10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended November 30, 2011.

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from             to             .

Commission File Number: 0-50150

CHS Inc.

(Exact name of registrant as specified in its charter)

Minnesota	41-0251095
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

5500 Cenex Drive	(651) 355-6000
Inver Grove Heights, MN 55077 (Address of principal executive offices, including zip code)	(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 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the Registrant was required to submit and post such files).    YES  x    NO  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨		Accelerated Filer	¨
Non-Accelerated Filer	x	(Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

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

Class	Number of shares outstanding at January 11, 2012
NONE	NONE

INDEX

	PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)		3
Consolidated Balance Sheets as of November 30, 2011, August 31, 2011 and November  30, 2010		3
Consolidated Statements of Operations for the three months ended November 30, 2011 and 2010		4
Consolidated Statements of Cash Flows for the three months ended November 30, 2011 and 2010		5
Notes to Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures about Market Risk		35
Item 4. Controls and Procedures		35
PART II. OTHER INFORMATION
Item 1A. Risk Factors		36
Item 6. Exhibits		36
SIGNATURE PAGE		37

1

PART I. FINANCIAL INFORMATION

SAFE HARBOR STATEMENT UNDER THE PRIVATE

SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties that may cause the Company’s actual results to differ materially from the results discussed in the forward-looking statements. These factors include those set forth in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the caption “Cautionary Statement Regarding Forward-Looking Statements” to this Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2011.

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ITEM 1. FINANCIAL STATEMENTS

CHS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS

	November 30, 2011			August 31, 2011			November 30, 2010
	(dollars in thousands)
Current assets:
Cash and cash equivalents	$	1,795,561		$	937,685		$	264,246
Receivables		2,759,759			2,980,105			2,368,849
Inventories		3,013,342			2,768,424			2,604,020
Derivative assets		402,321			635,646			366,065
Margin deposits		272,352			1,081,243			632,025
Other current assets		376,891			334,232			394,614
Total current assets		8,620,226			8,737,335			6,629,819
Investments		585,565			595,979			704,570
Property, plant and equipment		2,503,740			2,420,214			2,289,916
Other assets		427,158			463,482			474,483
Total assets	$	12,136,689		$	12,217,010		$	10,098,788
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	645,515		$	716,268		$	951,646
Current portion of long-term debt		92,133			90,804			113,133
Current portion of mandatorily redeemable noncontrolling interests		64,906
Customer margin deposits and credit balances		304,419			751,393			438,919
Customer advance payments		557,398			601,685			707,801
Checks and drafts outstanding		155,656			197,283			100,192
Accounts payable		2,612,963			2,315,311			1,804,433
Derivative liabilities		301,437			482,613			189,597
Accrued expenses		442,138			405,270			357,725
Dividends and equities payable		561,968			400,216			285,095
Total current liabilities		5,738,533			5,960,843			4,948,541
Long-term debt		1,383,543			1,411,193			933,651
Mandatorily redeemable noncontrolling interests		263,770
Other liabilities		666,595			579,654			487,331
Commitments and contingencies
Equities:
Equity certificates		2,652,974			2,695,626			2,379,476
Preferred stock		319,368			319,368			319,368
Accumulated other comprehensive loss		(194,230	)		(174,876	)		(199,301	)
Capital reserves		1,293,033			1,075,474			959,307
Total CHS Inc. equities		4,071,145			3,915,592			3,458,850
Noncontrolling interests		13,103			349,728			270,415
Total equities		4,084,248			4,265,320			3,729,265
Total liabilities and equities	$	12,136,689		$	12,217,010		$	10,098,788

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

3

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended November 30,
	2011			2010
	(dollars in thousands)
Revenues	$	9,734,159		$	8,132,854
Cost of goods sold		9,094,152			7,826,028
Gross profit		640,007			306,826
Marketing, general and administrative		112,520			98,223
Operating earnings		527,487			208,603
Gain on investments		(38	)
Interest, net		20,807			15,012
Equity income from investments		(24,129	)		(37,635	)
Income before income taxes		530,847			231,226
Income taxes		41,965			24,891
Net income		488,882			206,335
Net income attributable to noncontrolling interests		72,674			4,610
Net income attributable to CHS Inc.	$	416,208		$	201,725

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

4

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended November 30,
	2011			2010
	(dollars in thousands)
Cash flows from operating activities:
Net income including noncontrolling interests	$	488,882		$	206,335
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		51,645			51,525
Amortization of deferred major repair costs		7,878			5,754
Income from equity investments		(24,129	)		(37,635	)
Distributions from equity investments		40,961			35,794
Noncash patronage dividends received		(108	)		(661	)
Gain on sale of property, plant and equipment		(915	)		(736	)
Gain on investments		(38	)
Deferred taxes		972			4,135
Other, net		179			173
Changes in operating assets and liabilities, net of acquisitions:
Receivables		238,487			(171,143	)
Inventories		(227,824	)		(642,645	)
Derivative assets		233,885			(117,391	)
Margin deposits		810,149			(13,640	)
Other current assets and other assets		(53,858	)		(212,468	)
Customer margin deposits and credit balances		(447,450	)		15,348
Customer advance payments		(45,000	)		272,576
Accounts payable and accrued expenses		249,411			316,711
Derivative liabilities		(181,216	)		(92,463	)
Other liabilities		15,561			3,994
Net cash provided by (used in) operating activities		1,157,472			(376,437	)
Cash flows from investing activities:
Acquisition of property, plant and equipment		(98,901	)		(84,508	)
Proceeds from disposition of property, plant and equipment		1,497			1,103
Expenditures for major repairs		(16,570	)		(95,806	)
Investments in joint ventures and other		(3,220	)		(3,468	)
Investments redeemed		49			20,028
Changes in notes receivable		31,506			(291,237	)
Business acquisitions, net of cash acquired		(32,346	)		(3,150	)
Other investing activities, net		1,404			33
Net cash used in investing activities		(116,581	)		(457,005	)
Cash flows from financing activities:
Changes in notes payable		(70,753	)		689,556
Long-term debt borrowings					100,000
Principal payments on long-term debt		(39,157	)		(38,257	)
Payments for bank fees on debt		(12,390	)		(3,448	)
Changes in checks and drafts outstanding		(41,626	)		(34,058	)
Distributions to noncontrolling interests		(5,779	)		(3,486	)
Preferred stock dividends paid		(6,136	)		(6,136	)
Retirements of equities		(2,447	)		(2,440	)
Other financing activities, net		(2	)
Net cash (used in) provided by financing activities		(178,290	)		701,731
Effect of exchange rate changes on cash and cash equivalents		(4,725	)		1,294
Net increase (decrease) in cash and cash equivalents		857,876			(130,417	)
Cash and cash equivalents at beginning of period		937,685			394,663
Cash and cash equivalents at end of period	$	1,795,561		$	264,246

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

5

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in thousands)

Note 1. Accounting Policies

Basis of Presentation and Reclassifications

The unaudited Consolidated Balance Sheets as of November 30, 2011 and 2010, the Consolidated Statements of Operations for the three months ended November 30, 2011 and 2010, and the Consolidated Statements of Cash flows for the three months ended November 30, 2011 and 2010, reflect in the opinion of our management, all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full fiscal year because of, among other things, the seasonal nature of our businesses. Our Consolidated Balance Sheet data as of August 31, 2011, has been derived from our audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The consolidated financial statements include our accounts and the accounts of all of our wholly-owned and majority-owned subsidiaries and limited liability companies, which is primarily National Cooperative Refinery Association (NCRA), included in our Energy segment. The effects of all significant intercompany accounts and transactions have been eliminated.

These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, 2011, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission.

As discussed in Note 10, we have aligned our segments based on an assessment of how our businesses operate and the products and services they sell.

In April 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” ASU No. 2011-02 clarifies the accounting principles applied to loan modifications and addresses the recording of an impairment loss. The adoption of ASU No. 2011-02 during the first quarter of fiscal 2012 did not have a material impact on our consolidated financial statements.

As of September 1, 2011, we changed the expected useful lives of certain fixed assets in our Energy segment. We increased the expected useful lives of refining and asphalt assets from 16 years to 20 years, which we estimate will reduce depreciation expense by approximately $27.0 million in fiscal 2012.

Derivative Instruments and Hedging Activities

Our derivative instruments primarily consist of commodity and freight futures and forward contracts and, to a minor degree, may include foreign currency and interest rate swap contracts. These contracts are economic hedges of price risk, but are not designated or accounted for as hedging instruments for accounting purposes, with the exception of some derivative instruments included in our Energy segment as well as some interest rate swap contracts which were accounted for as cash flow hedges. Derivative instruments are recorded on our Consolidated Balance Sheets at fair values as discussed in Note 11, Fair Value Measurements.

Certain financial contracts within our Energy segment were entered into, and had been designated and accounted for as hedging instruments (cash flow hedges). The unrealized gains or losses of these contracts were previously deferred to accumulated other comprehensive loss in the equity section of our Consolidated Balance Sheet and all amounts were recognized in cost of goods sold as of August 31, 2011, with no amounts remaining in accumulated other comprehensive loss.

6

We have netting arrangements for our exchange-traded futures and options contracts and certain over-the-counter (OTC) contracts, which are recorded on a net basis in our Consolidated Balance Sheets. Although accounting standards permit a party to a master netting arrangement to offset fair value amounts recognized for derivative instruments against the right to reclaim cash collateral or the obligation to return cash collateral under the same master netting arrangement, we have not elected to net our margin deposits.

As of November 30, 2011, August 31, 2011 and November 30, 2010, we had the following outstanding purchase and sales contracts that are accounted for as derivatives:

	November 30, 2011				August 31, 2011				November 30, 2010
	Purchase Contracts		Sales Contracts		Purchase Contracts		Sales Contracts		Purchase Contracts		Sales Contracts
	(units in thousands)
Grain and oilseed - bushels		573,239		825,374		667,409		796,332		752,908		1,033,107
Energy products - barrels		8,687		13,338		9,915		14,020		4,454		9,281
Crop nutrients - tons		829		1,122		1,177		1,420		1,918		1,790
Ocean and barge freight - metric tons		1,101		341		983		93		1,921		371

As of November 30, 2011, August 31, 2011 and November 30, 2010, the gross fair values of our derivative assets and liabilities not designated as hedging instruments were as follows:

	November 30, 2011		August 31, 2011		November 30, 2010
Derivative Assets:
Commodity and freight derivatives	$	641,890	$	882,445	$	705,690
Foreign exchange derivatives		15		1,508
	$	641,905	$	883,953	$	705,690
Derivative Liabilities:
Commodity and freight derivatives	$	540,426	$	730,170	$	529,256
Foreign exchange derivatives						1,281
Interest rate derivatives		595		750		739
Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests		105,188
	$	646,209	$	730,920	$	531,276

As of November 30, 2010, the gross fair values of our derivative assets and liabilities designated as cash flow hedging instruments were as follows:

	November 30, 2010
Derivative Assets:
Commodity and freight derivatives	$	2,054

7

For the three-month periods ended November 30, 2011 and 2010, the pre-tax gain (loss) recognized in our Consolidated Statements of Operations for derivatives not accounted for as hedging instruments were as follows:

	Location of Gain (Loss)	Amount of Gain (Loss)
		For the Three Months Ended November 30,
		2011			2010
Commodity and freight derivatives	Cost of goods sold	$	(50,933	)	$	210,424
Foreign exchange derivatives	Cost of goods sold		686			(1,050	)
Interest rate derivatives	Interest, net		0			7
		$	(50,247	)	$	209,381

Losses of $2.2 million ($1.3 million, net of taxes) were recorded in our Consolidated Statement of Operations for derivatives designated as cash flow hedging instruments during the three months ended November 30, 2010, related to settlements. All contracts were entered into during our third quarter of fiscal 2010, and expired in fiscal 2011. As of November 30, 2010, the unrealized gains deferred to accumulated other comprehensive loss were as follows:

	November 30, 2010
Gains included in accumulated other comprehensive loss, net of tax expense of $0.8 million	$	1,255

Goodwill and Other Intangible Assets

Goodwill was $26.2 million, $26.4 million and $23.8 million on November 30, 2011, August 31, 2011 and November 30, 2010, respectively, and is included in other assets in our Consolidated Balance Sheets.

Intangible assets subject to amortization primarily include customer lists, trademarks and agreements not to compete, and are amortized over the number of years that approximate their respective useful lives (ranging from 3 to 30 years). Excluding goodwill, the gross carrying amount of our intangible assets was $75.3 million with total accumulated amortization of $45.1 million as of November 30, 2011. No intangible assets were acquired during the three-month periods ended November 30, 2011 or 2010. Total amortization expense for intangible assets during the three-month periods ended November 30, 2011 and 2010, was $2.7 million and $2.9 million, respectively. The estimated annual amortization expense related to intangible assets subject to amortization for the next five years is as follows:

Year 1	$	9,196
Year 2		5,691
Year 3		3,209
Year 4		2,496
Year 5		2,011
Thereafter		7,581
	$	30,184

In our Energy segment, major maintenance activities (turnarounds) at our two refineries are accounted for under the deferral method. Turnarounds are the scheduled and required shutdowns of refinery processing units. The costs related to the significant overhaul and refurbishment activities include materials and direct labor costs. The costs of turnarounds are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs, which is generally 2-4 years. The amortization expense

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related to turnaround costs are included in cost of goods sold in our Consolidated Statements of Operations. The selection of the deferral method, as opposed to expensing the turnaround costs when incurred, results in deferring recognition of the turnaround expenditures. The deferral method also results in the classification of the related cash flows as investing activities in our Consolidated Statements of Cash Flows, whereas expensing these costs as incurred, would result in classifying the cash outflows as operating activities.

For the three months ended November 30, 2011 and 2010, major repairs turnaround expenditures were $16.6 million and $95.8 million, respectively. During the three months ended November 30, 2011, our Laurel, Montana refinery completed a turnaround. During the three months ended November 30, 2010, both our Laurel, Montana and NCRA’s McPherson, Kansas refineries completed turnarounds.

Recent Accounting Pronouncements

In April 2011, the FASB issued ASU No. 2011-03, “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.” ASU No. 2011-03 removes the transferor’s ability criterion from the consideration of effective control for repurchase agreements and other agreements that both entitle and obligate the transferor to repurchase or redeem financial assets before their maturity. It also eliminates the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets. This guidance is effective for interim and annual periods beginning on or after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in our third quarter of fiscal 2012.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards.” ASU No. 2011-04 provides a consistent definition of fair value to ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. ASU No. 2011-04 is effective for interim and annual periods beginning after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in our third quarter of fiscal 2012.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of stockholders’ equity. It requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05”, to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. All other provisions of this update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in fiscal 2013.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350)—Testing Goodwill for Impairment.” ASU No. 2011-08 allows entities to use a qualitative approach to test goodwill for impairment. It permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. This guidance is effective for annual and interim goodwill

9

impairment tests performed for fiscal years beginning after December 15, 2011, and early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-09, “Compensation—Retirement Benefits— Multiemployer Plans (Subtopic 715-80).” ASU No. 2011-09 requires that employers provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. The additional quantitative and qualitative disclosures will provide users with more detailed information about an employer’s involvement in multiemployer pension plans. This guidance is effective for annual periods for fiscal years ending after December 15, 2011, and early adoption is permitted. As ASU No. 2011-09 is only disclosure related, it will not have an impact on our financial position, results of operations, or cash flows.

Note 2. Receivables

	November 30, 2011		August 31, 2011		November 30, 2010
Trade accounts receivable	$	2,028,765	$	2,248,665	$	1,694,963
CHS Capital notes receivable		572,757		604,268		625,455
Other		279,601		246,198		145,404
		2,881,123		3,099,131		2,465,822
Less allowances and reserves		121,364		119,026		96,973
	$	2,759,759	$	2,980,105	$	2,368,849

Trade accounts receivable are initially recorded at a selling price, which approximates fair value, upon the sale of goods or services to customers.

CHS Capital, our wholly-owned subsidiary, has notes receivable from commercial and producer borrowers. The short-term notes receivable generally have terms of 12-14 months and are reported at their outstanding principle balances as CHS Capital has the ability and intent to hold these notes to maturity. The notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of certain regional cooperative’s capital stock. These loans are primarily originated in the states of Minnesota, Wisconsin and North Dakota. CHS Capital also has loans receivable from producer borrowers which are collateralized by various combinations of growing crops, livestock, inventories, accounts receivable, personal property and supplemental mortgages. In addition to the short-term amounts included in the table above, CHS Capital had long-term notes receivable with durations of not more than ten years of $114.5 million, $151.1 million, and $143.4 million as of November 30, 2011, August 31, 2011 and November 30, 2010, respectively, which are included in other assets on our Consolidated Balance Sheets. As of November 30, 2011, August 31, 2011 and November 30, 2010, the commercial notes represented 86%, 84% and 93%, respectively, and the producer notes represented 14%, 16% and 7%, respectively, of the total CHS Capital notes receivable.

CHS Capital evaluates the collectability of both commercial and producer notes on a specific identification basis, based on the amount and quality of the collateral obtained, and records specific loan loss reserves when appropriate. A general reserve is also maintained based on historical loss experience and various qualitative factors. In total, our specific and general loan loss reserves related to CHS Capital are not material to our consolidated financial statements, nor are the historical write-offs. The accrual of interest income is discontinued at the time the loan is 90 days past due unless the credit is well-collateralized and in process of collection. The amount of CHS Capital notes that were past due was not significant at any reporting date presented.

CHS Capital has commitments to extend credit to a customer as long as there is no violation of any condition established in the contract. As of November 30, 2011, CHS Capital’s customers have additional available credit of $849.2 million.

10

In connection with the preparation of the fiscal 2011 audited financial statements, we determined that certain loan transfers under various participation agreements did not meet the definition of a ‘participating interest’, as defined in Accounting Standard Update No. 2009-16, “Accounting for Transfers and Servicing of Financial Assets” and, therefore, should have been accounted for as secured borrowings rather than sales transactions during fiscal 2011. As a result of the error described above, both receivables and notes payable reported in our previously issued unaudited Consolidated Balance Sheet included in the Quarterly Report on Form 10-Q were understated by $140.6 million as of November 30, 2010. In addition, in our previously issued unaudited Consolidated Statements of Cash Flows included in the Quarterly Report on Form 10-Q, net cash used in investing activities and net cash provided by financing activities were each understated by $140.6 million for the three months ended November 30, 2010. The November 30, 2010 previously reported unaudited interim Consolidated Balance Sheets and Consolidated Statements of Cash Flows have been revised to correct these errors. This correction had no impact on our previously reported net income or equity. In addition, it had no impact upon our compliance with any covenants under our credit facilities.

Note 3. Inventories

	November 30, 2011		August 31, 2011		November 30, 2010
Grain and oilseed	$	1,375,456	$	1,232,818	$	1,448,876
Energy		799,061		732,609		637,702
Crop nutrients		395,551		389,741		164,279
Feed and farm supplies		384,804		346,572		281,388
Processed grain and oilseed		47,492		55,231		61,979
Other		10,978		11,453		9,796
	$	3,013,342	$	2,768,424	$	2,604,020

At November 30, 2011, we valued approximately 13% of inventories, primarily related to energy, using the lower of cost, determined on the last in first out (LIFO) method, or market (12% and 13% as of August 31, 2011 and November 30, 2010, respectively). If the first in first out (FIFO) method of accounting had been used, inventories would have been higher than the reported amount by $577.9 million, $551.0 million and $409.6 million at November 30, 2011, August 31, 2011 and November 30, 2010, respectively.

Note 4. Investments

Agriliance LLC (Agriliance) is owned and governed by us (50%) and Land O’Lakes, Inc. (50%). We account for our Agriliance investment using the equity method of accounting within Corporate and Other. Agriliance is currently winding down its business activities and primarily holds long-term liabilities. During the three months ended November 30, 2010, the Company received $20.0 million of cash distributions from Agriliance as returns of capital for proceeds from the sale of Agriliance retail facilities and the collection of receivables.

We have a 50% interest in Ventura Foods, LLC, (Ventura Foods), a joint venture which produces and distributes primarily vegetable oil-based products, and is included in Corporate and Other. We account for Ventura Foods as an equity method investment, and as of November 30, 2011, our carrying value of Ventura Foods of $277.6 million exceeded our share of their equity by $13.2 million, of which $0.4 million is being amortized with a remaining life of less than one year. The remaining basis difference represents equity method goodwill. The following provides summarized unaudited financial information for the Ventura Foods balance sheets as of November 30, 2011, August 31, 2011, and November 30, 2010 and the statements of operations for the three months ended November 30, 2011 and 2010:

	For the Three Months Ended November 30,
	2011		2010
Net sales	$	665,583	$	540,481
Gross profit		56,051		62,795
Net income		15,102		22,858
Net income attributable to CHS Inc.		7,551		11,429

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	November 30, 2011		August 31, 2011		November 30, 2010
Current assets	$	595,727	$	585,760	$	549,899
Non-current assets		460,204		464,621		459,729
Current liabilities		235,469		227,199		201,954
Non-current liabilities		291,816		292,368		306,535

Note 5. Notes Payable

	November 30, 2011		August 31, 2011		November 30, 2010
Notes payable	$	124,498	$	130,719	$	440,119
CHS Capital notes payable		521,017		585,549		511,527
	$	645,515	$	716,268	$	951,646

As of November 30, 2011, we had two primary committed lines of credit. In September 2011, we established a three-year revolving facility and a five-year revolving facility, each with committed amounts of $1.25 billion, for a total of $2.5 billion. No amounts were outstanding on either facility as of November 30, 2011. On August 31, 2011 and November 30, 2010, we had no amounts outstanding and $400.0 million outstanding, respectively, related to the primary credit facilities in place on those respective dates.

Note 6. Interest, net

	For the Three Months Ended November 30,
	2011			2010
Interest expense	$	23,307		$	18,897
Capitalized interest		(1,806	)		(1,396	)
Interest income		(694	)		(2,489	)
Interest, net	$	20,807		$	15,012

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Note 7. Equities

Changes in equity for the three-month periods ended November 30, 2011 and 2010 are as follows:

	Fiscal 2012			Fiscal 2011
CHS Inc. balances, September 1, 2011 and 2010	$	3,915,592		$	3,335,664
Net income attributable to CHS Inc.		416,208			201,725
Other comprehensive (loss) income		(4,772	)		5,966
Equities retired		(2,447	)		(2,440	)
Equity retirements accrued		2,447			2,440
Equities issued in business combinations		11,509
Preferred stock dividends		(6,136	)		(6,136	)
Preferred stock dividends accrued		4,091			4,091
Accrued dividends and equities payable		(168,291	)		(81,191	)
Purchase of noncontrolling interests		(96,720	)
Other, net		(336	)		(1,269	)
CHS Inc. balances, November 30, 2011 and 2010	$	4,071,145		$	3,458,850
Noncontrolling interests balances, September 1, 2011 and 2010	$	349,728		$	268,787
Net income attributable to noncontrolling interests		72,674			4,610
Distributions to noncontrolling interests		(5,779	)		(3,486	)
Distributions accrued		5,544			2,757
Accrued dividends and equities payable		(71,740	)
Purchase of noncontrolling interests		(337,145	)
Other		(179	)		(2,253	)
Noncontrolling interests balances, November 30, 2011 and 2010	$	13,103		$	270,415

The purchase of noncontrolling interests above relate to our firm commitment to purchase the remaining NCRA noncontrolling interests. See Note 13, Acquisitions for additional information.

The following table presents the effect of changes in our NCRA ownership interest on CHS Inc. equities:

	For the Three Months Ended November 30,
	2011			2010
Net income attributable to CHS Inc.	$	416,208		$	201,725
Transfers to noncontrolling interests:
Decrease in CHS Inc. capital reserves for purchase of noncontrolling interests		(82,138	)
Changes from net income attributable to CHS Inc. and transfers to noncontrolling interests	$	334,070		$	201,725

Note 8. Comprehensive Income

Total comprehensive income was $484.1 million and $212.3 million for the three months ended November 30, 2011 and 2010, respectively, which included amounts attributable to noncontrolling interests of $72.7 million and $4.6 million, respectively. Total comprehensive income primarily consisted of net income attributable to CHS Inc. during the three months ended November 30, 2011 and 2010. On November 30, 2011, August 31, 2011 and November 30, 2010, accumulated other comprehensive loss primarily consisted of pension liability adjustments.

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Note 9. Employee Benefit Plans

Employee benefits information for the three months ended November 30, 2011 and 2010 is as follows:

	Qualified Pension Benefits						Non-Qualified Pension Benefits				Other Benefits
	2011			2010			2011		2010		2011			2010
Components of net periodic benefit costs for the three months ended November 30, 2011 and 2010:
Service cost	$	6,502		$	6,467		$	172	$	320	$	510		$	420
Interest cost		5,935			5,505			348		497		636			509
Expected return on plan assets		(10,024	)		(10,475	)
Prior service cost (credit) amortization		458			582			57		35		(26	)		(31	)
Actuarial loss amortization		3,732			3,964			112		253		207			87
Transition amount amortization												234			235
Net periodic benefit cost	$	6,603		$	6,043		$	689	$	1,105	$	1,561		$	1,220

Employer Contributions:

Total contributions to be made during fiscal 2012, including the NCRA plan, will depend primarily on market returns on the pension plan assets and minimum funding level requirements. During the three months ended November 30, 2011, CHS and NCRA made no contributions to the pension plans. At this time, we do not anticipate having to make a contribution for our benefit plans in fiscal 2012.

Note 10. Segment Reporting

We have aligned our segments based on an assessment of how our businesses operate and the products and services they sell. During our second quarter of fiscal 2011, there were several changes in our senior leadership team which resulted in the realignment of our segments based on an assessment of how our businesses operate and the products and services they sell. One of these changes is that we no longer have a chief operating officer of Processing, resulting in the elimination of that segment. The revenues previously reported in our Processing segment were entirely from our oilseed processing operations, and those operations have grain-based commodity inputs and similar commodity risk management requirements and are managed along with other operations in our Ag Business segment. Accordingly, we have included oilseed processing in that segment. Our wheat milling and packaged food operations previously included in our Processing segment are now included in Corporate and Other, as those businesses are conducted through non-consolidated joint ventures. In addition, our non-consolidated agronomy joint venture is winding down its business activity and is included in Corporate and Other, rather than in our Ag Business segment, where it was previously reported. There was no change to our Energy segment. For comparative purposes, segment information for the three months ended November 30, 2010, have been retrospectively revised to reflect these changes. This revision had no impact on consolidated net income or net income attributable to CHS Inc.

Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag Business segment purchases and further processes or resells grains and oilseeds originated by our members or third parties, and also serves as a wholesaler and retailer of crop inputs. Corporate and Other primarily represents the non-consolidated wheat milling and packaged food joint ventures, as well as our business solutions operations, which consists of commodities hedging, insurance and financial services related to crop production.

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Corporate administrative expenses are allocated to each business segment, and Corporate and Other, based on direct usage for services that can be tracked, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and operating results will vary throughout the year. Historically, our income is generally lowest during the second fiscal quarter and highest during the third fiscal quarter. Our business segments are subject to varying seasonal fluctuations. For example, in our Ag Business segment, agronomy and country operations businesses experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Also in our Ag Business segment, our grain marketing operations are subject to fluctuations in volumes and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and crop drying seasons.

Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, and general political and economic conditions.

While our revenues and operating results are derived from businesses and operations which are wholly-owned and majority-owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. In our Ag Business segment, this principally includes our 50% ownership in TEMCO, LLC (TEMCO). In Corporate and Other, these investments principally include our 50% ownership in Ventura Foods and our 24% ownership in Horizon Milling and Horizon Milling G.P.

Reconciling Amounts represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments.

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Segment information for the three months ended November 30, 2011 and 2010 is as follows:

	Energy			Ag Business			Corporate and Other			Reconciling Amounts			Total
For the Three Months Ended November 30, 2011
Revenues	$	3,396,974		$	6,449,821		$	17,494		$	(130,130	)	$	9,734,159
Cost of goods sold		2,965,168			6,259,871			(757	)		(130,130	)		9,094,152
Gross profit		431,806			189,950			18,251			—			640,007
Marketing, general and administrative		32,903			61,843			17,774						112,520
Operating earnings		398,903			128,107			477			—			527,487
Gain on investments					(38	)								(38	)
Interest, net		3,502			13,914			3,391						20,807
Equity income from investments		(1,890	)		(7,162	)		(15,077	)					(24,129	)
Income before income taxes	$	397,291		$	121,393		$	12,163		$	—		$	530,847
Intersegment revenues	$	(130,130	)							$	130,130		$	—
Goodwill	$	1,165		$	18,170		$	6,898					$	26,233
Capital expenditures	$	59,716		$	37,504		$	1,681					$	98,901
Depreciation and amortization	$	26,429		$	20,358		$	4,858					$	51,645
Total identifiable assets at November 30, 2011	$	4,063,388		$	5,359,783		$	2,713,518					$	12,136,689
For the Three Months Ended November 30, 2010
Revenues	$	2,392,742		$	5,813,264		$	15,614		$	(88,766	)	$	8,132,854
Cost of goods sold		2,305,443			5,610,320			(969	)		(88,766	)		7,826,028
Gross profit		87,299			202,944			16,583			—			306,826
Marketing, general and administrative		30,076			52,716			15,431						98,223
Operating earnings		57,223			150,228			1,152			—			208,603
Interest, net		1,633			10,593			2,786						15,012
Equity income from investments		(1,666	)		(15,039	)		(20,930	)					(37,635	)
Income before income taxes	$	57,256		$	154,674		$	19,296		$	—		$	231,226
Intersegment revenues	$	(88,766	)							$	88,766		$	—
Goodwill	$	1,165		$	15,687		$	6,898					$	23,750
Capital expenditures	$	53,485		$	30,072		$	951					$	84,508
Depreciation and amortization	$	29,279		$	18,019		$	4,227					$	51,525
Total identifiable assets at November 30, 2010	$	2,941,978		$	4,930,830		$	2,225,980					$	10,098,788

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Note 11. Fair Value Measurements

The following table presents assets and liabilities included in our Consolidated Balance Sheets that are recognized at fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value. As required by accounting standards, assets and liabilities are classified, in their entirety, based on the lowest level of input that is a significant component of the fair value measurement. The lowest level of input is considered Level 3. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels. Fair value measurements at November 30, 2011, August 31, 2011 and November 30, 2010 were as follows:

	Fair Value Measurements at November 30, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Readily marketable inventories			$	1,423,083			$	1,423,083
Commodity and freight derivatives	$	147,915		254,406				402,321
Other assets		69,271						69,271
Total Assets	$	217,186	$	1,677,489			$	1,894,675
Liabilities:
Commodity and freight derivatives	$	18,583	$	282,259			$	300,842
Interest rate swap derivatives				595				595
Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests					$	105,188		105,188
Mandatorily redeemable noncontrolling interests						328,676		328,676
Total Liabilities	$	18,583	$	282,854	$	433,864	$	735,301

	Fair Value Measurements at August 31, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Total
Assets:
Readily marketable inventories			$	1,288,049		$	1,288,049
Commodity and freight derivatives	$	85,082		549,056			634,138
Foreign currency derivatives		1,508					1,508
Other assets		68,246					68,246
Total Assets	$	154,836	$	1,837,105		$	1,991,941
Liabilities:
Commodity and freight derivatives	$	191,607	$	290,256		$	481,863
Interest rate swap derivatives				750			750
Total Liabilities	$	191,607	$	291,006		$	482,613

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	Fair Value Measurements at November 30, 2010
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Total
Assets:
Readily marketable inventories			$	1,510,855		$	1,510,855
Commodity and freight derivatives	$	46,024		320,041			366,065
Other assets		67,247					67,247
Total Assets	$	113,271	$	1,830,896		$	1,944,167
Liabilities:
Commodity and freight derivatives	$	18,035	$	169,542		$	187,577
Foreign currency derivatives		1,281					1,281
Interest rate swap derivatives				739			739
Total Liabilities	$	19,316	$	170,281		$	189,597

Readily marketable inventories — Our readily marketable inventories primarily include our grain and oilseed inventories that are stated at fair values. These commodities are readily marketable, have quoted market prices and may be sold without significant additional processing. We estimate the fair market values of these inventories included in Level 2 primarily based on exchange quoted prices, adjusted for differences in local markets. Changes in the fair market values of these inventories are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Commodity, freight and foreign currency derivatives — Exchange traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward commodity purchase and sales contracts, flat price or basis fixed derivative contracts, ocean freight contracts and other OTC derivatives are determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, adjusted for location specific inputs, and are classified within Level 2. The location specific inputs are generally broker or dealer quotations, or market transactions in either the listed or OTC markets. Changes in the fair values of these contracts are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Other assets — Our available-for-sale investments in common stock of other companies and our Rabbi Trust assets are valued based on unadjusted quoted prices on active exchanges and are classified within Level 1. Changes in the fair values of these other assets are primarily recognized in our Consolidated Statements of Operations as a component of marketing, general and administrative expenses.

Interest rate swap derivatives — Fair values of our interest rate swap liabilities are determined utilizing valuation models that are widely accepted in the market to value such OTC derivative contracts. The specific terms of the contracts, as well as market observable inputs such as interest rates and credit risk assumptions, are factored into the models. As all significant inputs are market observable, all interest rate swaps are classified within Level 2. Changes in the fair values of contracts not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of Operations as a component of interest, net. Changes in the fair values of contracts designated as hedging instruments are deferred to accumulated other comprehensive loss in the equity section of our Consolidated Balance Sheets and are amortized into earnings within interest, net over the term of the agreements.

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Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests — The fair value of the accrued liability was calculated utilizing an average price option model, an adjusted black-scholes pricing model commonly used in the energy industry to value options. The model uses market observable inputs and unobservable inputs. Due to significant unobservable inputs used in the pricing model, the liability is classified within Level 3. Significant inputs used in the pricing model are as follows:

	Fiscal 2012
Crack spread margin on November 30	$12.36
Contractual target crack spread margin	$17.50
Expected volatility	97.46%
Risk-free interest rate	0.3-1.2%
Expected life (years)	1.75-5.76

The expected volatility was calculated using annualized daily historical market crack spread data. We adjust the volatility for market fluctuations on an annual basis.

Mandatorily redeemable noncontrolling interests — The fair value is calculated by discounting each future redemption payment to its present value as of the balance sheet date. Our long-term borrowing rates were used as the discount rates for the present value calculations. We believe the discount rates that are used are commensurate with the risk inherent in our cash flows. The inputs are significant unobservable inputs, and the liability is classified within Level 3.

The table below represents a reconciliation at November 30, 2011, for liabilities measured at fair value using significant unobservable inputs (Level 3):

	Level 3 Liabilities
	Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests		Mandatorily redeemable noncontrolling interests
Balances, September 1, 2011	$	—	$	—
Purchases		105,188		328,676
Balances, November 30, 2011	$	105,188	$	328,676

There were no significant transfers between Level 1, Level 2, and Level 3 assets and liabilities.

Note 12. Commitments and Contingencies

Guarantees

We are a guarantor for lines of credit and performance obligations of related companies. As of November 30, 2011, our bank covenants allowed maximum guarantees of $500.0 million, of which $38.0 million was outstanding. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. All outstanding loans with respective creditors are current as of November 30, 2011.

Note 13. Acquisitions

NCRA:

On November 29, 2011, the Board of Directors approved a stock transfer agreement, dated as of November 17, 2011, between CHS Inc. (CHS) and GROWMARK, Inc. (Growmark), and a stock transfer agreement, dated as of November 17, 2011, between CHS and MFA Oil Company (MFA). Pursuant to these

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agreements, CHS will acquire from Growmark and MFA shares of Class A common stock and Class B common stock of NCRA representing approximately 25.571% of NCRA’s outstanding capital stock. CHS owns the remaining approximately 74.429% of NCRA’s outstanding capital stock and accordingly, upon completion of the acquisitions contemplated by these agreements, NCRA will be a wholly owned subsidiary of CHS.

Pursuant to the agreement with Growmark, CHS will acquire stock representing approximately 18.616% of NCRA’s outstanding capital stock in four separate closings to be held on September 1, 2012, September 1, 2013, September 1, 2014 and September 1, 2015, for an aggregate base purchase price of $255.5 million (approximately $48.0 million of which will be paid at each of the first three closings, and $111.4 million of which will be paid at the final closing). In addition, Growmark is entitled to receive up to two contingent purchase price payments following each individual closing, calculated as set forth in the agreement with Growmark, if the average crack spread margin referred to therein over the fiscal year ending on August 31 of the calendar year in which the contingent payment date falls exceeds a specified target.

Pursuant to the agreement with MFA, CHS will acquire stock representing approximately 6.955% of NCRA’s outstanding capital stock in four separate closings to be held on September 1, 2012, September 1, 2013, September 1, 2014 and September 1, 2015, for an aggregate base purchase price of $95.5 million (approximately $18.0 million of which will be paid at each of the first three closings, and $41.6 million of which will be paid at the final closing). In addition, MFA is entitled to receive up to two contingent purchase price payments following each individual closing, calculated as set forth in the agreement with MFA, if the average crack spread margin referred to therein over the fiscal year ending on August 31 of the calendar year in which the contingent payment date falls exceeds a specified target.

As a result of this transaction, we are no longer including the noncontrolling interests related to NCRA as a component of equity. Instead, we recorded the present value of the future payments to be made to Growmark and MFA as a liability on our Consolidated Balance Sheet as of November 30, 2011. Noncontrolling interests in the amount of $337.1 million was reclassified and an additional adjustment to equity in the amount of $96.7 million was recorded as a result of the transaction. The $105.2 million fair value related to the crack spread contingent payments has also been recorded on our Consolidated Balance Sheet as of November, 30, 2011 and is included in other liabilities. The fair value of the accrued liability was calculated utilizing an average price option model, an adjusted black-scholes pricing model commonly used in the energy industry to value options. Subsequent changes in the fair value of the crack spread contingent payments will be included in cost of goods sold in our Consolidated Statements of Operations. The portion of NCRA earnings attributable to Growmark and MFA for the first quarter of fiscal 2012, prior to the transaction date, have been included in net income attributable to noncontrolling interests. Beginning in the second quarter of fiscal 2012, earnings will not be attributable to the noncontrolling interests and future patronage earned by Growmark and MFA will be included as interest, net in our Consolidated Statements of Operations.

Solbar:

On November 23, 2011, we entered into an agreement and plan of merger to acquire Solbar Industries Ltd., an Israeli company (Solbar).

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each ordinary share of Solbar issued and outstanding at the effective time would be converted into the right to receive from CHS $4.00 in cash, without interest, which reflects an equity value of approximately $133.0 million. Included in this value is an amount related to Solbar stock options which would be terminated in exchange for a cash payment in an amount per share equal to the difference between the applicable exercise price per share and $4.00.

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Provided all conditions set forth in the merger agreement are met, we anticipate that the merger will be consummated in our second quarter of fiscal 2012.

Creston:

In November 2011, we acquired a crushing facility in Creston, Iowa for $32.3 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussions of financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and notes to such statements and the cautionary statement regarding forward-looking statements found at the beginning of Part I, Item 1, of this Quarterly Report on Form 10-Q, as well as our consolidated financial statements and notes thereto for the year ended August 31, 2011, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission. This discussion contains forward-looking statements based on current expectations, assumptions, estimates and projections of management. Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, as more fully described in the cautionary statement and elsewhere in this Quarterly Report on Form 10-Q.

CHS Inc. (CHS, we or us) is a diversified company, which provides grain, foods and energy resources to businesses and consumers on a global basis. As a cooperative, we are owned by farmers, ranchers and their member cooperatives across the United States. We also have preferred stockholders that own shares of our 8% Cumulative Redeemable Preferred Stock.

