10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

/x/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended February 28, 2001

Commission file number: 33-83868

AMERICAN CRYSTAL SUGAR COMPANY
(Exact name of registrant as specified in its charter)

Minnesota	84-0004720
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

101 North Third Street
Moorhead, Minnesota 56560
(Address of principal executive offices)

Telephone Number (218) 236-4400
(Registrant's telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12[nb]months, and (2) has been subject to such filing requirements for the past 90 days.

YES     X  NO       

    Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class of Common Stock	Outstanding at April 5, 2001
$10 Par Value	3,062

AMERICAN CRYSTAL SUGAR COMPANY

FORM 10-Q

INDEX

			Page No.
PART I		FINANCIAL INFORMATION
	ITEM 1.	FINANCIAL STATEMENTS
		BALANCE SHEETS	1
		STATEMENTS OF OPERATIONS	3
		STATEMENTS OF CASH FLOWS	4
		NOTES TO THE FINANCIAL STATEMENTS	5
	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION	7
PART II		OTHER INFORMATION
	ITEM 1.	LEGAL PROCEEDINGS	10
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	11
	ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K	11
SIGNATURES			14

AMERICAN CRYSTAL SUGAR COMPANY

Balance Sheets

(Unaudited)
(Dollars in Thousands)

ASSETS

			February 28			February 29
									August 31, 2000*
			2001			2000
Current Assets:
	Cash and Cash Equivalents		$	1,039		$	55		$	70,124
	Accounts Receivable:
		Trade		58,562			64,212			49,489
		Members		3			10			1,063
		Other		1,008			2,857			3,230
	Advances to Related Parties			8,687			7,877			9,219
	Inventories			346,944			362,971			147,935
	Prepaid Expenses			4,829			520			4,363
Total Current Assets				421,072			438,502			285,423
Property and Equipment:
	Land			31,035			26,068			27,616
	Buildings and Equipment			825,785			811,901			825,047
	Construction-in-Progress			11,490			11,404			6,676
	Less: Accumulated Depreciation			(501,299	)		(481,187	)		(477,868	)
Net Property and Equipment				367,011			368,186			381,471
Other Assets:
	Investments in CoBank			15,135			15,406			15,135
	Investments in Marketing Cooperatives			3,346			3,170			3,219
	Investments in ProGold Limited Liability Company			37,745			36,184			36,867
	Investments in Crystech, LLC			1,538			1,163			1,630
	Notes Receivable—Crystech, LLC			13,905			13,905			13,905
	Other Assets			2,012			4,069			2,069
Total Other Assets				73,681			73,897			72,825
Total Assets			$	861,764		$	880,585		$	739,719

*

Derived from audited financial statements.

1

AMERICAN CRYSTAL SUGAR COMPANY

Balance Sheets (Continued)

(Unaudited)
(Dollars in Thousands)

LIABILITIES AND MEMBERS' INVESTMENTS

			February 28			February 29
									August 31, 2000*
			2001			2000
Current Liabilities:
	Short-Term Debt		$	128,335		$	130,509		$	103,376
	Current Maturities of Long-Term Debt			18,925			18,915			18,925
	Accounts Payable:
		Trade		11,178			9,459			19,895
		Other		4,206			3,138			6,396
	Advances due to Related Parties			5,801			603			8,845
	Accrued Continuing Costs (see note 3)			64,755			75,677			—
	Other Current Liabilities			18,076			18,574			18,984
	Amounts Due Members			127,406			132,429			53,666
Total Current Liabilities				378,682			389,304			230,087
Long-Term Debt, Excluding Current Maturities				220,520			231,335			230,905
Deferred Income Taxes				1,962			1,879			1,920
Other Liabilities				25,291			31,233			27,477
Total Liabilities				626,455			653,751			490,389
Members' Investments:
	Preferred Stock			38,275			38,275			38,275
	Common Stock			30			30			30
	Additional Paid-in Capital			136,655			130,112			131,071
	Unit Retains			97,309			97,157			116,216
	Accumulated Other Comprehensive Income/(Loss)			(655	)		(4,088	)		(655	)
	Retained Earnings/(Deficit)			(36,305	)		(34,652	)		(35,607	)
Total Members' Investments				235,309			226,834			249,330
Total Liabilities and Members' Investments			$	861,764		$	880,585		$	739,719

*

Derived from audited financial statements.

2

AMERICAN CRYSTAL SUGAR COMPANY

Statements of Operations

(Unaudited)
(Dollars in Thousands)

			For the Six Months Ended						For the Three Months Ended
			February 28			February 29			February 28			February 29
			2001			2000			2001			2000
Net Revenue			$	416,242		$	385,807		$	173,387		$	167,829
Cost of Product Sold				13,484			(20,614	)		(35,700	)		(33,539	)
Gross Proceeds				402,758			406,421			209,087			201,368
Selling, General & Administrative Expenses				82,593			82,303			39,225			37,804
Accrued Continuing Costs (see note 3)				64,755			75,677			28,297			35,938
Operating Proceeds				255,410			248,441			141,565			127,626
Other Income (Expenses)
	Interest Income			1,888			1,132			564			668
	Interest Expense			(10,932	)		(10,177	)		(6,508	)		(6,006	)
	Other Income			1,359			1,178			602			579
	Other Expenses			(692	)		(636	)		(379	)		(605	)
Other Income (Expense)				(8,377	)		(8,503	)		(5,721	)		(5,364	)
Proceeds before Income Taxes				247,033			239,938			135,844			122,262
Income Taxes (Provision)/Benefit				(39	)		(52	)		(19	)		(30	)
Net Proceeds Resulting from Member and Non-Member Business			$	246,994		$	239,886		$	135,825		$	122,232
Distribution of Net Proceeds:
	Credited/(Charged) to Members' Investments:
		Non-Member Business Income/(Loss)	$	(698	)	$	(924	)	$	(249	)	$	(663	)
		Unit Retains Declared to Members		—			—			—			—
Net Credit/(Charge) to Members' Investments				(698	)		(924	)		(249	)		(663	)
Payments to/due Members for Sugarbeets, Net of Unit Retains Declared				220,209			240,810			108,591			122,895
Payment to/due Members for PIK Certificates, Net of Equity Retention Declared				27,483			—			27,483			—
Total			$	246,994		$	239,886		$	135,825		$	122,232

