|                                  
|----------------------------------
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|WASHINGTON, D. C. 20549           

|          |  | 
|--------- |  | 
|          |  | 
|FORM 10-Q
|          |  | 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE 
SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended: May 31, 2009

OR

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

|                              |  | 
|----------------------------- |  | 
|Commission file: No. 33-94644
|                             
|                              |  | 

|                                                        |                              | 
|------------------------------------------------------- | ---------------------------- | 
|                                                        | 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
 executive offices) | (Zip Code)                                  

|                                                     |                | 
|---------------------------------------------------- | -------------- | 
|                                                     | (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.

| |      |  |     | 
| | ---- |  | --- | 
| | YESx |  | 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 |  | NOx | 

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 |  | NOx | 

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 24, 2009 | 
| |                       |  |                               | 
| | $250 Par Value        |  | 475                           | 

Minn-Dak
Farmers Cooperative (The Company) 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.

1





---



PART I.
FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

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

|                                                                                                |  |                           |          |                         |   |          |  
|----------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | ----------------------- | - | -------- | -
|                                                                                                |  | May 31, 2009
 (Unaudited) |          | Aug 31, 2008
 (Audited) |  
|ASSETS                                                                                          |  |                           |          |                         |   |          |  
|                                                                                                |  |                           |          |                         |   |          |  
|CURRENT ASSETS                                                                                  |  |                           |          |                         |   |          |  
|Cash                                                                                            |  | $                         | 128      |                         | $ | 159      |  
|                                                                                                |  |                           |          |                         |   |          |  
|Receivables                                                                                     |  |                           |          |                         |   |          |  
|Trade accounts                                                                                  |  |                           | 15,019   |                         |   | 16,376   |  
|Growers                                                                                         |  |                           | 11,639   |                         |   | 7,313    |  
|Receivable from affiliates                                                                      |  |                           | 2,161    |                         |   | 1,492    |  
|Income Tax                                                                                      |  |                           |         |                         |   | 234      |  
|Other receivables                                                                               |  |                           | 3        |                         |   | 3        |  
|Total Receivables                                                                               |  |                           | 28,822   |                         |   | 25,418   |  
|                                                                                                |  |                           |          |                         |   |          |  
|Inventories                                                                                     |  |                           |          |                         |   |          |  
|Refined sugar, in-process sugar, pulp and
 molasses to be sold on a pooled basis                |  |                           | 70,009   |                         |   | 28,453   |  
|Non-member refined sugar                                                                        |  |                           | 13       |                         |   | 1,358    |  
|Yeast                                                                                           |  |                           | 147      |                         |   | 168      |  
|Materials and supplies                                                                          |  |                           | 10,146   |                         |   | 10,160   |  
|Total Inventories                                                                               |  |                           | 80,315   |                         |   | 40,139   |  
|                                                                                                |  |                           |          |                         |   |          |  
|Deferred charges                                                                                |  |                           | 810      |                         |   | 1,436    |  
|Prepaid expenses                                                                                |  |                           | 2,132    |                         |   | 2,150    |  
|Other current assets                                                                            |  |                           | 806      |                         |   |         |  
|Current deferred income tax asset                                                               |  |                           | 39       |                         |   | 145      |  
|                                                                                                |  |                           |          |                         |   |          |  
|Total current assets                                                                            |  |                           | 113,052  |                         |   | 69,447   |  
|                                                                                                |  |                           |          |                         |   |          |  
|PROPERTY, PLANT AND EQUIPMENT                                                                   |  |                           |          |                         |   |          |  
|Land and land improvements                                                                      |  |                           | 27,130   |                         |   | 26,476   |  
|Buildings                                                                                       |  |                           | 37,592   |                         |   | 37,592   |  
|Factory/Agricultural equipment                                                                  |  |                           | 145,926  |                         |   | 141,263  |  
|Other equipment                                                                                 |  |                           | 4,017    |                         |   | 3,767    |  
|Capitalized Leases                                                                              |  |                           | 2,461    |                         |   | 746      |  
|Construction in progress                                                                        |  |                           | 3,016    |                         |   | 4,501    |  
|Total Property, Plant and Equipment                                                             |  |                           | 220,142  |                         |   | 214,345  |  
|Less accumulated depreciation                                                                   |  |                           | (125,767 | )                       |   | (119,567 | )
|Net Property, Plant and Equipment                                                               |  |                           | 94,375   |                         |   | 94,778   |  
|                                                                                                |  |                           |          |                         |   |          |  
|OTHER ASSETS                                                                                    |  |                           |          |                         |   |          |  
|Investment in other cooperatives,
 unconsolidated marketing subsidiaries and other corporations |  |                           | 12,041   |                         |   | 11,523   |  
|Other long-term assets                                                                          |  |                           | 1,092    |                         |   | 1,314    |  
|Total Other Assets                                                                              |  |                           | 13,133   |                         |   | 12,837   |  
|                                                                                                |  |                           |          |                         |   |          |  
|TOTAL ASSETS                                                                                    |  | $                         | 220,560  |                         | $ | 177,062  |  

See Notes to
Consolidated Financial Statements.

2

---



MINN-DAK FARMERS COOPERATIVE 
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS EQUITY
(In Thousands)

|                                                                                                                                            |  |                            |         |                          |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | ------------------------ | - | ------- | -
|                                                                                                                                            |  | May 31, 2009 
 (Unaudited) |         | Aug 31, 2008 
 (Audited) |  
|LIABILITIES AND MEMBERS INVESTMENT                                                                                                         |  |                            |         |                          |   |         |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|CURRENT LIABILITIES                                                                                                                         |  |                            |         |                          |   |         |  
|Short-term notes payable                                                                                                                    |  | $                          | 26,498  |                          | $ | 24,440  |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|Current portion of long-term debt, capital
 leases and bonds payable                                                                        |  |                            | 4,915   |                          |   | 4,604   |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|Accounts payable:                                                                                                                           |  |                            |         |                          |   |         |  
|Trade                                                                                                                                       |  |                            | 13,530  |                          |   | 9,511   |  
|Growers                                                                                                                                     |  |                            | 23,405  |                          |   | 17,430  |  
|Total Accounts Payable                                                                                                                      |  |                            | 36,935  |                          |   | 26,941  |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|Accrued Liabilities                                                                                                                         |  |                            | 3,155   |                          |   | 3,814   |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|Total current liabilities                                                                                                                   |  |                            | 71,503  |                          |   | 59,799  |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|LONG-TERM DEBT, CAPITAL LEASES, AND BONDS
 PAYABLE, NET OF CURRENT PORTION                                                                  |  |                            | 33,629  |                          |   | 27,268  |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|LONG-TERM DEFERRED INCOME TAX LIABILITY                                                                                                     |  |                            | 377     |                          |   | 443     |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|LONG-TERM UNRECOGNIZED TAX LIABILITY                                                                                                        |  |                            | 270     |                          |   | 256     |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|LONG-TERM PENSION LIABILITY                                                                                                                 |  |                            | 6,060   |                          |   | 5,280   |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                                                                               |  |                            |        |                          |   |        |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|Total liabilities                                                                                                                           |  |                            | 111,839 |                          |   | 93,046  |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|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, 477 shares at May 31, 2009 and 483 shares
 at August 31, 2008 |  |                            | 119     |                          |   | 121     |  
|Paid in capital in excess of par value                                                                                                      |  |                            | 32,094  |                          |   | 32,094  |  
|Nonqualified allocated patronage                                                                                                            |  |                            | 52,997  |                          |   | 28,299  |  
|Accumulated other comprehensive loss                                                                                                        |  |                            | (4,882  | )                        |   | (4,891  | )
|Retained earnings                                                                                                                           |  |                            | 9,910   |                          |   | 9,910   |  
|Total Member Investment                                                                                                                     |  |                            | 108,721 |                          |   | 84,016  |  
|                                                                                                                                            |  |                            |         |                          |   |         |  
|TOTAL LIABILITIES AND MEMBER INVESTMENT                                                                                                     |  | $                          | 220,560 |                          | $ | 177,062 |  

See Notes to Consolidated Financial
Statements.

