MINN-DAK FORM 10-K FISCAL YEAR ENDED AUGUST 31, 2007

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o YES x NO

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. o YES x NO

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. x YES o NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 2b-2 of the Exchange Act. (Check one):

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

Minn-Dak Farmers Cooperative (the “Company”) has previously registered securities for offer and sale pursuant to the Securities Act of 1933, as amended (the “Securities Act”). As a result of that previous registration under the Securities Act, under Sections 15(d) and 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is obligated to file quarterly reports on form 10-Q, annual reports on Form 10-K and supplemental reports on Form 8-K. However, the Company has not registered any of its securities under Section 12(g) of the Exchange Act. The Company is exempt from any obligation to register its securities under the Exchange Act due to the provisions of Section 12(g)(2)(E), which exempts from Exchange Act registration any security of an issuer, such as the Company, which is a “cooperative association” as defined in the Agricultural Marketing Act of 1929. As a result, those provisions of the Exchange Act, which are applicable only to securities registered under Section 12 of that act, do not apply to shares issued by the Company. The provisions, which do not apply to the Company’s shares, include the regulation of proxies under Section 14 of the Exchange Act and the reporting and other obligations of directors, officers and principal stockholders under Section 16 of the Exchange Act.

This report contains forward-looking statements and information based upon assumptions by the Company’s management, including assumptions about risks and uncertainties faced by the Company. Any statements regarding future market prices, anticipated costs, agricultural results, operating results and other statements that are not historical facts contained in this annual report are considered forward-looking statements. The words “expect”, “project”, “estimate”, “believe”, “anticipate”, “plan”, “intend”, “could”, “may”, “predict”, and similar expressions are also intended to be identified as forward-looking terminology. Such statements involve risks, uncertainties and assumptions, including, without limitation, market factors, the effect of weather and economic conditions, farm and trade policy, the available supply of sugar, available quantity and quality of sugarbeets and other factors detailed elsewhere in this and other Company filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

The Company is a closed cooperative whose common stock and preferred stock are subject to significant restrictions on transfer and eligibility requirements. No public market for voting and non-voting common equity of the Company is established and it is unlikely in the foreseeable future that a public market for its voting and non-voting common equity will develop.

Stock purchased by investors in the Company typically do not use valuation methods that are commonly used for stock bought or sold on the open market for personal or institutional investment purposes.

The Company is typically referred to as a “Closed Cooperative”. In a “Closed Cooperative”, members must purchase equity (represented by classes of preferred shares) in a cooperative to acquire the rights to participate in the cooperative’s business, and membership must be approved by the Cooperative’s Board of Directors. The Company requires shareholders to own a Unit of Preferred Stock, which currently entitles a member to grow and deliver a maximum number of acres of sugarbeets per unit as authorized by the Board of Directors for each farming year. See Part II Item 5 for a more detailed explanation.

As of November 15, 2007, 484 shares of the Company’s Common Stock and 72,200 “units” of the Registrant’s Preferred Stock, each consisting of 1 share of Class A Preferred Stock, 1 share of Class B Preferred Stock and 1 share of Class C Preferred Stock, were outstanding.

The Company has not made any repurchases of its securities in the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K.

There is only a limited, private market for shares of the Company’s Common or Preferred Stock, as such shares may be held only by farmer-producers who are eligible for membership in the Company. The Company’s shares are not listed for trading on any exchange or quotation system. A number of stock transfers, representing approximately 3% of available stock, were not arms length (estate settlements, estate planning from one generation to the next, etc.) and an accurate value for that stock was not available. The Company believes that less than 1% of its available stock was traded at arm’s length during the fiscal year ended August 31, 2007. Of the stock transferred at arms length, the transfers were made during the second and third quarters of the Company’s fiscal year and, to the best of the Company’s knowledge, ranged in price from $3,300 to $2,850 per unit. The fourth quarter did not have any arms length transactions. The value of stock is highly dependent upon an individual stockholder’s ability to raise sugarbeets successfully both agronomically and financially. Prior to purchasing stock, a potential stockholder is advised to properly research the agronomic aspect of stock ownership.

The Company is a North Dakota agricultural cooperative that was formed in 1972 and currently has 484 members. Membership in the Company is limited to sugarbeet growers located in those areas of North Dakota and Minnesota within an approximate fifty (50) mile radius of the Company’s offices and sugarbeet processing facilities in Wahpeton, North Dakota. The Company’s facilities allow the members to process their sugarbeets into sugar and other products. The products are pooled and then marketed through the services of marketing agents under contract with the Company. The sugar-marketing agent, United Sugars Corporation, is a cooperative association owned by its members, the Company, American Crystal Sugar Company and United States Sugar Corporation. The Company’s sugarbeet molasses and sugarbeet pulp are also marketed through a marketing agent, Midwest Agri-Commodities Company. Midwest Agri-Commodities Company is a cooperative association owned by its members, the Company, American Crystal Sugar Company, Southern Minnesota Beet Sugar Cooperative and Michigan Sugar Company. The Company owns a 100% interest in Minn-Dak Yeast Company, Inc. (“Minn-Dak Yeast”), which has facilities located adjacent to the Company’s sugar production facilities, and which produces fresh baker’s yeast.

The Company’s corporate headquarters are located at 7525 Red River Road, Wahpeton, North Dakota 58075, telephone number (701) 642-8411. Its fiscal year ends August 31. The Company’s website is www.mdf.coop. The Company files annual, quarterly and periodic reports with the United States Securities and Exchange Commission (SEC). The SEC maintains an Internet site at http:/www.sec.gov that contains reports and other information filed electronically about the Company.

The Company is engaged primarily in the production and marketing of sugar from sugarbeets. The Company also produces and markets certain co-products, sugarbeet molasses and sugarbeet pulp pellets, of the sugar it produces. The Company’s subsidiary Minn-Dak Yeast uses a portion of the Company’s sugarbeet molasses as the growth medium in the production of fresh baker’s yeast. Minn-Dak Yeast provided revenues totaling approximately 5% of the Company’s total revenues for the fiscal year ended August 31, 2007.

The Company processes sugarbeets grown by its members at its sugarbeet processing facility located in Wahpeton, North Dakota. The processing period generally occurs from September to March or April of the following year, depending on the size of the crop.

Because the Company’s harvest period is much shorter than its processing period, sugarbeet long-term storage is very important to maximize the earnings from each crop year. Each harvest is unique and critical judgments are made by the agricultural staff regarding each crop. Judgments are impacted by the weather conditions at the time of harvest. If the weather is too warm or too cold the sugarbeets will not store well.

The Company uses what it considers to be the best industry practices to preserve and extend the quality of sugarbeets it has in storage. The methods utilized by the Company include, but are not limited to: minimizing pile height, leveling the tops of piles, infrared scanning, timely hauling, splitting piles, passive ventilation, active ventilation, covering active ventilation piles with plastic, storage sheds, and insulating sugarbeets in storage sheds. Each method is evaluated for its anticipated economic impact for each crop year.

The period during which the Company’s processing facility is in operation to process sugarbeets into sugar and co-products is referred to as the “campaign.” The campaign is expected to begin in September of each year and continues until the available supply of sugarbeets has been depleted. Once the sugarbeets arrive at the processing facility, the basic steps in producing sugar from them include: washing; slicing into thin strips called “cossettes”; extracting the sugar from the cossettes in a diffuser; purifying the resulting “raw juice” and boiling it, first in an evaporator to thicken it and then in vacuum pans to crystallize the sugar; separating the sugar crystals in a centrifuge; drying the sugar; and storing sugar in bulk form for bulk and bag shipping.

The Company’s sugarbeet co-products include sugarbeet molasses, sugarbeet pulp pellets and sugarbeet pressed pulp. After the extraction of raw juice from the cossettes, the remaining sugarbeet pulp is dried, processed into pellets and sold as animal feed or not dried and sold as wet animal feed to the local market. The sugarbeet molasses is the process materials left after all economical means have been taken to extract the sugar from the process. The sugarbeet molasses is sold primarily to yeast and pharmaceutical manufacturers and for use in animal feeds.

The Company’s members harvested 2.2 million tons of sugarbeets from the 2007-crop, approximately 6% below the most recent 5-year average, due to difficult growing conditions early in the growing season. The Company purchased .3 million tons of non-member 2007-crop sugarbeets from a neighboring sugar processor. Sugar content of the 2007-crop at harvest was 1% above the average of the five most recent years. Due to the lower harvested tons, purchased non-member tons, and slightly above average sugar content, the Company’s production of sugar from the 2007-crop sugarbeets is expected to be 4% more than the average of the five most recent years of sugar production. This forward-looking material is based on the Company’s expectations regarding the processing of the 2007 sugarbeet crop; the actual production results obtained by processing those sugarbeets could differ materially from the Company’s current estimate as a result of factors that include changes in production efficiencies and storage conditions for the Company’s sugarbeets.

The Company’s initial sugarbeet payment estimate totals $39.43 per ton or $0.133028 per harvested /bonus extractible pound of sugar, with the final sugarbeet payment determined in October of 2008. This projected payment is 15% less than the final 2006-crop payment per ton and 15% less per pound of extractible sugar. The lower projected 2007-crop payment per ton results from lower sugar prices, fewer total tons of beets processed, increased operating and fixed costs per ton and offset somewhat by higher by-product prices versus the prior year.

For a discussion of the 2006, 2005 and 2004 crops and results of operations for fiscal years 2007, 2006 and 2005, see “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.”

The Company’s ability to market sugar each year under the current U.S. Farm Bill is highly dependent upon the U.S. Department of Agriculture’s (“USDA”) Overall Allotment Quantity (“OAQ”) announcements. Currently, the Company has allocation rights to market 5.4 million cwt of refined sugar based on the current USDA OAQ announcement of 8,450,000 short tons raw value (“STRV”). The USDA OAQ has varied from a high of 9,300,000 STRV to a low of 8,100,000 STRV over the past five years. Each 100,000 STRV of OAQ computes to 66,000 cwt of marketing allocations for the Company. Each 1,000 acres of planted sugarbeets is estimated to produce 55,000 cwt of sugar for sale from an average crop. To the extent the Company’s sugar production exceeds its marketing allocations, it must carry the additional sugar in inventory until the next year, sell sugar without allocations to another sugar processor, sell sugar to non-human consumption users, sell sugar for export or reduce future plantings of sugarbeet acres. The Company may find it necessary to reduce planted acreage in a future year in order to balance production with available allocations.

United Sugars Corporation (“United Sugars”), a common marketing agency operating on a cooperative basis, is the marketer for the Company’s sugar. The Company owns United Sugars along with two other sugar-producing companies (American Crystal Sugar Company and United States Sugar Corporation) and exists to market sugar produced by the three member owners.

As of this writing the Company has a 12% ownership interest in United Sugars with contributed capital totaling $1.3 million.

The Company, as well as the other members of United Sugars, has entered into a “Uniform Member Marketing Agreement” with United Sugars, as amended on September 20, 2007. Under that agreement, the sugar produced by the Company is pooled with sugar produced by the other sugar-producing member owners and is then sold through the efforts of United Sugars. The Company receives payment for its sugar by receiving its pro rata share of the net proceeds from the sale of the pooled sugar. The net proceeds of such sales represent the gross proceeds of the sale of the sugar, adjusted for the various costs and expenses of marketing the pooled sugar, including the Company’s pro rata share of the marketing and sales expenses incurred by United Sugars. Any net proceeds from the operation of United Sugars are distributed to the members on a patronage basis.

United Sugars sells industrial bulk sugar, industrial bagged sugar, packaged sugar for retail and specialty sugars. It distributes both cane sugar and beet sugar, and distributes sugar to customers over a large geographical area. United Sugars markets the Company’s sugar primarily to industrial users such as confectioners, breakfast cereal manufacturers and bakeries. The customer base of United Sugars includes most of the large domestic industrial sugar users. The customer base also includes retail grocery companies and wholesalers. The Company has no single customer, which accounts for more than ten percent (10%) of its consolidated revenues. For the fiscal year ended August 31, 2007, 93% of the Company’s sugar was shipped in bulk form, mostly to industrial users, and 7% in bagged powdered sugar.

The prices at which United Sugars sells the Company’s sugar fluctuate periodically based on changes in domestic sugar supply and demand. Bulk sugar, the largest portion of the Company’s sales, is contracted one or more quarters in advance, with the effect of stabilizing fluctuations in revenue from quarter to quarter. Retail (grocery) products are sold mostly on a quarterly basis. Current net selling prices for sugar are forecast to be lower than the prior year because of: (1) increased levels of domestic sugar availability, which is due to higher than average yields and/or planted acres in sugarbeets and sugarcane in the US; and (2) increased levels of imported sugar in amounts that the Company believes is in excess of market needs.

The Company markets its co-products, dried sugarbeet pulp and sugarbeet molasses, through Midwest Agri-Commodities Company (“Midwest Agri”), a common marketing agency operating on a cooperative basis, whose members are the Company, American Crystal Sugar Company, Southern Minnesota Beet Sugar Cooperative and Michigan Sugar Company. Midwest Agri markets sugarbeet pulp, sugarbeet molasses and other liquid livestock feed for its member owners as well as non-members. Sugarbeet pulp is marketed to livestock feed mixers, livestock feeders and other animal feed sellers (pets, horses etc.) in the United States and foreign markets. Sugarbeet molasses is marketed to yeast and pharmaceutical manufacturers and for use in animal feeds in the United States.

As of this writing the Company has a 25% ownership interest in Midwest Agri, and has contributed capital that totals 12% of all capital from members.

A “Uniform Member Marketing Agreement” evidences the sales and marketing arrangement with Midwest Agri. Under that agreement, the sugarbeet pulp and sugarbeet molasses produced by the Company is pooled with sugarbeet pulp and sugarbeet molasses produced by the other producing member owners and is then sold through the efforts of Midwest Agri. The Company receives payment for its sugarbeet pulp and sugarbeet molasses by receiving its pro rata share of the net proceeds from the sale of the pooled sugarbeet pulp and sugarbeet molasses. The net proceeds of such sales represent the gross proceeds of the sale of the sugarbeet pulp and sugarbeet molasses, adjusted for the various costs and expenses of marketing the pooled sugarbeet pulp and sugarbeet molasses, including the Company’s pro rata share of the marketing and sales expenses incurred by Midwest Agri. Any net proceeds from the operation of Midwest Agri are distributed to the members on a patronage basis.

For the year ended August 31, 2007, approximately 43% of Midwest Agri’s sugarbeet pulp production was exported to Asia, Europe, and Africa and the remaining 57% was sold in North America. The market for sugarbeet pulp is affected by the worldwide supply of dried sugarbeet pulp, the availability and quality of competitive feedstuffs, the cost of transportation and by the strength of the U.S. dollar relative to local currencies in export markets. Dried sugarbeet pulp prices decreased in FY 2007 due primarily to increased production of dried sugarbeet pulp in the United States and a rise in transportation costs. Production of dried sugarbeet pulp in the United States was higher as a result of an increase in sugarbeet acres planted and higher yields in most growing areas. Transportation costs increased as a result of high ocean freight markets and an increase in inland transportation costs due to rising oil prices. Sugarbeet molasses prices increased in FY 2007 primarily due to the lingering effects of a shortage of worldwide supplies of cane molasses in the market during the late summer selling period. Successive poor crops in Asia as well as the increased usage of cane molasses for ethanol production had resulted in lower supplies of cane molasses.

Co-product sales accounted for approximately 11% of the Company’s total consolidated net sales revenue during FY 2007. This relationship is primarily a function of the average market prices for sugar, sugarbeet pulp, sugarbeet molasses and fresh yeast and is not necessarily indicative of future relationships between co-product, fresh yeast and sugar revenues, because prices and production of these products fluctuate independently of each other.

The Company’s subsidiary company Minn-Dak Yeast manufactures bagged and cream fresh baker’s yeast in a plant located adjacent to the Company’s sugar plant in Wahpeton, North Dakota. A portion of the Company’s sugarbeet molasses production is used in Minn-Dak Yeast’s process and is sold through a supply agreement between the two companies. Minn-Dak Yeast has a long-term marketing agreement with National Yeast LLC to market and sell all production of its yeast. That agreement will expire on May 31, 2011.

The Company purchases virtually all of its sugarbeets from members under contract with the Company. All members have automatically renewing contracts with the Company covering each growing season (the “Growers’ Agreements”). At the end of each year, the Growers Agreement automatically extends for an additional year, so that such agreements always have a remaining term of one year, unless the Company, prior to the automatic renewal, has given notice of termination. In that situation, the agreement will not renew, but will continue in effect for the then remaining year under the agreement. Each Unit of Preferred Stock currently entitles a member to grow the maximum number of acres per share authorized by the Board of Directors for each farming year. The Company’s Board of Directors has the discretion to adjust the acreage that may be planted for each Unit of Preferred Stock held by the members. For the 2007-crop year the Company’s Board of Directors authorized its members to plant 1.52 acres per unit. For the 2008-crop year, the Company’s Board of Directors has authorized members a planting level of 1.52 acres per unit; however, this authorization is subject to change by the board before the planting of the 2008-crop. The authorized acres for planting are due in part to the amount of expected or anticipated sugar marketing allocations that will be available for the 2008-crop production. (For a discussion of the current farm bill sugar allocations, see Management’s Discussion on Government Programs and Regulations.)

