EDGAR 10-K Filing

Company CIK: 1163609
Filing Year: 2025
Filename: 1163609_10-K_2025_0001163609-25-000010.json

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ITEM 1. BUSINESS
Item 1. Business.
Overview
South Dakota Soybean Processors, LLC (“we,” “us,” “our” or the “Company”) is the owner and operator of two soybean processing plants and a soybean oil refinery in the state of South Dakota. Our principal place of business
is in Volga, South Dakota, where we operate a soybean processing plant and refinery, and our administrative offices are located. We also own and operate a small oilseed processing plant near Miller, South Dakota, which is approximately 100 miles from Volga. We own a controlling interest in a subsidiary which indirectly owns and, following completion of construction, will operate a large oilseed processing plant and refinery located just south of Mitchell, South Dakota. Construction of the Mitchell facility commenced in September 2023 and is expected to be completed and operational by the fourth quarter of 2025.
We are owned by approximately 2,200 members, many of whom are agricultural producers residing in South Dakota and neighboring states. Our members deliver and sell soybeans to our plants for processing and production of our end products. All our assets and operations are domiciled in South Dakota, where all of our products are produced.
Our core business consists of processing locally grown soybeans into two main products, soybean meal and oil. We market and sell soybean meal primarily to resellers, feed mills, and livestock producers as livestock feed. We market and sell multiple grades of soybean oil, in either crude or refined formats, to food, biodiesel and chemical industries. Under certain market conditions, we may register and deliver warehouse receipts for crude oil under specific terms and conditions of a Chicago Board of Trade (CBOT) soybean oil futures contract. We also market and sell contracting services for the construction and management of oilseed processing plants.
We strive to maintain a competitive position in the marketplace by producing high quality products, operating highly efficient operations, and adding value to our core products to capture larger margins. We continue to research ways to improve overall efficiency by analyzing new methods of vertical integration, adding value to our products through additional processing investment, and studying applications of our products in the food and energy industries. Although a primary objective is to maximize cash distributions to our members from profits generated by operations, we recognize the need to maintain our financial strength through investment in and capital improvements into our business and facilities.
General Development of Business
In 1993, we were organized and operated as a South Dakota cooperative. In 2002, we reorganized and converted our legal form from a South Dakota cooperative to a South Dakota limited liability company. As a limited liability company, we are taxed as a partnership for U.S. tax purposes, meaning we are not subject to U.S. income tax but file information returns and report our income annually, and all of our income is passed through to and included in the taxable income of our members.
After completion of construction of our first facility in Volga in 1996, we commenced operations and processing of soybeans into soybean meal and hulls, and crude soybean oil. Since 1996, we have invested heavily internally by making significant capital improvements and expanding our business to include vertically integrated product lines and services. In 2002, we completed the construction of a refining facility and began refining crude soybean oil which sold to customers in the oil and other industries. In 2011, we completed the construction of a deodorizer and began selling deodorized oil directly to customers in the food industry. In 2014, we purchased the Miller oilseed processing plant, which has permitted expansion into new markets through the processing of identity-preserved soybeans, including non-genetically modified organisms (GMO) and organic soybeans.
In 2019, we invested into Prairie AquaTech, LLC and its affiliates, which are engaged in the research, development and production of high-quality protein feed derived from soybeans. Following our investment, Prairie AquaTech constructed and now operates a 45,000 square foot production facility immediately adjacent to our Volga plant. The facility has the capacity to produce up to 30,000 tons of feed annually, which is currently being marketed and sold to the fish and pet industries.
In 2023, we took major steps toward developing and operating a new oilseed processing facility near Mitchell, South Dakota. We formed a subsidiary, High Plains Partners, LLC, a South Dakota limited liability company, to help finance and develop the Mitchell facility and made a large investment of approximately $100.4 million into it. High Plains Partners then formed its own subsidiary, HPP SD Holdings, LLC, a Delaware limited liability company, of which it owns and controls a majority interest, to hold a one-hundred percent ownership interest in High Plains Processing, LLC, a Delaware limited liability company, which is the owner-operating company of the Mitchell facility. The Mitchell facility will be a switch-processing facility, making it capable of processing soybeans and other oilseed varieties. The facility will have the capacity to process 35 million bushels of soybeans annually. Storage volume for the facility is expected to be 4 million bushels of soybean/oilseed, 8,000 metric tons of meal/hulls, 12.3 million
gallons of crude oil and 3.52 million gallons of refined oil. Construction of the facility commenced in September 2023 and is scheduled to be completed by the fourth quarter of 2025. Once operational, we will manage the operations of the facility through a management services agreement.
Industry Information
Globally, soybean production is concentrated in three principal countries: the U.S., Brazil, and Argentina. The United States Department of Agriculture (“USDA”) reports that, for the 2024 crop year, the U.S. produced approximately 4.37 billion bushels of soybeans, or approximately 28% of estimated world production; Brazil produced 6.2 billion bushels, or 40% of estimated world production; and Argentina produced 1.9 billion bushels, or 12% of estimated world production.
Soybean production fluctuates annually due to various factors, including weather, government policy, economic conditions, and prices of other commodities. Soybean consumption, by contrast, fluctuates less because soybeans are a staple commodity and are used globally. Yet, consumption fluctuates from time-to-time due to various factors, including general economic conditions, health concerns, population growth and trade policy.
Soybean processing generally involves the conversion of soybeans into three principal products: soybean meal, soybean hulls, and soybean oil. A bushel of soybeans, weighing approximately 60 pounds, yields, approximately forty-four pounds of meal, four pounds of hulls, and eleven pounds of crude oil. Approximately 80% of a soybean bushel is processed and sold as soybean meal or hulls, with the remaining 20% extracted as crude soybean oil. Soybean meal and hulls are sold and used as feed by livestock producers and fish farms. Soybean oil, which is produced in multiple grades, is sold to and used in the food, petroleum and chemical industries. The food industry typically integrates soybean oil in cooking and salad dressings, baking and frying fats, and butter substitutes.
Soybean processing facilities are generally located in areas where there are adequate sources of soybeans and a strong demand for soybean meal. In the U.S., soybean meal is predominantly fed to and consumed by the poultry and swine industries. On average, exports of soybean meal from the U.S. account for 20% to 30% of total production. The USDA estimates that approximately 55% of soybeans produced in the U.S. are processed domestically, 42% are exported as whole soybeans, and 3% are retained for seed and residual use. Historically, the U.S. exports more soybeans to China than any other country, followed usually by the European Union, Mexico, and Japan.
Soybean oil refineries are generally located adjacent to soybean processing plants. Refined and crude soybean oil is shipped throughout the U.S. and for export. The USDA estimates that approximately 48% of domestic soybean oil production is used in food, feed and industrial applications, 47% in biofuels production, and 5% for export for various uses.
The soybean industry continues to introduce soy-based products as substitutes for various petroleum-based products including lubricants, plastics, ink, crayons and candles. Soybean oil is increasingly being converted to biofuels, including biodiesel or renewable diesel. Biodiesel and renewable diesel, substitutes for standard, petroleum-based diesel fuel, has experienced rapid growth the past five years following the expansion of the Renewable Fuel Standard (RFS) program and resumption of the biodiesel blenders’ tax credit.
Soybean crushing and refining margins are generally cyclical in nature. The price of soybeans may fluctuate substantially from year to year, whereas the price of meal and oil generally tracks that of soybeans although not necessarily on a one-for-one basis; therefore, margins can be variable.
