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


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FORM 10-Q

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xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: February 28, 2009

OR

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

Commission file:
No. 33-94644


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|                                                              |                                     |  |  |            | 
|------------------------------------------------------------- | ----------------------------------- |  |  | ---------- | 
|MINN-DAK FARMERS COOPERATIVE                                 
|(Exact named of registrant as specified in its charter)      
|                                                             
|                                                              | North Dakota                        |  |  | 23-7222188 | 
|(State or other jurisdiction ofIncorporation or organization) | (I.R.S. EmployerIdentification No.)

| |                                            |  |            |       | 
| | ------------------------------------------ |  | ---------- | ----- | 
| | 7525 Red River Road
Wahpeton, North Dakota |  |            | 58075 | 
| | (Address of principalexecutive 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)

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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.

YESxNOo

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 oAccelerated FileroNon-Accelerated FilerxSmaller Reporting
Coo

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

YESoNOx

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
 March 20, 2009
|$250 Par Value        |  | 478                           

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





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|        |                      
|------- | ---------------------
|PART I. | FINANCIAL INFORMATION
|        |                      
|ITEM 1. | FINANCIAL STATEMENTS 

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

|                                                                                                |  |                           |          |                         |   |          |  
|----------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | ----------------------- | - | -------- | -
|                                                                                                |  | Feb 28, 2009
 (Unaudited) |          | Aug 31, 2008
 (Audited) |  
|ASSETS                                                                                          |  |                           |          |                         |   |          |  
|                                                                                                |  |                           |          |                         |   |          |  
|CURRENT ASSETS                                                                                  |  |                           |          |                         |   |          |  
|Cash                                                                                            |  | $                         | 60       |                         | $ | 159      |  
|                                                                                                |  |                           |          |                         |   |          |  
|Receivables                                                                                     |  |                           |          |                         |   |          |  
|Trade accounts                                                                                  |  |                           | 11,196   |                         |   | 16,376   |  
|Advance Seed Deposits                                                                           |  |                           | 3,610    |                         |   |         |  
|Growers                                                                                         |  |                           | 22       |                         |   | 7,313    |  
|Receivable from affiliates                                                                      |  |                           | 1,503    |                         |   | 1,492    |  
|Income Tax                                                                                      |  |                           |         |                         |   | 234      |  
|Other receivables                                                                               |  |                           | 3        |                         |   | 3        |  
|Total Receivables                                                                               |  |                           | 16,334   |                         |   | 25,418   |  
|                                                                                                |  |                           |          |                         |   |          |  
|Inventories                                                                                     |  |                           |          |                         |   |          |  
|Refined sugar, in-process sugar, pulp and
 molasses to be sold on a pooled basis                |  |                           | 75,327   |                         |   | 28,453   |  
|Non-member refined sugar                                                                        |  |                           | 25       |                         |   | 1,358    |  
|Sugarbeets / Raw Sugar Inventory                                                                |  |                           | 16,078   |                         |   |         |  
|Yeast                                                                                           |  |                           | 194      |                         |   | 168      |  
|Materials and supplies                                                                          |  |                           | 10,398   |                         |   | 10,160   |  
|Total Inventories                                                                               |  |                           | 102,022  |                         |   | 40,139   |  
|                                                                                                |  |                           |          |                         |   |          |  
|Deferred charges                                                                                |  |                           | 425      |                         |   | 1,436    |  
|Prepaid expenses                                                                                |  |                           | 3,561    |                         |   | 2,150    |  
|Current deferred income tax asset                                                               |  |                           | 39       |                         |   | 145      |  
|                                                                                                |  |                           |          |                         |   |          |  
|Total current assets                                                                            |  |                           | 122,441  |                         |   | 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                                                                                 |  |                           | 4,192    |                         |   | 3,766    |  
|Capitalized Leases                                                                              |  |                           | 2,461    |                         |   | 746      |  
|Construction in progress                                                                        |  |                           | 672      |                         |   | 4,501    |  
|Total Property, Plant and Equipment                                                             |  |                           | 217,973  |                         |   | 214,345  |  
|Less accumulated depreciation                                                                   |  |                           | (123,827 | )                       |   | (119,567 | )
|Net Property, Plant and Equipment                                                               |  |                           | 94,146   |                         |   | 94,778   |  
|                                                                                                |  |                           |          |                         |   |          |  
|OTHER ASSETS                                                                                    |  |                           |          |                         |   |          |  
|Investment in other cooperatives,
 unconsolidated marketing subsidiaries and other corporations |  |                           | 11,286   |                         |   | 11,523   |  
|Other long-term assets                                                                          |  |                           | 1,147    |                         |   | 1,314    |  
|Total Other Assets                                                                              |  |                           | 12,433   |                         |   | 12,837   |  
|                                                                                                |  |                           |          |                         |   |          |  
|TOTAL ASSETS                                                                                    |  | $                         | 229,020  |                         | $ | 177,062  |  