Under the terms of the Growers Agreement, each member receives payment for his or her sugarbeets based on a price per pound of extractable and bonus sugar. The price per pound of extractable and bonus sugar is determined by dividing the total grower distribution of net proceeds (less the amount credited to members investment from member patronage and credited to retained earnings from non-member patronage) by the total of members’ pounds of extractable and bonus sugar. Extractable pounds of sugar are calculated by the processing of sugarbeet samples taken from members’ sugarbeets during harvest. Bonus sugar is a premium for early delivery of sugarbeets during pre-harvest. Each member’s grower payment is obtained by multiplying that member’s total pounds of extractable and bonus sugar times the price per pound of extractable and bonus sugar as determined above.

Under the Growers Agreement, each member receives an initial installment of the payment for his or her sugarbeets on or about November 15, soon after delivery of his or her crop to the Company. That initial installment is subject to adjustment by the Company’s Board of Directors and management, but will not exceed 65% of the estimated price per pound of extractable sugar. A second installment is paid in early February; that installment, in combination with the first installment, will not exceed 70% of the estimated price per pound of extractable sugar. A third installment is paid in early April, with the aggregate of all installments paid to that date not to exceed 80% of the estimated price per pound of extractable sugar. A fourth installment payment is paid in early July, with the total of installment payments to that date not to exceed 95% of the estimated price per pound of extractable sugar. The final payment is determined after the end of the Company’s fiscal year, ending on August 31, and is in an amount necessary to bring the total of all payments to the price to be paid per pound of extractable sugar to all growers during the applicable fiscal year. In addition, the Company’s annual patronage net income, if any, which is equal to the Company’s sales less all expenditures and member sugarbeet payments, is distributed to the members on the basis of the pounds of extractable sugar obtained from each of the members’ sugarbeets; such amounts are distributed in either cash payments or allocated in the form of patronage credits to the member’s patronage account on the books of the Company.

The Company’s by-laws provide that the Company’s members are to be divided into districts for the purposes of voting and the election of members of the Board of Directors. Those districts do not have specific geographic boundaries but, instead, contain a loosely defined area representing the area served by a particular piling station to which members deliver their sugarbeets for storage until the sugarbeets are to be processed. When a member joins the Company, he or she is assigned to a particular district based upon criteria including: (i) the physical location of the shareholder’s sugarbeet growing acres relative to a piling site; (ii) if the previous criteria do not clearly indicate the district to which the shareholder should be assigned, then the physical location of the shareholder’s base of farming operations relative to a piling site (some members deliver sugarbeets to more than one piling site due to the locations of their various fields, even though they are assigned to membership in only one district); and (iii) if the first two criteria do not provide a clear indication of the district to which the shareholder should be assigned, then the shareholder is given the option of being assigned to the district which would best serve the needs of that shareholder.

Given that shareholders are assigned to districts based upon ease of delivery of harvested sugarbeets and because shareholders own different numbers of Units of Preferred Stock, each district includes a different number of acres of sugarbeet production and, therefore, a different quantity of sugarbeets delivered to the Company. However, none of the districts provides the Company with a materially disproportionate quantity of the sugarbeets produced by the Company’s members. While the allocation of members to the various districts has a significant impact on the election of directors, the Company does not believe that the districts represent a significant factor in the day-to-day business operations of the Company.

The Company conducts very little research and development activity, but does participate in some sugar industry research and development activities. Any research findings are then shared by the entire sugar industry. Participatory research and development is accomplished through such organizations as the Beet Sugar Development Foundation and North Dakota/Minnesota Research and Education Board. The Company participates in the organizations listed above through the efforts of its representatives to the boards of directors of those entities. The Company’s representatives, either a member of the Company’s Board of Directors or a management employee of the Company, allow the Company to participate in and help direct agricultural and factory operations research and development activities carried out by the listed organizations. Those organizations also have established various committees on which the Company has placed certain of its employees. That practice is designed to provide the company with direct access to any research and development information available from the applicable committees. None of the Company’s employees or directors devotes a significant portion of their time and energies to the activities described in this section.

During the fiscal year ended on August 31, 2007, the Company contributed approximately $106,000 to the North Dakota/Minnesota Research and Education Board to fund that entity’s research and development activities. $21,000 was given to the Beet Sugar Development Foundation in connection with their research activities. In addition, through the auspices of the Beet Sugar Development Foundation, the Company, together with other interested companies, is participating in the financing of a full commercial test project involving the growing, harvesting, processing and sale of sugar and co-products produced from bio-tech sugarbeet seed. The Company’s share of this project cost will total approximately $51,000 and is evidenced in the form of a loan that is to be repaid to the Company through the proceeds derived from the sale of sugar and co-products produced from the project. The balance owed to the Company at fiscal year end totaled approximately $25,000.

The Company also has established a sugarbeet seed committee, which reviews the performance of new and existing sugarbeet seed varieties. The committee then advises the Board of Directors with regard to those sugarbeet seed varieties that should be approved for use by the Company’s shareholders.

The Company is subject to a broad range of evolving environmental laws and regulations. These laws and regulations include the Food Quality Protection Act of 1996, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and Rodenticide Act and the Comprehensive Environmental Response, Compensation and Liability Act. Other than what is provided herein, the Company is not aware of any areas of non-compliance.

The Company has $0.1 million of environmental capital improvements budgeted for the fiscal year ending August 31, 2008, the same as for fiscal year 2007.

Compliance with these laws and related regulations is an ongoing process that, at the current levels of spending, is not expected to have a material effect on the Company’s capital expenditures, earnings or competitive position. Environmental concerns are, however, inherent in most major agricultural operations, including those conducted by the Company, and there can be no assurance that the cost of compliance with environmental laws and regulations will not be material. Moreover, it is possible that future developments, such as increasingly strict environmental laws and enforcement policies there under, and further restrictions on the use of agricultural chemicals, could result in increased compliance costs.

Current U.S. Government statistics estimate total U.S. sugar deliveries for domestic food and beverage consumption at 185.1 million cwt refined for the fiscal year beginning October 1, 2006 and ending September 30, 2007. For the same period ending in 2006, total deliveries were 190.4 million cwt refined. Comparing the two years shows demand declined 2.8% for U.S. sugar sellers. U.S. Government information indicates that from FY 2005 through FY 2007 baking, cereal, beverage, canned, bottled and frozen food deliveries have increased; while confectionery, ice cream, dairy, retail grocers and wholesaler deliveries have decreased. Determining total domestic deliveries continues to be complicated by the high proportion of deliveries constituted by sugar imports of entities that are not required to report to the USDA. These imports have totaled about 11.5 million cwt. refined for FY 2006 (6% of reported deliveries through that same time period). Unlike domestic deliveries from sugarbeet processors and cane refiners, there is no way to track direct consumption imports to end-users, and therefore there is no certainty as to when the imported sugar was actually delivered to an end user. The U.S. Government estimates that FY 2008 deliveries will total 188.8 million cwt refined, or about 2% more than FY 2007.

Given the size of the domestic market, the Company’s sugar production and sales represent approximately 3% of the total domestic market for refined sugar in 2007. United Sugars Corporation, which sells the Company’s production through a sugar marketing pool, represents approximately 25% share of the FY2007 U.S. sugar market.

The U.S. refined sugar market has grown over the past fifteen years, despite a loss of demand to the substitution of high fructose corn syrups for sugar in beverages and certain food products. Non-nutritive sweeteners such as aspartame and sucralose have also been developed as a substitute for sugar. The substitution of non-sugar sweeteners for sugar not only reduced demand for sugar in the United States, but has also resulted in a high degree of sugar industry contraction. Since 1996 more than one third of all U.S. sugarbeet and sugarcane mills and refineries have closed, 33 plants in total. Also, sugar companies have been consolidating or closing as a result of marketplace conditions. Today there are seven sugar sellers, with approximately 90% of U.S. sugar market share concentrated in the top five sellers, most of which are integrated sugarbeet and sugarcane suppliers. The Company’s main competitors in the domestic market are Imperial Sugar Company, American Sugar Refining Company, Amalgamated Sugar Company and Cargill. Competition in the U.S. sugar industry, because sugar is a fungible commodity, is primarily based upon price, customer service and reliability as a supplier.

Domestic sugar prices are supported under a program administered by the United States Department of Agriculture (“USDA”). Under the current program, which was initiated in 1981 and extended under the Food Security Act of 1985, the Food, Agriculture, Conservation and Trade Act of 1990, the Federal Agriculture Improvement and Reform Act of 1996 and now The Farm Security and Rural Investment Act of 2002 (the “Farm Bill”), the price of sugar is required to be maintained above the price at which producers could forfeit sugar to repay non-recourse loans obtained through the Commodity Credit Corporation (“CCC”). The USDA maintains sugar prices without cost to the U.S. Treasury by regulating the quantity of sugar imports. The U.S. currently imports approximately 21% of its total domestic needs.

The Farm Bill was enacted on May 13, 2002. It contains several provisions related to the domestic sugar industry, with the ultimate goal of such provisions to achieve balance and stability in the U.S. sugar market while minimizing the cost to the Federal government. The Farm Bill applies to the 2002 through 2007 crop years. Generally, the Farm Bill restricts imports of foreign sugar, maintains the previous non-recourse loan program, and establishes a system of marketing allocations for sugarbeet and sugarcane producers in an attempt to balance the supply and demand for sugar in the U.S. domestic sugar market.

Under the Farm Bill, sugar processors can borrow funds on a non-recourse basis from the Commodity Credit Corporation (CCC), with repayment of such funds secured by sugar. When the price of sugar drops below the forfeiture price, the processors can forfeit the sugar securing the loans to the CCC in lieu of repayment. Processors may also obtain CCC loans for “in-process” sugar or syrups at 80% of the loan rate.

The USDA has historically maintained sugar prices above the forfeiture price without cost to the U.S. Treasury by regulating the supply of sugar in the U.S. market through regulating the quantity of sugar imports and the establishment of an overall allotment quantity for the domestic sugar producers. Under the Tariff Rate Quota (TRQ) implemented October 1, 1990, sugar-producing countries are allowed to export a fixed quantity of sugar into the United States duty-free or subject to minimal duties. The amount of the TRQ established by USDA for FY 2008 was 1,231,497 short tons raw value (STRV), or the minimum access commitment level under World Trade Organization (WTO). Unlimited additional quantities may be exported to the United States upon payment of a tariff of 15.36 cents per pound prior to shipment. To date, only immaterial quantities of sugar have been imported under this higher tariff level.

The Farm Bill sets an 18-cent per pound loan rate for raw cane sugar and a 22.9-cent per pound loan rate for refined beet sugar. Both loan rates are effective for the 2007-year crop.

In order to reduce the risk of sugar forfeitures to the CCC and to provide balance in the marketplace, the Farm Bill establishes annual flexible marketing allotments for both cane and sugarbeet sugar processors. The USDA determines the overall allotment quantity (OAQ) for the U.S. domestic sugar market for each crop year by estimating sugar consumption, adding stocks expected to be carried into the succeeding year, and then subtracting 1,532,000 short tons, raw value of sugar (the maximum level of imports allowed before marketing allotments are expected to be suspended), and subtracting carry-in stocks of sugar, including CCC inventory. Once the USDA has determined the OAQ for a crop year, it then determines each allotment for sugarbeet and sugarcane sugar by multiplying the OAQ by 54.35% for beet and 45.65% for cane. An individual processor’s allocation of the allotment for a crop year is determined by formula set forth in the Farm Bill. Each domestic processor of sugar, which includes the Company, is provided an allocation whenever allotments are in effect, based upon that formula. Sugarbeet processor allocations are based on each sugar processor’s sugar production history, while sugar cane processor allocations are based on past marketings, ability to market and past processings. The USDA annually establishes individual processor’s allocations.

Under the Farm Bill, a processor may market sugar in excess of its allocation if such sales (i) enable another processor to meet its allocation, (ii) facilitate the export of sugar or (iii) are made for nonhuman consumption. Or any sugar in excess of a processor’s allocation may be held until such time that allotments are lifted or additional allocations become available. The USDA can assess a penalty equal to three times the U.S. market value of any quantity of sugar marketed in excess of a processor’s allocation. The Farm Bill and its related regulations do not allow marketing allocations to be traded among processors. The Farm Bill does, however, provide for the transfer of allocations associated with a particular processing facility in the event ownership of the facility is transferred.

The marketing allotments and allocations set forth under the Farm Bill affect the sugar processed from the 2002 crop through the 2007 crop. On an annual basis, the marketing allotments, and the corresponding allocation to the Company, will determine the amount of sugar the Company can sell into the domestic market. The Company’s allocation may reduce the amount of sugar the Company can market for a given year, thus reducing the number of acres of sugarbeets required for processing. The Company anticipates that it may have to increase or reduce its authorized planted acres each year to more closely match its anticipated allocation of sugar sales. The Company also manages its allocation needs by selling non-allocation sugar to other sugar producers and for non-human consumption needs, which are not counted against allocation sales.

The U.S. Congress is currently, actively discussing renewal of the Farm Bill. However the Company does not know if Congress will be successful in renewing the Farm Bill; and if it is, whether the existing Farm Bill sugar provisions will be extended in its current form or whether there will be changes to the sugar provisions. Therefore the Company cannot assess at this time the magnitude of the impact of a renewed Farm Bill will have on the Company and its shareholders.

The Company believes the North American Free Trade Agreement (“NAFTA”) currently presents a serious public policy challenge to itself and the domestic sugar industry. Under the terms of the NAFTA text the agreement establishes a common market between the United States and Mexico in sugar by 2008.

The NAFTA agreement provided for second tier tariffs under a schedule that was set at a certain level and then declined by approximately 1.5 cents per year until reaching zero in 2008. Low world raw sugar prices and the current second tier tariff make it economically viable for Mexican sugar to enter the United States this year, if the Mexican interests so choose.

When the United States and Mexican governments initiated the NAFTA agreement, there was disagreement on the interpretation of the sugar provisions. In July 2006 the United States and Mexico announced an agreement that resolves these disputes that relate to each nation’s interpretation of the sweetener provisions in the NAFTA. Under the agreement, the United States provided for duty-free access to 250,000 metric tons raw value (MTRV) of Mexican sugar for fiscal year 2007, and duty-free access to between 175,000 and 250,000 MTRV of Mexican sugar for the period of October 1, 2007 and December 31, 2007. In turn, Mexico provided for duty-free access to equivalent amounts of United States high fructose corn syrup (HFCS) corresponding to the same periods. Also, the United States is allowed to ship 7,258 MTRV of sugar duty-free to Mexico for each of the marketing years 2006, 2007 and 2008. Effective on January 1, 2008, under NAFTA, there will be no duties or quantitative restraints between the two countries on all sugar and HFCS trade.

It is possible that the passage of this announced agreement could, in the future, have a material adverse effect on the Company through a reduction in acreage that can be planted by the Company’s shareholders, and/or a reduction in sugar selling prices, and a corresponding reduction in the sugarbeet payment to the shareholders and to the Company earnings. The magnitude of the impact cannot be determined at this time.

Under the General Agreement on Tariffs and Trade Act of 1990 (“GATT”), tariff rate quotas were implemented for certain sugar producing countries that provided for a fixed quantity of sugar imports duty-free or subject to minimal duties. Unlimited additional quantities may be imported upon payment of a tariff of 15.36 cents per pound of refined sugar prior to shipment (to date, very little sugar has been imported under this higher tariff level). Further, imports of sugar under the tariff rate quota are based upon the difference between domestic sugar consumption and domestic sugar production, with one exception. Under the terms of the GATT the minimum imports of sugar are established at 1,257,000 short tons, raw value. Therefore, even if the difference between domestic sugar consumption and production are less than 1,257,000 short tons, raw value, GATT will require that 1,257,000 short tons be imported into the United States from the quota holding foreign countries.

The World Trade Organization (WTO) met in November, 2001 in Doha, Qatar where members launched new multilateral trade negotiations aimed at improving market access, reducing and eventually phasing out all forms of export subsidies and substantial reductions in trade-distorting domestic support. Any agreements reached during the Doha Round could present a threat to the domestic sugar industry because sugar is one of the most highly protected sectors within world agricultural trade and is thus a target for reform.

