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

                                    FORM 10-K
              [X] Annual Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934
                            For the fiscal year ended
                                 AUGUST 31, 2002
                                       Or
            [ ] Transition Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934
                            -------------------------
                                 Commission File
                                  No. 33-94644
                            -------------------------

                          MINN-DAK FARMERS COOPERATIVE
             (Exact name of registrant as specified in its charter)
             North Dakota                           23-7222188
      (State of incorporation)        (I.R.S. Employer Identification Number)
        7525 Red River Road
    Wahpeton, North Dakota 58075                 (701) 642-8411
(Address of principal executive offices)   (Registrant's telephone number)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE

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

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

         Minn-Dak Farmers Cooperative 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 Cooperative 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 Cooperative has not registered any of its
securities under Section 12(g) of the Exchange Act. The Cooperative 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 Cooperative, 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
Cooperative. The provisions, which do


<PAGE>

not apply to the Cooperative'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.

         As of November 13, 2002, 488 shares of the Company's Common Stock and
72,200 "units" of the Registrant's Preferred Stock, each consisting of 1 share
of Class A Preferred Stock, 1 share of Class B Preferred Stock and 1 share of
Class C Preferred Stock, were outstanding. There is only a limited, private
market for shares of the Company's Common or Preferred Stock, as such shares may
be held only by farmer-producers who are eligible for membership in the Company.
The Company's shares are not listed for trading on any exchange or quotation
system. A number of stock transfers, representing approximately 6% of available
stock, were not arms length (estate settlements, estate planning from one
generation to the next, etc.) and an accurate value for that stock was not
available. Management believes that less than 1% of the Company's available
stock was traded at arm's length during the fiscal year ended August 31, 2002.

         Any statements regarding future market prices, anticipated costs,
agricultural results, operating results and other statements that are not
historical facts contained in this annual report are 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 factors detailed elsewhere in this and other Company filings with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated.



DOCUMENTS INCORPORATED BY REFERENCE - None



ITEM 1.  BUSINESS

         Minn-Dak Farmers Cooperative ("Minn-Dak" or the "Company") is a North
Dakota agricultural cooperative that was formed in 1972 and has 488 members.
Membership in the Company is limited to sugarbeet growers located in those areas
of North Dakota and Minnesota within an approximate fifty (50) mile radius of
the Company's offices and sugarbeet processing facilities in Wahpeton, North
Dakota. The Company's facilities allow the members to process their sugarbeets
into sugar and other products. The products are pooled and then marketed through
the services of a marketing agent under contract with the Company. The
sugar-marketing agent, United Sugars Corporation, is a cooperative association
owned by its members, the Company, American Crystal Sugar Company, Southern
Minnesota Beet Sugar Cooperative and United States Sugar Corporation. The
Company's beet molasses and beet pulp are also marketed through a marketing
agent, Midwest Agri-Commodities Company. Midwest Agri-Commodities Company is a
cooperative association owned by its members, the Company, American Crystal
Sugar Company and Southern Minnesota Beet Sugar Cooperative.

         Minn-Dak's corporate headquarters are located at 7525 Red River Road,
Wahpeton, North Dakota 58075 (telephone number (701) 642-8411). Its fiscal year
ends August 31.



<PAGE>

PRODUCTS AND PRODUCTION

         The Company is engaged primarily in the production and marketing of
sugar from sugarbeets. The Company also markets certain co-products of the sugar
it produces, such as beet molasses and beet pulp pellets. The Company also owns
an 80% interest in Minn-Dak Yeast Company, Inc., which has facilities located
near the Company's sugar production location. Minn-Dak Yeast Company, Inc.
produces fresh baker's yeast and provided revenues totaling approximately 4% of
the Company's gross revenues for the fiscal year ended August 31, 2002.

         The Company processes sugarbeets grown by its members at its sugar mill
located in Wahpeton, North Dakota. The period during which the Company's plant
is in operation to process sugarbeets into sugar and co-products is referred to
as the "campaign." The campaign is expected to begin in September of each year
and continues until the available supply of beets has been depleted, which
generally occurs in March or April of the following year, depending on the size
of the crop. Based on current processing capacity, an average campaign lasts
approximately 210-225 days, assuming normal crop yields.

         Once the sugarbeets are harvested, rapid processing is important to
maximize sugar extraction and minimize spoilage. Members transport their crop by
truck to receiving stations designated by the Company. Beets are then stored in
the Company's factory yard and at outlying piling stations until processed.
Under the Company's "growers agreement" with its members, the Company furnishes
all loading equipment at loading stations and, after delivery of the beets to
the Company, pays all freight and mileage charges for hauling the sugarbeets
from the piling stations to the factory for processing.

         The Company's total sugar production is influenced by the amount and
quality of sugarbeets grown by its members, by the processing capacity of the
Company's plant and by the ability to store harvested beets. Most of the beet
harvest is stored in piles. Although piled sugarbeets that have been frozen by
the winter temperatures may be stored for extended periods, beets stored in
unprotected piles at temperatures above freezing must be processed within
approximately 160 days.

         Sugarbeets deteriorate in storage due to the organic nature of their
existence. Beets harvested prior to obtaining a root temperature of fifty
degrees or less must be processed as soon as possible or sugar loss will occur
and they will deteriorate. The plant start up in the fall is timed to the
anticipated end of processing in the spring. The plan of the Company is to
finish processing unprotected beets prior to early March, ventilated beets prior
to early April, and storage shed beets as soon thereafter as is possible.

         Unprotected beets are "split" by processing the center of the piles
first. This method allows the processing of the center beets, which do not
freeze and therefore deteriorate more rapidly, at the earliest possible date.

         Ventilated beets have culverts with air holes running every eleven feet
into the pile. Prior to freezing of the beets, air is blown into the piles to
bring the pile temperature to an average temperature of approximately
thirty-five degrees Fahrenheit. When a week or more of sub zero temperatures are
forecast, the fans are turned on when the temperature reaches zero degrees and
continues to ventilate until the pile temperature reaches zero to five degrees.

         Storage shed beets are handled in the same manner as the ventilated
beets. The difference between the processes is the building itself, which
insulates the beets from sun, wind, and warmer spring temperatures. With the
buildings, storage of the beets can run as late as mid May of each year.


<PAGE>

         In addition, unprotected and ventilated beets will, in long campaigns,
have extra steps taken to extend their life. Beets can be sprayed with lime to
create a reflectant and reduce the harmful impact from the sun's rays in the
spring. Straw can also be applied to the sides of some later processed piles to
further insulate the beets from sun, wind, and temperature.

         Once the sugarbeets arrive in the factory, the basic steps in producing
sugar from them include: washing; slicing into thin strips called "cossettes";
extracting the sugar from the cossettes in a diffuser; purifying the resulting
"raw juice" and boiling it, first in an evaporator to thicken it and then in
vacuum pans to crystallize the sugar; separating the sugar crystals in a
centrifuge; drying the sugar; and storing sugar in bulk form for bulk and bag
shipping.

         The Company's sugarbeet co-products include beet molasses and beet pulp
pellets. After the extraction of raw juice from the cossettes, the remaining
pulp is dried and processed into and sold as animal feeds. The beet molasses is
the sugar juice left after all economical means have been taken to extract the
sugar from the sugar juice. The beet molasses is sold primarily to yeast and
pharmaceutical manufacturers and for use in animal feeds. The beet molasses and
beet pulp pellets are marketed through Midwest Agri-Commodities Company.


RECENT CROPS

         The Company's members harvested 2.4 million tons of sugarbeets from the
2002 crop, the largest crop ever delivered to the Company. Sugar content of the
2002 crop at harvest was 4% below the average of the five most recent years.
Because of the record size of the crop delivered, the Company's production of
sugar from the 2002 crop sugarbeets is expected to set a new record for sugar
produced. This forward-looking material is based on the Company's expectations
regarding the processing of the 2002 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 such as changes in production
efficiencies and storage conditions for the Company's sugarbeets. The Company's
initial beet payment estimate totals $38.15 per ton or $.13130869 per
harvested/bonus pound of sugar, with the final beet payment determined in
October of 2003.

         For a discussion of the 2001, 2000 and 1999 crops and results of
operations for fiscal years 2002, 2001 and 2000, see "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


MARKETING, CUSTOMERS AND PRICING

         Since January 1, 1994 United Sugars Corporation ("United Sugars") a
common marketing agency operating on a cooperative basis, owned by the Company
and three other sugar producing companies (American Crystal Sugar Company,
Southern Minnesota Beet Sugar Cooperative and United States Sugar Corporation)
to market sugar produced by the four member owners, has marketed the Company's
sugar.

         At August 31, 2002 the Company had an ownership interest in United
Sugars (year to date contributed capital) totaling $1.2 million, which
represented approximately 13% of the total.

          The Company, as well as the other members of United Sugars, has
entered into a "Uniform Member Marketing Agreement" with United Sugars. Under
that agreement, the sugar produced by the



<PAGE>

Company is pooled with sugar produced by the other sugar-producing member owners
and is then sold through the efforts of United Sugars. The Company receives
payment for its sugar by receiving its pro rata share of the net proceeds from
the sale of the pooled sugar. The net proceeds of such sales represent the gross
proceeds of the sale of the sugar, adjusted for the various costs and expenses
of marketing the pooled sugar, including the Company's pro rata share of the
marketing and sales expenses incurred by United Sugars. Any net proceeds from
the operation of United Sugars are distributed to the various members on a
patronage basis.

         On November 15, 2002, Southern Minnesota Sugarbeet Cooperative provided
United Sugars with a formal, written notice that it intends to leave the United
Sugars organization. The Uniform Member Marketing Agreement provides that when a
member serves notice of its intent to leave United Sugars it must provide a
minimum of fifteen months notice. In this case, Southern Minnesota Sugarbeet
Cooperative has provided United Sugars twenty-one months notice. The marketing
or financial impact, if any, to United Sugars or to the Company of the departure
of this member is not currently known. Southern Minnesota Sugarbeet Cooperative
has averaged 11% of United Sugars annual production volume.

         United Sugars sells industrial bulk sugar, industrial bagged sugar, and
retail bagged sugar and specialty sugars. It distributes both cane sugar and
beet sugar, and distributes sugar to customers over a large geographical area.
United Sugars markets the Company's sugar primarily to industrial users such as
confectioners, breakfast cereal manufacturers and bakeries. The customer base of
United Sugars includes most of the large industrial sugar users. The customer
base also includes retail grocery and wholesalers. The Company has no single
customer, which accounts for more than ten percent (10%) of its consolidated
revenues. For the fiscal year ended August 31, 2002, 94% of the Company's sugar
was shipped in bulk form, mostly to industrial users, and 6% in bagged powdered
sugar.

         The prices at which United Sugars sells the Company's sugar fluctuate
periodically based on changes in domestic sugar supply and demand. Bulk sugar,
the largest portion of the Company's sales, is contracted one or more quarters
in advance, with the effect of stabilizing fluctuations in revenue from quarter
to quarter. Retail (grocery) products are sold mostly on a spot basis. Current
net selling prices for sugar are forecast to be higher than the prior two years
because of : (1) the Federal Government's imposition of marketing allotments,
which is provided for in the 2002 Farm Bill; (2) government ownership of sugar
(Commodity Credit Corporation) has been reduced, thereby not being as great a
negative influence on sugar pricing as in the previous two years.

         The Company markets its co-products, dried beet pulp and beet molasses,
through Midwest Agri-Commodities Company ("Midwest Agri"), a cooperative whose
members are the Company, American Crystal Sugar Company and Southern Minnesota
Beet Sugar Cooperative. Midwest Agri markets beet pulp, beet molasses and other
liquid livestock feed for its member owners as well as non-members. Beet pulp is
marketed to livestock feed mixers and livestock feeders in the United States and
foreign markets.

         A "Uniform Member Marketing Agreement" evidences the sales and
marketing arrangement with Midwest Agri. Under that agreement, the beet pulp and
beet molasses produced by the Company is pooled with beet pulp and beet molasses
produced by the other producing member owners and non-members and is then sold
through the efforts of Midwest Agri. The Company receives payment for its beet
pulp and beet molasses by receiving its pro rata share of the net proceeds from
the sale of the pooled beet pulp and beet molasses. The net proceeds of such
sales represent the gross proceeds of the sale of the beet pulp and beet
molasses, adjusted for the various costs and expenses of marketing the pooled
beet pulp and beet molasses, including the Company's pro rata share of the
marketing and sales


<PAGE>

expenses incurred by Midwest Agri. Any net proceeds from the operation of
Midwest Agri are distributed to the various members and non-members on a
patronage basis.

         For the year ended August 31, 2002, approximately 56% of the Company's
beet pulp production was exported to Japan and Europe, and the remaining 44% was
sold domestically. The market for beet pulp is affected by the availability and
quality of competitive feedstuffs and by the strength of the U.S. dollar
relative to local currencies in export markets. Dried beet pulp prices decreased
in FY 2002 due to high beginning inventories in Japan, the strength of the
dollar against the Yen and Euro, and an abundance of competitive feedstuffs
available in both the export and domestic markets. Beet molasses is marketed
primarily to yeast manufacturers, pharmaceutical houses, livestock feed mixers
and livestock feeders. Beet molasses prices increased in FY 2002 due to
shrinking supplies of domestically produced molasses and improvement in
worldwide prices for beet molasses and competitive commodities.

         Co-product sales accounted for approximately 9% of the Company's total
consolidated net sales revenues during FY 2002. This relationship is primarily a
function of the average market prices for sugar, beet pulp, beet molasses and
fresh yeast and is not necessarily indicative of future relationships between
co-product, fresh yeast and sugar revenues, because prices of these products
fluctuate independently of each other.

         The Company is an eighty percent (80%) equity owner of Minn-Dak Yeast
Company, Inc. ("Minn-Dak Yeast"). Minn-Dak Yeast manufactures fresh baker's
yeast in a plant located adjacent to the Company's sugar plant in Wahpeton,
North Dakota. The Company started the yeast business in 1989 in order to add
value to its co-product beet molasses. Beet molasses is the main ingredient
(growth medium) in the fermentation process used to grow baker's yeast to
commercial volumes. A portion of the Company's beet molasses production is used
in Minn-Dak Yeast's process and is sold through a supply agreement between the
two companies. Sensient Technologies Corporation, Milwaukee, Wisconsin,
("Sensient") holds the remaining twenty percent (20%) equity stake. Minn-Dak
Yeast Company, Inc. also has a long-term marketing agreement whereby Sensient
will buy all production of yeast produced by Minn-Dak Yeast Company, Inc. in
return for certain guaranteed sales volumes. That contract will expire in June
2004, but the Company has a unilateral right to extend it another three years.


JOINT VENTURE WITH PROGOLD LIMITED LIABILITY COMPANY

         Minn-Dak is a five percent (5%) equity owner in ProGold Limited
Liability Company ("ProGold"). ProGold was formed in 1994 by three entities for
the purpose of building a plant to produce from corn and market high fructose
corn syrup; and to produce and market corn gluten feed, corn gluten meal and
corn germ, all co-products produced by the plant. The other two equity owners
are American Crystal Sugar Company, Moorhead, Minnesota (46% ownership share)
and Golden Growers Cooperative, Fargo, North Dakota (49% ownership share). The
Company originally contributed approximately $5.2 million in exchange for its 5%
ownership position, while the current book value of the investment totals $4.1
million.

         On November 1, 1997 ProGold signed a 10 year lease agreement with
Cargill, Inc. ("Cargill") to lease ProGold's corn wet-milling plant. Under the
lease arrangement, which expires on October 31, 2007, the Company and the other
ProGold members will retain ownership of the plant, while Cargill will operate
the plant and sell the finished products. ProGold will receive rental payments
in a base amount fixed for each year during the term of the lease. ProGold will
also receive supplemental rent equal to fifty percent (50%) of the amount by
which earnings before taxes from operations of the facility exceed a specified
base.