Raw Materials and Suppliers
The principal raw material used in our production process is soybeans. We primarily purchase soybeans for our Volga and Miller plants from soybean producers and elevators located within approximately 50 miles of these plants. The State of South Dakota and the upper Midwest, historically, has produced an adequate supply of soybean for our procurement and the soybean processing industry. In 2024, agricultural producers in South Dakota grew and harvested approximately 243 million bushels of soybeans, ranking it eighth among the top producing states in the U.S., as illustrated in the following table:
State Production (bushels)
Illinois 699 million
Iowa 608 million
Indiana
337 million
Minnesota
358 million
Nebraska 310 million
Missouri
274 million
Ohio 262 million
South Dakota 243 million
North Dakota 219 million
Arkansas 166 million
Producers in South Dakota, in comparison to previous years, grew and harvested approximately 222 million bushels in 2023, 197 million bushels in 2022, 223 million bushels in 2021, and 224 million bushels in 2020. Of this amount, we purchased and processed 33.3 million bushels in 2024, compared to 33.3 million bushels in 2023, 34.5 million bushels in 2022, 34.9 million bushels in 2021, and 34.3 million bushels in 2020.
We control the flow of soybeans into our facilities with a combination of pricing and contracting options. Threats to our soybean supply include weather (especially drought), changes in government programs, and competition from other processors and export markets.
Products and Services
The principal products produced at our Volga and Miller plants, and upon completion of construction of our Mitchell plant, are soybean meal and hulls, and soybean oil and oil byproducts.
Sales, Marketing and Customers
Our soybean meal is primarily sold to resellers, feed mills, and livestock producers as livestock feed. The meal is primarily sold to customers in the local area (typically within 200 miles of our Volga plant), Western U.S., and Canada. Our crude oil is sold to refining companies for further processing, refined at our facilities, and sold directly to the food industry for human consumption, or to the biofuel industry as transportation fuel.
In 2024, our percentage of sales by quantity of product sold within various markets is illustrated by the following table:
Market Soybean
Meal and Hulls
Soybean
Oil
Local 45% 14%
Other U.S. States 29% 76%
Export 26% 10%
Over half of our products are shipped by rail. Our rail service is provided by the Rapid City, Pierre & Eastern (RCP&E) rail line, which is owned and operated by Genesee & Wyoming, Inc., which connects to the Burlington-Northern Santa Fe, Canadian Pacific (CP), and the Union Pacific rail lines.
Dependence upon a Single Customer
None.
Competition
We are in direct competition with several other soybean processing companies in the U.S., many of which have significantly greater resources than we. The U.S. soybean processing industry is comprised primarily of 16 different companies which operate 70 plants in the U.S. The industry is generally characterized as mature, consolidated and
vertically-integrated, with four companies - Archer Daniels Midland (ADM), Bunge, Cargill and Ag Processing (AGP) - controlling nearly 85% of the processing industry.
We are one of two soybean processing companies operating in South Dakota. AGP operates a processing facility in Aberdeen, South Dakota, approximately 160 miles from our Volga facility. Our processing facilities represent approximately 7% of the total soybean processing capacity in the upper Midwest and about 1.3% in the U.S. Despite our size, we strive to maintain a competitive position in the market by producing high quality products, operating highly efficient operations at the lowest possible cost, and investing into value-add projects and companies.
Utilities
Volga Plant
We use natural gas and electricity to operate the crushing and refining plants in Volga, South Dakota. Natural gas is used for processing heat and drying soybeans. Our natural gas provider is NorthWestern Energy, Sioux Falls, South Dakota. We are at risk to adverse price fluctuations in the natural gas market but have the capability to use fuel oil and biofuel as a backup to natural gas in the event of delivery interruption or market conditions dictate. We also employ forward contracting to offset some of this risk. Our electricity provider is the City of Volga, South Dakota.
Miller Plant
We use electricity and propane to operate the mechanical press plant in Miller, South Dakota, as natural gas distribution lines are not located in the area. Our electricity provider is NorthWestern Energy, Sioux Falls, South Dakota, and CHS Farmers Alliance, Mitchell, South Dakota, is our propane provider.
Mitchell Plant
We plan to use natural gas and electricity to operate the crushing and refining plants in Mitchell, South Dakota. Our natural gas provider will be Northwestern Energy, and our electricity provider will be Central Electric Cooperative.
Employees
We currently employ approximately 139 individuals, all but eight of whom are full-time. We have no unions or other collective bargaining agreements. Upon completion of the Mitchell plant, we will employ approximately 215 individuals, as we will manage and operate the plant through a management and services agreement.
Government Regulation and Environmental Matters
Our business is subject to various laws and regulations that are designed to protect the environment, which are administered by the U.S. Environmental Protection Agency, the South Dakota Department of Agriculture and Natural Resources, and local government agencies. These laws and regulations govern the discharge of materials to the environment, air and water; reporting storage of hazardous wastes; transporting, handling and disposition of wastes; and the labeling of pesticides and similar substances. Our business is also subject to laws and regulations administered by other federal, state, local and foreign governmental agencies which govern the processing, storage, distribution, advertising, labeling, quality and safety of feed and grain products. Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible recalls of products.
The sale of soybean oil for human consumption is impacted by the regulation of trans-fat, which results from the hydrogenation process of products such as soybean oil and plant oils. The U.S. Food and Drug Administration requires that food processors disclose the level of trans-fatty acids contained in their products. In addition, various local governments in the U.S. have enacted, or are considering enacting, restrictions on the use of trans-fats in restaurants. As a result, many food manufacturers have reduced the amount of hydrogenated soybean oil included in their products or switched to other oils containing lower amounts of trans-fat.
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to the Securities Exchange Act of 1934, as amended, are filed with the SEC. These reports and other information filed by us with the SEC are available on the SEC website (www.sec.gov). The SEC maintains an Internet site that contains reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Our website is at www.sdsbp.com.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
We are affected by changes in commodity prices. Our revenues, earnings and cash flows are affected by market prices for commodities such as crude petroleum oil, natural gas, soybeans, and crude and refined vegetable oils. Commodity prices generally are affected by a wide range of factors beyond our control, including weather, disease, insect damage, drought, the availability and adequacy of soybean supply, government regulation and policies, and general political and economic conditions. In addition, we are exposed to the risk of nonperformance by counterparties to contracts. Risk of nonperformance by counterparties includes the inability to perform because of a counterparty’s financial condition and also the risk the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than the current market prices.
We are affected by inflation. We have experienced and anticipate continued effects of inflation on costs such as soybeans, materials, labor, natural gas, and electricity. In response to inflationary pressures, the U.S. Federal Reserve has raised interest rates, which has resulted in uncertainty and volatility in financial markets and increased borrowing costs under our revolving credit facilities. Although inflation has subsided the past few months, inflation and its effects, many of which are beyond our control, could escalate in the future. We may be unable to pass on all of our increased costs as a result of inflation to customers. Accordingly, inflationary pressures could have a material and adverse effect on our business.
Our business operations and demand for our products are highly dependent on certain global and regional factors which are outside our control. The level of demand for our products is increasingly affected by regional and global demographic and macroeconomic conditions, including population growth rates and changes in standards of living. A significant downturn in global economic growth, or recessionary conditions in major geographic regions, may lead to reduced demand for agricultural commodities which could adversely affect our business and results of operations. Additionally, weak global economic conditions and turmoil in global financial markets, including constraints on the availability of credit, have in the past adversely affected, and may in the future continue to adversely affect, the financial condition and creditworthiness of some of our customers, suppliers and other counterparties which in turn may negatively impact our business.
Current and future geopolitical events outside of our control could adversely impact our business. We face risks related to geopolitical events, international hostility, epidemics, outbreaks and other macroeconomic events that are outside of our control. The occurrence of certain geopolitical events, including those arising from terrorist activity, international hostility, public health crises, and the economic impact of global trade tensions and the imposition of tariffs, could significantly disrupt our business and operational plans and adversely affect our results of operations, cash flows, financial condition and liquidity.