3

American Crystal Sugar Company

Statements of Cash Flows

(Unaudited)
(In Thousands)

			For the Six Months Ended
			February 28			February 29
			2001			2000
Cash Provided By (Used In) Operations:
	Net Proceeds Resulting from Member and Non-Member Business		$	246,994		$	239,886
	Payments to Members for Sugarbeets, Net of Unit Retains Declared			(220,209	)		(240,810	)
	Payments to Members for PIK Certificates, Net of Equity Rentention Declared			(27,483	)		—
	Add (Deduct) Non-Cash Items:
		Depreciation and Amortization		26,406			22,248
		(Income) Loss from Equity Method Investees		(947	)		(64	)
		(Gain) Loss on the Disposition of Property and Equipment		614			(20	)
		Non-Cash Portion of Patronage Dividend from Banks for Cooperatives		—			21
		Deferred Gain Recognition		(99	)		(99	)
	Changes in Assets and Liabilities:
		Receivables		(5,791	)		8,812
		Inventories		(304,054	)		(251,013	)
		Prepaid Expenses		(466	)		1,760
		Advances to Related Parties		(2,512	)		15,145
		Accounts Payable		(10,907	)		(13,661	)
		Accrued Continuing Costs		64,755			75,677
		Other Liabilities		485			1,930
		Amounts Due Members		73,740			96,731
Net Cash (Used In) Operations				(159,474	)		(43,457	)
Cash Provided By (Used In) Investing Activities:
	Purchases of Property and Equipment			(12,392	)		(14,172	)
	Proceeds from the Sale of Property and Equipment			3			530
	Investments in Crystech LLC			—			(47	)
	Notes Receivable—Crystech LLC			—			(2,022	)
	Changes in Other Assets			19			2,066
Net Cash (Used In) Investing Activities				(12,370	)		(13,645	)
Cash Provided By (Used In) Financing Activities:
	Net Proceeds (Payments) on Short-Term Debt			126,467			70,329
	Proceeds from Long-Term Debt			8,415			—
	Long-Term Debt Repayment			(18,800	)		(1,800	)
	Proceeds from Sale of Stock			5,584			6,164
	Payment of Unit Retains			(18,907	)		(19,692	)
Net Cash Provided by Financing Activities				102,759			55,001
Increase (Decrease) In Cash and Cash Equivalents				(69,085	)		(2,101	)
Cash and Cash Equivalents, Beginning of Year				70,124			2,156
Cash and Cash Equivalents, End of Period			$	1,039		$	55
Supplemental Schedule of Non-Cash Financing Activities:
On September 30, 2000, the Company forfeited sugar in satisfaction of the Commodity Credit Corporation loans of $105.3 million including accrued interest of $3.8 million.

4

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 AND FEBRUARY 29, 2000

Note 1: Basis of Presentation

    The unaudited financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles. However, in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

    The operating results for the six month period ended February 28, 2001 are not necessarily indicative of the results that may be expected for the year ended August 31, 2001.

    The amount paid to growers for sugarbeets (beet payment) depends on the future selling prices of sugar and agri-products as well as processing and other costs to be incurred during the remainder of the fiscal year. For the purposes of this report, the amount of the beet payment, future revenues and costs have been estimated. Therefore, adjustments with respect to these estimates may be necessary in the future as additional information becomes available.

    These financial statements should be read in conjunction with the financial statements and notes included in the Company's annual report for the year ended August 31, 2000.

    Certain reclassifications have been made to the February 29, 2000 financial statements to conform with the February 28, 2001 presentation.

Note 2: Inventories

    The major components of inventories are as follows (In Thousands):

	02/28/01		02/29/00		8/31/00
Refined Sugar, Pulp, Molasses, Other Agri-Products   and Sugar Beet Seed	$	246,618	$	241,756	$	126,545
Unprocessed Sugarbeets		82,980		101,526		3,402
Maintenance Parts & Supplies		17,346		19,689		17,988
Total Inventories	$	346,944	$	362,971	$	147,935

    Sugar, pulp, molasses and other agri-products inventories are valued at estimated net realizable value. Unprocessed sugarbeets are valued at the estimated net beet payment plus estimated unit retains to be withheld. Maintenance parts & supplies and beet seed inventories are valued at the lower of average cost or market.

Note 3: Accrued Continuing Costs

    For interim reporting, the Net Proceeds from Member Business is based on the forecasted beet payment and the percentage of the tons of sugarbeets processed to the total estimated tons of sugarbeets to process for a given crop year. Accrued continuing costs represent the difference between the Net Proceeds from Member Business as determined above and actual member business crop year revenues realized and expenses incurred through the end of the reporting period. Accrued continuing costs are reflected in the Financial Statements as a cost on the Statements of Operations and as a current liability on the Balance Sheets.

5

Note 4: Members' Investments

		Par Value		Shares Authorized	Shares Issued & Outstanding
Preferred Stock:
	April 5, 2001	$	76.77	600,000	498,570
	February 28, 2001	$	76.77	600,000	498,570
	August 31, 2000	$	76.77	600,000	498,570
	February 29, 2000	$	76.77	600,000	498,570
Common Stock:
	April 5, 2001	$	10.00	4,000	3,062
	February 28, 2001	$	10.00	4,000	3,004
	August 31, 2000	$	10.00	4,000	3,006
	February 29, 2000	$	10.00	4,000	2,953

Note 5: Interest Paid

    Interest paid, net of amounts capitalized, was $11.0 million and $9.8 million for the six months ended February 28, 2001 and February 29, 2000, respectively.

Note 6: Short-Term Debt

    As of February 28, 2001, the company had an outstanding non-recourse loan with the CCC of $34.2 million, against which 1.5 million hundredweight of sugar was pledged as collateral. The loan carried an interest rate of 6.0% with a maturity date of September 30, 2001. The Company also had outstanding commercial paper, as of February 28, 2001, of $94.1 million at an average interest rate of 6.52% and maturity dates between March 1, 2001 and August 31, 2001.