3

---



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

|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------------- | - | ------------- | ------- | - | - | ------- | -
|                                                                                |  | Three-Months Ended |        | Nine-Months Ended |  
|                                                                                |  | May 31,
 2009      |        | May 31,
 2008     |   | May 31,
 2009 |   | May 31,
 2008 |        
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|REVENUE:                                                                        |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Sales of sugar, co-products and yeast, net of
 discounts                        |  | $                  | 61,844 |                   | $ | 65,953        |   | $             | 171,348 |   | $ | 184,651 |  
|Changes in finished goods inventory andin-process
 sugar at NRV                 |  |                    | (5,318 | )                 |   | (3,939        | ) |               | 41,556  |   |   | 39,106  |  
|Total Revenue                                                                   |  |                    | 56,526 |                   |   | 62,014        |   |               | 212,904 |   |   | 223,757 |  
|                                                                               
|EXPENSES:                                                                       |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Production costs of sugar, in-process
 sugar,co-products and yeast sold         |  |                    | 17,106 |                   |   | 21,516        |   |               | 66,973  |   |   | 62,030  |  
|Sales and distribution costs                                                    |  |                    | 10,925 |                   |   | 15,291        |   |               | 34,244  |   |   | 37,569  |  
|General and administrative                                                      |  |                    | 1,699  |                   |   | 2,065         |   |               | 5,160   |   |   | 5,170   |  
|Interest                                                                        |  |                    | 285    |                   |   | 805           |   |               | 1,558   |   |   | 2,743   |  
|(Gain)/Loss on disposition of property and
 equipment                           |  |                    | (98    | )                 |   | 99            |   |               | (98     | ) |   | 113     |  
|Total Expenses                                                                  |  |                    | 29,917 |                   |   | 39,776        |   |               | 107,837 |   |   | 107,625 |  
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|OTHER INCOME                                                                    |  |                    | 766    |                   |   | 1,083         |   |               | 2,583   |   |   | 1,347   |  
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND
 NON-MEMBER BUSINESS BEFORE INCOME TAXES |  | $                  | 27,375 |                   | $ | 23,321        |   | $             | 107,650 |   | $ | 117,479 |  
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|INCOME TAXES                                                                    |  | $                  | 18     |                   | $ | (281          | ) | $             | 50      |   | $ | (1,155  | )
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND
 NON-MEMBER BUSINESS                     |  | $                  | 27,393 |                   | $ | 23,040        |   | $             | 107,700 |   | $ | 116,324 |  
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|DISTRIBUTION
 OF NET PROCEEDS                                                   |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Credited to members investment                                                 |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Components of net income                                                        |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Income from non-member business                                                 |  | $                  | 4      |                   | $ | 569           |   | $             | 6       |   | $ | 2,261   |  
|Patronage income                                                                |  |                    | 4,528  |                   |   | 1,917         |   |               | 24,789  |   |   | 19,277  |  
|Net income credited to members
investment                                      |  |                    | 4,532  |                   |   | 2,486         |   |               | 24,795  |   |   | 21,538  |  
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|Allocated costs of sugarbeets paid or
 payable togrowers for production to date |  | $                  | 22,861 |                   | $ | 20,554        |   | $             | 82,905  |   | $ | 94,786  |  
|                                                                                |  |                    |        |                   |   |               |   |               |         |   |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND NON-MEMBER
 BUSINESS                     |  | $                  | 27,393 |                   | $ | 23,040        |   | $             | 107,700 |   | $ | 116,324 |  

See Notes to
Consolidated Financial Statements.

4

---



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

|                                                                 |  |                   |         |               |   |         |  
|---------------------------------------------------------------- |  | ----------------- | ------- | ------------- | - | ------- | -
|                                                                 |  | Nine-Months Ended |        
|                                                                 |  | May 31,
 2009     |         | May 31,
 2008 |  
|                                                                 |  |                   |         |               |   |         |  
|OPERATING ACTIVITIES                                             |  |                   |         |               |   |         |  
|Income allocated to members
investment                          |  | $                 | 24,795  |               | $ | 21,538  |  
|Add (deduct) noncash items:                                      |  |                   |         |               |   |         |  
|Depreciation and amortization                                    |  |                   | 6,375   |               |   | 6,395   |  
|Equipment disposals - (Gain)/Loss                                |  |                   | (99     | )             |   | 113     |  
|Net income allocated from unconsolidated
 marketing subsidiaries |  |                   | (6      | )             |   | (6      | )
|Noncash portion of patronage capital
 credits                    |  |                   | (908    | )             |   | (616    | )
|Changes in operating assets and
liabilities                      |  |                   |         |               |   |         |  
|Accounts receivable and advances                                 |  |                   | (3,405  | )             |   | 1,089   |  
|Inventory and prepaid expenses                                   |  |                   | (40,963 | )             |   | (40,708 | )
|Deferred charges and other assets                                |  |                   | 906     |               |   | 547     |  
|Accounts payable, accrued liabilities and
 other liabilities     |  |                   | 14,449  |               |   | 6,260   |  
|Net cash used (in)/from operating
 activities                    |  |                   | 1,144   |               |   | (5,388  | )
|                                                                
|INVESTING ACTIVITIES                                             |  |                   |         |               |   |         |  
|Proceeds from disposition of property,
 plant and equipment      |  |                   | 99      |               |   | 17      |  
|Capital expenditures                                             |  |                   | (5,798  | )             |   | (4,437  | )
|Issuance of notes receivable                                     |  |                   |        |               |   | 25      |  
|Patronage received from other coops                              |  |                   | 418     |               |   | 273     |  
|Net cash used in investing activities                            |  |                   | (5,281  | )             |   | (4,122  | )
|                                                                
|FINANCING ACTIVITIES                                             |  |                   |         |               |   |         |  
|Net proceeds from issuance of short-term
 debt                   |  |                   | 2,058   |               |   | 20,196  |  
|Net proceeds from issuance of long-term
 debt and capital leases |  |                   | 11,715  |               |   | 320     |  
|Payment of long-term debt and capital
 leases                    |  |                   | (5,043  | )             |   | (4,527  | )
|Payment of financing fees                                        |  |                   | (207    | )             |   | (236    | )
|Payment of allocated patronage                                   |  |                   | (4,417  | )             |   | (6,039  | )
|Net cash provided by financing
activities                        |  |                   | 4,106   |               |   | 9,714   |  
|                                                                
|NET
 INCREASE/(DECREASE) IN CASH                                 |  |                   | (31     | )             |   | 204     |  
|                                                                 |  |                   |         |               |   |         |  
|CASH,
 BEGINNING OF YEAR                                         |  |                   | 159     |               |   | 255     |  
|                                                                 |  |                   |         |               |   |         |  
|CASH, END OF
 QUARTER                                            |  | $                 | 128     |               | $ | 459     |  
|                                                                 |  |                   |         |               |   |         |  
|SUPPLEMENTAL
 DISCLOSURES OF CASH FLOW INFORMATION               |  |                   |         |               |   |         |  
|Cash payments for(Receipts from)                                 |  |                   |         |               |   |         |  
|Interest                                                         |  | $                 | 1,678   |               | $ | 2,771   |  
|                                                                 |  |                   |         |               |   |         |  
|Income taxes, net of refunds                                     |  | $                 | (792    | )             | $ | 1,301   |  

See Notes to Consolidated
Financial Statements.

5

---



MINN-DAK FARMERS COOPERATIVE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | The
 consolidated financial statements of the Company and that of its subsidiary
 companies Minn-Dak Yeast Company (Minn-Dak Yeast) and Link Limited
 Liability Company (Link LLC) for the three-month and nine-month periods
 ended May 31, 2009 and 2008 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, 2008. The results of
 operations for the three-month and nine-month periods ended May 31, 2009 are
 not necessarily indicative of the results for the entire fiscal year ending
 August 31, 2009.                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|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.
 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
 growers and/or non-members, but not yet converted into refined sugar or
 in-process sugar, that inventory is valued at grower and/or non-members
 payment cost. In valuing inventories at net realizable value, the Company, in
 effect sells the remaining inventory to the subsequent periods 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
 2008, and effective as of August 31, 2008, the Company declared a revolvement
 of the remaining 52 percent of the allocated patronage for the 2001-crop
 totaling $1.9 million and 54 percent of the allocated patronage for the
 2002-crop totaling $2.5 million. These amounts were accrued as of August 31,
 2008 and paid to the stockholders on September 18, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4. | In October
 2008, the Company allocated to members $5.1 million of patronage from the
 2007-crop in the form of non-qualified allocated patronage credits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|5. | As of May
 31, 2009 the Company had $100.4 million of short-term credit capacity, with
 $26.5 million being utilized, leaving a remaining short-term credit capacity
 of $73.9 million. The $100.4 million consists of $50.0 million short-term
 line of credit from its primary lender CoBank (the Bank), $15.0 million bid
 loan supplement facility through the Bank (which is currently available from
 the Bank upon request by the Company, however, it is contingent upon the Banks
 lending capacity at the time of request) and $35.4 million of USDA Commodity
 Credit Corporation sugar loan capacity. The decrease in seasonal debt from
 February 28, 2009 to May 31, 2009 is due to normal seasonal operations and
 the funding necessary to cover crop payments to growers.                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On October
 30, 2008, the Company renewed, through November 1, 2009, the revolving Credit
 Supplement, the Bid Loan Supplement and the Term Loan Supplement, all part of
 a short term and long term loan agreement package with the Bank. The loan
 agreements included the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |   |                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | The
 revolving Credit and Bid Loan Supplements were renewed at the same level as
 the previous year, totaling $50.0 million and $15.0 million, respectively.                                                                         
| |   |                                                                                                                                                                                                                                      
| | o | The Term
 Loan Supplement amount increased $10.0 million to a total of $25.8 million.
 This will add approximately twelve more quarterly payments (at the current
 repayment level) to the end of the Companys prior loan agreement.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The Companys
 shareholders harvested 1,863,920 tons of sugarbeets from the 2008-crop, which
 created an initial estimated payment liability of $70.9 million. The
 estimated payment liability was officially increased by $2.4 million during
 the three-month period ended February 28, 2009 and was increased by an
 additional $8.7 million during the three-month period ended May 31, 2009. The
 Companys estimated liability payment for the 2008-crop sugarbeets made
 through May 31, 2009 totaled $58.6 million, leaving an estimated balance
 payable to the shareholder for sugarbeets of $23.4 million.