We provide a full range of production agricultural inputs such as refined fuels, propane, farm supplies, animal nutrition and agronomy products, as well as services, which include hedging, financing and insurance services. We own and operate petroleum refineries and pipelines, and market and distribute refined fuels and other energy products, under the Cenex^® brand, through a network of member cooperatives and independents. We purchase grains and oilseeds directly and indirectly from agricultural producers primarily in the midwestern and western United States. These grains and oilseeds are either sold to domestic and international customers or further processed into a variety of grain-based food products.

The consolidated financial statements include the accounts of CHS and all of our wholly-owned and majority-owned subsidiaries and limited liability companies, including National Cooperative Refinery Association (NCRA) in our Energy segment. The effects of all significant intercompany transactions have been eliminated.

We have aligned our segments based on an assessment of how our businesses operate and the products and services they sell. Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag Business segment purchases and further processes or resells grains and oilseeds originated by our members or third parties, and also serves as wholesaler and retailer of crop inputs. Corporate and Other primarily represents our non-consolidated wheat milling and packaged food joint ventures, as well as our business solutions operations, which consist of commodities hedging, insurance and financial services related to crop production.

Corporate administrative expenses are allocated to each business segment, and Corporate and Other, based on direct usage for services that can be tracked, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and operating results will vary throughout the year. Overall, our income is generally lowest during the second fiscal quarter and highest during the third fiscal quarter. Our business segments are subject to varying seasonal fluctuations. For example, in our Ag Business segment, our retail agronomy, crop nutrients and country operations businesses generally experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Also in our Ag Business segment, our grain marketing operations are subject to fluctuations in volume and earnings based on

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producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and crop drying seasons.

Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, and general political and economic conditions.

While our revenues and operating results are derived from businesses and operations which are wholly-owned and majority-owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. In our Ag Business segment, this principally includes our 50% ownership in TEMCO, LLC (TEMCO). In Corporate and Other, these investments principally include our 50% ownership in Ventura Foods and our 24% ownership in Horizon Milling and Horizon Milling G.P.

Recent Events

On November 29, 2011, the Board of Directors approved a stock transfer agreement, dated as of November 17, 2011, between CHS and GROWMARK, Inc. (Growmark), and a stock transfer agreement, dated as of November 17, 2011, between CHS and MFA Oil Company (MFA). Pursuant to these agreements, CHS will acquire from Growmark and MFA shares of Class A common stock and Class B common stock of NCRA representing approximately 25.571% of NCRA’s outstanding capital stock. CHS owns the remaining approximately 74.429% of NCRA’s outstanding capital stock and accordingly, upon completion of the acquisitions contemplated by these agreements, NCRA will be a wholly owned subsidiary of CHS. See Note 13, Acquisitions for additional information.

On November 23, 2011, we entered into an agreement and plan of merger to acquire Solbar Industries Ltd., an Israeli company (Solbar). See Note 13, Acquisitions for additional information.

Results of Operations

Comparison of the three months ended November 30, 2011 and 2010

General. We recorded income before income taxes of $530.8 million during the three months ended November 30, 2011 compared to $231.2 million during the three months ended November 30, 2010, an increase of $299.6 million (130%). Operating results reflected higher pretax earnings in our Energy segment.

Our Energy segment generated income before income taxes of $397.3 million for the three months ended November 30, 2011 compared to $57.3 million in the three months ended November 30, 2010. This increase in earnings of $340.0 million is primarily from improved margins on refined fuels at both our Laurel, Montana refinery and our NCRA refinery in McPherson, Kansas. Earnings in our propane, lubricants and transportation businesses improved, while our renewable fuels marketing business experienced lower earnings during the three months ended November 30, 2011 when compared to the same three-month period of the previous year. We have considered recent news regarding the reversal of the crude oil pipeline in the Cushing, OK area, and believe that the reversal could have a negative impact on our future refined fuels margins, the impact of which we are not able to estimate at this time.

Our Ag Business segment generated income before income taxes of $121.4 million for the three months ended November 30, 2011 compared to $154.7 million in the three months ended November 30, 2010, a decrease

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in earnings of $33.3 million. Earnings from our wholesale crop nutrients business improved $3.0 million for the three months ended November 30, 2011 compared with the same period in fiscal 2011, primarily due to higher sales prices which increased product margins. Our country operations earnings decreased $9.9 million during the three months ended November 30, 2011 compared to the same period in the prior year, primarily as a result of lower operating margins. Our grain marketing earnings decreased by $25.2 million during the three months ended November 30, 2011 compared with the same period in the prior year, primarily due to lower volumes. Our oilseed processing volumes were relatively flat, but we experienced lower earnings due to decreased operating margins during the three months ended November 30, 2011 compared to the same period in the prior year. We expect decreased grain volumes during fiscal 2012, primarily from large crops harvested in the Black Sea, South America and Australia, which we believe will reduce our grain exports and reduce our earnings. In addition, the fall harvest produced short crops in the U.S, which may also negatively impact our volumes.

Corporate and Other generated income before income taxes of $12.2 million for the three months ended November 30, 2011 compared to $19.3 million during the same period of the previous year, a decrease in earnings of $7.1 million (37%). Business solutions experienced a net decrease in earnings of $0.9 million for the three months ended November 30, 2011 compared with the same period in the prior year, primarily due to decreased margins in our financing business. Our share of earnings from Ventura Foods, our packaged foods joint venture, net of allocated expenses, decreased by $4.1 million for the three months ended November 30, 2011, compared to the same period of the previous year, primarily from decreased margins. Our share of earnings from our wheat milling joint ventures, net of allocated expenses, decreased by $1.5 million during the three months ended November 30, 2011 compared to the same period in the previous year.

Net Income attributable to CHS Inc. Consolidated net income attributable to CHS Inc. for the three months ended November 30, 2011 was $416.2 million compared to $201.7 million for the three months ended November 30, 2010, which represents a $214.5 million increase (106.3%).

Revenues. Consolidated revenues were $9.7 billion for the three months ended November 30, 2011 compared to $8.1 billion for the three months ended November 30, 2010, which represents a $1.6 billion increase (19.7%).

Our Energy segment revenues of $3.4 billion, after elimination of intersegment revenues, increased by $1.0 billion (42%) during the three months ended November 30, 2011 compared to the three months ended November 30, 2010. During the three months ended November 30, 2011 and 2010, our Energy segment recorded revenues from sales to our Ag Business segment of $130.1 million and $88.8 million, respectively. The net increase in revenues of $962.9 million is comprised of a net increase of $761.2 million related to higher prices and $201.6 million related to higher sales volume. Refined fuels revenues increased $835.0 million (50%), of which $647.4 million was related to a net average selling price increase, and $187.6 million was related to a net increase in sales volumes, compared to the same period in the previous year. The sales price of refined fuels increased $0.82 per gallon (35%), and sales volumes increased by 11%. Propane revenues increased $85.2 million (51%), of which $48.3 million was related to an increase in the net average selling price and $36.9 million was attributable to an increase in volume, when compared to the same period in the previous year. The average selling price of propane increased $0.29 per gallon (24%) and sales volume increased 22% in comparison to the same period of the prior year. Renewable fuels marketing revenues increased $37.1 million (11%), from an increase in the average selling price of $0.51 per gallon (22%), partially offset by a 10% decrease in volume, when compared with the same three-month period in the previous year.

Our Ag Business segment revenues of $6.5 billion increased $0.6 billion (11%) during the three months ended November 30, 2011 compared to the three months ended November 30, 2010. Grain revenues in our Ag Business segment totaled $4.7 billion and $4.5 billion during the three months ended November 30, 2011 and 2010, respectively. Of the grain revenues increase of $233.1 million (5%), $572.8 million is due to increased average grain selling prices, partially offset by $339.7 million due to a net decrease in volume of 8% during the three months ended November 30, 2011 compared to the same period in the prior fiscal year. The average sales

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price of all grain and oilseed commodities sold reflected an increase of $1.10 per bushel (14%) over the same three-month period in fiscal 2011. Corn had increased volumes, while soybeans and wheat had decreased volumes compared to the three months ended November 30, 2010.

Our oilseed processing revenues in our Ag Business segment of $348.7 million increased $66.9 million (24%) during the three months ended November 30, 2011 compared to the three months ended November 30, 2010. The net increase in revenues of $66.9 million is comprised of $52.6 million from an increase in the average selling price of our oilseed products and an increase of $14.3 million related to increased volumes, as compared to the three months ended November 30, 2010. Typically, changes in average selling prices of oilseed products are primarily driven by the average market prices of soybeans.

Wholesale crop nutrient revenues in our Ag Business segment totaled $658.8 million and $558.9 million during the three months ended November 30, 2011 and 2010, respectively. Of the wholesale crop nutrient revenues increase of $99.8 million (18%), $154.2 million was related to increased average fertilizer selling prices, partially offset by $54.4 million related to decreased volumes, during the three months ended November 30, 2011 compared to the same period last fiscal year. The average sales price of all fertilizers sold reflected an increase of $123 per ton (31%) over the same three-month period in fiscal 2011. Our wholesale crop nutrient volumes decreased 10% during the three months ended November 30, 2011 compared with the same period in the previous year.

Our Ag Business segment other product revenues, primarily feed and farm supplies, of $644.6 million increased by $183.6 million (40%) during the three months ended November 30, 2011 compared to the three months ended November 30, 2010, primarily the result of increased country operations sales of energy and feed products. Other revenues within our Ag Business segment of $59.2 million during the three months ended November 30, 2011 increased $7.1 million (14%) compared to the three months ended November 30, 2010.

Total revenues include other revenues generated primarily within our Ag Business segment and Corporate and Other. Our Ag Business segment’s country operations elevators and agri-service centers derive other revenues from activities related to production agriculture, which include grain storage, grain cleaning, fertilizer spreading, crop protection spraying and other services of this nature, and our grain marketing operations receive other revenues at our export terminals from activities related to loading vessels. Corporate and Other derives revenues primarily from our financing, hedging and insurance operations.

Cost of Goods Sold. Consolidated cost of goods sold was $9.1 billion for the three months ended November 30, 2011 compared to $7.8 billion for the three months ended November 30, 2010, which represents a $1.3 billion (16%) increase.

Our Energy segment cost of goods sold of $3.0 billion increased by $659.7 million (29%) during the three months ended November 30, 2011 compared to the same period of the prior year. The increase in cost of goods sold is primarily due to increased per unit costs for refined fuels products. Specifically, refined fuels cost of goods sold increased $466.4 million (28.9%) which reflects an increase in the average cost of refined fuels of $0.22 per gallon (9%); while volumes increased by 18% compared to the three months ended November 30, 2010. We process approximately 55,000 barrels of crude oil per day at our Laurel, Montana refinery and 85,000 barrels of crude oil per day at NCRA’s McPherson, Kansas refinery. The average cost increase is primarily related to higher input costs at our two crude oil refineries and higher average prices on the refined products that we purchased for resale compared to the three months ended November 30, 2010. The aggregate average per unit cost of crude oil purchased for the two refineries increased 16% compared to the three months ended November 30, 2010. Cost of goods sold decreased by $113.0 million when compared to the first quarter of fiscal 2011 as a result of the change in fair values of our derivative contracts and is reflected in the $0.22 per gallon average cost of refined fuels. The cost of propane increased $84.6 million (51.9%) primarily from an average cost increase of $0.30 per gallon (24%) and a 22% increase in volumes, when compared to the three months ended November 30, 2010. Renewable fuels marketing costs increased $37.5 million (11%), primarily

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from an increase in the average cost of $51 per gallon (23%), partially offset by a 10% decrease in volumes, when compared with the same three-month period in the previous year.

Our Ag Business segment cost of goods sold, after elimination of intersegment costs, of $6.3 billion, increased $650 million (12%) during the three months ended November 30, 2011 compared to the same period of the prior year. Grain cost of goods sold in our Ag Business segment totaled $4.7 billion and $4.4 billion during the three months ended November 30, 2011 and 2010, respectively. The cost of grains and oilseed procured through our Ag Business segment increased $341.9 million (8%) compared to the three months ended November 30, 2010. This is primarily the result of a $1.30 (17%) increase in the average cost per bushel, partially offset by an 8% net decrease in bushels sold, as compared to the same period in the prior year.

Our oilseed processing cost of goods sold in our Ag Business segment of $344.1 million increased $68.6 million (25%) during the three months ended November 30, 2011 compared to the three months ended November 30, 2010, which was primarily due to increases in cost of soybeans purchased, coupled with higher volumes sold of oilseed refined products.

Wholesale crop nutrients cost of goods sold in our Ag Business segment totaled $627.8 million and $531.5 million during the three months ended November 30, 2011 and 2010, respectively. The net increase of $96.3 million (18%) is comprised of an increase in the average cost per ton of fertilizer of $117 (31%), partially offset by a net decrease in tons sold of 10%, when compared to the same three-month period in the prior year.

Our Ag Business segment other product cost of goods sold, primarily feed and farm supplies, increased $174.1 million (47%) during the three months ended November 30, 2011 compared to the three months ended November 30, 2010, primarily due to net higher input commodity prices, along with increased volumes, including additional volumes generated from acquisitions.

Marketing, General and Administrative. Marketing, general and administrative expenses of $112.5 million for the three months ended November 30, 2011 increased by $14.3 million (14.6%) compared to the three months ended November 30, 2010. This net increase includes expansion of foreign operations and retail acquisitions in our Ag Business segment.

Interest, net. Net interest of $20.8 million for the three months ended November 30, 2011 increased $5.8 million (39%) compared to the same period in fiscal 2011. Interest expense for the three months ended November 30, 2011 and 2010 was $23.3 million and $18.9 million, respectively. The increase in interest expense of $4.4 million (23%) is primarily due to a private placement of $500.0 million in June 2011 for long-term debt, partially offset by decreased short-term borrowings from decreased working capital needs during the three months ended November 30, 2011 compared to the same period in the previous year. The average level of short-term borrowings decreased $350.1 million during the three months ended November 30, 2011 compared to the same period in fiscal 2011. For the three months ended November 30, 2011 and 2010, we capitalized interest of $1.8 million and $1.4 million, respectively, primarily related to construction projects at both refineries in our Energy segment. Interest income was $0.7 million and $2.5 million for the three months ended November 30, 2011 and 2010, respectively.

Equity Income from Investments. Equity income from investments of $24.1 million for the three months ended November 30, 2011 decreased $13.5 million (36%) compared to the three months ended November 30, 2010. We record equity income or loss from the investments in which we have an ownership interest of 50% or less and have significant influence, but not control, for our proportionate share of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. The net decrease in equity income from investments was attributable to reduced earnings from investments in our Ag Business and Corporate and Other segments of $7.9 million and $5.9 million, respectively, and was partially offset by increased equity investment earnings in our Energy segment of $0.2 million.

Our Ag Business segment generated decreased equity investment earnings of $7.9 million. We had a net decrease of $6.8 million from our share of equity investment earnings in our grain marketing joint ventures

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during the three months ended November 30, 2011 compared to the same period the previous year, which is primarily related to decreased earnings from an international investment and the dissolution of United Harvest. Additionally, we sold our 45% ownership interest in Multigrain AG during fiscal 2011 to one of our joint venture partners, Mitsui & Co. Our country operations business reported an aggregate decrease in equity investment earnings of $1.0 million from several small equity investments.

Corporate and Other generated decreased equity investment earnings of $5.9 million, primarily from Ventura Foods, our vegetable oil-based products and packaged foods joint venture, which decreased $3.9 million compared to the same three-month period in the previous year. Our wheat milling joint venture earnings also decreased by $1.8 million compared to the same three-month period in the previous year.

Income Taxes. Income tax expense of $42.0 million for the three months ended November 30, 2011 compared with $24.9 million for the three months ended November 30, 2010, resulting in effective tax rates of 7.9% and 10.8%, respectively. The federal and state statutory rate applied to nonpatronage business activity was 38.9% for the three-month periods ended November 30, 2011 and 2010. The income taxes and effective tax rate vary each year based upon profitability and nonpatronage business activity during each of the comparable years.

Noncontrolling Interests. Noncontrolling interests of $72.6 million for the three months ended November 30, 2011 increased by $68.1 million compared to the three months ended November 30, 2010. This net increase was a result of more profitable operations within our majority-owned subsidiaries. Substantially all noncontrolling interests relate to NCRA, an approximately 74.4% owned subsidiary, which we consolidate in our Energy segment. As discussed in Note 13, on November 29, 2011, the Board of Directors approved a stock transfer agreement, dated as of November 17, 2011, between CHS and the noncontrolling interests of NCRA. The portion of NCRA earnings attributable to the noncontrolling interests of NCRA for the first quarter of 2012, prior to the transaction date, have been included in net income attributable to noncontrolling interests. Beginning in the second quarter of fiscal 2012, earnings will not be attributable to the noncontrolling interests and future patronage earned by the noncontrolling interests of NCRA will be included as interest, net in our Consolidated Statements of Operations.

Liquidity and Capital Resources

On November 30, 2011, we had working capital, defined as current assets less current liabilities, of $2,881.7 million and a current ratio, defined as current assets divided by current liabilities, of 1.5 to 1.0, compared to working capital of $2,776.5 million and a current ratio of 1.5 to 1.0 on August 31, 2011. On November 30, 2010, we had working capital of $1,681.3 million and a current ratio of 1.3 to 1.0, compared to working capital of $1,604.0 million and a current ratio of 1.4 to 1.0 on August 31, 2010.

On November 30, 2011, we had two primary committed lines of credit. We had a three-year revolving facility and a five-year revolving facility, each with committed amounts of $1.25 billion, for a total of $2.5 billion. No amounts were outstanding on either facility as of November 30, 2011. As of August 31, 2011 we had two revolving lines of credit totaling $2.2 billion, both of which were terminated and replaced by the existing facilities in September 2011. The major financial covenants for both revolving facilities require us to maintain a minimum consolidated net worth, adjusted as defined in the credit agreements, of $2.5 billion and a consolidated funded debt to consolidated cash flow ratio of no greater than 3.00 to 1.00. The term consolidated cash flow is principally our earnings before interest, taxes, depreciation and amortization (EBITDA) with adjustments as defined in the credit agreements. A third financial ratio does not allow our adjusted consolidated funded debt to adjusted consolidated equity to exceed .80 to 1.00 at any time. Our credit facilities are established with a syndication of domestic and international banks, and our inventories and receivables financed with them are highly liquid. With our current cash balances and our available capacity on our committed lines of credit, we believe that we have adequate liquidity to cover any increase in net operating assets and liabilities and expected capital expenditures.

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On November 30, 2010, we had two committed lines of credit. One of these lines of credit was a $900.0 million committed five-year revolving facility that had an expiration date of June 2015, which had $400.0 million outstanding on November 30, 2010, and an interest rate of 2.01%. On November 24, 2010, we terminated our $700.0 million revolving facility that had a May 2011 expiration date and entered into a new $1.3 billion committed 364-day revolving facility that had an expiration date in November 2011. There was no amount outstanding on the 364-day revolving facility on November 30, 2010.

In addition, our wholly-owned subsidiary, CHS Capital, makes seasonal and term loans to member cooperatives, businesses and individual producers of agricultural products included in our cash flows from investing activities, and has its own financing explained in further detail below under “Cash Flows from Financing Activities.”

Cash Flows from Operations

Cash flows from operations are generally affected by commodity prices and the seasonality of our businesses. These commodity prices are affected by a wide range of factors beyond our control, including weather, crop conditions, drought, the availability and the adequacy of supply and transportation, government regulations and policies, world events, and general political and economic conditions. These factors are described in the cautionary statements and may affect net operating assets and liabilities, and liquidity.

Our cash flows provided by operating activities were $1,157.5 million for the three months ended November 30, 2011 compared to cash flows used in operating activities of $376.4 million for the three months ended November 30, 2010. The fluctuation in cash flows when comparing the two periods is primarily from a significant increase in cash inflows for net changes in operating assets and liabilities during the three months ended November 30, 2011, compared to a significant increase in net cash outflows during the three months ended November 30, 2010. Commodity prices decreased significantly during the three months ended November 30, 2011, and resulted in decreased working capital needs compared to August 31, 2011. Commodity prices increased significantly during the three months ended November 30, 2010, and resulted in increased working capital needs compared to August 31, 2010.

Our operating activities provided net cash of $1,157.5 million during the three months ended November 30, 2011. Net income including noncontrolling interests of $488.9 million, net non-cash expenses and cash distributions from equity investments of $76.4 million and a decrease in net operating assets and liabilities of $592.1 million provided the net cash from operating activities. The primary components of adjustments to reconcile net income to net cash provided by operating activities included depreciation and amortization, and amortization of deferred major repair costs, of $59.5 million, and redemptions from equity investments, net of income from those investments, of $16.8 million. The decrease in net operating assets and liabilities was caused primarily by a decrease in commodity prices resulting in a decrease in margin deposits, partially offset by a decrease in customer margin deposits and an increase in inventory quantities on November 30, 2011, when compared to August 31, 2011. On November 30, 2011, the per bushel market prices of our three primary grain commodities decreased as follows: corn $1.56 (21%), soybeans $3.18 (22%) and spring wheat $1.31 (14%) when compared to market prices on August 31, 2011. In general, crude oil market prices increased $12 (13%) per barrel on November 30, 2011 compared to August 31, 2011. On November 30, 2011, fertilizer commodity prices affecting our wholesale crop nutrients and country operations retail businesses generally remained flat or decreased up to 5%, depending on the specific products, compared to prices on August 31, 2011. An increase in grain inventory quantities in our Ag Business segment of 17.6 million bushels (14%) partially offset the decreases in net operating assets and liabilities when comparing inventories at November 30, 2011 to August 31, 2011.

Our operating activities used net cash of $376.4 million during the three months ended November 30, 2010. Net income including noncontrolling interests of $206.3 million and net non-cash expenses and cash distributions from equity investments of $58.4 million were exceeded by an increase in net operating assets and liabilities of

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$641.1 million. The primary components of adjustments to reconcile net income to net cash used in operating activities included depreciation and amortization, and amortization of deferred major repair costs, of $57.3 million and deferred taxes of $4.1 million, partially offset by income from equity investments, net of redemptions of those investments, of $1.8 million. The increase in net operating assets and liabilities was caused primarily by an increase in commodity prices in addition to inventory quantities reflected in increased inventories, margin deposits and receivables, partially offset by an increase in accounts payable and customer advance payments on November 30, 2010, when compared to August 31, 2010. On November 30, 2010, the per bushel market prices of our three primary grain commodities increased as follows: corn $1.06 (25%), soybeans $2.35 (23%) and spring wheat $0.44 (6%) when compared to market prices on August 31, 2010. In general, crude oil market prices increased $12 (17%) per barrel on November 30, 2010 compared to August 31, 2010. On November 30, 2010, fertilizer commodity prices affecting our wholesale crop nutrients and country operations retail businesses generally increased between 20% and 29%, depending on the specific products, compared to prices on August 31, 2010. An increase in grain inventory quantities in our Ag Business segment of 39.1 million bushels (26%) also contributed to the increase in net operating assets and liabilities when comparing inventories at November 30, 2010 to August 31, 2010.

We expect our net operating assets and liabilities to increase through our second quarter of fiscal 2012, resulting in increased cash needs. Our second quarter has typically been the period of our highest short-term borrowings. We expect to increase crop nutrient and crop protection product inventories and prepayments to suppliers of these products in our wholesale crop nutrients and country operations businesses during our second quarter of fiscal 2012. At the same time, we expect this increase in net operating assets and liabilities to be partially offset by the collection of prepayments from our customers for these products. Prepayments are frequently used for agronomy products to assure supply and at times to guarantee prices. In addition, during our second fiscal quarter of 2012, we will make payments on deferred payment contracts for those producers that sold grain to us during prior quarters and requested payment after the end of the calendar year. We believe that we have adequate capacity through our current cash balances and committed credit facilities to meet any likely increase in net operating assets and liabilities.

Cash Flows from Investing Activities

For the three months ended November 30, 2011 and 2010, the net cash flows used in our investing activities totaled $116.6 million and $457.0 million, respectively.

The acquisition of property, plant and equipment totaled $98.9 million and $84.5 million for the three months ended November 30, 2011 and 2010, respectively. Included in our acquisitions of property, plant and equipment during the three months ended November 30, 2010, were capital expenditures for an Environmental Protection Agency (EPA) mandated regulation that required the reduction of the benzene level in gasoline to be less than 0.62% volume by January 1, 2011. As a result of this regulation, our refineries incurred capital expenditures to reduce the current gasoline benzene levels to meet the new regulated levels. Both refineries were producing gasoline within the regulated benzene levels as of January 1, 2011. Approximately $14.0 million of expenditures for the project were incurred during the three months ended November 30, 2010.

Expenditures for major repairs related to our refinery turnarounds during the three months ended November 30, 2011 and 2010, were $16.6 million and $95.8 million, respectively. Refineries have planned major maintenance to overhaul, repair, inspect and replace process materials and equipment which typically occur for a five-to-six-week period every 2-4 years. Our Laurel, Montana refinery completed a turnaround during the three months ended November 30, 2011. Both our Laurel, Montana and NCRA’s McPherson, Kansas refineries completed turnarounds during the three months ended November 30, 2010.

For the year ending August 31, 2012, we expect total expenditures for the acquisition of property, plant and equipment and major repairs to be approximately $717.9 million. Included in our expected capital expenditures for fiscal 2012, is $100.0 million for upgraded infrastructure and additional capacity at our Kalama, Washington

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grain export facility which is expected to be completed in fiscal 2013 with total expenditures of $160.0 million. We have spent $15.8 million on the project through November 30, 2011, with $4.0 million of that occurring in fiscal 2012. In addition, we have budgeted $60.0 million in fiscal 2012 for a project to replace a coker at one of our refineries with an expected total cost of $555.0 million and expected completion in fiscal 2015. During the first quarter of 2012, we spent $6.3 million related to this project.

Investments made during the three months ended November 30, 2011 and 2010, totaled $3.2 million and $3.5 million, respectively.

Cash acquisitions of businesses, net of cash received, totaled $32.3 million and $3.2 million during the three months ended November 30, 2011 and 2010. In November 2011, we acquired a crushing facility in Creston, Iowa that is included in our Ag Business segment.

Changes in notes receivable during the three months ended November 30, 2011 resulted in a net increase in cash flows of $31.5 million compared to a net decrease of $291.2 million during the three months ended November 30, 2010. The primary cause of the increase in cash flows during fiscal 2012 was a decrease in CHS Capital notes receivable on November 30, 2011 compared to August 31, 2010 of $68.0 million. During fiscal 2011, the primary cause of the decrease in cash flows was additional CHS Capital notes receivable of $284.1 million resulting from additional customer borrowings due to higher commodity prices.

Partially offsetting our cash outlays for investing activities for the three months ended November 30, 2010, were redemptions of investments we received totaling $20.0 million. These redemptions were returns of capital from Agriliance for proceeds the company received from the sale of its retail facilities and the collection of receivables. In addition, for the three months ended November 30, 2011 and 2010, we received proceeds from the disposition of property, plant and equipment of $1.5 million and $1.1 million, respectively.

Cash Flows from Financing Activities

For the three months ended November 30, 2011, the net cash flows used by our financing activities totaled $178.3 million compared to the net cash flows provided by our financing activities of $701.7 million for the three months ended November 30, 2010.

Working Capital Financing

We finance our working capital needs through short-term lines of credit with a syndication of domestic and international banks. On November 30, 2011, we had two primary committed lines of credit. We had a three-year revolving facility and a five-year revolving facility, each with committed amounts of $1.25 billion, for a total of $2.5 billion. On November 30, 2010, we had two primary committed lines of credit. One of these lines of credit was a $900.0 million committed five-year revolving facility that had a May 2011 expiration date and the other was a $1.3 billion committed 364-day revolving facility that had an expiration date in November 2011. Both of these lines of credit were replaced and terminated in connection with the issuance of our existing revolvers in September 2011. In addition to our primary revolving lines of credit, we have a committed revolving credit facility dedicated to NCRA, with a syndication of banks in the amount of $15.0 million. In December 2011, the line of credit dedicated to NCRA was renewed and expires in December 2014. We also have a three-year, $40.0 million committed revolving facility, with the right to increase the capacity to $120.0 million, that expires in November 2013. Our wholly-owned subsidiaries, CHS Europe S.A., CHS do Brasil Ltda. and CHS de Argentina have uncommitted lines of credit which are collateralized by $122.6 million of inventories and receivables at November 30, 2011. On November 30, 2011, August 31, 2011 and November 30, 2010 we had total short-term indebtedness outstanding on these various facilities and other miscellaneous short-term notes payable totaling $124.5 million, $130.7 million and $440.1 million, respectively.

We have two commercial paper programs, totaling up to $125.0 million, with two banks participating in our revolving credit facilities. Terms of our credit facilities allow a maximum usage of $200.0 million to pay

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principal under any commercial paper facility. We had no commercial paper outstanding on November 30, 2011, August 31, 2011 or November 30, 2010.

CHS Capital Financing

CHS Capital sells eligible commercial loans receivable it has originated to Cofina Funding, LLC (Cofina Funding), a wholly-owned subsidiary of CHS Capital, which are then pledged as collateral under the note purchase agreements. The notes payable issued by Cofina Funding bear interest at variable rates based on commercial paper with a weighted average rate of 1.53% as of November 30, 2011. Borrowings by Cofina Funding utilizing the issuance of commercial paper under the note purchase agreements totaled $67.5 million as of November 30, 2011.

CHS Capital has available credit under master participation agreements with numerous counterparties. Borrowings under these agreements are accounted for as secured borrowings and bear interest at variable rates ranging from 1.96% to 3.50% as of November 30, 2011. As of November 30, 2011, the total funding commitment under these agreements was $361.5 million, of which $117.8 million was borrowed.

CHS Capital sells loan commitments it has originated to ProPartners Financial (ProPartners) on a recourse basis. The total capacity for commitments under the ProPartners program is $250.0 million. The total outstanding commitments under the program totaled $165.7 million as of November 30, 2011, of which $96.3 million was borrowed under these commitments with an interest rate of 1.86%.

CHS Capital borrows funds under short-term notes issued as part of a surplus funds program. Borrowings under this program are unsecured and bear interest at variable rates ranging from 0.85% to 1.35% as of November 30, 2011, and are due upon demand. Borrowings under these notes totaled $239.4 million as of November 30, 2011.

Long-term Debt Financing

We typically finance our long-term capital needs, primarily for the acquisition of property, plant and equipment, with long-term agreements with various insurance companies and banks.

On November 30, 2011, we had total long-term debt outstanding of $1,475.7 million, of which $150.0 million was bank financing, $1,273.1 million was private placement debt and $52.6 million was other notes and contracts payable. The aggregate amount of long-term debt payable presented in the Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended August 31, 2011, has not changed significantly during the three months ended November 30, 2011. On August 31, 2011 and November 30, 2010, we had long-term debt outstanding of $1,502.0 million and $1,046.8 million, respectively. Our long-term debt is unsecured except for other notes and contracts in the amount of $17.7 million; however, restrictive covenants under various agreements have requirements for maintenance of minimum consolidated net worth and other financial ratios as of November 30, 2011. We were in compliance with all debt covenants and restrictions as of November 30, 2011.

We had no long-term borrowings during the three months ended November 30, 2011, compared to $100.0 million of long-term borrowing during the three months ended November 30, 2010. During the three months ended November 30, 2011 and 2010, we repaid long-term debt of $39.2 million and $38.3 million, respectively.

Other Financing

During the three months ended November 30, 2011 and 2010, changes in checks and drafts outstanding resulted in a decrease in cash flows of $41.6 million and $34.1 million, respectively.

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Distributions to noncontrolling interests for the three months ended November 30, 2011 and 2010, were $5.8 million and $3.5 million, respectively, and were primarily related to NCRA.

In accordance with the bylaws and by action of the Board of Directors, annual net earnings from patronage sources are distributed to consenting patrons following the close of each fiscal year. Patronage refunds are calculated based on amounts using financial statement earnings. The cash portion of the patronage distribution is determined annually by the Board of Directors, with the balance issued in the form of capital equity certificates. Consenting patrons have agreed to take both the cash and the capital equity certificate portion allocated to them from our previous fiscal year’s income into their taxable income, and as a result, we are allowed a deduction from our taxable income for both the cash distribution and the allocated capital equity certificates as long as the cash distribution is at least 20% of the total patronage distribution. Distributable patronage earnings from the fiscal year ended August 31, 2011, are expected to be distributed during the three months ended February 28, 2012. The cash portion of this distribution, deemed by the Board of Directors to be 35% for individual members and 40% for nonindividual members, is expected to be approximately $260.1 million and is classified as a current liability on our November 30, 2011 and August 31, 2011 Consolidated Balance Sheets in dividends and equities payable.

Redemptions of capital equity certificates, approved by the Board of Directors, are divided into two pools, one for non-individuals (primarily member cooperatives) who may participate in an annual retirement program for equities held by them, and another for individuals who are eligible for equity redemptions at age 70 or upon death. In accordance with authorization from the Board of Directors, we expect total redemptions related to the year ended August 31, 2011, that will be distributed in cash in fiscal 2012, to be approximately $136.0 million, of which $2.4 million was redeemed in cash during the three months ended November 30, 2011, compared to $2.4 million distributed in cash during the three months ended November 30, 2010.

Our 8% Cumulative Redeemable Preferred Stock (Preferred Stock) is listed on the NASDAQ Global Select Market under the symbol CHSCP. On November 30, 2011, we had 12,272,003 shares of Preferred Stock outstanding with a total redemption value of approximately $306.8 million, excluding accumulated dividends. Our Preferred Stock accumulates dividends at a rate of 8% per year, which are payable quarterly, and is redeemable at our option. At this time, we have no current plan or intent to redeem any Preferred Stock. Dividends paid on our preferred stock during the three months ended November 30, 2011 and 2010, were $6.1 million and $6.1 million, respectively.

Off Balance Sheet Financing Arrangements

Lease Commitments:

Our lease commitments presented in Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended August 31, 2011, have not materially changed during the three months ended November 30, 2011.

Guarantees:

We are a guarantor for lines of credit and performance obligations of related companies. As of November 30, 2011, our bank covenants allowed maximum guarantees of $500.0 million, of which $38.0 million was outstanding. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties, for which we provide guarantees, are current as of November 30, 2011.

Debt:

There is no material off balance sheet debt.

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Contractual Obligations

Our contractual obligations are presented in Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended August 31, 2011. In November 2011, we entered into an agreement to purchase the noncontrolling interests of NCRA, including additional contingent consideration. See Note 13, Acquisitions for additional information.

Critical Accounting Policies

Our critical accounting policies are presented in our Annual Report on Form 10-K for the year ended August 31, 2011. There have been no changes to these policies during the three months ended November 30, 2011.

Effect of Inflation and Foreign Currency Transactions

We believe that inflation and foreign currency fluctuations have not had a significant effect on our operations since we conduct a significant portion of our business in U.S. dollars.

Recent Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-03, “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.” ASU No. 2011-03 removes the transferor’s ability criterion from the consideration of effective control for repurchase agreements and other agreements that both entitle and obligate the transferor to repurchase or redeem financial assets before their maturity. It also eliminates the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets. This guidance is effective for interim and annual periods beginning on or after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in our third quarter of fiscal 2012.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards.” ASU No. 2011-04 provides a consistent definition of fair value to ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. ASU No. 2011-04 is effective for interim and annual periods beginning after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in our third quarter of fiscal 2012.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of stockholders’ equity. It requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05”, to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. All other provisions of this update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning after

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December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in fiscal 2013.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350)—Testing Goodwill for Impairment.” ASU No. 2011-08 allows entities to use a qualitative approach to test goodwill for impairment. It permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, and early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-09, “Compensation—Retirement Benefits— Multiemployer Plans (Subtopic 715-80).” ASU No. 2011-09 requires that employers provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. The additional quantitative and qualitative disclosures will provide users with more detailed information about an employer’s involvement in multiemployer pension plans. This guidance is effective for annual periods for fiscal years ending after December 15, 2011, and early adoption is permitted. As ASU No. 2011-09 is only disclosure related, it will not have an impact on our financial position, results of operations, or cash flows.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE SECURITIES LITIGATION REFORM ACT

Any statements contained in this report regarding the outlook for our businesses and their respective markets, such as projections of future performance, statements of our plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on our assumptions and beliefs. Such statements may be identified by such words or phrases as “will likely result,” “are expected to,” “will continue,” “outlook,” “will benefit,” “is anticipated,” “estimate,” “project,” “management believes” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

Certain factors could cause our future results to differ materially from those expressed or implied in any forward-looking statements contained in this report. These factors include the factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2011 under the caption “Risk Factors,” the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.

• Our revenues and operating results could be adversely affected by changes in commodity prices.

• Our operating results could be adversely affected if our members were to do business with others rather than with us.

• We participate in highly competitive business markets in which we may not be able to continue to compete successfully.

• Changes in federal income tax laws or in our tax status could increase our tax liability and reduce our net income.

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• We incur significant costs in complying with applicable laws and regulations. Any failure to make the capital investments necessary to comply with these laws and regulations could expose us to financial liability.

• Changing environmental and energy laws and regulation, including those related to climate change and Green House Gas (“GHG”) emissions, may result in increased operating costs and capital expenditures and may have an adverse effect on our business operations.

• Government policies and regulation affecting the agricultural sector and related industries could adversely affect our operations and profitability.

• Environmental liabilities could adversely affect our results and financial condition.

• Actual or perceived quality, safety or health risks associated with our products could subject us to liability and damage our business and reputation.

• Our operations are subject to business interruptions and casualty losses; we do not insure against all potential losses and could be seriously harmed by unexpected liabilities.

• Our cooperative structure limits our ability to access equity capital.

• Consolidation among the producers of products we purchase and customers for products we sell could adversely affect our revenues and operating results.

• If our customers choose alternatives to our refined petroleum products our revenues and profits may decline.

• Operating results from our agronomy business could be volatile and are dependent upon certain factors outside of our control.

• Technological improvements in agriculture could decrease the demand for our agronomy and energy products.

• We operate some of our business through joint ventures in which our rights to control business decisions are limited.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We did not experience any material changes in market risk exposures for the period ended November 30, 2011, that affect the quantitative and qualitative disclosures presented in our Annual Report on Form 10-K for the year ended August 31, 2011.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of November 30, 2011. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of that date, our disclosure controls and procedures were effective.

During the first fiscal quarter ended November 30, 2011, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. Risk Factors

There were no material changes to our risk factors during the period covered by this report. See the discussion of risk factors in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2011.

ITEM 6. Exhibits

Exhibit	Description
10.1	Amendment No. 1 Amended and Restated Credit Agreement dated as of December 16, 2011, by and among National Cooperative Refinery Association, various lenders and CoBank, ACB.
10.2	Stock Transfer Agreement, dated as of November 17, 2011, between CHS and GROWMARK, Inc.
10.3	Stock Transfer Agreement, dated as of November 17, 2011, between CHS and MFA Oil Company.
10.4	Agreement and Plan of Merger among CHS, Science Merger Sub Ltd., an Israeli company and wholly-owned subsidiary of CHS, and Solbar Industries Ltd., an Israeli company (Incorporated by reference to our Current Report on Form 8-K, filed November 23, 2011).
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from CHS Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2011 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements 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.