6

Item 2.  Management's Discussion and Analysis of Results of Operations and Financial Condition For the Six months and Three months Ended February 28, 2001 and February 29, 2000

    This report contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, among others, those statements including the words "expect", "anticipate", "believe", "may" and similar expressions. The Company's actual results could differ materially from those indicated. Important factors that could cause or contribute to such differences include, without limitation, market factors, weather and general economic conditions, farm and trade policy, available quantity and quality of sugarbeets. For a more complete discussion of "Important Factors", please refer to the Company's 2000 Form 10-K.

Comparison of the Six months Ended February 28, 2001 and February 29, 2000

    Revenue for the six months ended February 28, 2001, was $416.2 million, an increase of $30.4 million from 2000. Revenue from total sugar sales increased 9.5 percent which reflects the proceeds from the forfeiture of sugar to the Commodity Credit Corporation (CCC) this year, partially offset by a 1.8 percent decrease in hundredweight sold and a 8.4 percent decrease in the average selling price per hundredweight. Revenue from pulp sales decreased 10.5 percent due to a 15.3 percent decrease in the volume of pulp sold partially offset by a 5.7 percent increase in the average selling price per ton. Revenue from molasses sales decreased 52.5 percent due to a 63.1 percent decrease in the volume of molasses sold partially offset by a 29.0 percent increase in the average selling price per ton. Revenue from the sales of Concentrated Separated By-Product (CSB), a by-product of the molasses desugarization process, increased 52.0 percent due to a 25.2 percent increase in sales volume and a 21.3 percent increase in the average selling price per ton. The decrease in sales volume of molasses and the increase in sales volume of CSB are primarily the result of the Crystech, LLC molasses desugarization facility at Hillsboro, North Dakota, which became operational on February 1, 2000.

    Cost of product sold, for the six months ended February 28, 2001, exclusive of payments for sugarbeets, increased $34.1 million as compared to the same period in 2000. Direct processing costs for sugar and pulp increased 22.3 percent due to processing 3.2 percent more sugarbeets and due to the commencement of tolling charges from Crystech, LLC. Fixed and committed expenses decreased 1.5 percent reflecting lower maintenance costs. The cost associated with sugar purchased to meet customer needs was down $15.0 million due to no such activity during the first six months of fiscal 2001. Change in inventories impacted the cost of product sold unfavorably by $33.6 million in the first six months of fiscal 2001 as compared to fiscal 2000 due primarily to the forfeiture of sugar to the CCC partially offset by increased sugar production.

    Selling, General and Administrative expenses for the six months ended February 28, 2001 increased $.3 million from 2000. Sugar selling expenses increased $.7 million between the two years. General and Administrative expenses decreased $.4 million compared with last year.

    The decrease in accrued continuing costs was due primarily to changes in the volume of sugar sales and production, differences in the timing of incurring processing costs and the amount of unsold inventory on hand.

    Interest income increased $.8 million in fiscal 2001 primarily due to a higher average balance of investments at slightly higher rates.

    Interest expense increased primarily due to higher long-term and short-term interest rates partially offset by lower average borrowing levels.

    Non-member activities resulted in a loss of $.7 million for the six months ended February 28, 2001 as compared to a loss of $.9 million for the same period last year. The losses in both fiscal years were comprised mainly of activities related to the investment in ProGold, LLC.

7

Comparison of the Three months Ended February 28, 2001 and February 29, 2000

    Revenue for the three months ended February 28, 2001, was $173.4 million, an increase of $5.6 million from 2000. Revenue from total sugar sales increased 6.0 percent reflecting a 16.2 percent increase in hundredweight sold partially offset by an 8.8 percent decrease in the average selling price per hundredweight. Revenue from pulp sales decreased 22.9 percent due to a 27.3 percent decrease in the volume of pulp sold partially offset by a 6.2 percent increase in the average selling price per ton. Revenue from molasses sales decreased 80.0 percent due to an 82.1 percent decrease in the volume of molasses sold partially offset by an 11.9 percent increase in the average selling price per ton. Revenue from the sales of Concentrated Separated By-Product (CSB), a by-product of the molasses desugarization process, increased 39.8 percent due to a 15.2 percent increase in sales volume and a 21.4 percent increase in the average selling price per ton. The decrease in sales volume of molasses and the increase in sales volume of CSB are primarily the result of the Crystech, LLC molasses desugarization facility at Hillsboro, North Dakota, which became operational on February 1, 2000.

    Cost of product sold, for the three months ended February 28, 2001, exclusive of payments for sugarbeets, decreased $2.2 million as compared to the same period in 2000. Direct processing costs for sugar and pulp increased 20.9 percent primarily due to the commencement of tolling charges from Crystech, LLC. Fixed and committed expenses remained relatively level between years. The cost associated with sugar purchased to meet customer needs was down $3.9 million due to no such activity during the 2001 fiscal quarter. Change in inventories impacted the cost of product sold favorably by $3.4 million. Selling, General and Administrative expenses for the three months ended February 28, 2001 increased $1.4 million from the same period in 2000. Selling expenses increased $1.8 million due to the increased volume of sugar sold. General and Administrative expenses decreased $.4 million compared with last year primarily due to lower personnel costs and general cost reductions.

    The decrease in accrued continuing costs was due primarily to changes in the volume of sugar sales and production, differences in the timing of incurring processing costs and the amount of unsold inventory on hand.

    Interest income decreased $.1 million in fiscal 2001 primarily due to a slightly lower average balance of investments during this quarter.

    Interest expense increased primarily due to higher long-term and short-term interest rates partially offset by lower average borrowing levels.

    Non-member activities resulted in a loss of $.2 million for the three months ended February 28, 2001 as compared to a loss of $.7 million for the same period last year. The losses in both fiscal years were comprised mainly of activities related to the investment in ProGold, LLC.

