Anticipate a Bylaw Amendment Proposal in January

Over the past two years, Golden Growers Cooperative held virtual Annual Meetings in order to protect our members from the possibility of COVID-19 infection. Obviously, this is not our preferred way to interact with our membership on an annual basis.

Accordingly, we modified our meeting procedures to allow full participation for every member while still adhering to our bylaw requirements. For instance, all members received ballots in the mail to vote for Directors along with return envelopes, and, based on advice of counsel, ballots received were counted toward our quorum. The good news is that we had more votes cast in each of the last two elections than in any of prior ten elections.

We recognize, however, that bylaw requirements to allow a ‘nomination from the floor’ would be nearly impossible to effectively or fairly administer. For instance, a roll call vote would not be confidential and we would need to verify that a mailed ballot had not been received from members voting. Further, the floor nominated candidate would be disadvantaged by all of the mailed votes cast prior to the annual meeting.

Recognizing these problems, the Board is reviewing bylaw amendments that are likely to be proposed to the membership by mail in January. Amendments would include:

  • Nominations for Director are limited to petitons filed within three weeks of the annual meeting
  • Ballots will be mailed with the Annual Meeting notice
  • Ballots are officially counted toward the quorum
  • Any member may vote by mail in Director elections
  • Sections related to the transition period to reduce directors from 15 to 9 will be removed

While we do anticipate an ‘in-person’ annual meeting for 2022, assuming COVID-19 is under control, and members are protected, this bylaw proposal will assure that we are prepared for anything that might come our way.

Avoid the $75/Year Administrative Fee, Enroll in Direct Deposit

Starting in 2022, a $75 Printed Check Administrative Fee for Members NOT Enrolled in Direct Deposit.

Direct Deposit was first utilized in October of 2017 with 250 members participating (16%). Over the past four years, we have had steady growth in participation with 1,343 members enrolled (89.6%) for the October payment. Participants have been pleased with the timely, seamless, and secure process for receipt of distributions. They also receive a mailed letter explaining the payment for their records.  Due to the success of Direct Deposit and the reduced administrative costs associated with it, the Board determined that all members will need to participate by January 1 of 2023.

Golden Growers will be mailing an enrollment letter to non-participating members in December explaining the change in policy and encouraging participation prior to January Method A payment and the February distribution. You can enroll earlier by completing the reverse side of your distribution payment letter.

2022 Pool Election, Agency Fees & Incentive Payments

2022 Incentive Payments and Agency Fees
Incentive Payments and Agency Fees for Method A and Method B Pool participation will remain the same for 2022. That means Golden Growers will pay $0.05 for Method A bushels delivered directly to the plant and will charge $0.02 for Method B bushels the Cooperative secures and delivers on a member’s behalf.

2022 ADA Pool Election Decision
Each year, Members have the opportunity to change their method of delivery by submitting a revised Annual Delivery Agreement (ADA). This is your only opportunity to change your method of delivery for the coming year.

In early October, members received their Annual Delivery Election letter with the ADA form on the back page. Members intending to change their delivery method, must return the form no later than December 10th.

Only members intending to change their delivery method need to respond. Members who deliver directly to the plant through the Method A pool have a $0.07/bushel advantage over members participating in the Method B pool. In 2021, 27% of bushels were delivered by members directly to the plant.

GGC Board Approves $0.13/Unit Distribution

On September 16th, the Golden Growers Board of Directors approved a distribution of $2,013,762 to members of record as of October 1, 2021. This distribution retires a portion of 2019 allocated income. In combination with the February and June distributions, a total of $6,041,286 has been issued to members in 2021.

Over the past few years, the GGC Board built a reserve in preparation for capital expenditures at the plant. In anticipation of capital expenses for the pre-dryer repair and the first phase of the distributive control system (DCS), ProGold has reduced distributions to Golden Growers. Golden Growers is able to continue distributions because the GGC Board built a reserve during the course of this lease.

This distribution authorized by the Board will result in a remaining equity credit balance for 2019 of $117,283 and a 2020 equity credit balance of 3,634,526 totaling $0.24/bushel. (Note: This balance does not constitute an outstanding obligation for GGC.)