The 147 members of the WTO reached an agreement July 31, 2004, on a framework for the final phase of the Doha Development Agenda of global trade talks. The original deadline to complete talks by January 1, 2005, has been postponed a number of times. The latest deadline to complete the final phase of the WTO Doha talks has been established as the end of calendar year 2007. However talks have stalled and currently there appears to be little chance of WTO countries meeting this latest deadline date. The effect of any final WTO agreement on United States farm programs and the sugar program in particular and the Company will depend largely on the details of the agreement, which have not yet been fully negotiated.

The Dominican Republic - Central American Free Trade Agreement (DR-CAFTA) was signed into law on August 2, 2005 and was substantially implemented starting on January 1, 2006. As a result, the Company has seen an increase in the amount of sugar that will be imported into the United States as a result of this agreement. The impact of this trade agreement on the Company cannot be fully assessed at this time. It is possible, however, that the trade agreement could have a material adverse effect on the Company through a reduction in acreage that can be planted by the Company’s shareholders, and/or a reduction in sugar selling prices, and a corresponding reduction in the sugarbeet payment to the shareholders and the Company earnings. The magnitude of the impact cannot be determined at this time.

The United States government is pursuing an aggressive agenda on international trade. It is seeking to negotiate new free trade agreements with a number of countries and regions that are major producers of sugar. The Company believes these agreements, if they reach fruition, could negatively impact the Company’s profitability. The primary agreements under consideration, to the Company’s knowledge, are the Free Trade Area of the Americas; the Andean Free Trade Agreement; the Thailand Free Trade Agreement; the U.S.-Panama Free Trade Agreement and the South African Customs Union Free Trade Agreement. Many of the countries included in these agreements are major sugar producers and exporters. If increases in guaranteed access or reductions in sugar tariffs are included in these agreements, excess sugar from these regions could enter the U.S. market and put pressure on domestic sugar prices. The U.S. sugar industry and the Company recognize the potential negative impact that would result if these agreements were entered into by the United States.

The impact of the various trade agreements on the Company can not be assessed at this time due to the uncertainty concerning the terms of the agreements and whether they will ultimately be implemented. It is possible, however, that the passage of various trade agreements could have a material adverse effect on the Company through a reduction in acreage that can be planted by the Company’s shareholders, and/or a reduction in sugar selling prices, and a corresponding reduction in the sugarbeet payment to the shareholders and to the Company earnings. The magnitude of the impact cannot be determined at this time.

The Farm Bill provides price support provisions for sugar. However, if the price support program including the Tariff Rate Quota system described above were eliminated in its entirety, or if the effectiveness that the United States’ price support program provides from foreign competitors were materially reduced, the Company could be materially and adversely affected. In such a situation if the Company were not able to adopt strategies that would allow it to compete effectively in a greatly changed domestic market for sugar, the adverse affects could impact the Company’s continued viability and the desirability of grower sugarbeets for delivery to the Company.

As of October 25, 2007, the Company had 301 full-time employees, of whom 264 were hourly and 37 were salaried. It also employs approximately 394 additional hourly seasonal workers during the sugarbeet harvest and processing campaign. The Company has a collective bargaining agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (AFL-CIO, CLC) for its factory employee group. The contract became effective June 1, 2005 and continues through May 31, 2011. Office, clerical, management and harvest employees are not unionized. Full time employees are provided with health, dental and vision insurance, a defined benefit pension retirement plan, a 401(k) retirement savings plan, a short and long-term disability plan, term life insurance, and vacation and holiday pay plans. Seasonal workers are also provided some of these same employee benefits. The Company considers its employee relations to be excellent.

If any of the following risks actually occur, our results of operations, cash flows and the trading price of our common stock could be negatively impacted. Although we believe that we have identified and discussed below the key, significant risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our performance or financial condition.

In the event that the United States government enters into bilateral trade agreements with sugar producing countries, the amount of sugar in the domestic sugar market could be impacted. A change in the supply of sugar could put pressure on the price of sugar, which would impact the Company’s profitability.

The nature and scope of future legislation and regulation affecting the sugar market cannot be predicted and there can be no assurance that price supports and market protections will continue in their present forms. If the price support programs were eliminated in their entirety, or if certain protections the federal government provides from foreign competitors were materially reduced, the Company could be materially and adversely affected. In such a situation, if the Company were not able to adopt strategies that would allow it to compete effectively in a greatly changed domestic market for sugar, the adverse effects could negatively impact the desirability of growing sugarbeets for delivery to the Company, the Company’s financial results, and the Company’s continued viability.

Under the current terms of the NAFTA and other government regulations, imports of sugar from Mexico may enter the U.S. market. These imports could oversupply the U.S. market and negatively affect the price of sugar. The Company, along with the domestic sugar industry, is seeking improvements to NAFTA to address the matter. If the sugar industry is unsuccessful in these and any other endeavors it pursues to prevent the influx of Mexican sugar into the U.S. market, there could be adverse financial consequences to the Company and its members.

The impact of the Farm Bill on the operations of the Company cannot be completely predicted. The long-term ramifications of the marketing allotment and allocation program depend on the Company’s ability to maintain its marketing allocation on an annual basis and to obtain access, if necessary, to additional allocations at a reasonable price.

The Company has an ongoing strategy of maximizing profitability by controlling operating expenses and maximizing production of sugar. This strategy is necessary because the price of sugar has remained within a fairly narrow government program controlled price range. The strategy includes ongoing activities that include constant review of costs and a capital expenditure program that emphasizes efficiencies through cost reduction or production increases. We cannot assure you that our continued efforts in this area will result in our continued or increased profitability.

The sugarbeet, as with most other crops, is affected by weather conditions during the growing season. Additionally, weather conditions during the processing season affect the Company’s ability to store sugarbeets held for processing. Growing and storage conditions different from the Company’s expectations may change the quantity and quality of sugarbeets available for processing and therefore may affect the quantity of sugar produced by the Company. A significant reduction in the quantity or quality of sugarbeets harvested resulting from adverse weather conditions, disease (such as rhizomania) or other factors could result in increased per unit processing costs and decreased production, with adverse financial consequences to the Company and its members.

There are no unresolved written SEC staff comments regarding our periodic or current reports under the Securities Exchange Act of 1934.

The Company operates a single sugarbeet processing factory at Wahpeton, North Dakota that is located in the Red River Valley area of Minnesota-North Dakota. The Company owns the factory, receiving sites, and the land on which they are located.

The properties are adequate to process normal and above normal crop sizes, and for the last three years have averaged a slice rate of 9,658 tons per day. The 2006-crop was the largest tonnage in the history of the Company, producing approximately 3,019,000 tons of sugarbeets. If the Company encounters normal weather patterns, which will in turn provide normal sugarbeet storage conditions, then it does not anticipate having material difficulties in processing crops equal in size to the 2006-crop. Achievement of the levels of slice and sugar production in the factory is due mostly to the quality of the crop and the Company’s effort to maximize the potential production from a crop.

Minn-Dak Yeast, of which the Company is a 100% owner, operates a single yeast manufacturing factory at Wahpeton, North Dakota. Minn-Dak Yeast owns the factory and the land on which it is located. During fiscal 2007, fresh yeast was produced and sold into the domestic yeast marketplace.

All properties are held subject to a mortgage by the Company’s primary lender.

From time to time and in the ordinary course of its business, the Company is named as a defendant in legal proceedings related to various issues, including worker’s compensation claims, tort claims and contractual disputes. Other than as provided herein, the Company is not currently involved in legal proceedings that have arisen in the ordinary course of its business, and the Company is also unaware of certain other potential claims that could result in the commencement of legal proceedings. The Company carries insurance that provides protection against certain types of claims.

The Company is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control. The Company conducts an ongoing and expanding control program designed to meet these environmental laws and regulations. As disclosed under “ENVIRONMENTAL MATTERS” above, there currently are no pending regulatory enforcement actions and the Company believes that it is in substantial compliance with applicable environmental laws and regulations.

There were no matters submitted to a vote of the Company’s shareholders during the quarter ended August 31, 2007.

The Company is typically referred to as a “closed cooperative.” In a “closed cooperative”, members must purchase equity (represented by classes of preferred shares) in a cooperative to acquire the rights to participate in the cooperative’s business, and membership must be approved by the cooperative’s Board of Directors.

The Company’s equity consists of common stock and preferred stock. The Company’s preferred stock consists of Class A preferred stock, Class B preferred stock and Class C preferred stock, with one share of each class of preferred stock constituting a “unit” of preferred stock.

Stock is not purchased in the Company using the traditional valuation methods used for stock commonly bought or sold for personal or institutional investment purposes.

A requirement for owning the Company’s stock includes the shareholder being actively engaged in farming and having an active interest in the crop being produced.

The Company believes a shareholder purchases the Company’s stock in order to secure acreage delivery rights, and therefore is based upon the purchaser’s ability to make a profit by delivering sugarbeets to the Company.

The Company believes each individual shareholder will have a different financial model for its economic analysis of Company stock purchase. Estimates for direct input costs to raise a sugarbeet crop vary significantly from shareholder to shareholder. The Company has no direct knowledge of the total of the direct input costs.

A shareholder is at risk for the size and quality of the sugarbeet crop to be raised. The ability of a shareholder to raise a quality crop of significant quantity to not only cover the shareholder’s input costs, but also provide for a return on stock ownership and stockholder management inputs is key to determining the economic value the Company’s stock holds for the shareholder or potential shareholder.

A shareholder is able to insure the risk of growing a crop through the purchase of Federal Crop Insurance. The Federal Crop Insurance program is managed by RMA, a branch of the United States Government. Changes in the Federal Crop Insurance program may have a significant impact on the level of financial risk that a shareholder may be able to insure.

A shareholder is also at financial risk based on the ability of the Company to pay the shareholder a sugarbeet payment that provides him/her with a profit.

Because the return to a shareholder is based upon the results of an entire year, the Company believes reliance upon one quarter of financial activity in comparison to a similar quarter of activity in a prior year is of limited value versus comparisons made at fiscal year end. Quarterly financial statements have significant management judgments regarding the final crop value.

Because the Company and other sugar companies have different methods of describing and paying their shareholders for sugarbeets delivered, the publicly announced payments by companies need to be adjusted for quality, patronage, trucking, and re-hauling costs to arrive at a comparable payment to the shareholder/grower for the delivery of those sugar beets.

The Company’s common stock and preferred stock are not listed or admitted for trading on any stock market, any system of inter-dealer quotation, or on the Pink Sheets, the OTC Bulletin Board or any other quotation service for market makers. Transfer of shares, if any, is subject to significant restriction, including the approval of the Company’s Board of Directors and the requirement that preferred stock must be transferred together. Therefore, there is no established public trading market for any class of common equity of the Company and it is unlikely that a public market for the Company’s units will develop in the foreseeable future.

Further, the rules of the Securities and Exchange Commission require that the Company provide a line graph presenting the cumulative, five-year returns on an indexed basis with a broad market index and either a nationally recognized industry standard or an index of peer companies selected by the Company. Because there is no established public trading market for any class of the Company’s equity securities, the Company is unable to estimate the value of any class of the Company’s equity securities or present a line graph or any other information comparing the value of any of the Company’s equity securities with any index.

As of November 15, 2007, there were 484 holders of the Company’s common stock and 484 holders of units of the Company’s preferred stock.

The Company has not made any repurchases of its securities in the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K.

There is only a limited, private market for shares of the Company’s Common or Preferred Stock. A number of stock transfers, representing approximately 3% of available stock, were not arms length (estate settlements, estate planning from one generation to the next, etc.) and an accurate value for that stock was not available. The Company believes that less than 1% of its available stock was traded at arm’s length during the fiscal year ended August 31, 2007. Of the stock transferred at arms length, the transfers were made during the second and third quarters of the Company’s fiscal year and ranged in price from $3,300 to $2,850 per unit. The fourth quarter did not have any arms length transactions. The value of stock is highly dependent upon an individual stockholder’s ability to raise sugarbeets successfully both agronomically and financially. Prior to purchasing stock, a potential stockholder is advised to properly research the agronomic aspect of stock ownership.

Holders of the Company’s common stock are entitled to shares in the Company’s profits and losses based upon sugar delivered, to receive distributions of the Company’s net cash flow when declared by the Board of Directors, to participate in the distribution of the Company’s assets if it dissolves or liquidates, and, to vote on matters submitted to a vote of the Company’s members. Under state law and the Company’s Bylaws, each member of the cooperative is entitled to one vote, regardless of the number of shares the member holds. Holders of the Company’s common stock are committed under Uniform Delivery and Marketing Agreements to grow and deliver a minimum and maximum number of acres of sugarbeets per unit of preferred stock as authorized by the Board of Directors for each farming year. The Company’s common stock and preferred stock may be held only by farmer-producers who are eligible for membership in the Company and may only be transferred with the consent of the Board of Directors of the Company.

The Company has never declared a dividend. The company distributes its patronage based upon net margins in the form of qualified or non-qualified allocated patronage using the sugar delivered for the crop year as the distribution factor.

The following table summarizes selected financial data for each of the last five fiscal years. The selected financial data of the Company should be read in conjunction with the financial statements and related notes included in Item 8. of this report.

	Fiscal Year Ended August 31,
FINANCIAL DATA	2007		2006		2005		2004		2003
(in thousands)
Revenues	$	278,571	$	176,967	$	189,681	$	198,941	$	193,817
Distribution of net proceeds (1)		148,415		76,096		88,088		107,909		109,663
Total assets		177,666		163,129		158,996		168,563		171,254
Long-term debt, including current maturities		36,931		42,008		44,455		50,215		55,920
Members’ investment (2)		83,373		83,951		83,410		82,150		81,647
Property and equipment additions, net of retirements		4,827		4,395		4,754		5,487		9,148
Working capital		13,228		14,025		12,433		14,578		17,798

RATIOS
Ratio of long-term debt to equity (3)		.39		.45		.47		.56		.63
Ratio of net proceeds to fixed charges (4)		35.60		22.50		31.42		37.99		32.01
Current ratio		1.23		1.36		1.38		1.39		1.50

PRODUCTION DATA (5)
Acres harvested (members)		116,646		102,121		98,819		112,849		112,346
Tons of sugarbeets purchased (members)		3,019,475		1,810,269		2,295,904		2,264,154		2,383,936
Tons purchased per acre harvested		25.89		17.73		23.23		20.06		21.22
Payment to members per ton of sugarbeets delivered, plus allocated patronage and unit retains (6)	$	49.06	$	41.89	$	38.08	$	47.35	$	44.33

Sugar (cwts):
Produced (from member and purchased sugarbeets)		7,822,687		4,848,804		5,868,576		6,424,346		6,112,522
Sold (includes purchased sugar)		7,301,360		4,954,040		6,092,025		6,602,252		5,580,872

Beet pulp pellets (tons):
Produced		147,888		101,328		119,054		112,483		99,733
Sold		151,791		105,138		113,913		110,424		98,911

Beet molasses (tons):
Produced		130,878		79,599		89,797		104,883		100,585
Sold		88,652		47,007		73,824		92,852		86,616
Used for yeast production		26,581		25,537		23,045		20,095		19,270

Yeast (pounds, in thousands):
Produced		39,248		34,787		32,043		29,253		28,458
Sold		39,152		34,670		31,984		29,436		28,394

(1) Net Proceeds are the Company’s gross revenues, less the costs and expenses of producing, purchasing and marketing sugar, sugar co-products, and yeast, but before payments to members for sugarbeets. (For a more complete description of the calculation of Net Proceeds, see “Description of Business-Growers’ Agreements”.)

(2) Members’ investment includes preferred and common stock, unit retention capital, allocated patronage and retained earnings.

(3) Calculated by dividing the Company’s long-term debt, exclusive of the current maturities of such debt, by equity.

(4) Computed by dividing (i) the sum of Net Proceeds plus fixed charges, plus amortization of capitalized interest by (ii) the sum of interest expense and interest capitalized. The Company does lease certain items, such as some office equipment. Due to the proportionately small amounts involved, an interest factor on lease payments has not been included in the total of the Company’s fixed charges or the calculation of this ratio. See Exhibit 12.

(5) Information for a fiscal year relates to the crop planted and harvested in the preceding calendar year (e.g., information for the fiscal year ended August 31, 2007, relates to the 2006 crop).

(6) Reflects the total amount paid in cash and allocated to individual grower equity accounts for each ton of sugarbeets delivered.

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the Company’s financial statements and notes included elsewhere in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. The Company’s actual future results may differ materially from those anticipated in the forward-looking statements contained in this section; such differences could arise as a result of a variety of factors including, but not limited to, the market and regulatory factors described elsewhere in this Report.

Preparation of the Company’s consolidated financial statements requires estimates and judgments to be made that affect the amounts of assets, liabilities, revenues and expenses reported. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. Management continually evaluates these estimates based on historical experience and other assumptions it believes to be reasonable under the circumstances.