Current Market Trends

    The domestic sugar market is currently experiencing an oversupply of refined sugar. This oversupply is the result of several factors. First, the World Trade Organization (WTO) requires imports of sugar, regardless of the domestic supply situation, from approximately 40 foreign nations that produce and export sugar. Second, sugar is currently entering the United States from Canada, over and above the WTO minimum, in the form of "stuffed molasses." "Stuffed molasses" is molasses that contains an extremely high percentage of sugar. Once the "stuffed molasses" reaches the United States, it is run through a desugarization process that separates the liquid sugar from the molasses. The liquid sugar is then sold in the domestic market. Third, Mexico, under the North American Free Trade Agreement (NAFTA), will be allowed to export 2.5 million hundredweight of sugar, tariff free, into the United States during fiscal 2001.

    Due to these factors, the supply of refined sugar currently exceeds the domestic demand for refined sugar in the United States. This excess supply has resulted in a decline in domestic sugar prices.

8

Lower sugar prices adversely impact the profitability of selling refined sugar in the United States, resulting in a direct negative impact on the gross beet payment.

    During 2000, market conditions caused prices for raw and refined sugar to drop below the non-recourse loan rates established under the Federal Agriculture Improvement and Reform Act (the FAIR Act). The United States Department of Agriculture (USDA) attempted to support market prices by purchasing 132,000 tons of sugar and through a Payment-In-Kind program between it and the sugar producers, but prices remained below the non-recourse loan rates. As a result of this fall in price, several producers forfeited sugar under the terms of loans obtained from the CCC. The Company forfeited approximately 4.5 million hundredweight of sugar under CCC loans on September 30, 2000 (the maturity date of the loans).

    During 2000, the USDA implemented a Payment-In-Kind (PIK) program. Under this program, the Company's shareholders were paid to destroy a portion of their 2000 sugarbeet crop. Payments to the Company's shareholders were made by the USDA in the form of certificates to be exchanged for sugar obtained by the USDA as a result of the purchases and forfeitures noted in the above paragraph. The Company has entered into contracts with its shareholders to purchase the sugar certificates they received from the USDA and reduce the shareholders' delivery obligation to the Company to the extent sugarbeets were destroyed. As a result of the PIK program, the number of acres of the 2000 sugarbeet crop harvested by the shareholders was reduced by approximately 33,000 acres. At this time, the Company does not believe that the reduction in sugarbeets available to process as a result of the PIK program will materially affect the results of operations for fiscal 2001. On December 1, 2000, the CCC finalized the amount of sugar to be exchanged for the PIK certificates. As a result, the Company received approximately 1.6 million hundredweight of sugar in exchange for the PIK certificates.

Liquidity and Capital Resources

    Under the Company's Bylaws and Grower Contracts, payments for member delivered sugarbeets, the Company's principal raw material, are subordinated to all member business expenses. Cash payments to members are spread over a period of approximately one-year following delivery of their sugarbeet crops to the Company. All unpaid portions remain available to meet the Company's capital requirements. This member financing arrangement may result in an additional source of liquidity and reduced outside financing requirements in comparison to a similar business operated on a non-cooperative basis. Because sugar is sold throughout the year (while sugarbeets are processed primarily in the fall, winter and spring) and because substantial amounts of equipment are required for its operations, the Company has utilized substantial outside financing on both a seasonal and long-term basis to fund such operations. The majority of such financing has been provided by CoBank, ACB. The Company has a long-term debt commitment with CoBank of $218.7 million against which the Company had borrowed $138.3 million. In addition, the Company has long-term debt outstanding of $50 million from a private placement of Senior Notes that occurred in September of 1998, a term loan with US Bank of $2.0 million, a term loan with Bank of North Dakota of $6.4 million, and $42.7 million from nine separate issuances of Pollution Control and Industrial Development Revenue Bonds. The Company also has a seasonal line of credit with CoBank, ACB of $210 million that includes a line of credit with Wells Fargo Bank for $3 million and any amounts obtained through issuance of instruments in its commercial paper program. The Company's commercial paper program provides short-term borrowings of up to $150 million.

9

    On March 31, 2000, the Company entered into new Term and Seasonal loan agreements with CoBank, ACB. These new loans replace the loans with the St. Paul Bank for Cooperatives that have expired. CoBank, ACB and the St. Paul Bank for Cooperatives merged in 1999. The various loan agreements between CoBank, ACB and the Company obligate the Company to maintain or achieve certain amounts of working capital and certain financial ratios and impose restrictions on the Company. As of February 28, 2001, the Company was in compliance with its loan agreements.

    On September 30, 2000, the Company forfeited approximately 4.5 million hundredweight of 1999 crop sugar to the CCC in satisfaction of the remaining $101.5 million in outstanding non-recourse loans and $3.8 million of accrued interest. The financial effect of this forfeiture on the members' 1999 crop beet payment has been reflected in the net realizable value calculation of the August 31, 2000, sugar inventory.

    The change in the Company's financial condition from August 31, 2000 to February 28, 2001 is primarily due to normal business seasonality. The first six months of the Company's fiscal year includes the completion of the sugarbeet harvest, start of the processing campaign, and the initial payments to members for delivered sugarbeets. The cash used in operations of $159.5 million and investing activities of $12.4 million was funded through the cash provided by financing activities. The net cash provided by financing activities was primarily comprised of the net proceeds from long-term and short-term debt of $134.9 million, and proceeds from the installment sale of stock of $5.6 million partially offset by the payment of the unit retains of $18.9 million and long-term debt repayment of $18.8 million.

    As of February 28, 2001, the company had an outstanding non-recourse loan with the CCC of $34.2 million, against which 1.5 million hundredweight of sugar was pledged as collateral. The Company also had outstanding commercial paper, as of February 28, 2001, of $94.1 million.

    Working capital has decreased $12.9 million from $55.3 million at the beginning of the year to $42.4 million as of February 28, 2001 primarily due to additional short-term debt, increases in payables, and the amounts due growers partially offset by increased inventories. Working capital as of February 28, 2001 was $42.4 million, an increase of $6.8 million when compared to $49.2 million of working capital as of February 29, 2000.

    Capital expenditures for the six months ended February 28, 2001 were $12.4 million as compared to $14.2 million for the same period in 2000. The Company had outstanding commitments totaling $4.8 million as of February 28, 2001, for equipment and construction contracts related to various capital projects.