<PAGE>

         The arrangement between ProGold and Cargill also specifies a variety of
alternatives that may take effect upon expiration of the initial lease. These
alternatives include agreeing to enter into another long-term lease upon
mutually agreeable terms and conditions, or ProGold could offer to sell to
Cargill, at fair market value, a fifty percent (50%) or one hundred percent 100%
ownership interest in ProGold.

         To date the lease with Cargill has provided ProGold, as an entity, with
rental payments of a fixed amount. And, while it is not anticipated to happen in
the near future, the lease also provides the opportunity to receive supplemental
rental payments in the event that the ProGold facility is operated profitably.
As a result, the lease arrangement has provided protection from the exposure of
the risks of participation in the corn sweetener market, including a risk of
future, material financial losses by ProGold and the necessity of additional
capital investment from the Company to cover such future losses.


GROWERS' AGREEMENTS

         The Company purchases virtually all of its sugarbeets from members
under contract with the Company. All members have three-year contracts with the
Company covering the growing seasons of 2002 through 2004 (the "Growers'
Agreements"). At the end of each year, the Growers Agreement automatically
extends for an additional year, so that such agreements always have a remaining
term of three years, unless the Company prior to the automatic renewal has given
notice of termination. In that situation, the agreement will not renew, but will
continue in effect for the two year period then remaining under the agreement.
Each Unit of Preferred Stock currently entitles a member to grow 1.35 acres of
sugarbeets for sale to the Company. The Company's Board of Directors has the
discretion to adjust the acreage, which may be planted for each Unit of
Preferred Stock held by the members. For the 2002 crop year the Company's Board
of Directors authorized members to plant 1.55 acres per unit. For the 2003 crop
year, the Company's Board of Directors has authorized the members to plant 1.45
acres per unit. This reduction in acres is a direct result of the current farm
bill sugar allocations. (For a discussion of the current farm bill sugar
allocations, see Management's Discussion on Government Programs and
Regulations.)

         Under the terms of the Growers Agreement, each member receives payment
for his or her sugarbeets based on a price per pound of extractable sugar. The
price per pound of extractable sugar is determined by dividing the total grower
distribution of net proceeds (less the amount credited to members investment
from member patronage and credited to retained earnings from non-member
patronage) by the total of members' pounds of extractable sugar. Extractable
pounds of sugar are obtained by the processing of beet samples taken from
members' sugarbeets during harvest. Each member's grower payment is obtained by
multiplying that member's total pounds of extractable sugar times the price per
pound of extractable sugar as determined above.

         Under the Growers Agreement, each member receives an initial
installment of the payment for his or her sugarbeets on or about November 15,
soon after delivery of his or her crop to the Company. That initial installment
is subject to adjustment by the Cooperative's Board of Directors and management,
but will not exceed 65% of the estimated price per pound of extractable sugar. A
second installment is paid in early February; that installment, in combination
with the first installment, will not exceed 70% of the estimated price per pound
of extractable sugar. A third installment is paid in early April, with the
aggregate of all installments paid to that date not to exceed 80% of the
estimated price per pound of extractable sugar. A fourth installment payment is
paid in early July, with the total of installment payments to that date not to
exceed 95% of the estimated price per pound of extractable



<PAGE>

sugar. The final payment is determined after the end of the Company's fiscal
year, ending on August 31, and is in an amount necessary to bring the total of
all payments to the price to be paid per pound of extractable sugar to all
growers during the applicable fiscal year. In addition, the Company's annual
patronage net income, which is equal to the Company's sales less all
expenditures and member beet payments, is distributed to the members on the
basis of the pounds of extractable sugar obtained from each of the members'
sugarbeets; such amounts are distributed in either cash payments or allocated in
the form of patronage credits to the member's patronage account on the books of
the Company.

         The Company intends to have a new Growers Agreement signed by each of
the shareholders for the 2003 crop. The modifications to the agreement are
considered minor in nature by the management and board of directors of the
Company and addresses incorporating certain growing practice situations into the
agreement.


COMPANY DISTRICTS

         The Company's by-laws provide that the Company's members are to be
divided into districts for the purposes of voting and the election of members of
the Board of Directors. Those districts do not have specific geographic
boundaries but, instead, contain a loosely defined area representing the area
served by a particular piling station to which members deliver their sugarbeets
for storage until the sugarbeets are to be processed. When a member joins the
Company, he or she is assigned to a particular district based upon criteria
including: (i) the physical location of the shareholder's sugarbeet growing
acres relative to a piling site, (ii) if the previous criteria do not clearly
indicate the district to which the shareholder should be assigned, then the
physical location of the shareholder's base of farming operations relative to a
piling site (some members deliver sugarbeets to more than one piling site due to
the locations of their various fields, even though they are assigned to
membership in only one district) and (iii) if the first two criteria do not
provide a clear indication of the district to which the shareholder should be
assigned, then the shareholder is given the option of being assigned to the
district which would best serve the needs of that shareholder.

         Given that shareholders are assigned to districts based upon ease of
delivery of harvested sugarbeets and because shareholders own different numbers
of Units of Preferred Stock, each district includes a different number of acres
of sugarbeet production and, therefore, a different quantity of sugarbeets
delivered to the Company. However, none of the districts provides the Company
with a materially disproportionate quantity of the sugarbeets produced by the
Company's members. While the allocation of members to the various districts has
a significant impact on the election of directors, the Company does not believe
that the districts represent a significant factor in the day-to-day business
operations of the Company.


RESEARCH AND DEVELOPMENT

         The Company is involved in very little of its own research and
development activities, but does participate in some sugar industry research and
development activities. Any research findings are then shared by the entire
sugar industry. Participatory research and development is accomplished through
such organizations as Beet Sugar Development Foundation, Sugar Association, and
North Dakota/Minnesota Research and Education Board. The Company participates in
the organizations listed above through the efforts of its representatives to the
boards of directors of those entities. The Company's representatives, either a
member of the Company's Board of Directors or a management employee of the
Company, allow the Company to participate in and help direct agricultural and
factory


<PAGE>

operations research and development activities carried out by the listed
organizations. Those organizations also have established various committees on
which the Company has placed certain of its employees. That practice is designed
to provide the company with direct access to any research and development
information available from the applicable committees. (Through its employees,
the Beet Sugar Development Foundation also provides some legislative and
lobbying efforts on a national level. Those efforts are directed at maintaining
funding for the various federal sugarbeet research facilities.) None of the
Company's employees or directors devotes a significant portion of their time and
energies to the activities described in this section; instead, such efforts are
a minor portion of their continuing duties on behalf of the Company.

         During the fiscal year ended on August 31, 2002, the Company
contributed approximately $67,000 to the North Dakota/Minnesota Research and
Education Board to fund that entity's research and development activities.
$16,000 was given to the Beet Sugar Development Foundation in connection with
their research activities, and $86,000 to the Sugar Association for their
research activities and membership dues.

         The Company also has established a sugarbeet seed committee, which
reviews the performance of new and existing sugarbeet seed varieties. The
committee then advises the Board of Directors with regard to those sugarbeet
seed varieties that should be approved for use by the Company's shareholders.


ENVIRONMENTAL MATTERS

         The Company is subject to a broad range of evolving environmental laws
and regulations. These laws and regulations include the Food Quality Protection
Act of 1996, the Clean Air Act, the Clean Water Act, the Resource Conservation
and Recovery Act, the Federal Insecticide, Fungicide and Rodenticide Act and the
Comprehensive Environmental Response, Compensation and Liability Act. Currently,
the Company is unaware of any areas of non-compliance.

         The Company has approved a $9.0 MM Steam Dryer project, which is
intended to reduce solid waste and air emissions. The projected completion date
for this capital expenditure is September 2003. In addition to the Steam Dryer
Project, the Company has $.8 MM of environmental capital improvements budgeted
for FY 03.

         Compliance with these laws and related regulations is an ongoing
process that, at the current levels of spending, is not expected to have a
material effect on the Company's capital expenditures, earnings or competitive
position. Environmental concerns are, however, inherent in most major
agricultural operations, including those conducted by the Company, and there can
be no assurance that the cost of compliance with environmental laws and
regulations will not be material. Moreover, it is possible that future
developments, such as increasingly strict environmental laws and enforcement
policies thereunder, and further restrictions on the use of agricultural
chemicals, could result in increased compliance costs.


MARKET AND COMPETITION

         Current U.S. Government statistics estimate total U.S. sugar deliveries
at 181.3 million cwt refined for the fiscal year beginning October 1, 2001 and
ending September 30, 2002. For the same period ending in 2001, total deliveries
were 186.9 million cwt. refined. Comparing the two years shows demand reduction
of 3.0% for U.S. sugar sellers. After experiencing strong and steady growth
during the


<PAGE>

1990's, U.S. demand for sugar has stagnated since fiscal year 2000. While
October 2001 - July 2002 deliveries to non-industrial end users (such as retail
grocers and wholesalers) have increased by 5% relative to the same time period
the previous year, same-period deliveries to industrial end users have decreased
by 8% from a year earlier. Deliveries are down substantially for the largest
three industrial end use sectors: bakery and cereal - 6.9%; confectionery
industry - 12.3%; and the multiple use category - 15.8%. While there is no clear
explanation for the decline in sugar consumption, the decline coincided with a
decline in U.S. economic activity, suggesting that aggregate disposal income and
sweetener consumption may be related. Other factors that could have contributed
to the decline include: (1) September 11, 2001 (the lowest recorded monthly
deliveries of domestic food and beverages in over 10 years); (2) changes in
dietary habits and (3) the effect of sugars contained in imported products,
which have increased significantly since 1995.

         The U.S. government forecasts growth between 2002 and 2003 to be
approximately 1%, at 183.2 million cwt. refined, indicating deliveries to
non-industrial end users will likely increase along with population growth.
Also, national economic recovery should help demand for products that contain
sugar. A continued problem will be the upward trend in imported products that
contain sugar. The Company has no reason to disagree with the U.S. Government's
estimate of sugar deliveries for fiscal year 2003. Given the size of the
domestic market, the Company's sugar production and sales represent between 2
and 3% of the total domestic market for refined sugar in 2002. United Sugars,
which sells the Company's production through a sugar marketing pool, represents
approximately 26% share of the U.S. sugar market.

         The U.S. refined sugar market has continued to grow over the past
twenty years, despite the enormous amount of demand lost to the substitution of
high fructose corn syrups for sugar in beverages and certain food products.
Non-nutritive sweeteners such as aspartame have also been developed to
substitute for sugar. The substitution of corn sweeteners for sugar not only
reduced demand for sugar in the United States, but also resulted in a high
degree of sugar industry consolidation. For example, in 1978 there were 28 sugar
producers and sellers in the U.S. market. Today there are seven sugar sellers,
with over 85% of U.S. sugar market share concentrated in the top four sellers,
most of which are fully integrated beet and cane suppliers. The Company's main
competitors in the domestic market are Imperial Sugar Company, Domino,
Amalgamated Sugar Company and California and Hawaii Sugar Company. Competition
in the U.S. sugar industry, because sugar is a fungible commodity, is primarily
based upon price, customer service and reliability as a supplier.


GOVERNMENT PROGRAMS AND REGULATION

         Domestic sugar prices are supported under a program administered by the
United States Department of Agriculture ("USDA"). Under the current program,
which was initiated in 1981 and extended under the Food Security Act of 1985,
the Food, Agriculture, Conservation and Trade Act of 1990, the Federal
Agriculture Improvement and Reform Act of 1996 and now The Farm Security and
Rural Investment Act of 2002 (the "Farm Bill"), the price of sugar is required
to be maintained above the price at which producers could forfeit sugar to repay
non-recourse loans obtained through the Commodity Credit Corporation ("CCC").
The USDA maintains sugar prices without cost to the U.S. Treasury by regulating
the quantity of sugar imports. The Farm Bill maintains the basic 18 cent per
pound loan rate for raw sugar and puts in place a 22.90 cent per pound loan rate
for refined beet sugar. Both loan rates are effective for crop years 2002
through 2007. Price support loans are made on a non-recourse basis, which means
the sugar processor is able to forfeit sugar to CCC if sugar prices are below
the loan rate.


<PAGE>

         However, the Farm Bill also provides that, to the maximum extent
possible, the Secretary of Agriculture of the USDA (the "Secretary") shall
operate the sugar program at no cost to the Federal Government by avoiding the
forfeiture of sugar to CCC. The Farm Bill further provides for the imposition of
marketing allotments each crop year for the marketing by processors of sugar
processed from sugarbeets and domestically produced sugarcane at a level that
the Secretary estimates will be needed to avoid forfeitures of sugar to the CCC.
The Secretary only suspends allotments whenever the Secretary estimates or
re-estimates, or has reason to believe, that imports of sugar for human
consumption will exceed 1,532,000 short tons raw value.

         Each domestic processor of sugar, which includes the Company, is
provided an allocation whenever allotments are in effect, based upon a formula.
The Company believes that the amount of allocation it can expect to receive from
the Secretary in each year of the Farm Bill may not be sufficient to allow it to
sell all of its production of sugar in the domestic for human consumption
marketplace. Any amount of sugar produced by the Company within an allotment
year that does not have a corresponding allocation will have to be marketed into
alternative markets or held until such time that allotments are lifted. The
Company anticipates that it will have to adjust its production of sugar each
year to more closely match its anticipated allocation. To the extent that the
Company has to market any over-allocation sugar into alternative markets, or
reduce production to more closely match its anticipated allocation, it is not
expected that those decisions would have a material adverse effect on the
operations of the Company.

         Under the General Agreement on Tariffs and Trade Act o f 1990 ("GATT"),
tariff rate quotas were implemented for certain sugar producing countries, that
provided for a fixed quantity of sugar imports duty-free or subject to minimal
duties. Unlimited additional quantities may be imported upon payment of a tariff
of 16.21 cents per pound of refined sugar prior to shipment (to date, very
little sugar has been imported under this higher tariff level). Further, imports
of sugar under the tariff rate quota are based upon the difference between
domestic sugar consumption and domestic sugar production, with one exception.
Under the terms of the GATT the minimum imports of sugar are established at
1,257,000 short tons, raw value. Therefore, even if the difference between
domestic sugar consumption and production are less than 1,257,000 short tons,
raw value, GATT will require that 1,257,000 short tons be imported into the
United States from the quota holding foreign countries.

         In November 1999, the so-called Millennium Round of the World Trade
Organization (WTO) began in Seattle, Washington with the goal of continuing to
move toward multilateral free trade in all sectors. The WTO met again in
November 2001 in Doha, Qatar where members launched new multilateral trade
negotiations aimed at improving market access, reducing and eventually phasing
out of all forms of export subsidies and substantial reductions in
trade-distorting domestic support. Any agreements reached at the Millennium
Round could represent a threat to the domestic sugar industry because sugar is
one of the most highly protected sectors within world agricultural trade and is
thus a target for reform. The trend toward liberalization will most likely focus
on the minimum import requirement of 1,257,000 short tons. There will likely be
a movement to raise the minimum import requirement, and if successful, such a
movement could cause additional supply/demand pressure in the United States.

         The Company believes the North American Free Trade Agreement ("NAFTA")
currently represents the most serious public policy challenge to itself and the
domestic sugar industry. Under the terms of the original NAFTA text, Mexico
would have been allowed to ship any excess production of sugar into the United
States if Mexico were to achieve net surplus producer status two years in a row.
Concerned that Mexico's productive capabilities and possible conversion to the
use of high fructose corn sweeteners could quickly change Mexico from a net
sugar importer to a net sugar exporter, the U.S.


<PAGE>

sugar industry insisted that NAFTA be changed to delay Mexico's access to the
U.S. market. To embody these changes, a side agreement on sugar was reached
prior to passage of NAFTA to give Mexico incrementally larger but capped volumes
of duty-free access, and an ability to send additional quantities if it were to
pay a gradually descending second tier tariff. The side agreement establishes a
common market between the United States and Mexico in sugar by 2008. The side
agreement has recently been contested by Mexico as invalid, contending that the
side agreement was not signed by Mexico. To date, the United States has
contended that the side agreement is valid and has dealt with sugar imports from
Mexico accordingly. The two countries continue to negotiate over this issue and
the Company cannot predict the outcome of those negotiations. However, should
Mexico prevail on this issue with the United States, the Company believes that
imports from Mexico could increase dramatically and therefore have a material
adverse affect on the domestic price of sugar.