See Notes to
Consolidated Financial Statements.

2

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

|                                                                                                                                                 |  |                           |         |                         |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- | ------- | ----------------------- | - | ------- | -
|                                                                                                                                                 |  | Feb 28, 2009
 (Unaudited) |         | Aug 31, 2008
 (Audited) |  
|LIABILITIES AND MEMBERS INVESTMENT                                                                                                              |  |                           |         |                         |   |         |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|CURRENT LIABILITIES                                                                                                                              |  |                           |         |                         |   |         |  
|Short-term notes payable                                                                                                                         |  | $                         | 43,885  |                         | $ | 24,440  |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|Current portion of long-term debt, capital
 leases and bonds payable                                                                             |  |                           | 4,920   |                         |   | 4,604   |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|Accounts payable:                                                                                                                                |  |                           |         |                         |   |         |  
|Trade                                                                                                                                            |  |                           | 8,709   |                         |   | 9,511   |  
|Growers                                                                                                                                          |  |                           | 21,979  |                         |   | 17,430  |  
|Total Accounts Payable                                                                                                                           |  |                           | 30,688  |                         |   | 26,941  |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|Accrued Liabilities                                                                                                                              |  |                           | 3,766   |                         |   | 3,814   |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|Total current liabilities                                                                                                                        |  |                           | 83,259  |                         |   | 59,799  |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|LONG-TERM DEBT, CAPITAL LEASES, AND BONDS
 PAYABLE, NET OF CURRENT PORTION                                                                       |  |                           | 35,630  |                         |   | 27,268  |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|LONG-TERM DEFERRED INCOME TAX LIABILITY                                                                                                          |  |                           | 399     |                         |   | 443     |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|LONG-TERM UNRECOGNIZED TAX BENEFITS
 LIABILITY                                                                                                   |  |                           | 265     |                         |   | 256     |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|LONG-TERM PENSION LIABILITY                                                                                                                      |  |                           | 5,280   |                         |   | 5,280   |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                    |  |                           |        |                         |   |        |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|Total liabilities                                                                                                                                |  |                           | 124,833 |                         |   | 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, 478 shares at February 28, 2009 and 483
 shares at August 31, 2008 |  |                           | 120     |                         |   | 121     |  
|Paid in capital in excess of par value                                                                                                           |  |                           | 32,094  |                         |   | 32,094  |  
|Nonqualified allocated patronage                                                                                                                 |  |                           | 48,465  |                         |   | 28,299  |  
|Accumulated other comprehensive loss                                                                                                             |  |                           | (4,885  | )                       |   | (4,891  | )
|Retained earnings                                                                                                                                |  |                           | 9,910   |                         |   | 9,910   |  
|Total Member Investment                                                                                                                          |  |                           | 104,187 |                         |   | 84,016  |  
|                                                                                                                                                 |  |                           |         |                         |   |         |  
|TOTAL LIABILITIES AND MEMBER INVESTMENT                                                                                                          |  | $                         | 229,020 |                         | $ | 177,062 |  

See Notes to
Consolidated Financial Statements.