    The Company anticipates that the funds necessary for working capital requirements and future capital expenditures will be derived from operations, short-term borrowings, depreciation, unit retains and long-term borrowings.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

    From time to time and in the ordinary course of its business, the Company is named as a defendant in legal proceedings related to various issues, including worker's compensation claims, tort claims and contractual disputes. The Company is currently involved in certain legal proceedings, which have arisen in the ordinary course of the Company's business. The Company is also aware of certain other potential claims, which could result in the commencement of legal proceedings. The Company carries insurance, which provides protection against certain types of claims. With respect to current litigation and potential claims of which the Company is aware, the Company's management believes that (i) the Company has insurance protection to cover all or a portion of any judgments which may be rendered against the Company with respect to certain claims or actions and (ii) any judgments which may be entered against the Company and which may exceed such insurance coverage or which may

10

arise in actions involving potential liabilities not covered by insurance policies are not likely to have a material adverse effect upon the Company, or its assets or operations.

Item 4. Submission of Matters to a Vote of Security Holders

    None

Item 6. Exhibits and Reports on Form 8-K

    (a) Exhibits

	Item No.	Method of Filing
3.1	Restated Articles of Incorporation of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(i) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
3.2	Restated By-laws of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(ii) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
4.1	Restated Articles of Incorporation of American Crystal Sugar Company	See Exhibit 3.1
4.2	Restated By-laws of American Crystal Sugar Company	See Exhibit 3.2
10.1	Trademark License Agreement between Registrant and United Sugars Corporation, dated November 1, 1993	Incorporated by reference to Exhibit 10(l) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.2	Uniform Member Marketing Agreement, Pool Basis between Registrant and Midwest Agri-Commodities Company, dated April 14, 1992	Incorporated by reference to Exhibit 10(m) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.3	Amended and Restated Loan Agreement between Registrant and US Bank, formerly First Bank National Association, dated November 22, 1993	Incorporated by reference to Exhibit 10(q) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.4	Pension Contract and Amendments	Incorporated by reference to Exhibit 10(r) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.5	Form of Operating Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(u) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.

11

10.6	Form of Member Control Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(v) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.7	Administrative Services Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(w) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.8	Uniform Member Marketing Agreement	Incorporated by reference to Exhibit 10(x) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
†10.9	Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 25, 1995	Incorporated by reference to Exhibit 10(y) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
†10.10	Coal Transportation Agreement between Registrant and Northern Coal Transportation Company, dated August 25, 1995	Incorporated by reference to Exhibit 10(z) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
†10.11	Gas Sales Contract between Registrant and Coastal Gas Marketing Company, dated as of March 20, 1996	Incorporated by reference to Exhibit 10(aa) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
†10.12	Trademark License Agreement between Registrant and The Pillsbury Company, dated as of April 9, 1997	Incorporated by reference to Exhibit 10(dd) from the Company's Registration Statement on Form S-1 (File No. 333-32251), declared effective October 24, 1997.
10.13	Pledge Agreement between Registrant and First Union Trust Company, NA	Incorporated by reference to Exhibit 10(ee) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
10.14	Indemnity Agreement between Registrant, Newcourt Capital USA Inc., Crystech, LLC and Crystech Senior Lender Trust	Incorporated by reference to Exhibit 10(ff) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
10.15	Tolling Services Agreement between Crystech, LLC and Registrant	Incorporated by reference to Exhibit 10(gg) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
10.16	Operations and Maintenance Agreement between Crystech, LLC and Registrant	Incorporated by reference to Exhibit 10(hh) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.

12

††10.17	Limited Liability Company Agreement of Crystech, LLC	Incorporated by reference to Exhibit 10(ii) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
10.18	Master Agreement between the Registrant and Bakery, Confectionery, Tobacco Workers & Grain Millers AFL-CIO, CLC	Incorporated by reference to Exhibit 10.22 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999
10.19	Uniform Member Beet Sugar Marketing Agreement	Incorporated by reference to Exhibit 10.23 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999
10.20	Registrant's Senior Note Purchase Agreement	Incorporated by reference to Exhibit 10.24 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999
10.21	Registrant's Senior Note Intercreditor and Collateral Agency Agreement	Incorporated by reference to Exhibit 10.25 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999
10.22	Registrant's Senior Note Restated Mortgage and Security Agreement	Incorporated by reference to Exhibit 10.26 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999
10.23	Employment Agreement between the Registrant and James J. Horvath	Incorporated by reference to Exhibit 10.28 from the Company's Annual Report on Form 10-K form the year ended August 31, 1999
10.24	Term and Seasonal Loan Agreements between the Registrant and CoBank, ACB dated March 31, 2000	Incorporated by reference to Exhibit 10.27 from the Company's Form 10-Q for the quarter ended May 31, 2000
10.25	Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency, dated April 4, 2000	Incorporated by reference to Exhibit 10.28 from the Company's Form 10-Q for the quarter ended May 31, 2000
10.26	Board of Directors Deferred Compensation Plan, dated June 30, 1994	Incorporated by reference to Exhibit 10.29 from the Company's Annual Report on Form 10K for the year ended August 31, 2000
10.27	Long Term Incentive Plan, dated September 1, 1995	Incorporated by reference to Exhibit 10.30 from the Company's Annual Report on Form 10K for the year ended August 31, 2000

13

10.28	Long Term Incentive Plan, dated June 23, 1999	Incorporated by reference to Exhibit 10.31 from the Company's Annual Report on Form 10K for the year ended August 31, 2000
10.29	Growers' Contract (5-year Agreement) for the crop years 1998 through 2002.	Filed herewith electronically
10.30	Growers' Contract (Annual Contract) for crop year 2001.	Filed herewith electronically
21.1	List of Subsidiaries of the Registrant	Incorporated by reference to Exhibit 21.1 from the Company's Annual Report on Form 10K for the year ended August 31, 1999
23.1	Consent of Eide Bailly LLP	Incorporated by reference to Exhibit 23.1 from the Company's Annual Report on Form 10K for the year ended August 31, 2000

†

Portions of the Exhibit have been granted confidential treatment by the Commission. The omitted portions have been filed separately with the Commission.