6

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. | In fiscal
 year 2009 the Company included in Other Income the settlement of a lawsuit.                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|8. | The
 Financial Accounting Standards Board has issued Financial Accounting
 Standards No. 158, Employers Disclosure about Pensions and Other
 Post-Retirement Benefits. This standard requires disclosures to interim and
 annual financial statements, which are effective for the interim period
 financial statements ending May 31, 2009, but does not change the recognition
 requirements related to pensions and post-retirement benefits.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Components of Net Periodic Benefit Cost for
 the Nine-Months Ended May 31, 2009
 (In 000s)                                                                                                                                                                                                                                                                                                                                                      

| |                                     |  |              |        |                         |   |        |   |      |   |  |   |   | 
| | ----------------------------------- |  | ------------ | ------ | ----------------------- | - | ------ | - | ---- | - |  | - | - | 
| |                                     |  | Pension Plan |        | Other Than Pension Plan |  
| |                                     |  | 2009         |        | 2008                    |   | 2009   |   | 2008 |  
| | Service Cost                        |  | $            | 795    |                         | $ | 718    |   | $    | 0 |  | $ | 0 | 
| | Interest
 Cost                      |  |              | 1,319  |                         |   | 1,175  |   |      | 0 |  |   | 0 | 
| | Expected
 return on plan assets     |  |              | (1,222 | )                       |   | (1,216 | ) |      | 0 |  |   | 0 | 
| | Amortization
 of prior service cost |  |              | 25     |                         |   | 25     |   |      | 0 |  |   | 0 | 
| | Amortization
 of transition cost    |  |              | 0      |                         |   | 0      |   |      | 0 |  |   | 0 | 
| | Amortization
 of net (gain) loss    |  |              | 189    |                         |   | (1     | ) |      | 0 |  |   | 0 | 
| | Net periodic
 benefit cost          |  | $            | 1,106  |                         | $ | 701    |   | $    | 0 |  | $ | 0 | 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Through the
 nine-months ended May 31, 2009, the Company has made $0.9 million
 contributions as compared to $1.1 million through the nine-months ended May
 31, 2008. The Company anticipates contributing $0.9 million in additional
 funds to its pension plan in FY 2009, for a total of $1.8 million.
 Contributions in FY 2008 totaled $1.1 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In
 accordance with Statement No. 158, Employers Accounting for Defined Pension
 and Other Postretirement Plans an amendment of FASB statements No. 87, 88,
 106 and 132(R) which requires the Company, in Fiscal 2009, to change the
 annual measurement date of the funded status of the pension plans from May 31
 to August 31, which will result in a one time direct charge of approximately
 $0.3 million to the beginning retained earnings representing a measurement
 date adjustment of 3/15ths of the pension cost for the period of June 1, 2008
 to August 31, 2009. The Company is expecting to reflect this portion of the
 pronouncement in the fourth quarter of Fiscal 2009. Also, the remaining
 12/15ths of this pension cost will be expensed and recognized during Fiscal
 2009.                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|9. | Recently
 Issued Accounting Pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On June 29,
 2009 the FASB issued Statement of Financial Accounting Standards (SFAS) No.
 168, The FASB Accounting Standards
 Codification and the Hierarchy of Generally Accepted Accounting Principles a
 replacement of FASB Statement No. 162. This Statement establishes
 the Codification as the source of authoritative GAAP recognized by the FASB
 to be applied by nongovernmental entities. Rules and interpretive releases of
 the SEC under federal securities laws are also sources of authoritative GAAP
 for SEC registrants. All guidance contained in the Codification carries an equal
 level of authority. This Statement shall be effective for financial
 statements issued for interim and annual periods ending after September 15,
 2009. The adoption of this statement will not have a material effect on the
 Companys results of operations, financial position or cash flows.                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On June 12,
 2009 the FASB issued Statement of Financial Accounting Standards (SFAS) No.
 167, Amendments to FASB Interpretation No.
 46(R). This statement was issued 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
 statement is effective for the first annual reporting period that begins
 after November 15, 2009. The application of this statement will only apply
 and be effective should the Company have any interest in a variable interest
 entity after September 1, 2010. The adoption of this statement will not have
 a material effect on the Companys results of operations, financial position
 or cash flows.                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On June 12,
 2009 the FASB issued Statement of Financial Accounting Standards (SFAS) No.
 166, Accounting for Transfers of Financial
 Assets and amendment of FASB Statement No. 140.This statement was
 issued to improve the relevance, representational faithfulness, and
 comparability of the information that a reporting entity provides in its
 financial statements about a transfer of financial assets; the effects of a
 transfer on its financial position, financial performance, and cash flows; and
 a transferors continuing involvement, if any, in transferred financial
 assets. This statement is effective for the first annual reporting period
 that begins after November 15, 2009. The application of this statement will
 only apply and be effective should the Company transfer financial assets
 after September 1, 2010. The adoption of this statement will not have a
 material effect on the Companys results of operations, financial position or
 cash flows.

7

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | FAS 165
 Subsequent Events  On May 28, 2009 the FASB issued Statement of Financial
 Accounting Standards (SFAS) No. 165,
 Subsequent Events. This statement establishes general standards of
 accounting for and disclosure of events that occur after the balance sheet
 date but before financial statements are issued or are available to be
 issued. Entities are required to disclose the date through which subsequent
 events have been evaluated and the basis for that date. This Statement shall
 be effective for interim or annual financial periods ending after June 15,
 2009, and shall be applied prospectively. The adoption of this statement will
 not have a material effect on the Companys results of operations, financial
 position or cash flows.                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | FAS 164
 Not-for-Profit Entities Mergers and Acquisitions  On May 22, 2009 the FASB
 issued Statement of Financial Accounting Standards (SFAS) No. 164,
 Not-for-Profit Entities Mergers and Acquisitions. The Company falls outside
 of the statements definition of a not-for-profit entity, so the adoption of
 this statement will not have a material effect on the Companys results of
 operations, financial position or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | On April 9,
 2009, the FASB issued Staff Position FAS 157-4, Determining Fair Value When the Volume and Level of Activity for
 the Asset or Liability Have Significantly Decreased and Identifying
 Transactions That Are Not Orderly. This FSP provides additional
 guidance for estimating fair value in accordance with FASB Statement No. 157,
 Fair Value Measurements, when
 volume and level of activity for the asset or liability have significantly
 decreased. This FSP also includes guidance on identifying circumstances that
 indicate that a transaction is not orderly (that is, in a forced liquidation
 or distressed sale). This FSP shall be effective for interim and annual
 reporting periods ending after June 15, 2009, and shall be applied
 prospectively. Early adoption is permitted for periods ending after March 15,
 2009. Earlier adoption for periods ending before March 15, 2009, is not
 permitted. The adoption of this statement is not expected to have an impact
 on the Companys results of operations, financial position or cash flows.                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | On April 9,
 2009, the FASB issued Staff Position FAS 115-2 and FAS 124-2, Recognition and Presentation of
 Other-Than-Temporary Impairments. This FSP provides additional
 guidance for determination of whether the holder of an investment in a debt
 or equity security for which changes in fair value are not regularly
 recognized in earnings (such as securities classified as held-to-maturity or
 available-for-sale) should recognize a loss in earnings when the investment
 is impaired. This FSP shall be effective for interim and annual reporting
 periods ending after June 15, 2009, early adoption for periods ending before
 March 15, 2009, is not permitted. Because the Company holds no such
 securities, the adoption of FAS 115-2 and FAS 124-2 is not expected to have
 an impact on the Companys results of operations, financial position or cash
 flows.                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | On April 9,
 2009, the FASB issued Staff Positions No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
 Instruments. This FASB Staff Position (FSP) amends FASB Statement
 No. 107,Disclosures about Fair Value of
 Financial Instruments; to require disclosures about fair value of
 financial instruments for interim reporting periods of publicly traded
 companies as well as in annual financial statements. This FSP also amends APB
 Opinion No. 28, Interim Financial
 Reporting, to require those disclosures in summarized financial
 information at interim reporting periods. This FSP shall be effective for
 interim reporting periods ending after June 15, 2009, with early adoption
 permitted for periods ending after March 15, 2009. The Company does not
 expect the adoption of FAS 107-1 and APB 28-1 to have an impact on the
 Companys results of operations, financial position or cash flows.                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | On December
 30, 2008, FASB issued FSP No.132 (R)-1, Employers
 Disclosures about Pensions and Other Postretirement Benefits,to
 require that an employer disclose the following information about the fair
 value of plan assets: 1) How investment allocation decisions are made,
 including the factors that are pertinent to understanding of investment
 policies and strategies; 2) The major categories of plans assets 3) The
 inputs and valuation techniques used to measure the fair value of plan
 assets; 4) The effect of fair value measurements using significant
 unobservable inputs on changes in plan assets for the period; and 5)
 Significant concentrations of risk within plan assets. This FSP will be
 effective for fiscal years ending after December 15, 2009, with early
 application permitted. At initial adoption, application of the FSP would not
 be required for earlier periods that are presented for comparative purposes.The Company is currently evaluating the
 impact that FSP No. 132(R)-1 will have on its results of operations,
 financial position and cash flows.