3

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

|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------ | ------ | ------------------ | - | ------------------ | - | ----------------- | ------- |  | - | ------- | -
|                                                                                 |  | Three-Months Ended |        | Six-Months Ended   |  
|                                                                                 |  | February 28,
 2009 |        | February 29,
 2008 |   | February 28,
 2009 |   | February 29
 2008 |        
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|REVENUE:                                                                         |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|Sales of sugar, co-products and yeast, net
 of discounts                         |  | $                  | 50,821 |                    | $ | 57,038             |   | $                 | 109,504 |  | $ | 118,699 |  
|Changes in finished goods inventory and
 in-process sugar at NRV                 |  |                    | 33,468 |                    |   | 31,044             |   |                   | 46,874  |  |   | 43,046  |  
|Total Revenue                                                                    |  |                    | 84,289 |                    |   | 88,082             |   |                   | 156,378 |  |   | 161,745 |  
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|EXPENSES:                                                                        |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|Production costs of sugar, in-process
 sugar, co-products and yeast sold         |  |                    | 26,636 |                    |   | 21,320             |   |                   | 49,866  |  |   | 40,515  |  
|Sales and distribution costs                                                     |  |                    | 8,839  |                    |   | 10,637             |   |                   | 23,319  |  |   | 22,279  |  
|General and administrative                                                       |  |                    | 1,849  |                    |   | 1,753              |   |                   | 3,461   |  |   | 3,105   |  
|Interest                                                                         |  |                    | 572    |                    |   | 1,120              |   |                   | 1,273   |  |   | 1,939   |  
|Loss on disposition of property and
 equipment                                   |  |                    |       |                    |   | (5                 | ) |                   |        |  |   | 13      |  
|Total Expenses                                                                   |  |                    | 37,896 |                    |   | 34,825             |   |                   | 77,919  |  |   | 67,851  |  
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|OTHER INCOME                                                                     |  |                    | 946    |                    |   | 247                |   |                   | 1,816   |  |   | 264     |  
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND
 NON-MEMBER BUSINESS BEFORE INCOME TAXES  |  | $                  | 47,339 |                    | $ | 53,504             |   | $                 | 80,275  |  | $ | 94,158  |  
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|INCOME TAXES                                                                     |  | $                  | 14     |                    | $ | (583               | ) | $                 | 32      |  | $ | (874    | )
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND
 NON-MEMBER BUSINESS                      |  | $                  | 47,353 |                    | $ | 52,921             |   | $                 | 80,307  |  | $ | 93,284  |  
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|DISTRIBUTION OF NET PROCEEDS                                                     |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|Credited to members investment                                                  |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|Components of net income                                                         |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|Income from non-member business                                                  |  | $                  | 1      |                    | $ | 1,065              |   | $                 | 2       |  | $ | 1,692   |  
|Patronage income                                                                 |  |                    | 16,151 |                    |   | 10,485             |   |                   | 20,261  |  |   | 17,361  |  
|Net income credited to members investment                                       |  |                    | 16,152 |                    |   | 11,550             |   |                   | 20,263  |  |   | 19,053  |  
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|Allocated costs of sugarbeets paid or
 payable to growers for production to date |  | $                  | 31,201 |                    | $ | 41,371             |   | $                 | 60,044  |  | $ | 74,231  |  
|                                                                                 |  |                    |        |                    |   |                    |   |                   |         |  |   |         |  
|NET PROCEEDS RESULTING FROM MEMBER AND
 NON-MEMBER BUSINESS                      |  | $                  | 47,353 |                    | $ | 52,921             |   | $                 | 80,307  |  | $ | 93,284  |  

See Notes to
Consolidated Financial Statements.