In early 2025, the new U.S. presidential administration announced wide-ranging policy changes and issued numerous executive actions on topics including international trade, energy resources, corporate taxes, global climate change initiatives, employment practices, corporate compliance programs, environmental regulations, as well as other matters. Further, the new presidential administration has indicated an intent to make structural changes to the executive branch of the federal government, including significant reductions in the federal workforce. Continuing legal challenges to many of the policy changes and executive actions are expected. We cannot predict how these policy changes and executive actions will be implemented and interpreted, or the ultimate effect they will have on our business. We cannot reasonably estimate the period of time that these conditions will persist; the full extent of the impact they will have on our business.
Our business and operations may be affected by weather conditions that are outside of our control. For example:
•Weather conditions during the spring planting season and early summer crop nutrient and crop protection application season affect product volumes and profitability.
•Adverse weather conditions, such as heavy snow or rainfall and any flooding that results, may cause delays in or prevent soybeans from being planted which could affect our ability to procure soybeans for production and increase costs.
•Changes in weather patterns and conditions, including changes in rainfall and storm patterns and intensities, water shortages, and temperature levels, could adversely impact our costs and business operations; the location, cost and competitiveness of commodity agricultural production, related storage and processing facilities; and demand for agricultural commodities. These effects could significantly reduce demand for the products we sell to or buy from agricultural producers and local elevators, and therefore could adversely impact our business.
We face risks related to health epidemics, pandemics, and similar outbreaks. While we have effectively managed through the risks arising from the pandemic caused by COVID-19, we could be materially affected in the future if a more severe variant or other disease would arise causing disruptions far more severe than COVID-19. We may be unable to perform fully on our contractual obligations, our supply chain and logistical networks may be affected, and costs and working capital needs may increase. These cost increases may not be fully recoverable or adequately covered by insurance. In addition, demand for certain products, particularly biofuels and ingredients incorporated into food that support the food services channels, could be materially impacted from a prolonged regional or global outbreak, leading to government-imposed lockdowns, quarantines, or other restrictions.
We could be affected by higher than anticipated operating costs, including but not limited to increased prices for soybeans. In addition to general market fluctuations and economic conditions, we could experience significant cost increases associated with the ongoing operation of our soybean processing and refining plants caused by a variety of factors, many of which are beyond our control. These cost increases could arise from an inadequate local supply of soybeans and a resulting price increase which is not accompanied by an increase in the price for soybean meal and oil. Labor costs can also increase over time, particularly if there is a shortage of labor, or shortage of persons with the skills necessary to operate our facility. Adequacy and cost of electric and natural gas utilities could also affect our operating costs. Changes in price, operation and availability of truck and rail transportation may affect our profitability with respect to the transportation of soybean meal, oil and other products to our customers.
It may become more difficult to sell our soybean oil for human consumption. The U.S. Food and Drug Administration requires food manufacturers to disclose the levels of trans-fatty acids contained in their products. In addition, various local governments in the U.S. are considering, and some have enacted, restrictions on the use of trans-fats in restaurants. Several food processors have either switched or indicated an intention to switch to edible oil products with lower levels of trans-fatty acids. Because processing soybean oil, particularly hydrogenation, creates trans-fat, it may become difficult to sell our oil to customers engaged in the food industry which could adversely affect our revenues and profits.
Hedging transactions involve risks that could harm our profitability. To reduce our price change risks associated with holding fixed price commodity positions, we generally take opposite and offsetting positions by entering into commodity futures contracts (either a straight futures contract or an options futures contract) for soybeans, soybean meal and crude soybean oil on the Chicago Board of Trade. While hedging activities reduce our risk of loss from changing market values, such activities also limit the gain potential which otherwise could result from those market fluctuations. Our policy is to maintain hedged positions within limits, but we can be long or short at any time. In addition, at any one time, our inventory and purchase contracts for delivery to our facility may be substantial, which could limit our ability to adjust our hedged positions. If our risk management policies and procedures that guide our net position limits are inadequate, we could suffer adverse financial consequences.
Our business is not diversified. Our success depends primarily on our ability to profitably operate our soybean processing and soybean oil refining plants. We do not have any other material lines of business or other material sources of revenue if we are unable to operate our soybean processing and soybean oil refining plants. This lack of diversification may limit our ability to adapt to changing business conditions and could cause harm to our business.
We are dependent on our management and other key personnel, and the loss of their services may adversely affect our business. Our success and business strategy is dependent in large part on our ability to attract and retain key management and operating personnel. This can present challenges for us, because we operate in a specialized industry and our business is located in a rural area. Key employees are in high demand and are often subject to competing employment offers in the agricultural value-added industries within the local and regional area. Any loss of the key employees or the failure of these individuals to perform their job functions in a satisfactory manner would have a material adverse effect on our business operations and prospects.
We operate in an intensely competitive industry, and we may not be able to continue to compete effectively. We may be unable to continue to successfully penetrate the markets for our products. The soybean processing business is highly competitive, and other companies presently in the market, or that could enter the market, could adversely affect prices for the products we sell. We compete with major soybean processors such as Archer-Daniels Midland (ADM), Cargill, Bunge, and Ag Processing (AGP), among others, all of which are capable of producing significantly greater quantities of soybean products than we do and may achieve higher operating efficiencies and lower costs due to their scale. AGP's processing facility in Aberdeen, South Dakota, could increase the competition for soybeans and adversely affect our business.
Our profitability is influenced by the protein and moisture content of soybeans in the local area. The northern portion of the western soybean belt, where our two soybean crushing plants are located, typically produces a lower protein content soybean, which results in lower protein soybean meal. Because lower protein soybean meal is sold at a lower price, we may not be able to operate as profitably as soybean processing plants in other parts of the country. If adverse weather conditions further reduce the protein content of the soybeans grown in our area, our business may be materially harmed because we will be required to sell our soybean meal at discounted prices to our customers.
In addition, the moisture content of the soybeans that are delivered to our plants also influences our profitability and the efficiency of our plant operations. Soybeans with high moisture content require more energy to dry them before they can be processed. While we may recover some of these extra energy costs by paying producers less for high moisture soybeans, these savings may not be sufficient to offset our additional operating expenses.
Because soybean processing and refining is energy intensive, our business will be materially harmed if energy prices increase substantially. The price of electricity, natural gas and propane, the primary sources of energy for our plants, have steadily increased the last few years. If the trend in electricity, natural gas and propane prices continues, our energy costs will remain high and could adversely affect our profitability and operating results.
Transportation costs are a factor in the price of soybean meal and oil, and increased transportation costs could adversely affect our profitability. Soybean meal and oil may be shipped by trucks, rail cars, and barges. Added transportation costs are a significant factor in the price of our products, and we may be more vulnerable to increases in transportation costs than other producers because our locations in Volga and Miller are more remote than that of most of our competitors. Today, most of our products are sold FOB Volga or Miller, South Dakota, and those that are not, have the full transportation cost added to the contract. Transportation costs do not currently affect our margin directly; however, the added costs could eventually affect demand for our products.
Increases in the production of soybean meal or oil could result in lower prices for soybean meal or oil and have other adverse effects. New and existing soybean processing and refining plants are expected to be constructed or expanded in the near future. The increased expansion is expected to add approximately 750 million bushels in crush capacity per year within the next one to two years. Without a corresponding increase in the demand for soybean meal and oil, increased soybean meal and oil production may lead to lower prices for soybean meal and oil which could adversely affect our business.
