
 deduction from the 2010-crop, and as of May 31, 2011, this has been deducted
 and allocated to shareholders equity accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6. | Short term
 credit utilized as of May 31, 2011 consisted of $61.3 million; $32.1 million
 has been borrowed from CoBank (the Bank) and $29.2 million from the USDA
 Commodity Credit Corporation CCC. That leaves the Company with a remaining
 short-term credit capacity totaling $23.0 million. The increase in seasonal
 debt from August 31, 2010 to May 31, 2011 is due to normal seasonal
 operations for a 3.1 million ton crop.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|        |  |               |      |          |   |                 |  |   |      | 
|------- |  | ------------- | ---- | -------- | - | --------------- |  | - | ---- | 
|Source  |  | Capacity      |      | Utilized |   | Unused Capacity | 
|        |  | (In
Millions) |      |          |   |                 | 
|        |  |               |      |          |   |                 | 
|Co-Bank |  | $             | 45.0 |          | $ | 32.1            |  | $ | 12.9 | 
|CCC     |  | $             | 39.3 |          | $ | 29.2            |  | $ | 10.1 | 
|Total   |  | $             | 84.3 |          | $ | 61.3            |  | $ | 23.0 | 

|   |                                                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. | On November
 15, 2010 the Company renewed the Revolving Credit Supplement with the Bank
 through December 31, 2011. The Revolving Credit Supplement was renewed at
 $85.0 million for the time period from November 15, 2010 to May 31, 2011;
 then it is reduced to $45.0 million through December 31, 2011.

7

---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
|8.  | On December
 7, 2009, the Company applied for and received approval from Richland County
 to re-finance its tax-exempt long-term bonds. All variable rate bonds
 outstanding as of January 15, 2010 were called and new variable rate bonds
 (currently at 0.22 percent interest rate) were issued with a single maturity
 date of February 1, 2023 with no associated gains or losses. In addition,
 $7.0 million in new tax-exempt bonds, which are also exempt from alternative
 minimum taxes, were approved by Richland County to finance future capital
 expenditures. These variable rate bonds (currently at 0.13 percent interest
 rate) were issued on February 18, 2010 with a single maturity date of
 February 1, 2025. The letters of credit from the Bank associated with these
 bonds were also renewed as of the date of the issuance of the bonds. The new
 tax-exempt bonds are held as a restricted investment in a bond trust until
 qualified expenditures related to the bonds have been expended by the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|9.  | On November
 30, 2010, the Company applied for and received approval from Richland County
 to sell $8.8 million of new tax-exempt bonds, which are also exempt from
 alternative minimum taxes, to finance future capital expenditures. These
 variable rate bonds (currently at 0.13 percent interest rate) were issued on
 November 30, 2010 with a single maturity date of November 1, 2025. The
 letters of credit from the Bank associated with all of the bonds were also
 renewed as of the date of the issuance of the November 30, 2010 bonds, with
 the letters of credit increasing $9.1 million, representing the $8.8 million
 in principal plus interest. These newly issued tax-exempt bonds are held as a
 restricted investment in a bond trust until qualified expenditures related to
 the bonds have been expended by the Company.                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|10. | Fair value
 is defined as the price that would be received from selling an asset or paid
 to transfer a liability in an orderly transaction between market participants
 at the measurement date. When determining the fair value measurements for
 assets and liabilities required to be recorded at fair value, the Company
 considers the principal or most advantageous market in which it would
 transact and considers assumptions that market participants would use when
 pricing the asset or liability, such as inherent risk, transfer restrictions,
 and risk of nonperformance.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|    | The fair
 value hierarchy requires the Company to maximize the use of observable inputs
 and minimize the use of unobservable inputs when measuring fair value. A
 financial instruments categorization within the fair value hierarchy is
 based upon the lowest level of input that is significant to the fair value
 measurement. Three levels of inputs may be used to measure fair value:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Level 1:
 Quoted prices in active markets for identical assets or liabilities                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Level 2:
 Includes the following inputs:                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  | Quoted
 prices in active markets for similar assets or liabilities                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  | Quoted
 prices for identical or similar assets or liabilities in markets that are not
 active                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  | Or other
 inputs that are observable or can be corroborated by observable market data
 for substantially the full term of the assets or liabilities.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Level 3:
 Unobservable inputs that are supported by little or no market activity and
 that are significant to the fair value of assets or liabilities.                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Long-Term Debt, Inclusive of Current Maturities
 - Based upon discounted cash flows and current borrowing rates with similar
 maturities, the book value of the long-term debt as of May 31, 2011, was
 approximately $18.8 million of Bank debt in comparison to the fair value of
 $18.8 million. Also included in the Companys long-term debt is $28.1 million
 in tax-exempt bonds, in comparison to the fair value of $28.1 million.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Proceeds for Bond Issuance Transferred to Restricted Investment included
 in the Companys current and long-term Restricted Investments was $4.1
 million in comparison to the fair value of $4.1 million. Current and long-term
 Restricted Investments are invested in short-term government backed
 securities.                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Investments in CoBank, Dakota Valley Electric, and Investments in
 Marketing Cooperatives - The Company believes it is
 not practical to estimate the fair value of these investments without
 incurring excessive costs because there is no established market for these
 securities and equity interests, and it is inappropriate to estimate future
 cash flows which are largely dependent on future earnings of these organizations. 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Foreign Currency Forward Contracts  there
 were no open foreign currency forward contracts as of May 31, 2011.                                                                                                                                                                                                                                                                                                                           

8

---



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Interest Rate Contracts  Based on the zero
 coupon method in which the term, notional amount, and repricing date of the
 interest rate swap match the term, repricing date, and principal amount of
 the interest-bearing liability on which the hedging interest payments are
 due, the fair value of the interest rate contracts as of May 31, 2011 was a
 liability of $0.5 million. Inputs used to measure the fair value of the
 interest rate swap contracts are quoted prices in active markets for similar
 assets or liabilities and therefore are contained within level 2 of the fair
 value hierarchy. See the tables below.