         The Company is concerned that low world sugar prices and a trade
conflict between the U.S. and Mexico over high fructose corn sweeteners could
permit de facto acceleration of the side agreement under NAFTA. Under the NAFTA
tariff schedule, second tier sugar tariffs are set at approximately 9.34 cents
in 2002 but decline by approximately 1.5 cents per year until reaching zero in
2008. The Company believes that current low world raw sugar prices make it
feasible for Mexican second tier sugar to enter the United States marketplace.
In contrast to Mexico's duty free access to the United States sugar market,
which is at 250,000 metric tons per year, NAFTA contains no restrictions on
second tier imports.

         Under the current terms of NAFTA and the side agreement, the Company is
concerned that imports from Mexico could oversupply the U.S. market forcing
sugar prices significantly lower. Any fluctuation in the price of sugar has a
direct impact on any sugarbeet payments that are made to members. The Company,
along with the domestic sugar industry, is seeking improvements to NAFTA and is
also pursuing legal remedies to address the matter. If the sugar industry is
unsuccessful in these or any other endeavors it pursues to prevent the influx of
Mexican sugar into the U.S. market, there could be adverse financial
consequences to the Company and its members.

         The recently passed Farm Bill provides price support provisions for
sugar. However, if the price support program including the Tariff Rate Quota
system described above, were eliminated in its entirety, or if the protection
the United States' price support program provides from foreign competitors were
materially reduced, the Company could be materially and adversely effected. 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 could impact the Company's continued viability and the
desirability of grower sugarbeets for delivery to the Company.


EMPLOYEES
         As of November 9, 2002, the Company had 246 full-time employees, of
whom 214 were hourly and 32 were salaried. It also employs approximately 346
additional hourly seasonal workers during the sugar beet harvest and processing
campaign. In August 2000 the Company concluded the negotiations for a collective
bargaining agreement with the American Federation of Grain Millers (AFL-CIO)
union for its factory employee group. The written contract is in effect from
June 1, 2000 through May 31st of the year 2005. Office, clerical, management and
harvest employees are not unionized. Full time employees are provided with
health and dental insurance, a defined benefit pension retirement plan, a 401(k)
retirement savings plan, a short and long-term disability plan, term life
insurance, and vacation and holiday pay plans. Seasonal workers are provided
some of the above employee benefits. The Company considers its employee
relations to be excellent.



<PAGE>

ITEM 2.   PROPERTIES

         The Company operates a single sugarbeet processing factory at Wahpeton,
North Dakota that is located in the Red River Valley of Minnesota-North Dakota.
The Company owns the factory, receiving sites, and the land on which they are
located.

         The properties are adequate to process normal and above normal crop
sizes with a three-year post expansion average slice rate of 9,400 tons per day.
The processing factory is anticipating processing the 2002 crop, which is a
record size crop, with little difficulty if we have normal weather patterns,
which in turn provide normal beet storage conditions.

         Minn-Dak Yeast Company, Inc, of which the Company is an 80% owner,
operates a single yeast manufacturing factory at Wahpeton, North Dakota that is
located in the Red River Valley. Minn-Dak Yeast Company, Inc. owns the factory
and the land on which it is located. During fiscal 2002, fresh yeast was
produced and sold into the domestic yeast marketplace.

         All properties are held subject to a mortgage by the Company's primary
lender.


ITEM 3.  LEGAL PROCEEDINGS

         From time to time and in the ordinary course of its business, the
Company is named as a defendant in legal proceedings related to various issues,
including worker's compensation claims, tort claims and contractual disputes.
Other than as provided herein, the Company is not currently involved in legal
proceedings that have arisen in the ordinary course of its business, and the
Company is also unaware of certain other potential claims that could result in
the commencement of legal proceedings. The Company carries insurance that
provides protection against certain types of claims.

         The Company is subject to extensive federal and state environmental
laws and regulations with respect to water and air quality, solid waste disposal
and odor and noise control. The Company conducts an ongoing and expanding
control program designed to meet these environmental laws and regulations. As
disclosed under "ENVIRONMENTAL MATTERS" above, there currently are no pending
regulatory enforcement actions and the Company believes that it is in
substantial compliance with applicable environmental laws and regulations.



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

         There were no matters submitted to a vote of the Company's shareholders
during the quarter ended August 31, 2002.

         At the Annual Meeting of Shareholders which is to be held on December
10th, 2002, the following seats on the board of directors will be up for
election: District #4, District #5, and District #7. A brief biography of each
of the candidates for the open seats follows.

DISTRICT #4

         MICHAEL HASBARGEN has been a director since 1993 and is currently
serving as board vice chairman. Mr. Hasbargen has been farming near
Breckenridge, MN since graduating from NDSU in Ag



<PAGE>

Economics in 1967. Mr. Hasbargen also serves on the board of directors of United
Sugars Corporation and it one of Minn-Dak's representatives to the American
Sugarbeet Growers Association in Washington, DC. Mr. Hasbargen is the
brother-in-law of Mr. Steven Caspers, Executive Vice President & Chief Financial
Officer.

DISTRICT #5

         JACK LACEY has been a director since 1993. Mr. Lacey has been farming
with his wife, Sharon, near Wendell, MN since 1963. He serves as one of
Minn-Dak's representatives to the American Sugarbeet Growers Association in
Washington, DC.

DISTRICT #7

         PAUL SUMMER has been a director since 1993 and is currently serving as
board secretary. Mr. Summer has been farming near Herman, MN since 1963.





                                     PART II

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is only a limited, private market for shares of the Company's
Common or Preferred Stock, as such shares may be held only by farmer-producers
who are eligible for membership in the Company. The Company's shares are not
listed for trading on any exchange or quotation system. A number of stock
transfers, representing approximately 6% of available stock, were not arms
length (estate settlements, estate planning from one generation to the next,
etc.) and an accurate value for that stock was not available. Management
believes that less than 1% of the Company's available stock was traded at arm's
length during the fiscal years ended August 31, 2002 and 2001. Of the stock
transferred at arms length, the transfers were made during the first, second and
third quarters of each of the Company's fiscal years and range in price from
$1,450 to $1,600 per unit the first quarter, $1,600 to $1,900 the second quarter
and $1,800 to $2,000 the third quarter for the year ended August 31, 2002, and
$1,450 to $1,600 per unit during the fiscal year ended August 31, 2001. The
fourth quarter did not have any arms length transactions.




<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

         The following table summarizes selected financial data for each of the
last five completed fiscal years. The selected financial data of the Company
should be read in conjunction with the financial statements and related notes
included elsewhere in this Report.

<TABLE>
<CAPTION>
                                                    Fiscal Year Ended August 31,

FINANCIAL DATA
(Numbers in Thousands)                                  2002               2001          2000           1999            1998

<S>                                                      <C>             <C>            <C>            <C>             <C>
Revenues                                                 $158,003        $177,899       $170,151       $152,742        $149,574
Distribution of Net Proceeds (1)                           84,224          94,620         86,604         63,352          72,084
Total Assets                                              171,573         161,737        173,001        174,296         184,830
Long-term Debt, including current maturities, Net
of bond investments, 1998                                  61,580          53,205         58,193         61,185          59,798
Members' Investment (2)                                    76,912          76,203         75,336         79,394          82,082
Property and Equipment Additions, net of
Retirements                                                 4,582             914          2,404          2,962          10,893
Working Capital                                            11,647          11,974         12,234         13,403          11,170

Ratio of Long-Term Debt to Equity (3)                         .73             .63            .71            .71             .65
Ratio of Net Proceeds to Fixed Charges (4)                  23.48           20.25          17.68          13.05           13.92
Dividends Paid on Common Stock                                  0               0              0              0               0

PRODUCTION DATA (5)

Acres harvested                                            92,395          94,856        102,078         97,336          91,374
PIK Acres                                                   9,881           8,620              0              0               0
Tons purchased (members)                                1,666,663       2,062,162      2,201,776      1,772,648       1,721,240
Tons purchased (non-member)                                                                             198,770          44,065
Tons purchased per acre harvested                           18.04           21.74          21.57          18.21           18.84
Payment to members per ton of sugarbeets
delivered, plus allocated patronage and unit
retains (6)                                                $46.17          $42.34         $39.19         $35.34          $41.68

Sugar hundredweight
         Produced, including PIK sugar                  5,076,252       6,310,374      5,739,893      4,750,921       4,788,131
         Sold, including purchased sugar                5,192,482       6,757,402      5,220,321      5,324,764       4,672,631

Beet pulp pellet tons
         Produced                                          78,408          97,731         97,541        100,215          89,263
         Sold                                              85,209          89,282         96,452        127,160         105,270

Beet molasses tons
         Produced                                          72,123          92,333         87,417        103,127          78,077
         Sold                                              75,090          91,218         91,829         97,775          70,985
         Used for Yeast Production                         15,164          17,123         17,745         17,652          18,651
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                                        <C>             <C>            <C>            <C>             <C>
Yeast pounds (in thousands)
         Produced                                          22,254          25,582         26,062         26,198          27,191
         Sold                                              22,327          25,421         26,034         26,240          27,227
</TABLE>

 (1) Net Proceeds are the Company's gross revenues, less the costs and expenses
of producing, purchasing and marketing sugar, sugar co-products, and yeast, but
before payments to members for sugarbeets. (For a more complete description of
the calculation of Net Proceeds, see "Description of Business-Growers'
Agreements".)

(2) Members' investment includes preferred and common stock, unit retention
capital, allocated patronage and retained earnings (deficit).

(3) Calculated by dividing the Company's long-term debt, exclusive of the
current maturities of such debt, by equity.

(4) Computed by dividing (i) the sum of Net Proceeds plus fixed charges, plus
amortization of capitalized interest by (ii) the sum of interest expense and
interest capitalized. The Company does lease certain items, such as some office
equipment. Due to the proportionately small amounts involved, an interest factor
on lease payments has not been included in the total of the Company's fixed
charges or the calculation of this ratio. See Exhibit 12.

(5) Information for a fiscal year relates to the crop planted and harvested in
the preceding calendar year (e.g., information for the fiscal year ended August
31, 2002, relates to the 2001 crop).

(6) Reflects the total amount paid in cash and allocated to individual grower
equity accounts for each ton of beets delivered.



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS:

         The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Company's
financial statements and notes included elsewhere in this Report. This
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual future results may differ materially from
those anticipated in the forward-looking statements contained in this section;
such differences could arise as a result of a variety of factors including, but
not limited to, the market and regulatory factors described elsewhere in this
Report.

EXTERNAL RISK FACTORS THAT MAY AFFECT THE COMPANY

         o        Regulatory: The Company's ability to become more efficient
                  through growth can be adversely affected by the amount of
                  product it is allowed to market in the United States.
         o        Imports and Quota Circumvention: To the extent that sugar
                  imports and quota circumvention cause the supply to increase
                  in the United States, available markets and pricing could be
                  adversely affected. See management discussion on Government
                  Programs and Regulations.
         o        Weather: Weather conditions affect the Company's operations.
                  Weather impacts the size and quality of the crop, which
                  impacts the Company's ability to lessen per unit fixed costs.
                  Weather


<PAGE>

                  impacts the storage conditions, which may cause a decreased
                  sugar production yield from sugarbeets as a result of poor
                  storage conditions.
         o        Raw Material Costs: The costs of raw materials may adversely
                  impact the final net return to the growers.
         o        Other Factors: Variables, such as crop failures, federal
                  agricultural programs and international trade agreements may
                  unfavorably impact the Company's operations.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Preparation of the Company's 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 historical experience and other assumptions we believe to be reasonable
under the circumstances.

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

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



INVENTORY VALUATION

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

PROPERTY, EQUIPMENT AND DEPRECIATION

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

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


<PAGE>

PENSION PLAN BENEFITS

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

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

         The significant actuarial assumptions used in the determination of the
actuarial present value of accumulated plan benefits for fiscal 2002 were as
follows: Valuation Funding Method - Entry age normal, frozen initial liability;
Life Expectancy - 1983 group annuity mortality; Retirement Age - participants
retire at age 65; Investment Return - 8.00 percent compounded annually for
funding; Discount Rate- 7.5 percent compounded annually; Salary Scale - 5.0
percent compounded annually.

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


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 Co-Bank (the "Bank"). The Company has a short-term
line of credit with the Bank totaling $45.0 million and successfully completed
its annual renewal of this financing arrangement in March 2002 covering a one
year period ending May 31, 2003. The Company anticipates using the USDA Sugar
Loan Provisions contained in the 2002 Farm Bill to provide an additional source
of seasonal financing for the 2002 and future crops.

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

o Maintain working capital of not less than $9.0 million as of August 31, 2002.
o Maintain a long-term debt and capitalized leases to equity ratio of not
  greater than .8:1.
o Maintain a current ratio of not less than 1.2:1.0 based on monthly financial
  statements and attain a current ratio of not less than 1.2:1.0 based on fiscal
  year end audits.
o Maintain available cash to current long-term debt ratio as defined in the
  agreement of not less than 1.25:1.

<PAGE>

          As of August 31, 2002 the Company was in compliance with its loan
agreement covenants with the Bank.

          During fiscal year 2000, the Company sold certain notes receivable
with recourse. The Company's contingent liability related to these notes totaled
$2.3 million as of August 31, 2002.

         Working capital decreased $0.3 million for fiscal year 2002. As of
August 31, 2002, the Company achieved its targeted working capital position.

         The company has protected itself from interest rate fluctuations
through a strategy using tax-exempt bond financing and a term debt portfolio
that fixes rates and maturities into the future on set amounts of debt. The
current term debt portfolio is expected to provide the company stable term debt
interest rates over the next four years at approximately 160 basis points over
current market rates for similar maturities. An increase or decrease in the
interest rate market of 100 basis points is expected to have little or no
additional impact on the profitability of the Company as a result of its
interest rate strategy. Capital expenditures for fiscal year 2000 were $4.7
million, fiscal year 2001 were $3.1 million and Fiscal year 2002 were $4.8
million. Capital expenditures for fiscal year 2003 are currently estimated at
$10.5 million, of which $7.0 million will be associated with the major capital
expenditure involving the installation of a steam dryer for beet pulp.

<TABLE>
<CAPTION>
                                                              Payments Due by Period
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------
Contractual                                                Less
Obligations                               Total           Than 1            1 - 3               4 -5              After 5
                                                           Year             Years              Years               Years
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------
<S>                                 <C>                <C>            <C>                <C>                 <C>
Long-Term Debt                      $37.9MM            $ 4.8MM        $14.4MM            $ 9.6MM             $ 9.1MM
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------
Capital Lease Obligations           $23.7MM            $  .9MM        $ 3.6MM            $ 3.7MM             $15.5MM
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------
Operating Leases                    $ 2.4MM            $  .9MM        $ 1.0MM            $  .2MM             $  .3MM
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------
Unconditional
Purchase Obligations                $ 3.5MM            $ 3.5MM              0                  0                   0
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------
Other Long-Term
Obligations                               0                  0              0                  0                   0
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------
Total Contractual Cash
Obligations                         $67.5MM            $10.1MM        $19.0MM            $13.5MM             $24.9MM
----------------------------------- ------------------ -------------- ------------------ ------------------- ------------------

</TABLE>

          The Company has elected to install a steam dryer to dry its beet pulp
at a cost of approximately $9.0 MM, with a construction completion date of
September 2003. The funding for this investment will be in the form of a capital
lease supported by tax-exempt bonds. On February 28, 2002, the Company completed
a transaction whereby $14.0 MM of tax-exempt bonds was secured. Of the $14.0 MM
in bonds, $9.0 MM was estimated for the steam dryer project, $1.5 MM for solid
waste projects currently in process and $3.5 MM for anticipated future solid
waste project needs. The Company used $2.9 MM of the Bond Proceeds for the steam
dryer project and solid waste projects for the fiscal year ended August 31,
2002.