The difficulty in applying these policies arises from the assumptions, estimates and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions. As the difficulty of the assumptions, estimates and judgments increases, the level of precision decreases, meaning that actual results could be different from those currently estimated.

Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made, and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. The Company’s critical accounting estimates include the following:

Sugar, pulp, molasses and other agri-product inventories are valued at estimated net realizable value. The Company derives its estimates from sales contracts, recent sales and evaluations of market conditions and trends. Changes in market conditions may cause management’s estimates to differ from actual results.

Property and Equipment, Property and Equipment Held for Lease, and Depreciation

Property and equipment, and property and equipment held for lease are depreciated for financial reporting purposes principally using straight-line methods with estimated useful lives ranging from 3 to 40 years. Economic circumstances or other factors may cause management’s estimates of expected useful lives to differ from actual.

The Company reviews its property and equipment, and property and equipment held for lease for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. There were no impairment losses incurred during the fiscal year covered by this report. However, considerable management judgment is necessary to estimate future cash flows and may differ from actual results.

The Company maintains and administers a defined benefit pension plan. The annual cost of this plan can be significantly affected by changes in assumptions and differences between expected and actual experience. The Company utilizes actuarial methods required by SFAS No. 87, “Employers’ Accounting for Pensions,” (SFAS No 87) to account for its defined benefit pension plan. The actuarial methods require numerous assumptions to calculate the net periodic pension benefit expense and the related projected benefit obligations for our defined benefit pension plan. Two of the most significant assumptions are the discount rates and expected long-term rate of return on plan assets. In making these assumptions, we are required to consider current market conditions, including changes in interest assumptions.

Discount Rate: An assumed discount rate is required to be used in the pension plan actuarial valuation. The discount rate is a significant assumption. The Company’s methodology for selecting the discount rate for the company’s plan is to seek guidance from outside pension experts for an appropriate discount rate.

Expected Return on Plan Assets: The expected long-term rate of return on plan assets should, over time, approximate the actual long-term returns on pension plan assets. The Company’s methodology for selecting the Expected Return on Plan Assets is to seek guidance from outside pension experts for an appropriate rate.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132R”. This standard requires employers to recognize the under funded or over funded status of defined benefit pension and postretirement plans as an asset or liability in its statement of financial position, and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive loss, which is a component of stockholders’ equity. This standard also eliminates the requirement for Additional Minimum Pension Liability (AML) require under SFAS No. 87. As a result of the application of SFAS No. 158 as of August 31, 2007 the Company increased liabilities by $ 3.95 million to account for the funded status of the defined benefit pension plan. This liability was offset to accumulated other comprehensive loss and long-term deferred tax assets. As a result of implementation of SFAS No. 158, the Company recognized an after-tax decrease in accumulated other comprehensive loss of $2.37 million. For the year ended August 31, 2009, the Company will be required to change the measurement date of the plan’s liabilities for the defined benefit plan from May 31 to August 31.

Determining the consolidated provision for income tax expense, income tax liabilities and deferred tax assets and liabilities involves judgment. The company calculates income taxes in each of the tax jurisdictions in which we operate. This involves estimating current tax exposures in each jurisdiction as well as making judgments regarding the recoverability of deferred tax assets. Tax exposures can involve complex issues and may require an extended period to resolve.

In June 2006, the FASB issued FIN 48 “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109.” FIN 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. This Interpretation is effective as of September 1, 2007 and the cumulative effects, if any, of applying this Interpretation will be recorded as an adjustment to retained earnings as of September 1, 2007. The Company is uncertain the adoption of FIN 48 will have a material impact on its consolidated results of operations or financial condition.

Because the Company operates as a cooperative, payment for member-delivered sugarbeets, the principal raw material used in producing the sugar and co-products it sells, are subordinated to all member business expenses. In addition, actual cash payments to members are spread over a period of approximately one year following delivery of sugarbeet crops to the Company and are net of unit retains and patronage allocated to them, both of which remain available to meet the Company’s capital requirements. This member financing arrangement may result in an additional source of liquidity and reduced outside financing requirements in comparison to a similar business operated on a non-cooperative basis. However, because sugar is sold throughout the year (while sugarbeets are processed primarily between September and April) and because substantial amounts of equipment are required for its operations, the Company has utilized substantial outside financing on both a seasonal and long-term basis to fund such operations. The short and long-term financing has been primarily provided by CoBank (the “Bank”). The Company has a short-term line of credit with the Bank totaling $50.0 million, of which $31.0 million was available as of August 31, 2007. The Company also has a $15.0 million bid loan supplement facility through the Bank. The Company also has available the USDA Sugar Loan Provisions contained in the 2002 Farm Bill to provide an additional source of seasonal financing for the 2007 and future crops.

Due to the anticipated size of the 2007 crop payment, the Company believes that an additional $20 million line of seasonal credit, or the use of USDA sugar loans (for a total of $70 million short-term line of credit) will be necessary. The Company believes it’s primary lender, will provide this additional line of credit.

On May 30^th, 2007, the Company renewed, through May 31, 2008, the seasonal and term-debt lines of credit with the Bank.

The loan agreements between the Bank and the Company obligate the company to maintain the following financial covenants, and in accordance with GAAP:

As of August 31, 2007 the Company was in compliance with its loan agreement covenants with the Bank.

Working capital decreased $0.8 million for fiscal year 2007. The Company funds its capital expenditure and debt retirement needs primarily from operating activities. The Company has approximately 5-years of long-term debt remaining with the Bank and it has two tax exempt bond issues, one with $3.8 million long-term remaining to be paid and one with $11.7 million long-term remaining to be paid.

As of August 31, 2007, the Company achieved its budgeted working capital position.

The company has protected itself from interest rate fluctuations through a strategy of using tax-exempt bond financing and a term debt portfolio that fixes rates and maturities into the future on set amounts of debt. The Bank current term debt portfolio, comprised of $1.7 MM using variable interest rates and $17.4 MM using fixed interest rates over various maturities, is expected to provide the company stable term debt interest rates over the next four years at similar rates to current market rates for maturities of the same type. An increase or decrease in the interest rate market of approximately 100 basis points is expected to be immaterial on the profitability of the Company as a result of its interest rate strategy. Capital expenditures for fiscal year 2007 were $4.9 million, for fiscal year 2006 were $4.7 million, and for fiscal year 2005 were $4.9 million.

Capital expenditures for fiscal year 2008 have been approved at $13.3 million; however, some of those capital expenditures are contingent upon further study. The Company anticipates funding the majority of these expenditures through a modification to its long-term debt agreement with the Bank.

The Bonds are secured by a letter of Credit from Wells Fargo Bank. The letter of credit is ultimately secured by the plant and property of the Company’s facility at Wahpeton, ND.

The Company is not aware of any known trends, demands, commitments, events or uncertainties that will likely result in the Company’s liquidity increasing or decreasing materially.

Other than those items described above, the Company is not aware of any known material trends, either favorable or unfavorable, that would cause the mix of equity to debt or the cost of debt to materially change.

Net payments to members for sugarbeets delivered by the shareholder/growers, increased by $69.0 million or 96% in fiscal year 2007 and totaled $140.6 million. As of August 31, 2007, the Board of Directors authorized the payment of prior years’ member patronage and per unit retains (including equity payments to estates of deceased shareholders) totaling $6.0 million to shareholders compared to $3.6 million in the previous year. The payment of $6.0 million will leave approximately 4.5 years of prior years’ patronage and per unit retains withheld versus the prior year of 4.9 years withheld.

Revenues for the year ended August 31, 2007 were comprised of Sugar 84%, Pulp 7%, Yeast 5% and Molasses 4%.

Revenue for the year ended August 31, 2007, increased $101.6 million or 57% from 2006. Revenue from total sugar sales increased $73.5 million or 50% reflecting a 47% increase in cwt. sold, and a 3% increase in the average net selling price per cwt. Revenue from co-products increased 68%, reflecting an increase of 38% in volume, and a 30% increase in the average selling price per ton. The increase in volume of sugar and co-products sold from the 2006-crop is attributable to the larger crop size and quality when compared to the 2005 crop of beets delivered by shareholder/growers plus the 2005-crop non-member purchased beets.

Revenues from yeast sales increased 37% reflecting an increase in volume of 13%, and an increase in the average net selling price of 24%. Selling prices increased due to a combination of two factors: (1) a change in the way that yeast selling prices are determined under a different marketing agreement that Minn Dak Yeast Company (MDYC) entered into in May 2006, and which accounted for the majority of increase in the calculation of the yeast price, and (2) somewhat higher selling prices for yeast.

The value of finished product inventories in fiscal year 2007 increased $12.6 million from fiscal year 2006, mostly the result of an increase in the volume of ending sugar inventory. Sugar inventory was larger due to the timing of contract off-take for a select number of customers.

Expenses, exclusive of grower payments for sugarbeets and cost of non-member purchased beets, increased $30.1 million or 30%. Minn-Dak Farmers Cooperative (MDFC) expenses increased $27.9 million, while Minn-Dak Yeast Company expenses increased $2.2 million.

The production cost per cwt. of sugar produced decreased 31% versus the prior year due to a combination of a 62% increase in sugar produced with only a corresponding 12% increase in total costs.

Of the $27.9 million increase in the MDFC expenses, the cost of operations increased $7.0, or 12% due to the record volume of sugarbeets processed, including the record length of the 2006-crop processing period.

Sales and Distribution costs increased $21.4 million or 74%. Increases are mainly the result of the increase in the production and sale of finished goods from the larger sugarbeet crop and from the cost of sugar marketing allocations. Sugar marketing allocation costs increased $5.0 million or 400% from the 2005-crop and were due to the amount of allocation acquired to allow for the marketing of the large 2006 crop. General and Administrative expenses increased $.9 million or 15%. Employee costs, beet transportation equipment depreciation and expenses associated with sugar policy and farm bill renewal was the primary reasons for the increase. Interest expense increased $.8 reflecting a higher level of seasonal debt and an increased rate of interest.

Other business income increased $.7 million in fiscal year 2007 due primarily to the yeast business being accounted for as patronage business and income on the yeast business qualifying for cooperative tax treatment.

Net payments to members for sugarbeets delivered by the shareholder/growers, decreased by $10.6 million or 13% in fiscal year 2006 and totaled $71.6 million. As of August 31, 2006, the Board of Directors authorized the payment of prior years’ member patronage and per unit retains (including equity payments to estates of deceased shareholders) totaling $3.6 million to shareholders compared to $4.6 million in the previous year. The payment of $3.6 million will leave approximately 4.9 years of prior years’ patronage and per unit retains withheld versus the prior year of 7.6 years withheld.

Revenues for the year ended August 31, 2006 were comprised of Sugar 84%, Pulp 7%, Yeast 5% and Molasses 4%.

During the year ended August 31, 2006, the Company purchased 156,788 tons of sugarbeets from a sugarbeet processor due to a shorter than normal sugarbeet supply from the Company’s shareholder/growers. The purchase comprised 8% of all sugarbeets purchased by the Company for the year.

On April 30, 2006, the Company acquired the non-controlling 20% interest in its Minn-Dak Yeast subsidiary from Sensient Technologies Corporation.

Revenue for the year ended August 31, 2006, decreased $12.7 million or 7% from 2005. Revenue from total sugar sales decreased $16.1 million or 10% reflecting a 19% decrease in cwt. sold, and a 9% increase in the average net selling price per cwt. Revenue from co-products decreased 10%, reflecting a decrease of 22% in volume, offset by a 12% increase in the average selling price per ton. The decrease in volume of sugar and co-products sold from the 2005-crop is attributable to the lower crop size and quality when compared to the 2004 crop of sugarbeets delivered by shareholder/growers.

Revenues from yeast sales increased 28% reflecting an increase in volume of 8%, and an increase of 20% in the price of yeast due to a change in the marketing arrangement. A different marketing arrangement changed the methodology used in the determination of the selling price for yeast.

The value of finished product inventories in fiscal year 2006 increased $.5 million from fiscal year 2005.

Cost of product sold, on a consolidated basis, exclusive of grower payments for sugarbeets and cost of outside purchased sugarbeets, remained the same. However, the Company’s costs decreased $1.5 million and Minn-Dak Yeast’s costs increased $1.5 million.

Of the $1.5 million decrease in the Company’s cost of product sold, the cost of operations decreased due to a shorter processing season. Offsetting those costs somewhat were maintenance costs, which increased as a result of the late start (October rather than September) of the 2005-crop processing period. The offsetting increase of $1.5 million in cost of product sold by Minn-Dak Yeast was due to a $0.6 million increase in the cost of molasses (29% price increase and 10% volume increase), $0.6 million of purchased cream yeast (no purchases in prior fiscal year) and $0.3 million increase in the cost of chemicals, due primarily to the increase in volume of production.

Sales and Distribution costs decreased $8.1 million or 22%. Decreases are mainly the result of lower costs of purchased sugar (less volume) and the lower cost of marketing allocations (less volume). General and Administrative expenses decreased $.4 million or 6%. Employee costs and trade association dues were the primary reasons for the decrease. Interest expense increased $.6 million reflecting a lower level of debt and an increased rate of interest.

Overall, the cost per cwt. of sugar produced increased 18% versus the prior year due to a 1% increase in costs and a 17% reduction in sugar produced.

Other business income increased $.2 million in fiscal year 2006 due primarily to transactions related to the acquisition of 100% ownership in Minn-Dak Yeast, offset by less patronage dividends received from other cooperatives.

This discussion contains a summary of the Company’s current estimates of the financial results to be obtained from the Company’s processing of the 2007 sugarbeet crop. Given the nature of the estimates required in connection with the payments to members for their sugarbeets, this discussion includes forward-looking statements regarding the quantity of sugar to be produced from the 2007 sugarbeet crop, the net selling price for the sugar and co-products produced by the Company and the Company’s operating costs. These forward-looking statements are based largely upon the Company’s expectations and estimates of future events; as a result, they are subject to a variety of risks and uncertainties. Some of those estimates, such as the selling price for the Company’s products, the quantity of sugar produced from the sugarbeet crop, changes in plant production efficiencies and sugarbeet storage conditions are beyond the Company’s control. The actual results experienced by the Company could differ materially from the forward-looking statements contained herein.

The Company’s members harvested 2.2 million tons of sugarbeets from the 2007 crop, approximately 6% below the most recent 5-year average, due to difficult growing conditions early in the growing season. The Company purchased .3 million tons of non-member 2007-crop sugarbeets from a neighboring sugar processor. Sugar content of the 2007-crop at harvest was 1% above the average of the five most recent years. The Company is projecting the sugar production from the 2007-crop to be 4% more than the average of the five most recent years of sugar production. Revenues for the crop-year 2007 are expected to be 22% below the 2006 crop-year due to reduced sugar production and lower sugar prices, and somewhat offset by higher co-product prices. Deducting all expenses of the Company, including non-member sugarbeet purchases, results in an estimated 2007 crop gross payment to growers for sugarbeets of $87.1 million, which is $53.5 million less than that of the record 2006 crop year of $141.6 million.

The 2007 crop sugarbeet payment per ton, when compared to the 2006-crop payment per ton, decreased as a result of less harvested tons, higher operating costs per ton, and lower sugar prices; the decreases that reduced the 2007 crop payment were partially offset by increases resulting from more sugar produced per ton and higher prices for molasses and pulp resulting in a combined net decrease in the 2007 crop sugarbeet payment per ton.

The Company’s initial sugarbeet payment estimate totals $39.43 per ton or $0.133028 per harvested/bonus pound of sugar, with the final sugarbeet payment determined in October of 2008. This projected payment per pound is 15% less than the final 2006 crop payment per pound, but 1% less than the original projected 2006 crop payment per pound. The projected 2007 crop payment per ton results from what management believes is a consistent approach to forecasting sugar production and sugar production costs. While the crop has been harvested, it is still at risk for adverse storage conditions, which may mean that actual results may differ from forecast.

Although the Company does not anticipate any difficulty in obtaining the necessary seasonal financing for this crop, the dollar volume will likely require the Company to either increase (on a temporary basis) its line of credit with Co-Bank, and/or utilize the Commodity Credit Corporation sugar loan program.

Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market-risk sensitive financial instruments, including long-term debt.

The Company’s long-term debt interest costs are stabilized through the use of multi-year interest rate locks on various amounts and terms through its primary lender CoBank. This strategy allows the Company to project future interest costs and cash flows with a reasonable degree of accuracy.

The Company has long-term tax-exempt bonds using a variable interest rate. Borrowing levels have been $17.4 million for 2007, $19.1 million for 2006 and $21.0 million for 2005. The historic interest rates for these instruments have been under 5% with an anticipated fluctuation of less than 1% per year.