We face significant risks associated with our new oilseed processing plant in Mitchell, South Dakota, including cost overruns, construction delays and operational issues. Our investment in the development and construction of our Mitchell facility, the cost of which will be approximately $500 million, is significant. We have contractually committed to invest approximately $100 million into the project, which will be our largest single investment in history. We are also acting as a guarantor on our subsidiary’s, High Plains Partners, investment into the project, which is scheduled for completion by the fourth quarter of 2025. There is no assurance that actual construction costs for the plant will not exceed current estimates, that we will not have to make additional investment or commitment into the project, that the plant will be operational based on our anticipated timing, or that the plant will be profitable.
We are exposed to risk of nonperformance and nonpayment by counterparties. We are exposed to risk of nonperformance and nonpayment by counterparties, whether pursuant to contracts or otherwise. Risk of nonperformance and nonpayment by counterparties includes the inability or refusal of a counterparty to pay us; the inability or refusal to perform because of a counterparty's financial condition and liquidity, operational failures, labor issues, cybersecurity events, outbreaks of disease or for any other reason; and risk that the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than current market prices. In the event we experience significant nonperformance or nonpayment by counterparties, our business could be materially and adversely affected.
Legislative, legal or regulatory developments could adversely affect our profitability. We are subject to extensive air, water and other environmental laws and regulations at the federal and state level. In addition, some of these laws require our plant to operate under a number of environmental permits. These laws, regulations and permits can often require pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, damages, criminal sanctions, permit revocations and/or plant shutdowns.
New environmental laws and regulations, including new regulations relating to alternative energy sources and the risk of climate change, new interpretations of existing laws and regulations, increased governmental enforcement or other developments could require us to make additional unforeseen expenditures. It is expected that some form of regulation will be forthcoming at the federal level in the U.S. with respect to emissions of GHGs, (including carbon dioxide, methane and nitrous oxides). Also, new federal or state legislation or regulatory programs that restrict emissions of GHGs in areas where we conduct business could adversely affect our operations and demand for our products. New legislation or regulator programs could require substantial expenditures for the installation and operation of equipment that we do not currently possess or substantial modifications to existing equipment.
In addition, although our production of soybean meal and oil is not directly regulated by the U.S. Food & Drug Administration, we must comply with the FDA’s content and labeling requirements, which are monitored at our customers’ facilities. Failure to comply with these requirements could result in fines, liability to our customers or other consequences that could increase our operating costs and reduce profits. In addition, changes to the FDA’s rules or regulations could be adopted that would increase our operating costs and expenses, or require capital investment.
We are subject to industry-specific risks that could adversely affect our operating results. These risks include, but are not limited to, product quality or contamination; shifting consumer preferences; federal, state, and local food processing regulations; socially unacceptable farming practices; environmental, health and safety regulations; and customer product liability claims. Any liability resulting from these risks may not always be covered by, or could exceed liability insurance related to product liability and food safety matters maintained by us. The occurrence of any of the matters described above could adversely affect our revenues and operating results. Our products are used as ingredients in livestock and poultry feed. Thus, we are subject to risks associated with the outbreak of disease in livestock and poultry. The outbreak of disease could adversely affect demand for our products used as ingredients in livestock and poultry feed. A decrease in demand for these products could adversely affect our revenues and operating results.
We could face increased operating costs if we are required to segregate genetically modified soybeans and the products generated from these soybeans. Over the last several years, some soybean producers in our area have been planting genetically modified, or GMO, soybeans, commonly known as Round-up Ready beans. Neither the U.S. Department of Agriculture nor the FDA currently requires that genetically modified soybeans be segregated from other soybeans. If these agencies or our customers were to require that we process these genetically modified soybeans separately, we would face increased storage and processing costs, and our profitability could be harmed.
There is no public market for our units. There is no public trading market for our units. While we have established a private online matching service in order to facilitate the transfer of units among our members, the transfer of units on this service is severely limited. The service has been designed to comply with federal tax laws and IRS regulations governing a “qualified matching service,” as well as state and federal securities laws. Under these rules, there are detailed timelines and restrictions that must be followed with respect to offers and sales of units. As a result, capital units held by our members may not be easily resold and members may be required to hold their units indefinitely. Even if a member is able to resell units, the price may be less than the member's original investment for the units or may otherwise be unattractive to the member.
There are significant restrictions on the transfer of our units. To protect our status as a partnership for federal income tax purposes and to assure no public trading market for our units develops or exists, our units are subject to significant restrictions on transfer. All transfers of units must comply with the transfer provisions of our operating agreement and the capital units transfer system and are subject to approval by our board of managers. Our board of managers reserves the right not to approve any transfer of units that could cause us to lose our partnership tax status or violate federal or state securities laws. As a result, members may not be able to transfer their units and may be required to assume the risks of the investment for an indefinite period of time.
Members may realize taxable income without cash distributions, and may have to use funds from other sources to fund tax liabilities. Because we are taxed as a partnership for U.S. federal income tax purposes, members may realize taxable income in excess of cash distributions by us. There can be no assurance that we will pay distributions at a specific rate or at all. As a result, members may have to use funds from other sources to pay their tax liability.
We rely on information technology and any failure, inadequacy, interruption, or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate its business effectively. Hackers, government-backed threat actors, and organized crime may be able to penetrate our network or systems, misappropriate or compromise our confidential information or that of third parties, create system disruptions, corrupt data, or cause shutdowns. Using different tools and methodologies the threat actors may be able to deploy malware that attacks our systems or our supplier’s systems, or otherwise exploits any security vulnerabilities of our facilities and equipment. Vulnerabilities in our systems can also occur due to a lack of robustness, quality, and integrity, in our systems as a whole. While we employ a number of technical, organizational, and physical protective measures, these measures may fail to prevent or detect all attacks on or weaknesses in its systems.
We manage and store various proprietary, sensitive, and confidential information and data relating to our business as well as from our suppliers and customers. Breaches of this information and data due to insufficient security measures, accidental loss, inadvertent disclosure, or unapproved dissemination, including incidents as a result of fraud, trickery, or other forms of deception, could expose us or our customers or suppliers to a risk of loss or misuse of this information.
Any claim that our facilities, equipment, products, or systems are subject to cybersecurity risk or data breaches, whether legitimate or not, could have a material adverse effect on our business.
To the extent we experience any cybersecurity incidents in the future, our relationships with our customers and suppliers may be materially impacted, our brand and reputation may be harmed, and we could incur substantial costs in responding to and remediating the incidents and in resolving any investigations or disputes that may result, any of which could have a material adverse effect on our business. In addition, the cost and operational consequences of implementing and adding further data protection measures could be significant.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
We conduct our operations principally at two facilities, one in Volga, South Dakota, and the other in Miller, South Dakota.
At our Volga facility, we own the land, consisting of 98 acres on which most of our infrastructure and physical properties rest. Our facilities consist of a soybean processing plant, a soybean oil refinery and deodorizer, a quality control laboratory, and administrative and operations buildings.
At our Miller facility, we own the land, consisting of approximately 24 acres, on which our soybean processing plant and operations building are situated.
At our Mitchell facility, we indirectly own the land through our subsidiaries, consisting of 296 acres on which the processing plant, operations building, and transportation lines will be situated upon completion of construction.
All of our tangible property, real and personal, serves as collateral for our debt instruments with our primary lender, CoBank, ACB, of Greenwood Village, Colorado, which is described below under “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation-Indebtedness.”

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
From time to time in the ordinary course of our business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. We carry insurance that provides protection against general commercial liability claims, claims against our directors, officers and employees, business interruption, automobile liability, and workers’ compensation claims. We are not currently involved in any material legal proceedings and are not aware of any potential claim.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
None.
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of December 31, 2024 and March 1, 2025, there were 2,226 and 2,229 members of record, respectively, and a total of 30,411,500 Class A capital units issued and outstanding. We did not make any repurchases of Class A units during the fiscal year 2024 and, as of the date of this annual report, we did not have any publicly announced plans or programs with respect to purchases of our units.
