##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    August 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number: 0-50150
      CHS Inc.
 (Exact name of registrant as specified in its charter)
  Minnesota

41-0251095(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)5500 Cenex Drive

(651) 355-6000Inver Grove Heights, Minnesota 55077(Address of principal executive office,
    including zip code)

(Registrants Telephone number,
    including area code)       SECURITIES
    REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
    SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
    ACT:
  8% Cumulative Redeemable Preferred Stock

The NASDAQ Global Select Market(Title of Class)

(Name of Each Exchange on Which Registered)         YES o     NO þ
    YES o     NO þ
    YES þ     NO o
  Regulation S-K Form 10-K Form 10-K: o
  Rule 12b-2
  o o þ
  Rule 12b-2
  YES o     NO þ
        DOCUMENTS INCORPORATED BY REFERENCE




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##### 



INDEX
  PageNo.PART I.Item 1.

Business


1The Company


1Energy


2Ag Business .


5Processing


10Corporate and Other


13Price Risk and Hedging


14Employees


14Membership in CHS and Authorized Capital


15Item 1A.

Risk Factors


18Item 1B.

Unresolved Staff Comments


21Item 2.

Properties


21Item 3.

Legal Proceedings


24Item 4.

Submission of Matters to a Vote of Security
    Holders


24PART II.Item 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


24Item 6.

Selected Financial Data


24Item 7.

Managements Discussion and Analysis of Financial Condition
    and Results of Operation


27Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


48Item 8.

Financial Statements and Supplementary Data


50Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


50Item 9A.

Controls and Procedures


50Item 9B.

Other Information


51PART III.Item 10.

Directors, Executive Officers and Corporate
    Governance


51Board of Directors


51Executive Officers


55Section 16(a) Beneficial Ownership Reporting
    Compliance


56Code of Ethics


57Audit Committee Matters


57Item 11.

Executive Compensation


58Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


76Item 13.

Certain Relationships and Related Transactions
    and Director Independence


76Item 14.

Principal Accountant Fees and Services


78PART IV.Item 15.

Exhibits and Financial Statements


79SUPPLEMENTAL INFORMATION


84SIGNATURES


85Agreement Regarding Distribution of AssetsSubsidiaries of the RegistrantConsent of Independent Registered Public Accounting FirmPower of AttorneyCertificationCertificationCertificationCertification




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PART I.
  ITEM 1.
    BUSINESS  THE
    COMPANY
           1




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##### Table of Contents



CHS


IncomeBusiness Segment

Entity Name

Business Activity

Ownership%


RecognitionEnergy

National Cooperative Refinery Association

Petroleum refining


74.5
%

ConsolidatedProvista Renewable Fuels Marketing, LLC

Ethanol marketing


50
%

ConsolidatedFront Range Pipeline, LLC

Crude oil transportation


100
%

ConsolidatedCenex Pipeline, LLC

Finished product transportation


100
%

ConsolidatedAg Business

Agriliance LLC

Wholesale and retail distribution of agronomy products.


50
%

Equity MethodCHS do Brasil Ltda.

Soybean procurement in Brazil


100
%

ConsolidatedUnited Harvest, LLC

Grain exporter


50
%

Equity MethodTEMCO, LLC

Grain exporter


50
%

Equity MethodMultigrain S.A.

Soybean procurement in Brazil


37.5
%

Equity MethodProcessing

Horizon Milling, LLC

Wheat milling in U.S.


24
%

Equity MethodHorizon Milling General Partnership

Wheat milling in Canada


24
%

Equity MethodVentura Foods, LLC

Food manufacturing


50
%

Equity MethodUS BioEnergy Corporation

Ethanol manufacturing


20
%

Equity MethodCorporate and Other

Country Hedging, Inc.

Risk management products broker


100
%

ConsolidatedAg States Agency, LLC

Insurance agency


100
%

ConsolidatedCofina Financial, LLC

Finance company


49
%

Equity Method   Form 10-K,
    ENERGY
  Overview
  ®
  Operations
  Laurel Refinery.
   2




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##### Table of Contents



long-term
  McPherson Refinery.
    Provista Renewable Fuels Marketing, LLC.
  Other Energy Operations.
  Products
    and Services
    Sales
    and Marketing; Customers
   3




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Industry;
    Competition
  Regulation.
    fuel-efficient
  Competition.
       4




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##### Table of Contents



Summary
    Operating Results
    2007


2006


2005(Dollars in thousands)Revenues

$
8,105,067


$
7,414,361


$
5,794,266Cost of goods sold


7,274,638



6,834,676



5,487,813Gross profit


830,429



579,685



306,453Marketing, general and administrative


94,939



82,867



69,951Operating earnings


735,490



496,818



236,502Gain on investments










(862
)Interest, net


(6,106
)


6,534



8,918Equity income from investments


(4,468
)


(3,840
)


(3,478
)Minority interests


143,230



86,483



46,741Income before income taxes

$
602,834


$
407,641


$
185,183Intersegment revenues

$
(228,930
)

$
(242,430
)

$
(170,642
)Total identifiable assets  August 31

$
2,737,044


$
2,164,217


$
2,238,614   AG
    BUSINESS
    Agronomy
  Overview
    50-50
 5




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Operations
      Products
    and Services
    Sales
    and Marketing; Customers
    Industry;
    Competition
  Regulation.
 6




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##### Table of Contents



Competition.
  Agri-Products
  Country
    Operations
  Overview
    Products
    and Services
  Grain Purchasing.
  Other Products.
  Fin-Ag, Inc.
  Industry;
    Competition
  Regulation.
 7




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Competition.
    Grain
    Marketing
  Overview
    Operations
     8




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##### Table of Contents



Products
    and Services
    Sales
    and Marketing; Customers
    Industry;
    Competition
  Regulation.
  Competition.
   9




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##### Table of Contents



Summary
    Operating Results
    2007


2006


2005(Dollars in thousands)Revenues

$
8,575,389


$
6,575,165


$
5,670,644Cost of goods sold


8,388,476



6,401,527



5,541,282Gross profit


186,913



173,638



129,362Marketing, general and administrative


97,299



99,777



83,600Operating earnings


89,614



73,861



45,762Gain on investments


(5,348
)






(11,358
)Interest, net


28,550



23,559



20,535Equity income from investments


(51,830
)


(40,902
)


(55,473
)Minority interests


(16
)


(509
)


(41
)Income before income taxes

$
118,258


$
91,713


$
92,099Intersegment revenues

$
(18,372
)

$
(8,779
)

$
(9,640
)Total identifiable assets  August 31

$
2,846,950


$
1,806,243


$
1,604,571   PROCESSING
  Overview
    Regulation.
 10




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Oilseed
    Processing
              Wheat
    Milling
   11




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Foods
          Renewable
    Fuels
   12




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##### Table of Contents



Summary
    Operating Results
    2007


2006


2005(Dollars in thousands)Revenues

$
754,743


$
614,471


$
613,766Cost of goods sold


726,510



588,732



604,198Gross profit


28,233



25,739



9,568Marketing, general and administrative


23,545



21,645



20,750Operating earnings (losses)


4,688



4,094



(11,182
)Gain on investments


(15,268
)






(457
)Interest, net


14,783



11,096



12,287Equity income from investments


(48,446
)


(35,504
)


(36,202
)Income before income taxes

$
53,619


$
28,502


$
13,190Intersegment revenues

$
(370
)

$
(368
)

$
(502
)Total identifiable assets  August 31

$
681,118


$
518,186


$
420,373   CORPORATE
    AND OTHER
  Services
  Financial Services.
     13




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Country Hedging, Inc.
  Ag States Agency, LLC.
  PRICE
    RISK AND HEDGING
          EMPLOYEES
   14




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MEMBERSHIP
    IN CHS AND AUTHORIZED CAPITAL
  Introduction
    Distribution
    of Net Income; Patronage Dividends
       15




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Patrons
    Equities
      Governance
    Membership
      Voting
    Rights
     16




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Debt and
    Equity Instruments
    Distribution
    of Assets upon Dissolution; Merger and Consolidation
    Certain
    Antitakeover Measures
      Tax
    Treatment
         17




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##### Table of Contents



ITEM 1A.
    RISK
    FACTORS  CAUTIONARY
    STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS
    OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
    1995
  The information in this Annual Report on
    Form 10-K
    for the year ended August 31, 2007, includes
    forward-looking statements within the meaning of the
    Private Securities Litigation Reform Act of 1995 with respect to
    CHS. In addition, CHS and its representatives and agents may
    from time to time make other written or oral forward-looking
    statements, including statements contained in its filings with
    the Securities and Exchange Commission and its reports to its
    members and securityholders. Words and phrases such as
    will likely result, are expected to,
    is anticipated, estimate,
    project and similar expressions identify
    forward-looking statements. We wish to caution readers not to
    place undue reliance on any forward-looking statements, which
    speak only as of the date made.
  Our forward-looking statements are subject to risks and
    uncertainties that could cause actual results to differ
    materially from those discussed in the forward-looking
    statements. This Cautionary Statement is for the purpose of
    qualifying for the safe harbor provisions of the Act
    and is intended to be a readily available written document that
    contains factors which could cause results to differ materially
    from those projected in the forward-looking statements. The
    following matters, among others, may have a material adverse
    effect on our business, financial condition, liquidity, results
    of operations or prospects, financial or otherwise. Reference to
    this Cautionary Statement in the context of a forward-looking
    statement shall be deemed to be a statement that any one or more
    of the following factors may cause actual results to differ
    materially from those which might be projected, forecasted,
    estimated or budgeted by us in the forward-looking statement or
    statements.
  The following factors are in addition to any other cautionary
    statements, written or oral, which may be made or referred to in
    connection with any particular forward-looking statement. The
    following review should not be construed as exhaustive.
  We undertake no obligation to revise any forward-looking
    statements to reflect future events or circumstances.
  Our revenues and operating results could be adversely
    affected by changes in commodity prices.
     
    levels of worldwide and domestic supplies;
    capacities of domestic and foreign refineries;
    the ability of the members of OPEC to agree to and maintain oil
    price and production controls, and the price and level of
    foreign imports;
    disruption in supply; 18




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##### Table of Contents




    political instability or armed conflict in oil-producing regions;
    the level of consumer demand;
    the price and availability of alternative fuels;
    the availability of pipeline capacity; and
    domestic and foreign governmental regulations and taxes.    Our operating results could be adversely affected if our
    members were to do business with others rather than with us.
   We participate in highly competitive business markets in
    which we may not be able to continue to compete successfully.
   Changes in federal income tax laws or in our tax status could
    increase our tax liability and reduce our net income.
   We incur significant costs in complying with applicable laws
    and regulations. Any failure to make the capital investments
    necessary to comply with these laws and regulations could expose
    us to financial liability.
    19




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Environmental liabilities could adversely affect our results
    and financial condition.
   Actual or perceived quality, safety or health risks
    associated with our products could subject us to liability and
    damage our business and reputation.
   Our operations are subject to business interruptions and
    casualty losses; we do not insure against all potential losses
    and could be seriously harmed by unexpected liabilities.
   
    our oil refineries and other facilities are potential targets
    for terrorist attacks that could halt or discontinue production;
    our inability to negotiate acceptable contracts with unionized
    workers in our operations could result in strikes or work
    stoppages;
    the significant inventories that we carry or the facilities we
    own could be damaged or destroyed by catastrophic events,
    extreme weather conditions or contamination; and
    an occurrence of a pandemic flu or other disease affecting a
    substantial part of our workforce or our customers could cause
    an interruption in our business operations, the affects of which
    could be significant.    Our cooperative structure limits our ability to access equity
    capital.
  20




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Consolidation among the producers of products we purchase and
    customers for products we sell could adversely affect our
    revenues and operating results.
     If our customers choose alternatives to our refined petroleum
    products our revenues and profits may decline.
   Operating results from our agronomy business could be
    volatile and are dependent upon certain factors outside of our
    control.
   Technological improvements in agriculture could decrease the
    demand for our agronomy and energy products.
   We operate some of our business through joint ventures in
    which our rights to control business decisions are limited.
   ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES   21




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##### Table of Contents



Energy
    Refinery

Laurel, MontanaPropane terminal

Glenwood, MinnesotaTransportation terminals/ repair facilities

12 locations in Iowa, Kansas, Minnesota, Montana, North Dakota,
    South Dakota, Texas, Washington and Wisconsin, 3 of which are
    leasedPetroleum & asphalt terminals/storage facilities

9 locations in Montana, North Dakota and WisconsinPump stations

11 locations in Montana and North DakotaPipelines:Cenex Pipeline, LLC

Laurel, Montana to Fargo, North DakotaFront Range Pipeline, LLC

Canadian border to Laurel, Montana and on to Billings, MontanaConvenience stores/gas stations

42 locations in Iowa, Minnesota, Montana, North Dakota, South
    Dakota and Wyoming, 13 of which are leasedLubricant plants/warehouses