4

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

|                                                                 |  |                    |         |                    |   |         |  
|---------------------------------------------------------------- |  | ------------------ | ------- | ------------------ | - | ------- | -
|                                                                 |  | Six-Months Ended   |        
|                                                                 |  | February 28,
 2009 |         | February 29,
 2008 |  
|                                                                 |  |                    |         |                    |   |         |  
|OPERATING ACTIVITIES                                             |  |                    |         |                    |   |         |  
|Income allocated to members investment                          |  | $                  | 20,263  |                    | $ | 19,053  |  
|Add (deduct) noncash items:                                      |  |                    |         |                    |   |         |  
|Depreciation and amortization                                    |  |                    | 4,380   |                    |   | 4,212   |  
|Equipment disposals - loss                                       |  |                    |        |                    |   | 13      |  
|Net income allocated from unconsolidated
 marketing subsidiaries |  |                    | (2      | )                  |   | (5      | )
|Noncash portion of patronage capital
 credits                    |  |                    | (164    | )                  |   | (4      | )
|Changes in operating assets and liabilities                      |  |                    |         |                    |   |         |  
|Accounts receivable and advances                                 |  |                    | 9,084   |                    |   | 8,660   |  
|Inventory and prepaid expenses                                   |  |                    | (63,294 | )                  |   | (73,606 | )
|Deferred charges and other assets                                |  |                    | 1,318   |                    |   | 1,525   |  
|Accounts payable, accrued liabilities and
 other liabilities     |  |                    | 8,027   |                    |   | 13,029  |  
|Net cash used in operating activities                            |  |                    | (20,388 | )                  |   | (27,123 | )
|                                                                 |  |                    |         |                    |   |         |  
|INVESTING ACTIVITIES                                             |  |                    |         |                    |   |         |  
|Proceeds from disposition of property,
 plant and equipment      |  |                    |        |                    |   | 17      |  
|Capital expenditures                                             |  |                    | (3,628  | )                  |   | (3,006  | )
|Issuance of notes receivable                                     |  |                    |        |                    |   | (26     | )
|Patronage received from other coops                              |  |                    | 418     |                    |   | 273     |  
|Net cash used in investing activities                            |  |                    | (3,210  | )                  |   | (2,742  | )
|                                                                 |  |                    |         |                    |   |         |  
|FINANCING ACTIVITIES                                             |  |                    |         |                    |   |         |  
|Net proceeds from issuance of short-term
 debt                   |  |                    | 19,445  |                    |   | 38,648  |  
|Net proceeds from issuance of long-term
 debt and capital leases |  |                    | 11,715  |                    |   | 323     |  
|Payment of long-term debt and capital
 leases                    |  |                    | (3,037  | )                  |   | (2,878  | )
|Payment of financing fees                                        |  |                    | (207    | )                  |   | (236    | )
|Payment of allocated patronage                                   |  |                    | (4,417  | )                  |   | (6,039  | )
|Net cash provided by financing activities                        |  |                    | 23,499  |                    |   | 29,818  |  
|                                                                 |  |                    |         |                    |   |         |  
|NET DECREASE IN CASH                                             |  |                    | (100    | )                  |   | (47     | )
|                                                                 |  |                    |         |                    |   |         |  
|CASH, BEGINNING OF YEAR                                          |  |                    | 159     |                    |   | 255     |  
|                                                                 |  |                    |         |                    |   |         |  
|CASH, END OF QUARTER                                             |  | $                  | 60      |                    | $ | 208     |  
|                                                                 |  |                    |         |                    |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION               |  |                    |         |                    |   |         |  
|Cash payments for (Receipts from)                                |  |                    |         |                    |   |         |  
|Interest                                                         |  | $                  | 1,201   |                    | $ | 1,860   |  
|                                                                 |  |                    |         |                    |   |         |  
|Income taxes, net of refunds                                     |  | $                  | (869    | )                  | $ | 439     |  

See Notes to Consolidated
Financial Statements.