|                                   |  |              |               |                   |        |                                              |   |         |   |         |      |       |   |   |   |   |      |     | 
|---------------------------------- |  | ------------ | ------------- | ----------------- | ------ | -------------------------------------------- | - | ------- | - | ------- | ---- | ----- | - | - | - | - | ---- | --- | 
|Interest Rate Swaps
 (In Millions) |  |              |               |                   |        | Fair Value of Liabilities as of May 31, 2011 |  
|                                  
|Fiscal Year                        |  | Notional Amt |               | Ave Interest Rate |        | Level 1                                      |   | Level 2 |   | Level 3 |      | Total |  
|                                   |  |              |               |                   |        |                                              |   |         |   |         |      |       |  
|2011                               |  | $            | 10.0
 Million |                   | 0.440% |                                              | $ |        |   | $       | <0.1 |       | $ |  |   | $ | <0.1 |    
|2012                               |  | $            | 30.0
 Million |                   | 0.853% |                                              | $ |        |   | $       | 0.1  |       | $ |  |   | $ | 0.1  |    
|2013                               |  | $            | 25.0
 Million |                   | 1.870% |                                              | $ |        |   | $       | 0.2  |       | $ |  |   | $ | 0.2  |    
|2014                               |  | $            | 15.0
 Million |                   | 2.879% |                                              | $ |        |   | $       | 0.1  |       | $ |  |   | $ | 0.1  |    
|2015                               |  | $            | 5.0
 Million  |                   | 2.943% |                                              | $ |        |   | $       | <0.1 |       | $ |  |   | $ | <0.1 |    
|                                   |  |              |               |                   |        |                                              |   | $       |  |         | $    | 0.5   |   | $ |  |   | $    | 0.5 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|11. | FASB ASC 815
 (formerly SFAS No. 133, Accounting for Derivative Instruments and Hedging
 Activities) requires the Company to recognize all derivatives, as defined, on
 the balance sheet at fair value.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company,
 as a result of its operating and financing activities, is exposed to changes
 in foreign currency exchange rates and interest rates which may adversely
 affect its results of operations and financial position. In seeking to minimize
 the risks and/or costs associated with such activities, the Company may enter
 into derivative contracts.                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company
 manages its foreign currency related risks primarily through the use of
 foreign currency forward contracts. At May 31, 2011 and at August 31, 2010,
 the Company had no foreign currency derivative instruments.                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company
 is exposed to interest risk primarily through its borrowing activities. The
 Company uses variable rate interest on substantially all of its debt
 obligations. To manage the interest rate risk on its debt, the Company uses
 interest rate swaps for the underlying interest rate of similar maturity debt
 instruments. These interest rate swaps are matched with future fiscal year
 periods. The Company has designated these interest rate swap contracts as a
 cash flow hedge.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company
 does not consider its interest rate swaps Level 1 inputs because they are not
 exchange traded. The Company considers its interest rate swaps to be Level 2
 inputs because they are observable in the marketplace.                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company
 reviews the hedging activity for effectiveness on a quarterly basis. The
 Company did not hold any hedging activity to review prior to the 2nd
 quarter of the current fiscal year. No ineffectiveness was recognized in
 earnings during the three-month and nine-month periods ended May 31, 2011.                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The current
 period loss as a result of reclassifying prior Interest Rate Liabilities to
 Interest Rate Expense was <$0.1 and <$0.1 million for the three-month
 and nine-month periods ended May 31, 2011 respectively. There was no activity
 for the three-month and nine-month periods ended May 31, 2010 respectively.                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company
 has swap agreements in place by individual Fiscal Year with different
 interest rates for each Fiscal Year.                                                                                                                                                                                                                                                                                                                                                                             

9

---



Interest Rate Swaps in effect May 31, 2011:

|                     |  |                 |               |                       |  |                                  |  |                                 |               |  |   |              | 
|-------------------- |  | --------------- | ------------- | --------------------- |  | -------------------------------- |  | ------------------------------- | ------------- |  | - | ------------ | 
|Interest
 Rate Swaps |  |                 |               |                       |  |                                  |  |                                 |              
|Fiscal Year          |  | Notional Amount |               | Average Interest Rate |  | Mark to Market
 Short Term Liab. |  | Mark to Market
 Long Term Liab. |              
|                     |  |                 |               |                       |  |                                  |  |                                 |               |  |   |              | 
|2011                 |  | $               | 10.0
 Million |                       |  | 0.440%                           |  | $                               | <0.1
 Million |  | $ | 0.0
 Million | 
|2012                 |  | $               | 30.3
 Million |                       |  | 0.853%                           |  | $                               | <0.1
 Million |  | $ | 0.1
 Million | 
|2013                 |  | $               | 25.0
 Million |                       |  | 1.870%                           |  | $                               | 0.0
 Million  |  | $ | 0.2
 Million | 
|2014                 |  | $               | 15.0
 Million |                       |  | 2.879%                           |  | $                               | 0.0
 Million  |  | $ | 0.1
 Million | 
|2015                 |  | $               | 5.0
 Million  |                       |  | 2.943%                           |  | $                               | 0.0
 Million  |  | $ | 0.1
 Million | 
|                     |  |                 |               |                       |  |                                  |  | $                               | 0.1
 Million  |  | $ | 0.4
 Million | 

Interest Rate Swaps in effect August 31,
2010:

Interest Rate
Swaps - None

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|12. | The
 Companys shareholder/growers harvested 3,108,004 tons of sugarbeets from the
 2010-crop, which created a revised (in June 2011) estimated payment liability
 of $170.9 million, or a payment estimate of $55.00 per average ton.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|13. | The sugar
 beet industry and the Company have been or are currently involved in various
 litigations concerning the approval of Roundup Ready® sugarbeets for planting
 in 2011 and forward. The legal proceedings to date have resulted in the
 finding that, for the 2011-crop, it was legal for the Companys
 shareholder/growers to plant Roundup Ready® sugarbeet seed. However, the
 Company believes that there will continue to be legal challenges to the
 USDAs partial deregulation of the Roundup Ready® sugarbeet seed. The ability
 of shareholder/growers to plant Roundup Ready® sugarbeets in subsequent years
 will be based upon actions by the USDA, which may be subject to further
 challenge by certain groups who oppose the partial deregulation.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Environmental
 law restrictions on the use of Roundup Ready® sugarbeet seeds or other
 restriction relating to sugarbeet seeds or herbicides could have a
 significant, negative financial impact on the Company and its
 shareholder/growers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company
 has incurred $4.1 million in costs related to the raising of conventional
 seed for the 2012-crop year. These costs are reflected as inventory and the
 method of allocating these costs back to the 2012-crop patrons has not been
 determined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|14. | The
 following schedule provides the components
 of Net Periodic Benefit Cost for the Nine-Months Ended, May 31, 2011 and
 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                    |  |              |        |                         |   |        |   |      |   |  |   |   | 
|----------------------------------- |  | ------------ | ------ | ----------------------- | - | ------ | - | ---- | - |  | - | - | 
|(In 000s)                          |  | Pension Plan |        | Other Than Pension Plan |  
|                                    |  | 2011         |        | 2010                    |   | 2011   |   | 2010 |  
|Service Cost                        |  | $            | 960    |                         | $ | 753    |   | $    |  |  | $ |  | 
|Interest Cost                       |  |              | 1,493  |                         |   | 1,383  |   |      |  |  |   |  | 
|Expected return on plan
 assets     |  |              | (1,249 | )                       |   | (1,119 | ) |      |  |  |   |  | 
|Amortization of prior
 service cost |  |              | 24     |                         |   | 24     |   |      |  |  |   |  | 
|Amortization of transition
 cost    |  |              |       |                         |   |       |   |      |  |  |   |  | 
|Amortization of net (gain)
 loss    |  |              | 814    |                         |   | 457    |   |      |  |  |   |  | 
|Net periodic benefit cost           |  | $            | 2,042  |                         | $ | 1,498  |   | $    |  |  | $ |  | 

Through the
nine-months ended May 31, 2011, the Company has made $0.9 million of
contributions as compared to $0.8 million through the nine-months ended May 31,
2010. The Company anticipates contributing $0.9 million in additional funds to
its pension plan in Fiscal Year 2011, for a total of $1.8 million.
Contributions in Fiscal Year 2010 totaled $1.5 million.

10

---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|15. | Recently
 Issued Accounting Pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In December,
 2010, the FASB issued authoritative guidance to improve goodwill impairment
 testing. Under this guidance, goodwill and other intangible assets testing is
 a two-step test. When a goodwill impairment test is performed (either on an
 annual or interim basis), an entity must assess whether the carrying amount
 of a reporting unit exceeds its fair value (Step 1). If it does, an entity
 must perform an additional test to determine whether goodwill has been
 impaired and to calculate the amount of that impairment (Step 2). This
 guidance is effective for fiscal years, and interim periods within those
 years, beginning after December 15, 2010. Early adoption is not permitted.
 This Update will be implemented for the quarter ending November 2011. The
 Company does not expect that this authoritative guidance on impairment
 testing will have a material effect on the Companys financial statements.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In May,
 2011, The FASB issued ASU 2011-4 - amendments to achieve common Fair Value
 Measurement and Disclosure requirements in U.S GAAP and IFRSs. This amendment
 is to ensure that fair value has the same meaning in U.S. GAAP and IFRSs and
 that their respective fair value measurement and disclosure requirements are the
 same. This guidance is effective for the third quarter of 2012. The Company
 does not expect that this authoritative guidance will have any material
 effect on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In June,
 2011, The FASB issued ASU 2011-5. This objective of this amendment is to
 improve the comparability, consistence, and transparency of financial
 reporting and to increase the prominence of items reported in other
 comprehensive income. This guidance is effective in the first quarter of
 2013. The Company does not expect that this authoritative guidance will have
 any material effect on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|16. | Change in
 Accounting Standards:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In June and
 December 2009, the FASB issued authoritative guidance to improve financial
 reporting by enterprises involved with variable interest entities and to
 provide more relevant and reliable information to users of financial
 statements. This guidance became effective for the Company in Fiscal Year
 2011. The Company does not consider the adoption of this guidance to have a
 material effect on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In July
 2010, the FASB issued authoritative guidance regarding disclosures about
 credit quality of financing receivables and the allowance for credit losses.
 This guidance is effective for the quarter ending February, 28, 2010.
 However, in January 2011, the FASB issued guidance regarding deferral of the
 effective date of disclosures about troubled debt restructurings in Update
 No. 2010-20. The deferral of the disclosures was effective upon issuance. The
 deferred portions of Update No. 2010-20 is anticipated to be effective for
 interim and annual reporting periods after June 15, 2011                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|17. | Subsequent
 Events:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company
 has considered subsequent events through the date the financial statements
 were issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

ITEM
2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This
Discussion should be read in conjunction with information contained in the
Consolidated Financial Statements and Notes thereto and in the Companys Annual
Report on Form 10-K for fiscal year ended August 31, 2010.

OVERVIEW

The following
discussion and analysis relates to the financial condition and results of
operations of Minn-Dak Farmers Cooperative (the Company or the Registrant)
for the three-month and nine-month periods ended May 31, 2011 (the third
quarter of the Companys 2011 fiscal year). The Companys fiscal year runs from
September 1 to August 31.

11

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Any statements
regarding future market prices, anticipated costs, agricultural results,
operating results and other statements that are not historical facts contained
in this Quarterly Report on Form 10-Q are forward-looking statements. The words
expect, project, estimate, believe, anticipate, plan, intend,
could, may, predict and similar expressions are also intended to identify
forward-looking statements. Such statements involve risks, uncertainties and
assumptions, including, without limitation, market factors, the effect of weather
and economic conditions, farm and trade policy, the available supply of sugar,
available quantity and quality of sugarbeets and other risks, including those
set forth in the Companys reports filed with the Securities and Exchange
Commission, including Item 1A of Part I of the Companys Annual Report on Form
10-K for the year ended August 31, 2010. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated. These forward-looking
statements are made as of the date of this report and the Company assumes no
obligation to update such forward-looking statements, or to update the reasons
why actual results could differ materially from those anticipated in such
forward-looking statements.