8

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | FAS 141 (R)
 Business Combinations  This statement defines the acquirer, establishes the
 acquisition date, and defines how the acquisition method is applied to
 financial statements. It also recognizes and measures goodwill or a gain from
 a bargain purchase. On April 1, 2009 the FASB also released FSP No. FAS
 141(R)-1, Accounting for Assets Acquired
 and Liabilities Assumed in a Business Combination That Arise from
 Contingencies, to address some of the application issues under
 SFAS No. 141(R) Business Combinations.
 FSP No. FAS 141(R)-1 deals with the initial recognition and measurement of an
 asset acquired or a liability assumed in a business combination that arises
 from a contingency provided the asset or liabilitys fair value on the date
 of acquisition can be determined. When the fair value cant be determined,
 the FSP requires using the guidance under SFAS No. 5, Accounting for Contingencies and FASB
 Interpretation (FIN) No. 14, Reasonable
 Estimation of the Amount of a Loss. The application of these
 statements will only apply and be effective should the Company acquire the
 business assets of another entity after August 31, 2009.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | In April
 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the
 Useful Life of Intangible Assets (FSP No. 142-3) to improve the
 consistency between the useful life of a recognized intangible asset (under
 SFAS No. 142) and the period of expected cash flows used to measure the fair
 value of the intangible asset (under SFAS No. 141(R)). FSP No. 142-3 amends
 the factors to be considered when developing renewal or extension assumptions
 that are used to estimate an intangible assets useful life under SFAS No.
 142. The guidance in the new staff position is to be applied prospectively to
 intangible assets acquired after December 31, 2008, and interim periods
 within those fiscal years resulting in an effective date of September 1,
 2009. In addition, FSP No. 142-3 increases the disclosure requirements
 related to renewal or extension assumptions. The adoption of this statement
 is not expected to have a material effect on the Companys results of
 operations, financial position or cash flows.                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | FAS 158
 Employers Accounting for Defined Benefit Pension Plans and other
 Post-retirement Plans  This statement requires an employer that is a
 business entity and sponsors one or more single employer defined benefit
 plans to recognize the funded status of a benefit plan, measured as the
 difference between plan assets at fair value and the projected benefit
 obligation in the financial statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | In September
 of 2006, the FASB issued FAS No. 158 Employers Accounting for Defined
 Benefit Pension Plans and Other Post-retirement plans. This pronouncement
 had been adopted by the Company with the notation that the Company would
 continue to measure its plans liabilities as of May 31. However, with full
 adoption of FAS 158, the new measurement date for liability will be August
 31, which would result in a one-time addition to liability equal to
 approximately one-fourth of the Companys annual pension liability accrual.
 The Company is expecting to adopt this portion of the pronouncement in the
 fourth quarter of this fiscal year ending August 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | FAS 160
 Non-controlling Interests in Consolidated Financial Statement-an amendment of
 ARB No. 51  This statement requires all entities to report non-controlling
 (minority) interest in subsidiaries in the same way as equity in the
 consolidated financial statements to improve the relevance, comparability,
 and transparency of financial information provided to investors. The Company
 no longer has a non-controlling interest in any of its consolidated reporting
 entities. The application of this statement would only apply and be effective
 should the Company be involved in a non-controlling (minority) interest
 activity in a subsidiary after August 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10. | Change in
 Accounting Policy:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company
 has adopted the following pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | FASB Staff
 Position No. EITF 99-20-1, Amendments to
 the Impairment Guidance of EITF Issue No. 99-20.The FSP
 eliminates the requirement that a holders best estimate of cash flows be
 based upon those that a market participant would use. Instead, the FSP
 requires that an other-than-temporary impairment be recognized through
 earnings when it is probable that there has been an adverse change in the holders
 estimated cash flows from the cash flows previously projected. The Staff
 Position is effective for the first interim period or fiscal year ending
 after December 15, 2008, and each interim and annual period thereafter.
 Retroactive application to a prior interim period is not permitted. Because
 the Company holds no such securities, the adoption of FSP EITF 99-20-1 has
 not had, nor is expected to have an impact on the Companys results of
 operations, financial position or cash flows.                                                                                                                                                                                                                                                                  

9

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | FAS 140-4
 and FIN 46 (R)-8-Disclosures by Public Entities about Transfers of Financial
 Assets and Interests In Variable Interest Entities  Because the Company is
 not involved in Variable Interest Entities, it does not expect these
 interpretations to have any impact under the Companys current structure.
 This Staff Position was effective for the first reporting period (interim or
 annual) ending after December 15, 2008, with earlier application encouraged.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | FAS 157 Fair
 Value Measurements dated September 2006  This statement defines fair value,
 establishes a framework for measuring fair value in generally accepted
 accounting principles (GAAP), and expands disclosure about fair value
 measurements. Relative to SFAS 157, the FASB issued FASB Staff Position (FSP)
 157-1, 157-2 and 157-3. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, Accounting for Leases, and its related
 interpretive accounting pronouncements that address leasing transactions,
 while FSP 157-2 delays the effective date of FASB Statement No. 157, Fair Value
 Measurements, for nonfinancial assets and nonfinancial liabilities, except
 for items that are recognized or disclosed at fair value in the financial
 statements on a recurring basis (at least annually). The delay is until first
 quarter of fiscal 2010 and is intended to allow the Board and constituents
 additional time to consider the effect of various implementation issues that
 have arisen, or that may arise, from the application of Statement 157. These
 statements do not require any new fair value measurements. However, the
 application of these statements may change the accounting practice regarding
 any future mergers and acquisitions by the company. On October 10, 2008, the
 Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP)
 FAS 157-3, Determining the Fair Value of a Financial Asset
 When the Market for That Asset Is Not Active. The FSP clarifies
 the application of FASB Statement No. 157, Fair
 Value Measurements,in a market that is not active and provides an
 example to illustrate key considerations in determining the fair value of a
 financial asset when the market for that financial asset is not active. The
 FSP is effective upon issuance, including prior periods for which financial
 statements have not been issued. Revisions resulting from a change in the
 valuation technique or its application should be accounted for as a change in
 accounting estimate following the guidance in FASB Statement No. 154, Accounting Changes and Error Corrections.
 However, the disclosure provisions in Statement 154 for a change in
 accounting estimate are not
 required for revisions resulting from a change in valuation technique or its
 application. The adoption of this statement did not have a material effect on
 the Companys reported financial position or results of operations.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | FAS 159 The
 Fair Value Option for Financial Assets and Financial LiabilitiesOn
 February 15, 2007, the FASB issued Statement of Financial Accounting
 Standards (SFAS) No. 159, The Fair Value Option for Financial Assets and
 Financial Liabilities  Including an amendment of FASB Statement No 115 (SFAS
 159), which permits entities to choose to measure many financial instruments
 and certain other items at fair value. Unrealized gains and losses on items
 for which the fair value option has been elected shall be reported in
 earnings. The fair value option may be applied instrument by instrument with
 a few exceptions, and is irrevocable unless a new election date occurs. SFAS
 159 is effective as of the beginning of an entitys fiscal year that begins
 after November 15, 2007. Early adoption is permitted in certain
 circumstances. Retrospective application to fiscal years preceding the
 effective date (or early adoption date) is prohibited. The adoption of this
 statement did not have a material effect on the Companys reported financial
 position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In March
 2007, the FASB ratified the Emerging Issues Task Force (EITF) consensus on
 EITF Issue No. 06-10. Accounting for Collateral Assignment Split-Dollar Life
 Insurance. This EITF indicates that an employer should recognize a liability
 for Post-retirement benefits related to collateral assignment split-dollar
 life insurance arrangements. In addition, the EITF provides guidance for the
 recognition of an asset related to a collateral assignment split-dollar life
 insurance arrangement. The EITF is effective for fiscal years beginning after
 December 15, 2007. The adoption of this statement did not have a material
 effect on the Companys reported financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The FASB has
 issued FASB Staff Position (FSP) FAS 133-1 and FIN 45-4, Disclosure about Credit Derivatives and Certain
 Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation
 No. 45; and Clarification of the Effective Date of FASB Statement No. 161.
 This FSP amends FASB Statement No. 133, Accounting
 for Derivation Instruments and Hedging Activities, to require
 disclosure by sellers of credit derivatives, including credit derivatives
 embedded in a hybrid instrument. This FSP also amends FASB Interpretation No.
 45, Guarantors Accounting and Disclosure
 Requirement for Guarantees, Including Indirect Guarantees of Indebtedness of
 Others, to require an additional disclosure about the current
 status of the payment/performance risk of a guarantee. Further, this FSP
 clarifies the Boards intent about the effective date of FASB Statement No.
 161, Disclosures about Derivative
 Instruments and Hedging Activities. This FSP became effective for
 the Company on November 30, 2008. The adoption of this statement did not have
 a material effect on the Companys reported financial position or results of
 operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | FAS 161
 Disclosures About Derivative Instruments and Hedging Activities. On March 19, 2008 the FASB Issued
 Statement of Financial Accounting Standards (SFAS) No. 161, Disclosures
 About Derivative Instruments and Hedging Activities. This statement is intended to improve
 financial reporting about derivative instruments and hedging activities by
 requiring enhanced disclosures. This statement is effective for financial
 statements issued for fiscal years and interim periods beginning after
 November 15, 2008, with early application encouraged. The adoption of this
 statement did not have a material effect on the Companys reported financial
 position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | FAS 162 The
 Hierarchy of Generally Accepted Accounting Principles - In May 2008, the FASB
 issued FAS No. 162. FAS 162 is intended to improve financial reporting by
 identifying a consistent framework, or hierarchy, for selecting accounting
 principles to be used in preparing financial statements that are presented in
 conformity with GAAP for nongovernmental entities. FAS 162 was effective
 November 15, 2008, 60 days following the SECs approval of the Public Company
 Accounting Oversight Board amendments to AU Section 411, The Meaning of
 Present Fairly in Conformity with Generally Accepted Accounting Principles.
 The Company does not expect the adoption of this statement to have a material
 impact on its results of operations, financial position or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

