Annual Meeting Set for March 29th in West Fargo

Golden Growers Annual Meeting – Thursday, March 29

The Golden Growers Annual Meeting is set for Thursday, March 29, 2018 at the DoubleTree Conference Center 825 E Beaton Drive, West Fargo, ND. The Doubletree is located on the north side of Interstate 94 where it intersects with Veterans Boulevard.

The schedule is as follows:

8:00 a.m.         Registration and Continental Breakfast

9:00 a.m.         Short Courses

  • Genetic testing for fermentation bacterial infections (Megan O’Neil, National Agricultural Genomics Center)
  • Feasibility of Corn Fiber Ethanol (Kyle Althoff, Equinox, LLC)
  • Expectations for the 2018 Crop year (Pat Pithey, Cargill Corn Merchandizing)

10:00 a.m.       Business Meeting

  • Election of Directors
  • Financial Reports
  • Management Reports

11:00 a.m.       John Bode, President of the Corn Refiners Association

12:00 p.m.      Lunch

1:00 p.m.        Members Only Question & Answer Session

CRA President, John Bode to speak at Annual Meeting

Golden Growers is pleased to announce John Bode as our guest speaker at our March 29, 2018 GGC Annual Meeting to be held at the DoubleTree Conference Center in West Fargo, ND.

Since 2013, Mr. Bode has served as the President of the Corn Refiners Association, a national association representing the corn wet milling industry of the United States.  He has been involved in every significant change in federal food law since the 1981 Farm Bill.

Bode served in three Presidential appointments at the U.S. Department of Agriculture, including Assistant Secretary of Agriculture for Food and Consumer Services.  Before joining the USDA in 1981, he was on the staff of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, and served on the staff of then-Governor of Oklahoma David L. Boren.

The 199A Federal Tax Provision and Golden Growers Cooperative

Since the passage of federal tax legislation, a great deal of consternation has ensued about the 199A provision for cooperatives authored by Senators Hoeven and Thune. In oversimplified terms, producers who sell to a cooperative may deduct 20% of gross receipts from their business income compared to a 20% deduction against net income for sales to private firms.

GGC members are wondering if Method A deliveries qualify under this provision. The answer is NO. Because GGC is formed as a MN 308B cooperative, our tax identify is that of a partnership that does not qualify under this provision.

It is unclear if this tax law, with unintended consequences, can be resolved any time soon. Cooperatives want similar treatment to the older 199 provision AND parity with a 40% corporate tax cut to private entities. Stakeholders are meeting, but as of this time, no agreement has been reached.

If a fix can be agreed to, it must then be attached to legislation that passes both houses of Congress – a somewhat difficult task. Meanwhile, a great deal of market disruption and ‘sham’ coop development may occur.

For more detailed background on the 199A tax provision and its potential consequences review Farm Doc Daily’s Post Titled: A Discussion of the Sec 199A Deduction

GGC Board Allocates 2017 Income, Announces Payment to Retire Equity Credit

On February 3, 2018, after review of the 2017 end of year financial and income statements, the Board of Directors allocated income of $8,276,784 to the members of Golden Growers Cooperative. The Board also approved the retirement of a portion of allocated equity credit in an amount of $0.161 per patronized bushel for a total of $2,493,967.  This payment represents 30% of 2017 allocated income as required by the bylaws of Golden Growers Cooperative.

Payments are anticipated to be issued to Golden Growers members in mid February.

GGC Approves Distribution of $0.14/bushel

On September 14th, the Golden Growers Board of Directors approved a distribution of $2,168,667 to members of record as of October 1, 2017. This distribution is to be issued no later than October 15th. Total 2017 allocated income was $7,366,209. With this distribution a total of $6,552,471 of 2016 equity credit has been retired.