Trading Activity
Our capital units are not traded on an exchange or otherwise publicly traded and are subject to significant restrictions on transfer. Most transfers of capital units are conducted through a “qualified matching service” as defined by the publicly-traded partnership rules of the federal tax code. Under the qualified matching service, bids for capital units submitted by interested buyers and sellers are matched on the basis of a strict set of rules and conditions set forth under the federal tax code and by us; plus, all matching and transfers of units are subject to approval by our board of managers. Our qualified matching service is operated through www.AgStockTrade.com, an SEC-registered and regulated Alternative Trading Service which is owned and operated by Variable Investment Advisors, Inc., Tea, South Dakota, a registered broker-dealer with the SEC, FINRA, and various states. The following table contains historical information by quarter for the past two years regarding the matching of capital units through the qualified matching service:
Quarter Low Price
(1) High Price
(1) Average
Price # of
Capital
Units Matched
First Quarter 2023
$ 8.51 $ 9.00 $ 8.70 50,750
Second Quarter 2023
$ 8.99 $ 10.75 $ 9.84 28,250
Quarter Low Price
(1) High Price
(1) Average
Price # of
Capital
Units Matched
Third Quarter 2023
$ 9.00 $ 10.00 $ 9.72 40,500
Fourth Quarter 2023
$ 8.90 $ 9.12 $ 9.00 37,250
First Quarter 2024
$ 8.77 $ 9.50 $ 9.08 67,500
Second Quarter 2024
$ 9.19 $ 9.30 $ 9.25 103,000
Third Quarter 2024
$ 9.00 $ 9.20 $ 9.15 56,750
Fourth Quarter 2024
$ 8.80 $ 9.00 $ 8.95 44,500
(1)The qualified matching service rules prohibit firm bids; therefore, the prices reflect actual sale prices of the capital units.
Transfer Restrictions
As a limited liability company, we must severely restrict trading and transfers of our capital units to preserve our preferential single-level "partnership" tax status at the member level. To preserve this, our operating agreement prohibits transfers of capital units other than through the procedures specified under our capital units transfer system, or CUTS, which may be amended from time to time by our board of managers. Under the CUTS, our capital units cannot be traded on any national securities exchange or in any over-the-counter market. Also, we cannot permit the total number of capital units traded annually through the qualified matching service to exceed 10% of our total issued and outstanding capital units. All transactions, including any trades on the qualified matching service, must be approved by the board of managers, which are generally approved if they fall within “safe harbors” contained in the rules of the federal tax code. Permitted transfers include transfers by gift or death, sales to qualified family members, and trades through the qualified matching service subject to the 10% restriction. Pursuant to our operating agreement, a minimum of 2,500 capital units is required to be owned by an individual or entity for membership, and no member may own more than 10% of our total outstanding capital units.
Distributions to Members
We declared and issued to our members a cash distribution of $39.5 million (130.0¢ per capital unit) and $36.5 million (120.0¢ per capital unit) in the years ended December 31, 2024 and 2023, respectively. On February 4, 2025, our board of managers approved a cash distribution to our members of approximately $7.6 million (25.0¢ per capital unit), which was issued to our members on or about February 6, 2025. Our distributions are declared at the discretion of our board of managers and are issued in accordance with the terms of our operating agreement and distribution policy. Distributions are also subject to restrictions imposed under our loan agreement with our lender. There is no assurance as to if, when, or how much we will make in distributions in the future. Actual distributions depend upon our profitability, expenses and other factors discussed in this report.
Income Tax Considerations
Because we have elected to be taxed as a partnership, each of our members is required to report on his or her income tax return for the taxable year with which, or within which, ends our taxable year his or her distributive share of our income, gains, losses and deductions without regard to whether corresponding cash distributions are received from us. We provide each member with an annual Schedule K-1, indicating the member’s share of our income, loss and their separately stated components.
Under IRS Code Section 701, an entity, such as South Dakota Soybean Processors, subject to taxation as a partnership under Subchapter K of the Code, is not itself subject to U.S. income taxation. Instead, each of our members is required to report his or her allocable share of our income and/or losses, and each of our members is liable for U.S. income tax on such income in each member’s individual or separate capacity. IRS Code Section 702 provides that the character of any such item of income or deduction allocated to a member will be the same as its character to us. Each member will be taxed on his or her distributive share of our income even though the equivalent amount of cash may not be distributed to such member.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data.
The following table sets forth selected financial data of South Dakota Soybean Processors, LLC for the periods indicated. The financial statements included in Item 8 of this report were audited by Eide Bailly LLP.
2024 2023 2022 2021 2020
Bushels processed 33,272,916 33,349,230 34,465,628 34,876,323 34,306,674
Statement of Operations Data:
Revenues $ 554,419,770 $ 703,148,409 $ 721,532,329 $ 590,150,153 $ 415,025,765
Costs & expenses:
Cost of revenues
(525,031,207) (624,732,341) (648,116,685) (556,675,807) (395,772,460)
Operating expenses (6,054,341) (6,487,573) (5,669,426) (4,590,227) (3,819,645)
Operating income
23,334,222 71,928,495 67,746,218 28,884,119 15,433,660
Non-operating income
4,848,180 2,018,285 1,922,642 758,163 1,239,018
Interest expense (6,419,829) (2,837,555) (2,204,759) (1,634,367) (1,090,951)
Income tax benefit (expense) - - - - -
Net income 21,762,573 71,109,225 67,464,101 28,007,915 15,581,727
Net income attributed to non-controlling interests in consolidated entity 1,442,756 659,647 - - -
Net income
$ 20,319,817 $ 70,449,578 $ 67,464,101 $ 28,007,915 $ 15,581,727
Weighted average capital units outstanding
30,411,500 30,411,500 30,411,500 30,419,000 30,419,000
Net income (loss) per capital unit
$ 0.67 $ 2.32 $ 2.22 $ 0.92 $ 0.51
Balance Sheet Data:
Working capital $ 24,494,884 $ 100,176,364 $ 76,001,793 $ 37,448,081 $ 31,391,916
Net property, plant & equipment
359,781,254 174,927,830 74,559,969 72,532,608 64,231,194
Total assets 541,893,618 422,730,882 311,196,770 245,286,123 225,823,047
Long-term obligations 103,410,124 22,881,979 26,110,157 20,122,452 23,613,702
Members’ equity 178,279,321 197,494,454 163,538,676 113,414,905 94,836,880
Other Data:
Capital expenditures $ 175,696,571 $ 106,644,436 $ 7,754,541 $ 13,442,955 $ 4,652,368
Distributions to members $ 39,534,950 $ 36,493,800 $ 17,338,830 $ 9,429,890 $ 6,692,180
Distributions to members per capital unit $ 1.30 $ 1.20 $ 0.57 $ 0.31 $ 0.22

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion along with our consolidated financial statements and the notes to our consolidated financial statements included elsewhere in this report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance and achievements may differ materially from those expressed in, or implied by, such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Information” at the beginning of this report.
Overview and Executive Summary
Our consolidated net income decreased from $70.4 million in 2023 to $20.3 million in 2024 as we encountered various changes in the market. In 2023, robust demand for soybean oil from renewable fuel markets propelled soybean processing margins to very high levels. By contrast, processing margins in 2024 were set back as the
industry experienced new challenges. Early in 2024, renewable fuel margins fell as the overproduction of renewable diesel and biodiesel in the market caused a sharp drop in margins and a corresponding reduction in demand for soybean oil. Imports of used cooking oil also surged to record levels, displacing soybean oil as a renewable fuel feedstock. Later in 2024, a lack of guidance and clarity from the U.S. government on the proposed rule changes in the 45Z Clean Fuel program created uncertainty in the biofuels market, causing biofuel producers not to purchase soybean oil feedstocks. Finally, new soybean processing capacity came online, causing overproduction of soybean meal and oil and depressing prices in the process.