5

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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 six-month periods
 ended February 28, 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 six-month periods ended February 28, 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 February 28, 2009 the Company had $99.3 million of short-term credit
 capacity, with $43.9 million being utilized, leaving a remaining short-term
 credit capacity of $55.4 million. The $99.3 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 $34.3 million of USDA Commodity Credit
 Corporation sugar loan capacity. The increase in seasonal debt from August
 31, 2008 to February 28, 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 and was officially increased by $2.4 million during the three-month
 period ended February 28, 2009. The Companys payment for the 2008-crop
 sugarbeets made through February 28, 2009 totaled $51.3 million, leaving an
 estimated balance payable to the shareholder for sugarbeets of $22.0 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 February 28, 2009, but does not change the
 recognition requirements related to pensions and post-retirement benefits.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Components of Net Periodic Benefit Cost for the Six-Months Ended
 February 28, 2009                                                                                                                                                                                                                                                                                                                                                                   
|   | (In
 000s)                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                    |  |              |      |                         |   |      |   |      |   |  |   |   | 
|----------------------------------- |  | ------------ | ---- | ----------------------- | - | ---- | - | ---- | - |  | - | - | 
|                                    |  | Pension Plan |      | Other Than Pension Plan |  
|                                    |  | 2009         |      | 2008                    |   | 2009 |   | 2008 |  
|Service Cost                        |  | $            | 530  |                         | $ | 479  |   | $    | 0 |  | $ | 0 | 
|Interest
 Cost                      |  |              | 879  |                         |   | 783  |   |      | 0 |  |   | 0 | 
|Expected
 return on plan assets     |  |              | (815 | )                       |   | (811 | ) |      | 0 |  |   | 0 | 
|Amortization
 of prior service cost |  |              | 17   |                         |   | 17   |   |      | 0 |  |   | 0 | 
|Amortization
 of transition cost    |  |              | 0    |                         |   | 0    |   |      | 0 |  |   | 0 | 
|Amortization
 of net (gain) loss    |  |              | 126  |                         |   | (1   | ) |      | 0 |  |   | 0 | 
|Net periodic
 benefit cost          |  | $            | 738  |                         | $ | 467  |   | $    | 0 |  | $ | 0 | 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | Through the
 six-months ended February 28, 2009, the Company has made $0.5 million
 contributions as compared to $0.5 million through the six-months ended
 February 29, 2008. The Company anticipates contributing $1.3 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|9. | Recently
 Issued Accounting Pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On January
 12, 2009, the FASB issued 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.                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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. The pronouncement is effective for fiscal years beginning
 after December 15, 2008 and is to be applied prospectively. The application
 of this statement will only apply and be effective should the Company acquire
 the business assets of another entity after August 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

7

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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 did not 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | 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.

8

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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. The adoption of this statement
 did not have a material effect on the
 Companys reported financial position or results of operations.                                                                                                                                                                                                                                         

9

---



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 six-month periods ended February 28, 2009 (the second 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.

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:

Subsidiaries
Subsidiaries that are controlled by the Company are consolidated in the
Companys financial statements. During the quarter ended February 28, 2009, the
Company created and capitalized Link LLC. The capitalization was under $0.1
million. Link LLC was formed to advance possible strategic business activities
by the Company. As of the date of this report, the Company had not used Link
LLC for any such business activity.

Inventory Valuation
Finished 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.

10

---



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, Property and
Equipment Held for Lease, and Depreciation
Property and equipment, and property and equipment held for lease are
depreciated for financial reporting purposes principally using straight-line
methods with estimated useful lives ranging from 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 property and equipment held for lease
for impairment whenever events indicate that the carrying amount of the asset
may not be recoverable. An impairment loss is recorded when the sum of the
future cash flows is less than the carrying amount of the asset. An impairment
loss is measured as the amount by which the carrying amount of the asset
exceeds its fair value. There were no impairment losses incurred during the
three-month or six-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 Plan
The 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. Two of the most significant assumptions are the discount rates and
expected long-term rate of return on plan assets. In making these assumptions,
the Company is required to consider current market conditions, including
changes in interest assumptions.