The Company’s short-term debt rates will vary from year to year based on the short-term interest rate market changes. Average short-term debt borrowing levels have been $39.2 million, $24.7 million and $26.3 million for the years 2007, 2006 and 2005, respectively. Because each year’s short-term debt is closely associated with each year’s crop size and the finished goods market value from that crop, the interest fluctuations will have a direct impact on the final grower sugarbeet crop payment.

The Company will from time to time have a purchase obligation in foreign currency as a result of approved capital expenditure projects, and may reduce the risk of currency exchange by forward purchasing the applicable currency required for the expenditure.

The Company does not believe that it is subject to any material market risk exposure with respect to interest rates, exchange rates, commodity prices, equity prices and other market changes that would require disclosure under this item.

The consolidated financial statements of the Company for the fiscal years ended August 31, 2007, 2006 and 2005 have been audited by Eide Bailly, LLP, independent registered public accounting firm. Such consolidated financial statements have been included herein in reliance upon the report of Eide Bailly, LLP. The consolidated financial statements of the Company are included in Appendix A to this annual report.

There have been no changes in or disagreements with accountants on accounting and financial disclosure.

Sarbanes-Oxley Act: The Sarbanes-Oxley Act continues to have the interpretation of its rules reviewed and changed. The Company will comply with the rules and interpretations of these rules as they are promulgated. As of this writing, compliance with all applicable Sarbanes-Oxley rules for the Company has been deferred until August 31, 2008. The below listed areas of activity are not to be considered an all inclusive list, but rather an indication of how the Company’s Board of Directors and Management are approaching future compliance requirements.

Audit Committee: The audit committee is active in the oversight of the Company’s accounting, auditing, and key risk management areas. The Company’s bylaws require any board member to be actively engaged in the production of sugarbeets, therefore, the financial expert requirement for the audit committee is restricted to the pool of available directors who are eligible to serve on the audit committee. Therefore there is no financial expert, as defined within the provisions contained in the Securities and Exchange Commission, that serves on the Audit Committee. However, the Company believes that, taken as a whole, the members of the Audit Committee have sufficient education, experience and qualifications to carry out their duties. The Audit Committee has formulated a confidential and anonymous employee system to allow employees to report concerns regarding questionable accounting or auditing matters. The Audit Committee has adopted a code of ethics policy for top management.

The Audit Committee has reviewed and discussed separately with management, the independent auditors, and within the Audit Committee the financial statements and the quality of accounting principles and significant judgments affecting the financial statements contained in this Form 10-K filing. As a result of these reviews and discussions, the Audit Committee considers the financial statements contained here to be fairly presented.

Internal Controls: The Company’s payments to growers are derived from crop pools with each year’s harvest creating a “Crop Pool”. It is the Company’s practice to use accounting methods to allocate revenues and costs in a manner that such revenues and expenses associated with each pool are consistently applied on a year-to-year and a pool-to-pool basis. The Company has formalized a process whereby the material risks associated with the Company are determined, documented as to how these risks are to be managed and, where appropriate, reviewed by the Audit Committee.

The Company did not have any significant deficiencies nor material weaknesses for the year ended August 31, 2007.

The Company’s chief executive officer and chief financial officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934) as of a date within ninety days before the filing date of this annual report. Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the chief executive officer and chief financial officer have concluded that the Company’s current disclosure controls and procedures, as designed and implemented, were effective as regards to material weakness and significant deficiency. The evaluation has not revealed any fraud, intentional misconduct, or concealment on the part of Company personnel.

The table below lists the current directors of Minn-Dak Farmers Cooperative. The Board of Directors consists of one director from each of the nine districts. Directors must be common shareholders or representatives of common shareholders belonging to the district they represent and are elected by the members of that district. In the case of a common shareholder who is other than a natural person, a duly appointed or elected representative of such common shareholder may serve as a director. The directors have been elected to serve three-year terms expiring in December of the years indicated in the table below. One director is elected each year from three selected districts. Brief biographies for each of the directors are included after the table.

Name and Address	Age	District	Director Since	Term Expires In December
Dale Blume 17668 CO RD 11 Norcross, MN 56274-3050	57	District #7 – Lehman	2005	2008

Dennis Butenhoff 14319 150^th St. So. Barnesville, MN 56514	61	District #9 – Peet	2004	2007(1)

Brent Davison 7950 770^th Ave Tintah, MN 56583	56	District #5 – Hawes	2003	2008

Douglas Etten 30427 W. Stalker Road Dalton, MN 56324	56	District #8 – Lyngaas	1997	2009

Michael Hasbargen 2553 360^th ST Breckenridge, MN 56520	62	District #4 – Factory East	1993	2008

Dennis Klosterman 7942 CTY RD 1 Mooreton, ND 58061	47	District #3 – Gorder	2004	2007(2)

Russell Mauch 16305 Hwy 13 Barney, ND 58008	52	District #2 – Factory West	1998	2007(3)

Charles Steiner 2851 310^th AV Foxhome, MN 56543-9312	57	District #6 – Yaggie	2000	2009

Alton Theede 609 3^rd AV SE Hankinson, ND 58041	63	District #1 – Tyler	2003	2009

Dale Blume graduated from the NDSU with a degree in Ag Economics in 1973. He began farming in 1971 and continues to be actively farming today. Mr. Blume is one of Minn-Dak Farmers Cooperative’s original stockholders. Mr. Blume is a member of the Grant County FSA Board, the Delaware Township Board, and is a director at the First State Bank in Kensington, MN. He is also the co-chairman of the administrative council and on the financial committee of the United Methodist Church in Herman. He also serves on the Board of Directors for Minn-Dak Yeast Company.

Dennis Butenhoff has been a director since 2004 and serves on the Board of Directors of Minn-Dak Yeast Company. Mr. Butenhoff graduated from Barnesville High School, Barnesville, MN in 1965. Prior to serving his country in the military, Mr. Butenhoff attended North Dakota State University for 4 years, focusing on Ag economics. He has been farming in the Baker/Barnesville area since 1967. Mr. Butenhoff has served Trinity Lutheran Church as a Sunday school teacher and church elder.

Brent Davison has been a director since 2003 and is one of Minn-Dak’s representatives to the American Sugarbeet Growers Association in Washington, DC. Mr. Davison earned his B.S. degree in Education at Concordia University, Moorhead, MN, graduating in 1972. Mr. Davison taught school in Warren, MN from 1972 until coming home to farm near Tintah, Minnesota area in 1974. He is currently serving on the Tintah Township Board and is a former volunteer fireman and first responder.

Douglas Etten has been a director since 1997 and is currently serving as the board vice chairman. Mr. Etten has been farming near Foxhome, MN since graduating from Concordia College in Business and Math in 1974. Etten also serves on the Board of Directors for United Sugars Corporation. He is also one of Minn-Dak’s representatives to the American Sugarbeet Growers Association in Washington, DC.

Michael Hasbargen has been a director since 1993 and is currently serving as board chairman. He has also served as vice chairman. Mr. Hasbargen has been farming near Breckenridge, MN since graduating from NDSU in Ag Economics in 1967. Mr. Hasbargen also serves on the Board of Directors of United Sugars Corporation, Midwest Agri-Commodities Company, and Minn-Dak Yeast Company. He is also one of Minn-Dak’s representatives to the American Sugarbeet Growers Association in Washington, DC. Mr. Hasbargen is the brother-in-law of Mr. Steven Caspers, Executive Vice President & Chief Financial Officer.

Dennis Klosterman has been a director since 2004. Mr. Klosterman graduated from Wahpeton High School in Wahpeton in 1978. He began farming with his father and brother in the Mooreton, ND area in 1979 while attending North Dakota State College of Science and North Dakota State University. Mr. Klosterman has, and continues to, serve his community and church in several areas. He was a member and chairman of the Minn-Dak Farmers Cooperative Political Action Committee. Mr. Klosterman is a member of various farm and commodity organizations. Mr. Klosterman also serves on the Board of Directors for Minn-Dak Yeast Company.

Russell Mauch has been a director since 1998 and currently serving as board treasurer. Mr. Mauch graduated from North Dakota State University in 1977 with a B.S. in agriculture. From 1979 to 1981 Mr. Mauch was a commercial and agriculture loan officer for First Bank Corporation in Valley City, ND. Mr. Mauch has been farming near Barney, ND since 1981. Mr. Mauch also serves on the Board of Directors for United Sugars Corporation and as one Minn-Dak’s representatives to the American Sugarbeet Growers Association in Washington, DC.

Charles Steiner has been a director since 2000. Mr. Steiner has been farming near Foxhome, MN since 1969. Mr. Steiner graduated from the Northwest School of Agriculture, University of Minnesota at Crookston, MN. He also serves on the Board of Directors for Midwest Agri-Commodities Company and Minn-Dak Yeast Company. Mr. Steiner serves as the ex-officio member on the Board of Directors for United Sugars Company.

Alton Theede has been a director since 2003. Mr. Theede has been farming in the Fairmount, North Dakota area since 1966. He earned his B.S. degree in Business Administration from the University of North Dakota, Grand Forks, ND. Mr. Theede currently serves on the Board of Directors for the local CHS (Cenex Harvest States) and is very involved in community service. Mr. Theede has been and continues to be active in serving the congregation of St. Phillips Catholic Church in Hankinson, ND.

The Board of Directors has established a Compensation Committee, an Audit Committee and a Nominating Committee. The composition and function of these committees are set forth below

Compensation Committee. The Compensation Committee operates under a written charter and discharges the Board’s responsibilities relating to the fair and competitive compensation for the Chief Executive Officer, including reviewing and approving goals and objectives relating to the compensation of the Chief Executive Officer and the performance of the Chief Executive Officer. Based on its review, the Compensation Committee makes recommendations to the Board of Directors regarding the elements of the Chief Executive Officer’s compensation and the Compensation Committee, along with the Board of Directors, approves the compensation and other benefits of the Chief Executive Officer. A copy of the current charter of the Compensation Committee is available by following the link to “About MDFC” on the Company’s website at www.mdfarmerscoop.com. During 2007, the members of the Compensation Committee were Messrs. Charles Steiner (Chair), Dennis Butenhoff, Dennis Klosterman, Brent Davison and Alton Theede.

Nominating Committee. Shareholders from each district select two shareholders to serve as a Nominating Committee for that district. The Nominating Committee for each district is responsible for facilitating nominations for the position of director by shareholders of that district and evaluating whether shareholder proposed nominees are qualified candidates. Each Nominating Committee operates under a series of written guidelines relating to the legal requirements for the Company’s directors, qualifications of nominees, and process for soliciting shareholder nominees. During 2007, the members of the Nominating Committee were Messrs. Ed Moen (Chair), Roger Hanson (Alternate Chair), Gary Friskop, Luke Mauch, Bruce Olson, Blain Kummer and Dave Benedict. In fiscal 2007, there have not been any material changes to the procedures by which shareholders may recommend nominees to the Company’s Board of Directors.

Audit Committee. The Audit Committee assists the Board in fulfilling its responsibility relating to corporate accounting and reporting practices of the Company, the quality and integrity of financial reports, the financial reporting processes, the system of internal controls; the qualifications, independence and performance of the independent auditors; and compliance by the Company with certain legal and regulatory requirements. The Audit Committee has the authority to retain, compensate, oversee and terminate the independent auditors. The Audit Committee reviews the Company annual audited financial statements, quarterly financial statements and filings with the Securities and Exchange Commission. The Audit Committee also pre-approves all audit and non-audit services performed by the independent auditor. The Audit Committee operates under a written charter that is available by following the link to “About MDFC” on the Company’s website at www.mdfarmerscoop.com. During 2007, the Audit Committee consisted of Messrs. Russ Mauch (Chair), Dale Blume, Dennis Butenhoff, Doug Etten and Alton Theede.

The Board of Directors has reviewed the education, experience and other qualifications of each of the members of its Audit Committee. After review, the Board of Directors has determined that none of the members of the Audit Committee meet the Securities and Exchange Commission definition of an “audit committee financial expert.” However, the Company believes that, taken as a whole, the members of Audit Committee have sufficient education, experience and qualifications to carry out their duties.

The table below lists the senior management employees of the Company, none of whom owns any common or preferred shares. Brief biographies for each of the officers are included after the table.

David H. Roche is Minn-Dak Farmers Cooperative’s third president and CEO. He joined the Wahpeton, ND based sugar cooperative on March 1, 2001. He serves on the boards of United Sugars Corporation and Midwest Agri-Commodities. Mr. Roche is chairman of the board for Minn-Dak Yeast Company. In addition, he is a trustee of the United States Beet Sugar Association, and a member of the Board of Directors of The Sugar Association, Washington, D.C. Mr. Roche began his sugar industry career as a controller for Michigan Sugar Company in 1976. He progressed through the ranks until he was named president in 1994. In 1996 he became president of Savannah Foods Industrial and was appointed senior vice president of Savannah Foods & Industries. Imperial Sugar Company acquired controlling interest in Savannah in 1998. He was named as a managing director and senior vice president. Mr. Roche holds an MBA in Accounting from Michigan State University and became a Certified Public Accountant in 1974.

Steven M. Caspers is a graduate of the University of North Dakota with a Bachelor of Science in Business Administration and a major in Accounting. He has been employed with the Company since May 5, 1974. Mr. Caspers is president of Minn-Dak Yeast Company. He is active in national industry related boards and committees. Mr. Caspers is the brother-in-law of Mr. Michael Hasbargen, Director and Chairman.

Jeffrey L. Carlson is a graduate of the University of Minnesota-Morris with a Bachelor of Arts in Chemistry and the University of North Dakota with a Ph.D. in Physical Chemistry. He received his MBA from North Dakota State University in 2001. Mr. Carlson began his career as a research chemist and an assistant professor in 1986. Mr. Carlson began his employment with the Company on June 4, 1990.

John R. Haugen was promoted to the position of Director of Engineering on November 2, 2001 and to Vice President Engineering on August 1, 2002. He started his career with Minn-Dak Farmers Cooperative in 1976 as an Assistant Engineer and prior to this promotion held the position of Senior Engineer. Mr. Haugen is a graduate of the University of North Dakota and holds a BS in Mechanical Engineering.

Thomas D. Knudsen is a graduate of North Dakota State University with a Bachelor of Science in horticulture and has attended the Beet Sugar Institute at Fort Collins, Colorado. He began employment with the Company on May 24, 1977.

Richard W. Ames has been serving as the Operations Manager of Minn-Dak Yeast since 1989. He began his employment with the Company in September 1986. Dr. Ames holds a Ph.D. in Chemistry from University of North Dakota, which he earned in 1986. He is an active member of the American Chemical Society.

Susan M. Johnson has attended several post-secondary education classes in fields related to her employment at the Cooperative. Ms. Johnson began her career in the accounting department as receptionist and payroll clerk. She has also been employed in the human resources department, the executive offices, and is currently in the position of communications manager/executive administrative assistant. Ms. Johnson began employment with the Company on June 26, 1978.

Allen E. Larson is a graduate of Moorhead State University with a Bachelor of Science in Business Administration and a major in Accounting. He has been employed with the Company since October 26, 1981. Mr. Larson is a member of, and is currently serving as the Vice President of the North Central Chapter of, the National Society of Accountants for Cooperatives.

John S. Nyquist attended the North Dakota State College of Science, majoring in Accounting and Computer Programs. Mr. Nyquist began his purchasing and inventory control experience in 1975 in the Company storeroom. Mr. Nyquist is active in local civic and fraternal organizations and the National Association of Purchasing Managers. Mr. Nyquist began employment with the Company on September 15, 1975.

Greg J. Schmalz is a graduate of the University of North Dakota, Grand Forks, with a Bachelor of Arts Degree in Sociology and a Masters Degree in Guidance and Counseling. Mr. Schmalz is a member of the Society of Human Resources Management and the Agassiz Valley Human Resources Association. He began his career in human resources in 1979. He has been employed with the Company since August 30, 2004.

Kevin R. Shannon attended Taylor Institute and Vanguard Vo-Tech, majoring in Instrumentation. He is active in local civic organizations. Mr. Shannon began his technical and supervisory career in 1974. His employment with the Company began on June 1, 1983. Prior to becoming the safety director in September of 1992, Mr. Shannon was the Company’s tare lab supervisor.

The Company has adopted a code of ethics that applies to all directors, officers and employees, including its principal executive officer, principal financial officer and controller. This code of ethics is included in its Standards of Business Conduct which is publicly available by following the link to “About MDFC” at its website at www.mdfarmerscoop.com.

The Company intends to satisfy the disclosure requirements of the Securities and Exchange Commission regarding certain amendments to, or waivers from, provisions of its code of ethics that apply to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller by posting such information on the Company’s website at www.mdfarmerscoop.com.