In 2025, we expect markets to adjust and respond more positively than in 2024. Soybean meal and oil exports are currently tracking at a record pace, though imposition of tariffs by countries like Canada, Mexico, and China could slow the pace. Moreover, we have an ample supply of soybeans from last year’s crop which puts us in a good position production wise for the first half of the year. While we are still dealing with the uncertainties of the 45Z program, there is a strong desire to increase renewable fuel volume obligations and to address the imports of used cooking oil. We believe that we are positioned well to handle these challenges and deliver value and strong returns.
We are also encouraged by the progress of our new oilseed project, High Plains Processing, near Mitchell, South Dakota. Construction is on schedule, and equipment deliveries are nearly complete. Barring any inclement weather or construction delays, we believe the plant will commence operations in October 2025.
Results of Operations
Comparison of Years Ended December 31, 2024 and 2023
Year Ended December 31, 2024
Year Ended December 31, 2023
$ % of
Revenue $ % of
Revenue
Revenue $ 554,419,770 100.0 $ 703,148,409 100.0
Cost of revenues (525,031,207) (94.7) (624,732,341) (88.8)
Gross profit 29,388,563 5.3 78,416,068 11.2
Operating expenses (6,054,341) (1.1) (6,487,573) (0.9)
Interest expense (6,419,829) (1.2) (2,837,555) (0.4)
Other non-operating income (expense) 4,848,180 0.9 2,018,285 0.3
Net income 21,762,573 3.9 71,109,225 10.2
Net income attributable to non-controlling interests in consolidate entities 1,442,756 0.3 659,647 0.1
Net income attributed to Company $ 20,319,817 3.6 $ 70,449,578 10.1
Revenue - Revenue decreased $148.7 million, or 21.2%, for the year ended December 31, 2024, compared to the same period in 2023. The decrease was primarily due to a decrease in the average sales price of soybean products. The average price of soybean oil decreased 23.9% during the year ended December 31, 2024, compared to the same period in 2023, due to a decrease in demand. Soybean oil demand from the energy sector dropped dramatically in 2024 as refining margins for biodiesel and renewable diesel producers came under pressure from overproduction, which led to production slowdowns at some locations. Further contributing to the drop was an increase in imports of lower-priced alternatives to soybean oil, specifically used cooking oil. In addition, average soybean meal prices declined by 15.3% in 2024 following the return of Argentine processors to the global export market and an increase in U.S. soybean production.
Gross Profit/Loss - Gross profit decreased by $49.0 million, or 62.5%, for the year ended December 31, 2024, compared to the same period in 2023. The decrease was mainly due to declining board crush margins, which were caused by a decrease in demand for soybean oil and an increase in global soybean meal supply, which negatively affected U.S. export sales including our own.
Operating Expenses - Administrative expenses, including selling, general and administrative expenses, decreased approximately $0.5 million, or 6.7%, during the year ended December 31, 2024, compared to the same period in 2023, due to a decrease in labor costs. The decrease was partially offset by an increase in professional and related costs associated with the start-up of the High Plains Processing plant.
Interest Expense - Interest expense increased $3.6 million, or 126.2%, during the year ended December 31, 2024, compared to the same period in 2023. The increase in interest expense was due to a $28.6 million increase in borrowings from our credit facilities with our senior lender, CoBank. The average debt level was $68.2 million during 2024, compared to $39.6 million in 2023. Debt levels increased mainly to fund our investment commitment into the High Plains Processing plant through our subsidiaries.
Other Non-Operating Income (Expense) - Other non-operating income, including patronage dividend income, increased $2.8 million, or 140.2%, for the year ended December 31, 2024, compared to the same period in 2023. The increase in other non-operating income was due to a $2.6 million increase in interest income. Interest income increased from the deposit of investment proceeds which were received by our subsidiaries in connection with their equity financing of the High Plains Processing plant.
Net Income/Loss - We generated a net income of $20.3 million during the year ended December 31, 2024, a $50.1 million decrease from 2023. The decrease is primarily attributable to the reduction in gross profit and an increase in interest expense.
Comparison of Years Ended December 31, 2023 and 2022
Year Ended December 31, 2023
Year Ended December 31, 2022
$ % of
Revenue $ % of
Revenue
Revenue $ 703,148,409 100.0 $ 721,532,329 100.0
Cost of revenues (624,732,341) (88.8) (648,116,685) (89.8)
Gross profit 78,416,068 11.2 73,415,644 10.2
Operating expenses (6,487,573) (0.9) (5,669,426) (0.8)
Interest expense (2,837,555) (0.4) (2,204,759) (0.3)
Other non-operating income (expense) 2,018,285 0.3 1,922,642 0.3
Net income
$ 71,109,225 10.2 67,464,101 9.4
Net income attributable to non-controlling interests in consolidate entities 659,647 0.1 - -
Net income attributed to Company $ 70,449,578 10.1 $ 67,464,101 9.4
Revenue - Revenue decreased $18.4 million, or 2.5%, for the year ended December 31, 2023, compared to the same period in 2022. The decrease in revenues was primarily due to a 10.7% decrease in the average sales price of refined soybean oil. Oil prices were adversely affected by reduced demand from the renewable diesel industry following a delay in start-up of and various production issues encountered by renewable diesel plants in 2023.
Gross Profit/Loss - Gross profit increased $5.0 million, or 6.8%, for the year ended December 31, 2023, compared to 2022. The increase in gross profit was mainly due to improved board crush margins and growing conditions. Board crush margins improved primarily because of drought conditions in Argentina and North America. Argentina, which accounts for nearly 30% of the world's soybean meal exports, experienced a severe drought which shifted demand for soybean meal to the U.S. as a source. This shift allowed producers, like us, to benefit from increased export opportunities. Partially offsetting the increase in gross profit was a $4.7 million increase, or 12.9%, in production costs in 2023, compared to 2022. The increase in production costs was due to increases in maintenance, personnel, and utility costs resulting from inflation and supply shortages.
Operating Expenses - Administrative expenses, including selling, general and administrative expenses, increased approximately $0.8 million, or 14.4%, during the year ended December 31, 2023, compared to the same period in 2022. The increase was primarily due to an increase in legal and personnel costs.
Interest Expense - Interest expense increased $0.6 million, or 28.7%, during the year ended December 31, 2023, compared to the same period in 2022. The increase in interest expense was due to an increase in interest rates on our senior debt with CoBank. As of December 31, 2023, the interest rate on our revolving long-term loan was 7.85%, compared to 6.85% as of December 31, 2022. The increase in interest expense was partially offset by an $18.7 million decrease in borrowings from our lines of credit, as borrowing decreased due to improved profitability. The average debt level in 2023 was approximately $40.0 million, compared to $58.3 million in 2022.
Other Non-Operating Income (Expense) - Other non-operating income, including patronage dividend income, increased $0.1 million, or 5.0%, for the year ended December 31, 2023, compared to the same period in 2022. The increase in other non-operating income was due to a $1.6 million increase in interest income. During the year ended December 31, 2023, interest income was $1.6 million, compared to $0 in 2022. Partially offsetting the increase in interest income was a $1.3 million decrease in gains on our interest rate hedge instruments. During the year ended December 31, 2023, we had losses on interest rate hedges of $0.2 million, compared to gains of $1.1 million during the same period in 2022.
Net Income/Loss - We generated a net income of $70.5 million during the year ended December 31, 2023, a $3.0 million increase from 2022. The increase is primarily attributable to an increase in gross profit and other non-operating income.