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.

11

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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 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 November 30, 2008 and February 28, 2009,
respectively, are $0.3 million and $0.3 million. These amounts at November 30,
2008 and February 28, 2009, 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 February
28, 2009 and February 29, 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 $31.2 million, a decrease of $10.29 million or
24.6 percent from the prior year. As of February 28, 2009, Management has
estimated the Fiscal 2009 payment to growers for sugarbeets at $73.3 million,
which is $29.7 million or 28.8 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 quarter ended February 28, 2009 were comprised of Sugar 80 percent, Pulp 10
percent, Molasses 4 percent and Yeast 6 percent.

Revenue and
inventory changes for the three-months ended February 28, 2009 decreased $1.5
million from the 2008 period. Revenue from the sale of finished goods decreased
$6.2 million and the change in the value of inventories increased $4.7 million.

Revenue from
the sale of sugar decreased $5.6 million, or 12.3 percent reflecting a 17.9
percent decrease in volume and a 5.6 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 decreased $0.2 million, or 3.3 percent reflecting a 38.2 percent
decrease in sales volume and a 34.9 percent increase in the average gross selling
price. The decrease in volume is primarily due to 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 $0.4 million, or 16.8 percent reflecting a 36.2
percent decrease in sales volume and a 19.4 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 $0.1 million, or 1.6 percent reflecting a 9.2
percent increase in the average selling price and a 7.6 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.

12

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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 three-months ended February 28, 2009 amounted to $35.8
million or $4.7 million more of an increase in the value of finished goods
inventories for the three-months ended February 29, 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 three-month period ended
February 28, 2009.

In the
consolidated Statement of Operations, Expenses section, production costs of
sugar, in-process sugar, co-products and yeast totaled $26.6 million, $5.3
million or 25.0 percent more than the prior year. The cost of outside
non-member purchased beets increased by $7.2 million from the three-month
period ended February 29, 2008, offset some by the costs of transporting beets
from the grower fields to the Companys storage sites in the amount of $2.2
million which was included in the production costs for the period ended
February 29, 2008, while similar costs in the current year was recorded in the
first quarter of the fiscal year. Marketing costs totaled $10.6 million, $1.8
million or 20.3 percent more than the quarter ended February 29, 2008. The
increase in marketing costs is primarily due to purchasing more non-member
sugar for marketing needs than in the prior year.

Comparison of the six-months ended February
28, 2009 and February 29, 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 $60.0 million, a decrease of $14.2 million or
19.1 percent from the prior year. As of February 28, 2009, Management has estimated
the Fiscal 2009 payment to growers for sugarbeets at $73.3 million, which is
$29.7 million or 28.8 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 six-months ended February 28, 2009 were comprised of Sugar 82 percent, Pulp
8 percent, Molasses 4 percent and Yeast 6 percent.

Revenue and
inventory changes for the six-months ended February 28, 2009 decreased $3.1
million from the 2008 period. Revenue from the sale of finished goods decreased
$9.2 million and the change in the value of inventories increased $6.1 million.

Revenue from
the sale of sugar decreased $7.8 million, or 8.0 percent reflecting a 13.9
percent decrease in volume and a 5.9 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 decreased $0.4 million, or 4.6 percent reflecting a 36.2 percent
decrease in sales volume and a 31.6 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 $1.1 million, or 18.8 percent reflecting a 29.6
percent decrease in sales volume and a 10.8 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 less than $0.1 million, or 1.2 percent reflecting a 7.2
percent increase in the average selling price and a 6.0 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 six-months ended February 28, 2009 amounted to $49.2
million or $6.1 million more of an increase in the value of finished goods
inventories for the six-months ended February 28, 2009. 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 six-month period ended February
28, 2009 versus February 29, 2008.