The following discussion and analysis describes the Company’s compensation objectives and policies as applied to the following executive officers who are referred to in this Annual Report on Form 10-K as the Named Executive Officers:

This section is intended to provide a framework within which to understand the actual compensation awarded to or earned by the Named Executive Officers during the year ended August 31, 2007, as reported in the compensation tables and accompanying narrative sections appearing on pages 36 to 45 of this Annual Report on Form 10-K.

The primary responsibility of the Compensation Committee is to discharge the Board’s responsibilities relating to the fair and competitive compensation of the Company’s Chief Executive Officer. This responsibility includes reviewing and recommending to the Board the compensation and other terms of employment of the Chief Executive Officer, overseeing significant aspects of compensation and benefit programs in which the Chief Executive Officer participates, and approving performance-based goals and compensation. The Compensation Committee also annually reviews the Chief Executive Officer’s compensation and evaluates the Chief Executive Officer’s performance.

Under its charter, the Committee has the authority to engage the services of outside advisors, experts and others to assist it in performing its duties. While the Compensation Committee has used the services of a compensation consultant in the past, it did not do so in determining fiscal year 2007 compensation for the Chief Executive Officer. The Compensation Committee may choose to use the services of a compensation consultant in the future.

The Compensation Committee does not oversee or design compensation programs for any of the Named Executive Officers other than the Chief Executive Officer. The Compensation Committee believes that it is the responsibility of the Chief Executive Officer, as the highest highest-ranking executive, to implement the business goals of the Company established by the Board of Directors and to manage the Company’s business against an annual budget established by the Board of Directors. In this regard, the Chief Executive Officer is responsible for determining a strategy for achieving these goals, including the allocation of personnel, time and financial resources consistent with the budget. The Compensation Committee believes it is the responsibility of the Chief Executive Officer to manage and compensate the other Named Executive Officers in a manner that provides sufficient incentives for these employees to meet the business goals of the Company and to control compensation and benefits expense for all employees, including the Named Executive Officers. In reviewing the performance of the Chief Executive Officer each year, the Compensation Committee takes into consideration the extent to which the Chief Executive Officer has successfully fulfilled these responsibilities and holds the Chief Executive Officer accountable for the performance of each executive officer reporting to him.

In determining compensation for the Chief Executive Officer, the Compensation Committee solicits input from the Director of Human Resources and the Chief Financial Officer, primarily relating to the cost of the Company’s compensation programs and the financial performance of the Company. None of the Named Executive Officers, other than the Chief Executive Officer, has a role in establishing executive compensation. From time to time, some of the Named Executive Officers are invited to attend meetings of the Compensation Committee. However no Named Executive Officer attends any executive session of the Compensation Committee or is present during deliberations or determination of that Named Executive Officer’s compensation.

While the Chief Executive Officer does not seek approval from the Compensation Committee for the compensation of the other Named Executive Officers, the Chief Executive Officer does discuss their compensation with the Compensation Committee and with the Board of Directors from time to time to solicit input and advice.

The Compensation Committee’s philosophy is to provide competitive levels of compensation that are consistent with the Company’s annual and long-term performance goals. The Compensation Committee attempts to balance the financial interests of the Chief Executive Officer against the Company’s goal of maximizing its return to its shareholders. In determining the competitiveness of its programs, the Compensation Committee reviews the compensation offered by other local employers, as well as other sugar production cooperatives, such as American Crystal Sugar Company and Southern Minnesota Beet Sugar Cooperative. When determining compensation for the Chief Executive Officer, the Compensation Committee considers whether the form and amount of compensation is consistent with its philosophy.

The Compensation Committee believes that the Chief Executive Officer’s base salary should be at or below base salaries of similar positions in the region and in the Company’s industry. The Compensation Committee also adjusts base salary comparables for the size of the Company’s operations, both in terms of tons of sugarbeets processed and the quantity of sugar produced. The Compensation Committee intentionally sets base salary lower than comparable salaries believing that variable cash compensation, tied to specific performance measures, should constitute a significant portion of the Chief Executive Officer’s overall cash compensation. The variable cash compensation is provided through two bonus programs, one based on return per acre (referred to as the “Profit Sharing Bonus”) and one recommended by the Compensation Committee for Board of Directors approval based upon the results of an annual performance review (the “Performance Bonus”). The Compensation Committee intends the Profit Sharing Bonus to be fairly challenging and that average financial performance measured by return per acre will result in a relatively low level of Profit Sharing Bonus, while above average or exceptional financial performance would be required before a higher level Profit Sharing Bonus is earned by the Chief Executive Officer. Because return per acre is the measure that best quantifies the Company’s return to shareholders, the Compensation Committee believes that this measure is appropriate to align the Chief Executive Officer’s interests with those of the shareholders.

In determining the total compensation for the other Named Executive Officers, the Chief Executive Officer ascribes to much the same philosophy as the Compensation Committee but the Chief Executive Officer also considers internal pay equity, external competitiveness and the contribution of each executive to the Company’s overall performance when determining base salary and eligibility for a discretionary performance-based bonus.

The Compensation Committee followed the guiding principles outlined above in the development and administration of the compensation of the Chief Executive Officer while employed by the Company. The elements of in-service compensation of the Chief Executive Officer consist of base salary, a Profit Sharing Bonus based on return to shareholders and a discretionary Performance Bonus based on the Chief Executive Officer’s individual performance.

The Named Executive Officers, other than the Chief Executive Officer, receive compensation while employed with the Company consisting of a base salary and a discretionary performance bonus determined by the Chief Executive Officer based upon the Company’s overall performance and the individual performance of the Named Executive Officer.

The Company does not believe that personal benefits or perquisites (i.e. “perks”) are appropriate as a significant element of compensation, in particular because perks are not conditioned upon performance and are not based upon contribution to the Company’s business. None of the Named Executive Officers received perks that were a significant compensation element in 2007.

Mr. Roche and the Company entered into an employment agreement in 2001 and since that time, the Company has annually reviewed Mr. Roche’s performance to determine whether to retain Mr. Roche’s services and to establish a salary for Mr. Roche. The Compensation Committee set Mr. Roche’s base salary in August 2006 at the time the Company entered into the renewal of Mr. Roche’s employment agreement through August 31, 2007. Mr. Roche’s annual base salary for 2007 was set at $322,400, an increase of 3.5% from the annual base salary of $311,500 for 2006. The Compensation Committee increased Mr. Roche’s base salary primarily to recognize an increase in the cost of living and compensation market movements. Mr. Roche determines salaries for the other Named Executive Officers based upon the executive’s personal performance, the need for the salary to remain competitive with other organizations in the industry and within general budgetary guidelines established by the Chief Executive Officer.

The following table sets forth the annual base salaries for 2007 and 2006 for each of the other Named Executive Officers, as well as the percentage increase in 2007 as compared to 2006:

The cash bonus element of total compensation is available to the Named Executive Officers through a discretionary individual performance bonus, which for the Chief Executive Officer is referred to as the “Performance Bonus.” The Chief Executive Officer is also eligible for the Profit Sharing Bonus, a cash bonus based upon the return per acre to growers in the fiscal year.

In July 2007, the Compensation Committee and the Board of Directors conducted a performance review of Mr. Roche for fiscal 2007, in part to determine whether Mr. Roche would receive a Performance Bonus. This performance review solicited a rating from the Board of Directors of Mr. Roche’s performance in areas such as leadership, communication, budget and time management, as well as overall performance. This information was compiled anonymously and discussed among the Board members. The Board of Directors carefully reviewed Mr. Roche’s achievements for 2007, particularly his executive leadership contributing to a successful campaign during which the Company’s largest crop of sugarbeets was successfully processed and marketed, his involvement and leadership in industry affairs, and the above-average financial returns to the shareholders, in determining whether to award a Performance Bonus and the amount of the Performance Bonus. In view of the variety of the factors and the amount of information considered as well as the complexity and subjectivity of these matters, the Compensation Committee did not find it practical to, and did not attempt to, make specific assessments of, quantify, rank or otherwise assign relative weights to the specific factors considered by the Board or by the Compensation Committee. Individual members of the Compensation Committee may have given different weight to different factors. For 2007, the Compensation Committee awarded Mr. Roche a Performance Bonus of $70,000.

Mr. Roche determined the discretionary performance bonus amounts to be paid to the other Named Executive Officers and, consistent with past practice, he presented this information to the Compensation Committee and the Board of Directors for feedback in July 2007. Mr. Roche, in establishing the performance bonus awards for the other Named Executive Officers, considered their individual contribution toward achieving the Company goals, and the level of return to shareholders measured through dollars paid per acre of sugarbeets grown. The Company and Mr. Roche are currently developing a more formal program for executive officers (other than the Chief Executive Officer) for determining performance bonus awards that will clearly specify goals to be achieved and the level of bonus payment (as a percent of base salary) at various levels of achievement of the goals. The following table shows the individual Performance Bonus paid to each of the Named Executive Officers for 2007 and also shows the performance bonus as a percentage of 2007 salary:

For Mr. Roche, the Profit Sharing Bonus consists of a cash bonus based upon the return per acre to growers, with a matrix determining the amount of Profit Sharing Bonus at various levels of return per acre. The matrix was established by the 2001 employment agreement between Mr. Roche and the Company and sets forth the Profit Sharing Bonus that would be earned by him at various levels of return per acre to the growers as follows:

For the purposes of the Profit Sharing Bonus, return per acre is the amount received by the shareholders/growers as a grower payment for sugarbeets and does not include patronage, retains or trucking payments. For 2007, the return per acre to the growers was in excess of $900 per acre resulting in a Profit Sharing Bonus to Mr. Roche of $50,000. Mr. Roche’s Profit Sharing Bonus and Performance Bonus resulted in an aggregate bonus of $120,000, resulting in an amount equal to 37% of his 2007 annual base salary.

In 2001, the Company entered into an employment agreement with Mr. Roche relating to his service as the President and Chief Executive Officer. The Company’s employment agreement with Mr. Roche did not provide for severance or any other post-termination payments for 2007, except through plans in which executive officers participate generally. On August 28, 2007, the Company and Mr. Roche entered into a renewal agreement to the 2001 employment agreement that provides for, among other things, certain severance or post-termination payments. This renewal agreement is in effect for the one-year period ended August 31, 2008. The Company does not have employment agreements or arrangements with any of the other Named Executive Officers. See “Executive Compensation – Employment and Post-Employment Arrangements” in this Annual Report on Form 10-K for a discussion of the terms of the employment agreement with Mr. Roche.

In determining the compensation policies, programs and actions to be taken by the Company with respect to executive compensation, the Compensation Committee considers the impact of accounting rules, securities rules and tax rules. The Compensation Committee regularly reviews changes in these regulatory requirements to determine their applicability and impact on the Company. In 2007, the Compensation Committee adopted its charter, which included changes to securities rules and regulations and those requiring this Compensation Discussion and Analysis section.

The following table shows information concerning compensation earned for services in all capacities during fiscal year 2007 for: (i) David H. Roche, who served as the Company’s Chief Executive Officer in fiscal year 2007; (ii) Steven M. Caspers, who served as the Company’s Chief Financial Officer in fiscal year 2007; and (iii) the three other most highly compensated executive officers of the Company whose total compensation was at least $100,000, less the amount representing the change in pension value and nonqualified deferred compensation earnings (together referred to as the “Named Executive Officers”).

The table below sets forth information on the pension benefits for the Named Executive Officers under each of the following:

Both the MDFC Pension Plan and the MDFC SERP are described in more detail in Item 11. Executive Compensation of this Annual Report on Form 10-K under the section entitled “Employment and Post-Employment Arrangements – Post-Employment Arrangements for Named Executive Officers.”

No pension benefits were paid to any of the Named Executive Officers in fiscal year 2007. The Company does not have a policy for granting extra pension service. Further information on these pension plans, is included within this section of this Item of Form 10-K entitled “Compensation Discussion and Analysis.”

The amounts reported in the table below equal the present value of the accumulated benefit at August 31, 2007, for the Named Executive Officers under each plan based upon the assumptions described in footnote 2.

The table below provides information on the non-qualified deferred compensation of the Named Executive Officers in fiscal year 2007 under the Company’s Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). Under the terms of the Deferred Compensation Plan, participants may elect to defer receipt of their compensation and the Deferred Compensation Plan provides a means for deferrals of compensation. The Deferred Compensation Plan is described in more detail in Item 11. Executive Compensation of this Annual Report on Form 10-K under the section entitled “Employment and Post-Employment Arrangements – Post-Employment Arrangements for Named Executive Officers.”

On March 1, 2001, the Company entered into an employment agreement with David H. Roche to serve as its President and Chief Executive Officer with an initial term through August 31, 2002. This initial term has been renewed for 12 month periods running from September 1 to August 31 of the following year. Under the terms of the employment agreement, Mr. Roche is eligible for an increase in this base salary based upon an annual performance review and eligible for a profit sharing bonus based upon return per acre. See “Compensation Discussion and Analysis – Elements of In-Service Compensation – Cash Bonus Programs” for the matrix associated with the return per acre bonus. The Board of Directors also has the discretion to grant Mr. Roche a performance bonus regardless of whether the return per acre bonus is awarded. Mr. Roche is also eligible for health, dental and vision insurance on the same terms as other non-union employees, as well as other group benefits such as term life insurance, accidental death and dismemberment insurance, long-term disability insurance. If Mr. Roche retires as Chief Executive Officer on or after his 62nd birthday, the Company will provide him with medical insurance until he reaches age 65. Mr. Roche will also be included in the Company’s non-qualified deferred compensation plan, the pension plan, supplemental executive retirement plan and 401(k) plan.

During any term of the employment agreement, the agreement may be terminated by either party upon written notice to the other at least ninety days prior to the end of the term, by the Company for “material breach” or “just cause” by Mr. Roche and upon Mr. Roche’s death or disability. For the purposes of the employment agreement, “material breach” and “just cause” mean willful misconduct in following legitimate directions of the Board of Directors; breach of loyalty to the cooperative; conviction of a felony; habitual drunkenness; excessive absenteeism not related to illness, sick leave or vacations, but only after notice from the Board of Directors followed by a repetition of such excessive absenteeism; dishonesty; or continuous conflicts of interest after notice in writing from the Board of Directors.

On August 22, 2006, the Company and Mr. Roche entered into a renewal agreement for the period September 1, 2006 to August 31, 2007. The renewal agreement set Mr. Roche’s annual base salary at $322,400 for that renewal period and also provided for five weeks of vacation per year beginning on September 1, 2006, with increases over 5 weeks’ vacation at the discretion of the Board of Directors. The other provisions of the 2001 employment agreement were in effect for that renewal period.

On August 28, 2007, the Company and Mr. Roche entered into a renewal agreement for the period September 1, 2007 to August 31, 2008. In the renewal agreement, Mr. Roche’s annual base salary was set at $333,700 for the one-year period ended August 31, 2008. The renewal agreement also operated as an amendment to the termination provisions of the 2001 employment agreement. Under the employment agreement as modified by the renewal agreement, Mr. Roche’s employment may be terminated by either party upon 90 days’ advance notice, by the Company for “material breach” or “just cause” (as those terms are defined in the renewal agreement) and upon Mr. Roche’s death or disability. Under the renewal agreement, if the Company terminates Mr. Roche’s employment without cause, the Company will pay Mr. Roche’s then-current base salary for a period of 12 months, conditioned upon receipt of a general release and compliance with provisions of the renewal agreement relating to confidentiality of Company information. This post-employment payment does not apply to termination of Mr. Roche’s employment by Mr. Roche, by the Company for cause, or by reason of death or disability. The renewal agreement also added a provision to the employment agreement by which Mr. Roche agrees to keep confidential certain Company information during the term of his employment with the Company and following termination of employment.

The Company’s employment agreement with Mr. Roche does not provide for severance (unless terminated without cause) or any other post-termination payments for 2007, except through plans in which the Named Executive Officers participate generally. The Company provides post-employment compensation for the Named Executive Officers, David H. Roche, Steven M. Caspers, Thomas D. Knudsen, Jeffrey L. Carlson and John Haugen, through the following plans:

The Company has established the Minn-Dak Farmers Cooperative Pension Plan. The Pension Plan is a noncontributory, defined benefit retirement plan, which is available to all of its eligible employees. For 2007, there were approximately 326 eligible current employees participating in the Pension Plan, including the Named Executive Officers. The benefits of the Pension Plan are funded by periodic contributions by the Company to a retirement trust that invests the contributions and earnings from such contributions to pay benefits to employees. The Pension Plan provides for the payment of a monthly retirement benefit determined under a formula based on years of service and each employee’s compensation level. Benefits are paid to the employees upon reaching early (age 55 or older) or normal (age 65) retirement age. The plan also provides for the payment of certain disability and death benefits. See the table entitled “Pension Benefits” under Item 11. Executive Compensation of this Annual Report on Form 10-K for information on the benefits for 2007 to each of the Named Executive Officers under the Pension Plan.