          The Bond Proceeds of $14.0 MM were required to be sold in a single
transaction. The proceeds from these bonds are held in trust until the funds are
spent on approved projects. The bond transaction and restricted bond investments
associated with the transaction are subject to arbitrage compliance rules for
solid waste tax-exempt bond projects.

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


<PAGE>

          The Steam Dryer Purchase agreement was entered into in April 2002.

          As part of the Steam Dryer purchase, the Company has allocated
$1 million of its $45 million seasonal line of credit for the required
Commercial Letter of Credit contained in the Steam Dryer Purchase Contract. In
addition, because portions of the contract are in Euro funds, the Company has
entered into forward purchase Euro contracts to hedge against currency
fluctuations during this contract period.

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

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

COMPARISON OF THE YEARS ENDED AUGUST 31, 2002 AND 2001

         Revenue for the year ended August 31, 2002 decreased 11.2% or $19.9
million from 2001. Revenue from total sugar sales decreased $29.1 million or 18%
reflecting a 23% decrease in cwt. sold, partially offset by a 6% increase in the
average selling price per cwt. Revenue from co-products remained approximately
the same reflecting an increase of 10% in the average selling price per ton,
offset by a 10% decrease in volume.

         Revenues from yeast sales decreased $0.22 million or 4% reflecting a
price increase of 8%, offset by a decrease in volume of 12%.

         The value of finished product inventories in fiscal year 2002 increased
$.4 million, from fiscal year 2001.

         Cost of product produced, exclusive of grower payments for sugarbeets,
decreased $2.9 million. The decrease is primarily due to a 19% decrease in crop
size. The decrease in the crop size was due to a combination of crop growing
conditions and the Federal Government's Payment In Kind (PIK) program. Sales and
Distribution costs decreased $4.17 million or 15%. Decreases are the result of a
23% decrease in the volume of sugar sold for the year along with a 10% decrease
in the volume of co-products sold for the year. However, unit sales and
distribution costs of sugar increased 9%, while co-products increased 2% for the
year General and Administrative expenses decreased $.1 million or 2%. Interest
expense decreased $1.18 million or 24% due to reduced rates of interest and
lower levels of debt. Overall, the cost per cwt of sugar produced increased 17%,
primarily due to the reduced size of the crop and the effect it had on the
allocation of fixed costs on a per unit basis.

         Other business income increased $1.16 million in fiscal year 2002. This
change from expense to income was primarily due to higher patronage dividends
from other cooperatives, and lower write-downs and losses on disposal of
equipment.

         Net payments to members for sugarbeets, which include payments for
payment-in-kind certificates from the Commodity Credit Corporation, decreased by
$9.5 million in fiscal year 2002. This decrease was primarily due to 19% fewer
tons of harvested beets, similar payment-in-kind certificates coupled with a
9.7% increase per ton beet payment.




<PAGE>

COMPARISON OF THE YEARS ENDED AUGUST 31, 2001 AND 2000

         Revenue for the year ended August 31, 2001 increased 5% or $7.75
million from 2000, due to additional acres and favorable growing conditions,
offset by the PIK program. Revenue from total sugar sales increased $25.46
million or 18% reflecting a 29% increase in cwt. sold, partially offset by an
11% decrease in the average selling price per cwt. Revenue from co-products
increased $1.61 million or 13% reflecting an increase of 18% in the average
selling price per ton, partially offset by a 5% decrease in volume.

         Revenues from yeast sales increased $0.28 million or 5% reflecting a
price increase of 7%, partially offset by a decrease in volume of 2%.

         The value of finished product inventories in fiscal year 2001 decreased
$19.60 million more than they decreased in fiscal year 2000 primarily due to the
change in the value of ending sugar inventory. The change in the value of ending
sugar inventory vs. the prior year was the result of less sugar on hand than in
the prior year, and at a lower price. The ending sugar inventory was higher in
fiscal year 2000 as a result of market conditions and anticipated Commodity
Credit Corporation sugar loan forfeitures.

         Cost of product produced, exclusive of grower payments for sugarbeets,
decreased $0.4 million. The decrease is primarily due to a 3% decrease in
processing and maintenance costs, partially offset by a 7% increase in beet
costs - those costs incurred by the cooperative in the growing and delivering of
sugarbeets. Sales and Distribution costs increased $1.49 million or 6%.
Increases are the result of a 29% increase in the volume of sugar sold for the
year. However, unit sales and distribution costs of sugar and co-products
decreased for the year. General and Administrative expenses increased less than
1%. Interest expense decreased $0.3 million or 5% due to reduced rates of
interest and lower levels of debt. Overall, the cost per cwt of sugar produced
decreased 3%, primarily due to the quality of the crop.

         Other business expense decreased $1.15 million in fiscal year 2001.
This decrease was primarily due to higher patronage dividends from other
cooperatives, and lower write-downs and losses on disposal of equipment.

         Net payments to members for sugarbeets, which include payments for
payment-in-kind certificates from the Commodity Credit Corporation, increased by
$3.3 million in fiscal year 2001. This increase was primarily due to a higher
per ton beet payment coupled with the payment-in-kind certificates; and
partially offset by decreased tons harvested.


ESTIMATED FISCAL YEAR 2003 INFORMATION

         The agreements between the Company and its members regarding the
delivery of sugarbeets to the Company require payment for members' sugarbeets in
several installments throughout the year. As only the final payment is made
after the close of the fiscal year in question, the first payments to members
for their sugarbeets are based upon the Company's then-current estimates of the
financial results to be obtained from processing the crop in question and the
subsequent sale of the products obtained from processing those sugarbeets. 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 2002
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 2002 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



<PAGE>

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 and the
quantity of sugar produced from the sugarbeet crop 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 2.4 million tons of sugarbeets from the
2002 crop, the largest crop ever delivered to the Company. Sugar content of the
2002 crop at harvest was 4% below the average of the five most recent years
because of crop growing conditions. Because of the record size of the crop
delivered, the Company's production of sugar from the 2002 crop sugarbeets is
expected to set a new record for sugar produced. This forward-looking material
is based on the Company's expectations regarding the processing of the 2002
sugar beet crop; the actual production results obtained by processing those
sugarbeets could differ materially from the Company's current estimate as a
result of factors such as changes in production efficiencies and storage
conditions for the Company's sugarbeets. The Company's initial beet payment
estimate totals $38.15 per ton or $.13130869 per harvested/bonus pound of sugar,
with the final beet payment determined in October of 2003. This projected
payment is less than the final 2001 crop payment per ton/pound, but higher than
the original projected 2001 crop payment per ton/pound. The lower projected 2002
crop payment results from lower sugar content of the beets delivered, additional
estimated costs to the Company in the areas of business insurance, allocation
purchase costs and higher quality and quantity shrink for the stored beets.

         From the revenues generated from the sale of products produced from
each ton of sugarbeets must be deducted the Company's operating and fixed costs.
Revenues for the crop year 2002 are expected to be significantly above the 2001
crop year due to increased production of sugar and co-products. The deduction of
those operating costs results in a 2002 crop gross payment to growers for
sugarbeets of $95.7 MM which is estimated to be more than that of the 2001 crop
year of $76.9MM. The 2002 crop beet payment increase results from significantly
more harvested tons (more acres harvested and higher yield) and because growers
did not have PIK program payments (the 2001 crop generated $6.8MM of payments to
growers for destroyed beets resulting from the 2001 PIK program).


OTHER INFORMATION:

SARBANES-OXLEY ACT

         The newly enacted Sarbanes-Oxley Act has a number of provisions that
are currently in the rule making process or if finalized, the interpretation of
those rules continues to be an ongoing process. The Company is making every
reasonable effort to be in compliance with the new rules and is taking the steps
it feels appropriate to be in a position to be in compliance with proposed
rules. The below listed areas of activity are not to be considered an all
inclusive list, rather an indication of how the Company's Board of Directors and
Management are approaching future compliance requirements.

AUDIT COMMITTEE: The audit committee is intending to re-organize following the
December 2002 annual meeting. The intention of the re-organized audit committee
will be to become even more active in the oversight of the Company's accounting,
auditing, and key risk management areas. The Company's bylaws require any board
member to be actively engaged in the production of sugarbeets, therefore, the
audit committee membership pool is restricted to the pool of available
directors. The Audit Committee is currently reviewing options for a confidential
and anonymous employee system to allow employees to report concerns regarding
questionable accounting or auditing matters.


<PAGE>

INTERNAL CONTROLS: The Company's payments to growers are derived from crop pools
with each year's harvest creating a "Crop Pool". It is the Company's practice to
make every reasonable effort to allocate revenues and costs in such a manner the
revenues and expenses associated with each pool are materially correct and
accounting methods are consistently applied on a year-to-year and a pool-to-pool
basis. During fiscal year 2003, the Company anticipates formalizing a process
where-by the material risks associated with the Company are listed and how those
risks are managed will be documented and, where appropriate, reviewed by the
Audit Committee.

         The Company's chief executive officer and chief financial officer have
reviewed and evaluated the effectiveness of the Company's disclosure controls
and procedures (as defined in Rules 240.13a-14(c) and 15d-14(c) promulgated
under the Securities Exchange Act of 1934) as of a date within ninety days
before the filing date of this annual report. Based on that review and
evaluation, which included inquiries made to certain other employees of the
Company, the chief executive officer and chief financial officer have concluded
that the Company's current disclosure controls and procedures, as designed and
implemented, are reasonably adequate to ensure that they are provided with
material information relating to the Company required to be disclosed in the
reports the Company files or submits under the Securities Exchange Act of 1934.

CODE OF ETHICS: It has been the Company's practice to have each manager sign a
"Conflict of Interest" statement annually, which the CEO of the Company reviewed
and signed. It is not known specifically how this form and process will need to
be modified to meet the final rules, however, when these rules are finalized the
Company intends to be in full compliance.



ITEM 7A.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company's long-term debt interest costs are stabilized through the
use of multi-year interest rate locks on various amounts and terms through its
primary lender Co-Bank. This strategy allows the Company to project future
interest costs and cash flows with a reasonable degree of accuracy.

         The Company's short-term debt will vary from year to year based on the
short-term interest rate market. Average short-term debt borrowing levels have
been $23.5MM for 2002, $22.5MM for 2001 and $23.8MM for 2000. Because each
year's short-term debt is closely associated with a crop year, the interest
fluctuations will have a direct impact on the final grower beet payment.

         The Company has $23.7MM of Solid Waste Disposal Bonds which are
qualifed for tax exempt treatment. These bonds are variable rate bonds with a
history of interest rates under 5%.

         The Company will from time to time have a purchase obligation in
foreign currency as a result of capital improvement projects. Currently, the
Company has 1,5 Million Euro of obligations, connected with the steam dryer
project, that is forward contracted to protect the Company against currency
fluctuations.
<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


INDEPENDENT AUDITOR'S REPORT


The Board of Directors
Minn Dak Farmers Cooperative
Wahpeton, North Dakota


We have audited the accompanying consolidated balance sheets of Minn-Dak Farmers
Cooperative (a North Dakota cooperative association) as of August 31, 2002,
2001, and 2000, and the related consolidated statements of operations, change in
members' investments and cash flows for the years then ended. These financial
statements are the responsibility of the cooperative's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Minn-Dak Farmers
Cooperative as of August 31, 2002, 2001, and 2000, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.


Eide Bailly, LLP

Fargo, North Dakota
October 3, 2002


<PAGE>

MINN-DAK FARMERS COOPERATIVE
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 2002, 2001, AND 2000

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                     2002            2001            2000
                                                                 ------------    ------------    ------------
<S>                                                              <C>             <C>             <C>
ASSETS

CURRENT ASSETS
    Cash                                                         $    756,619    $    459,046    $  2,504,566
                                                                 ------------    ------------    ------------
    Current portion of long-term note receivable                        2,551           2,551           2,551
                                                                 ------------    ------------    ------------

    Receivables
       Trade accounts                                              13,069,048      13,868,003      11,115,705
       Growers                                                      4,157,019       3,796,044       3,996,356
       Other                                                           16,575       1,398,926         632,549
                                                                 ------------    ------------    ------------
                                                                   17,242,642      19,062,973      15,744,610
                                                                 ------------    ------------    ------------

    Advances to affiliates - Midwest Agri-Commodities Co.
      and United Sugars Corporation                                   134,940         414,046               -
                                                                 ------------    ------------    ------------

    Inventories
       Refined sugar, pulp and molasses
         to be sold on a pooled basis                              19,071,596      18,648,520      27,737,385
       Nonmember refined sugar                                         56,375           4,199           2,642
       Yeast                                                          125,108         120,575          87,511
       Materials and supplies                                       5,796,190       5,886,136       5,561,471
                                                                 ------------    ------------    ------------
                                                                   25,049,269      24,659,430      33,389,009
                                                                 ------------    ------------    ------------

    Deferred charges                                                1,084,792       1,085,108       1,122,838
                                                                 ------------    ------------    ------------

    Prepaid expenses                                                  351,866         289,866         251,628
                                                                 ------------    ------------    ------------

    Other                                                           1,126,000         527,000         543,000
                                                                 ------------    ------------    ------------

          Total current assets                                     45,748,679      46,500,020      53,558,202
                                                                 ------------    ------------    ------------

PROPERTY, PLANT AND EQUIPMENT
    Land and land improvements                                     21,734,422      21,187,079      20,968,468
    Buildings                                                      36,086,826      35,969,830      35,591,877
    Factory equipment                                             114,062,256     112,347,634     111,922,358
    Other equipment                                                 3,310,981       3,415,648       3,527,618
    Construction in progress                                        2,333,477          25,866          21,980
                                                                 ------------    ------------    ------------
                                                                  177,527,962     172,946,057     172,032,301
       Less accumulated depreciation                               76,510,304      70,058,956      65,281,136
                                                                 ------------    ------------    ------------

                                                                  101,017,658     102,887,101     106,751,165
                                                                 ------------    ------------    ------------
LONG-TERM NOTES RECEIVABLE,
  NET OF CURRENT PORTION                                              238,177          25,508          28,058
                                                                 ------------    ------------    ------------

OTHER ASSETS

    Investment in stock of other corporations, unconsolidated
       marketing subsidiaries and other cooperatives               12,574,385      11,183,783      10,407,956
    Deferred income taxes                                                   -          89,000       1,240,000
    Investment restricted for capital lease projects               11,063,169               -               -
    Other                                                             931,199         654,141         600,919
                                                                 ------------    ------------    ------------
                                                                   24,568,753      11,926,924      12,248,875
                                                                 ------------    ------------    ------------

                                                                 $171,573,267    $161,339,553    $172,586,300
                                                                 ============    ============    ============
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>

<TABLE>
<CAPTION>

                                                                   2002            2001            2000
                                                               ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>
LIABILITIES AND MEMBERS' INVESTMENT

CURRENT LIABILITIES
    Short-term notes payable                                   $ 11,795,000    $ 10,965,000    $ 15,458,800
                                                               ------------    ------------    ------------

    Current portion of long-term debt                             3,600,000       3,610,417       3,012,500
    Current portion of capital lease                                860,000         815,000         775,000
                                                               ------------    ------------    ------------
                                                                  4,460,000       4,425,417       3,787,500
                                                               ------------    ------------    ------------

    Accounts payable

       Trade                                                      4,807,878       1,842,796       2,223,574
       Growers                                                   10,167,008      14,816,615      16,927,545
                                                               ------------    ------------    ------------
                                                                 14,974,886      16,659,411      19,151,119
                                                               ------------    ------------    ------------

    Advances to affiliates - Midwest Agri-Commodities Co.

      and  United Sugars Corporation                                      -               -         201,242
                                                               ------------    ------------    ------------

    Accrued liabilities                                           2,871,298       2,476,011       2,725,105
                                                               ------------    ------------    ------------