	CHS Inc.
	(Registrant)
January 11, 2012		/s/ David A. Kastelic
		David A. Kastelic
		Executive Vice President and Chief Financial Officer

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EX-10.1

Exhibit 10.1

FIRST AMENDMENT

TO AMENDED AND RESTATED CREDIT AGREEMENT

This First Amendment to Amended and Restated Credit Agreement (this “Amendment”), dated as of December 16, 2011, is entered into by and among NATIONAL COOPERATIVE REFINERY ASSOCIATION, a cooperative marketing association formed under the laws of the State of Kansas (the “Borrower”), the Lenders (as defined in the Credit Agreement described below) signatories hereto, and COBANK, ACB (“CoBank”), a federally chartered banking organization, in its capacity as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

RECITALS

The Borrower, CoBank and U.S. AgBank, FCB (“U.S. AgBank”), as lenders, and the Administrative Agent are parties to that certain Amended and Restated Credit Agreement dated as of January 31, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Pursuant to various Assignments and Assumptions (as defined in the Credit Agreement), U.S. AgBank assigned its Individual Commitment (as defined in the Credit Agreement) to CoBank, and CoBank thereafter assigned certain portions of its Individual Commitment to Commerce Bank and Bank of America, N.A., who are now Lenders under the Credit Agreement and the other Loan Documents.

The Borrower has requested that the Administrative Agent and the Lenders agree to certain amendments to the Credit Agreement, and the Administrative Agent and the Lenders are willing to grant such request on the terms and subject to the conditions contained in this Amendment.

ACCORDINGLY, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Definitions. Capitalized terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings given them in the Credit Agreement.

Section 2. Amendments to the Credit Agreement. The Credit Agreement is hereby amended as follows:

(a) Amendment to Section 1.1 of the Credit Agreement (Definitions). Section 1.1 of the Credit Agreement is hereby amended by adding or amending and restating, as the case may be, the following definitions:

“Aggregate Facility Outstanding Amount” means, as of the date of determination, the sum of (a) the aggregate principal amount of all outstanding Advances (including, without duplication, the amount of all outstanding Overnight Advances), (b) the amount of all Committed Advances, and (c) the undrawn face amount of all outstanding Letters of Credit.

“Base Rate” means a rate per annum announced by the Administrative Agent on the first Banking Day of each week, which shall be the sum of (a) the highest of (i) 175 basis points greater than the higher of the one week or one month LIBO Rate, (ii) the Federal Funds Rate plus 50 basis points or (iii) the Prime Rate, and (b) 75 basis points; provided, however, if no LIBO Rate can be determined or if, in the Administrative Agent’s discretion, a reasonable basis for a LIBO Rate does not exist (including without limitation as a result of the circumstances described in Section 4.2 hereof), then “Base Rate” shall mean a rate per annum equal to the sum of (x) 75 basis points plus (y) the higher of (i) the Federal Fund Rate plus 50 basis points or (ii) the Prime Rate.

“Commitment Fee Factor” means 25 basis points per annum.

“Letter of Credit Fee” means a fee equal to 175 basis points multiplied by the face amount of the Letter of Credit.

“LIBOR Margin” means 175 basis points per annum.

“Maturity Date” means December 16, 2014.

“Required Lenders” means two or more Lenders (including Voting Participants in accordance with Section 14.26) having an aggregate Percentage in excess of fifty percent (50%); provided, however, the Percentage of any Delinquent Lender shall be excluded from any determination of Required Lenders; provided, further, that at any time during which only one Lender that is not a Delinquent Lender exists, “Required Lenders” means such single Lender.

(b) Amendment to Section 4.7(a) of the Credit Agreement (Commitment Fee). Section 4.7(a) of the Credit Agreement is amended and restated in its entirety to read as follows:

(a) Commitment Fee. A fee for each day during the Availability Period (“Commitment Fee”), for the pro rata account of each Lender, which Commitment Fee shall be (i) due and payable in arrears by the tenth calendar day following the close of each Quarter, and (ii) determined for each day during such Quarter by (x) multiplying the Commitment Fee Factor (expressed as a daily rate on the basis of a year of 360 days) times (y) the amount by which such Lender’s Individual Pro Rata Share of the Aggregate Revolving Commitment Amount exceeds such Lender’s Individual Pro Rata Share of the Aggregate Facility Outstanding Amount as of the close of the Administrative Agent’s business on such day. The outstanding principal balance of all Overnight Advances shall be included in calculating the Aggregate Facility Outstanding Amount with respect only to the Overnight Lender. The Commitment Fee shall be payable by Borrower to the Administrative Agent, and the Administrative Agent shall distribute the Commitment Fee to each Lender based on its Individual Pro Rata Share. Any Commitment Fee remaining unpaid on the Maturity Date shall be due and payable on such date.

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(c) Amendment to Section 14.8 of the Credit Agreement (Consent Required for Certain Actions). Subsection (a) of Section 14.8 of the Credit Agreement is amended and restated in its entirety to read as follows:

(a) Unanimous. Each of the Lenders and Voting Participants before:

(i) Agreeing to an increase in the Aggregate Revolving Commitment (except in accordance with Section 2.10, in which case only the consent of the Lenders participating in the Increased Facility Amount shall be required), or an extension of the Availability Period or the Maturity Date;

(ii) Agreeing to a reduction in the amount, or to a delay in the due date, of any payment by Borrower of interest, principal, or fees with respect to the Loans; provided, however, this restriction shall not apply to a delay in payment of interest or fees granted by the Administrative Agent in the ordinary course of administration of the Loans and the exercise of reasonable judgment, so long as such payment delay does not exceed five (5) days; or

(iii) Amending the definition of “Required Lenders” or any provision set forth in this subsection 14.8(a).

(d) Additional Amendment to Section 14.8 of the Credit Agreement (Consent Required for Certain Actions). Section 14.8 of the Credit Agreement is further amended by deleting therefrom the following sentence: “If no written consent or denial is received from a Lender within five (5) Banking Days after written notice of any proposed action as described in this Section is delivered to such Lender by the Administrative Agent, such Lender shall be conclusively deemed to have consented thereto for the purposes of this Section.”

(e) Amendment to Section 14.20 of the Credit Agreement (Administrative Agent Fee). Section 14.20 of the Credit Agreement is amended and restated in its entirety to read as follows:

14.20 Administrative Agent Fee. CoBank and any Successor Agent shall be entitled to the Administrative Agent Fee for acting as the Administrative Agent.

(f) Amendment to Section 14.22 of the Credit Agreement (Representations and Warranties of Administrative Agent and Lenders). Section 14.22 of the Credit Agreement is amended and restated in its entirety to read as follows:

14.22 Representations and Warranties of Administrative Agent and Lenders. The Administrative Agent and each Lender represents and warrants to each other that: (a) the execution and delivery of, and performance of its obligations under, this Credit Agreement is within its power and has been duly authorized by all necessary corporate and other action by it; (b) this Credit

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Agreement does not conflict with nor constitute a breach of its charter or bylaws nor any agreements by which it is bound, and does not violate any judgment, decree or governmental or administrative order, rule or regulation applicable to it; (c) no approval, authorization or other action by, or declaration to or filing with, any governmental or administrative authority or any other Person is required to be obtained or made by it in connection with the execution and delivery of, and performance of its obligations under, this Credit Agreement; and (d) this Credit Agreement has been duly executed by it, and constitutes the legal, valid, and binding obligation of such Person, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity). Each Lender that is a state or national bank represents and warrants that the act of entering into and performing its obligations under this Credit Agreement has been approved by its board of directors or its loan committee and such action was duly noted in the written minutes of the meeting of such board or committee, and that it will furnish the Administrative Agent with a certified copy of such minutes or an excerpt therefrom reflecting such approval.

(g) Addition of Section 15.18 of the Credit Agreement (Customer Identification – USA Patriot Act Notice). Section 15.18 is hereby added to the Credit Agreement immediately following Section 15.17 thereof to read in its entirety as follows:

Section 15.18 Customer Identification – USA Patriot Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that, pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), it is required to obtain, verify and record certain information and documentation that identifies the Borrower, which information includes the name and address of the Borrower and such other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act. The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

(h) Amendment to Exhibits to the Credit Agreement (Disclosures of Borrower). The Credit Agreement is amended by deleting Exhibits 1.76, 8.3, 8.9, 8.11, 11.1 and 11.3 to the Credit Agreement and replacing them in their entirety with Exhibits 1.76, 8.3, 8.9, 8.11, 11.1 and 11.3 to this Amendment.

(i) Amendment to Schedule 1 to the Credit Agreement (Commitments). The Credit Agreement is amended by deleting Schedule 1 to the Credit Agreement and replacing it in its entirety with Schedule 1 to this Amendment.

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Section 3. References. All references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby, and any and all references in any other Loan Document to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

Section 4. No Other Changes. Except as expressly set forth herein, all terms of the Credit Agreement and each of the other Loan Documents remain in full force and effect.

Section 5. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows:

(a) The Borrower has all requisite power and authority, corporate or otherwise, to execute and deliver this Amendment and to perform its obligations under this Amendment, the Credit Agreement (as amended hereby) and the other Loan Documents to which the Borrower is a party. This Amendment, the Credit Agreement (as amended hereby) and the other Loan Documents to which the Borrower is a party have been duly and validly executed and delivered to the Administrative Agent by the Borrower. This Amendment, the Credit Agreement (as amended hereby) and the other Loan Documents to which the Borrower is a party constitute the Borrower’s legal, valid and binding obligations, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by any applicable bankruptcy, insolvency or similar laws now or hereafter in effect affecting creditors’ rights generally and by general principles of equity.

(b) The execution, delivery and performance by the Borrower of this Amendment, the Credit Agreement (as amended hereby) and the other Loan Documents to which the Borrower is a party have been duly authorized by all necessary corporate or other action and do not and will not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate the organizational documents of the Borrower or any provision of any law, rule, regulation or order presently in effect having applicability to the Borrower, or (iii) result in a breach of, or constitute a default under, any indenture or agreement to which the Borrower is a party or by which the Borrower or its properties may be bound or affected.

(c) All of the representations and warranties contained in the Loan Documents, including without limitation the representations and warranties contained in Article 8 of the Credit Agreement, are correct in all material respects on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.

(d) There has occurred no change in the business, assets, liabilities, operations, prospects or condition, financial or otherwise, of the Borrower since August 31, 2011, which could reasonably be expected to result in a Material Adverse Effect.

(e) No event has occurred and is continuing, or would result from the execution and delivery of this Amendment or the other documents contemplated hereunder, which constitutes a Default or an Event of Default.

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Section 6. Effectiveness. This Amendment shall be effective only if the Administrative Agent has received, on or before the date of this Amendment (or such later date as the Administrative Agent may agree in writing), each of the following, each in form and substance acceptable to the Administrative Agent in its sole discretion:

(a) this Amendment, duly executed by the Borrower;

(b) a Note in favor of each Lender, duly executed by the Borrower;

(c) a Fee Letter dated November 15, 2011, duly executed by the Borrower;

(d) a signed copy of an opinion of counsel for the Borrower addressed to the Administrative Agent, on behalf of the Lenders, with respect to the matters contemplated by this Amendment;

(e) current searches of appropriate filing offices in each jurisdiction in which the Borrower is organized, has an office or otherwise conducts business (including, but not limited to, patent and trademark offices, secretaries of state and county recorders) showing that no state or federal tax liens have been filed and remain in effect against the Borrower, and that no financing statements or other notifications or filings have been filed and remain in effect against the Borrower, other than the Permitted Encumbrances or those for which the Administrative Agent has received an appropriate release, termination or satisfaction;

(f) evidence of all insurance required by the terms of the Loan Documents, together with certificates and loss payable endorsements showing the Administrative Agent, for the benefit of the Lenders, as additional insured and lender loss payee thereunder;

(g) financial statements of the Borrower as of the end of the most recent Fiscal Quarter, prepared on a consolidated and consolidating basis, including balance sheets, income statements and cash flow statements, in each case prepared in accordance with GAAP consistently applied, together with such other financial statements and information as the Administrative Agent may reasonably request;

(h) a 3-year Business Plan and pro-forma financial projections of the Borrower commencing September 1, 2011, including income statements, balance sheets and cash flow statements prepared in accordance with GAAP consistently applied;

(i) a certificate of the secretary or other appropriate officer of each of the Borrower certifying (i) that the execution, delivery and performance of this Amendment, the Credit Agreement (as amended hereby) and the other Loan Documents and other documents contemplated hereunder to which the Borrower is a party have been duly approved by all necessary action of the governing board of the Borrower, and attaching true and correct copies of the applicable resolutions granting such approval; (ii) that the organizational documents of the Borrower, which were previously certified and delivered to Administrative Agent, continue in full force and effect and have not been amended or otherwise modified except as set forth in the certificate to be delivered as of the date

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hereof; and (iii) that the officers and agents of the Borrower, who have previously been certified to Administrative Agent as being authorized to sign and to act on behalf of the Borrower, continue to be so authorized or setting forth the sample signatures of each of the officers and agents of the Borrower authorized to execute and deliver this Amendment, the Loan Documents to which the Borrower is a party, and all other documents, agreements and certificates on behalf of the Borrower;

(j) a certificate of good standing for the Borrower from the Secretary of State (or the appropriate official) of the state of formation of the Borrower, dated not more than thirty days prior to the date hereof; and

(k) payment of all fees and expenses due and payable pursuant to the Fee Letter and, to the extent invoiced on or prior to the date hereof, pursuant to Section 9 hereof.

Section 7. No Waiver. The execution of this Amendment and any documents, agreements and certificates contemplated hereunder shall not be deemed to be a waiver of any Default or Event of Default or any other breach, default or event of default under any Loan Document or other document held by the Administrative Agent or any Lender, whether or not known to the Administrative Agent or any Lender and whether or not existing on the date of this Amendment.

Section 8. Release of Administrative Agent and Lenders. The Borrower, by its signature to this Amendment, hereby absolutely and unconditionally releases and forever discharges the Administrative Agent, the Letter of Credit Bank and the Lenders, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which the Borrower has or claims to have, or may at any time have or claim to have, against any such Person for or by reason of any act, omission, matter, cause or thing whatsoever arising on or before the date of this Amendment in any way relating to or arising out of the Loan Documents or any action taken or omitted under the Loan Documents, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

Section 9. Costs and Expenses. Without limiting Section 15.1 of the Credit Agreement, the Borrower shall pay or reimburse the Administrative Agent on demand for all out-of-pocket costs and expenses incurred by the Administrative Agent (including without limitation reasonable fees, charges and disbursements of counsel for the Administrative Agent and specifically including allocated costs of in house counsel), in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and the other documents, agreements, amendments, releases and certificates contemplated hereunder (whether or not the transactions contemplated hereby or thereby shall be consummated).

Section 10. Miscellaneous. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Colorado (other than its conflicts of laws rules). This Amendment, together with the Credit Agreement as amended hereby and the other Loan

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Documents, comprise the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to such subject matter, superseding all prior oral or written understandings. Any provision of this Amendment which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.

Signature pages follow

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and year first above written.

NATIONAL COOPERATIVE REFINERY ASSOCIATION
By:	/s/    Kent S. Stos
	Name:   Kent S. Stos
	Title:     VP Finance

Signature Page to First Amendment

to Amended and Restated Credit Agreement

COBANK, ACB, as Administrative Agent, Lender, Letter of Credit Bank and Overnight Lender
By:	/s/    Jonathan Logan
	Name:   Jonathan Logan
	Title:     Senior Vice President

Signature Page to First Amendment

to Amended and Restated Credit Agreement

BANK OF AMERICA, N.A., as Lender
By:	/s/    Sueanna M. Budde
	Name:   Sueanna M. Budde
	Title:     Senior Vice President

Signature Page to First Amendment

to Amended and Restated Credit Agreement

COMMERCE BANK, as Lender
By:	/s/    R. David Emley, Jr.
	Name:   R. David Emley, Jr.
	Title:     Vice President

Signature Page to First Amendment

to Amended and Restated Credit Agreement

Exhibit 1.76

SUBSIDIARIES

Kaw Pipe Line Company	66.667	%
Osage Pipeline Company, LLC	50.00	%
Jayhawk Pipeline, L.L.C.	100	%

Ex. 1.76 - 1

Exhibit 8.3

LITIGATION

Rosie Mae Solze Rankin, et al. v. NCRA et al.: This is a wrongful death suit filed by Rosie Mae Solze Rankin, the surviving spouse of Jack Rankin, deceased. It is alleged that, during his working career, Mr. Rankin was exposed to asbestos and asbestos fibers at various locations in Kansas, Illinois, Nebraska, Missouri, Iowa, California, Tennessee, West Virginia, New York, Ohio and Oklahoma. It is further alleged that, as a result of his exposure, Mr. Rankin developed mesothelioma and died of that form of cancer.

Mrs. Rankin originally brought suit against 192 defendants, who are divided into two basic classes. The first class consists of manufacturers of asbestos. The second class of defendants is made up of what the plaintiff refers to as “premises liability defendants.” NCRA is a member of the premises liability defendant class. Additional defendants have been added, most recently in the Third Amended Complaint, such that a total of 204 defendants have now been named in the suit. Allegations with respect to the members of the premises liability defendant class are that, from 1966 through 2008, Mr. Rankin worked as a pipefitter at various sites, including NCRA, at which asbestos was used as insulation, and while upon those premises Mr. Rankin was exposed to, inhaled, ingested and/or absorbed some of the asbestos fibers. It is further alleged that the premises liability defendants knew or should have known that the asbestos fibers created an unreasonably dangerous condition, and took no steps to measure, regulate or control those fibers, or to provide respiratory equipment for persons such as Mr. Rankin. Plaintiff claims that the premises liability defendants’ conduct in using products which contained asbestos, in failing to eliminate the products, and in failing to provide industrial hygiene techniques and respiratory protective devices to Mr. Rankin, proximately caused Mr. Rankin’s death. Plaintiff further alleges that the defendants knew or should have known that there existed a high probability that their lack of action to protect Mr. Rankin would cause Mr. Rankin to suffer injury. The plaintiff complains that such conduct constituted willful and wanton disregard for the safety of Mr. Rankin. The plaintiff seeks unspecified actual damages in an amount in excess of $50,000.00 and unspecified punitive damages.

Absent from the petition is any statement of precisely when Mr. Rankin was exposed to asbestos at NCRA. Mr. Rankin was never employed by NCRA; however, although not alleged in the petition, the plaintiff is presumably alleging that Mr. Rankin may have been employed by a contractor or subcontractor who did work at the refinery. Local counsel for NCRA has advised that Mr. Rankin’s brother, a “coworker/site witness,” was deposed on April 13, 2011, and testified that Mr. Rankin did perform work at NCRA’s refinery; however, the witness did not work at NCRA’s refinery and did not witness any of the activities performed there by Mr. Rankin.

By Order dated June 10, 2011, this case has now been set for trial on the December 5, 2012, trial docket. In the meantime, additional discovery will be conducted.

SemCrude, L.P., et al., Bankruptcy Court for the District of Delaware: On July 22, 2008, SemCrude, L.P. and various affiliates, including SemGroup, L.P. (collectively, “SemCrude”), as debtors-in-possession, each filed a voluntary petition for relief under Chapter 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”). NCRA and its affiliates, Jayhawk Pipeline, L.L.C. and Kaw Pipe Line Company, had in place various arrangements with SemCrude relating to the purchase, sale, exchange and transportation of crude oil and condensate, including, without limitation, a Net-Out Agreement that provided for amounts due and owing to and from SemCrude and NCRA to be “netted-out” on a monthly basis. In view of its concern about SemCrude’s financial status, on July 21, 2008, NCRA sent SemCrude a demand for adequate assurances of its ability to perform its obligations under the Net-Out Agreement and associated agreements, and suspended its payments to SemCrude. Since that time, NCRA and SemCrude have cooperated in reconciling all amounts due under the Net-Out Agreement. As of the date of the Chapter 11 filing, the amount due by NCRA to SemCrude was $76,545,308.62 and that amount was setoff against the $57,104,741.81 that was owed by SemCrude to NCRA. After effecting the setoff as contemplated by the Net-Out Agreement, NCRA paid the incremental difference owed to SemCrude for both pre-petition and post-petition amounts. While there remains a possibility that either SemCrude or third parties could claim that additional amounts are due and owing by NCRA (See,

Ex. 8.3 - 1

Samson and Arrow cases below), it is NCRA’s position that the offset procedure is in compliance with the provisions of the Bankruptcy Code such that no additional amounts should be due to SemCrude, other than as incurred in the ordinary course of business pursuant to post-petition agreements. NCRA’s affiliates, Jayhawk Pipeline, L.L.C. and Kaw Pipe Line Company, were owed $36,511.41 and $131,915.20, respectively, relating to the pre-petition obligations of SemCrude. NCRA filed proofs of claim with respect to these amounts, and such amounts have since been fully recovered.

Samson Resources Company, et al. v. NCRA, et al.: On July 13, 2009 and July 21, 2009, Samson Resources Company and various affiliates (collectively, “Samson”) filed petitions in thirteen (13) different district courts in the State of Oklahoma naming NCRA and seventeen (17) other defendants. All of these actions are ancillary to the SemCrude bankruptcy matter described above. Samson alleges that it had a perfected purchase money security interest in the proceeds of crude oil that was sold to SemCrude and then to NCRA and the other defendants. Samson apparently filed these actions after it was unsuccessful in obtaining the desired relief in the SemCrude bankruptcy case. On July 31, 2009, NCRA and the other defendants joined in removing each of these cases to the United States District Court for the Western District of Oklahoma. These cases were then transferred to the United States Bankruptcy Court for the District of Delaware. The plaintiffs filed motions requesting the Bankruptcy Court to retransfer the cases back to the Western District of Oklahoma for remand back to the original state courts in which they were filed. On December 13, 2010, the Bankruptcy Court issued its Opinion denying the motions, and ruling that the action should remain in the Delaware Bankruptcy Court. On December 27, 2010, Samson filed a motion requesting that the Bankruptcy Court reconsider and reverse its decision, or in the alternative, certify the Opinion for immediate appeal to the United States Third Circuit Court of Appeals. The briefing on this motion is complete and the Bankruptcy Court has taken the matter under advisement. There is no set date for the Court to issue its ruling. In the interim, the Bankruptcy Court has ordered that discovery go forward on all issues in the case. The parties are in the early stages of document production. No trial date is scheduled.

Samson also filed two actions in New Mexico in State District Courts, and NCRA was served effective August 26, 2009. These actions involve essentially the same defendants and the same causes of action, except that the crude oil at issue was produced from New Mexico leases. The actions were removed to the United States District Court for the District of New Mexico on September 9, 2009. On September 15, 2009, the defendants filed motions to transfer these cases to the United States Bankruptcy Court in Delaware. On September 25, 2009, NCRA filed separate motions to dismiss alleging that the New Mexico Courts lack personal jurisdiction over NCRA. On September 25, 2009, Samson filed motions requesting that the action be remanded back to the New Mexico State District Courts in which they were originally filed. On March 24, 2011, Samson voluntarily dismissed NCRA from the New Mexico actions.

Arrow Oil & Gas, Inc. v. NCRA, et al. / Anistine & Musgrove, Inc. v. NCRA, et al.: On May 3, 2010, (i) fifty-four (54) oil producers joined together to file an action against NCRA and sixteen (16) other purchasers in Pratt County, Kansas, and (ii) thirty-three (33) oil producers joined together to file an action against NCRA and eighteen (18) other producers in Pottawotomie County, Oklahoma, all asserting the same type of claims as in the Samson matter described above, and alleging the same theories. NCRA and the other producers removed the cases to the United States District Courts for the States of Kansas and Oklahoma, respectively, and also filed motions to transfer the cases to the United States Bankruptcy Court in Delaware. The plaintiffs filed motions to remand the cases back to the original state courts in which they were filed. The motions to remand were denied and the cases have been transferred to the United States Bankruptcy Court in Delaware.

The plaintiffs filed a motion requesting the Bankruptcy Court to retransfer the Oklahoma action back to the District Court of Oklahoma for remand back to the Oklahoma state court in which it was filed. On December 13, 2010, the Bankruptcy Court issued its Opinion denying the plaintiffs’ motion, and ruling that the action should remain in the Delaware Bankruptcy Court. On December 27, 2010, the plaintiffs filed a “Motion in Aid of December 13, 2010 Order,” that requests the Bankruptcy Court to reconsider and reverse its Opinion.

Ex. 8.3 - 2

Since the date of NCRA’s last audit response, the Kansas action has been included in the plaintiffs’ December 27, 2010 motion. The motion has been finally briefed and the Bankruptcy Court has taken the motion under advisement. There is no set date for the Court to issues its ruling. In the interim, the Bankruptcy Court has ordered that discovery go forward on all issues in the case. The parties are in the early stages of document production. No trial date is scheduled.

On July 18, 2011, NCRA filed motions in each of these cases seeking an order dismissing some, but not all, of the plaintiffs’ claims. The parties are still in the process of briefing these motions.

Ex. 8.3 - 3

Exhibit 8.9

REQUIRED LICENSES

1. Honeywell – OS Systems/Hardware License

2. Control Systems International (Scada) License

3. Allegro Development License

4. Oracle License

5. General Electric License

6. IBM Maximo License

Ex. 8.9 - 1

Exhibit 8.11

EQUITY INVESTMENTS

	Subsidiary	Investment
1.	Jayhawk Pipeline, L.L.C.	$	40,698,609
2.	Kaw Pipe Line Company	$	2,661,247
3.	Osage Pipeline Company, LLC	$	6,818,545

Ex. 8.11 - 1

Exhibit 11.1

EXISTING INDEBTEDNESS

Bonds	$	1,000,000
CHS Private Placement	$	43,750,000
5.25% 10-year unsecured term loan payable in equal semi-annual installments through 2015

Ex. 11.1 - 1

Exhibit 11.3

EXISTING LIENS

Jurisdiction	Secured Party	Filing No.	Filing Date
Kansas Secretary of State	Security Bank of Kansas City and City of McPherson, Kansas	95031000	12/27/06*
Kansas Secretary of State	Deere Credit, Inc.	96367826	06/10/08
Kansas Secretary of State	Deere Credit, Inc.	96367834	06/10/08
Kansas Secretary of State	Deere Credit, Inc.	96367842	06/10/08
Kansas Secretary of State	Textron Financial Corporation	70614271	11/26/08
Kansas Secretary of State	Natural Gas Exchange Inc.	6606677	06/18/09

*Continuation #98920771 filed on 12/7/2011

Ex. 11.3 - 1

SCHEDULE 1

LENDERS AND INDIVIDUAL COMMITMENTS

Lender Name/Address	Individual Commitment
CoBank, ACB 5500 So. Quebec Avenue Greenwood Village, Co 80111 Attention: Syndications Phone: (303) 740-6504 Fax: (303) 740-1021 Email: Agencybank@cobank.com	$5,000,000
Bank of America, N.A. 100 N. Broadway Wichita, KS 61202 Attention: Sueanna Budde Phone: (316) 261-4147 Fax: (312) 453-6303 Email: sueanna.m.budde@baml.com	$5,000,000
Commerce Bank 1000 Walnut Street, BB17-1 Kansas City, MO 64106 Attention: Alyssa George Phone: (816) 234-1935 Fax: (816) 234-7290 Email: alyssa.george@commercebank.com	$5,000,000

Sch. 1 - 1

EX-10.2

Exhibit 10.2

STOCK TRANSFER AGREEMENT

BY AND BETWEEN

CHS INC.,

and

GROWMARK, INC.

DATED AS OF NOVEMBER 17, 2011

STOCK TRANSFER AGREEMENT

THIS STOCK TRANSFER AGREEMENT (this “Agreement”) is made as of this 17th day of November, 2011 by and between GROWMARK, Inc., a Delaware corporation (“Seller”) and CHS Inc., a Minnesota cooperative corporation (“Buyer”).

RECITALS

WHEREAS, Seller owns 3 shares of Class A common stock and 2,555,060 shares of Class B common stock of National Cooperative Refinery Association (the “Company”), a Kansas cooperative association (together, Seller’s Class A common stock and Class B common stock represent approximately 18.616% of the Company’s outstanding capital stock and shall be referred to herein as the “Sale Stock”);

WHEREAS, the Company owns and operates a petroleum refinery near McPherson, Kansas, a terminal in Council, Bluffs, Iowa, pipelines and related assets;

WHEREAS, Buyer owns, as of the date hereof, Class A and Class B common stock of the Company representing approximately 74.429% of the Company’s outstanding capital stock;

WHEREAS, Seller and Buyer are parties to that certain Agreement dated June 9, 1995 that, among other things, contains certain provisions relating to their ownership and management rights in the Company (the “Settlement Agreement”); and

WHEREAS, Seller desires to sell, and Buyer desires to purchase, all the Sale Stock on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the Recitals and of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed that:

ARTICLE I

PURCHASE AND SALE

1.1 Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, Buyer shall purchase from Seller, and Seller shall sell, transfer and assign to Buyer all its rights in interests to all the Sale Stock, free and clear of all liens and encumbrances (except for Permitted Liens as described in Section 2.3 below), in four distinct closings (“Closings”). At each Closing, Buyer shall pay a base purchase price of $100 per share. In addition, Seller shall be entitled to receive up to two contingent purchase price payments following each Closing, depending upon certain conditions as described below and as more fully described in Exhibit A hereto (the dates on which a contingent payment is due being defined as “Contingent Payment Dates”). If the Contingent Payment Date falls on a Saturday or Sunday, the payment shall be made on the Monday that immediately follows the Contingent Payment Date. Whether or not Seller is entitled to receive a payment on a Contingent Payment Date shall be determined by whether or not the Average Crack Spread Margin (as defined below) over the 12-month period ending on August 31 of the calendar year in which such Contingent Payment Date falls exceeds $17.50 (the “Target Crack Spread”). If the Average Crack Spread Margin for the relevant period is less than or equal to the Crack Spread Target, Seller shall not receive a payment on such Contingent Payment Date. All purchase price payments shall be paid by wire transfer of immediately available funds to an account designated by Seller.

For purposes of this Agreement, “Average Crack Spread Margin” for each month means (i) a simple average of the daily Group Three Platts Low Unleaded Price for such month multiplied by 42 gallons (in order to arrive at a per barrel price), multiplied times 60%; plus (ii) a simple average of the daily Group Three Platts Low #2ULSD Price for such month multiplied by 42 gallons (in order to arrive at a per barrel price) times 40%; minus (iii) the average daily prompt settlement WTI NYMEX Crude Futures price for such month. Each monthly Average Crack Spread Margin, calculated pursuant to the prior sentence, for the relevant 12 month period shall then be added together and divided by 12 to arrive at the annual Average Crack Spread Margin to be used in Subsections 1.1(a), (b), (c) and (d) below. In the event that the GROUP THREE Platts Low Unleaded Price, Group Three Platts Low #2ULSD Price or WTI NYMEX Crude Futures is no longer reported substantially in the form reported on the date hereof, the parties will establish a replacement for such index that is a successor to such discontinued index or other index measure, in each case as reasonably acceptable to the parties.

(a) First Closing. On September 1, 2012, Seller shall sell to Buyer 18.8% of the Sale Stock representing 480,350 shares (the “First Closing”) in exchange for (i) a base purchase price payment of $48,035,000 payable at the First Closing, (ii) on October 31, 2013, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2013 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 3.5% (i.e., 0.035) and (iii) on October 31, 2014, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2014 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 3.5% (i.e., 0.035).

(b) Second Closing. On September 1, 2013, Seller shall sell to Buyer 18.8% of the Sale Stock representing 480,350 shares (the “Second Closing”) in exchange for (i) a base purchase price payment of $48,035,000 payable at the Second Closing, (ii) on October 31, 2014, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2014 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 3.5% (i.e., 0.035) and (iii) on October 31, 2015, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2015 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 3.5% (i.e., 0.035).

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(c) Third Closing. On September 1, 2014, Seller shall sell to Buyer 18.8% of the Sale Stock representing 480,350 shares (the “Third Closing”) in exchange for (i) a base purchase price payment of $48,035,000 payable at the Third Closing, (ii) on October 31, 2015, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2015 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 3.5% (i.e., 0.035) and (iii) on October 31, 2016, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2016 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate produced by the Company during such fiscal year as set forth in the Company’s year-end production records x 3.5% (i.e., 0.035).

(d) Final Closing. On September 1, 2015, Seller shall sell to Buyer 43.6% of the Sale Stock representing 1,114,013 shares (the “Final Closing”) in exchange for (i) a base purchase price payment of $111,401,300 payable at the Final Closing, (ii) on October 31, 2016, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2016 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate produced by the Company during such fiscal year as set forth in the Company’s year-end production records x 8.11625% (i.e., 0.0811625) and (iii) on October 31, 2017, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2017 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate produced by the Company during such fiscal year as set forth in the Company’s year-end production records x 8.11625% (i.e., 0.0811625). The parties agree that the 3 shares of Class A common stock will be transferred at the Final Closing.

An example of a calculation of the contingent purchase price payment is set forth in Exhibit A attached hereto. Buyer shall cause the Company to provide Seller with audited financial statements and patronage calculations as presented to the Company’s board of directors for sales of gasoline and distillate for all fiscal years through August 31, 2015. Buyer shall cause the Company to provide Seller with production records, and such other information as reasonably requested by Seller, for production of gasoline and distillate at the McPherson refinery for fiscal years ending August 31, 2016 and 2017. For further clarity, Seller shall have the right to the final patronage payments and related records for the period ending August 31, 2015 which would normally be declared for payment on October 31, 2015 according to historic patronage policies.

1.2 Deliverables at Closings. At each of the four Closings, Seller shall deliver to Buyer a stock power endorsed to the Buyer representing the total number of shares of Sale Stock being sold by Seller to Buyer as described in Section 1.1 above, together with a certificate or certificates representing such shares. For each of the first three Closings, in the event that Seller does not have a certificate representing the exact number of shares of Sale Stock to be transferred at such Closing, Seller shall deliver to the Company certificates representing all its shares of Sale Stock and Buyer shall cause the Company to reissue two new certificates, one representing the number of shares of Sale Stock to be transferred to Buyer at such Closing and a second

3

representing the total number of remaining shares that Seller owns after its transfer of shares to Buyer at such Closing; the first such certificate shall be duly endorsed and transferred to Buyer at the Closing, and the second certificate shall be retained by Seller until the next Closing. Seller shall also deliver to Buyer at each Closing, a certificate signed by an officer of Seller certifying that (i) all of Seller’s representations and warranties contained in Article II are true and accurate on the such Closing Date as if made on such Closing Date, and (ii) Seller has complied with all covenants required to be performed by Seller at or prior to such Closing Date.

1.3 Closings. The Closings of the transactions contemplated by this Agreement will occur on each of the four closing dates by remote communications between the parties. The date of each of the four Closings is herein referred to as a “Closing Date.” Sometimes a Closing Date will fall on a Saturday or Sunday and the parties may agree to exchange payment and deliverables on a date other than the Closing Date; if that is the case, the effective date of the Closing shall remain September 1. The Closing shall be deemed to be effective as of 12:01 a.m. (local Kansas time) on each Closing Date.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

As a material inducement to Buyer to enter into this Agreement, Seller represents and warrants to Buyer on the date hereof and as of each of the Closing Dates as follows:

2.1 Organization. Seller is a corporation duly organized and validly existing and in good standing under the laws of the State of Delaware.

2.2 Authorization; Enforceability. This Agreement constitutes the valid and binding obligation of Seller, enforceable against the Seller in accordance with its terms. Seller has the absolute and unrestricted right, power, capacity and authority to enter into, execute and deliver this Agreement. Upon receipt of the board approval discussed in Section 5.1 below, Seller will have the absolute and unrestricted right, power, capacity and authority to carry out and perform the transactions contemplated herein. Except as noted in the prior sentence, no other corporate act or proceeding on the part of the Seller, its board or its shareholders is necessary to authorize or approve this Agreement or the consummation of the transactions contemplated herein.

2.3 Title. At the time of each Closing, Seller will have sole, good and marketable title to all the Sale Stock being transferred at such Closing, free and clear of all liens and encumbrances, except for such liens and encumbrances arising from this Agreement and the lien of the Company described in Section 5 of the Company’s Restated and Amended Bylaws (the “Permitted Liens”).

2.4 Information and Advice. Seller has had complete access to all information it has requested concerning the Company, its business, assets and prospects and is capable of evaluating the merits of this Agreement and any transactions under this Agreement and of forming an informed investment decision relating to its decision to sell the Sale Stock. Seller has obtained the advice of its own legal counsel, accountants and advisors with respect to the matters contained in the Agreement and the transactions contemplated herein.

4

2.5 No Other Interests. The Sale Stock represents Seller’s entire ownership interests in the Company. Seller is not party to any contract, agreement, plan or other document relating to the issuance, sale or transfer of any equity securities or other securities of any type related to the Company or any of the Company’s subsidiaries. Seller has no options, warrants or rights of any kind under any contract or otherwise to acquire any equity securities or other securities of the Company or its subsidiaries.

2.6 No Conflict. Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated herein will, directly or indirectly (with or without notice or lapse of time):

(a) Contravene, conflict with, or result in a violation of any provision of the Seller’s organizational documents or any resolution adopted by Seller’s board of directors or the stockholders of Seller;

(b) Contravene, conflict with, or result in a violation of, or give any governmental body or other person the right to challenge any of the transactions contemplated herein; or

(c) Result in the imposition or creation of any encumbrance upon the Sale Stock.

2.7 Brokers or Finders. Seller and its agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement.

2.8 Certain Proceedings. There is no pending proceeding that has been commenced against Seller that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the contemplated transactions in this Agreement. To Seller’s knowledge, no such proceeding has been threatened.

2.9 Disclosure. The representations and warranties contained in this Article II do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Article II not misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller on the date hereof and as of each of the Closing Dates as follows:

3.1 Organization. Buyer is a cooperative corporation duly organized and validly existing and in good standing under the laws of the State of Minnesota.

5

3.2 Authorization; Enforceability. This Agreement constitutes the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Buyer has the absolute and unrestricted right, power, capacity and authority to enter into, execute and deliver this Agreement. Upon receipt of the board approval discussed in Section 5.1 below, Buyer will have the absolute and unrestricted right, power, capacity and authority to carry out and perform the transactions contemplated herein. Except as noted in the prior sentence, no other corporate act or proceeding on the part of Buyer, its board or its shareholders is necessary to authorize or approve this Agreement or the consummation of the transactions contemplated herein.

3.3 No Conflict. Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated herein will, directly or indirectly (with or without notice or lapse of time):

(a) Contravene, conflict with, or result in a violation of any provision of Buyer’s organizational documents or any resolution adopted by Buyer’s board of directors or the stockholders of Buyer; or

(b) Contravene, conflict with, or result in a violation of, or give any governmental body or other person the right to challenge any of the transactions contemplated herein.

3.4 Brokers or Finders. Buyer and its agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement.

3.5 Certain Proceedings. There is no pending proceeding that has been commenced against Buyer that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the contemplated transactions in this Agreement. To Buyer’s knowledge, no such proceeding has been threatened.

3.6 Investment Representations

(a) The Sale Stock is being acquired by Buyer for its own account, for investment purposes only, within the meaning of the United States Securities Act of 1933, as amended (the “1933 Act”), with no intention of assigning any participation or interest in the Sale Stock, and not with a view to the distribution of any of the Sale Stock.