3 locations in Minnesota, Ohio and Texas, 1 of which is leased     Refinery

McPherson, KansasPetroleum terminals/storage

2 locations in Iowa and KansasPipeline

McPherson, Kansas to Council Bluffs, IowaJayhawk Pipeline, LLC

Throughout Kansas, with branches in Oklahoma, Texas and NebraskaJayhawk stations

26 locations located in Kansas, Oklahoma and NebraskaOsage Pipeline (50% owned by NCRA)

Oklahoma to KansasKaw Pipeline (67% owned by NCRA)

Throughout Kansas   Ag
    Business
    Crop
    Nutrients
    
 22




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Country
    Operations
    Grain
    Marketing
    
  Processing
    Oilseed
    Processing
    Wheat
    Milling
    
  Corporate
    Headquarters
  33-acre
 23




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##### Table of Contents



ITEM 3.
    LEGAL
    PROCEEDINGS      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS    PART II.
  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES        ITEM 6.
    SELECTED
    FINANCIAL DATA   24




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##### Table of Contents



Summary
    Consolidated Financial Data
  2007


2006


2005


2004


2003(Dollars in thousands)Income Statement Data:Revenues

$
17,215,992


$
14,383,835


$
11,926,962


$
10,969,081


$
9,314,116Cost of goods sold


16,139,691



13,570,507



11,449,858



10,527,715



8,989,050Gross profit


1,076,301



813,328



477,104



441,366



325,066Marketing, general and administrative


245,357



231,238



199,354



202,455



175,662Operating earnings


830,944



582,090



277,750



238,911



149,404Gain on investments


(20,616
)






(13,013
)


(14,666
)Gain on legal settlements














(692
)


(10,867
)Interest, net


31,098



41,305



41,509



42,758



40,516Equity income from investments


(109,685
)


(84,188
)


(95,742
)


(79,022
)


(47,299
)Minority interests


143,214



85,974



47,736



33,830



21,950Income from continuing operations before income taxes


786,933



538,999



297,260



256,703



145,104Income taxes


36,600



49,327



30,434



29,462



16,031Income from continuing operations


750,333



489,672



266,826



227,241



129,073(Income) loss on discontinued operations, net of taxes






(625
)


16,810



5,909



5,232Net income

$
750,333


$
490,297


$
250,016


$
221,332


$
123,841Balance Sheet Data (August 31):Working capital

$
815,634


$
828,954


$
758,703


$
493,440


$
458,738Net property, plant and equipment


1,728,171



1,476,239



1,359,535



1,249,655



1,122,982Total assets


6,693,586



4,942,583



4,726,937



4,031,292



3,807,968Long-term debt, including current maturities


688,321



744,745



773,074



683,818



663,173Total equities


2,432,990



2,017,391



1,757,897



1,628,086



1,481,711  25




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##### Table of Contents



Summary
    Financial Data By Business Segment
  Energy


Ag Business2007


2006


2005


2007


2006


2005(Dollars in thousands)Revenues

$
8,105,067


$
7,414,361


$
5,794,266


$
8,575,389


$
6,575,165


$
5,670,644Cost of goods sold


7,274,638



6,834,676



5,487,813



8,388,476



6,401,527



5,541,282Gross profit


830,429



579,685



306,453



186,913



173,638



129,362Marketing, general and administrative


94,939



82,867



69,951



97,299



99,777



83,600Operating earnings


735,490



496,818



236,502



89,614



73,861



45,762Gain on investments










(862
)


(5,348
)






(11,358
)Interest, net


(6,106
)


6,534



8,918



28,550



23,559



20,535Equity income from investments


(4,468
)


(3,840
)


(3,478
)


(51,830
)


(40,902
)


(55,473
)Minority interests


143,230



86,483



46,741



(16
)


(509
)


(41
)Income before income taxes

$
602,834


$
407,641


$
185,183


$
118,258


$
91,713


$
92,099Intersegment revenues

$
(228,930
)

$
(242,430
)

$
(170,642
)

$
(18,372
)

$
(8,779
)

$
(9,640
)Total identifiable assets  August 31

$
2,737,044


$
2,164,217


$
2,238,614


$
2,846,950


$
1,806,243


$
1,604,571   Processing


Corporate and Other2007


2006


2005


2007


2006


2005(Dollars in thousands)Revenues

$
754,743


$
614,471


$
613,766


$
28,465


$
31,415


$
29,070Cost of goods sold


726,510



588,732



604,198



(2,261
)


(2,851
)


(2,651
)Gross profit


28,233



25,739



9,568



30,726



34,266



31,721Marketing, general and administrative


23,545



21,645



20,750



29,574



26,949



25,053Operating earnings (losses)


4,688



4,094



(11,182
)


1,152



7,317



6,668Gain on investments


(15,268
)






(457
)










(336
)Interest, net


14,783



11,096



12,287



(6,129
)


116



(231
)Equity income from investments


(48,446
)


(35,504
)


(36,202
)


(4,941
)


(3,942
)


(589
)Minority interests






















1,036Income before income taxes

$
53,619


$
28,502


$
13,190


$
12,222


$
11,143


$
6,788Intersegment revenues

$
(370
)

$
(368
)

$
(502
)Total identifiable assets  August 31

$
681,118


$
518,186


$
420,373


$
428,474


$
453,937


$
463,379  26




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
  Form 10-K. Form 10-K.
    ®
           27




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50-50
        Results
    of Operations
  Comparison
    of the years ended August 31, 2007 and
    2006
  General.
     28




---



##### Table of Contents



Net Income.
  Revenues.
   29




---



##### Table of Contents



30




---



##### Table of Contents



Cost of Goods Sold.
        Marketing, General and
    Administrative.
  Gain on Investments.
  Interest, net.
 31




---



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Equity Income from Investments.
       32




---



##### Table of Contents



Minority Interests.
  Income Taxes.
  Discontinued Operations.
  Comparison
    of the years ended August 31, 2006 and
    2005
  General.
     33




---



##### Table of Contents



Net Income.
  Revenues.
     34




---



##### Table of Contents



Cost of Goods Sold.
   35




---



##### Table of Contents



Marketing, General and
    Administrative.
  Gain on Investments.
    Interest, net.
 36




---



##### Table of Contents



Equity Income from Investments.
        Minority Interests.
  Income Taxes.
 37




---



##### Table of Contents



Discontinued Operations.
  Liquidity
    and Capital Resources
      Cash
    Flows from Operations
  Form 10-K,
     38




---



##### Table of Contents



39




---



##### Table of Contents



Cash
    Flows from Investing Activities
           40




---



##### Table of Contents



Cash
    Flows from Financing Activities
   41




---



##### Table of Contents



42




---



##### Table of Contents



2008

$
98,9772009


117,9102010


82,6342011


111,6652012


94,517Thereafter


182,618$
688,321              43




---



##### Table of Contents



Off
    Balance Sheet Financing Arrangements
  Lease
    Commitments:
     44




---



##### Table of Contents



Total(Dollars in millions)2008

$
32.92009


24.62010


20.12011


13.02012


8.7Thereafter


8.2Total minimum future lease payments

$
107.5   Guarantees:
    Debt:
    Contractual
    Obligations
    Payments Due by PeriodLess than


1 - 3


3 - 5


More thanContractual Obligations

Total


1 Year


Years


Years


5 Years(Dollars in thousands)Notes payable(1)

$
672,571


$
672,571Long-term debt(1)


688,321



98,977


$
200,544


$
206,182


$
182,618Interest payments(2)


147,300



40,394



59,981



32,692



14,233Operating leases


107,476



32,877



44,754



21,663



8,182Purchase obligations(3)


3,686,847



2,434,178



1,244,419



2,212



6,038Other liabilities(4)


215,611







21,237



48,187



146,187Total obligations

$
5,518,126


$
3,278,997


$
1,570,935


$
310,936


$
357,258     (1)
    
    Included on our Consolidated Balance Sheet.(2)
    
    Based on interest rates and long-term debt balances as of
    August 31, 2007.(3)
    
    Purchase obligations are legally binding and enforceable
    agreements to purchase goods or services that specify all
    significant terms, including fixed or minimum quantities; fixed,
    minimum or variable price provisions; and time of the
    transactions. Of our total purchase obligations,
    $1,199.8 million is included in accounts payable and
    accrued expenses on our Consolidated Balance Sheet.(4)
    
    Other liabilities includes the long-term portion of deferred
    compensation, deferred income taxes, accrued turnaround and
    contractual redemptions, and is included on our Consolidated
    Balance Sheet. Of our total other liabilities on our
    Consolidated Balance Sheet in the amount of $359.2 million,
    the timing of the payments of $143.6 million of such
    liabilities cannot be determined. 45




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##### Table of Contents



Critical
    Accounting Policies
    Allowances
    for Doubtful Accounts
    Inventory
    Valuation and Reserves
  last-in, first-in,
  Derivative
    Financial Instruments
    Pension
    and Other Postretirement Benefits
   46




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##### Table of Contents



Deferred
    Tax Assets
    Long-Lived
    Assets
      Environmental
    Liabilities
    Revenue
    Recognition
   47




---



##### Table of Contents



Effect of
    Inflation and Foreign Currency Transactions
    Recent
    Accounting Pronouncements
    accrue-in-advance accrue-in-advance
      ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  COMMODITY
    PRICE RISK
     48




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##### Table of Contents



INTEREST
    RATE RISK
     49




---



##### Table of Contents



FOREIGN
    CURRENCY RISK
    ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  page F-1. Regulation S-K
  November 30,


February 28,


May 31,


August 31,2006


2007


2007


2007(Unaudited)(Dollars in thousands)Revenues

$
3,751,070


$
3,734,580


$
4,732,465


$
4,997,877Gross profit


222,276



145,708



327,925



380,392Income from continuing operations


153,453



87,359



259,734



286,387Net income


136,282



82,309



237,773



293,969   November 30,


February 28,


May 31,


August 31,2005


2006


2006


2006Revenues

$
3,453,549


$
3,156,834


$
3,743,021


$
4,030,431Gross profit


254,481



114,668



218,528



225,651Income from continuing operations


154,026



40,247



136,563



158,836Net income


154,234



40,148



136,593



159,322   ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    of Controls and Procedures:
  Rules 13a-15(e) 15d-15(e)
   50




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##### Table of Contents



Form 10-K.
  Change in
    Internal Control over Financial Reporting:
  Rule 13a-15(f)
  ITEM 9B.
    OTHER
    INFORMATION    PART III.
  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  BOARD OF
    DIRECTORS
    DirectorName and Address

Age


Region


SinceBruce Anderson


55



3



199513500  42nd St NE
    Glenburn, ND
    58740-9564Donald Anthony


57



8



200643970 Road 758
    Lexington, NE 68850Robert Bass


53



5



1994E 6391 Bass Road
    Reedsburg, WI 53959Dennis Carlson


46



3



20013255  50th Street
    Mandan, ND 58554Curt Eischens


55



1



19902153  330th Street North
    Minneota, MN
    56264-1880Steve Fritel


52



3



20032851  77th Street NE
    Barton, ND 58384Robert Grabarski


58



5



19991770 Highway 21
    Arkdale, WI 54613Jerry Hasnedl


61



1



199512276  150th Avenue SE
    St. Hilaire, MN 56754 -9776David Kayser


49



4



200642046  257th Street
    Alexandria, SD 57311James Kile


59



6



1992508 W. Bell Lane
    St. John, WA 99171 51




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##### Table of Contents



DirectorName and Address

Age


Region


SinceRandy Knecht


57



4



200140193  112th Street
    Houghton, SD 57449Michael Mulcahey


59



1



20038109  360th Avenue
    Waseca, MN 56093Richard Owen


53



2



19991591 Hawarden Road
    Geraldine, MT 59446Steve Riegel


55



8



200612748 Ridge Road
    Ford, KS 67842Daniel Schurr


42



7



20063009 Wisconsin Street
    LeClaire, IA 52753Duane Stenzel


61



1



199362904  295th Street
    Wells, MN 56097Michael Toelle


45



1



19925085 St. Anthony Drive
    Browns Valley, MN 56219   Bruce Anderson, secretary-treasurer
  Donald Anthony
  Robert Bass, first vice chairman
  Dennis Carlson
  Curt Eischens
  Steve Fritel
 52




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##### Table of Contents



Robert Grabarski, assistant secretary-treasurer
  Jerry Hasnedl
  David Kayser
  James Kile, second vice chairman
  Randy Knecht
  Michael Mulcahey
  Richard Owen
 53




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##### Table of Contents



Steve Riegel
  Daniel Schurr
  Duane Stenzel
  Michael Toelle, chairman
  Director
    Elections and Voting
    