††

Portions of the Exhibit have been deleted from the publicly filed document and have been filed separately with the Commission pursuant to a request for confidential treatment.

(b) Reports on Form 8-K

    The Company filed the following Current Report on Form 8-K during this quarter.

(i)

Current Report on Form 8-K, dated March 30, 2001.

    The Company filed a report on Form 8-K on April 2, 2001, stating that it had announced to its shareholders on March 30, 2001, that the forecasted gross beet payment for the 2000 crop has increased $1.00 from $31.50 to $32.50 per average ton of sugarbeets.

    The report also stated that on April 2, 2001, the Company would announce to its shareholders that the gross beet payment for the 2001 crop is currently estimated to be approximately $30.00 per average ton of sugarbeets. The actual gross beet payment for the 2001 crop will necessarily differ from the current estimate to reflect actual crop statistics, Company operations, and selling prices for the Company's products during fiscal year 2002.

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMERICAN CRYSTAL SUGAR COMPANY
	(Registrant)
Date: April 5, 2001	/s/ BRIAN INGULSRUD Corporate Controller, Chief Accounting Officer Duly Authorized Officer

14

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AMERICAN CRYSTAL SUGAR COMPANY Balance Sheets (Unaudited) (Dollars in Thousands)
ASSETS
AMERICAN CRYSTAL SUGAR COMPANY Balance Sheets (Continued) (Unaudited) (Dollars in Thousands)
LIABILITIES AND MEMBERS' INVESTMENTS
AMERICAN CRYSTAL SUGAR COMPANY Statements of Operations (Unaudited) (Dollars in Thousands)
American Crystal Sugar Company Statements of Cash Flows (Unaudited) (In Thousands)
AMERICAN CRYSTAL SUGAR COMPANY NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 AND FEBRUARY 29, 2000
PART II. OTHER INFORMATION
SIGNATURES

EX-10.29

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Exhibit 10.29

FIVE YEAR AGREEMENT
BETWEEN

                                                                                  
(Grower)

and

AMERICAN CRYSTAL SUGAR COMPANY
(Company)

1.

Grower agrees to prepare land, plant, cultivate, harvest and deliver with respect to the crop years of 1998, 1999, 2000, 2001 and 2002, the number of acres of sugarbeets equal to the number of Preferred Shares of the Company then owned by Grower, subject to (i) over-plant and under-plant tolerances established annually by Company, and (ii) the terms of the offering for Preferred Shares issued pursuant to the 1997 stock offering. Company shall not be obligated to purchase sugarbeets, and Grower agrees to destroy prior to harvest, sugarbeets from all acres planted in excess of that authorized by Company. Land to be used for sugarbeet production, cultural and harvest practice requirements, and other matters may be specified by annual contract to be entered into between the Company and Grower as a supplement to this Agreement.

2.

DEFINITIONS:

(a)

The "per hundredweight value of recovered sugar" shall be the "net selling price per hundredweight of sugar", as hereinafter defined, recovered from that year's crop, adjusted for the difference between the opening inventory book value and its actual net selling price, and adjusted by valuing the closing inventory at its estimated net realizable value.

(b)

"Recovered sugar" contained in the sugarbeets delivered by Grower shall be determined by Company deducting from gross sugar (i) sugar loss to molasses on a fresh beet basis using the British Sugar Corporation's Impurity Index Formula as modified by Company, and (ii) Grower's share of other sugar losses incurred in the storage and processing of the sugarbeets, allocated on a per net ton of sugarbeets delivered basis, and increased by (iii) Grower's share of additional sugar recovered through the molasses desugarization process on a per net ton of sugarbeets delivered basis.

(c)

The "net selling price per hundredweight of sugar" sold shall be determined by deducting from the gross sales price all such charges and expenditures as are regularly and customarily deducted from such gross sales price of sugar in accordance with Company's system of accounting used to determine the "net selling price of sugar" sold.

(d)

"Agri-products revenue" shall be determined by using the net selling price of feed pulp, molasses, and any other by-product produced by the Company, of that crop year as determined in accordance with the Company's system of accounting.

(e)

Operating costs shall be determined in accordance with the Company's system of accounting, and shall include all costs and expenses not otherwise accounted for with respect to business done with members, and shall be net of results from beet seed and other miscellaneous member business.

3.

Payment for sugarbeets delivered each crop year shall be as follows:

The Gross Beet Payment for sugarbeets delivered shall be the "per hundredweight value of recovered sugar" multiplied by the number of hundredweight of "recovered sugar" contained in the sugarbeets delivered by Grower. Grower's share of "agri-products revenue" will be added while Grower's share of "operating costs" will be subtracted, both allocated on a per net ton of

sugarbeets delivered basis. The following allowances, costs and deductions, if applicable, will be used in adjusting Grower's Gross Beet Payment to Grower's Net Beet Payment:

(a)

FREIGHT AND HAULING ALLOWANCE PROGRAM: Company reserves the right to establish for each crop year covered by this Agreement, a freight and hauling allowance program and in connection therewith to allocate the cost of the freight and hauling allowance program among the growers.



(b)

EARLY DELIVERY ALLOWANCE PROGRAM: Company reserves the right to establish for each crop year, an early delivery allowance program in partial compensation to Growers for the delivery of sugarbeets prior to the commencement of the piling campaign. The cost of this program will be shared equally each crop year on a per net ton of sugarbeets delivered basis by all growers who have delivered sugarbeets to Company.



(c)

MINIMUM PAYMENT ALLOWANCE PROGRAM: Company reserves the right to establish for each crop year, a minimum payment allowance program. The cost of this program will be shared equally each crop year on a per net ton of sugarbeets delivered basis by all growers who have delivered sugarbeets to Company.



(d)

TARE INCENTIVE PROGRAM: Company reserves the right to establish for each crop year, a tare incentive program to encourage growers to reduce tare. The cost of this program will be allocated among the growers in a manner consistent with the program, as approved by the Board of Directors.



(e)

REDUCTION OF LATE HARVEST PROGRAM: Company reserves the right to establish for each crop year, a program to discourage late harvest by the growers. The cost of this program will be allocated among the growers in a manner consistent with the program, as approved by the Board of Directors.