(b) Buyer understands that the shares of Sale Stock have not been, and will not be, registered under the 1933 Act or any other securities law of any country, state or other jurisdiction, in reliance upon an exemption from the registration requirements of such laws thereunder for transactions not involving any public offering or the general inapplicability of such laws. Buyer will not sell, distribute or otherwise dispose of the Sale Stock or cause the Sale Stock to be disposed of, unless the shares of Sale Stock are subsequently registered under the 1933 Act, if applicable, or any other applicable securities laws of any other country, state or other jurisdiction or, in the opinion of counsel satisfactory to the Company, an exemption from such registration is available under the circumstances of the contemplated sale or other disposition. Buyer understands that the Company is under no obligation to register the Sale Stock on the Buyer’s behalf.

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3.7 Buyer is capable of evaluating the merits of this Agreement and any transactions under this Agreement and of forming an informed investment decision relating to its investment. Buyer has obtained the advice of its own legal counsel, accountants and advisors with respect to the matters contained in the Agreement and the transactions contemplated herein.

3.8 Disclosure. The representations and warranties contained in this Article III do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Article III not misleading.

ARTICLE IV

COVENANTS

4.1 Effect on Settlement Agreement. After the date hereof and through the final patronage payment on October 31, 2015, the terms and conditions of the Settlement Agreement shall remain in full force and effect, provided, however, the parties agree to not exercise or enforce any rights under sections 5, 6 or 9 of the Settlement Agreement prior to December 7, 2011, and further provided, that if neither party exercises it right to terminate this Agreement on or prior to December 6, 2011 as provided for in Section 5.1 below, then, effective December 7, 2011, sections 5, 6, 9 and Exhibit A of the Settlement Agreement shall be deemed to be forever terminated and of no further force or effect. Buyer and Seller hereby agree that upon consummation of the Final Closing, neither party hereto may enforce rights or obligations under the Settlement Agreement against the other party hereto and immediately following the later to occur of the Final Closing as described in Section 1.1 above or the final closing as described in that certain Stock Transfer Agreement entered into between Buyer and MFA Oil Company, the Settlement Agreement shall terminate and be of no further force or effect except that section 12 of the Settlement Agreement shall survive such termination. The parties agree that neither this Agreement, nor the negotiations and discussions leading up to this Agreement, trigger any rights or obligations under the Settlement Agreement, and to the extent any provisions in this Agreement are inconsistent with or conflict with the terms of the Settlement Agreement, the terms in this Agreement shall control. Except as set forth in this Section 4.1 or elsewhere in this Agreement, all other provisions of the Settlement Agreement (a copy of which is attached hereto as Exhibit B) shall remain in full force and effect through the final patronage payment on October 31, 2015.

4.2 Board Approval. Each party shall cause its officers and representatives to (i) take such steps as are necessary and appropriate, as soon as practicable after the date hereof to call a board meeting to be held no later than December 2, 2011 for the purpose of approving this Agreement and the transactions contemplated herein, and (ii) recommend approval of this Agreement to its board of directors.

4.3 Covenants Regarding Ownership.

(a) Between the date of this Agreement and the Final Closing, Seller shall not: (i) sell, transfer or assign the Sale Stock; or (b) directly or indirectly, solicit, initiate or encourage any inquiries or proposals from, discuss or negotiate with, or provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from, any person (other than Buyer) relating to any transaction involving the sale, transfer or assignment of the Sale Stock.

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(b) On the date hereof, Seller’s senior lender, CoBank, ACB, has a lien on all its Sale Stock and no other mortgages, pledges, liens or encumbrances of any kind exist on the Sale Stock. Prior to each Closing, Seller shall cause the existing lien to be removed with respect to the Sale Stock being transferred at such Closing, and shall provide evidence (satisfactory to Buyer’s counsel) of such removal and the termination of such lien with respect to the Sale Stock to be transferred to Buyer under Section 1.1 at such Closing. Buyer may, if required to remove the existing lien on the transferred Sale Stock, pay all or a portion of the purchase price payment due hereunder to the lien holder. Prior to the Final Closing, Seller shall not allow any new mortgages, pledges, liens or encumbrances of any kind on the Sale Stock, provided, however, Seller may allow an assignment or replacement of the existing security interest as part of a refinancing of its existing debt, and provided, further, that all obligations herein pertaining to the termination of such security interest prior to the transfer of the Sale Stock shall apply to such replacement security interest.

(c) Between the date of this Agreement and the final patronage payment on October 31, 2015, Buyer shall not allow the Company to issue any equity or membership interest in the Company.

4.4 Notification. Between the date of this Agreement and the Final Closing, Seller will promptly notify Buyer in writing if Seller becomes aware of any fact or condition that causes or constitutes a breach of any of Seller’s representations, warranties or covenants in this Agreement or if Seller becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a breach of such representation or warranty or covenant had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition.

4.5 Announcements. Prior to Buyer publicly disclosing this Agreement and the transactions contemplated herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission by filing a Form 8-K or issuing a press release as required by the rules of the NASDAQ Stock Market, no announcement or public statement concerning the existence, subject matter or any term of this Agreement shall be made by or on behalf of any party hereto without the prior written approval of the other party. Seller understands that Buyer is a publicly traded company and that, unless and until this Agreement and the transactions contemplated herein are made public, Seller and each person to whom this Agreement or the transactions contemplated herein is disclosed (which shall only be on a “need to know basis”) may be privy to material, non-public information. Seller has been advised by Buyer and is otherwise aware that applicable securities laws prohibit any person or entity who has received material, non-public information from purchasing or selling securities of Buyer or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of Buyer. Accordingly, Seller understands and shall apprise those to whom it discloses the existence of this Agreement or the transactions contemplated herein of the need for confidentiality and the potential consequences of trading in the securities of Buyer.

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4.6 Patronage. After the date hereof and until this Agreement is terminated, all patronage payments to the shareholders of the Company shall be 100% cash.

4.7 Implementing Synergies. Notwithstanding any provision herein or in the Settlement Agreement to the contrary, Buyer shall have the right to take reasonable steps to implement synergies it identifies, in its reasonable business judgment, between Buyer and the Company; provided, such steps are not economically detrimental to the interests of any member.

4.8 Best Efforts. Between the date of this agreement and the Final Closing, the parties will use their commercially reasonable best efforts to fulfill their obligations hereunder and to cause such conditions to closing identified herein to be timely satisfied.

ARTICLE V

CONDITIONS OF CLOSING

5.1 Board Approval. Each party has as a condition to the Closings that it obtain the approval of its respective board of directors as provided for in this Section 5.1. Each party shall take the appropriate and necessary steps to call a meeting of its Board of Directors for the purpose of approving this Agreement and the transactions contemplated herein on or prior to December 2, 2011. In the event such board meeting is held and the Board fails to approve this Agreement and the transactions contemplated herein, such party may, by written notice to the other party on or prior to December 6, 2011, exercise its right to terminate this Agreement without any further obligation hereunder. In the event that the party does not provide said written notice on or before December 6, 2011, regardless of whether such party has received the appropriate approval of its board of directors, such party will be deemed to have waived its right to terminate under this Section 5.1 and shall thereafter be bound to this Agreement and be obligated to proceed with the Closings described in Article I above.

5.2 Conditions Precedent to Buyer’s Obligation to Close. Buyer’s obligation to purchase the Sale Stock on each of the four Closing Dates is subject to the satisfaction, at or prior to each Closing Date, of each of the following conditions (any of which may be waived by Buyer, in whole or in part):

(a) Accuracy of Representations. All of Seller’s representations and warranties in this Agreement must be accurate in all respects as of the date of this Agreement and as of each Closing Date as if made on such Closing Date.

(b) Seller’s Performance. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to each Closing Date must have been duly performed and complied with in all material respects.

(c) Additional Documents. Seller must have delivered to Buyer such documents as Buyer may reasonably request for the purpose of (i) evidencing the accuracy of any of Seller’s representations and warranties, (ii) evidencing the performance by Seller of, or the compliance by Seller with, any covenant or obligation required to be performed or complied with by the Seller, (iii) evidencing the satisfaction of any condition referred to in this Article V, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement, including, without limitation, the deliverables described in Section 1.2 above.

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(d) No Conflicts. Since the date of this Agreement, there must not have been commenced or threatened against Buyer or Seller, or against any person affiliated with Buyer or Seller, (a) any proceeding involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the contemplated transactions. There must not have been made or threatened by any person any claim asserting that such person is the holder or beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any of the Sale Stock. Neither the consummation nor the performance of any of the transactions contemplated in this Agreement will, directly or indirectly (with or without notice or lapse of time), materially contravene, conflict with, or result in a material violation of, or cause the Buyer to suffer any material adverse consequence under any applicable federal, state, local, municipal or other administrative order, law, ordinance, regulation, statute or treaty. There must not be in effect any legal requirement or any injunction or other order that prohibits the sale of the Sale Stock by Seller to Buyer.

5.3 Conditions Precedent to Seller’s Obligation to Close. Sellers’s obligation to sell the Sale Stock on each of the four Closing Dates is subject to the satisfaction, at or prior to each Closing Date, of each of the following conditions (any of which may be waived by Seller, in whole or in part):

(a) Accuracy of Representations. All of Buyer’s representations and warranties in this Agreement must be accurate in all respects as of the date of this Agreement and as of each Closing Date as if made on such Closing Date.

(b) Buyer’s Performance. All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to each Closing Date must have been duly performed and complied with in all material respects.

(c) Additional Documents. Buyer must have delivered to Seller such documents as Seller may reasonably request for the purpose of (i) evidencing the accuracy of any of Buyer’s representations and warranties, (ii) evidencing the performance by Buyer of, or the compliance by Buyer with, any covenant or obligation required to be performed or complied with by the Buyer, (iii) evidencing the satisfaction of any condition referred to in this Article V, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.

(d) No Conflicts. Since the date of this Agreement, there must not have been commenced or threatened against Buyer or Seller, or against any person affiliated with Buyer or Seller, (a) any proceeding involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the contemplated transactions. Neither the consummation nor the performance of any of the transactions contemplated in this Agreement will, directly or indirectly (with or without notice or lapse of time), materially contravene, conflict with, or result in a material violation of, or cause

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the Seller to suffer any material adverse consequence under any applicable federal, state, local, municipal or other administrative order, law, ordinance, regulation, statute or treaty. There must not be in effect any legal requirement or any injunction or other order that prohibits the sale of the Sale Stock by Seller to Buyer.

ARTICLE VI

TERMINATION

6.1 Termination Events. This Agreement may, by written notice given prior to the Final Closing, be terminated:

(a) by mutual written agreement of Buyer and Seller;

(b) by either Buyer or Seller if a final non-appealable governmental order permanently enjoining or otherwise prohibiting the transactions contemplated hereby has been issued by a governmental authority of competent jurisdiction;

(c) by either Buyer or Seller if a material breach of any provision of this Agreement has been committed by the other party and has not been cured within 30 days of delivery by the non-breaching party of a written notice describing such breach; or

(d) in accordance with Section 5.1 upon the failure of a party to timely obtain board approval.

6.2 Effect of Termination. Except with respect to a termination under Subsection 6.1(c) above, each party’s right of termination under Section 6.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 6.1, all further obligations of the parties under this Agreement will terminate, provided, however, that if this Agreement is terminated by a party because of the breach of the Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of the other party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

ARTICLE VII

MISCELLANEOUS

7.1 No Right to Distributions. Upon the consummation of each Closing, Seller forever releases and waives all its rights and claims with respect to the transferred Sale Stock, including, without limitation, all rights to distributions, dividends, refunds, patronage refunds or other distributions of any kind or nature, whether known or unknown, and however arising, except (i) the final payment of the fiscal year’s patronage to be paid in the October following such Closing, and (ii) the contingent purchase price payments described in Section 1.1.

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7.2 Failure to Deliver Sale Stock. In the event that Seller, having become obligated to sell and transfer Sale Stock to Buyer hereunder, fails to deliver such Sale Stock in accordance with the terms of this Agreement within 5 days of having received written notice from Buyer of such failure, then, without limiting any other rights or remedies that Buyer may have, Buyer (if it has not already delivered to Seller the purchase price payment for such undelivered Sale Stock) may instead deliver such payment to the Company in the form of a certified check or bank check to be held in escrow for the benefit of Seller. Upon Seller’s failure to deliver such Sale Stock within 5 days of Buyer’s delivery of the written notice, all Seller’s rights with respect to such Sale Stock that was to be transferred to Buyer shall be immediately terminated and Seller’s sole right will be to receive the payment held in escrow (provided Seller has not already received payment from Buyer for such Sale Stock). Buyer shall immediately have all the financial and governance rights with respect to such Sale Stock and may request Company to cancel on its books and records Seller’s certificate(s) representing such shares and reissue a new certificate for such Sale Stock in the name of Buyer. Moreover, Seller’s failure to deliver the Sale Stock within 5 days of receiving Buyer’s written notice shall result in an immediate and irrevocable termination of Seller’s right to receive any contingent purchase price payment, as described in Section 1.1, with respect to such undelivered Sale Stock.

7.3 Specific Performance. The parties each acknowledge that the provisions of this Agreement are of a special and unique nature, the breach of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of any such provisions would cause the other party irreparable harm. In the event of a breach or threatened breach of this Agreement by the other party, the non-breaching party will be entitled to injunctive and other equitable relief in addition to any other rights and remedies available to such party for such breach or threatened breach. Nothing in this Section will be construed as prohibiting any party from, or limiting any party in, pursuing any rights and remedies available to such party for any breach or threatened breach of any provision of this Agreement.

7.4 Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior agreements, understandings, negotiations, and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

7.5 Expenses. Each party shall pay its own costs and expenses in connection with the consummation of the transactions contemplated by this Agreement.

7.6 Governing Law; Consent to Jurisdiction. This Agreement will be construed in accordance with and governed by the laws of the State of Kansas applicable to agreements made and to be performed in such jurisdiction without reference to conflicts of law principles. The parties each irrevocably consent that any legal action or proceeding against it under, arising out of or in any manner relating to this Agreement or any other agreement, document or instrument arising out of or executed in connection with this Agreement may be brought only in the federal or state courts sitting in the State of Kansas. The parties further irrevocably consent to the

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service of any complaint, summons, notice or other process relating to any such action or proceeding by delivery thereof to it by hand or by mail in the manner provided for in Section 7.9 hereof. The parties hereby expressly and irrevocably waive any claim or defense in any action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non conveniens or any similar basis.

7.7 Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN, AND AGREE TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

7.8 Assignment. This Agreement shall not be assigned by any party without the prior written consent of the other party; provided, however, that Buyer may assign its rights, but not its obligations, under this Agreement to any subsidiary of the Buyer (other than the Company) and, provided further, either party may assign its rights and obligations hereunder to any successor entity that (i) purchases all, or substantially all of the assets of such party or (ii) merges with or into such party.

7.9 Notices. All communications or notices required or permitted by this Agreement shall be in writing and given (i) by hand delivery in person to an officer of the other party, (ii) by certified or registered mail, postage prepaid, return receipt requested, or (iii) by a nationally recognized overnight courier service. Notices so given shall be effective upon receipt by the party to which notice is delivered, or the date indicated as the delivery date or attempted delivery date when sent by certified mail or registered mail, or 24 hours after such notice is delivered to the nationally recognized courier, prepaid for overnight delivery. All notices shall be addressed as follows, unless and until either of such parties notifies the other in accordance with this Section 7.9 of a change of address:

If to the Seller:	GROWMARK, Inc. Attention: General Counsel 1701 Towanda Avenue Bloomington, IL 61702-2500 Phone: 309-557-6288 Fax: 309-557-6702
If to the Buyer:	CHS Inc. Attention: Lisa Zell, General Counsel 5500 Cenex Drive Inver Grove Heights, MN 55077 Phone: 651-355-6831 Fax: 561-355-4554

7.10 Further Assurances. The Buyer, on the one hand, and the Seller, on the other hand, shall, at its own cost and expense, duly execute and deliver such further instruments and documents and take all such further action, as may be necessary or proper in the reasonable judgment of the requesting party to carry out the provisions and purposes of this Agreement.

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7.11 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same Agreement. Signatures may be executed by facsimile, emailed in .PDF form or exchanged by some other electronic means, and such signatures shall be binding and deemed to be originals.

7.12 Severability. Upon a finding of the invalidity or unenforceability of any particular provision of this Agreement, the remaining provisions hereof will be construed in all respects as if such invalid or unenforceable provisions were omitted unless the exclusion of the invalid or unenforceable provision renders the enforcement of this Agreement grossly unreasonable and impracticable. All provisions of this Agreement will be enforced to the fullest extent permitted by law.

7.13 Third Party Beneficiaries. Except as expressly provided by this Agreement, nothing in this Agreement will confer any rights upon any person or entity which is not a party or permitted assignee of a party to this Agreement.

7.14 Rule of Construction. The parties hereto acknowledge and agree that each has negotiated and reviewed the terms of this Agreement, assisted by such counsel as they desired, and has contributed to its revisions. The parties further agree that the rule of construction that any ambiguities are resolved against the drafting party will be subordinated to the principle that the terms and provisions of this Agreement will be construed fairly as to both parties and not in favor of or against any party. The provisions of this Article VII shall survive any termination of this Agreement.

7.15 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have caused this Stock Transfer Agreement to be duly executed as of the day and year first above written.

*BUYER*
CHS INC.
By:	/s/ Jay Debertin
Its:	Executive VP & COO
*SELLER*
GROWMARK, INC.
By:	/s/ Jeff Solberg
Its:	CEO

EXHIBIT A

Example of Contingent Payment Calculation

	A		B		C		D		E		B + D – E
	Unleaded GRP-3 Platts Low		Adjusted Unleaded GRP-3 Platts Low1		#2ULSD GRP-3 Platts Low		Adjusted #2ULSD Platts  Low2		Crude Nymex $$		Crack Spread $$
September	$	2.7786	$	70.0207	$	2.9849	$	50.1463	$	85.61	$	34.56
October	$	2.7308	$	68.8162	$	3.0172	$	50.6890	$	86.43	$	33.08
November	$	2.6367	$	66.4449	$	3.0631	$	51.4601	$	94.26	$	23.64
December	$	2.6086	$	65.7367	$	3.0490	$	51.2232	$	94.19	$	22.77
January	$	2.6086	$	65.7367	$	3.0329	$	50.9527	$	94.13	$	22.56
February	$	2.6190	$	65.9988	$	3.0260	$	50.8368	$	94.09	$	22.75
March	$	2.6776	$	67.4755	$	3.0231	$	50.7881	$	94.02	$	24.24
April	$	2.7138	$	68.3877	$	3.0086	$	50.5445	$	93.95	$	24.98
May	$	2.6998	$	68.0349	$	2.9871	$	50.1833	$	93.85	$	24.37
June	$	2.6829	$	67.6091	$	2.9852	$	50.1514	$	93.73	$	24.03
July	$	2.6621	$	67.0849	$	2.9833	$	50.1194	$	93.60	$	23.60
August	$	2.6431	$	66.6061	$	2.9879	$	50.1967	$	93.47	$	23.33
		Annual Average Crack Spread Margin									$	25.33
		Crack Spread Target									($	17.50	)
		Avg. Crack over Target									$	7.83

Total Sales or Production:

	BBLS
Gasoline		16,536,000
Distillate		15,457,000
Total		31,993,000

Contingent Price:

Relevant Year August 31st	Sales or Production %			Contingent Payment Based on Year3
2013		3.50000	%	$	8,767,682
2014		7.00000	%	$	17,535,363
2015		7.00000	%	$	17,535,363
2016		11.61625	%	$	29,099,309
2017		8.11625	%	$	20,331,627

¹  Column A x 42 x 60%

²  Column C x 42 x 40%

³  31,993,000 BBLS x Sales or Production % x $7.83

EXHIBIT B

1995 Settlement Agreement

(See Attached)

AGREEMENT

THIS AGREEMENT is dated June 9, 1995, and is among CENEX, INC., a Minnesota cooperative corporation (“CENEX”), GROWMARK, INC., a Delaware corporation (“GROWMARK”), and MFA Oil Company, a Missouri farm marketing cooperative association (“MFA Oil”). In consideration of the agreements set forth herein, CENEX, GROWMARK and MFA Oil (collectively, the “Parties”) hereby agree as follows:

1. BACKGROUND. CENEX, GROWMARK and MFA Oil collectively are the 100% members and owners of National Cooperative Refinery Association, a Kansas cooperative association (“NCRA”), which owns and operates a petroleum refinery near McPherson, Kansas (the “NCRA Refinery”) and related assets. The Parties have had various disputes concerning the governance of NCRA and operations of its business, and those disputes are resolved by entry into this Agreement.

2. GOVERNANCE OF NCRA. From and after the date hereof:

a. Board Composition. NCRA will be governed by a six-member board of directors, four of whom will be appointed by CENEX, one of whom will be appointed by GROWMARK, and one of whom will be appointed by MFA Oil.

b. No Executive Committee. NCRA’s executive committee will be dissolved, and will not be re-constituted unless approved by the unanimous vote of the board of directors and no committee of the NCRA board shall be delegated any of the duties or functions of the board without the unanimous vote of the board of directors.

3. NCRA MANAGEMENT. The parties agree as follows with respect to management of NCRA’s business and operations:

a. General Manager. The day-to-day operations of NCRA and the NCRA Refinery will be managed by a General Manager to be employed by NCRA. The General Manager will report to the NCRA board of directors. The initial General Manager will be selected as soon as practicable by the unanimous vote of the NCRA board of directors. The NCRA board of directors shall use its best efforts to reach a consensus on the appointment of subsequent General Managers.

b. No Management Agreement. NCRA will not enter into any agreement to provide general management of NCRA, unless the agreement is approved by the unanimous vote of the board of directors.

c. Outsourcing. Notwithstanding paragraph 3(b) above, NCRA may, with approval of the board of directors, enter into agreements with one or more organizations or entities, including a member-owner, to provide specified administrative services, such as payroll, accounting or human resources functions, as long as an economic analysis is presented to the board showing that the service agreement is advantageous to NCRA, and is not economically detrimental to any member. The economic analysis to be presented to the board, with supporting documentation, shall be provided to all board members at least 60 days before the board meeting at which such agreement is to be presented, and any member-owner reasonably requesting information relating to the subject of the agreement shall be provided with such information within ten (10) working days of the request of the member-owner. Failure of a member-owner to object to an agreement on the basis of an economic detriment and provide documentation in support of such detriment at the time the agreement is considered by the board of directors, shall be deemed a waiver of the right to object to the agreement. It is the expectation of the Parties that each such agreement shall, if appropriate, be evaluated by the board of directors based upon alternative proposals for such services.

d. No Member Employees. NCRA will not employ any person who is also an employee of any of the member-owners unless such employment is approved by a unanimous vote of the board of directors.

4. NCRA OPERATIONS. It is the intention of the Parties that NCRA be operated fairly for all members. To that end, the Parties agree as follows with respect to the operation of the NCRA Refinery and the business of NCRA:

a. Cooperative Operation. NCRA will continue to operate on a cooperative basis, as contemplated in its Bylaws, and NCRA will continue to allocate and distribute its earnings consistent with its historic patronage policy.

b. Product Allocation and Availability. NCRA will continue to follow historic policies with respect to product allocation, availability, reserves and storage based on ownership.

c. Product Sales and Deliveries. NCRA will sell the products allocated to its member-owners F.O.B. at the NCRA Refinery at time of tender, at prices specified from time to time by NCRA according to the pricing methodology historically in effect for pipeline tender purchases. Scheduling of product deliveries to the member-owners will be made pursuant to policies and procedures that are equitable to all the member-owners.

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d. Relationship to Laurel Refinery. CENEX owns and operates a petroleum refinery located in Laurel, Montana. The Parties agree that the NCRA Refinery will be operated independently of CENEX’s Laurel refinery. However, if opportunities arise for coordination of specific activities or functions at the NCRA Refinery and CENEX’s Laurel refinery, and it can be reasonably demonstrated through economic analysis presented to the NCRA board that such coordination is likely to reduce the costs or increase the profitability of NCRA and will not be economically detrimental to the interest of any member, then the board of directors may approve the coordination of the specific activity or function. The economic analysis to be presented to the board, with supporting documentation, shall be provided to all board members at least 60 days before the board meeting at which such coordination proposal is to be presented, and any member-owner reasonably requesting information relating to the subject of the coordination proposal shall be provided with such information within ten (10) working days of the request from the member-owners. Failure of a member-owner to object to such coordination proposal on the basis of economic detriment and provide documentation in support of such detriment at the time such coordination proposal is considered by board of directors, shall be deemed a waiver of the right to object to such coordination proposal.

e. Fair Treatment. The board of directors of NCRA will treat all of its member-owners fairly without benefitting one member to the detriment of others and will assure that NCRA management does the same.

f. NCRA Mission Statement. The Parties agree that NCRA will be operated to provide the member-owners with a dependable, long-term supply of high quality petroleum products at a competitive price while realizing an adequate rate of return on investment.

g. Capital Expenditures. NCRA will continue to make capital expenditures consistent with historic practice and/or intended to allow NCRA to continue to be a modern and efficient refinery which operates consistently with applicable laws and regulations.

5. BUY-OUT OPTION.

a. Trigger Events. If any one of the following events occurs without the unanimous consent of the board of directors (each being referred to herein as a “Trigger Event”):

i. any change is made in NCRA’s patronage policy as set forth in paragraph 4(a); or

ii. any change is made in NCRA’s product allocation, availability, reserve or storage policy as set forth in paragraph 4(b); or

iii. any change is made in NCRA’s fuel sales and deliveries as set forth in paragraph 4(c); or

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iv. NCRA discontinues operating on a cooperative basis as set forth in paragraph 4(a) above; or

v. Any changes is made in the composition of the board of directors from that contemplated by paragraph 2(a) above; or

vi. NCRA enters into a management agreement, as proscribed in paragraph 3(b) above; or

vii. NCRA sells all or substantially all of its assets in a manner other than an arms length bona fide sale.

then, in any such event, GROWMARK and MFA Oil will each have the right (exercised independently or together) to require CENEX to purchase all of its ownership interests in NCRA at a cash price equal to the fair market value of the ownership interests, as provided in this paragraph 5. If a Trigger Event occurs, in order to exercise its buy-out right, GROWMARK or MFA Oil shall submit a written notice to CENEX within 90 days after the occurrence of the Trigger Event, specifying the Trigger Event and the date it occurred, and indicating the selling member-owner’s irrevocable election to require CENEX to purchase its ownership interests in NCRA and stating the member-owner’s determination of the fair market value of its ownership interests as of the date of the Trigger Event (“Trigger Date”). Within 30 days after the receipt of the selling member-owner’s notice of its determination of fair market value, CENEX shall submit a written notice to the selling member-owner stating either that (i) it denies that a Trigger Event has occurred, in which case the determination of the existence of a Trigger Event and the obligation to arbitrate shall be submitted to the Court pursuant to Section 10 hereof, (ii) CENEX agrees with the member-owner’s determination of fair market value, in which case a closing for the sale and purchase shall be held within 30 days, or (iii) CENEX does not agree with the member-owner’s determination of fair market value, in which case the selling member-owner and CENEX shall submit to binding arbitration to determine the fair market value. If CENEX fails to notify the selling member-owner within the 30-day period, CENEX shall be deemed to have accepted the existence of the Trigger Event and to have elected to submit the matter of fair market value to binding arbitration.

b. Status Quo Preserved. Once a Trigger Event has been determined to have occurred, NCRA shall revert to operating in the manner set forth in paragraph 4 until the Closing Date (as defined below) as if no such event had occurred. It is the intention of the parties that the status quo at NCRA, as set forth in paragraph 4, shall be preserved until the Closing Date.

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c. Election to Purchase Non-selling Member-Owner’s Interest. In the event either Growmark or MFA (but not both) exercise their right under this paragraph 5, CENEX may, at its sole option, elect to purchase the ownership interest of the other member-owner at a price to be mutually agreed upon by the Parties, or in the absence of such agreement, pursuant to arbitration as provided in this paragraph 5. CENEX shall provide the other member-owner with written notice of its intention to exercise its purchase option, and the determination of a selling price and the closing of the purchase shall occur as provided in this paragraph 5 at the same time and in the same proceeding involving the other member-owner.

d. Full Access to Information. All members shall have full and equal access to NCRA’s financial statements, projections and other documents and information relating to the financial condition of NCRA. No member may interfere with any other member’s access to such information.

e. Closing. If the matter is submitted for binding arbitration, the arbitration proceeding shall be conducted in the same manner specified in paragraph 9 below, and a closing for the sale and purchase shall be held within 30 days after the date of the arbitration decision of fair market value (“Closing Date”).

At any closing under this paragraph 5, (i) CENEX will pay to the selling member-owner(s) in cash the fair market value as of the Trigger Date, and (ii) the selling member-owner(s) will transfer to CENEX all of their ownership interests in NCRA, and cause their respective representative on the board of directors to resign, and release their respective rights to further product and patronage allocations from NCRA. If the Trigger Event is a sale under paragraph 5(a)(vii) that has already occurred, at the closing CENEX will pay to the other member-owner(s) the fair market value as of the Trigger Date less the sale proceeds received by the other member-owner(s).

f. Exclusive Remedy. If any Trigger Event occurs, the right of GROWMARK and MFA Oil to exercise the buy-out right specified in this paragraph 5 shall be their sole and exclusive remedy arising from the Trigger Event, except GROWMARK and MFA Oil may obtain other relief through the arbitration if CENEX breaches subparagraph 5(b) above regarding operations between the Trigger Date and the Closing Date.

6. MERGER OR PURCHASE OPTION.

a. Merger or Consolidation. The Parties agree that CENEX (as the majority owner of NCRA) shall retain the right to cause a merger or consolidation involving NCRA and either CENEX, a wholly-owned subsidiary of CENEX or any other entity, to occur, subject to the statutory dissenters and appraisal rights as provided under Kansas Statutes, Section 1642 (or any successor provision).

-5-

b. Voluntary Purchase. GROWMARK and MFA Oil each hereby agree that in lieu of a formal merger CENEX may, at its sole option, elect to purchase the ownership interests of GROWMARK and MFA Oil at a price to be mutually agreed upon by the Parties, or in the absence of such agreement, for fair market value as provided in paragraph 5 above. CENEX shall provide GROWMARK and MFA Oil with written notice stating its intention to elect its purchase option under this paragraph 6, together with CENEX’s written proposal for the purchase price. If CENEX and the minority members are unable to agree upon the purchase price within ninety (90) days after the date CENEX provides notice stating its intention to elect to exercise its rights pursuant to this paragraph 6, then the value shall be determined in arbitration pursuant to the terms of paragraph 5 hereof and the closing of the purchase shall occur as provided in paragraph 5 above. The date CENEX provides its notice of intention to exercise its purchase option shall be the Trigger Date for purposes of applying the terms of paragraph 5.

c. Status Quo Preserved. The status quo at NCRA shall be maintained consistent with paragraph 4 of this Agreement until the Closing Date.

7. TERMINATION OF MEMBERS’ AGREEMNT. The Members’ Agreement dated as of June 15, 1989, among NCRA and the Parties to this Agreement is hereby terminated. The Parties agree to enter into a separate agreement among themselves and NCRA before the Effective Date memorializing the termination of the Members’ Agreement.

8. ARTICLES AND BYLAW AMENDMENTS. The Parties agree to take all actions necessary to cause formal amendments to the Articles of Incorporation and Bylaws of NCRA to be approved and adopted as soon as practicable after the date hereof to give effect to the board of directors composition described in paragraph 2(a) above, to eliminate references to the executive committee, to provide for a General Manager as contemplated in paragraph 3(a) above, and to otherwise conform the Articles of Incorporation and Bylaws to the agreements and principles set forth in this Agreement. The Parties shall agree upon the language of the formal amendments in an addendum to be attached and incorporated into this Agreement by the Effective Date.

9. ARBITRATION. Except as to statutory appraisal proceedings as contemplated by paragraph 6 above or issues of arbitrability as contemplated by paragraphs 5 and 10, any controversy or claim arising out of or related to this Agreement shall be settled by arbitration, and judgment upon the award entered by the arbitrators may be entered in any court having proper jurisdiction. Any party may seek relief in the form of specific performance, injunctive or other equitable relief in order to enforce the decision of the arbitrators. The Parties shall have such additional remedies as may otherwise be provided by law with respect to disputes involving issues which are not addressed by this Agreement.

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Any such arbitration proceeding shall be conducted in Kansas City, Missouri, or in such other location as the Parties may agree. The arbitrators shall apply Kansas law in all arbitrations hereunder, without regard to principles of conflicts of law. In all arbitration proceedings to determine fair market value under paragraphs 5 or 6 above, each party shall bear its own expenses, including attorney’s fees, costs and expenses (including expert fees). In all arbitration proceedings except those to determine fair market value under paragraphs 5 or 6 above, the prevailing party shall be entitled to recover from the losing party all expenses incurred in connection with the arbitration, including all reasonable attorney’s fees, costs and expenses (including expert fees), unless the arbitrators determine that no party is a prevailing party or that other circumstances make an award of expenses unjust. The reasonableness of any fees and expenses awarded shall be determined by the arbitrators.

The procedures to be followed in arbitration conducted under this Agreement are set forth in Exhibit A attached hereto and incorporated herein.

10. COURT JURISDICTION. In the event that a party to this Agreement denies that a dispute or disagreement between the Parties is subject to arbitration, as set forth in Paragraph 9 above, or CENEX denies that a Trigger Event has occurred, as set forth in paragraph 5 above, then in that event, the United States District Court for the District of Kansas, the Honorable John W. Lungstrum, presiding, shall retain jurisdiction to resolve the dispute or disagreement regarding arbitrability.

11. BOARD APPROVAL. This Agreement is subject to approval by the respective board of directors of each of the Parties. The officers or representatives signing this Agreement on behalf of the Parties each agree to recommend such approval to its board of directors, and to use their best efforts to cause this Agreement to be approved by its board of directors as soon as practicable after the date hereof.

12. STIPULATION OF DISMISSAL, RELEASE AND EFFECTIVE DATE. Upon the occurrence of each of the following events: (a) approval of this Agreement by the Board of Directors of each party, as provided for in paragraph 11, (b) termination of the Members’ Agreement by the Parties and NCRA in a separate agreement, as provided for in paragraph 7, and (c) approval by the Parties of the language of Amendments to the NCRA Articles of Incorporation and Bylaws, as provided for in paragraph 8, the Parties shall execute the Stipulation of Dismissal attached hereto as Exhibit B, and the Release attached hereto as Exhibit C, each of which is hereby agreed to in form, and submit this Agreement for approval by Judge Lungstrum, along with the draft Order attached hereto as Exhibit D. The date of execution of the Stipulation of Dismissal and Release shall be the “Effective Date.”

13. MISCELLANEOUS.

a. Amendments. This Agreement may be amended only by a written document signed on behalf of all of the Parties.

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b. Changes in Law. If any change in law or in the interpretation thereof occurs after the date hereof which is inconsistent with the agreements and principles stated herein, the Parties will use their best efforts to mutually agree on changes or amendments to this Agreement in response to the change in law which are as consistent as possible with the spirit of this Agreement, and any such change or amendment to this Agreement will not be deemed to be a Trigger Event.

c. Governing Law. This Agreement shall be governed by the laws of the State of Kansas.

d. Assignment; Binding Effect. This Agreement may not be assigned by any Party without the written consent of the other Parties. This Agreement will be binding upon the Parties and their permitted successors and assigns and shall be binding upon any holder of any NCRA common stock pledged, encumbered, sold, transferred or otherwise disposed of and at the request of NCRA the Parties shall take appropriate actions to provide for the placement of a legend consistent with this provision on all stock certificates evidencing NCRA common stock.

e. Counterparts. This Agreement may be executed in counterpart originals, each of which shall be considered a complete original agreement.

f. Entire Agreement. This Agreement represents the entire agreement and understanding of the Parties hereto with reference to the matters set forth herein (except as to the Articles and Bylaws Amendments in paragraph 8, and the agreement memorializing the termination of the Members’ Agreement in paragraph 7), and no representations, warranties, or covenants have been made in connection with this Agreement other than those expressly set forth herein. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements among the Parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement.

g. Severability. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of the remaining portion, which remaining portion shall remain in force and effect as if this Agreement had been executed with the invalid portion thereof eliminated. It is the intention of the Parties that they would have executed the remaining portion of this Agreement without including any such part which may hereafter be declared invalid.

h. Authority of Signatories. The signatories hereto each represent and warrant that (a) they have full authority to execute this Agreement on behalf of each of the Parties for whom they sign; and (b) they are acting within the course and scope of such authority in executing this Agreement.

i. Waivers. Except as otherwise provided herein, the failure of any Party to enforce at any time any provisions of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part of it or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other breach.

-8-

IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their respective chief executive officers as of the date stated in the first paragraph above.

CENEX, INC.
By:	/s/ Noel K. Estenson
	Its CEO

GROWMARK, INC.
By:	/s/ Norman T. Jones
	Its CEO

MFA OIL COMPANY
By:	/s/ Dale H. Creach
	Its CEO

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STATE OF Minnesota	)
	)	SS.
COUNTY OF Dakota	)

The foregoing was acknowledged before me this 9^th day of June, 1995, by Noel K. Estenson, the CEO of CENEX, INC. on behalf of CENEX, INC.

/s/ Mary L. Just

Notary Public

STATE OF Illinois	)
	)	SS.
COUNTY OF McLean	)

The foregoing was acknowledged before me this 13^th day of June, 1995, by Norman T. Jones, the CEO of GROWMARK, INC. on behalf of GROWMARK, INC.

/s/ R. Stephen Carr

Notary Public

STATE OF Missouri	)
	)	SS.
COUNTY OF Boone	)

The foregoing was acknowledged before me this 13^th day of June, 1995, by Dale H. Creach, the President of MFA OIL COMPANY on behalf of MFA OIL COMPANY.

/s/ Beverly Twellman

Notary Public

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ARBITRATION PROCEDURES

This Appendix sets forth the procedures to be followed in all arbitration conducted pursuant to Paragraphs 5, 6(b) and 9 of the settlement agreement (“Agreement”) entered into as of June 9, 1995 among GROWMARK, Inc., MFA Oil Company, and CENEX, Inc. (collectively the “Parties” and individually “Party”). This Appendix is incorporated by reference in the Agreement and made a part thereof.

1. Applicable Rules. Except as otherwise provided herein, the Center for Public Resources Non-Administered Arbitration Rules (hereinafter “CPR Rules”) in effect from time to time shall govern all arbitrations conducted pursuant to the Agreement. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16.

2. Pre-Arbitration Mediation. In the event that any Party desires to commence an arbitration under the Agreement against any other Party, the initiating Party shall before serving a notice of arbitration pursuant to CPR Rule 3, submit any dispute or controversy subject to arbitration under the Agreement, to mediation as provided below, unless otherwise agreed to by the Parties to that dispute. Such mediation shall be conducted by Hon. Ronald Newman, United States Magistrate Judge for the District of Kansas, or, if Judge Newman is not available, by a mediator agreed to by the Parties to the dispute, or by a mediator appointed by the CPR. The mediation shall be commenced by serving upon the opposing party(ies) and the mediator a demand for mediation. Unless extended by agreement of all parties to the dispute, the parties to the dispute shall have thirty (30) days after service of the notice of mediation to resolve the dispute in mediation. Unless extended by agreement of all parties to the dispute, an arbitration must be commenced by service of a notice of arbitration under CPR Rule 3 thirty (30) days after the demand for mediation.