    At the time of declaration of candidacy, the individual (except
    in the case of an incumbent) must have the written endorsement
    of a locally elected producer board that is part of the CHS
    system and located within the region from which the individual
    is to be a candidate.
    At the time of the election, the individual must be less than
    the age of 68.    
    The individual must be a member of this cooperative or a member
    of a Cooperative Association Member.
    The individual must reside in the region from which he or she is
    to be elected.
    The individual must be an active farmer or rancher. Active
    farmer or rancher means an individual whose primary
    occupation is that of a farmer or rancher, excluding anyone who
    is an employee of ours or of a Cooperative Association Member. 54




---



##### Table of Contents



Region

Current IncumbentRegion 1 (Minnesota)

Michael ToelleRegion 3 (North Dakota)

Dennis CarlsonRegion 4 (South Dakota)

Randy KnechtRegion 5 (Wisconsin, Connecticut, Indiana, Illinois, Kentucky,
    Michigan, Ohio)

Robert BassRegion 8 (Colorado, Nebraska, Kansas, New Mexico, Oklahoma,
    Texas)

Steve Riegel     EXECUTIVE
    OFFICERS
    Name

Age

PositionJohn D. Johnson


59


President and Chief Executive OfficerJay Debertin


47


Executive Vice President and Chief Operating Officer, ProcessingPatrick Kluempke


59


Executive Vice President  Corporate AdministrationThomas D. Larson


59


Executive Vice President  Business SolutionsMark Palmquist


50


Executive Vice President and Chief Operating Officer, Ag BusinessJohn Schmitz


57


Executive Vice President and Chief Financial OfficerLeon E. Westbrock


60


Executive Vice President and Chief Operating Officer, Energy   John D. Johnson
  Jay Debertin,
  Patrick Kluempke,
 55




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##### Table of Contents



Thomas D. Larson,
  Mark Palmquist,
  John Schmitz,
  Leon E. Westbrock,
  Section 16(a)
    Beneficial Ownership Reporting Compliance
     56




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##### Table of Contents



Code
    of Ethics
  Regulation S-K
  (651) 355-6000
  Audit
    Committee Matters
       57




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##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION  Compensation
    Discussion and Analysis
  Executive
    Compensation
  Overview
    Compensation
    Philosophy and Objectives
    
    Maintaining a strong external market focus in order to attract
    and retain top talent by:  
    Aligning pay structures and total direct compensation at the
    market median through our benchmarking process
    Obtaining applicable and available survey data of similar sized
    companies  
    Maintaining reasonable internal pay equity among executives in
    order to allow for broad based development opportunities in
    support of our talent management objectives
    Driving strong business performance through annual and long-term
    incentive programs by:  
    Rewarding executives for company, business unit and individual
    performance
    Aligning executive rewards with competitive returns to our owner
    members
    Ensuring compensation components are mutually supportive and not
    contradictory
    Aligning annual and long-term results with performance goals  
    Ensuring compliance with federal and state regulations    Components
    of Executive Compensation and Benefits
     58




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##### Table of Contents



Components
    of Compensation
  pay-at-risk
  Pay Element

Definition of Pay Element

Purpose of Pay ElementBase Salary

Competitive base level of compensation provided relative to
    skills, experience, knowledge and contributions

These factors provide the fundamental element of compensation
    based on competitive market practice and internal equity
    considerations 59




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##### Table of Contents



Pay Element

Definition of Pay Element

Purpose of Pay ElementAnnual Variable Pay

Broad based employee short term pay-at-risk incentive for
    achieving predetermined annual financial and individual
    performance objectives

   Provide a direct link between pay and annual business objectives
   Pay for performance to motivate and encourage the achievement of critical business initiativesProfit Sharing

Broad based employee short term pay-at-risk program for
    achieving predetermined Return On Equity performance levels

   Provide a direct link between employee pay and CHSs profitability
   Encourage proper expense control and containmentLong-Term Incentive Plans

Long-term pay-at-risk incentive for Senior Management to achieve
    predetermined triennial Return On Equity performance goals

   Provide a direct link between senior management pay and long-term strategic business objectives
   Align management and member owner interests
   Encourage retention of key managementRetirement Benefits

Retirement benefits under the qualified retirement benefits are
    identical to the broad based retirement plans generally
    available to all full-time employees

These benefits are a part of our broad-based employee total
    rewards programThe supplemental plans include non-qualified retirement benefits
    that restore qualified benefits contained in our broad based
    plans for employees whose retirement benefits are limited by
    salary caps under the Internal Revenue Code. In addition, the
    plans allow participants to voluntarily defer receipt of a
    portion of their income

These benefits are provided to attract and retain senior
    managers with total rewards programs that are competitive with
    comparable companiesHealth & Welfare Benefits

Medical, dental, vision, life insurance and disability benefits
    generally available to all full-time employees with supplemental
    executive long-term disability

These benefits are a part of our broad-based employee total
    rewards programAdditional Benefits and Perquisites

Additional benefits and perquisites provided to certain
    officers, including our Named Executive Officers

These benefits are provided to remain competitive with
    comparable companies, retain individuals who are critical to
    CHS, facilitate the executives relationships with
    customers and to support their roles in the community.  60




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##### Table of Contents



Base
    Pay:
      Annual
    Variable Pay:
      CHS Company

Business Unit

Management Business

Percent of TargetPerformance Level

Performance Goal

Performance Goal

Objectives

AwardMaximum
    Target
    Threshold
    Below Threshold

12% Return on Equity
    10% Return on Equity
    7% Return on Equity

Threshold, Target and Maximum Return on Equity goals vary by
    business unit

Individual performance goals


200%
    100%
    20%
    0%        61




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##### Table of Contents



John D. Johnson

$
1,775,700John Schmitz

$
690,060Leon E. Westbrock

$
775,740Mark Palmquist

$
745,780Jay Debertin

$
574,000   Profit
    Sharing:
    ProfitEquates to Net

SharingReturn On Equity

Income for Fiscal 2007

Award13.0%

$260.2 Million


5
%12.0%

$240.2 Million


4
%10.0%

$200.2 Million


3
%9.0%

$180.2 Million


2
%7.0%

$140.2 Million


1
%     Return On Equity

Profit Sharing Award14.0%


5
%12.0%


4
%10.0%


3
%9.0%


2
%8.0%


1
%   Long-Term
    Incentive Plans:
   62




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##### Table of Contents



three-year 2005-2007
  three-year
    John D. Johnson

$
1,766,666John Schmitz

$
672,326Leon E. Westbrock

$
755,814Mark Palmquist

$
736,074Jay Debertin

$
552,160   Retirement
    Benefits:
    
    CHS Inc. Pension Plan
    CHS Inc. Savings Plan
    CHS Inc. Supplemental Executive Retirement Plan, and
    CHS Inc. Deferred Compensation Plan  CHS Inc.
    Pension Plan
    pay credits investment credits
   63




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##### Table of Contents



Regular
    Pay Credits
  Pay Below Social Security


Pay Above Social SecurityYears of Benefit Service

Taxable Wage Base


Taxable Wage Base1 - 3 years


3
%


6
%4 - 7 years


4
%


8
%8 - 11 years


5
%


10
%12 - 15 years


6
%


12
%16 years or more


7
%


14
%   Mid
    Career Pay Credits
    Minimum Pay CreditPay Below Social Security


Pay Above Social SecurityAge at Date of Hire

Taxable Wage Base


Taxable Wage BaseAge 40 - 44


4
%


8
%Age 45 - 49


5
%


10
%Age 50 or more


6
%


12
%   Special
    Career Credits
    Total Age and ServiceAs of 1/01/1988

Additional Credit of50 - 54


1
%55 - 59


2
%60 - 64


3
%65 - 69


4
%70 or more


5
%   Investment
    Credits
  12-month
  CHS Inc.
    Savings Plan
   64




---



##### Table of Contents



CHS Inc.
    Supplemental Executive Retirement Plan and CHS Inc. Deferred
    Compensation Plan
                Health &
    Welfare Benefits:
    Medical
    Plans
   65




---



##### Table of Contents



Dental,
    Vision, Hearing Plan
    Life,
    AD&D and Dependent Life Insurance
    Short-
    and Long-term disability
    Flexible
    Spending Accounts/Health Savings Accounts
    Travel
    Assistance Program
    Additional
    Benefits and Perquisites:
   66




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##### Table of Contents



Summary
    Compensation Table
  Change in PensionValue andNon-QualifiedNon-Equity


DeferredIncentive Plan


Compensation


All OtherName and Principal Position

Year


Salary(5)


Compensation(1),(5)


Earnings(2)


Compensation(3),(4)


TotalJohn D. Johnson


2007


$
900,000


$
3,542,366


$
1,050,906


$
267,018


$
5,760,290President & Chief Executive OfficerJohn Schmitz


2007



492,900



1,362,386



208,021



112,868



2,176,175Executive Vice President & Chief Financial OfficerLeon E. Westbrock


2007



554,100



1,531,554



991,223



129,683



3,206,560Executive Vice PresidentMark Palmquist


2007



532,700



1,481,854



193,536



143,447



2,351,537Executive Vice PresidentJay Debertin


2007



410,000



1,126,160



123,906



107,526



1,767,592Executive Vice President     (1)
    
    Amounts include CHS annual variable pay awards and long-term
    incentive awards.(2)
    
    This column represents both changes in pension value and
    above-market earnings on deferred compensation. Change in
    pension value is the aggregate change in the actuarial present
    value of the Named Executive Officers benefit under their
    retirement program and non qualified earnings, if applicable.Above-market earnings represent earnings exceeding 120% of the
    Federal Reserve long-term rate as determined by the Internal
    Revenue Service (IRS) on applicable funds. The following Named
    Executive Officers had above market earnings: John D. Johnson-
    $26,787; John Schmitz- $291; Leon E. Westbrock- $835; and Mark
    Palmquist- $342.(3)
    
    Amounts include CHS paid executive LTD, travel accident
    insurance, executive physical, CHS contributions to qualified
    and non-qualified defined contribution plans, car allowance,
    spousal travel, sporting tickets, club dues/memberships and
    financial planning.(4)
    
    This column includes car allowance amounts as follows: John D.
    Johnson- $25,800; and $15,120 each for John Schmitz, Leon E.
    Westbrock, Mark Palmquist and Jay Debertin.(5)
    
    Amounts reflect the gross compensation and include any
    applicable deferrals. Mr. Debertin deferred $206,043.  Material
    Terms of Named Executive Officer Employment Agreement
   67




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##### Table of Contents



Explanation
    of Ratio of Salary and Bonus to Total Compensation
    Grants of
    Plan-Based Awards
    Estimated Future Payouts Under Non-Equity Incentive Plan
    Awards
  Name

Grant Date


Threshold


Target


MaximumJohn D. Johnson


9-1-06
(1)

$
180,000


$
900,000


$
1,800,0009-1-06
(2)


180,000



900,000



1,800,000John Schmitz


9-1-06
(1)


71,078



355,390



710,7809-1-06
(2)


70,387



351,937



703,873Leon E. Westbrock


9-1-06
(1)


79,800



399,000



798,0009-1-06
(2)


79,058



395,290



790,580Mark Palmquist


9-1-06
(1)


76,818



384,090



768,1809-1-06
(2)


76,071



380,357



760,713Jay Debertin


9-1-06
(1)


59,122



295,610



591,2209-1-06
(2)


58,548



292,740



585,480     (1)
    
    Represents range of possible awards under our Annual Variable
    Pay Plan. The actual amount of the award earned for fiscal 2007
    is presented in the Non-Equity Incentive Plan
    Compensation column of our Summary Compensation Table. The
    Annual Variable Pay Plan is described in the Compensation
    Discussion and Analysis.(2)
    
    Represents range of possible awards under our Long-Term
    Incentive Plan for the fiscal
    2007-2009
    performance period. Goals are based on achieving a three-year
    ROE of 7%, 10% and 12%. Awards are earned over a three-year
    period and vest over an additional twenty-six-month period.  Grants
    Based Award Table Material Terms of Awards Disclosed in
    Table
   68




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##### Table of Contents



Pension
    Benefits Table
  Number of

PresentYears of

Value of

PaymentsCredited

Accumulated

During LastName

Plan Name

Service

Benefits

Fiscal YearJohn D. Johnson(1)

CHS Inc. Pension Plan

30.6667

$
515,668


$
0SERP

30.6667


3,439,646



0Special SERP

30.6667


1,738,908



0John Schmitz(1)

CHS Inc. Pension Plan

32.7500


462,851



0SERP

32.7500


685,723



0Leon E. Westbrock(1)

CHS Inc. Pension Plan

26.0000


617,971



0SERP

26.0000


4,134,653



0Mark Palmquist

CHS Inc. Pension Plan

27.8333


365,258



0SERP

27.8333


737,173



0Jay Debertin

CHS Inc. Pension Plan

23.0833


243,489



0SERP

23.0833


300,125



0     (1)
    
    An executive is eligible for early retirement in both the CHS
    Inc. Pension Plan and the Supplemental Executive Retirement Plan      Form 10-K
  