The Board of Directors adopted a Supplemental Executive Retirement Plan on January 21, 1997. Subject to the discretion of the Board of Directors, the Company credits to the account of each executive eligible to participate in the Supplemental Plan amounts equal to the difference between the benefits actually payable to the executive under the provisions of the defined benefit retirement plan and the amounts which would have been payable under the defined benefit retirement plan if certain provisions of the Internal Revenue Code did not prohibit the payment of such benefits. Of the Named Executive Officers, only Mr. Roche participated in the Supplemental Executive Retirement Plan in 2007. See the table entitled “Pension Benefits” under Item 11. Executive Compensation of this Annual Report on Form 10-K for information on the benefits for 2007 to Mr. Roche under the Supplemental Executive Retirement Plan. Unlike the Company’s Pension Plan, the Supplementary Executive Retirement Plan is an unfunded, unsecured obligation of the Company and is not qualified for tax purposes.

On August 1, 1978 the Company executed an adoption agreement establishing an unfunded Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”) for a select group of management or highly compensated employees. Under the terms of the Deferred Compensation Plan, certain employees may elect to defer receipt of their compensation and the Deferred Compensation Plan provides a means for deferrals of compensation into various investment options. The participants may change their election among these options no more than one time per quarter. The income earned does not constitute an “above-market interest rate” as defined by the Securities and Exchange Commission.

Under the Deferred Compensation Plan, participants may elect to defer any amount of their current salary and bonus as of the end of the prior year for the first payroll period beginning in the next year of the Deferred Compensation Plan. Income will be gained or lost on a daily basis as a result of the participants directed investment of his/her account. The participant is vested in those earnings immediately. Participants are eligible for payouts from the Deferred Compensation Plan at termination, death or disability. With respect to distributions, participants may only elect to receive payments in the form of cash over no more than ten annual installments. While the Company does not provide any matching contribution under the Company’s 401(k) retirement savings plan for compensation amounts deferred into the Deferred Compensation Plan, the Company does have the discretion to make nonelective or matching contributions to the Deferred Compensation Plan. Participants have no right, either directly or indirectly, to anticipate, sell, assign or otherwise transfer any benefit accrued under the Deferred Compensation Plan. In addition, no participant has any interest in any Company assets set aside as a source of funds to satisfy its benefit obligations under the Deferred Compensation Plan, including the establishment of any trust. Participants have the status of general unsecured creditors of the Company and the Deferred Compensation Plan constitutes an unsecured promise by the Company to make benefit payments in the future. See the table entitled “Nonqualified Deferred Compensation” under Item 11. Executive Compensation in this Annual Report on Form 10-K for information on the benefits for 2007 for each of the Named Executive Officers under the Deferred Compensation Plan.

The Company maintains a Section 401(k) retirement savings plan that permits employees, including the Named Executive Officers, to elect to set aside a portion of their gross compensation on a pre-tax basis in a trust to pay future retirement benefits. The Company provides a matching contribution of 100% of each employee’s first 4% of compensation that is set aside under the plan. The amounts set aside by each employee and the Company vests immediately. Benefits under the 401(k) plan begin to be paid to the employee: (i) upon the attainment of normal retirement at age 65, or if the employee chooses, any time after early retirement at or after age 55; (ii) the date the employee terminates employment with the Company; or (iii) a pre-retirement distribution equal to the value of the employees 401(k) account, provided the employee has attained age 59 1/2 and provided a written consent of the spouse (if married). Federal law limited employee pre-tax income contributions to $15,000 in calendar year 2006 for each participating employee age 49 and under, and $20,000 for each participating employee age 50 and older. For calendar year 2007, employee pre-tax income contributions were limited to $15,500 for each participating employee age 49 and under and $20,500 for each participating employee age 50 and older. See the table entitled “Summary Compensation Table” for information on the benefits for 2007 to each of the Named Executive Officers under the Company’s 401(k) plan.

Directors of the Company received the following amounts for Board and committee service in fiscal year 2007: $260 per regular Board meeting, special Board meeting and committee meeting. In addition, from time to time the Company requests that directors represent the Company’s interests at various industry meetings and conferences, meetings with government or regulators, meetings with shareholders and growers and other meetings with stakeholders. For attendance at each meeting requested by the Company, each director receives $130 per day for service of less than five hours and $260 per day for service of more than five hours. The Chairman of the Board of Directors also receives an additional retainer of $500 per month to compensate for the extra duties associated with that position. Mr. Michael Hasbargen served as the Chairman of the Board of Directors in fiscal year 2007.

The following table shows for fiscal year 2007, the cash and other compensation earned by each of the Company’s directors. Other than cash retainer and meeting fees earned in fiscal year 2007 as described above, none of the Company’s directors earned any other cash or other compensation.

The following report of the Compensation Committee shall not be deemed to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the 1934 Securities Exchange Act, as amended, except to the extent that the Company specifically incorporates it by reference in such filing.

The Compensation Committee has reviewed and discussed the section of this Annual Report on Form 10-K for the year ended August 31, 2007 entitled Compensation Discussion and Analysis (the “CD&A”) with management. In reliance on this review and discussion, the Compensation Committee recommended to the Board of Directors that the CD&A be included in this Annual Report on Form 10-K for the year ended August 31, 2007 for filing with the Securities and Exchange Commission.

Under state law and the Company’s Bylaws, each member of the cooperative is entitled to one vote, regardless of the number of shares the member holds. The Common Stock of the Company is voting stock and each member of the Company holds one share of Common Stock. The Preferred Stock of the Company is non-voting stock. The Company’s stock can only be held by individuals who are sugarbeet growers. To the Company’s knowledge, as of November 6, 2007, no person owned beneficially more than 5% of the Company’s outstanding shares and none of the principal officers listed above owned any such shares. As members of the cooperative, each director owns one share of Common Stock and is entitled to one vote. As a group, the directors own 5.23% of the outstanding Preferred Stock.

Each of the Company’s directors is also a sugarbeet grower or a shareholder member or representative of a shareholder member. By virtue of their status as such members of the Company, each director or the member he represents sells sugarbeets to the Company and receives payments for those sugarbeets. Such payments for sugarbeets often exceed $120,000. However, such payments that are received by the directors, or the entities they represent, are on the same basis as payments received by other members of the Company for the delivery of their sugarbeets. Except for the sugarbeet sales described in the preceding sentences, since the beginning of fiscal year 2007, the Company has not entered into any transaction and there are no currently proposed transactions, in which the Company was or is to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest.

The charter of the Audit Committee provides that the Audit Committee is responsible for reviewing and approving the terms and conditions of all of transactions the Company enters into in which an officer, director or 5% or greater shareholder or any affiliate of these persons has a direct of indirect material interest. The Standards of Business Conduct, which is applicable to all of the Company’s employees and directors, also prohibits the Company’s employees, including executive officers, and the Company’s directors from engaging in conflict of interest transactions. Requests for waivers by the Company’s executive officers and directors from the provisions of, or requests for consents by the Company’s executive officers and directors under, the Standards of Business Conduct must be made to the Audit Committee.

In addition, in November 2007, the Company adopted a formal related person transaction approval policy, which sets forth the Company’s policies and procedures for the review, approval or ratification of any transaction required to be reported in its filings with the Securities and Exchange Commission. The Company’s policy applies to any financial transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships in which the Company is a participant and in which a related person has a direct or indirect interest. Through the policy, the Audit Committee has also identified and pre-approved certain transactions with related persons, including:

The Audit Committee must approve any related person transaction subject to this policy before commencement of the related party transaction. If pre-approval is not feasible, the Audit Committee may ratify, amend or terminate the related person transaction. The Audit Committee will analyze the following factors, in addition to any other factors the Audit Committee deems appropriate, in determining whether to approve a related party transaction:

The Audit Committee may, in its sole discretion, approve or deny any related person transaction. Approval of a related person transaction may be conditioned upon the Company and the related person taking such precautionary actions, as the Audit Committees deems appropriate.

The Board of Directors undertook a review of director independence in November 2007 as to all nine directors then serving. As part of that process, the Board reviewed all transactions and relationships between each director (or any member of his immediate family) and the Company, its executive officers and its auditors, and other matters bearing on the independence of directors. Although none of the Company’s securities are listed on any stock exchange, the Board of Directors is required to select and apply the independence standards of a stock exchange. For the purposes of determining the independence of the Company’s directors and committee members, the Board of Directors selected the NASDAQ Marketplace Rules. As a result of its review, the Board of Directors affirmatively determined that each director, other than Mr. Michael Hasbargen, are independent according to the “independence” definition of the NASDAQ Marketplace Rules. Mr. Hasbargen is related by marriage to Steven M. Caspers, an executive officer of the Company.

The Company has also established separate criteria for eligibility to serve as a member of the Company’s Compensation Committee and Audit Committee.

The charter of the Compensation Committee requires that this committee consist of no fewer than three Board members and that no director shall be a member if the director currently is, or at any time during the past two fiscal years has been employed by the Company or in the judgment of the Executive Committee, has a relationship that would interfere with the exercise of independent judgment in carrying out responsibilities as a director or member of the Compensation Committee. Each member of our Compensation Committee meets these requirements.

The charter of the Audit Committee requires that the Audit Committee be comprised of at least three members, all of whom must be independent from management and the Company. The members of the Audit Committee should also include directors with financial or accounting backgrounds if available. The Board of Directors determined that each member of the Audit Committee meets the independence requirements of the charter. The Board of Directors also determined that some members of the Audit Committee have financial or accounting backgrounds.

The audit committee approves 100% of the services described in items 1 thru 4 above.

-Consolidated Statements of Operations for the Years Ended August 31, 2007, 2006 and 2005

-Consolidated Statements of Changes in Members’ Investments for the years ended August 31, 2007, 2006 and 2005

We have audited the accompanying consolidated balance sheets of Minn-Dak Farmers Cooperative (a North Dakota cooperative association) as of August 31, 2007, 2006, and 2005, and the related consolidated statements of operations, change in members’ investments and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we do not express such an opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Minn-Dak Farmers Cooperative as of August 31, 2007, 2006, and 2005, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

	2007		2006		2005
ASSETS

CURRENT ASSETS
Cash	$	254,906	$	223,593	$	651,141

Receivables
Trade accounts		18,620,647		15,141,356		9,404,653
Growers		4,907,384		4,551,852		4,102,800
Income tax		—		85,647		9,990
Other		90,227		24,169		27,430
		23,618,258		19,803,024		13,544,873

Inventories
Refined sugar, pulp and molasses to be sold on a pooled basis		32,843,130		20,222,901		19,730,432
Sugarbeets		—		2,017,662		—
Nonmember refined sugar		28,793		34,955		200,633
Yeast		167,808		165,856		114,845
Materials and supplies		9,046,232		7,116,506		7,037,784
		42,085,963		29,557,880		27,083,694

Deferred charges		2,038,296		1,506,495		1,444,959

Prepaid expenses and other assets		1,502,146		1,010,569		1,632,888

Current deferred income tax asset		688,000		607,000		541,000

Total current assets		70,187,569		52,708,561		44,898,555


PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		25,183,905		24,636,738		22,959,208
Buildings		37,481,480		37,474,147		37,263,990
Factory/Ag equipment		137,993,774		134,313,021		130,803,415
Other equipment		4,096,525		3,954,002		3,574,258
Construction in progress		1,382,936		933,339		2,315,654
		206,138,620		201,311,247		196,916,525
Less accumulated depreciation		111,843,105		103,991,337		97,088,389
		94,295,515		97,319,910		99,828,136


OTHER ASSETS

Investment in stock of other corporations, unconsolidated marketing subsidiaries and other cooperatives		11,500,298		11,017,442		11,038,556
Investment restricted for capital bond projects		—		600		1,491,930
Long-term deferred income taxes		150,000		—		—
Other		1,532,847		2,082,765		1,738,881
		13,183,145		13,100,807		14,269,367

	$	177,666,229	$	163,129,278	$	158,996,058

	2007			2006		2005
LIABILITIES AND MEMBERS’ INVESTMENT

CURRENT LIABILITIES
Short-term notes payable	$	19,000,000		$	14,445,000	$	9,800,000

Current portion of long-term debt and capital leases		2,591,849			2,564,630		3,600,000
Current portion of bonds payable		1,915,000			1,665,000		1,725,000
		4,506,849			4,229,630		5,325,000
Accounts payable
Trade		4,840,632			2,069,323		2,219,896
Growers		23,289,239			14,482,531		9,966,465
Income tax		122,271			—		—
		28,252,142			16,551,854		12,186,361
Payable to affiliates - Midwest Agri-Commodities Co. and United Sugars Corporation		842,476			532,661		1,472,747

Accrued liabilities		4,357,762			2,923,978		3,681,747

Total current liabilities		56,959,229			38,683,123		32,465,855


LONG-TERM DEBT AND CAPITAL LEASES, NET OF CURRENT PORTION		16,923,816			20,362,925		19,900,000

BONDS PAYABLE		15,500,000			17,415,000		19,230,000

LONG-TERM DEFERRED INCOME TAX LIABILITY		—			1,840,000		1,300,000

LONG-TERM PENSION LIABILITY		4,910,277			877,294		671,756

COMMITMENTS AND CONTINGENCIES (NOTE 11)

Total liabilities		94,293,322			79,178,342		73,567,611

NON-CONTROLLING INTEREST IN EQUITY OF SUBSIDIARY		—			—		2,018,551

MEMBERS’ INVESTMENT
Preferred stock
Class A - 100,000 shares authorized, $105 par value; 72,200 shares issued and outstanding		7,581,000			7,581,000		7,581,000
Class B - 100,000 shares authorized $75 par value; 72,200 shares issued and outstanding		5,415,000			5,415,000		5,415,000
Class C - 100,000 shares authorized, $76 par value; 72,200 shares issued and outstanding		5,487,200			5,487,200		5,487,200
		18,483,200			18,483,200		18,483,200

Common stock, 600 shares authorized, $250 par value;
484 shares issued and outstanding on 8-31-07,		121,000			120,000		119,250
480 shares outstanding on 8-31-06 and
477 shares outstanding on 8-31-05
Paid in capital in excess of par		32,094,407			32,094,407		32,094,407
Unit retention capital		—			—		1,379,798
Qualified allocated patronage		—			—		722,691
Nonqualified allocated patronage		27,598,667			26,077,023		23,694,526
Accumulated other comprehensive loss		(2,368,458	)		—		—
Retained earnings		7,444,091			7,176,306		6,916,024
		83,372,907			83,950,936		83,409,896

	$	177,666,229		$	163,129,278	$	158,996,058

	2007		2006			2005
REVENUE
From sales of sugar, sugar co-products, and yeast, net of discounts	$	278,571,049	$	176,966,668		$	189,681,378

EXPENSES
Production costs of sugar, co-products,and yeast sold		69,697,547		62,716,367			55,940,415
Sales and distribution costs		50,494,042		29,049,229			37,099,870
General and administrative		7,104,136		6,173,050			6,580,640
Interest		4,296,972		3,544,118			2,899,283
		131,592,697		101,482,764			102,520,208

OTHER INCOME (EXPENSE)		1,436,693		709,750			1,135,475

NET PROCEEDS RESULTING FROM MEMBER AND NON-MEMBER BUSINESS BEFORE NON-CONTROLLING INTEREST		148,415,045		76,193,654			88,296,645

NON-CONTROLLING INTEREST IN INCOME OF SUBSIDIARIES		—		(97,233	)		(208,317	)

NET PROCEEDS RESULTING FROM MEMBER AND NON-MEMBER BUSINESS	$	148,415,045	$	76,096,421		$	88,088,328

DISTRIBUTION OF NET PROCEEDS
Credited to members’ investment
Components of net income
Income from non-member business	$	267,785	$	260,282		$	662,191
Patronage income		7,560,504		4,220,538			5,191,808

Net income credited to member’s investment		7,828,289		4,480,820			5,853,999

Payments to members for sugarbeets, net of unit retention capital		140,586,756		71,615,601			82,234,329

NET PROCEEDS RESULTING FROM MEMBER AND NONMEMBER BUSINESS	$	148,415,045	$	76,096,421		$	88,088,328

Minn-Dak Farmers Cooperative (the Company) is a North Dakota cooperative association owned by its member-growers for the purpose of processing sugarbeets and marketing sugar and co-products. Minn-Dak Yeast Company, Inc. (Minn-Dak Yeast) is a North Dakota corporation engaged primarily in the production and marketing of bakers yeast.

The financial statements include the accounts of the Company and its subsidiary, Minn-Dak Yeast, which, as of May 1, 2006, is 100% owned by the Company. Prior to August 31, 2006, Minn-Dak Yeast Company activity was accounted for as non-patronage business. Effective September 1, 2006, Minn-Dak Yeast Company activity has been accounted for as patronage business.

