‘A Change of Partners’ – Harless discusses the ProGold partnership with Cargill
Chairman Mark Harless reviewed the change in ownership of ProGold LLC. “On March 1st, Cargill purchased 50% interest (in ProGold) from American Crystal Sugar Company and Golden Growers Cooperative purchased American Crystal’s remaining 1%. The next result is that Cargill and Golden Growers each own 50% interest in ProGold, LLC.”
Harless indicated that MDU’s August decision to build a natural gas pipeline to Wahpeton was a key issue for Cargill to consider exercising its option. Harless said that Cargill previously indicated that landing a co-located partner to utilize a significant portion of the corn plant’s grind was critical to exercising their option. “We found ourselves in a ‘catch-22’ situation. We needed natural gas to attract co-located partners, but natural gas providers wanted guaranteed purchase agreements” that neither ProGold or Cargill could sign. MDU’s new proposal involved “a commitment to purchase gas, but not guarantee repayment. In essence, it would prioritize stability and opportunity over the risk of repayment.” Harless thanked a ‘Team of Advocates’ who assisted in making the pipeline a reality. He recognized Wahpeton Mayor Steve Dale, City Auditor Darcie Huwe, Wahpeton’s gas consultant, the late David Yexley, and State Representative Alisa Mitskog. Harless also thanked Cargill for engaging in the effort.
“With natural gas uncertainty in the rear view mirror, Cargill had to make a decision on whether or not to exercise their option,” relayed Harless. “Cargill reached out to Golden Growers to discuss how we might structure an agreement to allow them to make an equity investment in ProGold.” The Board outlined GGC’s intention to have a long-term relationship with the plant. GGC also wanted to protect members’ investment and remove uncertainty for the future. Cargill was still interested in an integrated joint venture for the long term, but needed time to attract that elusive co-located partner. “After months of negotiations, Cargill and GGC reached final agreement,” said Harless.
Under terms of the agreement ProGold will lease the corn wet milling facility to Cargill through December 31, 2026. Lease payments for 2022 and 2023 will be $15.5 Million with a $750,000 ProGold contribution to infrastructure maintenance. For 2024 through 2026, the lease increases to $16 Million with $500,000 per year committed to infrastructure. “Under certain circumstances, Cargill and GGC may reach an integrated Joint Venture Agreement to fully share profits and losses of the facility.” GGC would be required to reimburse Cargill for 50% of undepreciated capital projects and costs associated with hosting a co-located partner. “If conditions do not occur OR Cargill and GGC are unable to agree on an integrated JV operating agreement, Cargill will purchase GGC’s interest in ProGold for $81 Million, plus half of any remaining lease payments,” stated Harless.
“Our agreement with Cargill assures that the ProGold plant will continue operations well into the future. This is important to Golden Growers members, the employees who work there, corn producers who deliver to the facility, and the surrounding community.” Harless offered his appreciation to American Crystal Sugar Company for their trusted partnership over the past 28 years. “As of March 1st, we are embarking on a new chapter for ProGold and Golden Growers as one partnershp ends and our new partnership with Cargill beings.”