    Discount rate of 6.25%;
    RP-2000 Combined Healthy Participant mortality table
    (post-decrement only);
    Each Named Executive Officer is assumed to retire at the
    earliest retirement age at which unreduced benefits are
    available (age 62 for Mr. Westbrock and age 65
    for all others). The early retirement benefits under the CENEX
    formula and the Farmers Union Central Exchange, Inc.
    formula are both currently described under the Pension Benefits
    Table. The early retirement benefit under the cash balance plan
    formula is equal to the participants account balance.
    Early retirement is not defined under the Special SERP; and
    Payments under the cash balance formula of the Pension Plan
    assume a lump sum payment and payments under the grandfather
    formula of the Pension Plan assume a single-life annuity. SERP
    benefits are payable as a lump sum.       69




---



##### Table of Contents



Year

Amount2003-2007

$
263,6632008


306,1632009


350,4282010


395,481                 2 3 1 3
  2 3 1 3
 70




---



##### Table of Contents



2007
    Nonqualified Deferred Compensation Table
  Executive

Registrant



Aggregate

Aggregate BalanceContributions in

Contributions in

Aggregate Earnings

Withdrawals/

at Last Fiscal YearName

Last Fiscal Year(3)

Last Fiscal Year(1)

in Last Fiscal Year(4)

Distributions

End (1),(2)John D. Johnson

$
0


$
2,277,224


$
938,066


$
0


$
15,743,925John Schmitz


0



732,393



79,441



125,301



1,612,537Leon E. Westbrock


0



818,268



273,968



1,170,155



4,287,239Mark Palmquist


0



804,130



97,953



0



1,991,163Jay Debertin


206,043



518,939



420,642



0



4,405,762     (1)
    
    Deferrals under the plan are made by the Named Executive
    Officer. Amounts include Long Term Incentive Plan (LTIP),
    retirement contributions on amounts exceeding IRS compensation
    limits, Profit Sharing, 401k match, plus Mr. Johnsons
    Special SERP.(2)
    
    Amounts vary in accordance with individual pension plan
    provisions and voluntary employee deferrals and withdrawals.
    These amounts include roll-overs, voluntary salary and voluntary
    incentive plan contributions from predecessor plans with
    predecessor employers that have increased in value over the
    course of the executives career. Named Executive Officers
    may defer up to 30% of their base salary and up to 100% of their
    annual variable pay to the Deferred Compensation Plan. Earnings
    on amounts deferred under the plan are determined based on the
    investment election made by the Named Executive Officer from
    five market based notional investments with a varying level of
    risk selected by CHS, and a fixed rate based on
    10-year U.S.
    Treasury Notes. Named Executive Officers may change their
    investment election daily with a maximum of 12 changes per year.
    Payments of amounts deferred are made in accordance with
    elections by the Named Executive Officer and in accordance with
    IRC §409(A). Payments under the plan may be made at a
    specified date elected by the Named Executive Officer or
    deferred until retirement, disability, or death. Payments would
    be made in a lump sum. In the event of retirement, the Named
    Executive Officer can elect to receive payments either in a lump
    sum or annual installments up to 10 years.(3)
    
    Includes amounts deferred from salary and annual incentive pay
    reflected in the Summary Compensation Table.(4)
    
    The amounts in this column include the change in value of the
    balance, not including contributions made by the Named Executive
    Officer. 71




---



##### Table of Contents



Post
    Employment
    John D. Johnson

$
900,000John Schmitz

$
492,900Leon E. Westbrock

$
554,100Mark Palmquist

$
532,700Jay Debertin

$
362,692       Director
    Compensation
  Overview
    Director
    Retirement and Healthcare Benefits
       72




---



##### Table of Contents



Years of Service

Director


CHS0 to 3


100
%


0
%3 to 6


50
%


50
%6+


0
%


100
%   Director
    Life Insurance
    CHS
    Inc. Deferred Compensation Plan
     73




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##### Table of Contents



Director
    Compensation Table
  Change in Pension ValueFees Earned or

and Nonqualified Deferred

All OtherName(1)

Paid in Cash(4)

Compensation Earnings(2)

Compensation(3)

TotalBruce Anderson

$
64,500


$
34,276


$
5,368


$
104,144Donald Anthony


44,100



11,664



6,649



62,413Robert Bass


64,500



30,104



12,087



106,691David Bielenberg


17,350



4,884



5,001



27,235Dennis Carlson(5)


57,300



17,161



10,797



85,258Curt Eischens


62,700



18,224



14,163



95,087Steven Fritel


62,100



19,861



17,229



99,190Robert Grabarski


66,300



33,974



10,061



110,335Jerry Hasnedl(5)


64,500



39,028



11,480



115,008David Kayser


43,050



7,003



11,701



61,754James Kile


63,000



48,713



9,432



121,145Randy Knecht


61,800



29,504



13,393



104,697Michael Mulcahey


62,400



30,668



13,945



107,013Richard Owen


63,600



24,725



9,908



98,233Steve Riegel


45,300



10,544



6,686



62,530Daniel Schurr


44,850



4,867



11,634



61,351Duane Stenzel(5)


61,050



31,038



10,912



103,000Michael Toelle


83,100



20,196



15,407



118,703Merlin Van Walleghen


20,200



3,571



6,109



29,880     (1)
    
    Change in board membership includes: Newly elected and departing
    directors as of
    12-1-06 
    new directors are Donald Anthony, David Kayser, Steve Riegel and
    Daniel Schurr; and departing directors are David Bielenberg (not
    re-elected), and Merlin VanWalleghen (retired)(2)
    
    This column represents both changes in pension value and
    above-market earnings on deferred compensation. Change in
    pension value is the aggregate change in the actuarial present
    value of the directors benefit under their retirement
    program, and nonqualified earnings, if applicable. The change in
    pension value will vary by director based on several factors
    including, age, service, pension benefit elected (lump sum or
    annuity- see above), discount rate and mortality factor used to
    calculate the benefit due.Above-market earnings represent earnings exceeding 120% of the
    Federal Reserve long-term rate as determined by the IRS on
    applicable funds. The following directors had above market
    earnings during the year: Robert Bass, $3; Michael Toelle, $5;
    and Merlin Van Walleghen, $18.(3)
    
    All other compensation includes health and life insurance
    premiums and spousal travel. These amounts vary primarily due to
    the variations in life and health insurance premiums. Premium
    variations are due to several factors including the
    directors age, length of service and the number of
    dependents covered by health care benefits.-
    
    Health care premiums paid for directors include: Bruce Anderson,
    $4,556; Donald Anthony, $5,752; Robert Bass, $10,596; David
    Bielenberg, $1,352; Dennis Carlson, $7,104; Curt Eischens,
    $12,184; Steven Fritel, $12,668; Robert Grabarski, $8,520; Jerry
    Hasnedl, $8,520; David Kayser, $9,952; James Kile, $8,520; Randy
    Knecht, $9,196; Michael Mulcahey, $8,520; Richard Owen, $8,520;
    Steve Riegel, $5,752; Daniel Schurr, $9,952; Duane Stenzel,
    $8,520; Michael Toelle, $14,744; and Merlin Van Walleghen,
    $2,768.-
    
    Life insurance premiums paid for directors include: Dave
    Bielenberg, $3,000; Dennis Carlson, $1,500; Steven Fritel,
    $2,931; Randy Knecht, $2,100; and Michael Mulcahey, $3,685. 74




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##### Table of Contents



-
    
    Spousal travel includes: Bruce Anderson, $735; Donald Anthony,
    $839; Robert Bass, $1,414; David Bielenberg, $630; Dennis
    Carlson, $2,116; Curt Eischens, $1,902; Robert Grabarski,
    $1,464; Jerry Hasnedl, $2,883; David Kayser, $1,691; Randy
    Knecht, $2,020; Michael Mulcahey, $1,663; Richard Owen, $1,818;
    Steve Riegel, $876; Daniel Schurr, $1,624; Duane Stenzel,
    $2,315; and Merlin Van Walleghen, $3,322.(4)
    
    Of this amount, the following directors defer the succeeding
    amounts to the Defined Contribution Plan: Steven Fritel, $6,900;
    Jerry Hasnedl,: $6,000; Michael Mulcahey, $6,000; Steve Riegel,
    $6,195; Michael Toelle, $6,000; and Merlin Van Walleghen, $4,000.(5)
    
    Made a one-time irrevocable retirement election in 2005 to
    receive a lump sum benefit under the directors retirement
    plan. All other directors will receive a monthly annuity upon
    retirement.  Compensation
    Committee Interlocks and Insider Participation
      Report
    of the Corporate Responsibility Committee
  Regulation S-K Form 10-K.
    
 75




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##### Table of Contents



ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Amount andNature ofBeneficialTitle of Class

Name of Beneficial Owner

Ownership


% of Class8% Cumulative Redeemable
    Preferred Stock

Directors:Michael Toelle


420 shares
(1)



*Bruce Anderson


40 shares




*Donald Anthony


0 shares




*Robert Bass


120 shares




*Dennis Carlson


710 shares
(1)



*Curt Eischens


120 shares




*Steve Fritel


880 shares




*Robert Grabarski


6,580 shares
(1)



*Jerry Hasnedl


200 shares




*David Kayser


0 shares




*James Kile


250 shares
(1)



*Randy Knecht


438 shares
(1)



*Michael Mulcahey


100 shares




*Richard Owen


240 shares




*Steve Riegel


0 shares




*Daniel Schurr


0 shares




*Duane Stenzel


600 shares




*Named Executive Officers:John D. Johnson


7,220 shares
(1)



*Jay Debertin


1,200 shares




*Patrick Kluempke


1,000 shares




*Thomas D. Larson


400 shares




*Mark Palmquist


400 shares




*John Schmitz


1,400 shares
(1)



*Leon E. Westbrock


3,000 shares




*Directors and executive officers as a group


25,318 shares




*     (1)
    
    Includes shares held by spouse, children and Individual
    Retirement Accounts (IRA).*
    
    Less than 1%.      ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE   76




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##### Table of Contents



mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law sister-in-law,
  Product Sales


PatronageName

and Purchases


DividendsBruce Anderson

$
258,692


$
2,197Curt Eischens


265,129



2,448Jerry Hasnedl


882,080



33,537David Kayser


651,517



14,789Michael Toelle


578,619



18,891   Review,
    Approval or Ratification of Related Party Transaction
      Director
    Independence
       77




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##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Description of Fees

2007


2006Audit Fees(1)

$
1,246,665


$
1,308,490Audit  Related Fees(2)


122,072



95,165Tax Fees(3)


20,850



257,480All Other Fees






Total

$
1,389,587


$
1,661,135     (1)
    
    Includes fees for audit of annual financial statements and
    reviews of the related quarterly financial statements, certain
    statutory audits, work related to filings of registration
    statements, and services for 404 readiness efforts.(2)
    
    Includes fees for employee benefit plan audits.(3)
    
    Includes fees related to tax compliance, tax advice and tax
    planning.     78




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##### Table of Contents



PART IV.
  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENTS  FINANCIAL STATEMENTS
  Form 10-K.
  Page No.CHS Inc.Report of Independent Registered Public Accounting Firm


F-1Consolidated Balance Sheets as of August 31, 2007 and 2006


F-2Consolidated Statements of Operations for the years ended
    August 31, 2007, 2006 and 2005


F-3Consolidated Statements of Equities and Comprehensive Income for
    the years ended August 31, 2007, 2006 and 2005


F-4Consolidated Statements of Cash Flows for the years ended
    August 31, 2007, 2006 and 2005


F-5Notes to Consolidated Financial Statements


F-6    FINANCIAL STATEMENT SCHEDULES
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
  Balance at


Additions:


Additions:


Deductions:


Balance atBeginning


Charged to Costs


Charged to


Write-offs, net


Endof Year


and Expenses


Other Accounts


of Recoveries


of Year(Dollars in thousands)Allowances for Doubtful Accounts2007

$
53,898


$
12,358






$
(3,296
)

$
62,9602006


60,041



11,414







(17,557
)


53,8982005


55,809



12,962







(8,730
)


60,041   Balance at


Additions:


Additions:


Deductions:


Balance atBeginning


Charged to Costs


Charged to


Expenditures


Endof Year


and Expenses


Other Accounts


for Maintenance


of Year(Dollars in thousands)Accrued Turnaround(1)2007

$
19,390


$
35,412






$
(34,158
)

$
20,6442006


19,035



43,234







(42,879
)


19,3902005


12,949



21,558







(15,472
)


19,035     (1)
    
    Accruals for planned major maintenance activities at our energy
    refineries 79




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on
  Financial Statement Schedule
    page F-1 Form 10-K Form 10-K.
  