10

---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|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 10K for fiscal year ended August 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|OVERVIEW                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|The
 following discussion and analysis relates to the financial condition and
 results of operations of Minn-Dak Farmers Cooperative (the Company) for the
 three-month and nine-month periods ended May 31, 2009 (the third quarter of
 the Companys 2009 fiscal year). The Companys fiscal year runs from
 September 1 to August 31.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|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, 2008. 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Preparation
 of the Companys consolidated financial statements requires estimates and
 judgments to be made that affect the amounts of assets, liabilities, revenues
 and expenses reported. Such decisions include the selection of the
 appropriate accounting principles to be applied and the assumptions on which
 to base accounting estimates. Management continually evaluates these
 estimates based on its professional judgment and other criteria it believes
 to be reasonable under the circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|The
 difficulty in applying these policies arises from the assumptions, estimates
 and judgments that have to be made currently about matters that are
 inherently uncertain, such as future economic conditions, operating results
 and valuations as well as management intentions. As the difficulty increases,
 the level of precision decreases, meaning that actual results may be
 different from those currently estimated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

11

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

There have
been no material changes to the Companys critical accounting policies since
the filing of its Annual Report on form 10-K for the year ended August 31,
2008, including the implementation of FAS 157. The Companys critical
accounting estimates include the following:

SubsidiariesSubsidiaries that are controlled by the Company are
consolidated in the Companys financial statements. The Company has created and
capitalized a wholly owned subsidiary called Link LLC on December 18, 2008,
which was formed to advance possible strategic business activities by the
Company.

Inventory ValuationFinished goods inventories of sugar, pulp and molasses
are valued at estimated net realizable value. The Company derives its estimates
from sales contracts, recent sales and evaluations of market conditions and
trends. Changes in market conditions may cause managements estimates to differ
from actual results.

Derivative and Hedging Activities

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended, requires the Company to recognize all derivatives, as defined, on the
balance sheet at fair value.

The Company
periodically enters into fixed asset purchase contracts with foreign
manufacturers and these contracts require portions of the total contract price
to be paid in Euros. If the financial exposure is significant, the Company may
enter into derivative contracts to reduce its exposure to variability in
foreign currency markets associated with a fixed asset purchase.

Property and Equipment, Leased Property and
Equipment and DepreciationProperty and equipment and leased property and
equipment are depreciated for financial reporting purposes principally using
straight-line methods with estimated useful lives ranging from 3 to 40 years.
Economic circumstances or other factors may cause managements estimates of
expected useful lives to differ from actual.

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

Defined Benefit Pension PlanThe Company maintains and administers a defined
benefit pension plan. The annual cost of this plan can be significantly
affected by changes in assumptions and differences between expected and actual
experience. The Company utilizes actuarial methods required by SFAS No. 158,
Employers Accounting for Defined Benefit Pension Plans and Other Post Retirement
Plans to account for its defined benefit pension plan. The actuarial methods
require numerous assumptions to calculate the net periodic pension benefit
expense and the related projected benefit obligations for the Companys defined
benefit pension plan. Three of the most significant assumptions are the
discount rates, expected long-term rate of return on plan assets and rate of
total compensation increase. In making these assumptions, the Company is
required to consider current market conditions, including changes in interest
assumptions.

12

---



Key assumptions used to
determine annual pension expense are as follows:

|                                    |  |  |       |  |  |       | 
|----------------------------------- |  |  | ----- |  |  | ----- | 
|                                    |  |  | 2009  |  |  | 2008  | 
|Discount rate                       |  |  | 6.50% |  |  | 6.50% | 
|Expected return on plan assets      |  |  | 8.00% |  |  | 8.00% | 
|Rate of total compensation increase |  |  | 4.25% |  |  | 4.30% | 
|                                    |  |  |       |  |  |       | 
|                                    |  |  |       |  |  |       | 

Discount Rate:
An assumed discount rate is required to be used in the pension plan actuarial
valuation. The discount rate is a significant assumption. The Companys
methodology for selecting the discount rate for the companys plan is to seek
guidance from outside pension experts for an appropriate discount rate.

Expected Return on Plan Assets: The expected long-term rate of return on plan
assets should, over-time, approximate the actual long-term returns on pension
plan assets. The Companys methodology for selecting the Expected Return on
Plan Assets is to seek guidance from outside pension experts for an appropriate
rate.

Rate of total
Compensation Increase: An assumption as to the rate of growth of an employees
salary. This is the expected long-term rate for compensation increases used to
cover all forms of increases from entry level to retirement. This rate
incorporates expected steps in pay scale, promotions, and any other form of pay
increases whether it is step increases, merit increases, or cost of living
increases. The Companys methodology for selecting the rate is to seek guidance
from outside pension experts for the appropriate rate.

The Company anticipates a significant adjustment to other comprehensive loss for the period ended
August 31, 2009 as a result of negative investment performance.

Income Taxes 
On September 1, 2007 The Company adopted the provisions of FASB Interpretation
(FIN) No. 48, Accounting for Uncertainty in
Income Taxes  An Interpretation of FASB Statement No. 109. FIN 48
prescribes a threshold for the financial statement recognition and measurement
of a tax position taken or are expected to be taken in an income tax return.
FIN 48 requires that the company determine whether the benefits of tax
positions are more likely than not of being sustained upon audit based upon the
technical merits of the tax position. For tax positions that are more likely
than not of being sustained upon audit, the Company recognizes the largest
amount of the benefit that is more likely than not of being sustained in its
financial statements. For tax positions that are not more likely than not of
being sustained upon audit, the Company does not recognize any portion of the
benefit in its financial statements.

The total
amount of unrecognized tax benefits as of May 31, 2009 and August 31, 2008,
respectively, are $0.3 million and $0.3 million. These amounts at May 31, 2009
and August 31, 2008, respectively, include accrued interest and penalties of
$0.1 million and $0.1 million.