Exhibit A

3. Selection of Arbitrators. Notwithstanding CPR Rule 5, and unless otherwise agreed by the parties to the arbitration, all arbitrations shall be conducted by a panel of three (3) independent arbitrators selected as provided by CPR Rule 6.4(b), except that no arbitrator selected shall be a current or former director, officer, employee, or agent of any party, or related to any person nor shall the arbitrators be an attorney, employee or former employee of a law firm that has represented one of the member companies. Two of the three arbitrators shall have oil refining industry experience. The parties hereby agree that the CPR shall take such actions as necessary to provide the parties with a panel of arbitrators consistent with the qualifications set forth above. The three arbitrators so selected are referred to herein as the “Tribunal.” All decisions of the Tribunal shall be by majority with all arbitrators participating.

4. Jurisdiction of the Tribunal. The provisions of CPR Rule 8, or any subsequent amendment to the CPR Rules governing the jurisdiction of the Tribunal shall not apply. All issues of arbitrability or the Tribunal’s jurisdiction shall be determined as provided for in Paragraph 10 of the Agreement.

5. Discovery. Each party to an arbitration shall be entitled to make a reasonable demand from the other party(ies) to produce documents likely to lead to discovery of admissible evidence. Each party may serve no more than twenty (20) interrogatories (as defined in the Federal District of Kansas Local Rules). Unless otherwise agreed to by all parties to the arbitration, or otherwise ordered by the Tribunal, all documents shall be produced, and all interrogatories answered, within twenty days of receipt. In arbitration proceedings to determine the fair market value of a Party’s stock, each party shall be entitled

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to take a deposition of each opposing party’s expert witness(es). Prior to the expert deposition, but not less than fifteen (15) days before the scheduled deposition, each party shall provide to each opposing party an expert report which discloses all information required under Rule 26(a)(2) of the Federal Rules of Civil Procedure. No depositions shall be allowed in all other arbitrations, unless permitted by the Tribunal.

6. Hearing. Unless otherwise agreed to by all parties to the arbitration, or otherwise ordered by the Tribunal, a hearing in any dispute shall commence no later than ninety (90) days after selection of the Tribunal.

7. Awards. Awards shall be issued within fourteen (14) days after the conclusion of the hearing. The Tribunal shall provide a written decision explaining the basis and reasoning for its award, and if damages are awarded, the basis for calculating, and the calculation of, the damages.

8. Pre-Award Interest. The Tribunal shall have the authority to award pre-award interest (at the Co-Bank national variable rate) other than in connection with an award establishing the fair market value of a Party’s stock.

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

GROWMARK, INC., a Delaware	)
Corporation, and MFA OIL	)
COMPANY, a Missouri farm marketing	)
Cooperative association,	)	Case NO. 94-2522 JWL
	)
Plaintiffs,	)
	)
v.	)	STIPULATION OF DISMISSAL
	)	WITH PREJUDICE
CENEX, INC., a Minnesota	)
Cooperative association,	)
NOEL K. ESTENSON, ROBERT C.	)
OEBSER, ELROY WEBSTER,	)
LLOYD K. ALLEN, JOHN G.	)
BROSTE, JOEL KOONCE, and	)
DAVID BAKER,	)
	)
Defendants.	)
	)
------------------------------------------------------------------------------	)

The above-entitled matter, having been duly compromised and settled by and between the parties hereto, it is hereby stipulated and agreed by and between the attorneys for the respective parties pursuant to a Settlement Agreement:

1. That the Settlement Agreement among CENEX, Inc., GROWMARK, Inc. and MFA Oil Company, a true and correct copy of which is attached hereto as Exhibit A, be approved by this Court,

2. That the Court dismiss with prejudice this action, and without costs to any party,

Exhibit B

3. That the Injunction entered by this Court on February 10, 1995, be dissolved, and

4. That the Court retain jurisdiction over this matter for the purpose of enforcing the arbitration provision of the parties’ Settlement Agreement.

DATED:                         , 1995	DOHERTY, RUMBLE & BUTLER PROFESSIONAL ASSOCIATION
	By:
		Boyd H. Ratchye Minnesota Atty. Reg. No. 89746 David G. Martin Minnesota Atty. Reg. No. 67994
	2800 Minnesota World Trade Center 30 East Seventh Street St. Paul, Minnesota 55101-4999 (612) 291-9333
	Attorneys for CENEX, Inc., a Minnesota Cooperative Association, Noel K. Estenson, Robert C. Oebser, Elroy Webster, Lloyd K. Allen, John G. Broste, Joel Koonce and David Baker
DATED:                     , 1995	SONNENSCHEIN NATH & ROSENTHAL
	By:
		Alan S. Gilbert
	8000 Sears Tower Chicago, IL 60606-6404 (312) 876-8000
	Attorneys for GROWMARK, Inc., a Delaware Corporation and MFA Oil Corporation, a Missouri farm marketing cooperative association

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

GROWMARK, INC., a Delaware	)
Corporation, and MFA OIL	)
COMPANY, a Missouri farm marketing	)
Cooperative association,	)	Case NO. 94-2522 JWL
	)
Plaintiffs,	)
	)
v.	)
	)
CENEX, INC., a Minnesota	)	RELEASE
Cooperative association,	)
NOEL K. ESTENSON, ROBERT C.	)
OEBSER, ELROY WEBSTER,	)
LLOYD K. ALLEN, JOHN G.	)
BROSTE, JOEL KOONCE, and	)
DAVID BAKER,	)
	)
Defendants.	)
	)
------------------------------------------------------------------------------	)

WHEREAS, the above-named parties are desirous of compromising and settling their differences; and

WHEREAS, an Agreement by and between CENEX, Inc., a Minnesota cooperative association (“CENEX”), GROWMARK, Inc., a Delaware corporation (“GROWMARK”), and MFA Oil Company, a Missouri farm marketing cooperative association (“MFA Oil”), has been negotiated and entered into by and between these companies, to settle their differences with respect to the operations of National Cooperative Refinery Association, a Kansas Cooperative association (“NCRA”), a true and correct copy of which is incorporated hereto and made a part herein by reference as Exhibit A; and

Exhibit C

WHEREAS, it is the intent of the parties to this Release that entry into the Agreement shall be and is consideration for settlement of any and all claims by and between the parties;

NOW, THEREFORE, in consideration of entry into the Agreement, the above-named parties hereby mutually release and forever discharge one another and their employees, agents and attorneys, and their heirs, successors and assigns, from each and every claim, known or unknown, arising out of or in any way related to the allegations and causes of action as set forth and alleged in the pleadings in the above-captioned action, being Case No. 94-2522 JWL, in the United States District Court for the District of Kansas, including claims that have been dismissed from said action, which claims, inclusive of claims for costs and disbursements, attorney’s fees and actual and punitive damages, are hereby mutually released and forever discharged.

This Release incorporates and is inclusive of any and all claims or causes of action, known or unknown, whether in equity or law, which were alleged or could have been alleged, by any of the parties hereto, jointly or singly, arising out of the events as alleged in the pleadings hereto, through and inclusive of the date of the execution of this Release.

It is understood and agreed by and between the parties hereto, that this Release is entered into and made on behalf of each person, corporation or cooperative association, and each person, corporation or cooperative association’s predecessors in interest, successors in interest or heirs and assigns, and that this Release shall enure to the benefit of all.

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This Release shall not be effective until the Agreement among CENEX, GROWMARK and MFA Oil is approved by the United States District Court for the District of Kansas.

It is further understood that upon court approval of the Agreement among CENEX, GROWMARK and MFA Oil, the Court’s injunction shall be dissolved in its entirety and it shall have no further force or effect as to the individuals named herein or the corporate signatories hereto.

GROWMARK, INC.

I,                              (print name), hereby execute this Agreement and certify that I am the                              (title) of GROWMARK, Inc., and that I am authorized to sign on behalf of GROWMARK, Inc.

DATED:                     , 1995
	By:	Norm Jones
	Its:

MFA OIL COMPANY

I,                              (print name), hereby execute this Agreement and certify that I am the                              (title) of MFA Oil Company, and that I am authorized to sign on behalf of MFA Oil Company.

DATED:                     , 1995
	By:	Dale Creach
	Its:	CEO

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CENEX, INC.

I,                              (print name), hereby execute this Agreement and certify that I am the                              (title) of CENEX, Inc., and that I am authorized to sign on behalf of CENEX, Inc.

DATED:                     , 1995
	By:	Noel K. Estenson
	Its:	CEO
DATED:                     , 1995
	Robert C. Oebser
DATED:                     , 1995
	Elroy Webster
DATED:                     , 1995
	Lloyd K. Allen
DATED:                     , 1995
	John G. Broste
DATED:                     , 1995
	Joel Koonce
DATED:                     , 1995
	David Baker
DATED:                     , 1995
	Noel K. Estenson

-4-

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

GROWMARK, INC., a Delaware	)
Corporation, and MFA OIL	)
COMPANY, a Missouri farm marketing	)
Cooperative association,	)	Case NO. 94-2522 JWL
	)
Plaintiffs,	)
	)
v.	)
	)
CENEX, INC., a Minnesota	)	ORDER
Cooperative association,	)
NOEL K. ESTENSON, ROBERT C.	)
OEBSER, ELROY WEBSTER,	)
LLOYD K. ALLEN, JOHN G.	)
BROSTE, JOEL KOONCE, and	)
DAVID BAKER,	)
	)
Defendants.	)
	)
------------------------------------------------------------------------------	)

The above-entitled matter, having been duly compromised and settled by and between the parties hereto, and the parties having submitted a Stipulation and Dismissal with Prejudice, IT IS HEREBY ORDERED:

1. That the Settlement Agreement among CENEX, Inc., GROWMARK, Inc. and MFA Oil Company, a true and correct copy of which is attached hereto as Exhibit A, is approved by this Court,

2. That the Court dismisses with prejudice this action, without costs to any party,

Exhibit D

3. That the Injunction entered by this Court on February 10, 1995, is hereby dissolved, and

4. That the Court retains jurisdiction over this matter for the purpose of enforcing the arbitration provision of the Settlement Agreement between CENEX, Inc., GROWMARK, Inc. and MFA Oil Company.

DATED:                     , 1995

Honorable John W. Lungstrum

Judge of the United States District Court

For the District of Kansas

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AMENDMENT

This is an Amendment to the Agreement dated June 9, 1995 (the “Agreement”) by and among CENEX, Inc., a Minnesota cooperative corporation, GROWMARK, Inc., a Delaware corporation, and MFA Oil Company, a Missouri farm marketing cooperative association (collectively, the “Parties”). The Parties hereby agree as follows:

1. Paragraphs 7 and 12 of the Agreement are amended to eliminate the requirement that NCRA agree to terminate the Members’ Agreement prior to the execution of the Stipulation of Dismissal and Releases and the submission of the Agreement for approval by Judge Lungstrum called for under Paragraph 12 of the Agreement. This Amendment does not affect the parties’ obligation to execute the Termination Agreement terminating the Members’ Agreement as set forth in paragraphs 7 and 12 of the Agreement.

2. The Parties agree to present to the NCRA Board of Directors and have each of the Parties’ NCRA board representatives vote for NCRA’s approval of the Termination Agreement executed by the Parties and to require that NCRA execute the Termination Agreement within 60 days of the Effective Date of the Agreement.

3. This Amendment may be executed in counterpart originals, each of which shall be considered a complete original agreement.

IN WITNESS WHEREOF, the Parties to the Agreement have caused this Amendment to be signed by their respective officers as of the dates set forth below.

Dated: June 22, 1995	CENEX, INC.
	By:	/s/ Noel K. Estenson
		Its Chief Executive Officer
Dated: June 23, 1995	GROWMARK, INC.
	By:	/s/ Norman T. Jones
		Its Chief Executive Officer
Dated: June 23, 1995	MFA OIL COMPANY
	By:	/s/ Dale H. Creach
		Its President

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ADDENDUM

THIS ADDENDUM to the Agreement dated June 9, 1995 by and among CENEX, INC., a Minnesota cooperative corporation, GROWMARK, INC., a Delaware corporation, and MFA OIL COMPANY, a Missouri farm marketing cooperative association is made effective June 21, 1995.

1. ARTICLES AMENDMENTS. The amendments to the Articles of Incorporation of NCRA required by paragraph 8 of the Agreement shall be the amendments contained in the Restated and Amended Articles of Incorporation of National Cooperative Refinery Association attached hereto as Exhibit A.

2. BYLAW AMENDMENTS. The amendments to the Bylaws of NCRA required by paragraph 8 of the Agreement shall be the amendments contained in the Bylaws of National Cooperative Refinery Association attached hereto as Exhibit B.

3. APPROVAL OF AMENDMENTS. The Parties to the Agreement agree to present and approve the amendments as set forth in Exhibits A and B.

4. COUNTERPARTS. This Addendum may be executed in counterpart originals, each of which shall be considered a complete original agreement.

IN WITNESS WHEREOF, the Parties to the Agreement have caused this Addendum to be signed by their respective officers as of the effective date set forth above.

CENEX, INC.
By:	/s/ Noel K. Estenson
	Its Chief Executive Officer
GROWMARK, INC.
By:	/s/ Norman T. Jones
	Its Chief Executive Officer
MFA OIL COMPANY
By:	/s/ Dale H. Creach
	Its President

Exhibit A

RESTATED AND AMENDED ARTICLES OF INCORPORATION

OF

NATIONAL COOPERATIVE REFINERY ASSOCIATION

KNOW ALL MEN BY THESE PRESENTS:

National Cooperative Refinery Association, a Kansas cooperative marketing association, originally incorporated on July 7, 1943 (the date of filing of its original Articles of Incorporation with the Office of the Secretary of State of Kansas), pursuant to the provisions of K.S.A. 1994 Supp. 17-1608 and K.S.A. 17-6605, hereby adopts restated Articles of Incorporation and amends its Articles of Incorporation, which restatement and amendment restates and integrates and also further amends the Articles of Incorporation as heretofore restated, amended or supplemented.

Such restatement and amendment made by these Restated and Amended Articles of Incorporation have been effected in conformity with the provisions of K.S.A. 1994 Supp. 171608 and K.S.A. 17-6605. At a regular meeting of the Board of Directors of the Association held on the      day of                 , 1995, the Board duly adopted resolutions setting forth the restatement and amendments hereafter set out to the Articles of Incorporation of the Association and declared the advisability of proposing such resolutions to the stockholders of the Association for their consideration of the adoption of the same. Thereafter, pursuant to said resolutions and in accordance with the Bylaws and the laws of the State of Kansas, said resolutions were presented at a special meeting of the stockholders for their consideration of said restatement and amendment, and thereafter, pursuant to due notice to all of the stockholders and in accordance with the statutes of the State of Kansas, on the      day of                 , 1995, said stockholders met and convened and considered said proposed restatement and amendment. Such restatement and amendment made by the Restated and Amended Articles of Incorporation were duly adopted by the stockholders of the Association on that date.

The Articles of Incorporation are hereby superseded by the following Restated and Amended Articles of Incorporation.

I

The name of the Association shall be NATIONAL COOPERATIVE ASSOCIATION.

II

The Association is organized as a non-profit association under the Cooperative Marketing Act, and it may serve any or all of the purposes expressed in Article 16, Chapter 17, Kansas Statutes Annotated, and, in particular it may engage in any activity in connection with the marketing or selling of the agricultural products of its stockholders, or with the harvesting, threshing, milling, preserving, drying, processing, canning, packing, storing, handling, shipping, or utilization thereof, or the manufacturing or marketing of the byproducts thereof, or in connection with the manufacturing, selling, or supplying to its stockholders of machinery, equipment, or supplies, or in financing of any of the said activities.

III

The registered office of the Association is located at 534 South Kansas Avenue, Topeka, Shawnee County, Kansas 66603, and the Association’s resident agent at such address is The Corporation Company, Inc.

IV

The Association is to exist to July 7, A.D. 2043.

V

The Association shall have six (6) directors. Four (4) directors shall be appointed by CENEX, Inc., a Minnesota cooperative corporation, one (1) director shall be appointed by GROWMARK, Inc., a Delaware corporation, and one (1) director shall be appointed by MFA Oil Company, a Missouri farm marketing cooperative association. Each of the aforementioned NCRA stockholders shall so appoint the directors at the NCRA annual meeting. A stockholder may at any time remove any director appointed by it and appoint a new director by giving written notice of such removal and appointment to the Association. A director may be removed only by action of the stockholder which appointed such director. Vacancies on the Board of Directors shall be filled by the stockholder which is entitled to appoint such director appointing a new director by giving written notice of such appointment to the Association. The appointment and removal rights herein shall be exercisable by any successor, assignee or transferee of any of the aforementioned stockholders that holds all of the stockholder’s stock in the Association. When the appointments have been made in accordance with this Article V, those appointed shall be deemed to be elected as the members of the Board of Directors. The terms of office of the directors shall be one (1) year from the time of their election and until their successors are elected and qualified.

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VI

The authorized capital of the Association shall be the sum of $270,000,000.00, and the Association shall be authorized to issue capital stock as follows:

a. Preferred shares of stock may be issued in the total sum of $3,500,000.00, the same to be divided into 140,000 shares of stock with a par value of $25.00 each. The Preferred Stock shall have no voting rights or powers and shall not participate in the management of the affairs of the Association. In case of dissolution or liquidation of the Association, the owners of the Preferred shares shall be entitled to receive the par value of their stock, plus any accrued and unpaid dividends thereon, before any payment or distribution is made to the holders of the Common Stock. Noncumulative annual dividends may be paid upon the Preferred Stock in such amount, and in such manner, as shall be fixed in the Bylaws. Preferred shares may be retired, in whole or in part, by the Board of Directors at any time by the mailing of notice thereof to the holder to his last known address. Thereafter, upon surrender of the stock certificate, the Association shall pay the holder thereof the par value thereof plus any declared but unpaid dividends. The Board of Directors may determine which particular shares shall be retired.

b. Common Stock, Class A, may be issued in the total sum of $10,000.00 divided into 100 shares of stock with a par value of $100.00 each. Each common stockholder of the Association shall own at least one (1) share of the said stock. Holders of Class A Common Stock shall be entitled to cast one (1) vote for each of their shares of Class A Common Stock, except for the purpose of appointing directors in which case the procedure set forth in Article V shall govern. No dividends shall be payable thereon. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be stockholders of Common Stock, Class A.

c. Common Stock, Class B, may be issued in the total sum of $236,490,000.00 to be divided into 2,364,900 shares with a par value of $100.00 each. Said stock shall be coordinate with the Class A Common Stock of the Association in every respect. Holders of Class B Common Stock shall be entitled to cast one (1) vote for each of their shares of Class B Common Stock, except for the purpose of appointing directors in which case the procedure set forth in Article V shall govern. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be stockholders of Common Stock, Class B.

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d. Common Stock, Class C, may be issued in the sum of $30,000,000.00 to be divided into 300,000 shares with a par value of $100.00 each. Holders of Class C Common Stock shall have no voting rights with respect to such shares. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be stockholders of Common Stock, Class C.

VII

The provisions of the Kansas general corporation code and all powers and rights thereunder shall apply to the Association except where such provisions are in conflict with, or inconsistent with, the express provisions of Article 16, Chapter 17, Kansas Statutes Annotated and the amendments thereto from time to time.

IN WITNESS WHEREOF, the undersigned officers of the Association have hereunto set their hands and caused the seal of the Association to be affixed hereto this      day of                 , 1995.

NATIONAL COOPERATIVE REFINERY ASSOCIATION
By
	Noel K. Estenson, Chairman of the Board

ATTEST

Norman T. Jones, Secretary

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STATE OF	)
	)ss:
COUNTY OF	)

The foregoing instrument was acknowledged before me this      day of                 , 1995, by Noel K. Estenson, Chairman of the Board, and Norman T. Jones, Secretary, of National Cooperative Refinery Association, a Kansas cooperative marketing association, on behalf of the Association.

Notary Public

My appointment expires:

(SEAL)

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Exhibit B

BYLAWS

OF

NATIONAL COOPERATIVE REFINERY ASSOCIATION

(As Amended Effective                     , 1995)

NAME

Section 1. Name. The name of this cooperative corporation shall be NATIONAL COOPERATIVE REFINERY ASSOCIATION.

STOCKHOLDERS

Section 2. Qualifications of Common Stockholders. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be common stockholders. The transfer of the Common Stock of the Association to persons not engaged in the production of agricultural products handled by the Association is prohibited, and such restrictions shall be printed upon every certificate of the Common Stock.

Section 3. Stockholder Business. The Association shall not deal in products of, or supplies for, persons who are not common stockholders to an amount greater in value than such as are handled for its common stockholders.

Section 4. Voting. The holders of Class A Common Stock and Class B Common Stock shall be entitled to cast one (1) vote for each of their shares of Class A Common Stock and Class B Common Stock, except for the purpose of appointing directors in which case Article V of the Association’s Restated and Amended Articles of Incorporation shall govern. All shares of the Association’s Class A Common Stock and Class B Common Stock shall be voted together as a single class. No class of stock of the Association other than Class A Common Stock and Class B Common Stock @ have voting rights.

SAVINGS AND OVERCHARGES

Section 5. Distribution. This Association shall at all times be operated as a non-profit cooperative Association in accordance with the provisions of the Cooperative Marketing Act of Kansas, as amended, for the purpose of furnishing crude petroleum, and refined petroleum products, at cost, to its common stockholders and subsidiaries and nominees of any of them, collectively hereinafter referred to as patrons; provided, however, that not to exceed fifty percent (50%), in value, of its total volume of business, exclusive of byproducts sales, in any fiscal year, may be transacted with any other customer or customers. Scheduling of product deliveries to patrons will be made pursuant to policies and procedures that are equitable to all patrons. The Association will sell the products allocated to its patrons F.O.B. at the Association’s refinery at time of tender, at prices specified from time to time by the Association according to the methodology historically in effect for pipeline tender purchases. Prices charged to patrons for products shall be uniform, except for such differences as may be attributable to differentials based upon grade, quality, place of delivery, and place of distribution. The excess, if any, of such prices over and above the actual cost to the Association of the goods and services supplied to such patrons shall belong to, and be refunded to, such patrons in proportion to their patronage as soon as may be practicable after the close of each fiscal year, or oftener if the Board should so order. The amount of any such overcharge shall at all times be the property of the patron to which it is refundable and shall at no time be the property or income of the Association.

The following procedure shall be employed for the purpose of determining the amount of such refund payable to each of the said patrons. As soon as may be practicable after the close of each fiscal year, or more often if the Board should so order, the total net savings of the Association for such year shall be determined in accordance with generally accepted accounting principles and practices adjusted for increases or decreases required in accordance with the applicable rules and regulations for the purpose of computing income taxes. From the total net savings thus ascertained, there shall be deducted the amount of any dividends payable upon the outstanding capital stock of the Association. From the remaining amount of net savings, there shall be deducted the net profit attributable to business done which is not with or for patrons, and the balance of net savings attributable to business done with or for patrons shall represent the refund due such patrons and shall be apportioned and distributed among them in the proportion that the volume of sales to each of such patrons during the said fiscal year bears to the total volume of sales to all such patrons during such year, either by departments or as a whole, as may be determined by the Board of Directors from time to time. The Association is obligated to make payments of the amounts so determined to the patrons by way of refunds or by way of credits to the capital account of each patron. The books and records of the Association shall be set up and kept in such a manner that at the end of each fiscal year the amounts of capital, if any, so furnished by each patron is clearly reflected and credited in an appropriate record to the capital accounts of each patron. The Association shall within 8-1/2 months after the close of each fiscal year notify each patron, in the form (to be determined by the Board of Directors) of a written notice of allocation (as defined in 26 U.S.C. 1388) of the amount of capital so credited to his or its account. Any remaining net savings not required to be distributed as dividends or as refunds to patrons shall constitute property and income of the Association subject to such distribution as may be required by law or, in the absence of any such requirement, as may be determined by the Board of Directors after making due provision for the payment of income taxes thereon.

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Each person who hereafter applies for and is accepted as a common stockholder in this Association and each person who is a common stockholder of this Association on the effective date of this Bylaw who continues as a common stockholder after such date shall, by such act alone, consent that the amount of any distributions with respect to his or its patronage occurring after June 30, 1963, which are made in qualified written notices of allocations (as defined in 26 U.S.C. 1388) and which are received from the Association, will be taken into account by him or it at their stated dollar amounts in the manner provided in 26 U.S.C. 1385(a) in the taxable year in which such written notices of allocation are received by him or it.

The Association shall have a first lien on all shares of its Class B Common Stock and Class C Common Stock held by stockholders of the Association, and, where applicable, upon all distributions declared upon the same and upon all patronage refunds, for any indebtedness of the respective holders of Class B Common Stock and Class C Common Stock to the Association whether due or to become due, whether now existing or which may hereafter be created, whether contingent or fixed and whether primary or secondary.

Each common stockholder shall file in the registered office of the Association a written acknowledgment that the common stockholder has been provided a copy of this Bylaw and has consented thereto.

Section 6. Revolving capital. For the purpose of enabling the Association to obtain additional capital with which to carry on its operations, and for the purpose of enabling it to retire such capital in the order of its initial accumulation by years, the Association is authorized to issue and sell its Class B Common Stock or Class C Common Stock in payment of the foregoing patronage overcharges. The business of the patrons of the Association shall be transacted on the condition that the Board of Directors of the Association may pay the full amount of the aforesaid overcharges due and payable to the said patrons in such Common Stock. For such purposes the Association is authorized to pay such overcharges with respect to patronage overcharges to be apportioned and distributed to patrons pursuant to the procedure set forth in the preceding Section in Class B Common Stock at its face value with the same purpose and effect as if they had been paid in cash to such patrons and such patrons had returned such cash to the Association in payment of such stock. Likewise, if the Board of Directors of the Association shall have theretofore authorized any patron to purchase crude petroleum or refined petroleum products in quantities greater than such patron would have otherwise been entitled to purchase based upon such patron’s percentage ownership of Class B Common Stock, for such purposes the Association is authorized to pay such overcharge with respect to such excess purchases in Class C Common Stock at its face value with the same purpose and effect as if they had been paid in cash to such patrons and such patrons had returned such cash to the Association in payment of such stock. Capital arising from the issuance of such stock shall be used for the purpose of creating a revolving capital fund to finance the operations of the Association, and for the purpose of revolving such capital when, in the opinion of the Board of Directors, the financial condition of the Association will permit. When the Board of Directors so determines, the portion of the patronage overcharges available for such purpose shall be devoted to the retirement of the oldest outstanding certificates of such Common Stock by

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years. Such certificates may contain such other terms and conditions not inconsistent herewith as may be prescribed from time to time by the Board of Directors. They shall be issued in annual series and each such series may be retired in whole or in part on a pro rata basis, but only at the discretion of the Board of Directors, and only in the order of issuance by years. Upon the dissolution of the Association in any manner, after the payment of all secured and unsecured indebtedness and the retirement of all Preferred Stock at par, plus any dividends declared thereon and unpaid, the said Common Stock shall be retired together with Class A Common Stock on a coordinate basis by share.

If at any time the Board shall determine that the financial condition of the Association will not be impaired thereby, the capital then credited to patrons’ accounts, in form other than Class B Common Stock or Class C Common Stock, provision for revolvement and retirement of which is provided above, may be retired in full or in part. Any such retirement of capital shall be made in order of priority according to the year in which the capital was furnished and credited with respect to such class of stock, the capital first received and credited by the Association being first retired.

Section 7. Classes of Common Stock. Each common stockholder of the Association shall own at least one (1) share of the Class A Common Stock. The Class A Stock shall be issued only for a cash consideration of $100.00 per share. The Class B Common Stock and Class C Common Stock may be issued only to common stockholders of the Association and may be issued for cash or for the purpose of paying to the common stockholders their respective proportions of patronage overcharges in accordance with the preceding section. The Class B Common Stock and Class C Common Stock shall be issued in annual series designated on the face of the certificate in accordance with the fiscal year in which such patronage overcharges accumulate. No dividends shall be payable on any class of Common Stock.

MEETINGS

Section 8. Annual Meeting. There shall be an annual meeting of the stockholders of the Association. It shall be held either within or outside of the State of Kansas at such time and at such place as shall be determined by the Board of Directors.

Section 9. Special Meetings. Special meetings of the stockholders of the Association may be called at any time by the order of the Board of Directors and shall be called by the Chairman of the Board whenever two (2) common stockholders shall make such request. The request shall state the object of the meeting.

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Section 10. Notice of Meeting. Notice shall be given by the Secretary of all meetings of the stockholders by mailing a notice thereof to each stockholder not less than ten (10) days preceding the date of the meeting. When common stockholders request a special meeting, notice of the time, place and purpose thereof shall be issued within ten (10) days from and after the presentation of the petition and such special meeting shall be held within thirty (30) days from and after the date of presenting the petition.

Section 11. Quorum. A majority of the common stockholders shall constitute a quorum.

Section 12. Order of Business. The order of the business at the annual meetings, and so far as possible at all other meetings of the stockholders, shall be:

1. Calling of roll,

2. Proof of notice of meeting,

3. Reading and disposal of all unapproved minutes,

4. Annual reports of officers and committees,

5. Unfinished business,

6. New business,

7. Election of directors.

DIRECTORS AND OFFICERS

Section 13. Directors. The business affairs of the Association shall be managed and controlled by its Board of Directors. Directors shall be elected by the stockholders as set forth in Article V of the Association’s Restated and Amended Articles of Incorporation.

Section 14. Meetings. The organization meeting of the directors shall be held immediately following the annual meeting of the stockholders at which the directors are elected and at the same place. in addition thereto, regular meetings of the Board of Directors shall be held quarter annually or at such other times and at such places as the Board may determine. Special meetings shall be held whenever called by the Chairman of the Board and shall be called on the written request of any two (2) members of the Board; and any and all business may be transacted at such meetings. Notice of the time and place of all meetings, other than the organization meeting, shall be given to each director at least seven (7) days in advance of the meeting, if by mail, or at least forty eight (48) hours in advance of the meeting if by telephone or telegraph. A majority of the Board shall constitute a quorum.

Section 15. Compensation. For his attendance at any meeting of the Board of Directors and for all time spent upon business of the corporation, each director shall receive an allowance of Five Hundred Dollars ($500.00) per day, unless he is a salaried officer, and actual expenses.

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Section 16. Officers. Officers of the Association shall consist of a Chairman, a Vice-Chairman, a General Manager, a Secretary and a Treasurer, which latter two offices may be held by one person, and such other officer or officers as the Board may determine, and shall be elected annually by the Board of Directors.

Section 17. Duties of the Chairman. The Chairman shall preside over all meetings of the stockholders of this Association and all meetings of its Board of Directors. He shall perform all acts and duties usually performed by a presiding officer. He shall sign on behalf of this Association all stock certificates and other instruments in writing within the framework of policies adopted by the Board of Directors. He shall perform any other duties in carrying out the policies adopted by the Board of Directors that may be prescribed by the Board of Directors.

Section 18. Duties of the Vice-Chairman. In the absence of the Chairman, the Vice-Chairman shall perform the duties of the Chairman; provided, however, that in case of death, resignation, or disability of the Chairman, the Board of Directors may declare the office vacant and elect his successor.

Section 19. General Manager. The Board of Directors shall select, employ, and fix the compensation of the General Manager. The General Manager shall be responsible for the efficient conduct of all of the Association’s affairs subject to the policies and determinations of the Board of Directors from time to time. To that end he shall keep the Board reasonably informed at all times on all matters substantially involving the policies or well-being of the Association. He shall have authority to sign on behalf of the Association all contracts, checks, or other instruments in writing within the framework of policies adopted by the Board of Directors; and he may delegate such authority on particular matters as in his discretion is required for efficient operation of the Association’s affairs. He shall perform such other duties as may be prescribed by the Board from time to time.

Section 20. Duties of the Secretary. The Secretary shall keep a complete record of all meetings of the Association and of the Board of Directors. He shall sign all stock certificates with the Chairman and such other papers pertaining to the Association as he may be authorized or directed to sign by the Board of Directors. He shall serve all notices required by law and by these Bylaws. He shall keep the corporate seal, the books and blank stock certificates, and complete and countersign all certificates issued, and affix the corporate seal to all papers requiring a seal. He shall keep complete stock certificate records. He shall make all reports required by law and shall perform such other duties as may be required of him by the Association or the Board of Directors. Upon the election of his successor, the Secretary shall turn over to him all books and other property belonging to the Association that he may have in his possession.

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Section 21. Duties of the Treasurer. The Treasurer shall perform such duties with respect to finances of the Association as may be prescribed by the Board of Directors.

Section 22. No Delegation. The Board of Directors shall not delegate any of its duties or functions to any committee, including any executive committee, without the unanimous vote of the directors.

MISCELLANEOUS

Section 23. Fiscal Year. The fiscal year of this Association shall begin on October 1 and end on September 30 of each year.

Section 24. Audits. The books of this Association shall be audited promptly after the close of the fiscal year and as often in addition thereto as the Board of Directors may prescribe. The annual audit shall be reported to the stockholders at the annual meeting.

Section 25. Amendments. The right to make, alter, or repeal these Bylaws is vested in the Board of Directors, subject to the right of the common stockholders to make, alter, or repeal the same.

Section 26. Indemnification Provision. The indemnification provision of Kansas Statutes Annotated 17-6305(a) to (f) inclusive, and any amendments thereto, shall be applicable as a matter of right to every person who is or was a director, officer, department head, or other employee regularly engaged in supervisory activity for the Association or for any other corporation or enterprise under authority from the Association.

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EX-10.3

Exhibit 10.3

STOCK TRANSFER AGREEMENT

BY AND BETWEEN

CHS INC.,

and

MFA OIL COMPANY

DATED AS OF NOVEMBER 17, 2011

STOCK TRANSFER AGREEMENT

THIS STOCK TRANSFER AGREEMENT (this “Agreement”) is made as of this 17^th day of November, 2011 by and between MFA Oil Company, a Missouri cooperative association (“Seller”) and CHS Inc., a Minnesota cooperative corporation (“Buyer”).

RECITALS

WHEREAS, Seller owns 3 shares of Class A common stock and 954,581 shares of Class B common stock of National Cooperative Refinery Association (the “Company”), a Kansas cooperative association (together, Seller’s Class A common stock and Class B common stock represent approximately 6.9551% of the Company’s outstanding capital stock and shall be referred to herein as the “Sale Stock”);

WHEREAS, the Company owns and operates a petroleum refinery near McPherson, Kansas, a terminal in Council, Bluffs, Iowa, pipelines and related assets;

WHEREAS, Buyer owns, as of the date hereof, Class A and Class B common stock of the Company representing approximately 74.429% of the Company’s outstanding capital stock;

WHEREAS, Seller and Buyer are parties to that certain Agreement dated June 9, 1995 that, among other things, contains certain provisions relating to their ownership and management rights in the Company (the “Settlement Agreement”); and

WHEREAS, Seller desires to sell, and Buyer desires to purchase, all the Sale Stock on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the Recitals and of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed that:

ARTICLE I

PURCHASE AND SALE

1.1 Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, Buyer shall purchase from Seller, and Seller shall sell, transfer and assign to Buyer all its rights in interests to all the Sale Stock, free and clear of all liens and encumbrances (except for Permitted Liens as described in Section 2.3 below), in four distinct closings (“Closings”). At each Closing, Buyer shall pay a base purchase price of $100 per share. In addition, Seller shall be entitled to receive up to two contingent purchase price payments following each Closing, depending upon certain conditions as described below and as more fully described in Exhibit A hereto (the dates on which a contingent payment is due being defined as “Contingent Payment Dates”). If the Contingent Payment Date falls on a Saturday or Sunday, the payment shall be made on the Monday that immediately follows the Contingent Payment Date. Whether or not Seller is entitled to receive a payment on a Contingent Payment Date shall be determined by whether or not the Average Crack Spread Margin (as defined below) over the 12-month period ending on August 31 of the calendar year in which such Contingent Payment Date falls exceeds $17.50 (the “Target Crack Spread”). If the Average Crack Spread Margin for the relevant period is less than or equal to the Crack Spread Target, Seller shall not receive a payment on such Contingent Payment Date. All purchase price payments shall be paid by wire transfer of immediately available funds to an account designated by Seller.

For purposes of this Agreement, “Average Crack Spread Margin” for each month means (i) a simple average of the daily Group Three Platts Low Unleaded Price for such month multiplied by 42 gallons (in order to arrive at a per barrel price), multiplied times 60%; plus (ii) a simple average of the daily Group Three Platts Low #2ULSD Price for such month multiplied by 42 gallons (in order to arrive at a per barrel price) times 40%; minus (iii) the average daily prompt settlement WTI NYMEX Crude Futures price for such month. Each monthly Average Crack Spread Margin, calculated pursuant to the prior sentence, for the relevant 12 month period shall then be added together and divided by 12 to arrive at the annual Average Crack Spread Margin to be used in Subsections 1.1(a), (b), (c) and (d) below. In the event that the GROUP THREE Platts Low Unleaded Price, Group Three Platts Low #2ULSD Price or WTI NYMEX Crude Futures is no longer reported substantially in the form reported on the date hereof, the parties will establish a replacement for such index that is a successor to such discontinued index or other index measure, in each case as reasonably acceptable to the parties.

(a) First Closing. On September 1, 2012, Seller shall sell to Buyer 18.8% of the Sale Stock representing 179,460 shares (the “First Closing”) in exchange for (i) a base purchase price payment of $17,946,000 payable at the First Closing, (ii) on October 31, 2013, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2013 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 1.30755% (i.e., 0.0130755) and (iii) on October 31, 2014, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2014 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 1.30755% (i.e., 0.0130755).

(b) Second Closing. On September 1, 2013, Seller shall sell to Buyer 18.8% of the Sale Stock representing 179,460 shares (the “Second Closing”) in exchange for (i) a base purchase price payment of $17,946,000 payable at the Second Closing, (ii) on October 31, 2014, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2014 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 1.30755% (i.e., 0.0130755) and (iii) on October 31, 2015, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2015 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 1.30755% (i.e., 0.0130755) .

2

(c) Third Closing. On September 1, 2014, Seller shall sell to Buyer 18.8% of the Sale Stock representing 179,460 shares (the “Third Closing”) in exchange for (i) a base purchase price payment of $17,946,000 payable at the Third Closing, (ii) on October 31, 2015, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2015 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate sold by the Company during such fiscal year as set forth in the Company’s year-end financial statements and patronage calculations x 1.30755% (i.e., 0.0130755) and (iii) on October 31, 2016, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2016 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate produced by the Company during such fiscal year as set forth in the Company’s year-end production records x 1.30755% (i.e., 0.0130755).

(d) Final Closing. On September 1, 2015, Seller shall sell to Buyer 43.6% of the Sale Stock representing 416,204 shares (the “Final Closing”) in exchange for (i) a base purchase price payment of $41,620,400 payable at the Final Closing, (ii) on October 31, 2016, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2016 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate produced by the Company during such fiscal year as set forth in the Company’s year-end production records x 3.03245% (i.e., 0.0303245) and (iii) on October 31, 2017, a contingent payment equal to the amount by which (A) the Average Crack Spread Margin for the fiscal year ended August 31, 2017 exceeds the Target Crack Spread, multiplied by (B) the number of barrels of total gasoline and distillate produced by the Company during such fiscal year as set forth in the Company’s year-end production records x 3.03245% (i.e., 0.0303245). The parties agree that the 3 shares of Class A common stock will be transferred at the Final Closing.

An example of a calculation of the contingent purchase price payment is set forth in Exhibit A attached hereto. Buyer shall cause the Company to provide Seller with audited financial statements and patronage calculations as presented to the Company’s board of directors for sales of gasoline and distillate for all fiscal years through August 31, 2015. Buyer shall cause the Company to provide Seller with production records, and such other information as reasonably requested by Seller, for production of gasoline and distillate at the McPherson refinery for fiscal years ending August 31, 2016 and 2017. For further clarity, Seller shall have the right to the final patronage payments and related records for the period ending August 31, 2015 which would normally be declared for payment on October 31, 2015 according to historic patronage policies.