     80




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##### Table of Contents



EXHIBITS
  3
.1

Articles of Incorporation of CHS Inc., as amended. (Incorporated
    by reference to our
    Form 10-Q
    for the quarterly period ended November 30, 2006, filed on
    January 11, 2007).3
.2

Bylaws of CHS Inc. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended November 30, 2005, filed on
    January 11, 2006).4
.1

Resolution Creating a Series of Preferred Equity to be
    Designated 8% Cumulative Redeemable Preferred Stock.
    (Incorporated by reference to Amendment No. 1 to our
    Registration Statement on
    Form S-2
    (File
    No. 333-101916),
    dated January 13, 2003).4
.2

Form of Certificate Representing 8% Cumulative Redeemable
    Preferred Stock. (Incorporated by reference to Amendment
    No. 2 to our Registration Statement on
    Form S-2
    (File
    No. 333-101916),
    dated January 23, 2003).4
.3

Unanimous Written Consent Resolution of the Board of Directors
    Amending the Amended and Restated Resolution Creating a Series
    of Preferred Equity to be Designated 8% Cumulative Redeemable
    Preferred Stock. (Incorporated by reference to Amendment
    No. 2 to our Registration Statement on
    Form S-2
    (File
    No. 333-101916),
    dated January 23, 2003).4
.4

Unanimous Written consent Resolution of the Board of Directors
    Amending the Amended and Restated Resolution Creating a Series
    of Preferred Equity to be Designated 8% Cumulative Redeemable
    Preferred Stock to change the record date for dividends.
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2003, filed
    July 2, 2003).10
.1

Lease between the Port of Kalama and North Pacific Grain
    Growers, Inc., dated November 22, 1960. (Incorporated by
    reference to our Registration Statement on
    Form S-1
    (File
    No. 333-17865),
    filed December 13, 1996).10
.2

Limited Liability Company Agreement for the Wilsey-Holsum Foods,
    LLC dated July 24, 1996. (Incorporated by reference to our
    Registration Statement on
    Form S-1
    (File
    No. 333-17865),
    filed December 13, 1996).10
.3

Long Term Supply Agreement between Wilsey-Holsum Foods, LLC and
    Harvest States Cooperatives dated August 30, 1996.
    (Incorporated by reference to our Registration Statement on
    Form S-1/A
    (File
    No. 333-17865),
    filed January 24, 1997).(*)10
.4

TEMCO, LLC Limited Liability Company Agreement between Cargill,
    Incorporated and Cenex Harvest States Cooperatives dated as of
    August 26, 2002. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2002, filed November 25,
    2002).10
.5

Cenex Harvest States Cooperatives Supplemental Savings Plan.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000).10
.5A

Amendment No. 3 to the CHS Inc. Supplemental Savings Plan.
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).10
.6

Cenex Harvest States Cooperatives Supplemental Executive
    Retirement Plan. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000).10
.6A

Amendment No. 4 to the CHS Inc. Supplemental Executive
    Retirement Plan. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).10
.7

Cenex Harvest States Cooperatives Senior Management Compensation
    Plan. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000)10
.8

Cenex Harvest States Cooperatives Executive Long-Term Variable
    Compensation Plan. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000)10
.9

Cenex Harvest States Cooperatives Share Option Plan.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.9A

Amendment to Cenex Harvest States Share Option Plan, dated
    June 28, 2001. (Incorporated by reference to our
    Registration Statement on
    Form S-2
    (File
    No. 333-65364),
    filed July 18, 2001).10
.9B

Amendment No. 2 to Cenex Harvest States Share Option Plan,
    dated May 2, 2001. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.9C

Amendment No. 3 to Cenex Harvest States Share Option Plan,
    dated June 4, 2002. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.9D

Amendment No. 4 to Cenex Harvest States Share Option Plan,
    dated April 6, 2004. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.10

CHS Inc. Share Option Plan Option Agreement. (Incorporated by
    reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004). 81




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##### Table of Contents



10
.11

CHS Inc. Share Option Plan Trust Agreement. (Incorporated
    by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.11A

Amendment No. 1 to the Trust Agreement. (Incorporated
    by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.12

$225,000,000 Note Agreement (Private Placement Agreement) dated
    as of June 19, 1998 among Cenex Harvest States Cooperatives
    and each of the Purchasers of the Notes. (Incorporated by
    Reference to our
    Form 10-Q
    Transition Report for the period June 1, 1998 to
    August 31, 1998, filed October 14, 1998).10
.12A

First Amendment to Note Agreement ($225,000,000 Private
    Placement), effective September 10, 2003, among CHS Inc.
    and each of the Purchasers of the notes. (Incorporated by
    reference to our
    Form 10-K
    for the year ended August 31, 2003, filed November 21,
    2003).10
.13

2006 Amended and Restated Credit Agreement (Revolving Loan) by
    and between CHS Inc. and the Syndication Parties dated as of
    May 18, 2006. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).10
.13A

First Amendment to 2006 Amended and Restated Credit Agreement by
    and among CHS Inc., CoBank, ACB and the Syndication Parties,
    dated May 8, 2007 (Incorporated by reference to our Current
    Report on
    Form 8-K
    filed May 11, 2007).10
.14

$200 Million Term Loan Credit Agreement dated as of June 1,
    1998 among Cenex Harvest States Cooperatives, CoBank, ACB, and
    St. Paul Bank for Cooperatives, including Exhibit 2.4 (form
    of $200 Million Promissory Note). (Incorporated by Reference to
    our
    Form 10-Q
    Transition Report for the period June 1, 1998 to
    August 31, 1998, filed October 14, 1998).10
.14A

First Amendment to Credit Agreement (Term Loan), effective as of
    May 31, 1999 among Cenex Harvest States Cooperatives,
    CoBank, ACB, and St. Paul Bank for Cooperatives. (Incorporated
    by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 1999, filed
    July 13, 1999).10
.14B

Second Amendment to Credit Agreement (Term Loan) dated
    May 23, 2000 by and among Cenex Harvest States
    Cooperatives, CoBank, ACB, St. Paul Bank for Cooperatives and
    the Syndication Parties. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2000, filed
    July 10, 2000).10
.14C

Third Amendment to Credit Agreement (Term Loan) dated
    May 23, 2001 among Cenex Harvest States Cooperatives,
    CoBank, ACB, and the Syndication Parties. (Incorporated by
    reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2001, filed
    July 3, 2001).10
.14D

Fourth Amendment to Credit Agreement (Term Loan) dated
    May 22, 2002 among Cenex Harvest States Cooperatives,
    CoBank, ACB and the Syndication Parties. (Incorporated by
    reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2002, filed
    July 3, 2002).10
.14E

Fifth Amendment to Credit Agreement (Term Loan) dated
    May 21, 2003 by and among Cenex Harvest States
    Cooperatives, CoBank, ACB and the Syndication Parties.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.14F

Sixth Amendment to Credit Agreement (Term Loan) dated as of
    May 20, 2004 by and among CHS Inc., CoBank, ACB, and the
    Syndication Parties. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2004, filed
    July 12, 2004).10
.14G

Seventh Amendment to Credit Agreement (Term Loan) dated as of
    May 19, 2005 by and among CHS Inc., CoBank, ACB, and the
    Syndication Parties. (Incorporated by reference to our
    form 10-K
    for the year ended August 31, 2005, filed on
    November 18, 2005)10
.14H

Eighth Amendment to Credit Agreement (Term Loan) dated as of
    November 18, 2005 by and among CHS Inc., CoBank, ACB, and
    the Syndication Parties. (Incorporated by reference to our
    form 10-K
    for the year ended August 31, 2005, filed on
    November 18, 2005).10
.14I

Ninth Amendment to Credit Agreement (Term Loan) dated as of
    May 18, 2006 by and among CHS Inc., CoBank, ACB and the
    Syndication Parties. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006).10
.14J

Tenth Amendment to Credit Agreement (Term Loan) dated as of
    May 8, 2007 by and among CHS Inc. and CoBank, ACB
    (Incorporated by reference to our Current Report on
    Form 8-K
    filed May 11, 2007).10
.15

Limited Liability Agreement of United Harvest, LLC dated
    November 9, 1998 between United Grain Corporation and Cenex
    Harvest States Cooperatives. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended November 30, 1998, filed
    January 13, 1999). 82




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10
.16

Joint Venture Agreement for Agriliance LLC, dated as of
    January 1, 2000 among Farmland Industries, Inc., Cenex
    Harvest States Cooperatives, United Country Brands, LLC and Land
    O Lakes, Inc. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended February 29, 2000, filed
    April 11, 2000).10
.17

Employment Agreement dated November 6, 2003 by and between
    John D. Johnson and CHS Inc. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2003, filed November 21,
    2003).10
.17A

Amended and Restated Employment Agreement between John D.
    Johnson and CHS Inc., effective as of August 1, 2007
    (Incorporated by reference to our Current Report on
    Form 8-K
    filed August 10, 2007).10
.18

CHS Inc. Special Supplemental Executive Retirement Plan.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2003, filed November 21,
    2003).10
.19

Note purchase and Private Shelf Agreement dated as of
    January 10, 2001 between Cenex Harvest States Cooperatives
    and The Prudential Insurance Company of America. (Incorporated
    by reference to our
    Form 10-Q
    for the quarterly period ended February 28, 2001, filed
    April 10, 2001).10
.19A

Amendment No. 1 to Note Purchase and Private Shelf
    Agreement, dated as of March 2, 2001. (Incorporated by
    reference to our
    Form 10-Q
    for the quarterly period ended February 28, 2001, filed
    April 10, 2001)10
.20

Note Purchase Agreement and Series D & E Senior
    Notes dated October 18, 2002. (Incorporated by reference to
    our
    Form 10-K
    for the year ended August 31, 2002, filed November 25,
    2002).10
.21

2003 Amended and Restated Credit Agreement ($15 million,
    2 Year Facility) dated December 16, 2003 between
    CoBank, ACB, U.S. AgBank, FCB and the National Cooperative
    Refinery Association, Inc. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended February 29, 2004, filed
    April 7, 2004).10
.21A

First Amendment to the 2003 Amended and Restated Credit
    Agreement between the National Cooperative Refinery Association
    and the Syndication Parties. (Incorporated by reference to our
    Current Report on
    Form 8-K
    filed December 20, 2005).10
.21B

Third Amendment to 2003 Amended and Restated Credit Agreement
    between National Cooperative Refinery Association and the
    Syndication Parties (Incorporated by reference to our Current
    Report on
    Form 8-K
    filed December 18, 2006)10
.22

Note Purchase and Private Shelf Agreement between CHS Inc. and
    Prudential Capital Group dated as of April 13, 2004.
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2004, filed
    July 12, 2004).10
.22A

Amendment No. 1 to Note Purchase and Private Shelf
    Agreement dated April 9, 2007, among CHS Inc., Prudential
    Investment Management, Inc. and the Prudential Affiliate parties
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended February 28, 2007 filed
    April 9, 2007).10
.23

Note Purchase Agreement for Series H Senior Notes dated
    September 21, 2004. (Incorporated by reference to our
    Current Report on
    Form 8-K
    filed September 22, 2004).10
.24

Deferred Compensation Plan. (Incorporated by reference to our
    Registration Statement on
    Form S-8
    (File
    No. 333-121161),
    filed December 10, 2004).10
.24A

First Amendment to CHS Inc. Deferred Compensation Plan.
    (Incorporated by reference to our Registration Statement on
    Form S-8
    (File
    No. 333-129464),
    filed November 4, 2005).10
.24B

Second Amendment to the CHS Inc. Deferred Compensation Plan.
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).10
.25

New Plan Participants 2005 Plan Agreement and Election Form for
    the CHS Inc. Deferred Compensation Plan. (Incorporated by
    reference to our Registration Statement on
    Form S-8
    (File
    No. 333-121161),
    filed December 10, 2004).10
.26

Beneficiary Designation Form for the CHS Inc. Deferred
    Compensation Plan. (Incorporated by reference to our
    Registration Statement on
    Form S-8
    (File
    No. 333-121161),
    filed December 10, 2004).10
.27

Share Option Plan Participants 2005 Plan Agreement and Election
    Form. (Incorporated by reference to our Registration Statement
    on
    Form S-8
    (File
    No. 333-129464),
    filed November 4, 2005). 83




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10
.28

Amended and Restated Loan and Security Agreement dated
    August 31, 2006, by and between Provista Renewable Fuels
    Marketing, LLC and LaSalle Bank National Association
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2006, filed November 22,
    2006).10
.28A

First Amendment to Amended and Restated Loan and Security
    Agreement by and among Provista Renewable Fuels Marketing, LLC
    and LaSalle Bank National Association dated January 30,
    2007 (Incorporated by reference to our Current Report on
    Form 8-K
    filed January 31, 2007).10
.28B

Second Amendment to Amended and Restated Loan and Security
    Agreement by and among Provista Renewable Fuels Marketing, LLC
    and LaSalle Bank National Association dated November 2,
    2007 (Incorporated by reference to our Current Report on
    Form 8-K
    filed November 6, 2007).10
.29