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by operations and borrowings under our various revolving lines of credit which are discussed below under “Indebtedness.” On December 31, 2024, we had working capital, defined as current assets less current liabilities, of approximately $24.5 million, compared to working capital of $100.2 million on December 31, 2023. Working capital decreased between periods primarily due to expenditures related to the construction and development of the High Plains Processing plant, which we have a controlling ownership stake through our subsidiaries.
Comparison of the Years Ended December 31, 2024 and 2023
2024 2023
Net cash provided by operating activities
$ 58,395,262 $ 128,890,291
Net cash used in investing activities
(176,001,498) (104,214,603)
Net cash provided by financing activities
84,289,984 47,367,949
Cash Flows Provided by Operating Activities
The $70.5 million decline in cash flows from operating activities was primarily driven by a $49.3 million decrease in net income, along with a $37.0 million reduction in cash generated from inventories. During the year ended December 31, 2024, our inventories decreased by $23.8 million, compared to $60.8 million in 2023.
Cash Flows Used in Investing Activities
The $71.8 million increase in cash flows used for investing activities was primarily driven by the $71.4 million increase in expenditures for purchasing various property and equipment. During 2024, we spent $175.7 million on property and equipment purchases, largely for the construction and development of the High Plains Processing plant, compared to $104.3 million during 2023.
Cash Flows Provided by Financing Activities
The $36.9 million increase in cash flows provided by financing activities was principally due to a $78.1 million increase in net proceeds on borrowings. Net proceeds on borrowings increased by $69.2 million during the year ended December 31, 2024, compared to net payments of $8.9 million during the same period in 2023. Partially offsetting the increase was a $40.6 million decrease in investment proceeds received and a $3.0 million increase in cash distributions to our members during the year ended December 31, 2024, compared to the same period in 2023.
Comparison of the Years Ended December 31, 2023 and 2022
2023 2022
Net cash from operating activities $ 128,890,291 $ 27,431,814
Net cash used for investing activities (104,214,603) (9,951,071)
Net cash used for financing activities 47,367,949 (17,447,782)
Cash Flows Provided by Operating Activities
The $101.5 million increase in cash flows from operating activities was largely due to a $101.4 million decrease in inventories. During the year ended December 31, 2023, our inventories decreased by $60.8 million, compared to a $40.6 million increase during the same period in 2022.
Cash Flows Used in Investing Activities
The $94.2 million increase in cash flows used for investing activities was due to a $94.3 million increase in expenditures for purchases of various property and equipment which were principally made for the construction and development of the High Plains Processing plant and contributed to our subsidiary, High Plains Partners, as part of our investment into this entity.
Cash Flows Provided by Financing Activities
The $67.3 million increase in cash flows from (used for) financing activities was principally due to the receipt of $98.1 million in investments received by High Plains Partners, the proceeds of which were contributed to pay for the construction and development of the High Plains Processing plant. Partially offsetting the increase is a $19.2 million increase in cash distributions to our members in 2023, compared to 2022.
Indebtedness
We hold various credit facilities with CoBank, our primary lender, to meet the short and long-term needs of our operations. The first credit line is a revolving long-term loan. Under this loan, we may borrow funds, as needed, up to the credit line maximum, or $65.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. The available credit line decreases by $3.25 million every six months until the credit line’s maturity on March 20, 2028 at which time a balloon payment for the remaining balance is due. We pay a 0.40% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $0 as of December 31, 2024 and 2023, respectively.
The second line of credit is a multiple advance note payable. The primary purpose of this note is to finance our investment and ownership in the High Plains Processing plant through our subsidiaries and any large capital project. Under this $50.5 million loan, principal payments of $4.5 million are made every six months which began on October 20, 2024 and end on the date of maturity, March 20, 2028, at which time a balloon payment is due for the remaining balance. The principal balance outstanding on this note was $50.5 million and $0 as of December 31, 2024 and 2023, respectively. Starting March 17, 2025, this note was consolidated into the note of the revolving term loan (see below).
The third credit line is a revolving working capital (seasonal) loan. The primary purpose of this loan is to finance our operating needs. We may borrow up to $70.0 million until the loan's maturity on December 1, 2025. We pay a 0.20% annual commitment fee on any funds not borrowed; however, we have the option to reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment fee. As of December 31, 2024 and 2023, the principal balance outstanding on this credit line was $0 and $0.0 million, respectively.
The fourth line of credit is a delayed-draw term loan. Under this loan, our subsidiary may borrow funds, as needed up to $254.0 million. Principal payments of $4.5 million are made quarterly beginning six months after the completion date of the High Plains Processing facility. The quarterly principal payments will increase $1.0 million on the anniversary date and continue until the maturity date of December 31, 2029. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on the delayed-draw term loan was $18.7 million and $0 as of December 31, 2024 and 2023, respectively. Under this loan, $235.3 million was available to be borrowed as of December 31, 2024.
The last line of credit is another revolving term loan. Under this loan, our subsidiary may borrow funds, as needed, up to the credit line maximum, or $40.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line until the credit line’s maturity on December 31, 2029 at which time a balloon payment for the remaining balance is due. Our subsidiary pays a 0.50% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan was $0 as
of December 31, 2024 and 2023. Under this loan, $40.0 million was available to be borrowed as of December 31, 2024.
The revolving, multiple advance, seasonal and delayed-draw loans with CoBank are set up with a variable rate option. The variable rate is set daily by CoBank. We also have a fixed rate option on all three loans, allowing us to fix rates for any period between one day and the entire commitment period. The annual interest rate on the revolving term and multiple advance loans was 6.56% and 7.85% as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the interest rate on the seasonal loan is 6.56% and 2.31%, respectively. As of December 31, 2024, the interest rate on our subsidiary's delayed-draw and revolving term loans was 7.76%. We were in compliance with all covenants and conditions under the loans as of December 31, 2024.
Capital Expenditures
We made a total of $175.7 million in capital expenditures on various property and equipment in 2024 compared to approximately $104.3 million in 2023. Significant purchases of property and equipment were made for the construction and development of the new Mitchell facility, which were contributed to our subsidiaries as part of our investment into the facility. Additional purchases were made to enhance the quality and efficiency of our Volga and Miller facilities. We anticipate spending approximately $248.0 million in capital purchases and improvements in 2025, which will be financed from our multiple advance loan and cash flows from operating activities.
Off Balance Sheet Financing Arrangements
We do not utilize variable interest entities or other off-balance sheet financial arrangements.
Contractual Obligations
The following table shows our contractual obligations for the periods presented:
Payment due by period
CONTRACTUAL
OBLIGATIONS Total Less than
1 year 1-3 years 3-5 years More than 5
years
Long-Term Debt Obligations (1) $ 78,479,000 $ 11,636,000 $ 21,769,000 $ 45,074,000 $ -
Operating Lease Obligations 41,746,000 5,209,000 9,484,000 8,419,000 18,634,000
Total $ 120,225,000 $ 16,845,000 $ 31,253,000 $ 53,493,000 $ 18,634,000
(1)Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.
Recent Accounting Pronouncements
See page, Note 1 of our audited consolidated financial statements for a discussion on the impact, if any, of the recently pronounced accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Preparation of our consolidated financial statements requires estimates and judgments to be made that affect the amounts of assets, liabilities, revenues and expenses reported. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. We continually evaluate these estimates based on historical experience and other assumptions that we believe to be reasonable under the circumstances.
The difficulty in applying these policies arises from the assumptions, estimates, and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions. As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated.
Of the significant accounting policies described in the notes to the consolidated financial statements, we believe that the following may involve a higher degree of estimates, judgments, and complexity:
Commitments and Contingencies
Contingencies, by their nature relate to uncertainties that require management to exercise judgment both in assessing the likelihood that a liability has been incurred, as well as in estimating the amount of the potential expense. In conformity with accounting principles generally accepted in the U.S., we accrue an expense when it is probable that a liability has been incurred and the amount can be reasonably estimated.