Critical Accounting
Policies and Estimates

The only
material changes to the Companys critical accounting policies and estimates
since the filing of its Annual Report on form 10-K for the year ended August
31, 2010 has been the Derivative and Hedging Activities.

The Companys
critical accounting policies and estimate changes include the following:

Derivative and Hedging Activities

FASB ASC 815
(formerly SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities) requires the Company to recognize all derivatives, as defined, on
the balance sheet at fair value.

The Company,
as a result of its operating and financing activities, is exposed to changes in
foreign currency exchange rates and interest rates which may adversely affect
its results of operations and financial position. In seeking to minimize the
risks and/or costs associated with such activities, the Company may enter into
derivative contracts.

The Company
manages its foreign currency related risks primarily through the use of foreign
currency forward contracts. At May 31, 2011 and at August 31, 2010, the Company
had no foreign currency derivative instruments.

The Company is
exposed to interest risk primarily through its borrowing activities. The
Company uses variable rate interest on substantially all of its debt
obligations. To manage the interest rate risk on its debt, the Company uses
interest rate swaps for the underlying interest rate of similar maturity debt
instruments. These interest rate swaps are matched with future fiscal year
periods. The Company has designated these interest rate swap contracts as a
cash flow hedge.

The Company
does not consider its interest rate swaps Level 1 inputs because they are not
exchange traded. The Company considers its interest rate swaps to be Level 2
inputs because they are observable in the marketplace.

The Company
reviews the hedging activity for effectiveness on a quarterly basis. The
Company did not hold any hedging activity to review prior to the 2nd
quarter of the current fiscal year. No ineffectiveness was recognized in
earnings during the three-month and nine-month periods ended May 31, 2011.

The current
period loss as a result of reclassifying prior Interest Rate Liabilities to
Interest Rate Expense was <$0.1 and <$0.1 million for the three-month and
nine-month periods ended May 31, 2011 respectively. There was no activity for
the three-month and nine-month periods ended May 31, 2010 respectively.

ESTIMATED FISCAL YEAR 2011/ CROP YEAR 2010 INFORMATION

This
discussion contains a summary of the Companys current estimates of the
financial results to be obtained from the Companys processing of the 2010
sugarbeet crop. Given the nature of the estimates required in connection with
the payments to shareholder/growers for their sugarbeets, this discussion
includes forward-looking statements regarding the quantity of sugar to be
produced from the 2010 sugarbeet crop, the net selling price for the sugar and
co-products produced by the Company and the Companys operating costs. These
forward-looking statements are based largely upon the Companys expectations
and estimates of future events; as a result, they are subject to a variety of
risks and uncertainties. Some of those estimates, such as the selling price for
the Companys products, the quantity of sugar produced from the sugarbeet crop,
changes in plant production efficiencies and sugarbeet storage conditions are
beyond the Companys control. The actual results experienced by the Company
could differ materially from the forward-looking statements contained herein.

12

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The Companys
shareholder/growers harvested 3.1 million tons of sugarbeets from the
2010-crop, approximately 42 percent more than the most recent 5-year average.
Sugar content of the 2010-crop was 1 percent above the average of the five most
recent years. Due to the higher harvested tons and sugar content, the Companys
initial production of sugar from the 2010-crop sugarbeets was expected to be 23
percent more than the average of the five most recent years of sugar
production. Unfavorable storage temperatures in October, combined with
excessively high storage heights of non-ventilated piles resulted in the
disposal of an estimated 0.2 million tons of beets. The need to dispose of an estimated
0.2 million tons of beets resulted in approximately $3.0 million in beet
disposal costs during the companys 2nd quarter. The Board of
Directors has authorized capital expenditures to add a sufficient quantity of
forced air ventilation and extended pile grounds to significantly reduce the
risk of having to discard beets in future years under the same size crop and
weather circumstances.

The Companys
initial sugarbeet payment estimate totaled $56.86 per ton or $0.19369042 per
harvested /bonus extractible pound of sugar. As a result of the loss of
sugarbeets in storage (as discussed above) and deterioration of the remaining
sugar beets, the payment estimate was revised to $53.57 per ton or $0.182508248
per harvested/bonus extractible pound of sugar during the Companys second
quarter, the payment estimate was again revised after the completion of the
Companys 2010-crop campaign to $55.00 per ton or $0.18736914 per
harvested/bonus extractible pound of sugar; with the final sugarbeet payment
determined in October of 2011. This revised projected payment is 16 percent
more than the final 2009-crop payment per ton and 2 percent more per pound of
extractible sugar. The higher projected 2010-crop payment per ton results from
more total tons of beets processed, higher sugar content in the sugarbeets,
decreased operating and fixed costs per ton as well as improved sugar prices;
offset to some degree by more beet discards, versus the prior year. The price
per pound of extractible sugar was diluted by 6.5 percent due to bonus sugar
for the 2010-crop vs. 2.3 percent for the 2009-crop. Bonus sugar is an
incentive payment to shareholder/growers to deliver sugarbeets prior to main
harvest. Harvest for the 2010-crop began on August 18, 2010 vs. the 2009-crop
beginning on September 8, 2009.

As of the date
of this report, the Company has taken into consideration key indicators of
actual results vs. projections used for the revised sugarbeet payment estimate.
Consideration has been given to beet inventory storage conditions, projected
net selling prices, factory operation costs, and sugar, pulp and molasses
production. No change in the revised estimated beet payment, as announced in
the 8-K filed June 28, 2011, has resulted from this review. It is the Companys
policy to update its estimate of yearly crop payments only when a material
change is sufficiently certain and the amount of such change is reasonably
calculable.

On June 1,
2011, Minn-Dak Farmers Cooperative employees represented by the American
Federation of Grain Millers AFL-CIO Local 405 ratified the labor agreement
reached by the company and union officials. The negotiated agreement extends
through May 31, 2013.