City of McPherson, Kansas Taxable Industrial Revenue Bond
    Series 2006 registered to National Cooperative Refinery
    Association in the amount of $325 million (Incorporated by
    reference to our Current Report on
    Form 8-K
    filed December 18, 2006).10
.30

Bond Purchase Agreement between National Cooperative Refinery
    Association, as purchaser, and City of McPherson, Kansas, as
    issuer, dated as of December 18, 2006 (Incorporated by
    reference to our Current Report on
    Form 8-K
    filed December 18, 2006).10
.31

Trust Indenture between City of McPherson, Kansas, as
    issuer, and Security Bank of Kansas City, Kansas City, Kansas,
    as trustee, dated as of December 18, 2006 (Incorporated by
    reference to our Current Report on
    Form 8-K
    filed December 18, 2006).10
.32

Lease agreement between City of McPherson, Kansas, as issuer,
    and National Cooperative Refinery Association, as tenant, dated
    as of December 18, 2006 (Incorporated by reference to our
    Current Report on
    Form 8-K
    filed December 18, 2006).10
.33

Commercial Paper Placement Agreement by and between CHS Inc. and
    Marshall & Ilsley Bank dated October 30, 2006
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended November 30, 2006, filed
    January 11, 2007).10
.34

Commercial Paper Dealer Agreement by and between CHS Inc. and
    SunTrust Capital Markets, Inc. dated October 6, 2006
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended November 30, 2006, filed
    January 11, 2007).10
.35

Note Purchase Agreement and Series I Senior Notes dated as
    of October 4, 2007 (Incorporated by reference to our
    Current Report on
    Form 8-K
    filed October 4, 2007).10
.36

Agreement Regarding Distribution of Assets, by and among CHS
    Inc., United Country Brands, LLC, Land OLakes, Inc. and
    Winfield Solutions, LLC, made as of September 4, 2007. (**)21
.1

Subsidiaries of the Registrant. (**)23
.1

Consent of Independent Registered Public Accounting Firm. (**)24
.1

Power of Attorney. (**)31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002. (**)31
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002. (**)32
.1

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002. (**)32
.2

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002. (**)     (*)
    
    Pursuant to Rule 406 of the Securities Act of 1933, as
    amended, confidential portions of Exhibit 10.3 have been
    deleted and filed separately with the Securities and Exchange
    Commission pursuant to a request for confidential treatment.(**)
    
    Filed herewith.  EXHIBITS
    SCHEDULES
    SUPPLEMENTAL
    INFORMATION
   84




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##### Table of Contents



SIGNATURES
      By:
    /s/  John
    D. Johnson   President and Chief Executive Officer
    Signature

Title/s/  John
    D. JohnsonJohn
    D. Johnson

President and Chief Executive Officer
    (principal executive officer)/s/  John
    SchmitzJohn
    Schmitz

Executive Vice President and Chief Financial Officer (principal
    financial officer)/s/  Jodell
    HellerJodell
    Heller

Vice President and Controller
    (principal accounting officer)Michael
    Toelle*

Chairman of the Board of DirectorsBruce
    Anderson*

DirectorDon
    Anthony*

DirectorRobert
    Bass*

DirectorDennis
    Carlson*

DirectorCurt
    Eischens*

DirectorSteve
    Fritel*

DirectorRobert
    Grabarski*

Director 85




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##### Table of Contents



Signature

TitleJerry
    Hasnedl*

DirectorDavid
    Kayser*

DirectorJames
    Kile*

DirectorRandy
    Knecht*

DirectorMichael
    Mulcahey*

DirectorRichard
    Owen*

DirectorSteve
    Riegel*

DirectorDan
    Schurr*

DirectorDuane
    Stenzel*

Director*By

/s/  John
    D. JohnsonJohn
    D. JohnsonAttorney-in-fact  86




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board
    of Directors and Members and Patrons of CHS Inc.:
      
    F-1




---



##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS
  August 312007


2006(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
357,712


$
112,525Receivables


1,401,251



1,076,602Inventories


1,666,632



1,130,824Other current assets


511,263



298,666Total current assets


3,936,858



2,618,617Investments


880,592



624,253Property, plant and equipment


1,728,171



1,476,239Other assets


147,965



223,474Total assets

$
6,693,586


$
4,942,583LIABILITIES AND EQUITIESCurrent liabilities:Notes payable

$
672,571


$
22,007Current portion of long-term debt


98,977



60,748Customer credit balances


110,818



66,468Customer advance payments


161,525



82,362Checks and drafts outstanding


143,133



57,083Accounts payable


1,120,822



904,143Accrued expenses


439,084



347,078Dividends and equities payable


374,294



249,774Total current liabilities


3,121,224



1,789,663Long-term debt


589,344



683,997Other liabilities


359,198



310,157Minority interests in subsidiaries


190,830



141,375Commitments and contingenciesEquities


2,432,990



2,017,391Total liabilities and equities

$
6,693,586


$
4,942,583    F-2




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years Ended August 312007


2006


2005(Dollars in thousands)Revenues

$
17,215,992


$
14,383,835


$
11,926,962Cost of goods sold


16,139,691



13,570,507



11,449,858Gross profit


1,076,301



813,328



477,104Marketing, general and administrative


245,357



231,238



199,354Operating earnings


830,944



582,090



277,750Gain on investments


(20,616
)






(13,013
)Interest, net


31,098



41,305



41,509Equity income from investments


(109,685
)


(84,188
)


(95,742
)Minority interests


143,214



85,974



47,736Income from continuing operations before income taxes


786,933



538,999



297,260Income taxes


36,600



49,327



30,434Income from continuing operations


750,333



489,672



266,826(Income) loss from discontinued operations, net of taxes






(625
)


16,810Net income

$
750,333


$
490,297


$
250,016Distribution of net income:Patronage refunds

$
550,000


$
374,000


$
203,000Unallocated capital reserve


200,333



116,297



47,016Net income

$
750,333


$
490,297


$
250,016    F-3




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF EQUITIES AND COMPREHENSIVE INCOME
  For the Years Ended August 31, 2007, 2006 and 2005AccumulatedCapital


Nonpatronage








Unallocated


Other


AllocatedEquity


Equity


Preferred


Patronage


Capital


Comprehensive


Capital


TotalCertificates


Certificates


Stock


Refunds


Reserve


Income (Loss)


Reserve


Equities(Dollars in thousands)Balances, September 1, 2004

$
1,114,641


$
27,586


$
106,692


$
116,790


$
261,462


$
(7,135
)

$
8,050


$
1,628,086Dividends and equity retirement determination


32,100











50,060



1,409











83,569Patronage distribution


119,736











(166,850
)


(4,464
)










(51,578
)Equities retired


(23,625
)


(48
)






















(23,673
)Capital equity certificates exchanged for preferred stock


(19,996
)






19,996







(87
)










(87
)Equities issued


1,375



























1,375Preferred stock dividends


















(9,178
)










(9,178
)Other, net


(666
)


(71
)










404











(333
)Comprehensive income:Net income














203,000



47,016











250,016Other comprehensive income






















12,106







12,106Total comprehensive income






























262,122Dividends and equities payable


(69,856
)










(60,900
)


(1,650
)










(132,406
)Balances, August 31, 2005


1,153,709



27,467



126,688



142,100



294,912



4,971



8,050



1,757,897Dividends and equity retirement determination


69,856











60,900



1,650











132,406Patronage distribution


145,333











(203,000
)


(4,850
)










(62,517
)Equities retired


(55,836
)


(97
)






















(55,933
)Capital equity certificates exchanged for preferred stock


(23,824
)






23,824







(88
)










(88
)Equities issued


11,064



























11,064Preferred stock dividends


















(10,816
)










(10,816
)Other, net


(3,300
)


(197
)










221











(3,276
)Comprehensive income:Net income














374,000



116,297











490,297Other comprehensive income






















8,131







8,131Total comprehensive income






























498,428Dividends and equities payable


(116,919
)










(130,900
)


(1,955
)










(249,774
)Balances, August 31, 2006


1,180,083



27,173



150,512



243,100



395,371



13,102



8,050



2,017,391Dividends and equity retirement determination


116,919











130,900



1,955











249,774Patronage distribution


246,802











(374,000
)


(5,860
)










(133,058
)Equities retired


(70,402
)


(382
)






















(70,784
)Capital equity certificates exchanged for preferred stock


(35,899
)






35,899







(145
)










(145
)Equities issued


10,132



























10,132Preferred stock dividends


















(13,104
)










(13,104
)Other, net


(3,203
)


(145
)










168







(9
)


(3,189
)Comprehensive income:Net income














550,000



200,333











750,333Other comprehensive income






















62,353







62,353Total comprehensive income






























812,686Adjustment to initially apply FASB Statement No. 158






















(62,419
)






(62,419
)Dividends and equities payable


(179,381
)










(192,500
)


(2,413
)










(374,294
)Balances, August 31, 2007

$
1,265,051


$
26,646


$
186,411


$
357,500


$
576,305


$
13,036


$
8,041


$
2,432,990    F-4




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years Ended August 312007


2006


2005(Dollars in thousands)Cash flows from operating activities:Net income

$
750,333


$
490,297


$
250,016Adjustment to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


140,596



126,777



110,332Income from equity investments


(109,685
)


(84,188
)


(95,742
)Distributions from equity investments


66,693



58,240



64,869Minority interests


143,214



85,974



47,736Noncash portion of patronage dividends received


(3,302
)


(4,969
)


(3,060
)Gain on sale of property, plant and equipment


(6,916
)


(5,232
)


(7,370
)Loss on sale of business










6,163Gain on investments


(20,616
)






(13,013
)Deferred taxes


46,800



78,300



26,400Other, net


4,261



460



1,027Changes in operating assets and liabilities:Receivables


(278,179
)


44,650



(250,202
)Inventories


(528,288
)


(198,501
)


(190,081
)Other current assets and other assets


(256,925
)


64,677



(74,911
)Customer credit balances


44,030



(25,915
)


3,216Customer advance payments


79,138



(48,062
)


62,773Accounts payable and accrued expenses


277,722



(142,934
)


328,961Other liabilities


23,746



15,368



9,417Net cash provided by operating activities


372,622



454,942



276,531Cash flows from investing activities:Acquisition of property, plant and equipment


(373,300
)


(234,992
)


(257,470
)Proceeds from disposition of property, plant and equipment


13,548



13,911



21,109Proceeds from sale of business










38,286Investments


(95,834
)


(72,989
)


(25,938
)Investments redeemed


4,935



7,283



13,514Proceeds from sale of investments


10,918







147,801Changes in notes receivable


(29,320
)


20,955



(23,770
)Acquisition of intangibles


(15,583
)


(2,867
)


(372
)Acquisition of working capital, net


(8,604
)Other investing activities, net


(2,051
)


3,351



(5,062
)Net cash used in investing activities


(495,291
)


(265,348
)


(91,902
)Cash flows from financing activities:Changes in notes payable


633,203



(59,025
)


(54,968
)Borrowings on long-term debt


4,050







125,000Principal payments on long-term debt


(60,851
)


(36,669
)


(36,033
)Payments for bank fees on debt


(104
)


(1,997
)


(2,474
)Changes in checks and drafts outstanding


85,412



(10,513
)


2,814Distributions to minority owners


(76,763
)


(80,529
)


(29,925
)Costs incurred  capital equity certificates redeemed


(145
)


(88
)


(87
)Preferred stock dividends paid


(13,104
)


(10,816
)


(9,178
)Retirements of equities


(70,784
)


(55,933
)


(23,673
)Cash patronage dividends paid


(133,058
)


(62,517
)


(51,578
)Net cash provided by (used in) financing activities


367,856



(318,087
)


(80,102
)Net increase (decrease) in cash and cash equivalents


245,187



(128,493
)


104,527Cash and cash equivalents at beginning of period


112,525



241,018



136,491Cash and cash equivalents at end of period

$
357,712


$
112,525


$
241,018    F-5




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.  Summary
    of Significant Accounting Policies
  Organization
    Consolidation
      Cash
    Equivalents
    Inventories
  last-in, first-in,
  Derivative
    Financial Instruments
  Commodity
    Price Risk
     F-6




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          Interest
    Rate Risk
     F-7




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Foreign
    Currency Risk
    Investments
      Property,
    Plant and Equipment
      and/or and/or
 F-8




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Goodwill
    and Other Intangible Assets
    Revenue
    Recognition
    Environmental
    Expenditures
    Income
    Taxes
    Comprehensive
    Income
   F-9




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Use
    of Estimates
    Recent
    Accounting Pronouncements
    accrue-in-advance accrue-in-advance
      Reclassifications
    F-10




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  2.  Receivables
    2007


2006(Dollars in thousands)Trade

$
1,366,428


$
1,056,514Other


97,783



73,9861,464,211



1,130,500Less allowances for doubtful accounts


62,960



53,898$
1,401,251


$
1,076,602     2007


2006


2005(Dollars in millions)Africa

$
229


$
119


$
83Asia


1,130



904



880Europe


178



183



129North America, excluding U.S.