13

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In the
consolidated Statement of Operations, Expenses section, production costs of
sugar, in-process sugar, co-products and yeast totaled $49.8 million, $9.4
million or 23 percent more than the prior year. The cost of outside purchased
beets increased by $7.2 million and Operating Chemicals increased 0.8 million
from the six-month period ended February 29, 2008.

Marketing
costs totaled $23.3 million, $1.0 million or 4.7 percent more than the
six-months ended February 29, 2008. The increase in marketing costs is
primarily due to purchasing more 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 $6.1 million was
available as of February 28, 2009. The Company also has a $15.0 million bid
loan supplement facility through the Bank, of which $15.0 million was available
on February 28, 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 $34.3
million of seasonal financing capacity for the period ending February 28, 2009
through the USDA Commodity Credit Corporation under the USDA Sugar Loan
Provisions contained in the 2008 Farm Bill, of which $34.3 million was
available on February 28, 2009.

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 February 28, 2009 the Company was in compliance with its loan
agreement covenants with the Bank.

14

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Working Capital as of February 28, 2009 totals $39.2 million compared
to $9.6 million at August 31, 2008, an increase of $29.6 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 $10.7 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 used for operations totaled $20.4 million versus $27.1 million for
the six-month periods ended February 28, 2009 and February 29, 2008,
respectively. The reduction of $6.7 million was partially the result of the
prior period ended having less Inventory and pre-paid expenses.

The Net Cash used for Investing Activities was $3.2 versus $2.7 million
for the six-month periods ended February 28, 2009 and February 29, 2008,
respectively. This change was primarily in the area of capital expenditures.

The Net Cash Provided by financing activities was $23.5 million versus
$29.8 million for the six-month periods ended February 28, 2009 and February
29, 2008, respectively. Seasonal debt was $19.4 versus $38.6 million for the
six-month periods ended February 28, 2009 and February 29, 2008, respectively.
Proceeds of long-term debt and capital leases were $11.7 million versus $0.3
million for the six-month periods ended February 28, 2009 and February 29,
2008, respectively. The payment of allocated patronage was $4.4 million versus
$6.0 million for the six-month periods ended February 28, 2009 and February 29,
2008, respectively.

Cash decreased
$0.1 million for the six-month period ended February 28, 2009.

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                         |  | $                      | 24.1 |                   | $ | 2.5        |  | $           | 9.2  |                | $ | 5.8  |  | $ | 6.6  | 
|Bonds Payable                          |  |                        | 14.3 |                   |   | 2.1        |  |             | 4.0  |                |   | 2.1  |  |   | 6.1  | 
|Capital Leases                         |  |                        | 2.1  |                   |   | 0.3        |  |             | 1.0  |                |   | 0.3  |  |   | 0.5  | 
|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            |  | $                      | 40.5 |                   | $ | 4.9        |  | $           | 14.2 |                | $ | 8.2  |  | $ | 13.2 | 
|Interest on Long Term Debt & Bond      |  | $                      | 6.1  |                   | $ | 1.2        |  | $           | 2.6  |                | $ | 1.3  |  | $ | 1.0  | 
|Operating Leases                       |  |                        | 3.4  |                   |   | 1.5        |  |             | 1.4  |                |   | 0.5  |  |   | 0.0  | 
|Total Contractual Obligations          |  | $                      | 50.0 |                   | $ | 7.6        |  | $           | 18.2 |                | $ | 10.0 |  | $ | 14.2 | 

15

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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 19 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. Due to the lower harvested tons and lower
sugar percent, the Companys production of sugar from the 2008-crop sugarbeets
is expected to be 21 percent less than the average of the five most recent
years of sugar production. This forward-looking material is based on the
Companys expectations regarding the processing of the 2008 sugarbeet crop; the
actual production results obtained by processing those sugarbeets could differ
materially from the Companys current estimate as a result of factors that
include changes in production efficiencies and storage conditions for the
Companys sugarbeets.