After the
September 1, 2007 implementation of FIN 48, the Company recognizes interest
accrued related to unrecognized tax benefits in tax expense.

RESULTS OF
OPERATIONS

Comparison of the three-months ended May 31,
2009 and 2008.In the
Consolidated Statements of Operations, Distribution of Net Proceeds, Allocated
costs of sugarbeets paid or payable to growers for production to date, net of
unit retention capital, totaled $22.9 million, an increase of $2.3 million or
11.2 percent from the prior year. As of May 31, 2009, management has estimated
the Fiscal 2009 payment to growers for sugarbeets at $82.0 million, which is
$21.0 million or 20.3 percent less than the prior year. The decrease in
payments to members is primarily due to a decrease of 0.3 million tons, or 15.6
percent in the number of delivered tons of sugarbeets; and increased operating
and fixed costs per ton, offset somewhat by higher sugar and by-product prices
versus the prior year.

The payment is
based upon (i) an average delivered sugar content of 16.5 percent, (ii) a total
member sugarbeet crop to process of 1.9 million tons and (iii) the Companys
projected selling price for its sugar and by-products, which are currently
estimated to be higher than the previous year.

13

---



Revenues for
the quarter ended May 31, 2009 were comprised of Sugar 79 percent, Pulp 10
percent, Molasses 5 percent and Yeast 6 percent.

Revenue and
inventory changes for the three-months ended May 31, 2009 decreased $5.5
million from the 2008 period. Revenue from the sale of finished goods decreased
$4.1 million and the change in the value of inventories decreased $1.4 million.

Revenue from
the sale of sugar decreased $6.9 million, or 12.3 percent reflecting a 21.3
percent decrease in volume and a 9.0 percent increase in the sales price for
sugar. The volume decrease was due to a smaller crop. The price increase
reflects a market wide response to a tighter supply of sugar available for sale.

Revenue from
pulp sales increased $2.5 million, or 66.7 percent reflecting a 9.2 percent
increase in sales volume and a 57.5 percent increase in the average gross
selling price. The increase in volume is primarily due to timing of shipments
to customers versus the prior year. The increase in gross selling price was due
to high demand for pulp and rising prices for corn and other commodities used
in feed rations during the primary marketing time frame when pulp sales were
made.

Revenue from
molasses sales increased $0.1 million, or 2.1 percent reflecting a 22.0 percent
decrease in sales volume and a 24.1 percent increase in the average gross
selling price. The decrease in sales volume is primarily due to a smaller crop
this year and the timing of shipments to customers versus the prior year. The
increase in average gross selling price is the result of reduced worldwide
supplies of available molasses for sale.

Revenues from
yeast sales increased less than $0.2 million, or 7.5 percent reflecting an 11.9
percent increase in the average selling price and a 4.4 percent decrease in the
sales volume. Marketplace prices are higher, a reflection of much higher
factory input and freight costs experienced by the industry, necessitating some
pass-through of these costs to customers. Volume decreases resulted from
decreased demand from certain existing customers.

The other
contributing factor to the change in revenues results from the change in
finished goods inventories. The decrease in the value of finished goods inventories
for the three-months ended May 31, 2009 amounted to $5.3 million or $1.4
million less of a decrease in the value of finished goods inventories for the
three-months ended May 31, 2008. Both periods resulted in a decrease in
inventory value. The primary factor for the lesser change in inventories was
due to a higher adjustment from cost to market pricing for all finished goods
for the three-month period ended May 31, 2009.

In the
consolidated Statement of Operations, Expenses section, Production costs of
sugar, in-process sugar, co-products and yeast totaled $17.1 million, $4.3
million or 20.1 percent less than the prior year. The cost of outside
non-member purchased beets decreased by $3.4 million from the three-month
period ended May 31, 2008. Marketing costs totaled $10.9 million, $4.4 million
or 28.6 percent less than the quarter ended May 31, 2008. The decrease in
marketing costs is primarily due to lower sales volume, energy costs and sugar
allocations costs.

Comparison of the nine-months ended May 31,
2009 and 2008In the
Consolidated Statements of Operations, Distribution of Net Proceeds, Allocated
costs of sugarbeets paid or payable to growers for production to date, net of
unit retention capital, totaled $82.9 million, a decrease of $11.9 million or
12.6 percent from the prior year. As of May 31, 2009, management has estimated
the Fiscal 2009 payment to growers for sugarbeets at $82.0 million, which is
$21.0 million or 20.3 percent less than the prior year. The decrease in
payments to members is primarily due to a decrease of 0.3 million tons, or 15.6
percent in the number of delivered tons of sugarbeets, increased operating and
fixed costs per ton and offset somewhat by higher sugar and by-product prices
versus the prior year The payment is based upon (i) an average delivered sugar
content of 16.5 percent, (ii) a total member sugarbeet crop to process of 1.9
million tons and (iii) the Companys projected selling price for its sugar and
by-products, which are currently estimated to be higher than the previous year.

Revenues for
the nine-months ended May 31, 2009 were comprised of Sugar 81 percent, Pulp 9
percent, Molasses 4 percent and Yeast 6 percent.

Revenue and
inventory changes for the nine-months ended May 31, 2009 decreased $10.9 million
from the 2008 period. Revenue from the sale of finished goods decreased $13.3
million and the change in the value of inventories increased $2.4 million.

14

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Revenue from
the sale of sugar decreased $14.6 million, or 9.5 percent reflecting a 16.6 percent
decrease in volume and a 7.1 percent increase in the sales price for sugar. The
volume decrease was due to a smaller crop. The price increase reflects a market
wide response to a tighter supply of sugar available for sale.

Revenue from
pulp sales increased $2.0 million, or 16.0 percent reflecting a 24.2 percent
decrease in sales volume and a 40.2 percent increase in the average gross
selling price. The decrease in volume is primarily the result a smaller crop
this year and timing of shipments to customers versus the prior year. The
increase in gross selling price was due to high demand for pulp and rising
prices for corn and other commodities used in feed rations during the primary
marketing time frame when pulp sales were made.

Revenue from
molasses sales decreased $1.0 million, or 11.8 percent reflecting a 27.0
percent decrease in sales volume and a 15.2 percent increase in the average
gross selling price. The decrease in sales volume is primarily due to a smaller
crop this year and the timing of shipments to customers versus the prior year.
The increase in average gross selling price is the result of reduced worldwide
supplies of available molasses for sale, also the selling price reflects
carry-over sales at a lower value from the prior marketing period. As future
period sales reflect the current crop marketing efforts, an increase in price
from market demand is expected.

Revenues from
yeast sales increased $0.3 million, or 3.4 percent reflecting an 8.8 percent
increase in the average selling price and a 5.4 percent decrease in the sales
volume. Marketplace prices are higher, a reflection of much higher factory
input and freight costs experienced by the industry, necessitating some
pass-through of these costs to customers. Volume decreases resulted from
decreased demand from existing customers.

The other
contributing factor to the change in revenues results from the change in
finished goods inventories. The increase in the value of finished goods
inventories for the nine-months ended May 31, 2009 amounted to $41.6 million or
$2.4 million more of an increase in the value of finished goods inventories for
the nine-months ended May 31, 2008. The primary factor for the increased change
in inventories was due to a higher adjustment from cost to market pricing for
all finished goods for the nine-month period ended May 31, 2009 versus 2008.

In the
consolidated Statement of Operations, Expenses section, Production costs of
sugar, in-process sugar, co-products and yeast totaled $67.0 million, $4.9
million or 7.9 percent more than the prior year. As part of the $4.9 million,
the cost of outside purchased beets increased by $3.8 million for the
nine-month period ended May 31, 2009.

Marketing
costs totaled $34.2 million, $3.3 million or 8.9 percent less for the nine-months
ended May 31, 2009. The decrease in marketing costs is primarily due to
purchasing less non-member sugar for marketing needs than in the prior year.

LIQUIDITY AND
CAPITAL RESOURCES

Because the
Company operates as a cooperative, payment for member-delivered sugarbeets, the
principal raw material used in producing the sugar and agri-products it sells,
are subordinated to all member business expenses. In addition, actual cash
payments to members are spread over a period of approximately one year following
delivery of sugarbeet crops to the Company and are net of unit retains and
patronage allocated to them, all three of which remain available to meet the
Companys capital requirements. This member 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 has a short-term line of credit with the Bank
totaling $50.0 million, of which $23.5 million was available as of May 31,
2009. The Company also has a $15.0 million bid loan supplement facility through
the Bank, of which $15.0 million was available on May 31, 2009. The bid loan
supplement facility is currently available from the Bank upon request by the
Company, however, is contingent upon the Banks lending capacity at the time of
request. The Company also had $35.4 million of seasonal financing capacity for
the period ending May 31, 2009 through the USDA Commodity Credit Corporation
under the USDA Sugar Loan Provisions contained in the 2008 Farm Bill, of which
$35.4 million was available on May 31, 2009.