          Total current liabilities                              34,101,184      34,525,839      41,323,766

LONG-TERM DEBT, NET OF CURRENT PORTION                           34,300,000      39,100,000      43,910,416

OBLIGATION UNDER CAPITAL LEASE                                   22,820,000       9,680,000      10,495,000

DEFERRED INCOME TAXES                                             1,400,000               -               -

OTHER                                                               551,364         566,744         431,857

COMMITMENTS AND CONTINGENCIES (NOTE 11)                                   -               -               -
                                                               ------------    ------------    ------------

          Total liabilities                                      93,172,548      83,872,583      96,161,039
                                                               ------------    ------------    ------------

MINORITY INTEREST IN EQUITY OF SUBSIDIARY                         1,488,645       1,263,581       1,089,320
                                                               ------------    ------------    ------------

MEMBERS' INVESTMENT
    Preferred stock

       Class A - 100,000 shares authorized, $105 par value;
          72,200 shares issued and outstanding                    7,581,000       7,581,000       7,581,000

       Class B - 100,000 shares authorized $75 par value;
          72,200 shares issued and outstanding                    5,415,000       5,415,000       5,415,000

       Class C - 100,000 shares authorized, $76 par value;
         72,200 shares issued and outstanding                     5,487,200       5,487,200       5,487,200
                                                               ------------    ------------    ------------
                                                                 18,483,200      18,483,200      18,483,200

    Common stock, 600 shares authorized, $250 par value;
       488, 497, and 484, shares issued and outstanding
       in 2002, 2001, and 2000, respectively                        122,000         124,250         121,000
    Paid in capital in excess of par                             32,094,407      32,094,407      32,094,407
    Unit retention capital                                        5,867,806       6,476,360       7,148,159
    Qualified allocated patronage                                 2,910,983       3,415,570       3,816,607
    Nonqualified allocated patronage                             15,857,824      14,466,641      12,894,627
    Retained earnings                                             1,575,854       1,142,961         777,941
                                                               ------------    ------------    ------------
                                                                 76,912,074      76,203,389      75,335,941
                                                               ------------    ------------    ------------

                                                               $171,573,267    $161,339,553    $172,586,300
                                                               ============    ============    ============

</TABLE>
<PAGE>


MINN-DAK FARMERS COOPERATIVE
CONSOLIDATED STATEMENTS OF OPERATIONS
AUGUST 31, 2002, 2001, AND 2000

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                     2002             2001              2000
                                                 -------------    -------------     -------------
<S>                                              <C>              <C>               <C>
REVENUE
     From sales of sugar, sugar co-products,
       and yeast, net of discounts               $ 158,003,073    $ 177,898,591     $ 170,151,248
                                                 -------------    -------------     -------------

EXPENSES
     Production costs of sugar,
       co-products, and yeast sold                  41,621,710       44,492,963        44,866,025
     Sales and distribution costs                   23,925,985       28,099,266        26,610,203
     General and administrative                      5,347,366        5,465,219         5,418,727
     Interest                                        3,741,758        4,920,260         5,198,876
                                                 -------------    -------------     -------------
                                                    74,636,819       82,977,708        82,093,831
                                                 -------------    -------------     -------------

OTHER INCOME (EXPENSE)                                 858,183         (301,011)       (1,453,810)
                                                 -------------    -------------     -------------

NET PROCEEDS RESULTING FROM
   MEMBER AND NON-MEMBER BUSINESS                $  84,224,437    $  94,619,872     $  86,603,607
                                                 =============    =============     =============

DISTRIBUTION OF NET PROCEEDS
     Credited to members' investment
         Components of net income
            Income from
              non-member business                $     432,893    $     365,020     $     316,097
            Patronage income                         3,611,367        4,624,324                 -
                                                 -------------    -------------     -------------

                Net income credited to
                  member's investment                4,044,260        4,989,344           316,097

     Payments to members for sugarbeets,
       net of unit retention capital                73,340,895       82,696,795        86,287,510
     Payments to members for PIK certificates        6,839,282        6,933,733                 -
                                                 -------------    -------------     -------------
            Total payments to members               80,180,177       89,630,528        86,287,510

NET PROCEEDS RESULTING FROM
  MEMBER AND NONMEMBER BUSINESS                  $  84,224,437    $  94,619,872     $  86,603,607
                                                 =============    =============     =============

</TABLE>


See Notes to Consolidated Financial Statements.

<PAGE>

MINN-DAK FARMERS COOPERATIVE

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' INVESTMENT
AUGUST 31, 2002, 2001, AND 2000

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                   Paid in Capital     Unit        Qualified
                                                            Preferred     Common     in Excess of    Retention     Allocated
                                                              Stock         Stock      Par Value      Capital      Patronage
                                                           -----------   -----------   -----------   -----------   -----------
<S>                                                        <C>           <C>           <C>           <C>          <C>
BALANCE, AUGUST 31, 1999                                   $18,483,200   $   118,250   $32,094,407   $ 7,560,034   $ 3,854,558
     Stock
        Sales - common (22 shares)                                             5,500
        Repurchases - common (11 shares)                                      (2,750)
     Revolvement of unit retention capital                                                              (411,875)
     Revolvment of prior years' allocated patronage                                                                    (37,951)
     Net income for the year ended August 31, 2000
                                                           -----------   -----------   -----------   -----------   -----------

BALANCE, AUGUST 31, 2000                                    18,483,200       121,000    32,094,407     7,148,159     3,816,607
     Stock
        Sales - common (26 shares)                                             6,500
        Repurchases - common (13 shares)                                      (3,250)
     Revolvement of unit retention capital                                                              (671,799)
     Revolvment of prior years' allocated patronage                                                                   (401,037)
     Net income for the year ended August 31, 2001
                                                           -----------   -----------   -----------   -----------   -----------

BALANCE, AUGUST 31, 2001                                    18,483,200       124,250    32,094,407     6,476,360     3,415,570
     Stock
        Sales - common (7 shares)                                              1,750
        Repurchases - common (16 shares)                                      (4,000)
     Revolvement of unit retention capital                                                              (608,554)
     Revolvment of prior years' allocated patronage                                                                   (504,587)
     Net income for the year ended August 31, 2002
                                                           -----------   -----------   -----------   -----------   -----------

BALANCE, AUGUST 31, 2002                                   $18,483,200   $   122,000   $32,094,407   $ 5,867,806   $ 2,910,983
                                                           ===========   ===========   ===========   ===========   ===========
</TABLE>


[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
                                                          Non-Qualified    Retained
                                                            Allocated      Earnings
                                                            Patronage     (Deficit)       Total
                                                           -----------   -----------   -----------

<S>                                                        <C>           <C>           <C>
BALANCE, AUGUST 31, 1999                                   $16,822,063   $   461,844   $79,394,356
     Stock
        Sales - common (22 shares)                                                           5,500
        Repurchases - common (11 shares)                                                    (2,750)
     Revolvement of unit retention capital                                                (411,875)
     Revolvment of prior years' allocated patronage         (3,927,436)                 (3,965,387)
     Net income for the year ended August 31, 2000                           316,097       316,097
                                                           -----------   -----------   -----------

BALANCE, AUGUST 31, 2000                                    12,894,627       777,941    75,335,941
     Stock
        Sales - common (26 shares)                                                           6,500
        Repurchases - common (13 shares)                                                    (3,250)
     Revolvement of unit retention capital                                                (671,799)
     Revolvment of prior years' allocated patronage         (3,052,310)                 (3,453,347)
     Net income for the year ended August 31, 2001           4,624,324       365,020     4,989,344
                                                           -----------   -----------   -----------

BALANCE, AUGUST 31, 2001                                    14,466,641     1,142,961    76,203,389
     Stock
        Sales - common (7 shares)                                                            1,750
        Repurchases - common (16 shares)                                                    (4,000)
     Revolvement of unit retention capital                                                (608,554)
     Revolvment of prior years' allocated patronage         (2,220,184)                 (2,724,771)
     Net income for the year ended August 31, 2002           3,611,367       432,893     4,044,260
                                                           -----------   -----------   -----------

BALANCE, AUGUST 31, 2002                                   $15,857,824   $ 1,575,854   $76,912,074
                                                           ===========   ===========   ===========

</TABLE>
<PAGE>


MINN-DAK FARMERS COOPERATIVE
CONSOLIDATED STATEMENTS OF CASH FLOWS
AUGUST 31, 2002, 2001, AND 2000

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                             2002             2001             2000
                                                                        ------------     ------------     ------------
OPERATING ACTIVITIES
<S>                                                                     <C>              <C>              <C>
     Income allocated to members' investment                            $  4,044,260     $  4,989,344     $    316,097
     Add (deduct) noncash items
        Depreciation and amortization                                      6,903,856        6,806,781        6,731,225
        Equipment disposals - loss                                            35,125          321,305          528,422
        Net income allocated from
          unconsolidated marketing subsidiaries                             (259,722)        (165,514)        (142,870)
        Noncash portion of patronage capital credits                      (1,304,070)        (779,627)        (273,292)
        Deferred income taxes                                                890,000        1,151,000          709,000
        Increase in cash surrender of officer life insurance                  68,181          (42,646)          (7,730)
        Stock cancellation - St. Paul Bank for Cooperatives                        -                -           51,138
     Changes in operating assets and liabilities:

        Accounts receivable and advances                                   2,099,437       (3,933,651)       7,441,649
        Inventory and prepaid expenses                                      (451,840)         126,579      (10,410,959)
        Deferred charges and other                                               316           53,730           84,453
        Other assets                                                               -                -           44,550
        Accounts payable, accrued liabilities, and other liabilities      (1,304,617)      (2,645,050)       8,031,619
                                                                        ------------     ------------     ------------

NET CASH FROM OPERATING ACTIVITIES                                        10,720,926        5,882,251       13,103,302
                                                                        ------------     ------------     ------------

INVESTING ACTIVITIES
     Investments restricted for capital lease projects                   (11,063,169)               -                -
     Proceeds from disposition of
       property, plant and equipment                                           3,638                -           59,391
     Capital expenditures                                                 (4,812,657)      (3,100,142)      (4,709,902)
     Investment in stock of other corporations, unconsolidated
        marketing subsidiaries and other cooperatives                         67,000                -                -
     Capital adjustment of marketing subsidiary                                    -           68,078                -
     Issuance of note receivable                                            (260,520)               -          (30,609)
     Proceeds on note receivable                                              47,851            2,550        3,227,037
     Net proceeds from patronage
       refunds and equity revolvements                                       106,189          101,236              133
     Minority interest in equity of subsidiaries                             225,063          174,261          142,396
                                                                        ------------     ------------     ------------

NET CASH USED FOR INVESTING ACTIVITIES                                   (15,686,605)      (2,754,017)      (1,311,554)
                                                                        ------------     ------------     ------------

FINANCING ACTIVITIES
     Sale and repurchase of common stock, net                                 (2,250)           3,250            2,750
     Net proceeds from issuance of short-term debt                           830,000        4,070,962       (2,321,200)
     Proceeds from issuance of long-term debt                                      -                -        1,750,000
     Proceeds from bond issuance                                          14,000,000                -                -
     Payment of financing fees                                              (605,756)        (135,321)        (145,314)
     Payment of long-term debt                                            (5,625,417)      (4,987,499)      (4,742,501)
     Retention of nonqualified unit retains                                        -                -                -
     Payment of unit retains and allocated patronage                      (3,333,325)      (4,125,146)      (4,377,262)
                                                                        ------------     ------------     ------------

NET CASH FROM FINANCING ACTIVITIES                                         5,263,252       (5,173,754)      (9,833,527)
                                                                        ------------     ------------     ------------

NET CHANGE IN CASH                                                           297,573       (2,045,520)       1,958,221

CASH, BEGINNING OF YEAR                                                      459,046        2,504,566          546,345
                                                                        ------------     ------------     ------------

CASH, END OF YEAR                                                       $    756,619     $    459,046     $  2,504,566
                                                                        ============     ============     ============


                                                                             2002             2001             2000
                                                                        ------------     ------------     ------------

SUPPLEMENTAL DISCLOSURES
  OF CASH FLOW INFORMATION
     Cash payments for

        Interest                                                        $  3,748,816     $  4,959,743     $  4,583,074
                                                                        ============     ============     ============

SUPPLEMENTAL DISCLOSURES
  OF NON CASH FLOW INFORMATION
     Reduction of short-term notes payable through
     the forfeiture of sugar inventory                                                   $  8,564,762
                                                                                         ============
</TABLE>

See Notes to Consolidated Financial Statements.




<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

PRINCIPAL BUSINESS ACTIVITY

Minn-Dak Farmers Cooperative (Minn-Dak) is a North Dakota cooperative
association owned by its member-growers for the purpose of processing sugar
beets and marketing sugar and co-products. Minn-Dak Yeast Company, Inc.
(Minn-Dak Yeast) is a North Dakota corporation engaged primarily in the
production and marketing of bakers yeast.

The majority of the net proceeds from Minn-Dak are from member business, whereas
Minn-Dak Yeast is considered non-member business.

PRINCIPLES OF CONSOLIDATION

The financial statements include the accounts of Minn-Dak and its subsidiary,
Minn-Dak Yeast, which is 80% owned by the cooperative.

CREDIT RISK

The cooperative and subsidiary grant credit to food processors located
throughout the United States. In addition, the cooperative grants credit to
members for sugar beet seed, located in North Dakota and Minnesota.

INVENTORIES

Inventories of refined 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 that approximates cost.

In valuing inventories at net realizable value, the cooperative, in effect sells
the remaining inventory to the subsequent years sugar and co-product pool.

DEFERRED CHARGES

Agricultural development and labor procurement costs incurred in connection with
the beet crop to be harvested in September and October are deferred and
subsequently charged to expense during the ensuing processing period.

PROPERTY, PLANT, EQUIPMENT AND DEPRECIATION

Property, plant and equipment are stated at cost. Additions, renewals and
betterments are capitalized, whereas expenditures for maintenance and repairs
are charged to expense. The cost and related accumulated depreciation of assets
retired or sold are removed from the appropriate asset and depreciation accounts
and the resulting gain or loss is reflected in income.



<PAGE>



It is the policy of the cooperative to provide depreciation based on methods
designed to amortize the cost of the properties over their estimated useful
lives. Property, plant and equipment are depreciated for financial reporting
purposes, principally using declining balance methods, with estimated useful
lives ranging from 8 to 40 years. Statutory lives and methods are used for
income tax reporting purposes.

Indirect costs capitalized were $106,781, $63,827, and $124,490 for the years
ended August 31, 2002, 2001, and 2000. There was construction-period interest
capitalized of approximately $9,200 for the year ended August 31, 2002. There
were no construction period-interest capitalized for the years ended August 31,
2001 and 2000.

EQUITY VALUE INVESTMENTS

The investments in United Sugars Corporation, Midwest Agri-Commodities Company
and ProGold Limited Liability Company are accounted for using the equity method,
wherein the investment is recorded at the amount of the underlying equity in the
net assets of the investments and adjusted to recognize the cooperative's share
of the undistributed earnings or losses.

INVESTMENTS IN OTHER COOPERATIVES

The investments in stocks and capital credits of other cooperatives are stated
at cost, plus the cooperative's share of allocated patronage and capital
credits.

INCOME TAXES

A consolidated federal income tax return is filed for the cooperative and its
subsidiary. Deferred income taxes are provided for in the timing of certain
temporary deductions/increases for financial and income tax reporting purposes.
Significant temporary differences are as follows:

     1.  When non-qualified unit retention capital and allocated patronage are
         elected by the board of directors, the cooperative is not allowed an
         income tax deduction until they are distributed in cash to the
         member-producers, whereas qualified unit retention capital and
         allocated patronage are deducted when declared.

     2.  Depreciation - For financial reporting purposes, the companies use
         straight-line and accelerated methods of depreciation with lives of 8
         to 40 years, while, for income tax purposes, the companies use required
         statutory depreciable lives and methods.