RESULTS OF
OPERATIONS

Comparison of the three-months ended May 31,
2011 and 2010

In the
Consolidated Statements of Operations, Distribution of Net Proceeds, allocated
costs of sugarbeets paid or payable to shareholder/growers for production to
date totaled $48.5 million, an increase of $18.7 million or 62.9 percent from
the prior year period. As of May 31, 2011, Management has revised the estimated
Fiscal 2011 payment to shareholder/growers for sugarbeets to $170.9 million,
which is $75.9 million or 79.8 percent more than the prior year.

The increase
in payments to shareholder/growers is based upon (i) an average delivered sugar
content of 16.8 percent, an 8.7 percent increase from the 2009-crop, (ii) a
total shareholder/grower sugarbeet crop to process of 3.1 million tons less an
estimated 0.2 million tons discarded and (iii) the Companys increased projected
selling price for its sugar, pulp and yeast; offset to some degree by lower
molasses prices when compared to the previous year.

Revenues for
the three-month period ended May 31, 2011 were comprised of Sugar 87 percent,
Pulp 6 percent, Molasses 4 percent and Yeast 3 percent.

13

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Consolidated
revenue for the three-month period ended May 31, 2011 from the sales of Sugar,
Pulp, Molasses and Yeast, increased $29.1 million or 53.0 percent from the
three-month period ended May 31, 2010. The table below reflects the percentage
changes in product revenues, prices and volumes for the three-month period
ended May 31, 2011.

|         |  |                    |   |                  |  |                         |  |                               |      |                        |  |       |   |  |      |   |  |       |   | 
|-------- |  | ------------------ | - | ---------------- |  | ----------------------- |  | ----------------------------- | ---- | ---------------------- |  | ----- | - |  | ---- | - |  | ----- | - | 
|Product  |  | Revenue
 $ Million |   | Change
 vs. 2010 |  | Revenue
 Percent Change |  | Selling Price
 Percent Change |      | Volume
 Percent Change | 
|         |  |                    |   |                  |  |                         |  |                               |      |                        |  |       |   |  |      |  
|Sugar    |  |                    | $ | 72.6             |  |                         |  | $                             | 28.7 |                        |  | 65.2  | % |  | 20.5 | % |  | 44.7  | % | 
|Pulp     |  |                    | $ | 5.3              |  |                         |  | $                             | 0.8  |                        |  | 18.1  | % |  | 1.2  | % |  | 16.9  | % | 
|Molasses |  |                    | $ | 3.4              |  |                         |  | $                             | 0.9  |                        |  | 35.9  | % |  | -9.0 | % |  | 44.9  | % | 
|Yeast    |  |                    | $ | 2.7              |  |                         |  | $                             | (1.3 | )                      |  | -31.7 | % |  | -3.4 | % |  | -28.3 | % | 
|         |  |                    |   |                  |  |                         |  |                               |      |                        |  |       |   |  |      |   |  |       |   | 
|Total    |  |                    | $ | 84.0             |  |                         |  | $                             | 29.1 |                        |  |       |   |  |      |   |  |       |   | 

The increase
in volume of sugar sold is attributable a larger 2010-crop, delivered by
shareholder/growers coupled with a very high demand from customers. The net
increase in volume of co-products sold is attributable to a larger 2010-crop
causing an earlier start to manufacturing on a pool wide basis. Overall returns
per ton for Pulp are projected to be higher and the overall returns per ton for
Molasses are projected to be lower for the Fiscal Year ended August 31, 2011.
Returns for Pulp and Molasses throughout the fiscal year will be impacted by
prior period carry-over sales, inventory levels, product mix and timing of
sales. Yeast sales volume decreased due to existing customers decreased demand
for yeast, the loss of one high-volume customer and above normal demand from a
large customer in the 2010 period.

The value of
finished product inventories for the three-month period ended May 31, 2011
increased $8.4 million, $0.6 million less than the three-month period ended May
31, 2010. The change in Sugar and Juice inventories accounted for substantially
all of the change vs. 2010.

Expenses for the three-month period ended May
31, 2011 increased $7.0 million. $2.9 million increased due to production
costs, $3.6 million increased due to Sales and Distribution Costs associated
with the larger crop and $0.5 million increased due to General, Administrative,
and Interest costs.

Comparison of the nine-months ended May 31,
2011 and 2010.

In the Consolidated
Statements of Operations, Distribution of Net Proceeds, allocated costs of
sugarbeets paid or payable to shareholder/growers for production to date
totaled $169.0 million, an increase of $79.3 million or 88.4 percent from the
prior year period. As of May 31, 2011, Management has revised the estimated
Fiscal 2011 payment to shareholder/growers for sugarbeets to $170.9 million,
which is $75.9 million or 79.8 percent more than the prior year.

The increase
in payments to shareholder/growers is based upon (i) an average delivered sugar
content of 16.8 percent, an 8.7 percent increase from the 2009-crop, (ii) a
total shareholder/grower sugarbeet crop to process of 3.1 million tons less an
estimated 0.2 million tons discarded and (iii) the Companys increased
projected selling price for its sugar, pulp and yeast; offset to some degree by
lower molasses prices when compared to the previous year.

Revenues for
the nine-month period ended May 31, 2011 were comprised of Sugar 85 percent,
Pulp 7 percent, Molasses 5 percent and Yeast 3 percent.

Consolidated
revenue for the nine-month period ended May 31, 2011, resulting from the sale
of Sugar, Pulp, Molasses and Yeast increased $74.0 million or 44.2 percent from
the nine-month period ended May 31, 2010. The table below reflects the
percentage changes in product revenues, prices and volumes for the nine-month
period ended May 31, 2011.