Your Golden Growers Board has determined that it is necessary to build a reserve during the course of this lease.  The Cooperative evaluated revenue and cash flows for the current year through the end of the new lease, including the potential for reduced distributions from ProGold LLC due to payments ProGold must make for infrastructure maintenance and certain capital improvements under the lease. The Cooperative also considered its potential purchase and payment obligations under the Consent Agreement dated April 4, 2017.

The distribution authorized by the Board will result in a remaining equity credit balance for 2016 of $813,738 or $0.0525 per bushel delivered in 2016.

GGC Members to Receive 1st Payments by Direct Deposit

Over 230 Golden Growers members will receive their October distribution payment by Direct Deposit through the Automated Clearing House (ACH) system.

The ACH system is a method of bank to bank transfers whereby GGC uploads a payment file to our bank (Bell Banks) through a secure system. Bell Bank then communicates these transactions directly to the bank of a participating GGC member.

GGC notified members of the opportunity to receive payments by direct deposit in June. Direct Deposit results in fewer errors, no lost checks, and less hassle for both GGC and our members.

If you are interested in Direct Deposit of your distribution payments, you can find the ACH Authorization form on the Direct Deposit page under the ‘Member Information’ tab on the Golden Growers website.  A form was also inserted with your Annual Delivery Election letter.

Simply complete the form, attach a VOIDed check or deposit slip, and return to the Golden Growers Office.

Please feel free to contact our office if you have questions.

GGC Approves Distribution of $0.14/bushel, Builds Reserve

Recently, the ProGold Board of Governors voted to resume monthly distributions to its members.  The Golden Growers Board is now able to consider future obligations against revenue as they plan for member distributions.

On June 15th, the Golden Growers Board of Directors approved a distribution of $0.14/bushel or $2,168,667 to members of record as of June 1, 2017. This distribution is to be issued no later than June 30th. Total 2016 allocated income was $7,366,209. Along with the February distribution, a total of $4,383,806 of 2016 equity credit has been retired.

Your Golden Growers Board believes it is important to build a reserve during the course of this lease for several reasons. If Cargill chooses to exercise its option to purchase 50% interest in ProGold from American Crystal Sugar Company, Golden Growers will be obligated to buy American Crystal’s remaining 1% in ProGold. In addition, there are likely to be capital expenditures during the lease that are the obligation of ProGold while lease income declines. When capital exenditures occur, distributions from ProGold will be reduced. By building a reserve, Golden Growers Cooperative will be able to moderate the impact of those capital expenditures and declining lease revenue.

The distribution authorized by the Board will result in a remaining equity credit balance for 2016 of $2,982,403.

With this payment, Golden Growers has issued payments to members totaling $94,043,859. This represents 174% of members’ original equity investment in the ProGold plant.

Revised US/Mexico Sugar Sugar Trade Suspension Agreement Reached – Duties/Retaliation Avoided, for now

In late April, after the confirmation of US Secretary of Agriculture Sonny Purdue, expectations for a deal to revise terms of the 2014 Anti-dumping and Countervailing Duty Suspension Agreements were circulating around Washington, D.C. The following week, the U.S. Department of Commerce issued an ultimatum that the Department would reinstate duties on sugar imports from Mexico unless an agreement is reached by June 5th. In response Mexico’s sugar industry submitted a request to Mexico’s Economy Ministry asking for an investigation into suspected dumping of U.S. HFCS syrup into Mexico. On June 6th, an agreement (in principle) was reached that avoided placement of 80% duties on Mexican sugar and immediate retaliation against HFCS by the Mexican Government.  The Mexican sugar industry has not withdrawn their request for a probe of HFCS dumping.


US, Mexico strike deal on sugar trade – The Hill 6-6-17

Mexico Agrees to Sugar Trade Deal, but U.S. REfiners Remain Unhappy – New York Times 6-6-17

U.S., Mexico clear way for NAFTA with new deal on sugar trade – Politico 6-6-17

Mexico Sugar Lobby Says Still Wants Dumping Probe of U.S. Fructose – Reuters 6-7-17

Cargill signs five year lease with ProGold

ProGold announced on Monday, April 10th that a new lease agreement has been reached with Cargill, Inc. to be effective as of January 1, 2018. The prior lease will remain in effect until then.