1.2 Deliverables at Closings. At each of the four Closings, Seller shall deliver to Buyer a stock power endorsed to the Buyer representing the total number of shares of Sale Stock being sold by Seller to Buyer as described in Section 1.1 above, together with a certificate or certificates representing such shares. For each of the first three Closings, in the event that Seller does not have a certificate representing the exact number of shares of Sale Stock to be transferred at such Closing, Seller shall deliver to the Company certificates representing all its shares of Sale Stock and Buyer shall cause the Company to reissue two new certificates, one representing the number of shares of Sale Stock to be transferred to Buyer at such Closing and a second

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representing the total number of remaining shares that Seller owns after its transfer of shares to Buyer at such Closing; the first such certificate shall be duly endorsed and transferred to Buyer at the Closing, and the second certificate shall be retained by Seller until the next Closing. Seller shall also deliver to Buyer at each Closing, a certificate signed by an officer of Seller certifying that (i) all of Seller’s representations and warranties contained in Article II are true and accurate on the such Closing Date as if made on such Closing Date, and (ii) Seller has complied with all covenants required to be performed by Seller at or prior to such Closing Date.

1.3 Closings. The Closings of the transactions contemplated by this Agreement will occur on each of the four closing dates by remote communications between the parties. The date of each of the four Closings is herein referred to as a “Closing Date.” Sometimes a Closing Date will fall on a Saturday or Sunday and the parties may agree to exchange payment and deliverables on a date other than the Closing Date; if that is the case, the effective date of the Closing shall remain September 1. The Closing shall be deemed to be effective as of 12:01 a.m. (local Kansas time) on each Closing Date.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

As a material inducement to Buyer to enter into this Agreement, Seller represents and warrants to Buyer on the date hereof and as of each of the Closing Dates as follows:

2.1 Organization. Seller is a corporation duly organized and validly existing and in good standing under the laws of the State of Delaware.

2.2 Authorization; Enforceability. This Agreement constitutes the valid and binding obligation of Seller, enforceable against the Seller in accordance with its terms. Seller has the absolute and unrestricted right, power, capacity and authority to enter into, execute and deliver this Agreement. Upon receipt of the board approval discussed in Section 5.1 below, Seller will have the absolute and unrestricted right, power, capacity and authority to carry out and perform the transactions contemplated herein. Except as noted in the prior sentence, no other corporate act or proceeding on the part of the Seller, its board or its shareholders is necessary to authorize or approve this Agreement or the consummation of the transactions contemplated herein.

2.3 Title. At the time of each Closing, Seller will have sole, good and marketable title to all the Sale Stock being transferred at such Closing, free and clear of all liens and encumbrances, except for such liens and encumbrances arising from this Agreement and the lien of the Company described in Section 5 of the Company’s Restated and Amended Bylaws (the “Permitted Liens”).

2.4 Information and Advice. Seller has had complete access to all information it has requested concerning the Company, its business, assets and prospects and is capable of evaluating the merits of this Agreement and any transactions under this Agreement and of forming an informed investment decision relating to its decision to sell the Sale Stock. Seller has obtained the advice of its own legal counsel, accountants and advisors with respect to the matters contained in the Agreement and the transactions contemplated herein.

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2.5 No Other Interests. The Sale Stock represents Seller’s entire ownership interests in the Company. Seller is not party to any contract, agreement, plan or other document relating to the issuance, sale or transfer of any equity securities or other securities of any type related to the Company or any of the Company’s subsidiaries. Seller has no options, warrants or rights of any kind under any contract or otherwise to acquire any equity securities or other securities of the Company or its subsidiaries.

2.6 No Conflict. Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated herein will, directly or indirectly (with or without notice or lapse of time):

(a) Contravene, conflict with, or result in a violation of any provision of the Seller’s organizational documents or any resolution adopted by Seller’s board of directors or the stockholders of Seller;

(b) Contravene, conflict with, or result in a violation of, or give any governmental body or other person the right to challenge any of the transactions contemplated herein; or

(c) Result in the imposition or creation of any encumbrance upon the Sale Stock.

2.7 Brokers or Finders. Seller and its agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement.

2.8 Certain Proceedings. There is no pending proceeding that has been commenced against Seller that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the contemplated transactions in this Agreement. To Seller’s knowledge, no such proceeding has been threatened.

2.9 Disclosure. The representations and warranties contained in this Article II do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Article II not misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller on the date hereof and as of each of the Closing Dates as follows:

3.1 Organization. Buyer is a cooperative corporation duly organized and validly existing and in good standing under the laws of the State of Minnesota.

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3.2 Authorization; Enforceability. This Agreement constitutes the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Buyer has the absolute and unrestricted right, power, capacity and authority to enter into, execute and deliver this Agreement. Upon receipt of the board approval discussed in Section 5.1 below, Buyer will have the absolute and unrestricted right, power, capacity and authority to carry out and perform the transactions contemplated herein. Except as noted in the prior sentence, no other corporate act or proceeding on the part of Buyer, its board or its shareholders is necessary to authorize or approve this Agreement or the consummation of the transactions contemplated herein.

3.3 No Conflict. Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated herein will, directly or indirectly (with or without notice or lapse of time):

(a) Contravene, conflict with, or result in a violation of any provision of Buyer’s organizational documents or any resolution adopted by Buyer’s board of directors or the stockholders of Buyer; or

(b) Contravene, conflict with, or result in a violation of, or give any governmental body or other person the right to challenge any of the transactions contemplated herein.

3.4 Brokers or Finders. Buyer and its agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement.

3.5 Certain Proceedings. There is no pending proceeding that has been commenced against Buyer that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the contemplated transactions in this Agreement. To Buyer’s knowledge, no such proceeding has been threatened.

3.6 Investment Representations

(a) The Sale Stock is being acquired by Buyer for its own account, for investment purposes only, within the meaning of the United States Securities Act of 1933, as amended (the “1933 Act”), with no intention of assigning any participation or interest in the Sale Stock, and not with a view to the distribution of any of the Sale Stock.

(b) Buyer understands that the shares of Sale Stock have not been, and will not be, registered under the 1933 Act or any other securities law of any country, state or other jurisdiction, in reliance upon an exemption from the registration requirements of such laws thereunder for transactions not involving any public offering or the general inapplicability of such laws. Buyer will not sell, distribute or otherwise dispose of the Sale Stock or cause the Sale Stock to be disposed of, unless the shares of Sale Stock are subsequently registered under the 1933 Act, if applicable, or any other applicable securities laws of any other country, state or other jurisdiction or, in the opinion of counsel satisfactory to the Company, an exemption from such registration is available under the circumstances of the contemplated sale or other disposition. Buyer understands that the Company is under no obligation to register the Sale Stock on the Buyer’s behalf.

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3.7 Buyer is capable of evaluating the merits of this Agreement and any transactions under this Agreement and of forming an informed investment decision relating to its investment. Buyer has obtained the advice of its own legal counsel, accountants and advisors with respect to the matters contained in the Agreement and the transactions contemplated herein.

3.8 Disclosure. The representations and warranties contained in this Article III do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Article III not misleading.

ARTICLE IV

COVENANTS

4.1 Effect on Settlement Agreement. After the date hereof and through the final patronage payment on October 31, 2015, the terms and conditions of the Settlement Agreement shall remain in full force and effect, provided, however, the parties agree to not exercise or enforce any rights under sections 5, 6 or 9 of the Settlement Agreement prior to December 7, 2011, and further provided, that if neither party exercises it right to terminate this Agreement on or prior to December 6, 2011 as provided for in Section 5.1 below, then, effective December 7, 2011, sections 5, 6, 9 and Exhibit A of the Settlement Agreement shall be deemed to be forever terminated and of no further force or effect. Buyer and Seller hereby agree that upon consummation of the Final Closing, neither party hereto may enforce rights or obligations under the Settlement Agreement against the other party hereto and immediately following the later to occur of the Final Closing as described in Section 1.1 above or the final closing as described in that certain Stock Transfer Agreement entered into between Buyer and GROWMARK, Inc., the Settlement Agreement shall terminate and be of no further force or effect except that section 12 of the Settlement Agreement shall survive such termination. The parties agree that neither this Agreement, nor the negotiations and discussions leading up to this Agreement, trigger any rights or obligations under the Settlement Agreement, and to the extent any provisions in this Agreement are inconsistent with or conflict with the terms of the Settlement Agreement, the terms in this Agreement shall control. Except as set forth in this Section 4.1 or elsewhere in this Agreement, all other provisions of the Settlement Agreement (a copy of which is attached hereto as Exhibit B) shall remain in full force and effect through the final patronage payment on October 31, 2015.

4.2 Board Approval. Each party shall cause its officers and representatives to (i) take such steps as are necessary and appropriate, as soon as practicable after the date hereof to call a board meeting to be held no later than December 2, 2011 for the purpose of approving this Agreement and the transactions contemplated herein, and (ii) recommend approval of this Agreement to its board of directors.

4.3 Covenants Regarding Ownership.

(a) Between the date of this Agreement and the Final Closing, Seller shall not: (i) sell, transfer or assign the Sale Stock; or (b) directly or indirectly, solicit, initiate or encourage any inquiries or proposals from, discuss or negotiate with, or provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from, any person (other than Buyer) relating to any transaction involving the sale, transfer or assignment of the Sale Stock.

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(b) On the date hereof, Seller’s senior lender, CoBank, ACB, has a lien on all its Sale Stock and no other mortgages, pledges, liens or encumbrances of any kind exist on the Sale Stock. Prior to each Closing, Seller shall cause the existing lien to be removed with respect to the Sale Stock being transferred at such Closing, and shall provide evidence (satisfactory to Buyer’s counsel) of such removal and the termination of such lien with respect to the Sale Stock to be transferred to Buyer under Section 1.1 at such Closing. Buyer may, if required to remove the existing lien on the transferred Sale Stock, pay all or a portion of the purchase price payment due hereunder to the lien holder. Prior to the Final Closing, Seller shall not allow any new mortgages, pledges, liens or encumbrances of any kind on the Sale Stock, provided, however, Seller may allow an assignment or replacement of the existing security interest as part of a refinancing of its existing debt, and provided, further, that all obligations herein pertaining to the termination of such security interest prior to the transfer of the Sale Stock shall apply to such replacement security interest.

(c) Between the date of this Agreement and the final patronage payment on October 31, 2015, Buyer shall not allow the Company to issue any equity or membership interest in the Company.

4.4 Notification. Between the date of this Agreement and the Final Closing, Seller will promptly notify Buyer in writing if Seller becomes aware of any fact or condition that causes or constitutes a breach of any of Seller’s representations, warranties or covenants in this Agreement or if Seller becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a breach of such representation or warranty or covenant had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition.

4.5 Announcements. Prior to Buyer publicly disclosing this Agreement and the transactions contemplated herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission by filing a Form 8-K or issuing a press release as required by the rules of the NASDAQ Stock Market, no announcement or public statement concerning the existence, subject matter or any term of this Agreement shall be made by or on behalf of any party hereto without the prior written approval of the other party. Seller understands that Buyer is a publicly traded company and that, unless and until this Agreement and the transactions contemplated herein are made public, Seller and each person to whom this Agreement or the transactions contemplated herein is disclosed (which shall only be on a “need to know basis”) may be privy to material, non-public information. Seller has been advised by Buyer and is otherwise aware that applicable securities laws prohibit any person or entity who has received material, non-public information from purchasing or selling securities of Buyer or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of Buyer. Accordingly, Seller understands and shall apprise those to whom it discloses the existence of this Agreement or the transactions contemplated herein of the need for confidentiality and the potential consequences of trading in the securities of Buyer.

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4.6 Patronage. After the date hereof and until this Agreement is terminated, all patronage payments to the shareholders of the Company shall be 100% cash.

4.7 Implementing Synergies. Notwithstanding any provision herein or in the Settlement Agreement to the contrary, Buyer shall have the right to take reasonable steps to implement synergies it identifies, in its reasonable business judgment, between Buyer and the Company; provided, such steps are not economically detrimental to the interests of any member.

4.8 Best Efforts. Between the date of this agreement and the Final Closing, the parties will use their commercially reasonable best efforts to fulfill their obligations hereunder and to cause such conditions to closing identified herein to be timely satisfied.

ARTICLE V

CONDITIONS OF CLOSING

5.1 Board Approval. Each party has as a condition to the Closings that it obtain the approval of its respective board of directors as provided for in this Section 5.1. Each party shall take the appropriate and necessary steps to call a meeting of its Board of Directors for the purpose of approving this Agreement and the transactions contemplated herein on or prior to December 2, 2011. In the event such board meeting is held and the Board fails to approve this Agreement and the transactions contemplated herein, such party may, by written notice to the other party on or prior to December 6, 2011, exercise its right to terminate this Agreement without any further obligation hereunder. In the event that the party does not provide said written notice on or before December 6, 2011, regardless of whether such party has received the appropriate approval of its board of directors, such party will be deemed to have waived its right to terminate under this Section 5.1 and shall thereafter be bound to this Agreement and be obligated to proceed with the Closings described in Article I above.

5.2 Conditions Precedent to Buyer’s Obligation to Close. Buyer’s obligation to purchase the Sale Stock on each of the four Closing Dates is subject to the satisfaction, at or prior to each Closing Date, of each of the following conditions (any of which may be waived by Buyer, in whole or in part):

(a) Accuracy of Representations. All of Seller’s representations and warranties in this Agreement must be accurate in all respects as of the date of this Agreement and as of each Closing Date as if made on such Closing Date.

(b) Seller’s Performance. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to each Closing Date must have been duly performed and complied with in all material respects.

(c) Additional Documents. Seller must have delivered to Buyer such documents as Buyer may reasonably request for the purpose of (i) evidencing the accuracy of any of Seller’s representations and warranties, (ii) evidencing the performance by Seller of, or the compliance by Seller with, any covenant or obligation required to be performed or complied with by the Seller, (iii) evidencing the satisfaction of any condition referred to in this Article V, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement, including, without limitation, the deliverables described in Section 1.2 above.

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(d) No Conflicts. Since the date of this Agreement, there must not have been commenced or threatened against Buyer or Seller, or against any person affiliated with Buyer or Seller, (a) any proceeding involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the contemplated transactions. There must not have been made or threatened by any person any claim asserting that such person is the holder or beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any of the Sale Stock. Neither the consummation nor the performance of any of the transactions contemplated in this Agreement will, directly or indirectly (with or without notice or lapse of time), materially contravene, conflict with, or result in a material violation of, or cause the Buyer to suffer any material adverse consequence under any applicable federal, state, local, municipal or other administrative order, law, ordinance, regulation, statute or treaty. There must not be in effect any legal requirement or any injunction or other order that prohibits the sale of the Sale Stock by Seller to Buyer.

5.3 Conditions Precedent to Seller’s Obligation to Close. Sellers’s obligation to sell the Sale Stock on each of the four Closing Dates is subject to the satisfaction, at or prior to each Closing Date, of each of the following conditions (any of which may be waived by Seller, in whole or in part):

(a) Accuracy of Representations. All of Buyer’s representations and warranties in this Agreement must be accurate in all respects as of the date of this Agreement and as of each Closing Date as if made on such Closing Date.

(b) Buyer’s Performance. All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to each Closing Date must have been duly performed and complied with in all material respects.

(c) Additional Documents. Buyer must have delivered to Seller such documents as Seller may reasonably request for the purpose of (i) evidencing the accuracy of any of Buyer’s representations and warranties, (ii) evidencing the performance by Buyer of, or the compliance by Buyer with, any covenant or obligation required to be performed or complied with by the Buyer, (iii) evidencing the satisfaction of any condition referred to in this Article V, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.

(d) No Conflicts. Since the date of this Agreement, there must not have been commenced or threatened against Buyer or Seller, or against any person affiliated with Buyer or Seller, (a) any proceeding involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the contemplated transactions. Neither the consummation nor the performance of any of the transactions contemplated in this Agreement will, directly or indirectly (with or without notice or lapse of time), materially contravene, conflict with, or result in a material violation of, or cause

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the Seller to suffer any material adverse consequence under any applicable federal, state, local, municipal or other administrative order, law, ordinance, regulation, statute or treaty. There must not be in effect any legal requirement or any injunction or other order that prohibits the sale of the Sale Stock by Seller to Buyer.

ARTICLE VI

TERMINATION

6.1 Termination Events. This Agreement may, by written notice given prior to the Final Closing, be terminated:

(a) by mutual written agreement of Buyer and Seller;

(b) by either Buyer or Seller if a final non-appealable governmental order permanently enjoining or otherwise prohibiting the transactions contemplated hereby has been issued by a governmental authority of competent jurisdiction;

(c) by either Buyer or Seller if a material breach of any provision of this Agreement has been committed by the other party and has not been cured within 30 days of delivery by the non-breaching party of a written notice describing such breach; or

(d) in accordance with Section 5.1 upon the failure of a party to timely obtain board approval.

6.2 Effect of Termination. Except with respect to a termination under Subsection 6.1(c) above, each party’s right of termination under Section 6.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 6.1, all further obligations of the parties under this Agreement will terminate, provided, however, that if this Agreement is terminated by a party because of the breach of the Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of the other party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

ARTICLE VII

MISCELLANEOUS

7.1 No Right to Distributions. Upon the consummation of each Closing, Seller forever releases and waives all its rights and claims with respect to the transferred Sale Stock, including, without limitation, all rights to distributions, dividends, refunds, patronage refunds or other distributions of any kind or nature, whether known or unknown, and however arising, except (i) the final payment of the fiscal year’s patronage to be paid in the October following such Closing, and (ii) the contingent purchase price payments described in Section 1.1.

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7.2 Failure to Deliver Sale Stock. In the event that Seller, having become obligated to sell and transfer Sale Stock to Buyer hereunder, fails to deliver such Sale Stock in accordance with the terms of this Agreement within 5 days of having received written notice from Buyer of such failure, then, without limiting any other rights or remedies that Buyer may have, Buyer (if it has not already delivered to Seller the purchase price payment for such undelivered Sale Stock) may instead deliver such payment to the Company in the form of a certified check or bank check to be held in escrow for the benefit of Seller. Upon Seller’s failure to deliver such Sale Stock within 5 days of Buyer’s delivery of the written notice, all Seller’s rights with respect to such Sale Stock that was to be transferred to Buyer shall be immediately terminated and Seller’s sole right will be to receive the payment held in escrow (provided Seller has not already received payment from Buyer for such Sale Stock). Buyer shall immediately have all the financial and governance rights with respect to such Sale Stock and may request Company to cancel on its books and records Seller’s certificate(s) representing such shares and reissue a new certificate for such Sale Stock in the name of Buyer. Moreover, Seller’s failure to deliver the Sale Stock within 5 days of receiving Buyer’s written notice shall result in an immediate and irrevocable termination of Seller’s right to receive any contingent purchase price payment, as described in Section 1.1, with respect to such undelivered Sale Stock.

7.3 Specific Performance. The parties each acknowledge that the provisions of this Agreement are of a special and unique nature, the breach of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of any such provisions would cause the other party irreparable harm. In the event of a breach or threatened breach of this Agreement by the other party, the non-breaching party will be entitled to injunctive and other equitable relief in addition to any other rights and remedies available to such party for such breach or threatened breach. Nothing in this Section will be construed as prohibiting any party from, or limiting any party in, pursuing any rights and remedies available to such party for any breach or threatened breach of any provision of this Agreement.

7.4 Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior agreements, understandings, negotiations, and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

7.5 Expenses. Each party shall pay its own costs and expenses in connection with the consummation of the transactions contemplated by this Agreement.

7.6 Governing Law; Consent to Jurisdiction. This Agreement will be construed in accordance with and governed by the laws of the State of Kansas applicable to agreements made and to be performed in such jurisdiction without reference to conflicts of law principles. The parties each irrevocably consent that any legal action or proceeding against it under, arising out of or in any manner relating to this Agreement or any other agreement, document or instrument arising out of or executed in connection with this Agreement may be brought only in the federal or state courts sitting in the State of Kansas. The parties further irrevocably consent to the

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service of any complaint, summons, notice or other process relating to any such action or proceeding by delivery thereof to it by hand or by mail in the manner provided for in Section 7.9 hereof. The parties hereby expressly and irrevocably waive any claim or defense in any action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non conveniens or any similar basis.

7.7 Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN, AND AGREE TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

7.8 Assignment. This Agreement shall not be assigned by any party without the prior written consent of the other party; provided, however, that Buyer may assign its rights, but not its obligations, under this Agreement to any subsidiary of the Buyer (other than the Company) and, provided further, either party may assign its rights and obligations hereunder to any successor entity that (i) purchases all, or substantially all of the assets of such party or (ii) merges with or into such party.

7.9 Notices. All communications or notices required or permitted by this Agreement shall be in writing and given (i) by hand delivery in person to an officer of the other party, (ii) by certified or registered mail, postage prepaid, return receipt requested, or (iii) by a nationally recognized overnight courier service. Notices so given shall be effective upon receipt by the party to which notice is delivered or the date indicated as the delivery date or attempted delivery date when sent by certified mail or registered mail, or 24 hours after such notice has been delivered to the nationally recognized courier, prepaid for overnight delivery. All notices shall be addressed as follows, unless and until either of such parties notifies the other in accordance with this Section 7.9 of a change of address:

If to the Seller:	MFA Oil Company
	Attention: Jerome Taylor, President
	One Ray Young Drive
	P.O. Box 519
	Columbia, MO 65205-0519
If to the Buyer:	CHS Inc.
	Attention: Lisa Zell, General Counsel
	5500 Cenex Drive
	Inver Grove Heights, MN 55077

7.10 Further Assurances. The Buyer, on the one hand, and the Seller, on the other hand, shall, at its own cost and expense, duly execute and deliver such further instruments and documents and take all such further action, as may be necessary or proper in the reasonable judgment of the requesting party to carry out the provisions and purposes of this Agreement.

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7.11 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same Agreement. Signatures may be executed by facsimile, emailed in .PDF form or exchanged by some other electronic means, and such signatures shall be binding and deemed to be originals.

7.12 Severability. Upon a finding of the invalidity or unenforceability of any particular provision of this Agreement, the remaining provisions hereof will be construed in all respects as if such invalid or unenforceable provisions were omitted unless the exclusion of the invalid or unenforceable provision renders the enforcement of this Agreement grossly unreasonable and impracticable. All provisions of this Agreement will be enforced to the fullest extent permitted by law.

7.13 Third Party Beneficiaries. Except as expressly provided by this Agreement, nothing in this Agreement will confer any rights upon any person or entity which is not a party or permitted assignee of a party to this Agreement.

7.14 Rule of Construction. The parties hereto acknowledge and agree that each has negotiated and reviewed the terms of this Agreement, assisted by such counsel as they desired, and has contributed to its revisions. The parties further agree that the rule of construction that any ambiguities are resolved against the drafting party will be subordinated to the principle that the terms and provisions of this Agreement will be construed fairly as to both parties and not in favor of or against any party. The provisions of this Article VII shall survive any termination of this Agreement.

7.15 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have caused this Stock Transfer Agreement to be duly executed as of the day and year first above written.

	*BUYER*
CHS INC.
By:	/s/ Jay Debertin
	Its: Executive VP & COO
	*SELLER*
MFA OIL COMPANY
By:	/s/ Jerome Taylor
	Its: CEO & President

EXHIBIT A

Example of Contingent Payment Calculation

	A		B		C		D		E		B + D – E
	Unleaded GRP-3 Platts Low		Adjusted Unleaded GRP-3 Platts Low1		#2ULSD GRP-3 Platts Low		Adjusted #2ULSD Platts  Low2		Crude Nymex $$		Crack Spread $$
September	$	2.7786	$	70.0207	$	2.9849	$	50.1463	$	85.61	$	34.56
October	$	2.7308	$	68.8162	$	3.0172	$	50.6890	$	86.43	$	33.08
November	$	2.6367	$	66.4449	$	3.0631	$	51.4601	$	94.26	$	23.64
December	$	2.6086	$	65.7367	$	3.0490	$	51.2232	$	94.19	$	22.77
January	$	2.6086	$	65.7367	$	3.0329	$	50.9527	$	94.13	$	22.56
February	$	2.6190	$	65.9988	$	3.0260	$	50.8368	$	94.09	$	22.75
March	$	2.6776	$	67.4755	$	3.0231	$	50.7881	$	94.02	$	24.24
April	$	2.7138	$	68.3877	$	3.0086	$	50.5445	$	93.95	$	24.98
May	$	2.6998	$	68.0349	$	2.9871	$	50.1833	$	93.85	$	24.37
June	$	2.6829	$	67.6091	$	2.9852	$	50.1514	$	93.73	$	24.03
July	$	2.6621	$	67.0849	$	2.9833	$	50.1194	$	93.60	$	23.60
August	$	2.6431	$	66.6061	$	2.9879	$	50.1967	$	93.47	$	23.33
		Annual Average Crack Spread Margin									$	25.33
		Crack Spread Target									($	17.50	)
		Avg. Crack over Target									$	7.83

Total Sales or Production:

	BBLS
Gasoline		16,536,000
Distillate		15,457,000
Total		31,993,000

Contingent Price:

Relevant Year August 31st	Sales or Production  %			Contingent Payment Based on Year3
2013		1.30755	%	$	3,275,481
2014		2.61510	%	$	6,550,961
2015		2.61510	%	$	6,550,961
2016		4.34000	%	$	10,871,925
2017		3.03245	%	$	7,596,445

¹  Column A x 42 x 60%

²  Column C x 42 x 40%

³  31,993,000 BBLS x Sales or Production % x $7.83

EXHIBIT B

1995 Settlement Agreement

(See Attached)

AGREEMENT

THIS AGREEMENT is dated June 9, 1995, and is among CENEX, INC., a Minnesota cooperative corporation (“CENEX”), GROWMARK, INC., a Delaware corporation (“GROWMARK”), and MFA Oil Company, a Missouri farm marketing cooperative association (“MFA Oil”). In consideration of the agreements set forth herein, CENEX, GROWMARK and MFA Oil (collectively, the “Parties”) hereby agree as follows:

1. BACKGROUND. CENEX, GROWMARK and MFA Oil collectively are the 100% members and owners of National Cooperative Refinery Association, a Kansas cooperative association (“NCRA”), which owns and operates a petroleum refinery near McPherson, Kansas (the “NCRA Refinery”) and related assets. The Parties have had various disputes concerning the governance of NCRA and operations of its business, and those disputes are resolved by entry into this Agreement.

2. GOVERNANCE OF NCRA. From and after the date hereof:

a. Board Composition. NCRA will be governed by a six-member board of directors, four of whom will be appointed by CENEX, one of whom will be appointed by GROWMARK, and one of whom will be appointed by MFA Oil.

b. No Executive Committee. NCRA’s executive committee will be dissolved, and will not be re-constituted unless approved by the unanimous vote of the board of directors and no committee of the NCRA board shall be delegated any of the duties or functions of the board without the unanimous vote of the board of directors.

3. NCRA MANAGEMENT. The parties agree as follows with respect to management of NCRA’s business and operations:

a. General Manager. The day-to-day operations of NCRA and the NCRA Refinery will be managed by a General Manager to be employed by NCRA. The General Manager will report to the NCRA board of directors. The initial General Manager will be selected as soon as practicable by the unanimous vote of the NCRA board of directors. The NCRA board of directors shall use its best efforts to reach a consensus on the appointment of subsequent General Managers.

b. No Management Agreement. NCRA will not enter into any agreement to provide general management of NCRA, unless the agreement is approved by the unanimous vote of the board of directors.

c. Outsourcing. Notwithstanding paragraph 3(b) above, NCRA may, with approval of the board of directors, enter into agreements with one or more organizations or entities, including a member-owner, to provide specified administrative services, such as payroll, accounting or human resources functions, as long as an economic analysis is presented to the board showing that the service agreement is advantageous to NCRA, and is not economically detrimental to any member. The economic analysis to be presented to the board, with supporting documentation, shall be provided to all board members at least 60 days before the board meeting at which such agreement is to be presented, and any member-owner reasonably requesting information relating to the subject of the agreement shall be provided with such information within ten (10) working days of the request of the member-owner. Failure of a member-owner to object to an agreement on the basis of an economic detriment and provide documentation in support of such detriment at the time the agreement is considered by the board of directors, shall be deemed a waiver of the right to object to the agreement. It is the expectation of the Parties that each such agreement shall, if appropriate, be evaluated by the board of directors based upon alternative proposals for such services.

d. No Member Employees. NCRA will not employ any person who is also an employee of any of the member-owners unless such employment is approved by a unanimous vote of the board of directors.

4. NCRA OPERATIONS. It is the intention of the Parties that NCRA be operated fairly for all members. To that end, the Parties agree as follows with respect to the operation of the NCRA Refinery and the business of NCRA:

a. Cooperative Operation. NCRA will continue to operate on a cooperative basis, as contemplated in its Bylaws, and NCRA will continue to allocate and distribute its earnings consistent with its historic patronage policy.

b. Product Allocation and Availability. NCRA will continue to follow historic policies with respect to product allocation, availability, reserves and storage based on ownership.

c. Product Sales and Deliveries. NCRA will sell the products allocated to its member-owners F.O.B. at the NCRA Refinery at time of tender, at prices specified from time to time by NCRA according to the pricing methodology historically in effect for pipeline tender purchases. Scheduling of product deliveries to the member-owners will be made pursuant to policies and procedures that are equitable to all the member-owners.

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d. Relationship to Laurel Refinery. CENEX owns and operates a petroleum refinery located in Laurel, Montana. The Parties agree that the NCRA Refinery will be operated independently of CENEX’s Laurel refinery. However, if opportunities arise for coordination of specific activities or functions at the NCRA Refinery and CENEX’s Laurel refinery, and it can be reasonably demonstrated through economic analysis presented to the NCRA board that such coordination is likely to reduce the costs or increase the profitability of NCRA and will not be economically detrimental to the interest of any member, then the board of directors may approve the coordination of the specific activity or function. The economic analysis to be presented to the board, with supporting documentation, shall be provided to all board members at least 60 days before the board meeting at which such coordination proposal is to be presented, and any member-owner reasonably requesting information relating to the subject of the coordination proposal shall be provided with such information within ten (10) working days of the request from the member-owners. Failure of a member-owner to object to such coordination proposal on the basis of economic detriment and provide documentation in support of such detriment at the time such coordination proposal is considered by board of directors, shall be deemed a waiver of the right to object to such coordination proposal.

e. Fair Treatment. The board of directors of NCRA will treat all of its member-owners fairly without benefitting one member to the detriment of others and will assure that NCRA management does the same.

f. NCRA Mission Statement. The Parties agree that NCRA will be operated to provide the member-owners with a dependable, long-term supply of high quality petroleum products at a competitive price while realizing an adequate rate of return on investment.

g. Capital Expenditures. NCRA will continue to make capital expenditures consistent with historic practice and/or intended to allow NCRA to continue to be a modern and efficient refinery which operates consistently with applicable laws and regulations.

5. BUY-OUT OPTION.

a. Trigger Events. If any one of the following events occurs without the unanimous consent of the board of directors (each being referred to herein as a “Trigger Event”):

i. any change is made in NCRA’s patronage policy as set forth in paragraph 4(a); or

ii. any change is made in NCRA’s product allocation, availability, reserve or storage policy as set forth in paragraph 4(b); or

iii. any change is made in NCRA’s fuel sales and deliveries as set forth in paragraph 4(c); or

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iv. NCRA discontinues operating on a cooperative basis as set forth in paragraph 4(a) above; or

v. Any changes is made in the composition of the board of directors from that contemplated by paragraph 2(a) above; or

vi. NCRA enters into a management agreement, as proscribed in paragraph 3(b) above; or

vii. NCRA sells all or substantially all of its assets in a manner other than an arms length bona fide sale.

then, in any such event, GROWMARK and MFA Oil will each have the right (exercised independently or together) to require CENEX to purchase all of its ownership interests in NCRA at a cash price equal to the fair market value of the ownership interests, as provided in this paragraph 5. If a Trigger Event occurs, in order to exercise its buy-out right, GROWMARK or MFA Oil shall submit a written notice to CENEX within 90 days after the occurrence of the Trigger Event, specifying the Trigger Event and the date it occurred, and indicating the selling member-owner’s irrevocable election to require CENEX to purchase its ownership interests in NCRA and stating the member-owner’s determination of the fair market value of its ownership interests as of the date of the Trigger Event (“Trigger Date”). Within 30 days after the receipt of the selling member-owner’s notice of its determination of fair market value, CENEX shall submit a written notice to the selling member-owner stating either that (i) it denies that a Trigger Event has occurred, in which case the determination of the existence of a Trigger Event and the obligation to arbitrate shall be submitted to the Court pursuant to Section 10 hereof, (ii) CENEX agrees with the member-owner’s determination of fair market value, in which case a closing for the sale and purchase shall be held within 30 days, or (iii) CENEX does not agree with the member-owner’s determination of fair market value, in which case the selling member-owner and CENEX shall submit to binding arbitration to determine the fair market value. If CENEX fails to notify the selling member-owner within the 30-day period, CENEX shall be deemed to have accepted the existence of the Trigger Event and to have elected to submit the matter of fair market value to binding arbitration.

b. Status Quo Preserved. Once a Trigger Event has been determined to have occurred, NCRA shall revert to operating in the manner set forth in paragraph 4 until the Closing Date (as defined below) as if no such event had occurred. It is the intention of the parties that the status quo at NCRA, as set forth in paragraph 4, shall be preserved until the Closing Date.

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c. Election to Purchase Non-selling Member-Owner’s Interest. In the event either Growmark or MFA (but not both) exercise their right under this paragraph 5, CENEX may, at its sole option, elect to purchase the ownership interest of the other member-owner at a price to be mutually agreed upon by the Parties, or in the absence of such agreement, pursuant to arbitration as provided in this paragraph 5. CENEX shall provide the other member-owner with written notice of its intention to exercise its purchase option, and the determination of a selling price and the closing of the purchase shall occur as provided in this paragraph 5 at the same time and in the same proceeding involving the other member-owner.

d. Full Access to Information. All members shall have full and equal access to NCRA’s financial statements, projections and other documents and information relating to the financial condition of NCRA. No member may interfere with any other member’s access to such information.

e. Closing. If the matter is submitted for binding arbitration, the arbitration proceeding shall be conducted in the same manner specified in paragraph 9 below, and a closing for the sale and purchase shall be held within 30 days after the date of the arbitration decision of fair market value (“Closing Date”).

At any closing under this paragraph 5, (i) CENEX will pay to the selling member-owner(s) in cash the fair market value as of the Trigger Date, and (ii) the selling member-owner(s) will transfer to CENEX all of their ownership interests in NCRA, and cause their respective representative on the board of directors to resign, and release their respective rights to further product and patronage allocations from NCRA. If the Trigger Event is a sale under paragraph 5(a)(vii) that has already occurred, at the closing CENEX will pay to the other member-owner(s) the fair market value as of the Trigger Date less the sale proceeds received by the other member-owner(s).

f. Exclusive Remedy. If any Trigger Event occurs, the right of GROWMARK and MFA Oil to exercise the buy-out right specified in this paragraph 5 shall be their sole and exclusive remedy arising from the Trigger Event, except GROWMARK and MFA Oil may obtain other relief through the arbitration if CENEX breaches subparagraph 5(b) above regarding operations between the Trigger Date and the Closing Date.

6. MERGER OR PURCHASE OPTION.

a. Merger or Consolidation. The Parties agree that CENEX (as the majority owner of NCRA) shall retain the right to cause a merger or consolidation involving NCRA and either CENEX, a wholly-owned subsidiary of CENEX or any other entity, to occur, subject to the statutory dissenters and appraisal rights as provided under Kansas Statutes, Section 1642 (or any successor provision).

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b. Voluntary Purchase. GROWMARK and MFA Oil each hereby agree that in lieu of a formal merger CENEX may, at its sole option, elect to purchase the ownership interests of GROWMARK and MFA Oil at a price to be mutually agreed upon by the Parties, or in the absence of such agreement, for fair market value as provided in paragraph 5 above. CENEX shall provide GROWMARK and MFA Oil with written notice stating its intention to elect its purchase option under this paragraph 6, together with CENEX’s written proposal for the purchase price. If CENEX and the minority members are unable to agree upon the purchase price within ninety (90) days after the date CENEX provides notice stating its intention to elect to exercise its rights pursuant to this paragraph 6, then the value shall be determined in arbitration pursuant to the terms of paragraph 5 hereof and the closing of the purchase shall occur as provided in paragraph 5 above. The date CENEX provides its notice of intention to exercise its purchase option shall be the Trigger Date for purposes of applying the terms of paragraph 5.

c. Status Quo Preserved. The status quo at NCRA shall be maintained consistent with paragraph 4 of this Agreement until the Closing Date.

7. TERMINATION OF MEMBERS’ AGREEMNT. The Members’ Agreement dated as of June 15, 1989, among NCRA and the Parties to this Agreement is hereby terminated. The Parties agree to enter into a separate agreement among themselves and NCRA before the Effective Date memorializing the termination of the Members’ Agreement.

8. ARTICLES AND BYLAW AMENDMENTS. The Parties agree to take all actions necessary to cause formal amendments to the Articles of Incorporation and Bylaws of NCRA to be approved and adopted as soon as practicable after the date hereof to give effect to the board of directors composition described in paragraph 2(a) above, to eliminate references to the executive committee, to provide for a General Manager as contemplated in paragraph 3(a) above, and to otherwise conform the Articles of Incorporation and Bylaws to the agreements and principles set forth in this Agreement. The Parties shall agree upon the language of the formal amendments in an addendum to be attached and incorporated into this Agreement by the Effective Date.

9. ARBITRATION. Except as to statutory appraisal proceedings as contemplated by paragraph 6 above or issues of arbitrability as contemplated by paragraphs 5 and 10, any controversy or claim arising out of or related to this Agreement shall be settled by arbitration, and judgment upon the award entered by the arbitrators may be entered in any court having proper jurisdiction. Any party may seek relief in the form of specific performance, injunctive or other equitable relief in order to enforce the decision of the arbitrators. The Parties shall have such additional remedies as may otherwise be provided by law with respect to disputes involving issues which are not addressed by this Agreement.

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Any such arbitration proceeding shall be conducted in Kansas City, Missouri, or in such other location as the Parties may agree. The arbitrators shall apply Kansas law in all arbitrations hereunder, without regard to principles of conflicts of law. In all arbitration proceedings to determine fair market value under paragraphs 5 or 6 above, each party shall bear its own expenses, including attorney’s fees, costs and expenses (including expert fees). In all arbitration proceedings except those to determine fair market value under paragraphs 5 or 6 above, the prevailing party shall be entitled to recover from the losing party all expenses incurred in connection with the arbitration, including all reasonable attorney’s fees, costs and expenses (including expert fees), unless the arbitrators determine that no party is a prevailing party or that other circumstances make an award of expenses unjust. The reasonableness of any fees and expenses awarded shall be determined by the arbitrators.

The procedures to be followed in arbitration conducted under this Agreement are set forth in Exhibit A attached hereto and incorporated herein.

10. COURT JURISDICTION. In the event that a party to this Agreement denies that a dispute or disagreement between the Parties is subject to arbitration, as set forth in Paragraph 9 above, or CENEX denies that a Trigger Event has occurred, as set forth in paragraph 5 above, then in that event, the United States District Court for the District of Kansas, the Honorable John W. Lungstrum, presiding, shall retain jurisdiction to resolve the dispute or disagreement regarding arbitrability.