14

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|         |  |                    |   |                  |  |                         |  |                               |      |                        |  |       |   |  |       |   |  |       |   | 
|-------- |  | ------------------ | - | ---------------- |  | ----------------------- |  | ----------------------------- | ---- | ---------------------- |  | ----- | - |  | ----- | - |  | ----- | - | 
|Product  |  | Revenue
 $ Million |   | Change
 vs. 2010 |  | Revenue
 Percent Change |  | Selling Price
 Percent Change |      | Volume
 Percent Change | 
|         |  |                    |   |                  |  |                         |  |                               |      |                        |  |       |   |  |       |  
|Sugar    |  |                    | $ | 204.8            |  |                         |  | $                             | 71.3 |                        |  | 53.4  | % |  | 17.3  | % |  | 36.1  | % | 
|Pulp     |  |                    | $ | 15.7             |  |                         |  | $                             | 2.5  |                        |  | 19.0  | % |  | -18.9 | % |  | 37.9  | % | 
|Molasses |  |                    | $ | 11.7             |  |                         |  | $                             | 2.7  |                        |  | 30.0  | % |  | -9.8  | % |  | 39.8  | % | 
|Yeast    |  |                    | $ | 9.3              |  |                         |  | $                             | (2.5 | )                      |  | -21.3 | % |  | -0.5  | % |  | -20.8 | % | 
|         |  |                    |   |                  |  |                         |  |                               |      |                        |  |       |   |  |       |   |  |       |   | 
|Total    |  |                    | $ | 241.5            |  |                         |  | $                             | 74.0 |                        |  |       |   |  |       |   |  |       |   | 

The increase
in volume of sugar sold is attributable a larger 2010 crop, delivered by
shareholder/growers coupled with a very high demand from customers. The
increase in volume of co-products sold is attributable to a larger 2010-crop
causing an earlier start to manufacturing on a pool wide basis. Overall returns
per ton for Pulp are projected to be higher and the overall returns per ton for
Molasses are projected to be lower for the Fiscal Year ended August 31, 2011.
Returns for Pulp and Molasses throughout the fiscal year will be impacted by
prior period carry-over sales, inventory levels, product mix and timing of
sales. Yeast sales volume decreased due to existing customers decreased demand
for yeast, the loss of one high-volume customer and above normal demand from a
large customer in the 2010 period. Selling prices for all products increased or
decreased due to general market conditions.

The value of
finished product inventories for the nine-month period ended May 31, 2011
increased $78.3 million, $43.3 million more than the increase for the
nine-month period ended May 31, 2010. A significant portion of the increase is
a reflection of the tolling the Company did for another processor during the
three-months ended February 28, 2010, and which did not take place in current
year. In addition, the start of campaign on August 20, 2010 allowed the Company
to be manufacturing at full capacity on September 1, 2010 the first day of the
nine-month period ended May 31, 2011. The change in Sugar and Juice inventories
accounted for almost all of the change in inventory vs. 2010.

Tolling and
Other Income decreased by $6.6 million due to the Company not having a tolling
agreement in place. The Company determined that it did not have excess capacity
in the current year to process sugarbeets for other processors.

Expenses for
the nine-month period ended May 31, 2011 increased $25.5 million; $13.8 million
increased due to the production costs for a campaign that has incurred twenty
four more operating days in 2011 vs. 2010. The production costs include $3.0
million in beet disposal costs; higher grower delivery and trucking costs,
higher trucking re-haul costs, higher energy costs, and higher maintenance
costs. Other than beet disposal costs, production costs were related to the
larger crop and higher levels of operations. $10.0 million increased due to
Sales and Distribution Costs associated with the larger crop and $1.6 million
increased due to General, Administrative, and Interest costs. Interest cost
increases are due primarily to higher levels of seasonal borrowing due to the
larger crop. Administrative cost increases are due primarily to the recording
of bonuses and related costs vs. the prior year when no similar costs were
recorded due to the lower crop size.

LIQUIDITY AND
CAPITAL RESOURCES

Because the
Company operates as a cooperative, payment for shareholder/grower-delivered
sugarbeets, the principal raw material used in producing the sugar and
co-products it sells, are subordinated to all shareholder/grower business
expenses. In addition, actual cash payments to shareholder/growers are spread
over a period of approximately one year following delivery of sugarbeet crops
to the Company and are net of per unit retains and patronage allocated to them,
both of which remain available to meet the Companys capital requirements. This
shareholder financing arrangement may result in an additional source of
liquidity and reduced outside financing requirements in comparison to a similar
business operated on a non-cooperative basis. However, because sugar is sold
throughout the year (while sugarbeets are processed primarily between September
and April) and because substantial amounts of equipment are required for its
operations, the Company has utilized substantial outside financing on both a
seasonal and long-term basis to fund such operations. The short and long-term
financing has been primarily provided by CoBank (the Bank). The Company also
has the ability to borrow money on a short-term basis from the USDA Commodity
Credit Corporation CCC using the Companys sugar inventory as collateral.

15

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May 31, 2011
Seasonal Debt Information

|        |  |          |                |          |   |                  |  |   |      | 
|------- |  | -------- | -------------- | -------- | - | ---------------- |  | - | ---- | 
|Source  |  | Capacity |                | Utilized |   | Unused
 Capacity | 
|        |  |          | (In
 Millions) |          |   |                  |  |   |      | 
|        |  |          |                |          |   |                  |  |   |      | 
|Co-Bank |  | $        | 45.0           |          | $ | 32.1             |  | $ | 12.9 | 
|CCC     |  | $        | 39.3           |          | $ | 29.2             |  | $ | 10.1 | 
|Total   |  | $        | 84.3           |          | $ | 61.3             |  | $ | 23.0 | 

During the
nine-month period ended May 31, 2011 the Company was reimbursed from the bond
trust for qualified capital expenditures in the amount of $6.8 million in
accordance with the sale of $7.0 million in tax exempt bonds during fiscal
2010. In addition, the Company is eligible to have an additional $4.8 million
reimbursed from the bond trust as of May 31, 2011 as an additional source of
available cash.

On November
30, 2010, the Company sold $8.8 million of new tax exempt bonds resulting from
the Federal Governments
economic stimulus legislation. The proceeds of these bonds are required to be
placed in a trust account until the Company makes qualifying capital
investments that allow for the use of the proceeds of these bonds. The Company
intends to use all of the proceeds from the bond issuance on qualifying capital
expenditures within the time period required in the bond indenture. The Company
intends to make the qualifying expenditures by August 31, 2012.