Inventory Valuation
We account for our inventories at estimated market value. These inventories are agricultural commodities that are freely traded, have quoted market prices, may be sold without significant further processing, and have predictable and insignificant costs of disposal. We derive our estimates from local market prices determined by grain terminals in our area. Processed product price estimates are determined by the ending sales contract price as of the close of the final day of the period. This price is determined by the average closing price on the Chicago Board of Trade, net of the local basis, for the last two business days of the period and the first business day of the subsequent period. Changes in the market values of these inventories are recognized as a component of cost of goods sold.
Accounting for Derivative Instruments and Hedging Activities
We minimize the effects of changes in the price of agricultural commodities by using exchange-traded futures and options contracts to minimize our net positions in these inventories and contracts. We account for changes in market value on exchange-traded futures and option contracts at exchange prices and account for the changes in value of forward purchase and sales contracts at local market prices determined by grain terminals in the area. Changes in the market value of all these contracts are recognized in earnings as a component of cost of goods sold.
Revenue Recognition
We account for all of our revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers, which became effective January 1, 2018. As part of the adoption of ASC 606, we applied the new standard on a modified retrospective basis analyzing open contracts as of January 1, 2018. However, no cumulative effect adjustment to retained earnings was necessary as no revenue recognition differences were identified when comparing the revenue recognition criteria under ASC 606 to previous requirements.
We principally generate revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any amounts collected on behalf of third parties (e.g. - taxes). We follow a policy of recognizing revenue at a single point in time when we satisfy our performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
Commodities Risk & Risk Management. To reduce the price change risks associated with holding fixed price commodity positions, we generally take opposite and offsetting positions by entering into commodity futures contracts (either a straight or options futures contract) on a regulated commodity futures exchange, the Chicago Board of Trade. While hedging activities reduce the risk of loss from changing market prices, such activities also limit the gain potential which otherwise could result from these significant fluctuations in market prices. Our policy is generally to maintain a hedged position within limits, but we can be long or short at any time. Our profitability is primarily derived from margins on soybeans processed, not from hedging transactions. Our management does not anticipate that hedging activities will have a significant impact on our future operating results or liquidity. Hedging arrangements do not protect against nonperformance of a cash contract.
At any one time, our inventory and purchase contracts for delivery to our facility may be substantial. We have risk management policies and procedures that include net position limits. They are defined by commodity, and include both trader and management limits. This policy and procedure triggers a review by management when any trader is outside of position limits. The position limits are reviewed at least annually with the board of managers. We monitor current market conditions and may expand or reduce the limits in response to changes in those conditions.
An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.
Foreign Currency Risk. We conduct essentially all of our business in U.S. dollars and have minimal direct risk regarding foreign currency fluctuations. Foreign currency fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of and demand for U.S. agricultural products compared to the same products offered by foreign suppliers.
An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.
Interest Rate Risk. We manage exposure to interest rate changes by using variable rate loan agreements with fixed rate options. Long-term loan agreements can utilize the fixed option through maturity; however, the revolving ability to pay down and borrow back would be eliminated once the funds were fixed.
As of December 31, 2024, we had $0 in fixed rate debt and $354.7 million in variable rate debt available to borrow. Interest rate changes impact the amount of our interest payments and, therefore, our future earnings and cash flows. Assuming other variables remain constant, a one percentage point (1%) increase in interest rates on our variable rate debt could have an estimated impact on profitability of approximately $3,547,000 per year.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
Reference is made to the “Index to Consolidated Financial Statements” of South Dakota Soybean Processors, LLC located on the page immediately preceding page of this report, and consolidated financial statements and schedules for the years ended December 31, 2024, 2023 and 2022.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Control and Procedures.
Evaluation of Disclosure Controls and Procedures. Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, our management has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Additionally, based on management’s evaluation, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is accumulated and communicated to our management to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisitions, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of December 31, 2024, our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control- Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this assessment using those criteria, management concluded that, as of December 31, 2024, our internal control over financial reporting is effective. Our management reviewed the results of their assessment with the Audit Committee.
This Annual Report does not include a report of our registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to an audit report by our registered public accounting firm pursuant to the rules of the Commission that permit us to provide only management’s report in this report.
Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
/s/ Thomas Kersting
Thomas Kersting, Chief Executive Officer
(Principal Executive Officer)
/s/ Mark Hyde
Mark Hyde, Chief Financial Officer
(Principal Financial Officer)

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
During the quarter ended December 31, 2024, none of our directors (managers) or executive officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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ITEM 11. EXECUTIVE COMPENSATION

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules.
The following exhibits and consolidated financial statements are filed as part of, or are incorporated by reference into, this report:
(a)(1) Financial Statements - Reference is made to the “Index to Consolidated Financial Statements” of South Dakota Soybean Processors, LLC located on the page immediately preceding page of this report
for a list of the consolidated financial statements for the year ended December 31, 2024. The consolidated financial statements appear on page of this Report.
(2) All supplemental schedules are omitted because of the absence of conditions under which they are required or because the information is shown in the Consolidated Financial Statements or notes thereto.
(3) Exhibits - Exhibits required to be filed by Item 601 of Regulation S-K are set forth in the Exhibit Index accompanying this Annual Report on Form 10-K and are incorporated herein by reference.
Exhibit
Number Description
3.1(i)
Articles of Organization
3.1(ii)
Operating Agreement, as amended and restated
3.1(iii)
Articles of Amendment to Articles of Organization
4.1
Form of Class A Unit Certificate
10.1
Railroad Car Lease Agreement with Trinity Industries dated February 12, 2002
10.2
Railroad Car Lease Agreements with Wells Fargo Rail Corporation, dated November 10, 2003 and November 25, 2003
10.3
Security Agreement with CoBank dated June 17, 2004
10.4
Credit Agreement with CoBank dated December 28, 2016
10.5
Amendment to Credit Agreement with CoBank dated March 28, 2017
10.6
Amendment to Credit Agreement with CoBank dated February 27, 2018
10.7
Amendment to Credit Agreement with CoBank dated January 28, 2020
10.8
Amendment to Credit Agreement with CoBank dated December 10, 2020
10.9
Amendment to Credit Agreement with CoBank dated December 14, 2021
10.10
Amendment to Credit Agreement with CoBank dated September 20, 2023
10.11
Amended and Restated Credit Agreement with CoBank dated March 17, 2025 (*)
10.12
Monitored Revolving Credit Supplement dated December 28, 2016
10.13
Amended and Restated Revolving Credit Promissory Note dated January 31, 2023
10.14
Amended and Restated Revolving Credit Promissory Note dated March 3, 2023
10.15
Amended and Restated Revolving Credit Promissory Note dated March 17, 2025 (*)
10.16
Amended and Restated Revolving Term Promissory Note dated April 27, 2022
10.17
Amended and Restated Revolving Term Promissory Note dated September 20, 2023
10.18
Amended and Restated Revolving Term Promissory Note dated March 17, 2025 (*)
10.19
Multiple Advance Term Promissory Note with CoBank dated September 20, 2023
10.20
Thomas Kersting Employment Agreement dated January 1, 2023
10.21
Mark Hyde Employment Agreement dated March 21, 2017
10.22
Capital Contribution and Commitment Agreement dated September 21, 2022
10.23
SDSP Parent Guarantee dated September 7, 2023
10.24
Insider Trading Policy (*)
21.1
Subsidiaries of the Company
31.1
Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer (*)
31.2
Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer (*)
32.1
Section 1350 Certification by Chief Executive Officer (*)
32.2
Section 1350 Certification by Chief Financial Officer (*)
____________________________________________________________________________
(*) Filed herewith.