11. BOARD APPROVAL. This Agreement is subject to approval by the respective board of directors of each of the Parties. The officers or representatives signing this Agreement on behalf of the Parties each agree to recommend such approval to its board of directors, and to use their best efforts to cause this Agreement to be approved by its board of directors as soon as practicable after the date hereof.

12. STIPULATION OF DISMISSAL, RELEASE AND EFFECTIVE DATE. Upon the occurrence of each of the following events: (a) approval of this Agreement by the Board of Directors of each party, as provided for in paragraph 11, (b) termination of the Members’ Agreement by the Parties and NCRA in a separate agreement, as provided for in paragraph 7, and (c) approval by the Parties of the language of Amendments to the NCRA Articles of Incorporation and Bylaws, as provided for in paragraph 8, the Parties shall execute the Stipulation of Dismissal attached hereto as Exhibit B, and the Release attached hereto as Exhibit C, each of which is hereby agreed to in form, and submit this Agreement for approval by Judge Lungstrum, along with the draft Order attached hereto as Exhibit D. The date of execution of the Stipulation of Dismissal and Release shall be the “Effective Date.”

13. MISCELLANEOUS.

a. Amendments. This Agreement may be amended only by a written document signed on behalf of all of the Parties.

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b. Changes in Law. If any change in law or in the interpretation thereof occurs after the date hereof which is inconsistent with the agreements and principles stated herein, the Parties will use their best efforts to mutually agree on changes or amendments to this Agreement in response to the change in law which are as consistent as possible with the spirit of this Agreement, and any such change or amendment to this Agreement will not be deemed to be a Trigger Event.

c. Governing Law. This Agreement shall be governed by the laws of the State of Kansas.

d. Assignment; Binding Effect. This Agreement may not be assigned by any Party without the written consent of the other Parties. This Agreement will be binding upon the Parties and their permitted successors and assigns and shall be binding upon any holder of any NCRA common stock pledged, encumbered, sold, transferred or otherwise disposed of and at the request of NCRA the Parties shall take appropriate actions to provide for the placement of a legend consistent with this provision on all stock certificates evidencing NCRA common stock.

e. Counterparts. This Agreement may be executed in counterpart originals, each of which shall be considered a complete original agreement.

f. Entire Agreement. This Agreement represents the entire agreement and understanding of the Parties hereto with reference to the matters set forth herein (except as to the Articles and Bylaws Amendments in paragraph 8, and the agreement memorializing the termination of the Members’ Agreement in paragraph 7), and no representations, warranties, or covenants have been made in connection with this Agreement other than those expressly set forth herein. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements among the Parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement.

g. Severability. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of the remaining portion, which remaining portion shall remain in force and effect as if this Agreement had been executed with the invalid portion thereof eliminated. It is the intention of the Parties that they would have executed the remaining portion of this Agreement without including any such part which may hereafter be declared invalid.

h. Authority of Signatories. The signatories hereto each represent and warrant that (a) they have full authority to execute this Agreement on behalf of each of the Parties for whom they sign; and (b) they are acting within the course and scope of such authority in executing this Agreement.

i. Waivers. Except as otherwise provided herein, the failure of any Party to enforce at any time any provisions of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part of it or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other breach.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their respective chief executive officers as of the date stated in the first paragraph above.

CENEX, INC.
By:	/s/ Noel K. Estenson
	Its CEO

GROWMARK, INC.
By:	/s/ Norman T. Jones
	Its CEO

MFA OIL COMPANY
By:	/s/ Dale H. Creach
	Its CEO

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STATE OF Minnesota	)
	)	SS.
COUNTY OF Dakota	)

The foregoing was acknowledged before me this 9^th day of June, 1995, by Noel K. Estenson, the CEO of CENEX, INC. on behalf of CENEX, INC.

/s/ Mary L. Just

Notary Public

STATE OF Illinois	)
	)	SS.
COUNTY OF McLean	)

The foregoing was acknowledged before me this 13^th day of June, 1995, by Norman T. Jones, the CEO of GROWMARK, INC. on behalf of GROWMARK, INC.

/s/ R. Stephen Carr

Notary Public

STATE OF Missouri	)
	)	SS.
COUNTY OF Boone	)

The foregoing was acknowledged before me this 13^th day of June, 1995, by Dale H. Creach, the President of MFA OIL COMPANY on behalf of MFA OIL COMPANY.

/s/ Beverly Twellman

Notary Public

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ARBITRATION PROCEDURES

This Appendix sets forth the procedures to be followed in all arbitration conducted pursuant to Paragraphs 5, 6(b) and 9 of the settlement agreement (“Agreement”) entered into as of June 9, 1995 among GROWMARK, Inc., MFA Oil Company, and CENEX, Inc. (collectively the “Parties” and individually “Party”). This Appendix is incorporated by reference in the Agreement and made a part thereof.

1. Applicable Rules. Except as otherwise provided herein, the Center for Public Resources Non-Administered Arbitration Rules (hereinafter “CPR Rules”) in effect from time to time shall govern all arbitrations conducted pursuant to the Agreement. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16.

2. Pre-Arbitration Mediation. In the event that any Party desires to commence an arbitration under the Agreement against any other Party, the initiating Party shall before serving a notice of arbitration pursuant to CPR Rule 3, submit any dispute or controversy subject to arbitration under the Agreement, to mediation as provided below, unless otherwise agreed to by the Parties to that dispute. Such mediation shall be conducted by Hon. Ronald Newman, United States Magistrate Judge for the District of Kansas, or, if Judge Newman is not available, by a mediator agreed to by the Parties to the dispute, or by a mediator appointed by the CPR. The mediation shall be commenced by serving upon the opposing party(ies) and the mediator a demand for mediation. Unless extended by agreement of all parties to the dispute, the parties to the dispute shall have thirty (30) days after service of the notice of mediation to resolve the dispute in mediation. Unless extended by agreement of all parties to the dispute, an arbitration must be commenced by service of a notice of arbitration under CPR Rule 3 thirty (30) days after the demand for mediation.

Exhibit A

3. Selection of Arbitrators. Notwithstanding CPR Rule 5, and unless otherwise agreed by the parties to the arbitration, all arbitrations shall be conducted by a panel of three (3) independent arbitrators selected as provided by CPR Rule 6.4(b), except that no arbitrator selected shall be a current or former director, officer, employee, or agent of any party, or related to any person nor shall the arbitrators be an attorney, employee or former employee of a law firm that has represented one of the member companies. Two of the three arbitrators shall have oil refining industry experience. The parties hereby agree that the CPR shall take such actions as necessary to provide the parties with a panel of arbitrators consistent with the qualifications set forth above. The three arbitrators so selected are referred to herein as the “Tribunal.” All decisions of the Tribunal shall be by majority with all arbitrators participating.

4. Jurisdiction of the Tribunal. The provisions of CPR Rule 8, or any subsequent amendment to the CPR Rules governing the jurisdiction of the Tribunal shall not apply. All issues of arbitrability or the Tribunal’s jurisdiction shall be determined as provided for in Paragraph 10 of the Agreement.

5. Discovery. Each party to an arbitration shall be entitled to make a reasonable demand from the other party(ies) to produce documents likely to lead to discovery of admissible evidence. Each party may serve no more than twenty (20) interrogatories (as defined in the Federal District of Kansas Local Rules). Unless otherwise agreed to by all parties to the arbitration, or otherwise ordered by the Tribunal, all documents shall be produced, and all interrogatories answered, within twenty days of receipt. In arbitration proceedings to determine the fair market value of a Party’s stock, each party shall be entitled

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to take a deposition of each opposing party’s expert witness(es). Prior to the expert deposition, but not less than fifteen (15) days before the scheduled deposition, each party shall provide to each opposing party an expert report which discloses all information required under Rule 26(a)(2) of the Federal Rules of Civil Procedure. No depositions shall be allowed in all other arbitrations, unless permitted by the Tribunal.

6. Hearing. Unless otherwise agreed to by all parties to the arbitration, or otherwise ordered by the Tribunal, a hearing in any dispute shall commence no later than ninety (90) days after selection of the Tribunal.

7. Awards. Awards shall be issued within fourteen (14) days after the conclusion of the hearing. The Tribunal shall provide a written decision explaining the basis and reasoning for its award, and if damages are awarded, the basis for calculating, and the calculation of, the damages.

8. Pre-Award Interest. The Tribunal shall have the authority to award pre-award interest (at the Co-Bank national variable rate) other than in connection with an award establishing the fair market value of a Party’s stock.

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

GROWMARK, INC., a Delaware	)
Corporation, and MFA OIL	)
COMPANY, a Missouri farm marketing	)
Cooperative association,	)	Case NO. 94-2522 JWL
	)
Plaintiffs,	)
	)
v.	)	STIPULATION OF DISMISSAL
	)	WITH PREJUDICE
CENEX, INC., a Minnesota	)
Cooperative association,	)
NOEL K. ESTENSON, ROBERT C.	)
OEBSER, ELROY WEBSTER,	)
LLOYD K. ALLEN, JOHN G.	)
BROSTE, JOEL KOONCE, and	)
DAVID BAKER,	)
	)
Defendants.	)
	)
------------------------------------------------------------------------------	)

The above-entitled matter, having been duly compromised and settled by and between the parties hereto, it is hereby stipulated and agreed by and between the attorneys for the respective parties pursuant to a Settlement Agreement:

1. That the Settlement Agreement among CENEX, Inc., GROWMARK, Inc. and MFA Oil Company, a true and correct copy of which is attached hereto as Exhibit A, be approved by this Court,

2. That the Court dismiss with prejudice this action, and without costs to any party,

Exhibit B

3. That the Injunction entered by this Court on February 10, 1995, be dissolved, and

4. That the Court retain jurisdiction over this matter for the purpose of enforcing the arbitration provision of the parties’ Settlement Agreement.

DATED:                         , 1995	DOHERTY, RUMBLE & BUTLER PROFESSIONAL ASSOCIATION
	By:
		Boyd H. Ratchye Minnesota Atty. Reg. No. 89746 David G. Martin Minnesota Atty. Reg. No. 67994
	2800 Minnesota World Trade Center 30 East Seventh Street St. Paul, Minnesota 55101-4999 (612) 291-9333
	Attorneys for CENEX, Inc., a Minnesota Cooperative Association, Noel K. Estenson, Robert C. Oebser, Elroy Webster, Lloyd K. Allen, John G. Broste, Joel Koonce and David Baker
DATED:                     , 1995	SONNENSCHEIN NATH & ROSENTHAL
	By:
		Alan S. Gilbert
	8000 Sears Tower Chicago, IL 60606-6404 (312) 876-8000
	Attorneys for GROWMARK, Inc., a Delaware Corporation and MFA Oil Corporation, a Missouri farm marketing cooperative association

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

GROWMARK, INC., a Delaware	)
Corporation, and MFA OIL	)
COMPANY, a Missouri farm marketing	)
Cooperative association,	)	Case NO. 94-2522 JWL
	)
Plaintiffs,	)
	)
v.	)
	)
CENEX, INC., a Minnesota	)	RELEASE
Cooperative association,	)
NOEL K. ESTENSON, ROBERT C.	)
OEBSER, ELROY WEBSTER,	)
LLOYD K. ALLEN, JOHN G.	)
BROSTE, JOEL KOONCE, and	)
DAVID BAKER,	)
	)
Defendants.	)
	)
------------------------------------------------------------------------------	)

WHEREAS, the above-named parties are desirous of compromising and settling their differences; and

WHEREAS, an Agreement by and between CENEX, Inc., a Minnesota cooperative association (“CENEX”), GROWMARK, Inc., a Delaware corporation (“GROWMARK”), and MFA Oil Company, a Missouri farm marketing cooperative association (“MFA Oil”), has been negotiated and entered into by and between these companies, to settle their differences with respect to the operations of National Cooperative Refinery Association, a Kansas Cooperative association (“NCRA”), a true and correct copy of which is incorporated hereto and made a part herein by reference as Exhibit A; and

Exhibit C

WHEREAS, it is the intent of the parties to this Release that entry into the Agreement shall be and is consideration for settlement of any and all claims by and between the parties;

NOW, THEREFORE, in consideration of entry into the Agreement, the above-named parties hereby mutually release and forever discharge one another and their employees, agents and attorneys, and their heirs, successors and assigns, from each and every claim, known or unknown, arising out of or in any way related to the allegations and causes of action as set forth and alleged in the pleadings in the above-captioned action, being Case No. 94-2522 JWL, in the United States District Court for the District of Kansas, including claims that have been dismissed from said action, which claims, inclusive of claims for costs and disbursements, attorney’s fees and actual and punitive damages, are hereby mutually released and forever discharged.

This Release incorporates and is inclusive of any and all claims or causes of action, known or unknown, whether in equity or law, which were alleged or could have been alleged, by any of the parties hereto, jointly or singly, arising out of the events as alleged in the pleadings hereto, through and inclusive of the date of the execution of this Release.

It is understood and agreed by and between the parties hereto, that this Release is entered into and made on behalf of each person, corporation or cooperative association, and each person, corporation or cooperative association’s predecessors in interest, successors in interest or heirs and assigns, and that this Release shall enure to the benefit of all.

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This Release shall not be effective until the Agreement among CENEX, GROWMARK and MFA Oil is approved by the United States District Court for the District of Kansas.

It is further understood that upon court approval of the Agreement among CENEX, GROWMARK and MFA Oil, the Court’s injunction shall be dissolved in its entirety and it shall have no further force or effect as to the individuals named herein or the corporate signatories hereto.

GROWMARK, INC.

I,                              (print name), hereby execute this Agreement and certify that I am the                              (title) of GROWMARK, Inc., and that I am authorized to sign on behalf of GROWMARK, Inc.

DATED:                     , 1995
	By:	Norm Jones
	Its:

MFA OIL COMPANY

I,                              (print name), hereby execute this Agreement and certify that I am the                              (title) of MFA Oil Company, and that I am authorized to sign on behalf of MFA Oil Company.

DATED:                     , 1995
	By:	Dale Creach
	Its:	CEO

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CENEX, INC.

I,                              (print name), hereby execute this Agreement and certify that I am the                              (title) of CENEX, Inc., and that I am authorized to sign on behalf of CENEX, Inc.

DATED:                     , 1995
	By:	Noel K. Estenson
	Its:	CEO
DATED:                     , 1995
	Robert C. Oebser
DATED:                     , 1995
	Elroy Webster
DATED:                     , 1995
	Lloyd K. Allen
DATED:                     , 1995
	John G. Broste
DATED:                     , 1995
	Joel Koonce
DATED:                     , 1995
	David Baker
DATED:                     , 1995
	Noel K. Estenson

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

GROWMARK, INC., a Delaware	)
Corporation, and MFA OIL	)
COMPANY, a Missouri farm marketing	)
Cooperative association,	)	Case NO. 94-2522 JWL
	)
Plaintiffs,	)
	)
v.	)
	)
CENEX, INC., a Minnesota	)	ORDER
Cooperative association,	)
NOEL K. ESTENSON, ROBERT C.	)
OEBSER, ELROY WEBSTER,	)
LLOYD K. ALLEN, JOHN G.	)
BROSTE, JOEL KOONCE, and	)
DAVID BAKER,	)
	)
Defendants.	)
	)
------------------------------------------------------------------------------	)

The above-entitled matter, having been duly compromised and settled by and between the parties hereto, and the parties having submitted a Stipulation and Dismissal with Prejudice, IT IS HEREBY ORDERED:

1. That the Settlement Agreement among CENEX, Inc., GROWMARK, Inc. and MFA Oil Company, a true and correct copy of which is attached hereto as Exhibit A, is approved by this Court,

2. That the Court dismisses with prejudice this action, without costs to any party,

Exhibit D

3. That the Injunction entered by this Court on February 10, 1995, is hereby dissolved, and

4. That the Court retains jurisdiction over this matter for the purpose of enforcing the arbitration provision of the Settlement Agreement between CENEX, Inc., GROWMARK, Inc. and MFA Oil Company.

DATED:                     , 1995

Honorable John W. Lungstrum

Judge of the United States District Court

For the District of Kansas

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AMENDMENT

This is an Amendment to the Agreement dated June 9, 1995 (the “Agreement”) by and among CENEX, Inc., a Minnesota cooperative corporation, GROWMARK, Inc., a Delaware corporation, and MFA Oil Company, a Missouri farm marketing cooperative association (collectively, the “Parties”). The Parties hereby agree as follows:

1. Paragraphs 7 and 12 of the Agreement are amended to eliminate the requirement that NCRA agree to terminate the Members’ Agreement prior to the execution of the Stipulation of Dismissal and Releases and the submission of the Agreement for approval by Judge Lungstrum called for under Paragraph 12 of the Agreement. This Amendment does not affect the parties’ obligation to execute the Termination Agreement terminating the Members’ Agreement as set forth in paragraphs 7 and 12 of the Agreement.

2. The Parties agree to present to the NCRA Board of Directors and have each of the Parties’ NCRA board representatives vote for NCRA’s approval of the Termination Agreement executed by the Parties and to require that NCRA execute the Termination Agreement within 60 days of the Effective Date of the Agreement.

3. This Amendment may be executed in counterpart originals, each of which shall be considered a complete original agreement.

IN WITNESS WHEREOF, the Parties to the Agreement have caused this Amendment to be signed by their respective officers as of the dates set forth below.

Dated: June 22, 1995	CENEX, INC.
	By:	/s/ Noel K. Estenson
		Its Chief Executive Officer
Dated: June 23, 1995	GROWMARK, INC.
	By:	/s/ Norman T. Jones
		Its Chief Executive Officer
Dated: June 23, 1995	MFA OIL COMPANY
	By:	/s/ Dale H. Creach
		Its President

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ADDENDUM

THIS ADDENDUM to the Agreement dated June 9, 1995 by and among CENEX, INC., a Minnesota cooperative corporation, GROWMARK, INC., a Delaware corporation, and MFA OIL COMPANY, a Missouri farm marketing cooperative association is made effective June 21, 1995.

1. ARTICLES AMENDMENTS. The amendments to the Articles of Incorporation of NCRA required by paragraph 8 of the Agreement shall be the amendments contained in the Restated and Amended Articles of Incorporation of National Cooperative Refinery Association attached hereto as Exhibit A.

2. BYLAW AMENDMENTS. The amendments to the Bylaws of NCRA required by paragraph 8 of the Agreement shall be the amendments contained in the Bylaws of National Cooperative Refinery Association attached hereto as Exhibit B.

3. APPROVAL OF AMENDMENTS. The Parties to the Agreement agree to present and approve the amendments as set forth in Exhibits A and B.

4. COUNTERPARTS. This Addendum may be executed in counterpart originals, each of which shall be considered a complete original agreement.

IN WITNESS WHEREOF, the Parties to the Agreement have caused this Addendum to be signed by their respective officers as of the effective date set forth above.

CENEX, INC.
By:	/s/ Noel K. Estenson
	Its Chief Executive Officer
GROWMARK, INC.
By:	/s/ Norman T. Jones
	Its Chief Executive Officer
MFA OIL COMPANY
By:	/s/ Dale H. Creach
	Its President

Exhibit A

RESTATED AND AMENDED ARTICLES OF INCORPORATION

OF

NATIONAL COOPERATIVE REFINERY ASSOCIATION

KNOW ALL MEN BY THESE PRESENTS:

National Cooperative Refinery Association, a Kansas cooperative marketing association, originally incorporated on July 7, 1943 (the date of filing of its original Articles of Incorporation with the Office of the Secretary of State of Kansas), pursuant to the provisions of K.S.A. 1994 Supp. 17-1608 and K.S.A. 17-6605, hereby adopts restated Articles of Incorporation and amends its Articles of Incorporation, which restatement and amendment restates and integrates and also further amends the Articles of Incorporation as heretofore restated, amended or supplemented.

Such restatement and amendment made by these Restated and Amended Articles of Incorporation have been effected in conformity with the provisions of K.S.A. 1994 Supp. 171608 and K.S.A. 17-6605. At a regular meeting of the Board of Directors of the Association held on the      day of                 , 1995, the Board duly adopted resolutions setting forth the restatement and amendments hereafter set out to the Articles of Incorporation of the Association and declared the advisability of proposing such resolutions to the stockholders of the Association for their consideration of the adoption of the same. Thereafter, pursuant to said resolutions and in accordance with the Bylaws and the laws of the State of Kansas, said resolutions were presented at a special meeting of the stockholders for their consideration of said restatement and amendment, and thereafter, pursuant to due notice to all of the stockholders and in accordance with the statutes of the State of Kansas, on the      day of                 , 1995, said stockholders met and convened and considered said proposed restatement and amendment. Such restatement and amendment made by the Restated and Amended Articles of Incorporation were duly adopted by the stockholders of the Association on that date.

The Articles of Incorporation are hereby superseded by the following Restated and Amended Articles of Incorporation.

I

The name of the Association shall be NATIONAL COOPERATIVE ASSOCIATION.

II

The Association is organized as a non-profit association under the Cooperative Marketing Act, and it may serve any or all of the purposes expressed in Article 16, Chapter 17, Kansas Statutes Annotated, and, in particular it may engage in any activity in connection with the marketing or selling of the agricultural products of its stockholders, or with the harvesting, threshing, milling, preserving, drying, processing, canning, packing, storing, handling, shipping, or utilization thereof, or the manufacturing or marketing of the byproducts thereof, or in connection with the manufacturing, selling, or supplying to its stockholders of machinery, equipment, or supplies, or in financing of any of the said activities.

III

The registered office of the Association is located at 534 South Kansas Avenue, Topeka, Shawnee County, Kansas 66603, and the Association’s resident agent at such address is The Corporation Company, Inc.

IV

The Association is to exist to July 7, A.D. 2043.

V

The Association shall have six (6) directors. Four (4) directors shall be appointed by CENEX, Inc., a Minnesota cooperative corporation, one (1) director shall be appointed by GROWMARK, Inc., a Delaware corporation, and one (1) director shall be appointed by MFA Oil Company, a Missouri farm marketing cooperative association. Each of the aforementioned NCRA stockholders shall so appoint the directors at the NCRA annual meeting. A stockholder may at any time remove any director appointed by it and appoint a new director by giving written notice of such removal and appointment to the Association. A director may be removed only by action of the stockholder which appointed such director. Vacancies on the Board of Directors shall be filled by the stockholder which is entitled to appoint such director appointing a new director by giving written notice of such appointment to the Association. The appointment and removal rights herein shall be exercisable by any successor, assignee or transferee of any of the aforementioned stockholders that holds all of the stockholder’s stock in the Association. When the appointments have been made in accordance with this Article V, those appointed shall be deemed to be elected as the members of the Board of Directors. The terms of office of the directors shall be one (1) year from the time of their election and until their successors are elected and qualified.

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VI

The authorized capital of the Association shall be the sum of $270,000,000.00, and the Association shall be authorized to issue capital stock as follows:

a. Preferred shares of stock may be issued in the total sum of $3,500,000.00, the same to be divided into 140,000 shares of stock with a par value of $25.00 each. The Preferred Stock shall have no voting rights or powers and shall not participate in the management of the affairs of the Association. In case of dissolution or liquidation of the Association, the owners of the Preferred shares shall be entitled to receive the par value of their stock, plus any accrued and unpaid dividends thereon, before any payment or distribution is made to the holders of the Common Stock. Noncumulative annual dividends may be paid upon the Preferred Stock in such amount, and in such manner, as shall be fixed in the Bylaws. Preferred shares may be retired, in whole or in part, by the Board of Directors at any time by the mailing of notice thereof to the holder to his last known address. Thereafter, upon surrender of the stock certificate, the Association shall pay the holder thereof the par value thereof plus any declared but unpaid dividends. The Board of Directors may determine which particular shares shall be retired.

b. Common Stock, Class A, may be issued in the total sum of $10,000.00 divided into 100 shares of stock with a par value of $100.00 each. Each common stockholder of the Association shall own at least one (1) share of the said stock. Holders of Class A Common Stock shall be entitled to cast one (1) vote for each of their shares of Class A Common Stock, except for the purpose of appointing directors in which case the procedure set forth in Article V shall govern. No dividends shall be payable thereon. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be stockholders of Common Stock, Class A.

c. Common Stock, Class B, may be issued in the total sum of $236,490,000.00 to be divided into 2,364,900 shares with a par value of $100.00 each. Said stock shall be coordinate with the Class A Common Stock of the Association in every respect. Holders of Class B Common Stock shall be entitled to cast one (1) vote for each of their shares of Class B Common Stock, except for the purpose of appointing directors in which case the procedure set forth in Article V shall govern. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be stockholders of Common Stock, Class B.

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d. Common Stock, Class C, may be issued in the sum of $30,000,000.00 to be divided into 300,000 shares with a par value of $100.00 each. Holders of Class C Common Stock shall have no voting rights with respect to such shares. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be stockholders of Common Stock, Class C.

VII

The provisions of the Kansas general corporation code and all powers and rights thereunder shall apply to the Association except where such provisions are in conflict with, or inconsistent with, the express provisions of Article 16, Chapter 17, Kansas Statutes Annotated and the amendments thereto from time to time.

IN WITNESS WHEREOF, the undersigned officers of the Association have hereunto set their hands and caused the seal of the Association to be affixed hereto this      day of                 , 1995.

NATIONAL COOPERATIVE REFINERY ASSOCIATION
By
	Noel K. Estenson, Chairman of the Board

ATTEST

Norman T. Jones, Secretary

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STATE OF	)
	)ss:
COUNTY OF	)

The foregoing instrument was acknowledged before me this      day of                 , 1995, by Noel K. Estenson, Chairman of the Board, and Norman T. Jones, Secretary, of National Cooperative Refinery Association, a Kansas cooperative marketing association, on behalf of the Association.

Notary Public

My appointment expires:

(SEAL)

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Exhibit B

BYLAWS

OF

NATIONAL COOPERATIVE REFINERY ASSOCIATION

(As Amended Effective                     , 1995)

NAME

Section 1. Name. The name of this cooperative corporation shall be NATIONAL COOPERATIVE REFINERY ASSOCIATION.

STOCKHOLDERS

Section 2. Qualifications of Common Stockholders. Only such natural persons, partnerships, corporations or cooperative associations as are eligible in accordance with the Cooperative Marketing Act of the State of Kansas and are approved by the Board of Directors of the Association may be common stockholders. The transfer of the Common Stock of the Association to persons not engaged in the production of agricultural products handled by the Association is prohibited, and such restrictions shall be printed upon every certificate of the Common Stock.

Section 3. Stockholder Business. The Association shall not deal in products of, or supplies for, persons who are not common stockholders to an amount greater in value than such as are handled for its common stockholders.

Section 4. Voting. The holders of Class A Common Stock and Class B Common Stock shall be entitled to cast one (1) vote for each of their shares of Class A Common Stock and Class B Common Stock, except for the purpose of appointing directors in which case Article V of the Association’s Restated and Amended Articles of Incorporation shall govern. All shares of the Association’s Class A Common Stock and Class B Common Stock shall be voted together as a single class. No class of stock of the Association other than Class A Common Stock and Class B Common Stock @ have voting rights.

SAVINGS AND OVERCHARGES

Section 5. Distribution. This Association shall at all times be operated as a non-profit cooperative Association in accordance with the provisions of the Cooperative Marketing Act of Kansas, as amended, for the purpose of furnishing crude petroleum, and refined petroleum products, at cost, to its common stockholders and subsidiaries and nominees of any of them, collectively hereinafter referred to as patrons; provided, however, that not to exceed fifty percent (50%), in value, of its total volume of business, exclusive of byproducts sales, in any fiscal year, may be transacted with any other customer or customers. Scheduling of product deliveries to patrons will be made pursuant to policies and procedures that are equitable to all patrons. The Association will sell the products allocated to its patrons F.O.B. at the Association’s refinery at time of tender, at prices specified from time to time by the Association according to the methodology historically in effect for pipeline tender purchases. Prices charged to patrons for products shall be uniform, except for such differences as may be attributable to differentials based upon grade, quality, place of delivery, and place of distribution. The excess, if any, of such prices over and above the actual cost to the Association of the goods and services supplied to such patrons shall belong to, and be refunded to, such patrons in proportion to their patronage as soon as may be practicable after the close of each fiscal year, or oftener if the Board should so order. The amount of any such overcharge shall at all times be the property of the patron to which it is refundable and shall at no time be the property or income of the Association.

The following procedure shall be employed for the purpose of determining the amount of such refund payable to each of the said patrons. As soon as may be practicable after the close of each fiscal year, or more often if the Board should so order, the total net savings of the Association for such year shall be determined in accordance with generally accepted accounting principles and practices adjusted for increases or decreases required in accordance with the applicable rules and regulations for the purpose of computing income taxes. From the total net savings thus ascertained, there shall be deducted the amount of any dividends payable upon the outstanding capital stock of the Association. From the remaining amount of net savings, there shall be deducted the net profit attributable to business done which is not with or for patrons, and the balance of net savings attributable to business done with or for patrons shall represent the refund due such patrons and shall be apportioned and distributed among them in the proportion that the volume of sales to each of such patrons during the said fiscal year bears to the total volume of sales to all such patrons during such year, either by departments or as a whole, as may be determined by the Board of Directors from time to time. The Association is obligated to make payments of the amounts so determined to the patrons by way of refunds or by way of credits to the capital account of each patron. The books and records of the Association shall be set up and kept in such a manner that at the end of each fiscal year the amounts of capital, if any, so furnished by each patron is clearly reflected and credited in an appropriate record to the capital accounts of each patron. The Association shall within 8-1/2 months after the close of each fiscal year notify each patron, in the form (to be determined by the Board of Directors) of a written notice of allocation (as defined in 26 U.S.C. 1388) of the amount of capital so credited to his or its account. Any remaining net savings not required to be distributed as dividends or as refunds to patrons shall constitute property and income of the Association subject to such distribution as may be required by law or, in the absence of any such requirement, as may be determined by the Board of Directors after making due provision for the payment of income taxes thereon.

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Each person who hereafter applies for and is accepted as a common stockholder in this Association and each person who is a common stockholder of this Association on the effective date of this Bylaw who continues as a common stockholder after such date shall, by such act alone, consent that the amount of any distributions with respect to his or its patronage occurring after June 30, 1963, which are made in qualified written notices of allocations (as defined in 26 U.S.C. 1388) and which are received from the Association, will be taken into account by him or it at their stated dollar amounts in the manner provided in 26 U.S.C. 1385(a) in the taxable year in which such written notices of allocation are received by him or it.

The Association shall have a first lien on all shares of its Class B Common Stock and Class C Common Stock held by stockholders of the Association, and, where applicable, upon all distributions declared upon the same and upon all patronage refunds, for any indebtedness of the respective holders of Class B Common Stock and Class C Common Stock to the Association whether due or to become due, whether now existing or which may hereafter be created, whether contingent or fixed and whether primary or secondary.

Each common stockholder shall file in the registered office of the Association a written acknowledgment that the common stockholder has been provided a copy of this Bylaw and has consented thereto.

Section 6. Revolving capital. For the purpose of enabling the Association to obtain additional capital with which to carry on its operations, and for the purpose of enabling it to retire such capital in the order of its initial accumulation by years, the Association is authorized to issue and sell its Class B Common Stock or Class C Common Stock in payment of the foregoing patronage overcharges. The business of the patrons of the Association shall be transacted on the condition that the Board of Directors of the Association may pay the full amount of the aforesaid overcharges due and payable to the said patrons in such Common Stock. For such purposes the Association is authorized to pay such overcharges with respect to patronage overcharges to be apportioned and distributed to patrons pursuant to the procedure set forth in the preceding Section in Class B Common Stock at its face value with the same purpose and effect as if they had been paid in cash to such patrons and such patrons had returned such cash to the Association in payment of such stock. Likewise, if the Board of Directors of the Association shall have theretofore authorized any patron to purchase crude petroleum or refined petroleum products in quantities greater than such patron would have otherwise been entitled to purchase based upon such patron’s percentage ownership of Class B Common Stock, for such purposes the Association is authorized to pay such overcharge with respect to such excess purchases in Class C Common Stock at its face value with the same purpose and effect as if they had been paid in cash to such patrons and such patrons had returned such cash to the Association in payment of such stock. Capital arising from the issuance of such stock shall be used for the purpose of creating a revolving capital fund to finance the operations of the Association, and for the purpose of revolving such capital when, in the opinion of the Board of Directors, the financial condition of the Association will permit. When the Board of Directors so determines, the portion of the patronage overcharges available for such purpose shall be devoted to the retirement of the oldest outstanding certificates of such Common Stock by

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years. Such certificates may contain such other terms and conditions not inconsistent herewith as may be prescribed from time to time by the Board of Directors. They shall be issued in annual series and each such series may be retired in whole or in part on a pro rata basis, but only at the discretion of the Board of Directors, and only in the order of issuance by years. Upon the dissolution of the Association in any manner, after the payment of all secured and unsecured indebtedness and the retirement of all Preferred Stock at par, plus any dividends declared thereon and unpaid, the said Common Stock shall be retired together with Class A Common Stock on a coordinate basis by share.

If at any time the Board shall determine that the financial condition of the Association will not be impaired thereby, the capital then credited to patrons’ accounts, in form other than Class B Common Stock or Class C Common Stock, provision for revolvement and retirement of which is provided above, may be retired in full or in part. Any such retirement of capital shall be made in order of priority according to the year in which the capital was furnished and credited with respect to such class of stock, the capital first received and credited by the Association being first retired.

Section 7. Classes of Common Stock. Each common stockholder of the Association shall own at least one (1) share of the Class A Common Stock. The Class A Stock shall be issued only for a cash consideration of $100.00 per share. The Class B Common Stock and Class C Common Stock may be issued only to common stockholders of the Association and may be issued for cash or for the purpose of paying to the common stockholders their respective proportions of patronage overcharges in accordance with the preceding section. The Class B Common Stock and Class C Common Stock shall be issued in annual series designated on the face of the certificate in accordance with the fiscal year in which such patronage overcharges accumulate. No dividends shall be payable on any class of Common Stock.

MEETINGS

Section 8. Annual Meeting. There shall be an annual meeting of the stockholders of the Association. It shall be held either within or outside of the State of Kansas at such time and at such place as shall be determined by the Board of Directors.

Section 9. Special Meetings. Special meetings of the stockholders of the Association may be called at any time by the order of the Board of Directors and shall be called by the Chairman of the Board whenever two (2) common stockholders shall make such request. The request shall state the object of the meeting.

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Section 10. Notice of Meeting. Notice shall be given by the Secretary of all meetings of the stockholders by mailing a notice thereof to each stockholder not less than ten (10) days preceding the date of the meeting. When common stockholders request a special meeting, notice of the time, place and purpose thereof shall be issued within ten (10) days from and after the presentation of the petition and such special meeting shall be held within thirty (30) days from and after the date of presenting the petition.

Section 11. Quorum. A majority of the common stockholders shall constitute a quorum.

Section 12. Order of Business. The order of the business at the annual meetings, and so far as possible at all other meetings of the stockholders, shall be:

1. Calling of roll,

2. Proof of notice of meeting,

3. Reading and disposal of all unapproved minutes,

4. Annual reports of officers and committees,

5. Unfinished business,

6. New business,

7. Election of directors.

DIRECTORS AND OFFICERS

Section 13. Directors. The business affairs of the Association shall be managed and controlled by its Board of Directors. Directors shall be elected by the stockholders as set forth in Article V of the Association’s Restated and Amended Articles of Incorporation.

Section 14. Meetings. The organization meeting of the directors shall be held immediately following the annual meeting of the stockholders at which the directors are elected and at the same place. in addition thereto, regular meetings of the Board of Directors shall be held quarter annually or at such other times and at such places as the Board may determine. Special meetings shall be held whenever called by the Chairman of the Board and shall be called on the written request of any two (2) members of the Board; and any and all business may be transacted at such meetings. Notice of the time and place of all meetings, other than the organization meeting, shall be given to each director at least seven (7) days in advance of the meeting, if by mail, or at least forty eight (48) hours in advance of the meeting if by telephone or telegraph. A majority of the Board shall constitute a quorum.

Section 15. Compensation. For his attendance at any meeting of the Board of Directors and for all time spent upon business of the corporation, each director shall receive an allowance of Five Hundred Dollars ($500.00) per day, unless he is a salaried officer, and actual expenses.

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Section 16. Officers. Officers of the Association shall consist of a Chairman, a Vice-Chairman, a General Manager, a Secretary and a Treasurer, which latter two offices may be held by one person, and such other officer or officers as the Board may determine, and shall be elected annually by the Board of Directors.

Section 17. Duties of the Chairman. The Chairman shall preside over all meetings of the stockholders of this Association and all meetings of its Board of Directors. He shall perform all acts and duties usually performed by a presiding officer. He shall sign on behalf of this Association all stock certificates and other instruments in writing within the framework of policies adopted by the Board of Directors. He shall perform any other duties in carrying out the policies adopted by the Board of Directors that may be prescribed by the Board of Directors.

Section 18. Duties of the Vice-Chairman. In the absence of the Chairman, the Vice-Chairman shall perform the duties of the Chairman; provided, however, that in case of death, resignation, or disability of the Chairman, the Board of Directors may declare the office vacant and elect his successor.

Section 19. General Manager. The Board of Directors shall select, employ, and fix the compensation of the General Manager. The General Manager shall be responsible for the efficient conduct of all of the Association’s affairs subject to the policies and determinations of the Board of Directors from time to time. To that end he shall keep the Board reasonably informed at all times on all matters substantially involving the policies or well-being of the Association. He shall have authority to sign on behalf of the Association all contracts, checks, or other instruments in writing within the framework of policies adopted by the Board of Directors; and he may delegate such authority on particular matters as in his discretion is required for efficient operation of the Association’s affairs. He shall perform such other duties as may be prescribed by the Board from time to time.

Section 20. Duties of the Secretary. The Secretary shall keep a complete record of all meetings of the Association and of the Board of Directors. He shall sign all stock certificates with the Chairman and such other papers pertaining to the Association as he may be authorized or directed to sign by the Board of Directors. He shall serve all notices required by law and by these Bylaws. He shall keep the corporate seal, the books and blank stock certificates, and complete and countersign all certificates issued, and affix the corporate seal to all papers requiring a seal. He shall keep complete stock certificate records. He shall make all reports required by law and shall perform such other duties as may be required of him by the Association or the Board of Directors. Upon the election of his successor, the Secretary shall turn over to him all books and other property belonging to the Association that he may have in his possession.

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Section 21. Duties of the Treasurer. The Treasurer shall perform such duties with respect to finances of the Association as may be prescribed by the Board of Directors.

Section 22. No Delegation. The Board of Directors shall not delegate any of its duties or functions to any committee, including any executive committee, without the unanimous vote of the directors.

MISCELLANEOUS

Section 23. Fiscal Year. The fiscal year of this Association shall begin on October 1 and end on September 30 of each year.

Section 24. Audits. The books of this Association shall be audited promptly after the close of the fiscal year and as often in addition thereto as the Board of Directors may prescribe. The annual audit shall be reported to the stockholders at the annual meeting.

Section 25. Amendments. The right to make, alter, or repeal these Bylaws is vested in the Board of Directors, subject to the right of the common stockholders to make, alter, or repeal the same.

Section 26. Indemnification Provision. The indemnification provision of Kansas Statutes Annotated 17-6305(a) to (f) inclusive, and any amendments thereto, shall be applicable as a matter of right to every person who is or was a director, officer, department head, or other employee regularly engaged in supervisory activity for the Association or for any other corporation or enterprise under authority from the Association.