15

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The loan
agreements between the Bank and the Company were historically renewed each year
by the end of the third quarter and were in place for a twelve-month period.
The delay in the renewal of the farm program legislation delayed the decision
making process on a number of capital expenditures. As a result of the delay in
determining the financial needs of the Company, the Bank and the Company have
modified the renewal date to October 31, 2009.

On October 30,
2008, the Company renewed, through November 1, 2009, the revolving Credit
Supplement, the Bid Loan Supplement and the Term Loan Supplement, all part of a
short term and long term loan agreement package with its primary lender CoBank
(the Bank). The loan agreements included the following:

| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | The
 revolving Credit and Bid Loan Supplements were renewed at the same level as
 the previous year, totaling $50.0 million and $15.0 million, respectively.
| |   |                                                                                                                                                             
| | o | The Term
 Loan Supplement amount increased $10.0 million to a total of $25.8 million.                                                                       

The increase
in the Term Loan Supplement was primarily the result of higher than normal
levels of capital expenditures during the fiscal years ended August 31, 2008
and August 31, 2009.

The loan
agreements between the Bank and the Company obligate the Company to maintain
the following financial covenants, and financial statements in accordance with
GAAP:

| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 of May 31,
2009 the Company was in compliance with its loan agreement covenants with the
Bank.

Working
Capital as of May 31, 2009 totals $41.5 million compared to $9.6 million at
August 31, 2008, an increase of $31.9 million for the period. Increased working
capital is a result of the increased Term Loan Supplement and normal
operational and capital expenditure activities of the Company. The Companys
normal working capital position pattern is to increase during the first, second
and third quarters of its fiscal year and decline during the fourth quarter.
The fourth quarter decline is normally attributed to inter-campaign maintenance
costs, a higher level of capital spending during the non-operating period, and
the recording of shareholder equity revolvements.

The Companys
estimate of working capital for August 31, 2009 is approximately $12.0 million
dollars. The Company has approximately six years of Bank long-term debt
remaining and it has two tax-exempt bond issues, one with approximately three
years remaining and one with approximately eleven years remaining.

Capital
expenditures for fiscal year 2009 have been approved at $11.6 million. The
Company is funding these capital expenditures through a combination of
depreciation as an element of working capital and additional long-term debt.

Cash provided
from operations totaled $1.1 million versus $5.4 million used for the
nine-month period ended May 31, 2009 and 2008, respectively. The increase of
$6.5 million was partially the result of the prior period ended having less
income and a reduction in current liabilities.

The Net Cash
used for Investing Activities was $5.3 million versus $4.2 million for the
nine-month periods ended May 31, 2009 and 2008, respectively. This change was
primarily in the area of capital expenditures.

The Net Cash
Provided by financing activities was $4.1 million versus $9.7 million for the
nine-month periods ended May 31, 2009 and 2008, respectively. The change in
seasonal debt was $2.1 million versus $20.2 million for the nine-month periods
ended May 31, 2009 and 2008, respectively. Proceeds of long-term debt and
capital leases were $11.7 million versus $0.3 million for the nine-month
periods ended May 31, 2009 and 2008, respectively. The payment of allocated
patronage was $4.4 million versus $6.0 million for the nine-month periods ended
May 31, 2009 and 2008, respectively.

Cash decreased
less than $0.1 million for the nine-month period ended May 31, 2009.

16

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Below is a
table detailing the Companys loan and lease payment obligations:

|                                       |  |                        |      |                   |  |           |  |           |      |               |  |      |  |  |      | 
|-------------------------------------- |  | ---------------------- | ---- | ----------------- |  | --------- |  | --------- | ---- | ------------- |  | ---- |  |  | ---- | 
|                                       |  | Payments Due by Period |     
|Contractual
 Obligations (in millions) |  | Total                  |      | Less Than 1
 Year |  | 1-3 Years |  | 4-5 Years |      | After 5 Years | 
|                                       |  |                        |      |                   |  |           |  |           |      |               |  |      |  |  |      | 
|Long-Term
 Debt                        |  |                        | 23.3 |                   |  | 2.5       |  |           | 9.2  |               |  | 5.8  |  |  | 5.8  | 
|Bonds
 Payable                         |  |                        | 13.5 |                   |  | 2.1       |  |           | 4.0  |               |  | 2.1  |  |  | 5.3  | 
|Capital
 Leases                        |  |                        | 1.8  |                   |  | 0.3       |  |           | 0.7  |               |  | 0.8  |  |  | 0.0  | 
|Unconditional
 Purchase Obligations    |  |                        | 0.0  |                   |  | 0.0       |  |           | 0.0  |               |  | 0.0  |  |  | 0.0  | 
|Other Long
 Term Obligations           |  |                        | 0.0  |                   |  | 0.0       |  |           | 0.0  |               |  | 0.0  |  |  | 0.0  | 
|Total Long Term Obligations            |  |                        | 38.6 |                   |  | 4.9       |  |           | 13.9 |               |  | 8.7  |  |  | 11.1 | 
|Interest on
 Long Term Debt & Bond     |  |                        | 6.3  |                   |  | 1.2       |  |           | 2.7  |               |  | 1.3  |  |  | 1.1  | 
|Operating
 Leases                      |  |                        | 2.7  |                   |  | 1.3       |  |           | 1.3  |               |  | 0.1  |  |  | 0.0  | 
|Total Contractual Obligations          |  |                        | 47.6 |                   |  | 7.4       |  |           | 17.9 |               |  | 10.1 |  |  | 12.2 | 

ESTIMATED
FISCAL YEAR 2009 / CROP YEAR 2008 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 2008
sugarbeet crop. Given the nature of the estimates required in connection with
the payments to members for their sugarbeets, this discussion includes
forward-looking statements regarding the quantity of sugar to be produced from
the 2008 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.

The Companys
members harvested 1.9 million tons of sugarbeets from the 2008-crop,
approximately 14 percent less than the most recent 5-year average, due to
extremely wet harvest conditions in a significant part of its growing area.
Sugar content of the 2008-crop at harvest was 5 percent below the average for
the five most recent crop years. Because of the lower harvested tons and lower
sugar percent, the Companys production of sugar from the 2008-crop sugarbeets
is expected to be 14 percent less than the average of the five most recent
years of sugar production.

The Companys
initial sugarbeet payment estimate used for the preparation of the November 30,
2008 financials totaled $38.02 per ton or $0.13466351 per harvested/bonus
extractable pound of sugar, with the final sugarbeet payment determined in
October of 2009. This projected payment has been increased by $2.4 million
during the three-month period ended February 28, 2009 and was increased by an
additional $8.7 million during the three-month period ended May 31, 2009. This
revised sugarbeet payment is 5.7 percent less than the final 2007-crop payment
per ton and 0.3 percent less per pound of extractible sugar. The lower
projected 2008-crop payment per ton results from fewer total tons of beets
processed, lower sugar content in the sugarbeets and increased operating and
fixed costs per ton; and offset somewhat by higher sugar and by-product prices
versus the prior year. As of the date of this report, the Company has completed
the processing for the 2008-crop.

17

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The Board of
Directors approved an increase to the estimated sugarbeet payment for the
2008-crop to 15.699946 cents per pound of extractible and bonus sugar ($44.00
per ton of average quality harvested sugarbeets). The $44.00 sugarbeet payment
is net of a $1.00 per ton of sugarbeets budget contingency hold back until such
time as the Company has an accurate assessment of what the final payment for
the 2008 sugarbeet crop will be. The estimated sugarbeet payment is based upon
the best information available as of May 31, 2009. The estimated sugarbeet
payment may be changed, modified or amended as additional information becomes
available during the Companys fiscal year. The Companys management reviews
each month with the Board of Directors its analysis of any known trends
relating to revenues and expenses that may have a measurable impact on the
estimated sugarbeet payment, including the impact of weather, estimated sugar
content in beets, transportation and storage expense, pricing of sugar and
by-products and operating and overhead costs of the Company. Based upon
managements analysis of the affect of known trends relating to revenues and
expenses on the estimated beet payment, management may recommend to the Board
of Directors an adjustment, up or down, to the next interim beet payment to the
Companys shareholder-growers. These changes in the interim beet payments are
intended to better align the interim payments with the actual annual beet
payment. However, because of the variability inherent in the factors considered
by management over the course of the year and the complexity of the trending
analysis required by management, an interim beet payment amount should not be
relied upon to calculate the full year beet payment or any other interim beet
payment. 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.