The loan
agreements between the Bank and the Company obligate the Company to maintain,
In accordance with GAAP, the following financial covenants:

|  |                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | Maintain a
 current ratio of no less than 1.10 for the first quarter of a fiscal year and
 1.15 for all other quarter and fiscal year ends;        
| | Maintain a
 long-term debt and capitalized leases to equity ratio of not greater than
 .8:1;                                                       
| | Maintain
 available cash flow to current long-term debt ratio as defined in the
 agreement of not less than 1.25:1, as measured at fiscal year-end.

As of May 31,
2011 the Company was in compliance with its loan agreement covenants with the
Bank.

Net Cash used
in operations totaled $20.8 million for the nine-month period ended May 31,
2011, compared to $5.2 million provided for the previous period. This decrease
of $25.9 million in net cash used vs. the period ended May 31, 2010 was
primarily due to the differences in the sugarbeet projected payments recorded
liability, actual payments to shareholder/growers, and the associated
additional inventory needs for processing materials from the record 2010-crop.
Beet disposal costs were $3.0 million. Also, $4.0 million was used to fund crop
chemical needs for the 2012 crop, should conventional sugarbeet seed be
determined to be the planting requirement for shareholder/growers.

The net cash
used in investing activities totaled $5.0 million for the nine-month period
ended May 31, 2011, compared to $5.9 million used the period ended May 31,
2010. The conversion of $6.8 million in restricted bond assets to cash during
the current period was offset by an increase of $9.4 million in capital
expenditures vs. the period ended May 31, 2010.

The net cash
provided by financing activities totaled $25.9 million for the nine-month
period ended May 31, 2011 compared to $0.7 million for the period ended May 31,
2010. This increase of $25.2 million was primarily due to a $24.7 million
increase in short term debt obligations required for the payment of sugarbeets
from the record 2010-crop. All other factors totaled $0.5 million.

The Company
retained $3.1 million as a non-cash item from the 2010-crop initial beet payment
in the form of non-qualified per unit retains.

16

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

Working
capital increased $33.2 million for the for the nine-month period ended May 31,
2011. The Company funds its capital expenditure and debt retirement needs
primarily from operating activities. The Company anticipates using the majority
of the remaining $9.0 million in economic stimulus bonds as a source of funding
for the fiscal 2011 capital expenditures.

Cash increased
$0.1 million for the for the nine-month period ended May 31, 2011.

Capital
expenditures for fiscal year 2011 have been approved at $22.3 million. The
capital expenditures are for equipment to improve efficiency, improved beet
storage, improved rail facilities and safety and replacement activities.
Failure by the Company to make capital expenditures over a period of years
could result in the Company being less competitive due to its failure to reduce
costs, increase operating efficiencies or increase revenues.

The Bonds are
secured by a letter of Credit from the Bank. The letter of credit is ultimately
secured by the plant and property of the Companys facility at Wahpeton, ND.

The Company is
not aware of any known trends, demands, commitments, events or uncertainties
that will likely result in the Companys liquidity increasing or decreasing
materially.

Other than those
items described above, the Company is not aware of any known material trends,
either favorable or unfavorable, that would cause the mix of equity to debt or
the cost of debt to materially change.

OTHER

Estimated Fiscal Year 2012 InformationThe Companys Board of Directors increased the
planting level for the 2011-crop vs. the 2010-crop level on May 9, 2011 due
primarily to a late planting start that resulted from wet field conditions. As
of the date of this report, 120,910 acres or a planting tolerance of 1.67 had
been planted, with no additional planted acres anticipated.

Nearly 100
percent of the 2011-crop utilized Roundup-Ready® sugarbeet seed. As of the date
of this report, the crop, as planted, had the potential for normal harvest
results.

EnvironmentalThe Company is subject to extensive federal and state
environmental laws and regulations with respect to water and air quality, solid
waste disposal and odor control. The Company conducts an ongoing compliance
program designed to meet these environmental laws and regulations. The Company
believes that it is in substantial compliance with applicable environmental
laws and regulations. From time to time, however, the Company may be involved
in investigations or determinations regarding matters that may arise in the
ordinary course of business. The Company works closely with all affected
government agencies to resolve environmental issues that have arisen and
believes such issues will be resolved without any material adverse effect on
the Company.

The Companys
sugar manufacturing process is energy intensive and generates carbon dioxide
and other Greenhouse Gases (GHGs). Several bills have been passed or
introduced in the United States Senate and House of Representatives that would
regulate GHGs and carbon dioxide emissions to reduce the impact of global
climate change. The Company believes it is likely that industries generating
GHGs, including the Company, will at some future date be subject to either
federal or state regulation relating to climate change policies. These
policies, if adopted, will increase the Companys energy and other operating
costs. Depending on how these policies address imports, the domestic sugar
market may have a competitive disadvantage compared with imported sugar. These
policies could have a significant negative impact on the Companys beet payment
to shareholder/growers if the Company is not able to pass the increased costs
on to the Companys customers.

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have
been no material changes to the Companys Quantitative and Qualitative
Disclosures About Market Risk since the filing of the Companys 10-K for the
Fiscal Year ended August 31, 2010.

17

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ITEM 4T.
CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and
Procedures 
As required by Rule 13a-15(b) under the Exchange Act, the Company conducted an
evaluation, under the supervision and with the participation of the Companys
management, including its Chief Executive Officer and Chief Financial Officer
(together the Certifying Officers), of the effectiveness of the design and
operation of the Companys disclosure controls and procedures as of May 31,
2011, the end of the period covered by this report. Based upon that evaluation,
the Certifying Officers concluded that the Companys disclosure controls and
procedures were effective.

Inherent Limitations on Effectiveness of
Controls 
Management is responsible for establishing and maintaining adequate internal
control over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. generally accepted accounting
principles. Internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with U.S. generally accepted accounting principles, and that
receipts and expenditures are being made only in accordance with authorizations
of the management and the Board; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of Company assets that could have a material effect on the
financial statements.