     3.  Non-qualified patronage credits from investments in other cooperatives
         - For financial statement purposes, the companies recognize income when
         the patronage credit notification is received while, for income tax
         purposes, the companies recognize income when the patronage is received
         in cash.

     4.  Inventory capitalization - For income tax reporting purposes, certain
         overhead costs are included as a part of inventory costs in accordance
         with inventory capitalization rules. These costs are charged to expense
         as incurred for financial reporting purposes.

     5.  Recognition of vacation pay - For financial reporting purposes,
         vacation pay is charged to expense as accrued, whereas, for income tax
         purposes, vacation pay is deducted when paid.



<PAGE>


ACCOUNTING ESTIMATE

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

UNINSURED CASH BALANCE

The Company maintains cash balances at various financial institutions throughout
the United States. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000. At times during the year, the
company's balances exceeded this limit.

RECLASSIFICATIONS

Certain amounts have been reclassified in the 2001 and 2000 financial statements
to conform to the 2002 presentation. The reclassifications have no effect on the
results of operations.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued Statement No. 143 regarding
Accounting for Asset Retirement Obligations and Statement No. 144 regarding
Accounting for the Impairment or Disposal of Long-Lived Assets. Management does
not expect the implementation of these pronouncements to have a significant
effect on the financial statements.

In December 2001, the American Institute of Certified Public Accountants issued
Statement of Position 01-6. This statement of position addresses policies
relating to trade accounts and loans receivable. The Company plans to carry all
trade accounts and loan receivables until maturity. The statement is not
expected to have a material impact on the financial statements.


NOTE 2 - NOTES RECEIVABLE

On February 11, 2002, the cooperative issued a note receivable in the amount of
$260,521, with an interest rate of 9%, to Midwest Agri-Commodities Company. The
proceeds of the loan are to be used to make a loan to Michigan Sugar Beet
Growers, Inc. pursuant to the Transaction agreement dated August 21, 2001. The
note is secured by the assets of Michigan Sugar Beet Growers, Inc. The notes
will be received in annual installments through December 1, 2004. The December
1, 2002 amount was received during the year ended 2002; therefore there is not a
current portion at August 31, 2002. The amount receivable at August 31, 2002 is
$215,220.

The cooperative's notes receivable from United Sugars member processors total
$25,508, $28,058, and $30,609 as of August 31, 2002, 2001, and 2000,
respectively. The notes receivable are unsecured, with a variable interest rate,
currently 6.5%. The notes will be received in equal annual installments through
August 31, 2012. The notes are subordinated to CoBank in 2002, 2001, and 2000.
The current portion of the notes is $2,551 as of August 31, 2002, 2001, and
2000.

During 2000, the cooperative sold certain notes receivable with recourse. The
cooperative's contingent liability related to these notes totaled $2,292,005,
$2,603,682, and $2,915,360 as of August 31, 2002, 2001, and 2000, respectively.

<PAGE>

NOTE 3 - INVESTMENTS

The investment in stock of other corporations, unconsolidated marketing
subsidiaries and other cooperatives consists of the following:

                                      2002           2001           2000
                                  -----------    -----------    -----------

     United Sugars Corporation    $   820,813    $   871,944    $   985,876
     Midwest Agri-Commodities          67,675         51,823         47,576
     ProGold, LLC                   4,137,381      3,842,378      3,635,255
     CoBank                         3,591,637      3,215,036      2,851,355
     Dakota Valley Electric         3,891,994      3,071,726      2,758,642
     Other                             64,885        130,876        129,252
                                  -----------    -----------    -----------

                                  $12,574,385    $11,183,783    $10,407,956
                                  ===========    ===========    ===========

NOTE 4 - SHORT-TERM DEBT

Information regarding short-term debt for the years ended August 31, is as
follows:

                                        2002           2001           2000
                                     -----------    -----------    -----------

     Seasonal loan with CoBank,
       due June 31, 2003, interest
       variable, currently at 3.02%  $11,795,000    $10,965,000    $ 4,980,000

     CCC notes                                --             --     10,478,800
                                     -----------    -----------    -----------
                                     $11,795,000    $10,965,000    $15,458,800
                                     ===========    ===========    ===========

The cooperative has a $44,000,000 seasonal line of credit with CoBank. The line
is secured with a first lien on substantially all property and equipment and
current assets of Minn-Dak.

Maximum borrowings, average borrowing levels and average interest rates for
short-term debt for the years ended August 31, is as follows:

                                    2002            2001            2000
                                 -----------     -----------     -----------

     Maximum borrowings          $45,350,000     $45,000,000     $42,030,000
                                 ===========     ===========     ===========

     Average borrowing levels    $23,559,231     $22,452,092     $23,484,062
                                 ===========     ===========     ===========

     Average interest rates             2.97%           6.38%           6.84%
                                 ===========     ===========     ===========



<PAGE>


NOTE 5 - LONG-TERM DEBT

Information regarding long-term debt at August 31, is as follows:

<TABLE>
<CAPTION>
                                                         2002             2001             2000
                                                    ------------     ------------     ------------
<S>                                                 <C>              <C>              <C>
     Term loan with CoBank, due in varying
       principal repayments through
       November 20, 2010, interest variable,
       currently at 3.07%, with a first lien on
       substantially all property and equipment
       and current assets of Minn-Dak located in
       Wahpeton, North Dakota                       $ 37,900,000     $ 42,700,000     $ 46,900,000

     Long-term interest free note with
       Dakota Valley Electric Cooperative                     --           10,417           22,916
                                                    ------------     ------------     ------------
                                                      37,900,000       42,710,417       46,922,916
     Less current maturities                          (3,600,000)      (3,610,417)      (3,012,500)
                                                    ------------     ------------     ------------

                                                    $ 34,300,000     $ 39,100,000     $ 43,910,416
                                                    ============     ============     ============
</TABLE>


Minn-Dak has complied with the terms of its loan agreement for the years ended
August 31, 2002, 2001, and 2000.

In addition, Minn-Dak can make special advance payments on its term loans with
CoBank after its seasonal loans have been paid in full, with the understanding
that the special advance payments will be readvanced subject to the
reinstatement provisions, prior to the granting of any new seasonal loans. Any
such advance payments are subject to a commitment fee of .25% of the daily
unadvanced commitment.

Interest expense totaled $3,741,759, $4,959,743, and $5,198,896 for 2002, 2001
and 2000, respectively.

Principal amounts due on all the cooperative's long-term debt are as follows:

Years ending August 31,
-----------------------
2003                                                        $   3,600,000
2004                                                            4,800,000
2005                                                            4,800,000
2006                                                            4,800,000
2007                                                            4,800,000
Thereafter                                                     15,100,000
                                                            -------------
                                                            $  37,900,000
                                                            =============


<PAGE>


NOTE 6 - OBLIGATIONS UNDER CAPITAL LEASE

The cooperative has a capital lease with Richland County, North Dakota for
equipment relating to solid waste disposal. The county has financed the leased
assets with a bond issue and accordingly has structured the cooperative's lease
payments to correspond with the bond issue's interest and principal
requirements. Details relative to the cooperatives obligations under the lease
agreement are as follows:

<TABLE>
<CAPTION>
                                               2002
                           -------------------------------------------------
                                           FINAL       CURRENT                       2001            2000
         Payee             INTEREST       MATURITY     PORTION         TOTAL         Total           Total
         -----             --------       --------   -----------    -----------    -----------    -----------

<S>                          <C>             <C>     <C>            <C>            <C>            <C>
     Richland County,
       North Dakota          1.65%           1/11    $ 1,010,260    $10,428,880    $11,795,451    $14,510,078

     Richland County,
       North Dakota          1.55%           1/19        217,000     16,412,911             --             --

         Less amount representing interest               367,260      3,161,791      1,300,451      3,240,078
                                                     -----------    -----------    -----------    -----------

                                                     $   860,000    $23,680,000    $10,495,000    $11,270,000
                                                     ===========    ===========    ===========    ===========
</TABLE>

Minimum future principal payments required on the obligations under capital
lease are as follows:

Years ending August 31,
-----------------------
         2003                                                   $    860,000
         2004                                                        905,000
         2005                                                        960,000
         2006                                                      1,725,000
         2007                                                      1,815,000
         Thereafter                                               17,415,000
                                                                ------------
                                                                $ 23,680,000
                                                                ============

The Company has letter of credit arrangements with a bank that provide for
short-term secured borrowings totaling approximately $25,000,000 at August 31,
2002. There were no outstanding advances under these letter of credit
arrangements at August 31, 2002.
<PAGE>


NOTE 7 - MEMBERS' INVESTMENT AND GROWER PAYMENTS

The ownership of non-dividend bearing common stock is restricted to a
"member-producer," as defined in the bylaws of Minn-Dak. Each member-producer
shall own only one share of common stock and is entitled to one vote at any
meeting of the members. Each member-producer is required to purchase one unit of
preferred stock for each 1.35 planted acres of sugar beet crops grown under a
grower's contract with Minn-Dak. A unit consists of one share each of Class A,
Class B and Class C preferred stock. The preferred shares are nonvoting and
non-dividend bearing. The board of directors must approve all transfers and
sales of stock.

Minn-Dak's net income, determined in accordance with generally accepted
accounting principles consistently applied, shall be distributed annually on the
basis of delivered pounds of sugar, in cash or in the form of credits to each
member-producer's patronage credit account as established on the books of the
cooperative. In the event of a loss in any one year, the cooperative shall act
in such a manner as to first recoup the loss from those patrons who were patrons
in the year in which the loss occurred.

Under the terms of Minn-Dak's beet growing contracts with each of its
member-producers, Minn-Dak is obligated to pay the member-producers for beets
delivered at a price per pound of extractable sugar. However, if, in the opinion
of CoBank, the working capital position of the cooperative is insufficient,
Minn-Dak shall retain from the price to be paid per pound of extractable sugar
such amounts as are deemed by the bank to be necessary for operations, the
deductions to be made at such time as the bank shall require. The amount so
retained shall be evidenced in the records of Minn-Dak by equity credits in
favor of the growers. The board of directors has the power to determine whether
such retains shall be "qualified" or "nonqualified" for income tax purposes.

For the year ended August 31, 2002, Minn-Dak allocated patronage of $3,611,367
to the members. For the year ended August 31, 2001, Minn-Dak allocated patronage
of $4,624,324 to the members. For the year ended August 31, 2000, Minn-Dak did
not allocate patronage to the members.

During the year ended August 31, 2002, Minn-Dak revolved 45% of the unit retains
and allocated patronage for the fiscal year ended August 31, 1993, totaling
$3,333,326.

During the year ended August 31, 2001, Minn-Dak revolved the remaining 30% of
the unit retains and allocated patronage for the fiscal year ended August 31,
1992 and 35% of the unit retains and allocated patronage for the fiscal year
ended August 31, 1993, totaling $1,475,742 and $2,647,922, in each respective
year, for a total of $4,123,664. In addition, unit retains and allocated
patronage owned by certain estates was redeemed at a discount. The discount
represented the difference between the book value of these items, totaling
$1,482, and the present value of the estimated future redemptions.

During the year ended August 31, 2000, Minn-Dak revolved the remaining 15% of
the unit retains and allocated patronage for the fiscal year ended August 31,
1991 and 70% of the unit retains and allocated patronage for the fiscal year
ended August 31, 1992, totaling $1,148,214 and $3,229,049, in each respective
year, for a total of $4,377,263.
<PAGE>


NOTE 8 - INCOME TAXES

Minn-Dak Farmers Cooperative is a nonexempt cooperative as described under
Section 1381(a)(2) of the Internal Revenue Code of 1986. Accordingly, net
margins from business done with member patrons, which are allocated and paid as
prescribed in Section 1382 of the Code, will be taxable to the members and not
to the cooperative. To the extent that net margins are not allocated and paid as
stated above or arise from business done with non-members, the cooperative shall
have taxable income subject to corporate income tax rates.

The significant components of deferred tax assets and liabilities included on
the balance sheet at August 31, is as follows:


<TABLE>
<CAPTION>

                                               2002             2001             2000
                                           ------------     ------------     ------------
<S>                                        <C>              <C>              <C>
 Deferred tax assets
   Non-qualified unit retains and
     allocated partonage due to members    $  8,690,000     $  8,377,000     $  8,017,000
   Net operating loss carryforwards           4,092,000        4,247,000        4,379,000
   Other                                      1,240,000        1,137,000        1,560,000
                                           ------------     ------------     ------------

     Gross deferred tax assets               14,022,000       13,761,000       13,956,000
       Less valuation allowance                (510,000)        (664,000)        (799,000)
                                           ------------     ------------     ------------

         Total deferred tax assets           13,512,000       13,097,000       13,157,000
                                           ------------     ------------     ------------

   Deferred tax liabilities
     Depreciation                            11,174,000       10,161,000        9,351,000
     Other                                    2,812,000        2,520,000        2,223,000
                                           ------------     ------------     ------------

         Total deferred tax liabilities      13,986,000       12,681,000       11,574,000
                                           ------------     ------------     ------------

                                           $   (474,000)    $    416,000     $  1,583,000
                                           ============     ============     ============

   Classified as follows
     Current asset                         $    926,000     $    327,000     $    343,000
     Long-term asset (liability)             (1,400,000)          89,000        1,240,000
                                           ------------     ------------     ------------

       Net deferred tax asset              $   (474,000)    $    416,000     $  1,583,000
                                           ============     ============     ============
</TABLE>

A provision for income taxes related to non-member income from
Minn-Dak Yeast Company, totaling $705,000, $659,000, and $560,000, for the year
ended August 31, 2002, 2001, and 2000, respectively, is included in other
expense.

The deferred tax asset valuation allowance reduces the estimated amount of the
net operating loss carry forwards that will be ultimately realized.



<PAGE>


NOTE 9 - EMPLOYEE BENEFIT PLANS

401(k) PLAN

The cooperative has a qualified 401(k) employee benefit plan that covers all
employees meeting eligibility requirements. The cooperative's contribution to
the plan is at a level of 75 percent of employee contributions, up to 4 percent
of compensation. Contributions to the plan totaled $299,234, $297,914, and
$310,258 for the years ended August 31, 2002, 2001, and 2000, respectively.

PENSION PLAN

The cooperative has a non-contributory defined benefit plan that covers
substantially all employees who meet certain requirements of age, length of
service and hours worked per year.

The following table sets forth the plan's funded status at August 31:

<TABLE>
<CAPTION>
                                                             2002             2001             2000
                                                         ------------     ------------     ------------
<S>                                                      <C>              <C>              <C>
     CHANGE IN BENEFIT OBLIGATION
       Benefit obligation at beginning of year           $ 13,969,412     $ 12,447,749     $ 11,857,238
         Service cost                                         597,884          628,658          577,611
         Interest cost                                      1,041,385          942,881          838,130
         Experience (gain)/loss
           due to participant changes                          94,367          256,902         (564,471)
         Benefits paid                                       (415,375)        (306,778)        (260,759)
                                                         ------------     ------------     ------------

       Benefit obligation at end of year                   15,287,673       13,969,412       12,447,749
                                                         ------------     ------------     ------------

     CHANGE IN PLAN ASSETS
       Fair value of plan assets at beginning of year      11,246,080       10,963,942        9,553,497
         Actual return on plan assets                        (330,029)          81,933          881,175
         Employer contribution                                793,370          506,983          790,029
         Benefits paid                                       (415,375)        (306,778)        (260,759)
                                                         ------------     ------------     ------------

       Fair value of plan assets at end of year            11,294,046       11,246,080       10,963,942
                                                         ------------     ------------     ------------

       Funded status                                       (3,993,627)      (2,723,332)      (1,483,807)
         Unrecognized net actuarial loss                    2,739,419        1,434,769          805,973
         Unrecognized prior service cost                      621,358          693,263          355,070
         Unrecognized transition asset                        (26,683)         (44,949)         (63,215)
                                                         ------------     ------------     ------------

       Accrued benefit cost                              $   (659,533)    $   (640,249)    $   (385,979)
                                                         ============     ============     ============

</TABLE>
<PAGE>


                                                      2002      2001      2000
                                                     ------    ------    ------

     WEIGHTED-AVERAGE ASSUMPTIONS AS OF AUGUST 31
       Discount rate                                   7.5%      7.5%      7.5%
       Expected return on plan assets                  8.0%      8.0%      8.0%
       Rate of compensation increase                   5.0%      5.0%      5.0%

The net periodic pension cost for the years ended August 31, includes the
following components:

<TABLE>
<CAPTION>
                                                   2002            2001            2000
                                                -----------     -----------     -----------
<S>                                             <C>             <C>             <C>
     COMPONENTS ON NET PERIODIC BENEFIT COST
       Service cost                             $   597,884     $   628,658     $   577,611
       Interest cost                              1,041,385         942,881         838,130
       Expected return on plan assets              (904,338)       (878,925)       (777,007)
       Amortization of prior service cost            95,989          86,905          54,873
       Amortization of transition amount            (18,266)        (18,266)        (18,266)
                                                -----------     -----------     -----------

         Net periodic benefit cost              $   812,654     $   761,253     $   675,341
                                                ===========     ===========     ===========
</TABLE>

NOTE 10 - ENVIRONMENTAL MATTERS

Minn-Dak is subject to extensive federal and state environmental laws and
regulations with respect to water and air quality, solid waste disposal and odor
and noise control. Minn-Dak conducts an ongoing and expanding control program
designed to meet these environmental laws and regulations. While Minn-Dak will
continue to have ongoing environmental compliance issues, currently there are no
pending regulatory enforcement actions and Minn-Dak believes that it is in
substantial compliance with applicable environmental laws and regulations.