GGC Board Approves Distribution of $0.13/Unit

On June 17th, the Golden Growers Board of Directors approved a $0.13/Unit distribution of $2,013,762 to members of record as of June 1, 2021.

This distribution will retire a portion of remaining 2019 allocated income. With this distribution, the remaining equity credit balance is $5,765,571 or $0.37/bushel. This balance is useful in determining per Unit basis levels and does not constitute an outstanding obligation for GGC.

It has been the GGC Board’s goal to level out distributions through the current ProGold lease. They estimated capital expenses, the timing of payment for capital projects, and declining lease payments. As we get closer to the end of the lease and capital expenses become clear, the Board will likely make adjustments to assure that payments to members do not exceed reserves and revenues at the end of the current lease.

Golden Growers has issued payments to members totaling $119,959,432 or 222.3% of the original investment in the ProGold plant.

MDU Announces Natural Gas Line to Wahpeton

Montana Dakota Utilities (MDU) announced plans to increase the supply of natural gas to the Wahpeton Community. This comes after several years of advocacy for a solution by Wahpeton city leaders, legislators, and industrial partners.

Presently, Wahpeton-Breckenridge is supplied by Great Plains Natural Gas (GPNG) through a 6-inch, high pressure natural gas pipeline that originates in Vergas, MN as an 8-inch pipe. (GPNG is a subsidiary of MDU.) From Fergus Falls, it is reduced to a 6-inch pipe that serves the Fergus Falls Green Plains ethanol plant and the Wahpeton-Breckenridge area. During high demand circumstances, industrial users are often forced to reduce or shut down operations. This lack of natural gas capacity has resulted in missed opportunities for industrial expansion in the area.

MDU will split service at the state line with Breckenridge being served by the existing pipeline. A new 12 inch pipeline will be constructed from Mapleton, ND to Wahpeton and serve residential and industrial users on North Dakota side of the river. In addition, a new rate structure will offer firm gas to industrial users at an increased cost that appears to be reasonably priced. These users, including the ProGold Plant, have agreed to a ten-year contract at the proposed rate. The contract, however, will not result in an extended obligation if, for some reason, operations would cease.

MDU anticipates the new supply pipeline could begin operations in the fall of 2024.

The Golden Growers Board of Directors would like to thank the City of Wahpeton, community leaders, and MDU for their continued efforts. In particular, we would like to thank Mayor Steve Dale and State Representative Alisa Mitskog for their tireless advocacy for a solution. We also extend our appreciation for the work of former MDU employee and Wahpeton’s natural gas consultant, David Yexley, whose assistance was key. Unfortunately, Mr. Yexley passed away in March.

This new natural gas line is a  very positive step for the long-term viability of the ProGold plant and allows for future expansion at the site.

Pre-Dryer Repair Approved

In April, the ProGold Board approved the repair of the pre-dryer at the ProGold plant. This repair is considered a major capital expense where the cost is the financial responsibility of ProGold. Previously, repairs to the finish dryer were completed at an approximate cost of $1.6 million.

The pre-dryer, which is constructed much the same as the finish dryer, is having similar structural failures that are getting progressively worse. To accomplish the repair, a conveyor must be built so that the previously repaired the finish dryer will function as the pre-dryer. This bypass conveyer allows continued plant operations during the repair. It also adds redundancy for dryer functions should a major failure occur at some time in the future.

American Coalition for Ethanol Executive VP Brian Jennings Provides Ethanol Status Repor

Brian Jennings discussed ethanol production, demand, and policy issues in his guest presentation.

In 2020, we lost 700 million bushels of corn use for ethanol due to the pandemic. Domestic use dropped from over 14 Billion gallons in 2019 to just over 12 Billion gallons in 2020. “We are seeing a recovery in 2021, but don’t anticipate getting back to the pre-COVID levels in 2021 or even 2022.” After the bottom fell out of the domestic fuel market in March of 2020, there was a quick rebound by July to a level around 15 to 20% below normal. “Domestic demand has continued run at about a 15-20% reduction when compared to prior years,” said Jennings.