Management
personnel, including the Certifying Officers, recognize that the Companys
internal control over financial reporting cannot prevent or detect all error
and all fraud. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the control systems objectives
will be met. The design of a control system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered
relative to their costs. Further, because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, have been detected. The design of any system of
controls is based in part on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions.

Changes in Internal Control over Financial
Reporting 
There have been no material changes to the Companys internal control over
financial reporting since the filing of the Companys Form 10-Q for the period
ended February 28, 2011 that has materially affected, or is reasonably likely
to materially affect, its internal control over financial reporting.

PART II.
OTHER INFORMATION

Item 1.
Legal Proceedings

In March 2005,
the U.S. Department of Agriculture (the USDA) made a determination that
Roundup Ready® sugarbeets should be deregulated. On January 23, 2008, a
coalition group including the Center for Food Safety, the Sierra Club and two
organic seed groups filed a lawsuit challenging the USDAs determination. On
September 21, 2009, the U.S. District Court for the Northern District of
California (the District Court) ruled that the USDA violated the National
Environmental Policy Act by failing to prepare an Environmental Impact
Statement (EIS) before deregulating Roundup Ready® sugarbeets. The District
Court also ordered the USDA to complete an EIS. The USDA has said that it expects
to complete the EIS by May of 2012.

On February 4,
2011the USDA issued an Environmental Assessment (EA) to address an
administrative action on its part to partially deregulate the use of Roundup
Ready® sugarbeet seed for sugarbeet crops in the U.S. Plaintiffs tried to stop
seed and root plantings for the 2011 crop by asking the Ninth District Court
for a Temporary Restraining Order and Temporary Injunction. That was denied.
The final result of all of the legal proceedings to date means that as of this
filing it is legal for the Companys shareholder/growers to plant Roundup
Ready® sugarbeet seed in 2011. However, the Company believes that the
Plaintiffs will continue to challenge by legal means the USDAs partial
deregulation of the Roundup Ready® sugarbeet seed going forward. The ability of
shareholder/growers to plant Roundup Ready® sugarbeets in subsequent years will
be based upon actions by the USDA, which may be subject to further challenge in
the future by the Plaintiffs or other groups also.

18

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On February 4,
2011 the Company, along with the rest of the sugarbeet industry, filed suit in
U.S. district court in the District of Columbia against the USDA, the Center
for Food Safety and the Sierra Club challenging some of the more onerous
requirements set forth in the conditions for partial deregulation of the
Roundup Ready® sugarbeet seed and requesting that the judge render a
declaratory judgment that the partial deregulation complies with the National
Environmental Protection Act (NEPA) and the Plant Protection Act (PPA).

According to
the USDA, Roundup Ready® varieties accounted for about 95 percent of the
planted acres in the 2009/10 crop year. The Companys Board of Directors
authorized the planting of Roundup Ready® sugarbeets beginning with the 2008
crop. Of the sugarbeet crop processed by the Company in 2010, the Company
estimates that nearly 100 percent was grown with Roundup Ready® seed. Nearly
100 percent of the sugarbeet crop planted in 2011 is planted with Roundup
Ready® seed. Environmental law restrictions on the use of Roundup Ready®
sugarbeet seeds or other restriction relating to sugarbeet seeds or herbicides
could have a significant, negative financial impact on the Company and its
shareholder/growers.

In May 2011,
the Company, along with others in the sugar industry (collectively the
Plaintiffs), filed a lawsuit in U.S. District Court, Central District of
California against the Corn Refiners Association and its member companies
(collectively the Defendants) and asked the Court to: (1) enjoin the
Defendants from continuing to make false and/or misleading representations of
fact about high fructose corn syrup (HFCS); (2) award Plaintiffs damages for
the harms they have suffered and continue to suffer as a result of the Defendants
false and/or misleading advertising, promotion and/or marketing of HFCS,
including a corrective advertising award and (3) award Plaintiffs their costs
and expenses of the lawsuit. The outcome of this lawsuit is unknown at this
time and the Company does not know what financial impact, if any, that this
lawsuit will have on the Company and its shareholder/growers.

Item
1A.  Risk Factors.There have been no material changes from risk factors as
previously disclosed in the Companys Form 10-K. For a detailed discussion of
certain risk factors that could affect the Companys operations, financial
condition or results for future periods, see Item 1 A, Risk factors in the
Companys 2010 Annual Report on Form 10-K.

Item
2.  Unregistered Sales of Equity Securities and Use of Proceeds.None

Item
3.  Defaults Upon Senior SecuritiesNone

Item
4.  Submission of Matters to a Vote of Security HoldersNone

Item
5.  Other InformationNone.

Item
6.  Exhibitsa) Exhibits

| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | Item #31.1
 Section 302 Certification of the President and Chief Executive Officer                
| | Item #31.2
 Section 302 Certification of the Executive Vice President and Chief Financial
 Officer
| | Item #31.3
 Section 302 Certification of the Controller and Chief Accounting Officer              
| | Item #32.1
 Section 906 Certification of the President and Chief Executive Officer                
| | Item #32.2
 Section 906 Certification of the Executive Vice President and Chief Financial
 Officer

19

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SIGNATURES

Pursuant to
the requirement 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.

|      |                |  |                                                      
|----- | -------------- |  | -----------------------------------------------------
|      |                |  | MINN-DAK
 FARMERS COOPERATIVE                        
|      |                |  | (Registrant)                                         
|      |                |  |                                                      
|Date: | JULY 11,
 2011 |  | /s/ DAVID H.
 ROCHE                                  
|      |                |  | David H.
 Roche                                      
|      |                |  | President
 and Chief Executive Officer               
|      |                |  |                                                      
|      |                |  |                                                      
|Date: | JULY 11,
 2011 |  | /s/ STEVEN
 M. CASPERS                               
|      |                |  | Steven M.
 Caspers                                   
|      |                |  | Executive
 Vice President and Chief Financial Officer

20

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