900



717



605South America


608



156



271$
3,045


$
2,079


$
1,968     3.  Inventories
    2007


2006(Dollars in thousands)Grain and oilseed

$
928,567


$
511,413Energy


490,675



447,664Feed and farm supplies


178,167



137,978Processed grain and oilseed


66,407



32,198Other


2,816



1,571$
1,666,632


$
1,130,824    F-11




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  4.  Investments
   2007


2006(Dollars in thousands)CF Industries Holdings, Inc.

$
101,986


$
34,105Cooperatives:Land OLakes, Inc.


41,061



38,929Ag Processing Inc.


20,416



21,297CoBank, ACB (CoBank)


12,659



11,956Joint ventures:United Country Brands, LLC (Agriliance LLC)


182,834



175,306US BioEnergy Corporation


138,474



69,264Ventura Foods, LLC


134,079



132,222Cofina Financial, LLC


39,805



38,752Horizon Milling, LLC


36,092



30,753Horizon Milling G.P.


15,500Multigrain AG


23,082TEMCO, LLC


11,957



3,486Other


122,647



68,183$
880,592


$
624,253        F-12




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          2007


2006(Dollars in thousands)Current assets

$
269,156


$
237,117Non-current assets


470,359



441,435Current liabilities


195,376



141,080Non-current liabilities


309,221



308,377   2007


2006


2005(Dollars in thousands)Net sales

$
1,637,998


$
1,483,583


$
1,413,426Gross profit


207,148



196,847



184,466Net income


62,366



57,756



61,779      F-13




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2007


2006(Dollars in thousands)Current assets

$
1,534,432


$
1,261,874Non-current assets


130,347



166,365Current liabilities


1,214,019



999,038Non-current liabilities


138,173



132,071   2007


2006


2005(Dollars in thousands)Net sales

$
4,049,088


$
3,739,632


$
3,735,125Earnings from operations


116,584



76,052



90,812Net income


58,701



52,268



77,113     5.  Property,
    Plant and Equipment
    2007


2006(Dollars in thousands)Land and land improvements

$
90,263


$
84,347Buildings


410,556



395,833Machinery and equipment


2,258,108



2,112,629Office and other


81,091



75,836Construction in progress


320,101



121,3793,160,119



2,790,024Less accumulated depreciation and amortization


1,431,948



1,313,785$
1,728,171


$
1,476,239        6.  Discontinued
    Operations
   F-14




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2006


2005(Dollars in thousands)Revenues





$
43,556Cost of goods sold






49,919Marketing, general and administrative*

$
(1,168
)


18,246Interest, net


145



2,903Income tax expense (benefit)


398



(10,702
)Income (loss) from discontinued operations

$
625


$
(16,810
)     *
    2006 and 2005 include a $1.6 million gain and a
    $6.2 million loss on disposition, respectively.  7.  Other
    Assets
    2007


2006(Dollars in thousands)Goodwill

$
3,804


$
3,904Customer lists, less accumulated amortization of $2,898 and
    $11,498, respectively


13,894



3,381Non-compete covenants, less accumulated amortization of $1,826
    and $1,678, respectively


3,201



1,531Trademarks and other intangible assets, less accumulated
    amortization of $7,249 and $5,379, respectively


15,823



12,838Prepaid pension and other benefits


101,073



192,180Notes receivable


5,874



3,859Other


4,296



5,781$
147,965


$
223,474         F-15




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  8.  Notes
    Payable and Long-Term Debt
    Interest Rates atAugust 31, 2007

2007


2006(Dollars in thousands)Notes payable(a)(i)

1.00% to 8.25%

$
672,571


$
22,007Long-term debt:Revolving term loans from cooperative and other banks, payable
    in installments through 2009, when the balance is due(b)(i)

6.17% to 13.00%

$
80,594


$
110,477Private placement, payable in equal installments beginning in
    2008 through 2013(c)(i)

6.81%


225,000



225,000Private placement, payable in installments beginning in 2007
    through 2018(d)(i)

4.96% to 5.60%


157,308



175,000Private placement, payable in equal installments beginning in
    2011 through 2015(e)(i)

5.25%


125,000



125,000Private placement, payable in equal installments in 2005 through
    2011(f)(i)

7.43% to 7.90%


45,714



57,143Private placement, payable in its entirety in 2010(g)(i)

4.08%


15,000



15,000Private placement, payable in its entirety in 2011(g)(i)

4.39%


15,000



15,000Industrial revenue bonds, payable in its entirety in 2011

5.23%


3,925



3,925Other notes and contracts(h)

1.89% to 12.17%


20,780



18,200Total long-term debt




688,321



744,745Less current portion




98,977



60,748Long-term portion



$
589,344


$
683,997   2007


2006Weighted-average interest rates at August 31:Short-term debt


6.50%



7.58%Long-term debt


6.03%



6.09%      (a)
    
    The Company finances its working capital needs through a
    short-term line of credit with a syndication of domestic and
    international banks. This revolving line of credit was a
    five-year $1.1 billion committed facility on
    August 31, 2007, with $600.0 million outstanding on
    that date. On October 1, 2007, the Company exercised the
    accordion feature of the agreement and obtained additional
    commitments in the amount of $200.0 million from certain
    lenders under the agreement. The additional commitments
    increased the total to $1.3 billion on the facility. In
    addition to this short-term line of credit, the Company has a
    one-year committed credit facility dedicated to NCRA, with a
    syndication of banks in the amount of $15.0 million, with
    no amount outstanding on August 31, 2007. The Company also
    has a committed revolving line of credit dedicated to Provista
    in the amount of $25.0 million, with $2.0 million
    outstanding on August 31, 2007. In addition, the Company
    has two commercial paper programs totaling up to
    $125.0 million with two banks participating in the
    five-year revolving credit facility. The commercial paper
    programs do not increase the committed borrowing capacity in
    that the Company is required to have at least an equal amount of
    undrawn capacity F-16




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  available on the five-year revolving facility as to the amount
    of commercial paper issued. On August 31, 2007,
    $51.9 million of commercial paper was outstanding. Other
    miscellaneous notes payable totaled $18.7 million on
    August 31, 2007.(b)
    
    The Company established a long-term credit agreement, which
    committed $200.0 million of long-term borrowing capacity to
    the Company through May 31, 1999, of which
    $164.0 million was drawn before the expiration date of that
    commitment. On August 31, 2007, $75.4 million was
    outstanding. NCRA term loans of $3.0 million are
    collateralized by NCRAs investment in CoBank.  (c)
    
    In June 1998, the Company entered into a private placement with
    several insurance companies for long-term debt in the amount of
    $225.0 million.(d)
    
    In October 2002, the Company entered into a private placement
    with several insurance companies for long-term debt in the
    amount of $175.0 million.(e)
    
    In September 2004, the Company entered into a private placement
    with several insurance companies for long-term debt in the
    amount of $125.0 million.(f)
    
    In January 2001, the Company entered into a note purchase and
    private shelf agreement with Prudential Insurance Company. A
    long-term note was issued for $25.0 million and a
    subsequent note for $55.0 million was issued in March 2001.(g)
    
    In March 2004, the Company entered into a note purchase and
    private shelf agreement with Prudential Capital Group. In April
    2004, two long-term notes were issued for $15.0 million
    each. In April 2007, the agreement was amended with Prudential
    Investment Management, Inc. and several other participating
    insurance companies to expand the uncommitted facility from
    $70.0 million to $150.0 million.(h)
    
    Other notes and contracts payable of $8.3 million are
    collateralized by property, plant and equipment, with a cost of
    $16.9 million, less accumulated depreciation of
    $5.0 million on August 31, 2007.(i)
    
    The debt is unsecured; however restrictive covenants under
    various agreements have requirements for maintenance of minimum
    working capital levels and other financial ratios.       F-17




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    (Dollars in thousands)2008

$
98,9772009


117,9102010


82,6342011


111,6652012


94,517Thereafter


182,618$
688,321     2007


2006


2005(Dollars in thousands)Interest expense

$
51,811


$
50,562


$
51,531Interest income


20,713



9,257



10,022Interest, net

$
31,098


$
41,305


$
41,509   9.  Income
    Taxes
    2007


2006


2005(Dollars in thousands)Continuing operations:Current

$
(10,200
)

$
(28,973
)

$
4,034Deferred


38,000



81,100



34,200Valuation allowance


8,800



(2,800
)


(7,800
)Income taxes from continuing operations


36,600



49,327



30,434Income taxes from discontinued operations






398



(10,702
)Income taxes

$
36,600


$
49,725


$
19,732   ultra-low
   F-18




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2007


2006(Dollars in thousands)Deferred tax assets:Accrued expenses and valuation reserves

$
81,653


$
76,582Postretirement health care and deferred compensation


65,339



49,652Tax credits


50,402



16,763Loss carryforward


6,427



25,027Other


15,169



14,573Total deferred tax assets


218,990



182,597Deferred tax liabilities:Pension, including minimum liability


55,957



52,715Equity method investments


84,671



55,128Property, plant and equipment


191,369



159,034Other


25,928



12,960Total deferred tax liabilities


357,925



279,837Deferred tax assets valuation reserve


(9,375
)


(571
)Net deferred tax liability

$
148,310


$
97,811         2007


2006


2005Statutory federal income tax rate


35.0
%


35.0
%


35.0
%State and local income taxes, net of federal income tax benefit


3.9



3.9



3.9Patronage earnings


(27.5
)


(27.4
)


(26.9
)Export activities at rates other than the U.S. statutory
    rate


(1.6
)


(0.8
)


(2.4
)Valuation allowance


1.1



(0.5
)


(2.6
)Tax credits


(3.6
)


(1.8
)Other


(2.6
)


0.8



3.2Effective tax rate


4.7
%


9.2
%


10.2
%  F-19




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  10.  Equities
            11.  Benefit
    Plans
     F-20




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Pre-SFAS No. 158


SFAS No. 158With AML


Adoption


Post SFASAdjustments


Adjustments


No. 158(Dollars in thousands)Prepaid pension

$
131,322


$
(95,239
)

$
36,083Accrued pension liability


(47,663
)


(15,057
)


(62,720
)Intangible asset


291



(291
)


Deferred tax asset


189



39,699



39,888Minority interest






8,469



8,469Accumulated other comprehensive income, net of tax


296



62,419



62,715Accumulated other comprehensive income, pre-tax


485



102,118



102,603     Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2007


2006


2007


2006


2007


2006(Dollars in thousands)Change in benefit obligation:Benefit obligation at beginning of period

$
328,125


$
333,464


$
23,381


$
27,440


$
28,315


$
29,845Service cost


14,360



14,892



1,023



2,195



957



1,024Interest cost


19,259



17,037



1,480



1,368



1,668



1,568Plan amendments


14,960



430



727



345Transfers














(5,049
)Actuarial (gain) loss


(852
)


(8,813
)


9,794



(885
)


881



(552
)Special agreement














85Assumption change


(5,401
)


(6,614
)


(37
)


(1,333
)


(1,482
)


(1,124
)Medicare D


















262Benefits paid


(24,132
)


(22,271
)


(724
)


(785
)


(2,600
)


(2,446
)Benefit obligation at end of measurement date

$
346,319


$
328,125


$
35,644


$
23,381


$
28,001


$
28,315Change in plan assets:Fair value of plan assets at beginning of period

$
345,860


$
335,488Actual income on plan assets


45,826



25,688Company contributions


14,877



6,955


$
724


$
785


$
2,600


$
2,446Benefits paid


(24,132
)


(22,271
)


(724
)


(785
)


(2,600
)


(2,446
)Fair value of plan assets at end of measurement date

$
382,431


$
345,860


$



$



$



$
Funded status of plans as of August 31, 2006





$
17,401






$
(23,381
)





$
(28,315
)Employer contributions after measurement date














328







205Unrecognized actuarial loss (gain)






104,665







888







(1,181
)Unrecognized transition obligation






















6,452Unrecognized prior service cost (benefit)






5,513







2,009







(1,362
)Special agreement














(85
)Prepaid benefit cost (accrued)





$
127,579






$
(20,241
)





$
(24,201
) F-21




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2007


2006


2007


2006


2007


2006(Dollars in thousands)Amounts recognized on balance sheet as of 
    August 31, 2006Other assets (accrued benefit liability)





$
127,579






$
(21,396
)





$
(24,201
)Intangible assets














599Accumulated other comprehensive loss














556Net amounts recognized





$
127,579






$
(20,241
)





$
(24,201
)Amounts recognized on balance sheet as of
    August 31, 2007Non-current assets

$
36,083Accrued benefit cost:Current liabilities









$
(1,862
)





$
(1,911
)Non-current liabilities










(33,119
)






(25,828
)Ending balance

$
36,083






$
(34,981
)