While prior leases were 10 years in length, this lease is a five-year commitment with an optional 6th year.

Base rent for the lease is as follows:

  • 2018-9 – $17,000,000
  • 2020 – $16,000,000
  • 2021-2 – $15,500,000
  • 2023 – $14,000,000 (optional 6th year)

In order to maintain the condition of the plant, ProGold agreed to fund a minimum of $750,000 for infrastructure maintenance each year of the lease.

ProGold may also be required to pay additional sums in order to make certain capital improvements in a manner similar to how the cooling tower replacement occurred in 2015.

The agreement includes an option for Cargill to purchase 50% interest in ProGold from American Crystal Sugar Company (ACSC). If Cargill exercises the option, GGC would purchase ACSC’s remaining 1%, to become a 50% owner of ProGold. GGC and Cargill have agreed to a general framework for a future partnership, with a detailed partnership agreement to be completed prior to Cargill exercising its option.

“The evolution of the corn wet milling industry was an important aspect of our discussions,” stated GGC Chairman Mark Harless. “We believe this lease is a reasonable bargain for the near term. It also holds out a possibility of a long term future for the ProGold plant.”

2016 Member Survey Results

In his Executive Vice President’s report, Scott Stofferahn presented detailed results from last year’s member survey.

Stofferahn complimented GGC members for their 80% response rate.  “We used best practices to obtain a response, but noboey would have predicted that we would have more than an 80% response rate! This is considered phenomenal for a mail in survey.”

Over the course of 20 years, GGC anticipated changes in member farming status.  At the time the cooperative was organized, every member had to be a producer.  That requirement was removed in 2009, yet the response shows that 64% of members continue to be producers.  Another 12% indicated that htey are retired, but ‘associated’ with a farming operation.  Generally these are people who, while retired, maintain an active relationship with their family members who are operating the farm.  “For purposes of analyzing data, we grouped producers with these ‘retired, but associated’ members.”  Another 24% said that they were retired or not farming with no association with a farming operation.

Electronic Delivery – roughly 2/3 of members are not interested in electronic delivery of newsletters or payments.

Investing Results:

When asked about how GGC might pay for value added processing at the ProGold plant, the majority recommended allowing individual members the opportunity to invest.  46% favored using ProGold lease income for this purpose.

While the majority of members (56%) were not interested in value added processing unrelated to the ProGold plant, those who did show interest (46%) had a preference for soybean crushing.

79% of Golden Growers members consider themselves to be ‘accredited investors’, a term defined by the SEC that measures income and assets to decide if someone is a sophisticated investor.

Delivery Results:

GGC members who meet their annual delivery requirement through direct deliveries to the plant (Method A Pool) also deliver an additional 13.5 million bushels on an annual basis.  This means that nearly 2/3 of the annual grind comes from Golden Growers members.

Among Method B pool participants, over 50% produce corn while 33% of Method B respondents said they are not crop producers.

Producer Only Responses:

Compared to twenty years ago, our members are planting more corn and soybeans.  Small grains and sunflowers are not nearly as comon within our membership as they were.

57% of Producers have a history of producing specialty crops with edible beans topping the list.

21% of Producers have raised non-GM corn or soybeans for specialty markets.

69% of producers are willing to produce crops for specialty markets.

48% said they were not interested in producing Non-GM corn.  Yet 59% would consider producing Non-GM corn if an incentive was offered and 31% indicated that producing Non-GM corn would align with a crop rotation strategy.

90% of producers indicated that they would produce for niche markets that would benefit the long-term stability of the ProGold plant. “We believe this answer shows an underlying commitment by our producers for a successful enterprise,” said Stofferahn.