Minn-Dak cannot predict whether future changes in environmental laws or
regulations might increase the cost of operating its facilities and conducting
its business. Any such changes could have financial consequences for Minn-Dak
and its members.


NOTE 11 - COMMITMENTS AND CONTINGENCIES

Minn-Dak may be subject to various lawsuits and claims which arising in the
ordinary course of its business. While the results of such litigation and claims
cannot be predicted with certainty, management believes the disposition of all
such proceedings, individually or in aggregate, should not have a material
adverse effect on the company's financial position, results of operations or
cash flows. Management is not aware of any such lawsuits or claims as of August
31, 2002.
<PAGE>


NOTE 12 - INVESTMENT IN MARKETING COOPERATIVES

Minn-Dak has formed common marketing agency agreements with United Sugars
Corporation (United Sugars) and Midwest Agri-Commodities (Midwest) to be the
exclusive marketing agents for all products produced by them and other member
processors.

Minn-Dak's ownership requirement in United Sugars is calculated periodically and
is based on the average volume of sugar produced during the five previous fiscal
years. The investment is accounted for on the equity method and the amount of
sales and related costs recognized by each member processor is allocated based
on their pro-rata share of production for the year. Minn-Dak provided United
Sugars with cash advances on an ongoing basis for operating and marketing
expenses incurred. During the years ended August 31, 2002, 2001, and 2000,
Minn-Dak had advanced $19,454,420, $22,204,411, and $21,501,838, respectively.
Minn-Dak had outstanding advances due from United Sugars of $190,306, $128,764,
and $249,117, for the years ended August 31, 2002, 2001, and 2000, respectively.
During 2001, a distribution of capital of $68,078 was received.

Minn-Dak has a one-third ownership interest in Midwest. The amount of the
investment is accounted for using the equity method. All beet pulp and a portion
of the molasses produced are sold by Midwest as an agent for Minn-Dak. The
amount of sales and related costs to be recognized by each owner is allocated
based on their pro-rata share of production for the year. The owners provide
Midwest with cash advances on an ongoing basis for operating and marketing
expenses incurred by Midwest. Minn-Dak advanced Midwest $1,281,325, $1,974,466,
and $1,611,326, respectively, during the years ended August 31, 2002, 2001, and
2000. Minn-Dak had outstanding advances due from (to) Midwest of $(55,366),
$285,282, and $(450,359), as of August 31, 2002, 2001, and 2000, respectively.
The owners are guarantors of the short-term line of credit Midwest has with
CoBank.


NOTE 13 - OPERATING LEASES

The cooperative is a party to various operating leases for vehicles and
equipment. Future minimum payments for the years ending August 31, under these
obligations, are approximately as follows:

Years ending August 31,
 -----------------------
     2003                                                          $863,000
     2004                                                           574,000
     2005                                                           196,000
     2006                                                           194,000
     2007                                                            77,000
     Thereafter                                                     415,000

Operating lease and contract expenses for the years ended August 31, 2002, 2001,
and 2000, totaled approximately $1,171,000, $1,105,000, and $1,206,000,
respectively.



<PAGE>



NOTE 14 - STOCK TRANSFER RESTRICTION

The cooperative has entered into an agreement with Minn-Dak Yeast's minority
shareholder, whereby neither party shall sell, option or transfer its interest
in Minn-Dak Yeast to any person, firm or corporation (third party) without first
offering, in writing, the other party the right to acquire such interest on the
same terms. If the offeree does not accept the offer within 30 days, the offeror
may sell, option or transfer its interest to the third party within 120 days
after expiration of the 30-day period.


NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

The following methods and assumptions were used by the company to estimate fair
value of the financial instruments, and the estimated fair values of the
company's financial instruments as of August 31, 2002, 2001, and 2000, are as
follows:

     INVESTMENTS - The investments in CoBank, Dakota Valley Electric
     Cooperative, Inc. and all other cooperatives are stated at cost, plus the
     cooperative's share of allocated patronage and capital credits. The
     investments in United Sugars Corporation, Midwest Agri-Commodities and
     ProGold Limited Liability Company are accounted for using the equity
     method, wherein the investments are recorded at the amount of the
     underlying equity in the net assets of the investments and adjusted to
     recognize the cooperative's share of the undistributed earnings or losses.
     Minn-Dak Farmers Cooperative believes it is not practicable to estimate the
     fair value without incurring excessive costs because there is no
     established market for this stock and it is inappropriate to estimate
     future cash flows that are largely dependent on future patronage earnings
     of the investment.

     LONG-TERM DEBT - The fair value of obligations under long-term debt are
     estimated based on the quoted market prices for the same or similar issues
     or on the current rates offered for debt of similar maturities.

     OBLIGATIONS UNDER CAPITAL LEASE - The fair value of obligations under
     capital lease was based on present value models using current financing
     rates available to the cooperative. At August 31, 2002, the carrying value
     of obligations under capital leases was $23,680,000 and the estimated fair
     value was $23,300,000. At August 31, 2001, the carrying value of
     obligations under capital leases was $10,495,000 and the estimated fair
     value was $8,200,000. At August 31, 2000, the carrying value of obligations
     under capital leases was $11,270,000 and the estimated fair value was
     $9,200,000.



<PAGE>


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

         None

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

IDENTIFICATION OF DIRECTORS

         The table below lists the current directors of Minn-Dak Farmers
Cooperative. The Board of Directors consists of one director from each district.
Directors must be common shareholders or representatives of common shareholders
belonging to the district they represent and are elected by the members of that
district. In the case of a common shareholder who is other than a natural
person, a duly appointed or elected representative of such common shareholder
may serve as a director. The directors have been elected to serve three-year
terms expiring in December of the years indicated in the table below. One
director is elected each year from three selected districts. Brief biographies
for each of the directors and directors-elected are included after the table.

<TABLE>
<CAPTION>
                                                                                                  Term Expires
Name and Address                              Age    District                 Director Since      in December
----------------                              ---    --------                 --------------      -----------
<S>                                           <C>    <C>                      <C>                 <C>
Douglas Etten                                 51     District #8 - Lyngaas    1997                2003
     3138 370th ST
     Foxhome, MN  56543

Michael Hasbargen                             57     District #4 - Factory    1993                2002(1)
     2553 360th ST                                   East
     Breckenridge, MN  56520

Victor Krabbenhoft                            53     District #9 - Peet       1989                2004
     416 44th AV S
     Moorhead, MN 56560

Jack Lacey                                    60     District #5 - Hawes      1993                2002(2)
     32936 320th AV
     Wendell, MN  56590-9750

Russell Mauch                                 47     District #2 - Factory    1998                2004
     16305 Hwy 13                                    West
     Barney, ND 58008

Jerry Meyer                                   64     District #1 - Tyler      1994                2003
     1433 15th Street North
     Wahpeton, ND  58075

Edward Moen                                   76     District #3 - Gorder     1989                2004
     17060 County Road 8
     Colfax, ND 58018
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                  Term Expires
Name and Address                              Age    District                 Director Since      in December
----------------                              ---    --------                 --------------      -----------
<S>                                           <C>    <C>                      <C>                 <C>
Charles Steiner                               52     District #6 - Yaggie     2000                2003
     2851 310th AV
     Foxhome, MN  56543-9312

Paul Summer                                   60     District #7 - Lehman     1993                2002(3)
     1509 Lakeside Drive
     Alexandria, MN 56308

</TABLE>

1) Mr. Hasbargen's term as a director of the Company from District #4-Factory
   East expires on December 10, 2002.

2) Mr. Lacey's term as a director of the Company from District #5-Hawes expires
   on December 10, 2002.

3) Mr. Summer's term as director of the Company from District #7-Lehman expires
   on December 10, 2002.


         DOUGLAS ETTEN has been a director since 1997. Mr. Etten has been
farming near Foxhome, MN since graduating from Concordia College in Business and
Math in 1974. Etten also serves on the board of directors for United Sugars
Corporation.

         MICHAEL HASBARGEN has been a director since 1992 and is currently
serving as board vice chairman. Mr. Hasbargen has been farming near
Breckenridge, MN since graduating from NDSU in Ag Economics in 1967. Mr.
Hasbargen also serves on the board of directors of United Sugars Corporation and
it one of Minn-Dak's representatives to the American Sugarbeet Growers
Association in Washington, DC. Mr. Hasbargen is the brother-in-law of Mr. Steven
Caspers, Executive Vice President & Chief Financial Officer.

         VICTOR KRABBENHOFT has been a director since 1989, currently serves as
board chairman, and is a former vice chairman. Mr. Krabbenhoft has been farming
near Glyndon, MN since 1971. He also serves on the board of directors for
Midwest Agri-Commodities Company, United Sugars Corporation, and Minn-Dak Yeast
Company; and is one of Minn-Dak's representatives to the American Sugarbeet
Growers Association in Washington, DC.

         JACK LACEY has been a director since 1993. Mr. Lacey has been farming
with his wife, Sharon, near Wendell, MN since 1963. He serves as one of
Minn-Dak's representatives to the American Sugarbeet Growers Association in
Washington, DC.

         RUSSELL MAUCH has been a director since 1998. Mr. Mauch graduated from
North Dakota State University in 1977 with a B.S. in agriculture. From 1979 to
1981 Mr. Mauch was a commercial and agriculture loan officer for First Bank
Corporation in Valley City, ND. Mr. Mauch has been farming near Barney, ND since
1981. Mr. Mauch


<PAGE>

also serves on the board of directors for Minn-Dak Yeast Company and on the
board of directors for Midwest Agri-Commodities Company.

         JERRY MEYER has been a director since 1994 and is currently serving as
board treasurer. Mr. Meyer has been farming near Fairmount, ND since 1958. He
also serves on the board of directors for Minn-Dak Yeast Company.

         ED MOEN has been a director since 1989. Mr. Moen has been farming near
Galchutt, ND since 1945.

         CHARLES STEINER has been a director since 2000. Mr. Steiner has been
farming near Foxhome, MN since 1969. Mr. Steiner graduated from the Northwest
School of Agriculture, University of Minnesota at Crookston, MN. He also serves
on the board of directors for Minn-Dak Yeast Company.

         PAUL SUMMER has been a director since 1993 and is currently serving as
board secretary. Mr. Summer has been farming near Herman, MN since 1963.

         The Board of Directors meets monthly. The Company provides its
directors with minimal compensation, consisting of (i) a payment of $225.00 per
meeting for regular and special board meetings, (ii) the greater (a) $112.50 for
any day in which directors partake in activities on the Company's behalf that
take less than five hours or (b) $225.00 for any day in which directors partake
in activities on the Company's behalf that take five hours or more. The Chairman
of the Board of Directors also receives a flat $200.00 per month to compensate
for the extra duties associated with that position.



EXECUTIVE OFFICERS

         The table below lists the principal officers of the Company, none of
whom owns any common or preferred shares. The president/chief executive officer
is appointed annually by the Board of Directors to serve on the board. Brief
biographies for each of the officers are included after the table.

Name                          Age     Position
----                          ---     --------

David H. Roche                55      President and Chief Executive Officer

Steven M. Caspers             52      Executive Vice President and Chief
                                        Financial Officer

Allen E. Larson               47      Controller and Chief Accounting Officer

Thomas D. Knudsen             48      Vice President of Agriculture

Jerald W. Pierson             63      Director of Human Resources

Jeffrey L. Carlson            47      Vice President of Operations

John S. Nyquist               47      Purchasing Manager

Patricia J. Keough-Wilson     62      Director of Corporate and Public Relations

Kevin R. Shannon              48      Safety Director

John Haugen                   50      Vice President of Engineering

<PAGE>

         DAVID H. ROCHE is Minn-Dak Farmers Cooperative's third president and
CEO. He joined the Wahpeton, ND based sugar cooperative on March 1, 2001. He
serves on the boards of United Sugars Corporation and Midwest Agri-Commodities.
In addition, he is a trustee of the United States Beet Sugar Association,
Washington, D.C. Mr. Roche began his sugar industry career as a controller for
Michigan Sugar Company in 1976. He progressed through the ranks until he was
named president in 1994. In 1996 he became president of Savannah Foods
Industrial and was appointed senior vice president of Savannah Foods &
Industries. He retained his position at Michigan Sugar Company, which was owned
by Savannah Foods & Industries, during this period. Imperial Sugar Company
acquired controlling interest in Savannah in 1998. He was named as a managing
director and senior vice president. Mr. Roche holds an MBA in Accounting from
Michigan State University and became a Certified Public Accountant in 1974.

         STEVEN M. CASPERS is a graduate of the University of North Dakota with
a Bachelor of Science in Business Administration and a major in Accounting. He
has been employed with the Company since May 5, 1974. Mr. Caspers is president
of Minn-Dak Yeast Company and serves as governor for ProGold, LLC. He also is
active in national industry related boards and committees. Mr. Caspers is the
brother-in-law of Mr. Michael Hasbargen, Director and Vice Chairman.

         ALLEN E. LARSON is a graduate of Moorhead State University with a
Bachelor of Science in Business Administration and a major in Accounting. He has
been employed with the Company since October 26, 1981.

         THOMAS D. KNUDSEN is a graduate of North Dakota State University with a
Bachelor of Science in horticulture and has attended the Beet Sugar Institute at
Fort Collins, Colorado. He began employment with the Company on May 24, 1977.

         JERALD W. PIERSON is a graduate of Black Hills State University with
human resources experience beginning in 1968. He is active in numerous local
civic and fraternal organizations including North Dakota Workers Compensation
and the North Dakota Job Service Employer Committee. He began his employment
with the Company on March 15, 1982.

         JEFFREY L. CARLSON is a graduate of the University of Minnesota-Morris
with a Bachelor of Arts in Chemistry and the University of North Dakota with a
Ph.D. in Physical Chemistry. He began his career as a research chemist and an
assistant professor in 1986. Mr. Carlson began his employment with the Company
on June 4, 1990.

         JOHN S. NYQUIST attended the North Dakota State College of Science,
majoring in Accounting and Computer Programs. Mr. Nyquist began his purchasing
and inventory control experience in 1975 in the Company storeroom. Mr. Nyquist
is active in local civic and fraternal organizations and the National
Association of Purchasing Managers. Mr. Nyquist began employment with the
Company on September 15, 1975.