ESTIMATED
FISCAL YEAR 2010 INFORMATION

On September
26, 2008, the Companys Board of Directors determined that the planting level
for the 2009-crop will be 150 percent of member preferred shares plus a 10
percent measuring tolerance for a total maximum planting of 160 percent and a
total minimum planting of 140 percent of member preferred shares. The
cooperative members planted an estimated 115,000 acres or 159 percent of member
preferred shares. The crop was planted later than normal, but at the time of
this report has the potential for an average quality crop.

OTHER
INFORMATION

Federal programs, regulations and trade
agreementsThe Food,
Conservation, and Energy Act of 2008, otherwise known as the Farm Bill, became
law on October 1, 2008, and covers crop years 2008 through 2012. The Company
considers the provisions of the Sugar Title in the Farm Bill to be supportive
to the idea of a viable, continuing domestic sugar industry. The Farm Bill
incorporates gradual loan rate increases for raw and refined sugar. For raw
sugar, the loan rate will increase three-quarters of a cent per pound, raw
value, phased-in in quarter-cent increments over crop years 2009-2011. Raw cane
loan rates will remain at 18.00 cents/lb in 2008 then rise gradually to 18.75
cents/lb by 2011, and they will remain at 18.75 cents/lb for the 2012-crop
year. Refined beet sugar loan rates are set at 22.90 cents/lb for the 2008-crop
and thereafter are set at a rate equal to 128.5 percent of the loan rate per
pound for raw cane sugar for each of the 2009 through 2012-crop years.

Marketing
allotments and allocations set forth under the Farm Bill affect the sugar
produced from the 2008-crop through the 2012-crop. On an annual basis, the
marketing allotments and the corresponding allocation to the Company will
dictate the amount of sugar the Company can sell into the domestic market. The
Companys allocation may reduce or increase the amount of sugar the Company can
market for a given year, thus possibly affecting the number of acres of
sugarbeets required for processing to produce that amount of sugar.

Provisions of
the current Farm Bill and existing trade agreements between the United States
and various foreign countries regulate domestic and imported sugar sales in the
U.S. Currently imports provide, on average, about 23 percent of the total
domestic consumption of sugar in the U.S., and it is the opinion of the Company
and the U.S. sugar industry as a whole that, given normal domestic supply and
marketing situations, any significant increase in the amount of imported sugar
to the U.S. marketplace could result in serious adverse sugar pricing
consequences. The Company does not know what the new Administrations
international trade agenda will be, although it appears that it will be more
deliberate in pursuing any currently negotiated, currently existing or future
trade agreements. It is seeking to negotiate new free trade agreements with a
number of countries and regions that are major producers and exporters of
sugar. If increases in guaranteed access or reductions in sugar tariffs are
included in these agreements, excess sugar from these regions could enter the
U.S. market and put pressure on domestic sugar prices. However, the Company
believes that these agreements, if negotiated and ratified, could negatively
impact the sugarbeet payment to the shareholders and the Companys
profitability.

18

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The current
Farm Bill provides price support provisions for sugar. However, if that price
support program, including the Tariff Rate Quota system for imported sugar,
were eliminated in its entirety, or if the effectiveness that the U.S.s price
support program provides from foreign competitors were materially reduced, the
Company could be materially and adversely affected. In such a situation, if the
Company were not able to adopt strategies that would allow it to compete
effectively in a greatly changed domestic market for sugar, the adverse affects
may result in a reduction in acreage that can be planted by the Companys
shareholders, and/or a reduction in sugar selling prices and a corresponding
reduction in the sugarbeet payment to the shareholders and in the Companys
earnings. This, in turn, could impact the Companys continued viability and the
desirability of growing sugarbeets for delivery to the Company.

North American Free Trade AgreementThe North
American Free Trade Agreement (NAFTA) governs sweetener trade between the U.S.
and Mexico. Under the NAFTA sugar from Mexico may enter and be sold in the U.S.
in any quantity without the added cost of tariffs. The U.S. Government
forecasts that Mexico will export 1,154,000 short tons raw value to the U.S. in
2008-2009, which would represent approximately 10.6 percent of domestic sugar
consumption for food and other; and 165,000 short tons raw value in 2009-2010,
representing approximately 1.6 percent of domestic sugar consumption for food.
Key variables that ultimately will determine the amount of imports from Mexico
include: (1) Mexican production; (2) Mexican high fructose corn syrup use; (3)
Mexican third-country imports and possible substitution; (4) Mexican government
policy decisions, such as a proposed ethanol program and others that could
mitigate or increase exports to the U.S.; (5) domestic U.S. production of beet
and cane sugar; and (6) possible U.S. and Mexico government agreement on a
rational sugar trade policy, other than what currently exists in the NAFTA.
Excessive imports of Mexican sugar could cause material harm to the U.S. sugar
market, however, the Company is unable to determine what the level of imports
would need to be in order to trigger material harm.

Regional and Bilateral Free Trade AgreementsThe U.S.
Government has negotiated or is currently negotiating free trade agreements
with a number of countries and regions that are major producers of sugar. The
primary agreements under consideration that affect sugar, to the Companys
knowledge, are the Columbia Free Trade Agreement; the Thailand Free Trade
Agreement; the Panama Free Trade Agreement; the Free Trade Area of the
Americas; the South African Customs Union Free Trade Agreement, and others. The
Columbia Free Trade Agreement and the Panama Free Trade Agreement have been
completed, signed, but as yet not been ratified by the U.S. Congress. The
Company is uncertain when these two trade agreements will be brought before
Congress for a vote. The Company believes these agreements, if they reach
fruition, could negatively impact the Companys profitability. If increases in
guaranteed access or reductions in sugar tariffs are included in these
agreements, excess sugar from these regions could enter the U.S. market and put
pressure on domestic sugar prices.

The Doha Round
negotiations of the World Trade Organization have resumed at some level but it
is unclear at this time whether these negotiations will result in an agreement
any time soon. There currently are ongoing efforts among key member countries
to negotiate and finish the Doha Round by the end of calendar year 2009. If
formal negotiations are successful, the outcome of any negotiated arrangement
could have adverse consequences for the Company.

The U.S. sugar
industry and the Company recognize the potential negative impact that would
result if these trade agreements are entered into by the U.S. and are taking
steps to attempt to manage the situation. The Company and the sugar industry
intend to continue to focus significant attention on trade issues in the
future.

The impact of
the various trade agreements on the Company cannot be assessed at this time due
to the uncertainty concerning the terms of the agreements and whether they will
ultimately be implemented. It is possible, however, that the passage of various
trade agreements could have a material adverse effect on the Company through a
reduction in acreage that can be planted by the Companys shareholders, and/or
a reduction in sugar selling prices, and a corresponding reduction in the beet
payment to the shareholders and the Company earnings.

EnvironmentalOn March 10,
2009, the United States Environmental Protection Agency (EPA) proposed
regulations mandating reporting of greenhouse gas emissions from all sectors
of the economy. The proposed regulation would apply to downstream facilities
with greenhouse gas emissions equal to or greater than 25,000 tons per year and
to upstream suppliers of fossil fuels and industrial greenhouse gases as well
as to manufacturers of vehicles and engines. Those subject to the regulations would be required
to submit annual reports of emissions of carbon dioxide (CO2),
methane (CH4), nitrous oxide (N2O), sulfur hexafluoride
(SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and other
fluorinated gasses. The Company is monitoring this and similar proposed
regulation changes and their potential impact to the Company.

19

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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 Annual Report
on Form 10-K for the year ended August 31, 2008.

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,
2009, 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 ReportingThere was no change in the Companys internal
control over financial reporting during the quarter ended May 31, 2009 that has
materially affected, or is reasonably likely to materially affect, its internal
control over financial reporting.

20

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PART II. OTHER INFORMATION

|                                                                    
|--------------------------------------------------------------------
|Item 1. Legal Proceedings                                           
|None                                                                
|                                                                    
|Item
 1A. Risk Factors.                                             
|None                                                                
|                                                                    
|Item
 2. Unregistered Sales of Equity Securities and Use of Proceeds
|None                                                                
|                                                                    
|Item 3. Defaults upon Senior Securities                             
|None                                                                
|                                                                    
|Item
 4. Submission of Matters to a Vote of Security Holders        
|None                                                                
|                                                                    
|Item 5. Other Information                                           
|None                                                                
|                                                                    
|Item 6. Exhibits                                                    

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

21

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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 14,
 2009 |  | /s/ DAVID H.
 ROCHE                                   | 
|      |                |  | David H.
 Roche                                       | 
|      |                |  | President
 and Chief Executive Officer                | 
|      |                |  |                                                       | 
|Date: | July 14,
 2009 |  | /s/ STEVEN
 M. CASPERS                                | 
|      |                |  | Steven M.
 Caspers                                    | 
|      |                |  | Executive
 Vice President and Chief Financial Officer

22

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