Over two thirds of Golden Growers members are participating in Direct Deposit of their Distribution payments. We have received numerous favorable comments about how well the system works. It is in the interest of members and Golden Growers to have our members participating in the electronic payment system. In early January, members who are not participating will receive a letter with a completed form and return envelope. Please consider enrolling to simplify your life, save time, and make your Cooperative more efficient.

Advantages include:

• No Lost Checks – On an annual basis, Golden Growers spends a great deal of time tracking down checks that have been lost or not cashed. Direct Deposit eliminates this problem. Members ALWAYS receive their money and GGC saves time and expense.
• Immediate Access to Payments – Direct Deposit participants have immediate access to their payments instead of waiting for the mail and the time needed to go to the bank to make a deposit. At the end of October, 23% of distribution checks worth over $220,000 remained uncashed AND 35 checks worth $28,000 from the June and February distribution were still outstanding. One month later, uncashed checks total exceed $119,000.
• Confirmation of Deposit – Golden Growers mails out a confirmation letter identifying the purpose and amount of the payment for your records.

Constraints on natural gas supplies in Wahpeton have caused concerns at the ProGold plant and for other major users of natural gas in the area. Whenever the temperature drops below 20 degrees on winter days it is common for Great Plains Natural Gas (local supplier) to notify Cargill and other major users to curtail use or dial back production.

This situation has been getting steadily worse and has the potential become critical in coming years.

Background: Natural gas is supplied to Wahpeton through a 60s era 8” pipe that originates in Vergas, MN, goes to Fergus Falls and then is reduced to a 6” pipe feeding the Wahpeton – Breckenridge community. As use of natural gas along the line expanded, pressures were increased to meet the growing demand. Presently, the line’s capacity is tapped out. And because of safety concerns, federal guidelines may cause pressure on the line to be reduced at a future date and dramatically exacerbate the situation.

Discussions within the community have been ongoing for several years, but no resolution is in sight. Several options have been considered – all of which would require a firm commitment over a period of years to guarantee the cost of construction of a new supply line. More importantly, any solution should have the capacity to serve future needs and growth (residential, commercial, and industrial) of the community. Additionally, any new supply for the area would serve as a backup supply for Fergus Falls should the existing pipeline go down.

As you can see, any solution provides a significant benefit to the area and other customers of Great Plains Natural Gas. Yet, proposals to pay for the majority of the project rely on guarantees of current major users at a significant increase to their current cost of natural gas.

Two scenarios are important to keep in mind. The first is simply to provide enough natural gas to maintain operations at the ProGold plant and meet the current needs of other major users with nearly all of the cost of increased supply shouldered by those users. The second scenario involves the addition of increased demand, whether it is another industrial user, processing plant, or an expansion of any of the existing plants currently served by Great Plains Natural Gas. In this situation, the cost of the supply project would be spread among existing and new users, but it would still result in a substantial increase for current users if the solution were to provide for future needs of the community.

To further complicate the situation, Cargill has less than four years remaining on their lease with ProGold. Any new pipeline would take approximately two years to build, which means Cargill could not and ProGold LLC would not guarantee payment for the cost of construction.

Meanwhile, we are all aware that over 20% of natural gas resulting from oil development in western ND is being flared. It would seem that the State of ND has an interest in the future of the ProGold plant, the community of Wahpeton and others like it. Hopefully, we can engage them in finding a solution to this dilemma.

On September 12th, the Golden Growers Board of Directors approved a distribution of $2,168,667 to members of record as of October 1, 2019. This distribution retires the remaining portion of 2017 allocated income and a portion of 2018 allocated income. Total 2018 allocated income was $7,811,471 or roughly $0.504/bushel. In combination with the February and June distributions, a total of $6,691,887 has been issued to members in 2019.

As previously mentioned, the GGC Board believes it is important to build a reserve during the course of this new lease for several reasons that include likely capital expenditures at the plant, and the potential for Cargill to exercise its option to purchase 50% interest in ProGold. This distribution authorized by the Board will result in a remaining equity credit balance for 2018 of $3,378,802.

According to Stofferahn, administrative costs are down for the 5th year in a row. 2018 cost reductions are primarily related to reduced legal expenses (SEC related). “Direct Deposit of distribution payments has also been very helpful in allowing a more efficient refocusing of time to more important tasks.”

Stofferahn addressed additional questions often asked by members:

Question: What are my membership Units worth?

Answer: GGC does not place a value on Units. The best option is to review recent transactions at the www.fncagstock.com website. It is important to understand that Units are very thinly traded. “Arms-length transfers (sales) peaked in 2010 at 1.75% of total Units. In most recent years, however, sales have always accounted for less than 1% transferred per year. Values through FNC peaked in 2014 slightly above $6.00, but more recently have been closer to the $3.00 range.

Question: Why can’t I receive my GGC K-1 sooner?

Answer: First of all, a K-1 is not a 1099 which can be printed shortly after the first of the year. The K-1 requires GGC to: 1) Close our books for the year (mid Jan); 2) Satisfy our Auditor (late Jan); 3) Have our accountant prepare an income estimate (late Jan); 4) Allocate income through Board motion (early Feb); and 5) Have our Accountant determine ND income tax withholding (early Feb). Finally, the K-1 is processed, printed, and mailed (mid Feb). Because many of our members need to file their taxes by the end of February, we proceed as fast as we possibly can. It is not possible to speed up the schedule by cutting corners or ignoring critical process. It is also not legally possible for GGC to change our tax year. IRS rules require our tax year to be the same as the majority of our partners, which is the calendar year.

Question: What are Transfer Requirements?

Answer: At the conclusion of a transfer, the resulting Member(s) must hold a minimum of 4,000 Units. We also require delivery to be completed before a transfer is approved. For Method A pool participants, this means bushels of corn delivered for the year must be equal to or greater than the number of Units to be transferred. For Method B pool participants, the Agency fee of $0.02/bushel must be paid so that GGC can acquire and deliver corn on the member’s behalf. New members must complete a new Uniform Member Agreement (UMA) and a new Annual Delivery Agreement (ADA). Existing members acquiring Units must complete a new ADA to include all Units the member owns.

Question: If I sell my Units, what would be my tax basis?

Answer: GGC does not offer tax advice. You must talk to your tax advisor. When it comes to basis, every member’s situation is different. GGC does provide important information to members or their tax advisors that may be necessary for basis calculations. It is important to recognize that a taxable event occurred when GGC converted from a ND Cooperative to a MN 308B Cooperative in 2009. Units were appraised to have a value of $2.86/Unit. For some, this was a taxable loss, for others it was a taxable gain. Distributions issued to members since t hat time (available on the GGC website) also have an impact on the tax basis. Generally, partnership distributions (characterized as a refund of equity) have the impact of reducing basis. Allocations of income, that have not yet been retired, generally have the impact of increasing basis. Basis is also tied to when a member acquired Units and how much the member paid for them or valued them at the time. GGC may provide information from an individual member’s file to indicate when Units were acquired along with any sales data that may have been involved. Once again, it is best to consult with your tax advisor.