         PATRICIA J. KEOUGH-WILSON is a graduate of Moorhead State University
with a Bachelor of Science in Mass Communications and Master of Arts in Liberal
Arts. Mrs. Keough-Wilson is active in local civic organizations and began her
publication-communications experience in 1973. Mrs. Keough-Wilson began
full-time employment with the Company on December 26, 1989.


<PAGE>

         KEVIN R. SHANNON attended Taylor Institute and Vanguard Vo-Tech,
majoring in Instrumentation. He is active in local civic organizations. Mr.
Shannon began his technical and supervisory career in 1974. His employment with
the Company began on June 1, 1983. Prior to becoming the safety director in
September of 1992, Mr. Shannon was the Company's tare lab supervisor.

         JOHN R. HAUGEN was promoted to the position of Director of Engineering
on November 2, 2001 and to Vice President of Engineering on August 1, 2002. He
started his career with Minn Dak Farmers Cooperative in 1976 as an Assistant
Engineer and prior to this promotion held the position of Senior Engineer. Mr.
Haugen is a graduate of the University of North Dakota and holds a BS in
Mechanical Engineering.


ITEM 11. EXECUTIVE COMPENSATION

         The following table summarizes the amount of compensation paid for
services rendered to the Company during the fiscal year ended August 31, 2002
and the two prior fiscal years to those persons serving as the Company's Chief
Executive Officer and to the other most highly compensated executive officers of
the Company whose cash compensation exceeded $100,000 per annum.

         The Company does not offer any equity based compensation plans to its
employees or directors.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

Name and                                                        Other Annual         All Other            Total
Principal Position          Year      Salary       Bonus        Compensation       Compensation        Compensation
------------------          ----      ------       -----        ------------       ------------        ------------
                                                                    (1)                 (2)
<S>                        <C>         <C>          <C>                <C>           <C>                 <C>
David Roche                2002        $265,000     $45,000            $ 13,270                          $323,270
President & CEO            2001        $128,346     $     0            $ 27,598                          $155,945
                           2000        $      0     $     0            $      0                          $      0

Steven Caspers             2002        $140,231     $30,000            $ 11,629                          $181,861
Executive Vice President   2001        $180,787     $30,000            $ 21,991                          $232,779
& CFO                      2000        $129,147     $30,000            $ 13,165                          $172,312

Thomas Knudsen             2002        $101,352     $15,000            $ 12,239                          $128,591
VP Agriculture             2001         $97,557     $14,500            $  4,302                          $116,359
                           2000         $94,624     $14,500            $ 11,380                          $120,504

Richard Richter            2002        $100,357     $15,000            $  5,973                          $121,330
VP Operations              2001         $97,350     $14,500            $  5,729                          $117,579
Retired as of              2000         $94,457     $14,500            $  5,196                          $114,153
9-3-02
Allen Larson               2002         $98,253     $14,000            $  4,579                          $116,832



<PAGE>

Controller and             2001        $100,747     $12,000            $  8,213                          $120,959
Chief Accounting           2000         $92,551     $12,000            $  4,094                          $108,645
Officer

</TABLE>

----------------------------

         1) In addition to the salary and bonus described above, Mr. Roche, Mr.
         Caspers, Mr. Knudsen, and Mr. Richter, and Mr. Larson are provided with
         "Other Annual Compensation," which includes the value of the excess
         life insurance cost, individual LTD plan, sold vacation, and Company
         match of the 401(k) plan. The company has a policy whereby Supervisory,
         Professional and Management employees are required to maintain their
         vacation and floating holiday hour combined balance at two hundred and
         forty (240) hours or less. While not encouraged, the cash optioning of
         vacation and floating holiday accrued hours is allowable. Employees
         with account balances in excess of 240 hours may elect to cash option
         up to fifty percent (50%) of the number of hours exceeding 240.
         Employees at or below the 240 hour limit may elect to cash option fifty
         percent (50%) of their combined vacation and floating holiday annually
         accrued hours.

                  Management employees are eligible for performance bonuses,
         which are partially based upon on the performance of the Company and
         partially on achievement of certain management performance objectives.
         The President/CEO determines those performance objectives for officers
         and significant other management employees of the Company and the Board
         of Directors determines performance objectives for the President/CEO.
         If minimum Company performance is not achieved in any given year (that
         performance based upon returns to the Company's shareholders),
         performance bonuses are not paid to employees.

                  On a periodic basis, the Company undertakes a compensation
         review study to determine that its employees' compensation is
         commensurate with responsibilities of the various Company positions,
         and that the compensation is equitable between jobs within the Company
         and externally competitive with other comparable jobs and
         responsibilities within the Company's geographic region. A national
         compensation consultant called Hay Management consultants performs the
         compensation review study. This study is made of all management
         employees, including the president, and non-union employees. In June of
         2002 the company instituted a salary range shift. From time to time
         individual employees have had a restudy based upon changes in their
         areas of responsibilities. As of August 31, 2002 all employees' wages
         had been adjusted to levels consistent with the Hay Management
         Consultants findings and recommendations.

         2) Mr. Roche became eligible for payments into a supplemental executive
         retirement plan upon his completion of one year of service. However, no
         obligations were recorded onto the Company's books on his behalf in the
         fiscal year ended August 31, 2002. See the section below on Retirement
         Plans for further details on the supplemental executive retirement
         plan.


<PAGE>

RETIREMENT PLANS

         Management employees are also eligible to participate in the Company's
defined benefit retirement plan as well as its 401(k) retirement savings plan,
each of which are described below.

         The Company has established a noncontributory, defined benefit
retirement plan, which is available to all eligible employees of the Company.
The benefits of the plan are funded by periodic contributions by the Company to
a retirement trust that invests the contributions and earnings from such
contributions to pay benefits to employees. The plan provides for the payment of
a monthly retirement benefit determined under a formula based on years of
service and each employee's compensation level. See "Executive
Compensation--Qualified Benefits Table." Benefits are paid to the employees upon
reaching early (age 55 or older) or normal (age 65) retirement age. The plan
also provides for the payment of certain disability and death benefits.

         The Company maintains a Section 401(k) retirement savings plan that
permits employees to elect to set aside, on a pre-tax basis, a portion of their
gross compensation in trust to pay future retirement benefits. The Company
provides a matching contribution of 75% of each employee's first 4% of
compensation that is set aside under the plan. The amounts set aside by each
employee and the Company vests immediately and are paid to each employee upon
the happening of certain events, all as more fully described in the master plan
document. Federal law limited employee pre-tax income contributions to $11,000
in calendar year 2002 for each participating employee age 49 and under, and
$12,000 for each participating employee age 50 and older. The contribution limit
for calendar limit was $10,500 for each participating employee, regardless of
age. Benefits under the 401(k) plan begin to be paid to the employee: (i) upon
the attainment of normal retirement age (65), or if the employee chooses, any
time after attaining early retirement date (age 55); (ii) the date the employee
terminates employment with the Company; or (iii) a pre-retirement distribution
equal to the value of the employees 401(k) account, provided the employee has
attained age 59 1/2 and provided a written consent of the spouse (if married).

         Effective September 1, 1996 certain executive employees of the Company
became eligible to participate in a "Supplemental Executive Retirement Plan."
The Company's Board of Directors adopted that plan on January 21, 1997. Subject
to the discretion of the Board of Directors, the plan provides for the Company
to credit to the account of each executive eligible to participate in the
Supplemental Plan amounts equal to the difference between the benefits actually
payable to the executive under the provisions of the defined benefit retirement
plan and the amounts which would have been payable under the defined benefit
retirement plan if certain provisions of the Internal Revenue Code did not
prohibit the payment of such benefits.




<PAGE>

QUALIFIED BENEFITS TABLE

         The following table reflects the estimated annual benefits payable to a
fully-vested executive officer of the Cooperative under the defined benefit
retirement plan upon retirement at age 65, after 15, 20, 25, 30, and 35 years of
annual service at the compensation levels set forth hereon:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                         Years of Service
---------------------------------------------------------------------------------------------------
Pension
Compensation                15             20              25              30             35
---------------------- ------------- --------------- --------------- --------------- --------------
<S>         <C>             <C>             <C>             <C>             <C>            <C>
            $ 125,000       $27,979         $37,306         $46,632         $55,958        $65,285
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 150,000       $34,167         $45,556         $56,945         $68,333        $79,722
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 175,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 200,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 225,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 250,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 275,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 300,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 325,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 350,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
            $ 375,000       $39,117         $52,156         $65,195         $78,233        $91,272
---------------------- ------------- --------------- --------------- --------------- --------------
</TABLE>

         Mr. Roche has 1 year of service under the plan.
         Mr. Caspers has 28 years of service under the plan.
         Mr. Knudsen has 25 years of service under the plan.
         Mr. Larson has 20 years of service under the plan.
         Mr. Richter had 26 years of service under the plan as of his retirement
         date.


ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table presents certain information with respect to the
ownership of shares of preferred stock as of November 13, 2002, by each
director. Each shareholder has direct ownership with respect to the share shown
as beneficially owned, except as otherwise indicated in a footnote. To the
Company's knowledge, as of November 13, 2002, no person owned beneficially more
than 5% of the Company's outstanding shares and none of the principal officers
listed above owned any such shares.

Name              Position with Company     No. of Shares    %of Shares
----              ---------------------     -------------    ----------

Douglas Etten              Director              450         less than 1%


<PAGE>

Michael Hasbargen          Director              375         less than 1%

Victor Krabbenhoft         Director              245         less than 1%

Jack Lacey (1)             Director              250         less than 1%

Russell Mauch (2)          Director              474         less than 1%

Jerry Meyer                Director              260         less than 1%

Ed Moen                    Director              180         less than 1%

Paul Summer (3)            Director              222         less than 1%

Charles Steiner(4)         Director              406         less than 1%

All Directors                                    2862        3.96%

(1)      Mr. Lacey's shares are held and grown under the name of Jack Lacey
         Company.

(2)      Mr. Mauch's shares are held and grown under the name of RCM Limited
         Partnership.

(3)      Mr. Summer's shares are grown under the name of P V Unlimited Corp.

(4)      Mr. Steiner's share are held and grown under the name of Steiner and
         Sons Limited Partnership.





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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


<PAGE>




                                    PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

ITEM 14(a) FINANCIAL STATEMENT SCHEDULES

     None

ITEM 14(b) REPORTS ON FORM 8-K

         The Company was not required to and did not file any reports on Form
8-K during the three months ended August 31, 2002.



<PAGE>


ITEM 14(C)        EXHIBITS

Index
-----
    **  3(i)   Articles of Amendment to the Articles of Incorporation of
               Minn-Dak Farmers Cooperative
     *  3(ii)  Articles of Incorporation of Minn-Dak Farmers Cooperative
   ***  3(iii) Amended Bylaws of Minn-Dak Farmers Cooperative
    ** 10(a)   Growers' Agreement (three-year Agreement) (example of agreement
               which each Shareholder is required to sign)
   ****10(b)   Uniform Member Marketing Agreement by and between United Sugars
               Corporation and Minn-Dak Farmers Cooperative
      *10(d)   Capitalization Agreement by and among Southern Minnesota Beet
               Sugar Cooperative, Minn-Dak Farmers Cooperative, American
               Crystal Sugar Company, and United Sugars Corporation
      *10(e)   Memorandum of Understanding and Uniform Member Agreement by
               and between Midwest Agri-Commodities Company and Minn-Dak
               Farmers Cooperative
      *10(f)   Molasses Purchase Contract by and between Minn-Dak Farmers
               Cooperative and Universal Foods Corporation (Confidential
               Treatment for
               certain sections)
      *10(g)   Yeast Purchase Contract by and between Universal Foods
               Corporation and Minn-Dak Yeast Company, Inc. (Confidential
               Treatment for certain sections)
      *10(i)   Operating Agreement of ProGold Limited Liability Company
      *10(j)   ProGold Limited Liability Company Member Control Agreement
      *10(k)   Agreement for Electrical Service
     **10(l)   Agreements for Coal Supply, Transportation, and Oiling Service
               (Confidential Treatment Requested as to certain provisions)
      *10(m)   Minn-Dak Farmers Cooperative Pension Plan
      *10(o)   Management Consulting Agreement between Minn-Dak Yeast Company
               and Universal Foods Corporation, (Confidential Treatment for
               certain
               sections)
    ***10(p)   Amendment to Minn-Dak Farmers Cooperative Pension Plan
  *****10(q)   Amendment to Minn-Dak Farmers Cooperative Pension Plan
  *****10(r)   David H. Roche Employment Agreement
  *****10(s)   Agreement with Universal Foods regarding sale of Red Star Yeast &
               Products Division, (Confidential Treatment requested for certain
               sections)
       12      Statement re Computation of Ratio of Net Proceeds to Fixed
               Charges
      *21      Subsidiaries of the Registrant
       99      906 Certifications

             ---------------------------

* Incorporated by reference from the Company's Registration Statement on Form
S-1 (File No. 33-94644), declared effective September 11, 1995.

<PAGE>

** Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1996 as filed on November 21, 1996.

*** Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1997 as filed on November 25, 1997.

**** Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1998 as filed on November 24, 1998.

*****Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 2001 as filed on November 29, 2001.



<PAGE>


SIGNATURES
         PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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

                                            BY /S/      David H. Roche
                                              ----------------------------------
                                                     DAVID H. ROCHE, PRESIDENT
                                                     AND CHIEF EXECUTIVE OFFICER

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DUTIES INDICATED.

<TABLE>
<CAPTION>
             SIGNATURE                              TITLE                            REPORT DATE
             ---------                              -----                            -----------
<S>                                      <C>                                           <C>
/s/  David H. Roche                            President and                           11-27-02
------------------------------------       Chief Executive Officer        ----------------------------------
David H. Roche

/s/  Steven M. Caspers                   Executive Vice President and                  11-27-02
------------------------------------       Chief Financial Officer        ----------------------------------
Steven M. Caspers

/s/  Allen E. Larson                            Controller and                         11-27-02
------------------------------------       Chief Accounting Officer       ----------------------------------
Allen E. Larson

/s/  Victor Krabbenhoft                            Director                            11-27-02
------------------------------------                                      ----------------------------------
Victor Krabbenhoft

/s/  Douglas Etten                                 Director                            11-27-02
------------------------------------                                      ----------------------------------
Douglas Etten

/s/  Edward Moen, Jr.                              Director                            11-27-02
------------------------------------                                      ----------------------------------
Edward Moen, Jr.

/s/  Mike Hasbargen                                Director                            11-27-02
------------------------------------                                      ----------------------------------
Mike Hasbargen

/s/  Charles Steiner                               Director                            11-27-02
------------------------------------                                      ----------------------------------
Charles Steiner

/s/  Jack Lacey                                    Director                            11-27-02
------------------------------------                                      ----------------------------------
Jack Lacey

/s/  Russell Mauch                                 Director                            11-27-02
------------------------------------                                      ----------------------------------
Russell Mauch

/s/  Jerry Meyer                                   Director                            11-27-02
------------------------------------                                      ----------------------------------
Jerry Meyer

/s/  Paul Summer                                   Director                            11-27-02
------------------------------------                                      ----------------------------------
Paul Summer
</TABLE>

<PAGE>

CERTIFICATION
-------------
I, David H. Roche, certify that:

1. I have reviewed this annual report on Form 10-K of Minn Dak Farmers
Cooperative;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: November 27, 2002                    /s/ David H. Roche
     ----------------------------          -------------------------------------
                                           President and Chief Executive Officer


<PAGE>



CERTIFICATION
-------------

I, Steven M. Caspers, certify that:

1. I have reviewed this annual report on Form 10-K of Minn Dak Farmers
Cooperative;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  November 27, 2002                   /s/ Steven M. Caspers
     ----------------------------          -------------------------------------
                                           Executive Vice President and Chief
                                                Financial Officer



<PAGE>




CERTIFICATION
-------------

I, Allen E. Larson, certify that:

1. I have reviewed this annual report on Form 10-K of Minn Dak Farmers
Cooperative;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  November 27, 2002                   /s/ Allen E. Larson
     ----------------------------          -------------------------------------
                                           Controller and Chief Accounting
                                                Officer