(f)

UNIT RETAIN: A unit retain may be declared by the Board of Directors and the amount of such unit retain shall be deducted from the final payment to be made for sugarbeets. The Board of Directors may estimate an amount of unit retain to be declared prior to its declaration. Grower consents to the provisions of Company's bylaws with respect to the tax treatment to Grower of unit retains.

THE PROVISIONS OF PARAGRAPH NO. 4 TO PARAGRAPH NO. 14, BOTH INCLUSIVE, AS SHOWN ON THE REVERSE HEREOF, ARE PART OF THIS AGREEMENT. THE UNDERSIGNED REPRESENTS THAT HE/SHE IS AN AUTHORIZED REPRESENTATIVE OF GROWER AND THAT HE/SHE HAS THE AUTHORITY TO BIND GROWER TO THE TERMS OF THIS AGREEMENT.

Dated this      day of            ,      .

AMERICAN CRYSTAL SUGAR COMPANY		GROWER
By		By
	Its	Its

4.

Settlement for sugarbeets delivered shall be made as follows:

(a)

An initial payment shall be made on or about November 15. Such payment shall be sixty-five percent (65%) of Company's then current estimate of Grower's Net Beet Payment for that crop year.

(b)

A second payment will be made on or about March 31. Such payment shall be an amount which will bring that payment plus the November payment to ninety percent (90%) of Company's then current estimate of Grower's Net Beet Payment for that crop year.

(c)

The final payment, which together with the prior payments shall equal one hundred percent (100%) of the Net Beet Payment, shall be made no later than 15 days after the completion and acceptance of the report of Company's independent public accountants on the audit of Company's financial statements as of its last fiscal year end.

5.

Grower agrees to abide by the Articles of Incorporation and the Bylaws of Company, to comply with all applicable federal, state and local laws, ordinances, regulations and rulings, as well as Company's operational and agricultural regulations and policies. Grower acknowledges and agrees that Grower is required, pursuant to this Agreement (and any annual supplement hereto) and the Bylaws of Company, to grow and deliver the sugarbeet crop to Company in each year at the times specified by the Company, as provided by this Agreement. The failure of Grower to plant, grow and deliver said crop to Company will constitute a breach of this Agreement, which will result in economic loss to Company and may subject Grower to the following penalties:

(a)

Expulsion as a member of the Company;

(b)

Forfeiture of Grower's Common Stock in the Company and qualification to be a preferred shareholder of Company;

(c)

Termination of this Agreement and the right to deliver sugarbeets to the Company for processing; and

(d)

Payment of liquidated damages to the Company, which liquidated damages are hereby declared and stated to be an amount equal to Grower's share of Company fixed costs for processing of the crop.

6.

Grower further agrees to undertake and conduct soil testing on an annual basis on all land Grower utilizes for growing of sugarbeets pursuant to this Agreement. Grower further agrees to report and make available the results of said soil tests to the agricultural department of Company, together with information as to the amounts and kinds of fertilizer applied to the soil tested.

7.

Grower agrees that he shall use no pesticide, chemical or other substances in a manner which could result in any residue in or on sugarbeets grown for Company under this Agreement, or in any sugar or by-products produced from such sugarbeets, beyond the limits permitted by law or governmental regulations.

Grower acknowledges and agrees that Company shall have the right to reject and refuse delivery of any sugarbeets to which have been applied, or which have been grown on ground to which has been applied, any unauthorized, non-registered, non-approved or prohibited pesticide, chemical or other substance.

Grower further acknowledges and agrees that Company's right to reject or refuse delivery of any of said sugarbeets may be invoked by Company at its sole option, regardless of whether or not use of, or application of, an unauthorized, non-registered, non-approved, or prohibited pesticide, chemical or other substance results in, or may result in, a residue in or on the sugarbeets grown, or sugar or by-products produced from such sugarbeets.

2

Grower agrees to hold harmless and indemnify Company and all shareholders of Company from any and all loss or damages Company or its shareholders may sustain as a result of a Grower delivering sugarbeets to Company to which have been applied, or which have been grown on ground upon or to which any unauthorized, non-registered, non-approved or prohibited pesticide, chemical or other substance has been applied.

8.

DELIVERY OF SUGARBEETS SHALL BE MADE BY GROWER AT SUCH TIMES, IN SUCH QUANTITIES, AND TO SUCH RECEIVING STATIONS AS MAY BE DESIGNATED BY COMPANY. Title and all risk of loss to said sugarbeets shall be and remain with Grower until such time as Grower completes delivery to Company at the designated receiving station, at which time title and risk of loss shall pass to Company. The sugarbeets shall be protected from sun and frost after removal from ground, including sugarbeets that are loaded on truck. Company has the option of rejecting any diseased, frozen or damaged sugarbeets, sugarbeets having less than 12% sugar or less than 80% purity, sugarbeets which, in Company's opinion, are not suitable for storage or for the manufacture of sugar, sugarbeets as to which, in Company's opinion, the terms and conditions of this Agreement have not been properly complied with, or for any other bona fide reason.

9.

All sugarbeets delivered shall be properly defoliated and free from excess dirt, stones, trash and other foreign substances of any kind which might interfere with handling and processing at Company's factories. All sugarbeets shall be subject to a deduction for tare. Tare determination, sugar percentage, and sugar loss to molasses shall be determined at quality laboratories operated by Company.

10.

It is agreed that the amount charged for all sugarbeet seed purchased from Company by Grower, and any and all other indebtedness to Company by Grower, whether due or not, shall constitute a debt which Company shall have the right to collect as it would any other contractual obligation. Any such amounts, or indebtedness which are due and payable or which hereafter may become due and payable to Company from the Grower shall be, become and remain a first and prior lien on the crop of sugarbeets to be grown and may, if not previously paid by Grower, be deducted by Company from any payments from Company to Grower which shall become due or under this Agreement or any subsequent beet contract between Company and Grower. Grower agrees to repay Company at the time of Grower's initial beet payment for each crop year all such amounts or indebtedness, together with interest at a rate to Grower as may be set by Company, but not to exceed the highest rate allowed by law. Notwithstanding any other remedy which may be available, Company shall have the rights, exercisable at its option to offset any indebtedness to Company against the beet payments to be made to Grower hereunder.