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. This revised sugarbeet
payment is 15.8 percent less than the final 2007-crop payment per ton and 10.9
percent less per pound of extractible sugar. The lower projected 2008-crop
payment per ton results 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 expects any remaining sugar beet inventory to be
processed without having to discard sugarbeets.

The Company
has announced that its Board of Directors has approved an estimated sugarbeet
payment for the 2008-crop of 14.024385 cents per pound of extractible and bonus
sugar ($39.30 per ton of average quality harvested sugarbeets). The $39.30
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 February 28, 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.

As the result
of managements analysis and estimates, management increased the estimated
annual payment of $38.02 to $39.30 per ton. This increase in the estimated
annual payment resulted in a corresponding increase in the February 2009
interim payment. Factors that influenced the change in the sugarbeet payment
included, but were not limited to the recent purchase of sugarbeets from
another sugarbeet processor and further refinement of budgeted income and
expense items. In determining the amount of the April 3, 2009 interim
payment, management again analyzed trends relating to revenues and expenses
that may affect the beet payment, including trends from the beet slicing
process. At the time that management must determine the amount of the
interim beet payment in order to make a timely payment, beet slicing was
ongoing. Because of the preliminary nature of the beet slicing trends, the
required timing of the determination and the other uncertainty in the information reviewed
by management, management concluded not to adjust the April
2009 interim beet payment.

16

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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.

OTHER
INFORMATION

Federal programs, regulations and trade
agreements

The 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 Sugar Title in
the Farm Bill addresses a number of important elements, including: (1) an
increase in the sugar loan rate; (2) the addition of sugar-to-ethanol
provisions that should help to balance sugar supply and demand in the U.S. as
well as reduce the likelihood of sugar loan forfeitures, which in turn reduces
the likelihood of government cost to the program; and (3) language that
provides domestic sugar processors with a steady share of domestic sugar
consumption. 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 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 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.

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.

17

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North American Free Trade Agreement

The 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 694,000 short tons raw value to the U.S. in
2008, which would represent approximately 6.6 percent of domestic sugar
consumption for food; and 680,000 short tons raw value in 2009, representing
approximately 6.3 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.; and 4) 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 Agreements

The 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 Peru 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 Peru Free Trade Agreement has
been completed, signed and ratified by the U.S. Congress. 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, although that effort failed
in calendar year 2008. 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.

Environmental

On 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.

18

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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
ProceduresAs required by
Rule 13a-15(b) under the Exchange Act, we 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 February 28, 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
ControlsManagement is responsible
for establishing and maintaining adequate internal control over financial
reporting to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. generally accepted accounting principles.
Internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. generally accepted accounting principles,
and that receipts and expenditures are being made only in accordance with
authorizations of the management and the Board; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of Company assets that could have a material
effect on the financial statements.

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

Changes in Internal
Control over Financial Reporting.

There was no
change in the Companys internal control over financial reporting during the
quarter ended February 28, 2009 that has materially affected, or is reasonably
likely to materially affect, its internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.
Legal ProceedingsNone

Item
1A. Risk Factors.None

Item
2. Unregistered Sales of Equity Securities and Use of ProceedsNone

Item 3.
Defaults upon Senior SecuritiesNone

19

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

Item 5.
Other InformationNone

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

20

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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: | April 13,
 2009 |  | /s/ DAVID H.
 ROCHE                                  
|      |                 |  | David H.
 Roche                                      
|      |                 |  | President
 and Chief Executive Officer               
|      |                 |  |                                                      
|Date: | April 13,
 2009 |  | /s/ STEVEN
 M. CASPERS                               
|      |                 |  | Steven M.
 Caspers                                   
|      |                 |  | Executive
 Vice President and Chief Financial Officer

21

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