$
(27,739
)Amounts recognized in accumulated other comprehensive income
    (pre-tax) as of August 31, 2007Net transition obligation

















$
5,516Prior service cost

$
19,608






$
2,276







(1,044
)Net loss (gain)


75,886







10,434







(1,603
)Minority interest


(7,191
)






(53
)






(1,226
)Ending balance

$
88,303






$
12,657






$
1,643    F-22




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2007


2006


2005


2007


2006


2005


2007


2006


2005(Dollars in thousands)Components of net periodic benefit cost:Service cost

$
14,360


$
14,892


$
12,749


$
1,023


$
2,195


$
991


$
957


$
1,024


$
874Interest cost


19,259



17,037



18,039



1,479



1,368



1,175



1,668



1,568



1,776Expected return on assets


(29,171
)


(28,362
)


(27,648
)Prior service cost amortization


867



855



792



494



516



519



(319
)


(305
)


(294
)Actuarial loss (gain) amortization


5,766



7,513



5,759



77



210



124



(231
)


17



43Transition amount amortization


























936



936



936Net periodic benefit cost

$
11,081


$
11,935


$
9,691


$
3,073


$
4,289


$
2,809


$
3,011


$
3,240


$
3,335Average assumptions:Discount rate


6.25%



6.05%



5.25%



6.25%



6.05%



5.25%



6.25%



6.05%



5.25%Expected return on plan assets


8.75%



8.80%



9.00%



N/A



N/A



N/A



N/A



N/A



N/ARate of compensation increase


4.50%



4.50%



4.80%



4.50%



4.50%



4.50%



4.50%



4.50%



4.80%     Non-QualifiedPension Benefits2007


2006(Dollars in thousands)Projected benefit obligation

$
35,644


$
23,381Accumulated benefit obligation


22,731



21,491Fair value of plan assets






     Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits(Dollars in thousands)Amortization of transition asset

$



$



$
202Amortization of prior service cost (benefit)


2,164



578



(319
)Amortization of net actuarial loss (gain)


4,398



823



(258
)  F-23




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    1% Increase


1% Decrease(Dollars in thousands)Effect on total of service and interest cost components

$
300


$
(267
)Effect on postretirement benefit obligation


2,571



(2,318
)          Other BenefitsQualified


Non-Qualified





Part DPension Benefits


Pension Benefits


Gross


Reimbursement(Dollars in thousands)2008

$
24,317


$
1,862


$
1,911


$
2002009


24,999



560



1,973



2002010


27,275



1,268



2,210



2002011


27,915



5,376



2,405



2002012


29,946



5,665



2,640



2002013-2017


186,647



13,664



14,680



800     
    optimize the long-term returns on plan assets at an acceptable
    level of risk, and
    maintain broad diversification across asset classes and among
    investment managers, and focus on long-term return objectives.     F-24




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        2007


2006Cash


2.7
%


0.0
%Debt


29.7



31.3Equities


62.0



63.7Real estate


3.9



3.8Other


1.7



1.2Total


100.0
%


100.0
%   12.  Segment
    Reporting
            F-25




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Corporate


ReconcilingEnergy


Ag Business


Processing


and Other


Amounts


Total(Dollars in thousands)For the year ended August 31, 2007:Revenues

$
8,105,067


$
8,575,389


$
754,743


$
28,465


$
(247,672
)

$
17,215,992Cost of goods sold


7,274,638



8,388,476



726,510



(2,261
)


(247,672
)


16,139,691Gross profit


830,429



186,913



28,233



30,726







1,076,301Marketing, general and administrative


94,939



97,299



23,545



29,574







245,357Operating earnings


735,490



89,614



4,688



1,152







830,944Gain on investments






(5,348
)


(15,268
)










(20,616
)Interest, net


(6,106
)


28,550



14,783



(6,129
)






31,098Equity income from investments


(4,468
)


(51,830
)


(48,446
)


(4,941
)






(109,685
)Minority interests


143,230



(16
)














143,214Income from continuing operations before income taxes

$
602,834


$
118,258


$
53,619


$
12,222


$



$
786,933Intersegment revenues

$
(228,930
)

$
(18,372
)

$
(370
)





$
247,672


$
Goodwill

$
3,654


$
150














$
3,804Capital expenditures

$
313,246


$
44,020


$
12,092


$
3,942






$
373,300Depreciation and amortization

$
86,558


$
33,567


$
15,116


$
5,355






$
140,596Total identifiable assets at August 31, 2007

$
2,737,044


$
2,846,950


$
681,118


$
428,474






$
6,693,586For the year ended August 31, 2006:Revenues

$
7,414,361


$
6,575,165


$
614,471


$
31,415


$
(251,577
)

$
14,383,835Cost of goods sold


6,834,676



6,401,527



588,732



(2,851
)


(251,577
)


13,570,507Gross profit


579,685



173,638



25,739



34,266







813,328Marketing, general and administrative


82,867



99,777



21,645



26,949







231,238Operating earnings


496,818



73,861



4,094



7,317







582,090Interest, net


6,534



23,559



11,096



116







41,305Equity income from investments


(3,840
)


(40,902
)


(35,504
)


(3,942
)






(84,188
)Minority interests


86,483



(509
)














85,974Income from continuing operations before income taxes

$
407,641


$
91,713


$
28,502


$
11,143


$



$
538,999Intersegment revenues

$
(242,430
)

$
(8,779
)

$
(368
)





$
251,577


$
Goodwill

$
3,654


$
250














$
3,904Capital expenditures

$
175,231


$
44,542


$
13,313


$
1,906






$
234,992Depreciation and amortization

$
75,581


$
31,471


$
14,049


$
5,676






$
126,777Total identifiable assets at August 31, 2006

$
2,164,217


$
1,806,243


$
518,186


$
453,937






$
4,942,583 F-26




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Corporate


ReconcilingEnergy


Ag Business


Processing


and Other


Amounts


Total(Dollars in thousands)For the year ended August 31, 2005:Revenues

$
5,794,266


$
5,670,644


$
613,766


$
29,070


$
(180,784
)

$
11,926,962Cost of goods sold


5,487,813



5,541,282



604,198



(2,651
)


(180,784
)


11,449,858Gross profit


306,453



129,362



9,568



31,721







477,104Marketing, general and administrative


69,951



83,600



20,750



25,053







199,354Operating earnings (losses)


236,502



45,762



(11,182
)


6,668







277,750Gain on investments


(862
)


(11,358
)


(457
)


(336
)






(13,013
)Interest, net


8,918



20,535



12,287



(231
)






41,509Equity income from investments


(3,478
)


(55,473
)


(36,202
)


(589
)






(95,742
)Minority interests


46,741



(41
)






1,036







47,736Income from continuing operations before income taxes

$
185,183


$
92,099


$
13,190


$
6,788


$



$
297,260Intersegment revenues

$
(170,642
)

$
(9,640
)

$
(502
)





$
180,784


$
Capital expenditures

$
205,484


$
27,600


$
4,751


$
19,635






$
257,470Depreciation and amortization

$
59,847


$
30,748


$
13,868


$
5,869






$
110,332   13.  Commitments
    and Contingencies
  Environmental
      Other
    Litigation and Claims
   F-27




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Grain
    Storage
    Guarantees
     F-28




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Guarantee/


Exposure onMaximum


August 31,


Nature of



Triggering

Recourse

Assets HeldEntities

Exposure


2007


Guarantee

Expiration Date

Event

Provisions

as Collateral(Dollars in thousands)Mountain Country, LLC

$
150


$
3


Obligations by Mountain Country, LLC under credit agreement

None stated, but may be terminated upon 90 days prior
    notice in regard to future obligations

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral and
    should be sufficient to cover guarantee exposureProvista Renewable Fuels Marketing, LLC

$
20,000



2,000


Obligations by Provista under credit agreement

None stated

Credit agreement default

Subrogation against Provista

NoneHorizon Milling, LLC

$
5,000






Indemnification and reimbursement of 24% of damages related to
    Horizon Milling, LLCs performance under a flour sales
    agreement

None stated, but may be terminated by any party upon
    90 days prior notice in regard to future obligations

Nonperformance under flour sale agreement

Subrogation against Horizon Milling, LLC

NoneTEMCO, LLC

$
25,000






Obligations by TEMCO under credit agreement

None stated

Credit agreement default

Subrogation against TEMCO, LLC

NoneTEMCO, LLC

$
1,000



66


Obligations by TEMCO under counterparty agreement

None stated, but may be terminated upon 5 days prior notice
    in regard to future obligations

Nonpayment

Subrogation against TEMCO, LLC

NoneThird parties


*



1,000


Surety for, or indemnification of surety for sales contracts
    between affiliates and sellers of grain under deferred payment
    contracts

Annual renewal on December 1 in regard to surety for one third
    party, otherwise none stated and may be terminated by the
    Company at any time in regard to future obligations

Nonpayment

Subrogation against affiliates

Some or all assets of borrower are held as collateral but might
    not be sufficient to cover guarantee exposureCofina Financial, LLC

$
18,839



15,706


Loans to our customers that are originated by Cofina and then
    sold to ProPartners, which is an affiliate of CoBank

None stated

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral but might
    not be sufficient to cover guarantee exposureCofina Financial, LLC

$
10,700



8,785


Loans made by Cofina to our customers

None stated

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral but might
    not be sufficient to cover guarantee exposureAgriliance LLC

$
5,674



5,674


Outstanding letter of credit from CoBank to Agriliance LLC

None stated

Default under letter of credit reimbursement agreement

Subrogation against borrower

NoneAg Business
    segment subsidiaries

$
1,473






Contribution obligations as a participating employer in the
    Co-op
    Retirement Plan

None stated

Nonpayment

None

None$33,234     *
    
    The Companys bank covenants allow for guarantees of up to
    $150.0 million, but the Company is under no obligation to
    extend these guarantees. The maximum exposure on any given date
    is equal to the actual guarantees extended as of that date. F-29




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Lease
    Commitments
        Rail





EquipmentCars


Vehicles


and Other


Total(Dollars in thousands)2008

$
11,463


$
18,101


$
3,313


$
32,8772009


7,507



14,184



2,921



24,6122010


6,188



11,409



2,545



20,1422011


5,166



5,436



2,348



12,9502012


3,708



3,114



1,891



8,713Thereafter


5,328



449



2,405



8,182Total minimum future lease payments

$
39,360


$
52,693


$
15,423


$
107,476   14.
    Supplemental
    Cash Flow and Other Information    2007


2006


2005(Dollars in thousands)Net cash paid (received) during the period for:Interest

$
52,323


$
54,228


$
57,569Income taxes


(20,274
)


(23,724
)


(8,804
)Other significant noncash investing and financing transactions:Capital equity certificates exchanged for preferred stock


35,899



23,824



19,996Capital equity certificates issued in exchange for elevator
    properties


10,132



11,064



1,375Accrual of dividends and equities payable


(374,294
)


(249,774
)


(132,406
)   15.
    Related
    Party Transactions    2007


2006(Dollars in thousands)Sales

$
1,639,689


$
1,475,478Purchases


1,176,462



468,286Receivables


50,733



27,208Payables


111,195



50,105  F-30




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    16.
    Comprehensive
    Income    2007


2006


2005(Dollars in thousands)Net income

$
750,333


$
490,297


$
250,016Additional minimum pension liability, net of tax (benefit)
    expense of ($759), $282 and $1,854 in 2007, 2006 and 2005,
    respectively


(1,193
)


444



2,822Unrealized net gains on available for sale investments, net of
    tax expense of $41,722, $1,138 and $5,147 in 2007, 2006 and
    2005, respectively


65,533



1,787



8,085Interest rate hedges, net of tax (benefit) expense of ($65),
    $826 and $279 in 2007, 2006 and 2005, respectively


(102
)


1,298



439Energy derivative instruments qualified for hedge accounting,
    net of tax (benefit) expense of ($1,787) and $1,787 in 2007 and
    2006, respectively


(2,806
)


2,806Foreign currency translation adjustment, net of tax expense of
    $588, $1,142 and $484 in 2007, 2006 and 2005, respectively


921



1,796



760Comprehensive income

$
812,686


$
498,428


$
262,122     2007


2006(Dollars in thousands)Pension liability adjustment, net of tax benefit of $40,881 and
    $423 in 2007 and 2006, respectively

$
(64,276
)

$
(664
)Unrealized net gains on available for sale investments, net of
    tax expense of $48,347 and $6,625 in 2007 and 2006, respectively


75,939



10,406Interest rate hedges, net of tax benefit of $1,397 and $1,332 in
    2007 and 2006, respectively


(2,194
)


(2,092
)Energy derivative instruments qualified for hedge accounting,
    net of tax expense of $1,787 in 2006






2,806Foreign currency translation adjustment, net of tax expense of
    $2,271 and $1,683 in 2007 and 2006, respectively


3,567



2,646Accumulated other comprehensive income

$
13,036


$
13,102  F-31