11.

In no event shall Company be liable to Grower for partial or complete failure of crop or for any injury or damage to sugarbeets prior to the time of delivery to Company.

12.

Fire, strikes, accidents, acts of God and the public enemy, or other causes beyond the reasonable control of the parties which prevent Grower from the performance of this Agreement, or Company from utilizing the sugarbeets contracted for in the manufacture of sugar, shall excuse the respective parties from the performance of this Agreement.

13.

Subject to the limitations set forth in the Articles of Incorporation and Bylaws of Company. this Agreement shall be binding upon Grower, his heirs, legal representatives, successors and permitted assigns; and upon Company, its successors and assigns. This Agreement shall not be transferable by Grower without written consent of Company. No agent of Company has any authority to change, waive, or modify any of the terms or provisions of this Agreement.

14.

Company reserves the right to alter any provisions of this Agreement; provided, any such alteration is approved at any regular or special meeting of the Shareholders of the Company at

3

which a quorum is registered as being present or represented by mail vote, by a majority of the Shareholders so present or represented by mail vote, where the notice of such meeting contains a statement of the proposed alteration.

4

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FIVE YEAR AGREEMENT BETWEEN (Grower) and AMERICAN CRYSTAL SUGAR COMPANY (Company)

EX-10.30

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Exhibit 10.30

2001 ANNUAL AGREEMENT

    This Agreement is entered into as of             , 2001 by and between American Crystal Sugar Company (the "Company")

and                                                                                         ,

shareholder #             (the "Grower").

WHEREAS, the Grower is a shareholder of the Company, and as such has entered into a Five Year Agreement with the Company with regard to the growing and delivery of sugarbeets to the Company; and

WHEREAS, the parties desire to supplement the Five Year Agreement as provided therein with regard to the 2001 sugarbeet crop.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein, the parties agree as follows:

    1.  Delivery Obligation.  In accordance with the terms of the Five Year Agreement, the Grower agrees to prepare land, plant, cultivate, harvest and deliver the 2001 sugarbeet crop from such number of acres and such fields as set forth on the Annual GPS Information form to be separately completed in an electronic format by the parties, and which shall thereafter be deemed to become an integral part of this Agreement. The Company shall provide a copy of the Annual GPS Information form to the Grower at the Grower's request.

    2.  Prevented Planting.  The Grower shall be unconditionally obligated to plant the 2001 sugarbeet crop unless such planting is prevented as a result of acts of God or other causes beyond the reasonable control of the Grower, as provided in Section 12 of the Five Year Agreement. If, after making all reasonable efforts, the Grower has been so prevented from planting the 2001 sugarbeet crop on or before June 1, 2001, the Grower shall be relieved of its obligation to plant the 2001 sugarbeet crop. The Grower may elect to plant the 2001 sugarbeet crop at any time after June 1, 2001. A determination as to whether the Grower is prevented from planting shall be mutually determined by the Grower and a representative of the Company based on the Grower's planting conditions for the period leading up to and including June 1, 2001.

    3.  Tolerances.  The total number of acres of sugarbeets to be planted by the Grower shall be subject to overplant and underplant tolerances as established from time to time by the Company pursuant to the Five Year Agreement. The Grower hereby acknowledges and agrees that said tolerances may be established and/or modified from time to time by the Company as determined to be appropriate to respond to planting and crop conditions. The initial tolerance and any modification thereof shall be effective upon communication of the same to the Grower by the Company, and the Annual GPS Information form shall be deemed modified to the extent of the tolerance.

    4.  Proration.  The Company hereby reserves the right to modify the annual tolerance levels by prorating delivery rights with regard to the 2001 crop. Any such proration shall be established by the Company after a determination that the Company may not be able to economically process the entire crop. A proration shall be communicated to, and applied against, all Growers of the Company on a uniform and equitable basis. The Annual GPS Information form shall be deemed modified to the extent of any such proration.

    5.  Deductions.  The Grower hereby authorizes and directs the Company to:

    (a) Deduct an amount specified by the Red River Valley Sugarbeet Growers Association, Inc., which amount shall not exceed 17¹/2¢ per ton, from the beet payments to be made by the Company to the Grower for sugarbeets delivered for the 2001 crop; provided, that,

such deduction shall not be made in the event the Grower notifies the Company in writing prior to June 1, 2001 that such deduction should not be made. Amounts deducted under this provision shall be paid by the Company to the Red River Valley Sugarbeet Growers Association, Inc.; and

    (b) Deduct such per ton amount, as may be necessary, from the beet payments to be made by the Company to the Grower for sugarbeets delivered for the 2001 crop to reimburse the Company for all costs incurred in the operation of the Truck Haul Committee for the piling location to which the Grower delivers sugarbeets. The amount charged to the Grower shall be determined on a per ton basis, reflecting a proration of the costs based on the total tonnage delivered to the respective piling locations.

    6.  Certification.  The Grower hereby certifies that:

    (a) It is a bona fide sugarbeet farm operator who will: (i) be the legal owner of the 2001 sugarbeet crop; (ii) have the majority financial interest in the 2001 crop, and (iii) have general control of the sugarbeet operations on the farm where the 2001 crop will be grown.

    (b) It has no agreements or understanding with third parties (i.e., owners, partners, shareholders, etc.) providing for guaranteed cash payments.

    7.  Nature of Agreement.  This Agreement is intended to supplement the Five Year Agreement as contemplated therein, and except as specifically provided herein, this Agreement shall not be deemed to amend or modify the terms of the Five Year Agreement. This Agreement and the related Five Year Agreement may be terminated by the Company upon ten (10) days written notice to the Grower in the event the Grower is, as of April 1, 2001, in default on any payment obligation owed to the Company.

    8.  No Modification.  No agent of the Company has any authority to change, waive, or modify any of the terms of this Agreement.

IN WITNESS WHEREOF, this Agreement has been executed as of the date set forth above.

AMERICAN CRYSTAL SUGAR COMPANY		GROWER
By		By
	Its	Its

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2001 ANNUAL AGREEMENT