‘Looking Straight Ahead’ – Chairman’s Annual Report

Chairman Mark Harless explained details of the new ProGold lease to Cargill. In particular, he focused on Cargill’s ‘option’ to purchase 50% of ProGold. “Golden Growers signed an agreement consenting to the sale, pending a partnership agreement between Golden Growers and Cargill. Golden Growers has also secured the right to purchase 1% of ProGold from American Crystal Sugar if the option is exercised. The combination of actions would result in Golden Growers and Cargill becoming 50/50 owners of the Wahpeton corn wet milling plant.”

Harless went on to relay how this provision has resulted in more questions than any other part of the lease. He then highlighted three most common questions.

“First, there is no guarantee that Cargill will exercise their option. Cargill will likely make their decision based on market conditions and potential opportunities at the time.
We do not presume to know those conditions or the timing of any decision.”

“Second, to accommodate this option, Golden Growers and Cargill must agree on terms of partnership. We have agreed on general principles, but we will still need to, expeditiously and in good faith, finalize a partnership agreement in advance if Cargill informs us of their intention to exercise their option.”

“And third, details of any agreement between Cargill and American Crystal Sugar, including a purchase price, are confidential between those parties.”

Harless explained that the Board would be reviewing how to best achieve a fair and profitable partnership agreement and exploring financing options for various scenarios if Cargill exercises their option. “We look forward to engaging our members in those discussions.”

Executive Vice President’s Report

This is our first full year as a single employee organization, stated Scott Stofferahn, Golden Growers Executive Vice President. “We’ve been able to make it work through contracting with Eide Bailly for bookkeeping and by finding more efficient ways to do things. As a result, our administration expenses are down this year and are projected to be down again in 2018.” Stofferahn stated that GGC will save roughly $40,000 annually under terms of the new Grain Services Agreement with Cargill. And despite more SEC reporting associated with a new ProGold lease, overall SEC costs are lower than they have ever been.

Direct Deposit of distribution checks continues to grow with 506 members or 33% currently enrolled. “We will continue to encourage members to participate in this time and cost saving payment delivery method.”

Stofferahn reserved most of his time to discuss Board Governance – specifically a proposal to reduce the size of the Board from 15 members to 9 and reduce the number of districts from 5 to 3. “A preferred plan has been identified, but the Board has not endorsed a plan.” Any change would require a Bylaw amendment at the 2019 Annual meeting. Member comments in the Q&A session were generally supportive of the move. Stofferahn stated that he plans to provide an opportunity for more member feedback by placing a survey on the GGC Website and through an emailed questionnaire.

The 199A Federal Tax Provision (An Update)

UPDATE: An agreement was reached and included in the Omnibus spending bill approved in late March. While the ‘fix’ has re-leveled the playing field, it too is complicated. Therefore, we’ll leave the explanations up to other sources and your tax accountant.

Related Article: How the Section 199A ‘Fix’ Will Work April 6, 2018 DTN Progressive Farmer

PREVIOUS ARTICLE from Feb 4, 2018: 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

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.

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