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Carl M. Casale, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CHS Inc. for the quarterly period ended November 30, 2011;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 11, 2012

/s/ Carl M. Casale

Carl M. Casale

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, David A. Kastelic, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CHS Inc. for the quarterly period ended November 30, 2011;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 11, 2012

/s/ David A. Kastelic

David A. Kastelic

Executive Vice President and

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report on Form 10-Q of CHS Inc. (the “Company”) for the quarterly period ended November 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Carl M. Casale, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Carl M. Casale

Carl M. Casale

President and Chief Executive Officer

January 11, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report on Form 10-Q of CHS Inc. (the “Company”) for the quarterly period ended November 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David A. Kastelic, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    David A. Kastelic

David A. Kastelic

Executive Vice President and Chief Financial Officer

January 11, 2012

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Notes Payable

3 Months Ended

Nov. 30, 2011

Notes Payable [Abstract]

Notes Payable

Note 5. Notes Payable

	November 30, 2011		August 31, 2011		November 30, 2010
Notes payable	$	124,498	$	130,719	$	440,119
CHS Capital notes payable		521,017		585,549		511,527
	$	645,515	$	716,268	$	951,646

As of November 30, 2011, we had two primary committed lines of credit. In September 2011, we established a three-year revolving facility and a five-year revolving facility, each with committed amounts of $1.25 billion, for a total of $2.5 billion. No amounts were outstanding on either facility as of November 30, 2011. On August 31, 2011 and November 30, 2010, we had no amounts outstanding and $400.0 million outstanding, respectively, related to the primary credit facilities in place on those respective dates.

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Investments

3 Months Ended

Nov. 30, 2011

Investments [Abstract]

Investments

Note 4. Investments

Agriliance LLC (Agriliance) is owned and governed by us (50%) and Land O’Lakes, Inc. (50%). We account for our Agriliance investment using the equity method of accounting within Corporate and Other. Agriliance is currently winding down its business activities and primarily holds long-term liabilities. During the three months ended November 30, 2010, the Company received $20.0 million of cash distributions from Agriliance as returns of capital for proceeds from the sale of Agriliance retail facilities and the collection of receivables.

We have a 50% interest in Ventura Foods, LLC, (Ventura Foods), a joint venture which produces and distributes primarily vegetable oil-based products, and is included in Corporate and Other. We account for Ventura Foods as an equity method investment, and as of November 30, 2011, our carrying value of Ventura Foods of $277.6 million exceeded our share of their equity by $13.2 million, of which $0.4 million is being amortized with a remaining life of less than one year. The remaining basis difference represents equity method goodwill. The following provides summarized unaudited financial information for the Ventura Foods balance sheets as of November 30, 2011, August 31, 2011, and November 30, 2010 and the statements of operations for the three months ended November 30, 2011 and 2010:

	For the Three Months Ended November 30,
	2011		2010
Net sales	$	665,583	$	540,481
Gross profit		56,051		62,795
Net income		15,102		22,858
Net income attributable to CHS Inc.		7,551		11,429

	November 30, 2011		August 31, 2011		November 30, 2010
Current assets	$	595,727	$	585,760	$	549,899
Non-current assets		460,204		464,621		459,729
Current liabilities		235,469		227,199		201,954
Non-current liabilities		291,816		292,368		306,535

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Nov. 30, 2011	Aug. 31, 2011	Nov. 30, 2010
Current assets:
Cash and cash equivalents	$ 1,795,561	$ 937,685	$ 264,246
Receivables	2,759,759	2,980,105	2,368,849
Inventories	3,013,342	2,768,424	2,604,020
Derivative assets	402,321	635,646	366,065
Margin deposits	272,352	1,081,243	632,025
Other current assets	376,891	334,232	394,614
Total current assets	8,620,226	8,737,335	6,629,819
Investments	585,565	595,979	704,570
Property, plant and equipment	2,503,740	2,420,214	2,289,916
Other assets	427,158	463,482	474,483
Total assets	12,136,689	12,217,010	10,098,788
Current liabilities:
Notes payable	645,515	716,268	951,646
Current portion of long-term debt	92,133	90,804	113,133
Current portion of mandatorily redeemable noncontrolling interests	64,906	0	0
Customer margin deposits and credit balances	304,419	751,393	438,919
Customer advance payments	557,398	601,685	707,801
Checks and drafts outstanding	155,656	197,283	100,192
Accounts payable	2,612,963	2,315,311	1,804,433
Derivative liabilities	301,437	482,613	189,597
Accrued expenses	442,138	405,270	357,725
Dividends and equities payable	561,968	400,216	285,095
Total current liabilities	5,738,533	5,960,843	4,948,541
Long-term debt	1,383,543	1,411,193	933,651
Mandatorily redeemable noncontrolling interests	263,770	0	0
Other liabilities	666,595	579,654	487,331
Commitments and contingencies
Equities:
Equity certificates	2,652,974	2,695,626	2,379,476
Preferred stock	319,368	319,368	319,368
Accumulated other comprehensive loss	(194,230)	(174,876)	(199,301)
Capital reserves	1,293,033	1,075,474	959,307
Total CHS Inc. equities	4,071,145	3,915,592	3,458,850
Noncontrolling interests	13,103	349,728	270,415
Total equities	4,084,248	4,265,320	3,729,265
Total liabilities and equities	$ 12,136,689	$ 12,217,010	$ 10,098,788

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Receivables

3 Months Ended

Nov. 30, 2011

Receivables [Abstract]

Receivables

Note 2. Receivables

	November 30, 2011		August 31, 2011		November 30, 2010
Trade accounts receivable	$	2,028,765	$	2,248,665	$	1,694,963
CHS Capital notes receivable		572,757		604,268		625,455
Other		279,601		246,198		145,404
		2,881,123		3,099,131		2,465,822
Less allowances and reserves		121,364		119,026		96,973
	$	2,759,759	$	2,980,105	$	2,368,849

Trade accounts receivable are initially recorded at a selling price, which approximates fair value, upon the sale of goods or services to customers.

CHS Capital, our wholly-owned subsidiary, has notes receivable from commercial and producer borrowers. The short-term notes receivable generally have terms of 12-14 months and are reported at their outstanding principle balances as CHS Capital has the ability and intent to hold these notes to maturity. The notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of certain regional cooperative’s capital stock. These loans are primarily originated in the states of Minnesota, Wisconsin and North Dakota. CHS Capital also has loans receivable from producer borrowers which are collateralized by various combinations of growing crops, livestock, inventories, accounts receivable, personal property and supplemental mortgages. In addition to the short-term amounts included in the table above, CHS Capital had long-term notes receivable with durations of not more than ten years of $114.5 million, $151.1 million, and $143.4 million as of November 30, 2011, August 31, 2011 and November 30, 2010, respectively, which are included in other assets on our Consolidated Balance Sheets. As of November 30, 2011, August 31, 2011 and November 30, 2010, the commercial notes represented 86%, 84% and 93%, respectively, and the producer notes represented 14%, 16% and 7%, respectively, of the total CHS Capital notes receivable.

CHS Capital evaluates the collectability of both commercial and producer notes on a specific identification basis, based on the amount and quality of the collateral obtained, and records specific loan loss reserves when appropriate. A general reserve is also maintained based on historical loss experience and various qualitative factors. In total, our specific and general loan loss reserves related to CHS Capital are not material to our consolidated financial statements, nor are the historical write-offs. The accrual of interest income is discontinued at the time the loan is 90 days past due unless the credit is well-collateralized and in process of collection. The amount of CHS Capital notes that were past due was not significant at any reporting date presented.

CHS Capital has commitments to extend credit to a customer as long as there is no violation of any condition established in the contract. As of November 30, 2011, CHS Capital’s customers have additional available credit of $849.2 million.

In connection with the preparation of the fiscal 2011 audited financial statements, we determined that certain loan transfers under various participation agreements did not meet the definition of a ‘participating interest’, as defined in Accounting Standard Update No. 2009-16, “Accounting for Transfers and Servicing of Financial Assets” and, therefore, should have been accounted for as secured borrowings rather than sales transactions during fiscal 2011. As a result of the error described above, both receivables and notes payable reported in our previously issued unaudited Consolidated Balance Sheet included in the Quarterly Report on Form 10-Q were understated by $140.6 million as of November 30, 2010. In addition, in our previously issued unaudited Consolidated Statements of Cash Flows included in the Quarterly Report on Form 10-Q, net cash used in investing activities and net cash provided by financing activities were each understated by $140.6 million for the three months ended November 30, 2010. The November 30, 2010 previously reported unaudited interim Consolidated Balance Sheets and Consolidated Statements of Cash Flows have been revised to correct these errors. This correction had no impact on our previously reported net income or equity. In addition, it had no impact upon our compliance with any covenants under our credit facilities.

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Inventories

3 Months Ended

Nov. 30, 2011

Inventories [Abstract]

Inventories

Note 3. Inventories

	November 30, 2011		August 31, 2011		November 30, 2010
Grain and oilseed	$	1,375,456	$	1,232,818	$	1,448,876
Energy		799,061		732,609		637,702
Crop nutrients		395,551		389,741		164,279
Feed and farm supplies		384,804		346,572		281,388
Processed grain and oilseed		47,492		55,231		61,979
Other		10,978		11,453		9,796
	$	3,013,342	$	2,768,424	$	2,604,020

At November 30, 2011, we valued approximately 13% of inventories, primarily related to energy, using the lower of cost, determined on the last in first out (LIFO) method, or market (12% and 13% as of August 31, 2011 and November 30, 2010, respectively). If the first in first out (FIFO) method of accounting had been used, inventories would have been higher than the reported amount by $577.9 million, $551.0 million and $409.6 million at November 30, 2011, August 31, 2011 and November 30, 2010, respectively.

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2011	Nov. 30, 2010
Consolidated Statements of Operations [Abstract]
Revenues	$ 9,734,159	$ 8,132,854
Cost of goods sold	9,094,152	7,826,028
Gross profit	640,007	306,826
Marketing, general and administrative	112,520	98,223
Operating earnings	527,487	208,603
Gain on investments	(38)	0
Interest, net	20,807	15,012
Equity income from investments	(24,129)	(37,635)
Income before income taxes	530,847	231,226
Income taxes	41,965	24,891
Net income	488,882	206,335
Net income attributable to noncontrolling interests	72,674	4,610
Net income attributable to CHS Inc.	$ 416,208	$ 201,725

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Acquisitions

3 Months Ended

Nov. 30, 2011

Acquisitions [Abstract]

Acquisitions

Note 13. Acquisitions

NCRA:

On November 29, 2011, the Board of Directors approved a stock transfer agreement, dated as of November 17, 2011, between CHS Inc. (CHS) and GROWMARK, Inc. (Growmark), and a stock transfer agreement, dated as of November 17, 2011, between CHS and MFA Oil Company (MFA). Pursuant to these agreements, CHS will acquire from Growmark and MFA shares of Class A common stock and Class B common stock of NCRA representing approximately 25.571% of NCRA’s outstanding capital stock. CHS owns the remaining approximately 74.429% of NCRA’s outstanding capital stock and accordingly, upon completion of the acquisitions contemplated by these agreements, NCRA will be a wholly owned subsidiary of CHS.

Pursuant to the agreement with Growmark, CHS will acquire stock representing approximately 18.616% of NCRA’s outstanding capital stock in four separate closings to be held on September 1, 2012, September 1, 2013, September 1, 2014 and September 1, 2015, for an aggregate base purchase price of $255.5 million (approximately $48.0 million of which will be paid at each of the first three closings, and $111.4 million of which will be paid at the final closing). In addition, Growmark is entitled to receive up to two contingent purchase price payments following each individual closing, calculated as set forth in the agreement with Growmark, if the average crack spread margin referred to therein over the fiscal year ending on August 31 of the calendar year in which the contingent payment date falls exceeds a specified target.

Pursuant to the agreement with MFA, CHS will acquire stock representing approximately 6.955% of NCRA’s outstanding capital stock in four separate closings to be held on September 1, 2012, September 1, 2013, September 1, 2014 and September 1, 2015, for an aggregate base purchase price of $95.5 million (approximately $18.0 million of which will be paid at each of the first three closings, and $41.6 million of which will be paid at the final closing). In addition, MFA is entitled to receive up to two contingent purchase price payments following each individual closing, calculated as set forth in the agreement with MFA, if the average crack spread margin referred to therein over the fiscal year ending on August 31 of the calendar year in which the contingent payment date falls exceeds a specified target.

As a result of this transaction, we are no longer including the noncontrolling interests related to NCRA as a component of equity. Instead, we recorded the present value of the future payments to be made to Growmark and MFA as a liability on our Consolidated Balance Sheet as of November 30, 2011. Noncontrolling interests in the amount of $337.1 million was reclassified and an additional adjustment to equity in the amount of $96.7 million was recorded as a result of the transaction. The $105.2 million fair value related to the crack spread contingent payments has also been recorded on our Consolidated Balance Sheet as of November, 30, 2011 and is included in other liabilities. The fair value of the accrued liability was calculated utilizing an average price option model, an adjusted black-scholes pricing model commonly used in the energy industry to value options. Subsequent changes in the fair value of the crack spread contingent payments will be included in cost of goods sold in our Consolidated Statements of Operations. The portion of NCRA earnings attributable to Growmark and MFA for the first quarter of fiscal 2012, prior to the transaction date, have been included in net income attributable to noncontrolling interests. Beginning in the second quarter of fiscal 2012, earnings will not be attributable to the noncontrolling interests and future patronage earned by Growmark and MFA will be included as interest, net in our Consolidated Statements of Operations.

Solbar:

On November 23, 2011, we entered into an agreement and plan of merger to acquire Solbar Industries Ltd., an Israeli company (Solbar).

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each ordinary share of Solbar issued and outstanding at the effective time would be converted into the right to receive from CHS $4.00 in cash, without interest, which reflects an equity value of approximately $133.0 million. Included in this value is an amount related to Solbar stock options which would be terminated in exchange for a cash payment in an amount per share equal to the difference between the applicable exercise price per share and $4.00.

Provided all conditions set forth in the merger agreement are met, we anticipate that the merger will be consummated in our second quarter of fiscal 2012.

Creston:

In November 2011, we acquired a crushing facility in Creston, Iowa for $32.3 million.

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Document and Entity Information	3 Months Ended
	Nov. 30, 2011	Jan. 11, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	CHS INC
Entity Central Index Key	0000823277
Document Type	10-Q
Document Period End Date	Nov. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--08-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		0

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2011	Nov. 30, 2010
Cash flows from operating activities:
Net income including noncontrolling interests	$ 488,882	$ 206,335
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	51,645	51,525
Amortization of deferred major repair costs	7,878	5,754
Equity income from investments	(24,129)	(37,635)
Distributions from equity investments	40,961	35,794
Noncash patronage dividends received	(108)	(661)
Gain on sale of property, plant and equipment	(915)	(736)
Gain on investments	(38)	0
Deferred taxes	972	4,135
Other, net	179	173
Changes in operating assets and liabilities, net of acquisitions:
Receivables	238,487	(171,143)
Inventories	(227,824)	(642,645)
Derivative assets	233,885	(117,391)
Margin deposits	810,149	(13,640)
Other current assets and other assets	(53,858)	(212,468)
Customer margin deposits and credit balances	(447,450)	15,348
Customer advance payments	(45,000)	272,576
Accounts payable and accrued expenses	249,411	316,711
Derivative liabilities	(181,216)	(92,463)
Other liabilities	15,561	3,994
Net cash provided by (used in) operating activities	1,157,472	(376,437)
Cash flows from investing activities:
Acquisition of property, plant and equipment	(98,901)	(84,508)
Proceeds from disposition of property, plant and equipment	1,497	1,103
Expenditures for major repairs	(16,570)	(95,806)
Investments in joint ventures and other	(3,220)	(3,468)
Investments redeemed	49	20,028
Changes in notes receivable	31,506	(291,237)
Business acquisitions, net of cash acquired	(32,346)	(3,150)
Other investing activities, net	1,404	33
Net cash used in investing activities	(116,581)	(457,005)
Cash flows from financing activities:
Changes in notes payable	(70,753)	689,556
Long-term debt borrowings	0	100,000
Principal payments on long-term debt	(39,157)	(38,257)
Payments for bank fees on debt	(12,390)	(3,448)
Changes in checks and drafts outstanding	(41,626)	(34,058)
Distributions to noncontrolling interests	(5,779)	(3,486)
Preferred stock dividends paid	(6,136)	(6,136)
Retirements of equities	(2,447)	(2,440)
Other financing activities, net	(2)	0
Net cash (used in) provided by financing activities	(178,290)	701,731
Effect of exchange rate changes on cash and cash equivalents	(4,725)	1,294
Net increase (decrease) in cash and cash equivalents	857,876	(130,417)
Cash and cash equivalents at beginning of period	937,685	394,663
Cash and cash equivalents at end of period	$ 1,795,561	$ 264,246

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Comprehensive Income

3 Months Ended

Nov. 30, 2011

Comprehensive Income [Abstract]

Comprehensive Income

Note 8. Comprehensive Income

Total comprehensive income was $484.1 million and $212.3 million for the three months ended November 30, 2011 and 2010, respectively, which included amounts attributable to noncontrolling interests of $72.7 million and $4.6 million, respectively. Total comprehensive income primarily consisted of net income attributable to CHS Inc. during the three months ended November 30, 2011 and 2010. On November 30, 2011, August 31, 2011 and November 30, 2010, accumulated other comprehensive loss primarily consisted of pension liability adjustments.

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Equities

3 Months Ended

Nov. 30, 2011

Equities [Abstract]

Equities

Note 7. Equities

Changes in equity for the three-month periods ended November 30, 2011 and 2010 are as follows:

	Fiscal 2012			Fiscal 2011
CHS Inc. balances, September 1, 2011 and 2010	$	3,915,592		$	3,335,664
Net income attributable to CHS Inc.		416,208			201,725
Other comprehensive (loss) income		(4,772	)		5,966
Equities retired		(2,447	)		(2,440	)
Equity retirements accrued		2,447			2,440
Equities issued in business combinations		11,509
Preferred stock dividends		(6,136	)		(6,136	)
Preferred stock dividends accrued		4,091			4,091
Accrued dividends and equities payable		(168,291	)		(81,191	)
Purchase of noncontrolling interests		(96,720	)
Other, net		(336	)		(1,269	)
CHS Inc. balances, November 30, 2011 and 2010	$	4,071,145		$	3,458,850
Noncontrolling interests balances, September 1, 2011 and 2010	$	349,728		$	268,787
Net income attributable to noncontrolling interests		72,674			4,610
Distributions to noncontrolling interests		(5,779	)		(3,486	)
Distributions accrued		5,544			2,757
Accrued dividends and equities payable		(71,740	)
Purchase of noncontrolling interests		(337,145	)
Other		(179	)		(2,253	)
Noncontrolling interests balances, November 30, 2011 and 2010	$	13,103		$	270,415

The purchase of noncontrolling interests above relate to our firm commitment to purchase the remaining NCRA noncontrolling interests. See Note 13, Acquisitions for additional information.

The following table presents the effect of changes in our NCRA ownership interest on CHS Inc. equities:

	For the Three Months Ended November 30,
	2011			2010
Net income attributable to CHS Inc.	$	416,208		$	201,725
Transfers to noncontrolling interests:
Decrease in CHS Inc. capital reserves for purchase of noncontrolling interests		(82,138	)
Changes from net income attributable to CHS Inc. and transfers to noncontrolling interests	$	334,070		$	201,725

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Fair Value Measurements

3 Months Ended

Nov. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 11. Fair Value Measurements

The following table presents assets and liabilities included in our Consolidated Balance Sheets that are recognized at fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value. As required by accounting standards, assets and liabilities are classified, in their entirety, based on the lowest level of input that is a significant component of the fair value measurement. The lowest level of input is considered Level 3. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels. Fair value measurements at November 30, 2011, August 31, 2011 and November 30, 2010 were as follows:

	Fair Value Measurements at November 30, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Readily marketable inventories			$	1,423,083			$	1,423,083
Commodity and freight derivatives	$	147,915		254,406				402,321
Other assets		69,271						69,271
Total Assets	$	217,186	$	1,677,489			$	1,894,675
Liabilities:
Commodity and freight derivatives	$	18,583	$	282,259			$	300,842
Interest rate swap derivatives				595				595
Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests					$	105,188		105,188
Mandatorily redeemable noncontrolling interests						328,676		328,676
Total Liabilities	$	18,583	$	282,854	$	433,864	$	735,301

	Fair Value Measurements at August 31, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Total
Assets:
Readily marketable inventories			$	1,288,049		$	1,288,049
Commodity and freight derivatives	$	85,082		549,056			634,138
Foreign currency derivatives		1,508					1,508
Other assets		68,246					68,246
Total Assets	$	154,836	$	1,837,105		$	1,991,941
Liabilities:
Commodity and freight derivatives	$	191,607	$	290,256		$	481,863
Interest rate swap derivatives				750			750
Total Liabilities	$	191,607	$	291,006		$	482,613

	Fair Value Measurements at November 30, 2010
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Total
Assets:
Readily marketable inventories			$	1,510,855		$	1,510,855
Commodity and freight derivatives	$	46,024		320,041			366,065
Other assets		67,247					67,247
Total Assets	$	113,271	$	1,830,896		$	1,944,167
Liabilities:
Commodity and freight derivatives	$	18,035	$	169,542		$	187,577
Foreign currency derivatives		1,281					1,281
Interest rate swap derivatives				739			739
Total Liabilities	$	19,316	$	170,281		$	189,597

Readily marketable inventories — Our readily marketable inventories primarily include our grain and oilseed inventories that are stated at fair values. These commodities are readily marketable, have quoted market prices and may be sold without significant additional processing. We estimate the fair market values of these inventories included in Level 2 primarily based on exchange quoted prices, adjusted for differences in local markets. Changes in the fair market values of these inventories are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Commodity, freight and foreign currency derivatives — Exchange traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward commodity purchase and sales contracts, flat price or basis fixed derivative contracts, ocean freight contracts and other OTC derivatives are determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, adjusted for location specific inputs, and are classified within Level 2. The location specific inputs are generally broker or dealer quotations, or market transactions in either the listed or OTC markets. Changes in the fair values of these contracts are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Other assets — Our available-for-sale investments in common stock of other companies and our Rabbi Trust assets are valued based on unadjusted quoted prices on active exchanges and are classified within Level 1. Changes in the fair values of these other assets are primarily recognized in our Consolidated Statements of Operations as a component of marketing, general and administrative expenses.

Interest rate swap derivatives — Fair values of our interest rate swap liabilities are determined utilizing valuation models that are widely accepted in the market to value such OTC derivative contracts. The specific terms of the contracts, as well as market observable inputs such as interest rates and credit risk assumptions, are factored into the models. As all significant inputs are market observable, all interest rate swaps are classified within Level 2. Changes in the fair values of contracts not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of Operations as a component of interest, net. Changes in the fair values of contracts designated as hedging instruments are deferred to accumulated other comprehensive loss in the equity section of our Consolidated Balance Sheets and are amortized into earnings within interest, net over the term of the agreements.

Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests — The fair value of the accrued liability was calculated utilizing an average price option model, an adjusted black-scholes pricing model commonly used in the energy industry to value options. The model uses market observable inputs and unobservable inputs. Due to significant unobservable inputs used in the pricing model, the liability is classified within Level 3. Significant inputs used in the pricing model are as follows:

	Fiscal 2012
Crack spread margin on November 30	$12.36
Contractual target crack spread margin	$17.50
Expected volatility	97.46%
Risk-free interest rate	0.3-1.2%
Expected life (years)	1.75- 5.76

The expected volatility was calculated using annualized daily historical market crack spread data. We adjust the volatility for market fluctuations on an annual basis.

Mandatorily redeemable noncontrolling interests — The fair value is calculated by discounting each future redemption payment to its present value as of the balance sheet date. Our long-term borrowing rates were used as the discount rates for the present value calculations. We believe the discount rates that are used are commensurate with the risk inherent in our cash flows. The inputs are significant unobservable inputs, and the liability is classified within Level 3.

The table below represents a reconciliation at November 30, 2011, for liabilities measured at fair value using significant unobservable inputs (Level 3):

	Level 3 Liabilities
	Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests		Mandatorily redeemable noncontrolling interests
Balances, September 1, 2011	$	—	$	—
Purchases		105,188		328,676
Balances, November 30, 2011	$	105,188	$	328,676

There were no significant transfers between Level 1, Level 2, and Level 3 assets and liabilities.

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Employee Benefit Plans

3 Months Ended

Nov. 30, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

Note 9. Employee Benefit Plans

Employee benefits information for the three months ended November 30, 2011 and 2010 is as follows:

	Qualified Pension Benefits						Non-Qualified Pension Benefits				Other Benefits
	2011			2010			2011		2010		2011			2010
Components of net periodic benefit costs for the three months ended November 30, 2011 and 2010:
Service cost	$	6,502		$	6,467		$	172	$	320	$	510		$	420
Interest cost		5,935			5,505			348		497		636			509
Expected return on plan assets		(10,024	)		(10,475	)
Prior service cost (credit) amortization		458			582			57		35		(26	)		(31	)
Actuarial loss amortization		3,732			3,964			112		253		207			87
Transition amount amortization												234			235
Net periodic benefit cost	$	6,603		$	6,043		$	689	$	1,105	$	1,561		$	1,220

Employer Contributions:

Total contributions to be made during fiscal 2012, including the NCRA plan, will depend primarily on market returns on the pension plan assets and minimum funding level requirements. During the three months ended November 30, 2011, CHS and NCRA made no contributions to the pension plans. At this time, we do not anticipate having to make a contribution for our benefit plans in fiscal 2012.

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Segment Reporting

3 Months Ended

Nov. 30, 2011

Segment Reporting [Abstract]

Segment Reporting

Note 10. Segment Reporting

We have aligned our segments based on an assessment of how our businesses operate and the products and services they sell. During our second quarter of fiscal 2011, there were several changes in our senior leadership team which resulted in the realignment of our segments based on an assessment of how our businesses operate and the products and services they sell. One of these changes is that we no longer have a chief operating officer of Processing, resulting in the elimination of that segment. The revenues previously reported in our Processing segment were entirely from our oilseed processing operations, and those operations have grain-based commodity inputs and similar commodity risk management requirements and are managed along with other operations in our Ag Business segment. Accordingly, we have included oilseed processing in that segment. Our wheat milling and packaged food operations previously included in our Processing segment are now included in Corporate and Other, as those businesses are conducted through non-consolidated joint ventures. In addition, our non-consolidated agronomy joint venture is winding down its business activity and is included in Corporate and Other, rather than in our Ag Business segment, where it was previously reported. There was no change to our Energy segment. For comparative purposes, segment information for the three months ended November 30, 2010, have been retrospectively revised to reflect these changes. This revision had no impact on consolidated net income or net income attributable to CHS Inc.

Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag Business segment purchases and further processes or resells grains and oilseeds originated by our members or third parties, and also serves as a wholesaler and retailer of crop inputs. Corporate and Other primarily represents the non-consolidated wheat milling and packaged food joint ventures, as well as our business solutions operations, which consists of commodities hedging, insurance and financial services related to crop production.

Corporate administrative expenses are allocated to each business segment, and Corporate and Other, based on direct usage for services that can be tracked, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and operating results will vary throughout the year. Historically, our income is generally lowest during the second fiscal quarter and highest during the third fiscal quarter. Our business segments are subject to varying seasonal fluctuations. For example, in our Ag Business segment, agronomy and country operations businesses experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Also in our Ag Business segment, our grain marketing operations are subject to fluctuations in volumes and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and crop drying seasons.

Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, and general political and economic conditions.

While our revenues and operating results are derived from businesses and operations which are wholly-owned and majority-owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. In our Ag Business segment, this principally includes our 50% ownership in TEMCO, LLC (TEMCO). In Corporate and Other, these investments principally include our 50% ownership in Ventura Foods and our 24% ownership in Horizon Milling and Horizon Milling G.P.

Reconciling Amounts represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments.

Segment information for the three months ended November 30, 2011 and 2010 is as follows:

	Energy			Ag Business			Corporate and Other			Reconciling Amounts			Total
For the Three Months Ended November 30, 2011
Revenues	$	3,396,974		$	6,449,821		$	17,494		$	(130,130	)	$	9,734,159
Cost of goods sold		2,965,168			6,259,871			(757	)		(130,130	)		9,094,152
Gross profit		431,806			189,950			18,251			—			640,007
Marketing, general and administrative		32,903			61,843			17,774						112,520
Operating earnings		398,903			128,107			477			—			527,487
Gain on investments					(38	)								(38	)
Interest, net		3,502			13,914			3,391						20,807
Equity income from investments		(1,890	)		(7,162	)		(15,077	)					(24,129	)
Income before income taxes	$	397,291		$	121,393		$	12,163		$	—		$	530,847
Intersegment revenues	$	(130,130	)							$	130,130		$	—
Goodwill	$	1,165		$	18,170		$	6,898					$	26,233
Capital expenditures	$	59,716		$	37,504		$	1,681					$	98,901
Depreciation and amortization	$	26,429		$	20,358		$	4,858					$	51,645
Total identifiable assets at November 30, 2011	$	4,063,388		$	5,359,783		$	2,713,518					$	12,136,689
For the Three Months Ended November 30, 2010
Revenues	$	2,392,742		$	5,813,264		$	15,614		$	(88,766	)	$	8,132,854
Cost of goods sold		2,305,443			5,610,320			(969	)		(88,766	)		7,826,028
Gross profit		87,299			202,944			16,583			—			306,826
Marketing, general and administrative		30,076			52,716			15,431						98,223
Operating earnings		57,223			150,228			1,152			—			208,603
Interest, net		1,633			10,593			2,786						15,012
Equity income from investments		(1,666	)		(15,039	)		(20,930	)					(37,635	)
Income before income taxes	$	57,256		$	154,674		$	19,296		$	—		$	231,226
Intersegment revenues	$	(88,766	)							$	88,766		$	—
Goodwill	$	1,165		$	15,687		$	6,898					$	23,750
Capital expenditures	$	53,485		$	30,072		$	951					$	84,508
Depreciation and amortization	$	29,279		$	18,019		$	4,227					$	51,525
Total identifiable assets at November 30, 2010	$	2,941,978		$	4,930,830		$	2,225,980					$	10,098,788

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Commitments and Contingencies

3 Months Ended

Nov. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 12. Commitments and Contingencies

Guarantees

We are a guarantor for lines of credit and performance obligations of related companies. As of November 30, 2011, our bank covenants allowed maximum guarantees of $500.0 million, of which $38.0 million was outstanding. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. All outstanding loans with respective creditors are current as of November 30, 2011.

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Accounting Policies

3 Months Ended

Nov. 30, 2011

Accounting Policies [Abstract]

Accounting Policies

Note 1. Accounting Policies

Basis of Presentation and Reclassifications

The unaudited Consolidated Balance Sheets as of November 30, 2011 and 2010, the Consolidated Statements of Operations for the three months ended November 30, 2011 and 2010, and the Consolidated Statements of Cash flows for the three months ended November 30, 2011 and 2010, reflect in the opinion of our management, all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full fiscal year because of, among other things, the seasonal nature of our businesses. Our Consolidated Balance Sheet data as of August 31, 2011, has been derived from our audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The consolidated financial statements include our accounts and the accounts of all of our wholly-owned and majority-owned subsidiaries and limited liability companies, which is primarily National Cooperative Refinery Association (NCRA), included in our Energy segment. The effects of all significant intercompany accounts and transactions have been eliminated.

These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, 2011, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission.

As discussed in Note 10, we have aligned our segments based on an assessment of how our businesses operate and the products and services they sell.

In April 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” ASU No. 2011-02 clarifies the accounting principles applied to loan modifications and addresses the recording of an impairment loss. The adoption of ASU No. 2011-02 during the first quarter of fiscal 2012 did not have a material impact on our consolidated financial statements.

As of September 1, 2011, we changed the expected useful lives of certain fixed assets in our Energy segment. We increased the expected useful lives of refining and asphalt assets from 16 years to 20 years, which we estimate will reduce depreciation expense by approximately $27.0 million in fiscal 2012.

Derivative Instruments and Hedging Activities

Our derivative instruments primarily consist of commodity and freight futures and forward contracts and, to a minor degree, may include foreign currency and interest rate swap contracts. These contracts are economic hedges of price risk, but are not designated or accounted for as hedging instruments for accounting purposes, with the exception of some derivative instruments included in our Energy segment as well as some interest rate swap contracts which were accounted for as cash flow hedges. Derivative instruments are recorded on our Consolidated Balance Sheets at fair values as discussed in Note 11, Fair Value Measurements.

Certain financial contracts within our Energy segment were entered into, and had been designated and accounted for as hedging instruments (cash flow hedges). The unrealized gains or losses of these contracts were previously deferred to accumulated other comprehensive loss in the equity section of our Consolidated Balance Sheet and all amounts were recognized in cost of goods sold as of August 31, 2011, with no amounts remaining in accumulated other comprehensive loss.

We have netting arrangements for our exchange-traded futures and options contracts and certain over-the-counter (OTC) contracts, which are recorded on a net basis in our Consolidated Balance Sheets. Although accounting standards permit a party to a master netting arrangement to offset fair value amounts recognized for derivative instruments against the right to reclaim cash collateral or the obligation to return cash collateral under the same master netting arrangement, we have not elected to net our margin deposits.

As of November 30, 2011, August 31, 2011 and November 30, 2010, we had the following outstanding purchase and sales contracts that are accounted for as derivatives:

	November 30, 2011				August 31, 2011				November 30, 2010
	Purchase Contracts		Sales Contracts		Purchase Contracts		Sales Contracts		Purchase Contracts		Sales Contracts
	(units in thousands)
Grain and oilseed - bushels		573,239		825,374		667,409		796,332		752,908		1,033,107
Energy products - barrels		8,687		13,338		9,915		14,020		4,454		9,281
Crop nutrients - tons		829		1,122		1,177		1,420		1,918		1,790
Ocean and barge freight - metric tons		1,101		341		983		93		1,921		371

As of November 30, 2011, August 31, 2011 and November 30, 2010, the gross fair values of our derivative assets and liabilities not designated as hedging instruments were as follows:

	November 30, 2011		August 31, 2011		November 30, 2010
Derivative Assets:
Commodity and freight derivatives	$	641,890	$	882,445	$	705,690
Foreign exchange derivatives		15		1,508
	$	641,905	$	883,953	$	705,690
Derivative Liabilities:
Commodity and freight derivatives	$	540,426	$	730,170	$	529,256
Foreign exchange derivatives						1,281
Interest rate derivatives		595		750		739
Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests		105,188
	$	646,209	$	730,920	$	531,276

As of November 30, 2010, the gross fair values of our derivative assets and liabilities designated as cash flow hedging instruments were as follows:

	November 30, 2010
Derivative Assets:
Commodity and freight derivatives	$	2,054

For the three-month periods ended November 30, 2011 and 2010, the pre-tax gain (loss) recognized in our Consolidated Statements of Operations for derivatives not accounted for as hedging instruments were as follows:

	Location of Gain (Loss)	Amount of Gain (Loss)
		For the Three Months Ended November 30,
		2011			2010
Commodity and freight derivatives	Cost of goods sold	$	(50,933	)	$	210,424
Foreign exchange derivatives	Cost of goods sold		686			(1,050	)
Interest rate derivatives	Interest, net		0			7
		$	(50,247	)	$	209,381

Losses of $2.2 million ($1.3 million, net of taxes) were recorded in our Consolidated Statement of Operations for derivatives designated as cash flow hedging instruments during the three months ended November 30, 2010, related to settlements. All contracts were entered into during our third quarter of fiscal 2010, and expired in fiscal 2011. As of November 30, 2010, the unrealized gains deferred to accumulated other comprehensive loss were as follows:

	November 30, 2010
Gains included in accumulated other comprehensive loss, net of tax expense of $0.8 million	$	1,255

Goodwill and Other Intangible Assets

Goodwill was $26.2 million, $26.4 million and $23.8 million on November 30, 2011, August 31, 2011 and November 30, 2010, respectively, and is included in other assets in our Consolidated Balance Sheets.

Intangible assets subject to amortization primarily include customer lists, trademarks and agreements not to compete, and are amortized over the number of years that approximate their respective useful lives (ranging from 3 to 30 years). Excluding goodwill, the gross carrying amount of our intangible assets was $75.3 million with total accumulated amortization of $45.1 million as of November 30, 2011. No intangible assets were acquired during the three-month periods ended November 30, 2011 or 2010. Total amortization expense for intangible assets during the three-month periods ended November 30, 2011 and 2010, was $2.7 million and $2.9 million, respectively. The estimated annual amortization expense related to intangible assets subject to amortization for the next five years is as follows:

Year 1	$	9,196
Year 2		5,691
Year 3		3,209
Year 4		2,496
Year 5		2,011
Thereafter		7,581
	$	30,184

In our Energy segment, major maintenance activities (turnarounds) at our two refineries are accounted for under the deferral method. Turnarounds are the scheduled and required shutdowns of refinery processing units. The costs related to the significant overhaul and refurbishment activities include materials and direct labor costs. The costs of turnarounds are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs, which is generally 2-4 years. The amortization expense related to turnaround costs are included in cost of goods sold in our Consolidated Statements of Operations. The selection of the deferral method, as opposed to expensing the turnaround costs when incurred, results in deferring recognition of the turnaround expenditures. The deferral method also results in the classification of the related cash flows as investing activities in our Consolidated Statements of Cash Flows, whereas expensing these costs as incurred, would result in classifying the cash outflows as operating activities.

For the three months ended November 30, 2011 and 2010, major repairs turnaround expenditures were $16.6 million and $95.8 million, respectively. During the three months ended November 30, 2011, our Laurel, Montana refinery completed a turnaround. During the three months ended November 30, 2010, both our Laurel, Montana and NCRA’s McPherson, Kansas refineries completed turnarounds.

Recent Accounting Pronouncements

In April 2011, the FASB issued ASU No. 2011-03, “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.” ASU No. 2011-03 removes the transferor’s ability criterion from the consideration of effective control for repurchase agreements and other agreements that both entitle and obligate the transferor to repurchase or redeem financial assets before their maturity. It also eliminates the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets. This guidance is effective for interim and annual periods beginning on or after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in our third quarter of fiscal 2012.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards.” ASU No. 2011-04 provides a consistent definition of fair value to ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. ASU No. 2011-04 is effective for interim and annual periods beginning after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in our third quarter of fiscal 2012.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of stockholders’ equity. It requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05”, to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. All other provisions of this update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We are currently evaluating the impact that the adoption will have on our consolidated financial statements in fiscal 2013.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350)—Testing Goodwill for Impairment.” ASU No. 2011-08 allows entities to use a qualitative approach to test goodwill for impairment. It permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, and early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-09, “Compensation—Retirement Benefits— Multiemployer Plans (Subtopic 715-80).” ASU No. 2011-09 requires that employers provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. The additional quantitative and qualitative disclosures will provide users with more detailed information about an employer’s involvement in multiemployer pension plans. This guidance is effective for annual periods for fiscal years ending after December 15, 2011, and early adoption is permitted. As ASU No. 2011-09 is only disclosure related, it will not have an impact on our financial position, results of operations, or cash flows.

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Interest, net

3 Months Ended

Nov. 30, 2011

Interest, net [Abstract]

Interest, net

Note 6. Interest, net

	For the Three Months Ended November 30,
	2011			2010
Interest expense	$	23,307		$	18,897
Capitalized interest		(1,806	)		(1,396	)
Interest income		(694	)		(2,489	)
Interest, net	$	20,807		$	15,012