A change in administrations will have an impact on the ethanol industry. The Trump EPA can be summed up in two policy issues, one good and one bad. Under Trump’s EPA, E15 was approved for sale year-round across the U.S. Unfortunately, the same EPA granted nearly 90 small refinery waivers of the renewable fuels standard and eroded about 4 billion gallons of demand from statutory levels.

Biden campaigned aggressively against those waivers and has indicated that they will reverse course. The Biden EPA is focused on net-zero emissions by 2050. The question is, ‘What role will Ag and ethanol play?’ “We intend to go on offense. There is an opportunity to increase ethanol demand because corn ethanol GHG emissions are 50% cleaner than gasoline.” Jennings cautioned that they have work to do to convince some Biden officials of the value of corn ethanol.

Jennings addressed recent auto manufacturer announcements on electric vehicles (EVs). “In terms of supply, 97% of vehicles are internal combustion. Even the most aggressive projections on future sale of EVs will mean ethanol will play a significant role in reducing GHG well into the century.”

‘A Year Like No Other’, Harless highlights the challenges of 2020

Chairman Mark Harless reflected on the year of the COVID-19 pandemic and its impacts on our personal lives, communities, and nation. He offered Golden Growers’ deepest sympathies to friends and families of numerous members who have died from the virus in the past year.

The pandemic had significant impacts on agriculture, according to Harless. Specific to corn milling, fewer cars on the road resulted in gas consumption at its lowest level since 1997, an ethanol production decline by over two billion gallons, and facilities idled or permanently closed. Corn based sweeteners lost business as bars, restaurants, and sporting events were severely restricted. On the positive side, as consumers shifted to online shopping, starch used for the production of cardboard boxes saw a significant increase in demand.

At the ProGold plant, Cargill made adjustments in operating procedures to keep their staff save and maintain uninterrupted operations. “They did a great job”, congratulated Harless. He also offered his congratulations to members for continuing their commitment to feeding the world despite risks involved.

Harless acknowledged some anxiety about policy changes at the federal level with a change in administration. “We do expect the Biden administration will take a different approach toward the ethanol industry. We anticipate fewer small refinery waivers to be approved. The focus on carbon reduction may benefit the renewable fuels industry,” stated Harless.

In the past year ProGold LLC continued to make investments in the plant. “Repair of the finish dryer was completed and the phased replacement of the distributive control system continues to move forward and on schedule,” relayed Harless. While acknowledging additional capital expenditures are likely for a 30 year old plant, Harless stressed that the ProGold plant continues to be in very good condition. There were no natural gas curtailments in 2020 due to a ‘bypass’ project at Fergus Falls that was completed in 2019. Natural gas supply continues to be an issue for the future, however. He indicated that local and state officials continue to work on our behalf on this matter.

As for the future, Cargill’s lease with ProGold continues through 2022, with the possibility of an additional year (through 2023). “While Cargill’s exclusive option to purchase 50% interest in the plant continues through 2021, ProGold will begin preparations for lease negotiations this year,” said Harless.

With vaccines rolling out and infection rates on the decline, Harless said, “We have hope for better days to come. Next year, we anticipate meeting you face to face at our annual meeting with a nice meal to follow.”

Board Elections – Vacancies in Next Two Years

Golden Growers members re-elected Larry Vipond (South District) and Scott Jetvig (At-Large Director) at the 2021 Annual Meeting. Pursuant to bylaw changes approved in 2019, the total number of Board members has now been reduced to nine.

At the 2022 Annual Meeting, there will be three vacancies to fill as three additional board members reach their term limits. Members who have an interest in serving on the Board should either visit with current or former Board members and/or contact our Executive Vice-President, Scott Stofferahn.

“In the next two years, we will have four vacancies to fill as current directors reach their term limits. I really encourage members who have an interest in serving on the Board to talk to one of our Directors or call the office.” Stofferahn specifically mentioned that women members should consider running for the Board. “Since 1995, we have had only one woman director.”