Trade receivables are uncollateralized customer obligations due under normal trade terms requiring payment within 15 to 90 days from the invoice date. Trade receivables are stated at the amount billed to the customer. Customer account balances with invoices dated over 90 days old are considered delinquent. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management reviews all trade receivable balances that exceed 90 days from the invoice date and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Additionally, management estimates an allowance to apply to the aggregate trade receivables to create a general allowance covering those amounts. The allowance is based on an evaluation of the receivables account with particular attention paid to the largest customer balances and the risk profile of the entire portfolio.

The Company and subsidiary grant credit to food processors located throughout the United States. In addition, the Company grants credit to member-growers located in North Dakota and Minnesota, for sugarbeet seed and limited produced co-products.

Inventories of refined sugar, thick juice, pulp and molasses to be sold on a pooled basis are valued at net realizable value, while third-party purchased refined sugar to be sold on a pooled basis is valued at the lower of cost or market. Inventory of yeast is valued at the lower of average cost or market. Materials and supplies are valued at most recent purchase that approximates cost. During the periods when sugarbeets are purchased from growers, but not yet converted into bin sugar or thick juice, that inventory is valued at grower payment cost. In valuing inventories at net realizable value, the Company, in effect sells the remaining inventory to the subsequent periods sugar and co-product pool.

Agricultural development and labor procurement costs incurred in connection with the sugarbeet crop to be harvested in September and October, of the following fiscal year, are deferred and subsequently charged to expense during the ensuing processing period.

Property, plant and equipment are stated at cost. Additions, renewals and betterments are capitalized, whereas expenditures for maintenance and repairs are charged to expense. The cost and related accumulated depreciation of assets retired or sold are removed from the appropriate asset and depreciation accounts and the resulting gain or loss is reflected in income.

It is the policy of the Company to provide depreciation based on methods designed to amortize the cost of the properties over their estimated useful lives. Property, plant and equipment are depreciated for financial reporting purposes, principally using declining balance methods, with estimated useful lives ranging from 8 to 40 years. Statutory lives and methods are used for income tax reporting purposes.

Capitalized assets include indirect costs such as fringe benefits, interest, and engineering when appropriate. The indirect costs capitalized for the years ended August 31, 2007, 2006, and 2005 were $158,642, $152,751, and $112,067, respectively. There was no construction-period interest capitalized for the years ended August 31, 2007, 2006 and 2005.

In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, the Company does not amortize goodwill. The Company evaluates goodwill and other intangible assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recovered.

Investments in Other Corporations, Unconsolidated Marketing Subsidiaries, and Other Cooperatives

Equity Value Investments in Unconsolidated Marketing Investments - The investments in United Sugars Corporation and Midwest Agri-Commodities Company are accounted for using the equity method, wherein the investment is recorded at the amount of the underlying equity in the net assets of the investments and adjusted to recognize the Company’s share of the undistributed earnings or losses.

Investments in Other Cooperatives - The investments in stocks and capital credits of other cooperatives are stated at cost, plus the Company’s share of allocated patronage and capital credits.

A consolidated federal income tax return is filed for the Company and its subsidiary. Deferred income taxes are provided for in the timing of certain temporary deductions/increases for financial and income tax reporting purposes.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $100,000. At times during the year, the Company’s balances exceeded this limit. The Company does not consider this a material risk.

The Company accounts for impairment or disposal of long-lived assets in accordance with the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Long-lived assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and will cease to be depreciated. SFAS No. 144 also requires long-lived assets to be disposed of other than by sale to be considered as held and used until disposed of, requiring the depreciable life to be adjusted as an accounting change.

Shipping and handling costs are included in cost of product sold upon receipt of the Company’s product by its customers as well as the net realizable value calculations of the inventory through allocations from the Company’s marketing Subsidiary.

In accordance with FAS 158, beginning with the fiscal year ended August 31, 2007, the Company records the liability for its defined benefit retirement plan as the benefit obligation in the financial statements. The difference between the benefit obligation and fair value of the plan assets is shown as Other Comprehensive Loss, offset by the long-term income tax benefit associated with FAS 158.

Certain amounts have been reclassified in the fiscal 2005 financial statements to conform to the 2006 presentation. The reclassification had no effect on the results of operations for fiscal 2006.

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 establishes a single definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurements, and requires new disclosures of assets and liabilities measured at fair value based on their level in the hierarchy. SFAS No. 157 is effective for all fiscal years beginning after November 15, 2007 (September 1, 2008 for the Company) and is to be applied prospectively. The Company is currently evaluating the impacts and disclosures of this standard, but would not expect SFAS No. 157 to have a material impact on the Company’s consolidated results of operations or financial condition.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).” Refer to Note 13 for additional information concerning this standard. Certain provisions of SFAS No. 158 have been implemented and others will be implemented as the requirements provide for.

In June 2006, the FASB issued Financial Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109.” Refer to Note 8 for additional information concerning this standard.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” The Company does not believe that SFAS No. 159 will have any material impact on its current financial statements. The Company cannot predict whether or not SFAS No. 159 will have an impact on future financial statements. SFAS No. 159 is effective as of the fiscal year ended August 31, 2009.

The Company’s total factory campaign and full time workforce consists of 477 employees, of which 56% is covered by a collective bargaining agreement. The agreement expires on May 31, 2011.

Interest costs - The Company is at risk for interest rate changes in both seasonal and long-term debt. The Company has long-term variable and fixed rates on a substantial portion of its long-term debt. The variable rate has limited variability on its rate; therefore the Company does not consider it’s interest rate risk for long-term debt to be material. Short-term debt risk is not expected to have a material impact on the Company’s annual return to its growers.

SFAS No. 130, Reporting Comprehensive Income, establishes rules for reporting comprehensive income and loss and its components. Comprehensive loss consists of the current year SFAS No. 158 adjustment and is presented in the Statement of Member’s Investment. See Note 13.

The Company acquired the 20% non-controlling interest in Minn-Dak Yeast from Sensient Technologies Corp. (“Sensient”) in May of 2006. The Company now owns 100% of Minn-Dak Yeast. The supplemental disclosure of non-cash investing and financing activities related to the acquisition of the non-controlling interest in Minn-Dak Yeast is shown below.

The acquisition cost for the non-controlling interest of Minn-Dak Yeast that was acquired from Sensient, including purchase price, legal fees and appraisal fees, was $2,768,383.

Intangible assets derived from the purchase of the non-controlling interest in Minn-Dak Yeast include Goodwill, which is not being amortized, and Customer Relations and a Non-Compete Agreement, which are being amortized on a straight-line basis over 15 years. The amortization of these intangible assets for the year ended August 31, 2007 and 2006 were $38,400 and $12,800 respectively. There was no amortization expense for these assets for the year ended August 31, 2005.

There are no contingent provisions or Research and Development assets purchased or written off in the purchase agreement between the Company and Sensient.

The investment in stock of other corporations, unconsolidated marketing subsidiaries and other cooperatives consists of the following:

Information regarding short-term debt for the years ended August 31, are as follows:

The Company has a $50,000,000 seasonal line of credit with CoBank, with $31,000,000 available on August 31, 2007. The Company also has a $15,000,000 bid loan supplement facility through CoBank. As of August 31, 2007 there were no advances against this line. Advances, maturity dates, and interest rates on the supplemental facility, which expires on May 31, 2008, are not guaranteed. The lines are secured with a first lien on substantially all property and equipment and current assets of the Company. The Company also utilizes the USDA’s CCC Sugar Loan Program to provide an additional source of seasonal financing.

Maximum borrowings, average borrowing levels and average interest rates for short-term debt for the years ended August 31, are as follows:

On May 29, 2007, the Company renewed the seasonal and term-debt lines of credit with CoBank.

The Company has complied with the terms of its loan agreement covenants for the years ended August 31, 2007, 2006, and 2005.

In addition, the Company can make special advance payments on its term loans with CoBank after its seasonal loans have been paid in full, with the understanding that the special advance payments will be re-advanced subject to the reinstatement provisions, prior to the granting of any new seasonal loans. Any such advance payments are subject to a commitment fee of .25% of the daily un-advanced commitment.

Interest expense for the years ended August 31, 2007, 2006, and 2005 totaled $4,296,972, $3,544,118, and $2,899,283 respectively.

The Company is the lessee of equipment under capital leases, with varying expiration dates. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. This equipment is being depreciated over its estimated useful life. Depreciation of assets under these capital leases is included in depreciation expense.

The Company financed construction projects related to the processing facility through the sale of Solid Waste Disposal Revenue and Industrial Development Revenue Bonds, Series 1996 and 2002, by Richland County North Dakota. The Company has leased the property and equipment from the County for the sum of the annual principal and interest payments on the bonds. Under the terms of the lease, the Company is responsible for the real estate taxes, insurance, repairs and maintenance, and other costs incident to the ownership of the property. The leased property is included with property and equipment in the financial statements and the bonds have been recorded as a direct obligation of the Company. Ownership of the property and equipment will transfer to the Company when the bonds are repaid in full. The bonds are guaranteed by the Company. The Company has letter of credit arrangements with a bank that provide security for obligations under the bonds payable totaling approximately $17,940,000 at August 31, 2007. There were no outstanding advances under these letter of credit arrangements at August 31, 2007. Details relative to the Company’s obligations under the lease agreement are as follows:

	2007
Payee	Variable Interest Rate	Final Maturity	Current Portion		Total		2006 Total		2005 Total

Richland County,
North Dakota	4.17%	Jan 2011	$	1,125,000	$	4,880,000	$	5,945,000	$	6,955,000

Richland County,
North Dakota	4.07%	Apr 2019	$	790,000		12,535,000		13,135,000		14,000,000

			$	1,915,000	$	17,415,000	$	19,080,000	$	20,955,000

Minimum future principal payments required on the obligations under bonds payable are as follows:

Bond financing costs incurred in connection with the financing of the construction projects related to the processing facility have been capitalized. The Company is amortizing the bond financing costs over the terms of the financing obtained. The effective interest method of amortization is used.

Amortization of bond financing cost for the years ended August 31, 2007, 2006 and 2005 totaled $33,340, $36,938 and $36,938, respectively.

The ownership of nondividend bearing common stock is restricted to a “member-producer,” as defined in the by-laws of the Company. Each member-producer shall own only one share of common stock and is entitled to one vote at any meeting of the members. Each member-producer is also required to purchase units of preferred stock and is entitled to grow the maximum acres per unit of preferred stock as is authorized by the Board of Directors each farming year. The Company’s Board of Directors authorized the members to plant 1.60, 1.50, and 1.45 acres per unit of preferred stock for the fiscal years 2007, 2006 and 2005 respectively. A unit consists of one share each of Class A, Class B and Class C preferred stock. The preferred shares are nonvoting and nondividend bearing. All transfers and sales of stock must be approved by the Company’s Board of Directors.

The Company’s net income, determined in accordance with generally accepted accounting principles consistently applied, shall be distributed annually on the basis of delivered pounds of sugar, in cash or in the form of credits to each member-producer’s patronage credit account as established on the books of the Company. In the event of a loss in any one year, the Company shall act in such a manner as to first recoup the loss from those patrons who were patrons in the year in which the loss occurred.

Under the terms of the Company sugarbeet growing contracts with each of its member-producers, the Company is obligated to pay the member-producers for sugarbeets delivered at a price per pound of extractable sugar. However, if, in the opinion of the Company’s Board of Directors, the working capital position of the Company is insufficient, the Company shall withhold and/or retain from the price to be paid per pound of extractable sugar such amounts as are deemed by the Board of Directors to be necessary for operations, the deductions to be made at such time and in a manner as the Board of Directors shall decide. The amount so withheld and or retained shall be evidenced in the records of the Company by allocated patronage and/or per unit retains in favor of the growers. The Board of Directors has the power to determine whether such allocated patronage and/or per unit retains shall be “qualified” or “nonqualified” for income tax purposes.

The Company allocated non-qualified patronage to the members for the years ended August 31, 2007, 2006 and 2005 of $7,560,504, $4,220,538, and $5,191,808, respectively.

During the year ended August 31, 2007, the Company revolved the remaining 94% of the allocated patronage for the fiscal year ended August 31, 2001, totaling $4,324,506 and 48% of the allocated patronage for the fiscal year ended August 31, 2002, totaling $1,714,354.

During the year ended August 31, 2006, the Company revolved the remaining 55% of the unit retains and allocated patronage for the fiscal year ended August 31, 1997, totaling $2,490,804 and 100% of the unit retains and allocated patronage for the fiscal years ended August 31 1998 and 1999 totaling $870,090, and 6% of the unit retains and allocated patronage for the fiscal year ended August 31, 2001 totaling $259,452 for a grand total revolved of $3,620,346. There were no per unit retains or equity withheld during the fiscal year ended August 31, 2000. In addition, during fiscal year 2006, although the grower payable was correctly stated on the August 31, 2005 balance sheet, a misclassification was relied upon to make the final 2004 crop grower payment, resulting in a payment that exceeded the amount that was required. The Company has corrected the grower payment by reducing the 2004 crop allocated patronage by $320,224.

During the year ended August 31, 2005, the Company revolved the remaining 92% of the unit retains and allocated patronage for the fiscal year ended August 31, 1996 and 40% of the unit retains and allocated patronage for the fiscal year ended August 31, 1997, totaling $2,533,592 and $2,008,115 in each respective year, for a total of $4,541,707. In addition, per unit retains and allocated patronage owned by certain estates were redeemed at a discount. The discount represented the difference between the book value of these items, totaling $50,102, and the present value of the estimated future redemptions.

The Company has formed common marketing agency agreements with United Sugars Corporation (United Sugars) and Midwest Agri-Commodities (Midwest) to be the exclusive marketing agents for all products produced by them and other member processors.

The Company’s ownership requirement in United Sugars is calculated periodically and is based on the average volume of sugar produced during the five previous fiscal years. The investment is accounted for on the equity method and the amount of sales and related costs recognized by each member processor is allocated based on their pro-rata share of production for the year. The Company provided United Sugars with cash advances on an ongoing basis for operating and marketing expenses incurred. During the years ended August 31, 2007, 2006, and 2005, the Company had advanced $30,775,443, $19,719,946 and $23,769,970, respectively. The Company had outstanding advances due to United Sugars of $36,638, $353,465 and $1,104,338, as of August 31, 2007, 2006, and 2005, respectively.

The Company has a one-fourth ownership interest in Midwest. The amount of the investment is accounted for using the equity method. All sugarbeet pulp and a portion of the molasses produced are sold by Midwest as an agent for the Company. The amount of sales and related costs to be recognized by each owner is allocated based on their pro-rata share of production for the year. The owners provide Midwest with cash advances on an ongoing basis for operating and marketing expenses incurred by Midwest. The Company advanced Midwest during the years ended August 31, 2007, 2006 and 2005, $995,766, $962,334 and $1,060,826, respectively. The Company had outstanding advances due to Midwest as of August 31, 2007, 2006 and 2005 of $805,838, $179,196 and $368,409, respectively. The owners of Midwest guarantee, on a pro-rate basis, the $5,500,000 short-term line of credit that Midwest has with CoBank.

The Company is a nonexempt cooperative as described under Section 1381(a)(2) of the Internal Revenue Code of 1986. Accordingly, net margins from business done with member patrons, which are allocated and paid as prescribed in Section 1382 of the Code, will be taxable to the members and not to the Company. To the extent that net margins are not allocated and paid as stated above or arise from business done with non-members, the Company shall have taxable income subject to corporate income tax rates.

The significant components of deferred tax assets and liabilities included on the balance sheet at August 31, is as follows:

	2007		2006			2005

Deferred tax assets
Non-qualified unit retains and allocated patronage due to members	$	11,040,000	$	10,431,000		$	10,030,000
Net operating loss carryforwards		4,393,000		4,543,000			4,543,000
Deferred pension FAS158		1,579,000		—			—
Other		1,849,000		1,013,000			945,000

Total deferred tax assets		18,861,000		15,987,000			15,518,000

Deferred tax liabilities
Depreciation		15,834,000		15,152,000			14,234,000
Other		2,189,000		2,068,000			2,043,000

Total deferred tax liabilities		18,023,000		17,220,000			16,277,000

Net deferred tax asset (liability)	$	838,000	$	(1,233,000	)	$	(759,000	)

Classified as follows
Current asset	$	688,000	$	607,000		$	541,000
Long-term asset (liability)		150,000		(1,840,000	)		(1,300,000	)

Net deferred tax asset (liability)	$	838,000	$	(1,233,000	)	$	(759,000	)

The state and federal operating loss carry forwards totaling approximately $15,087,093 will expire in 2010 through 2025.

Significant temporary timing differences between financial and income tax reporting are as follows:

An amendment to FASB Statements No 87, 88, 106 and 132R in 2006, known as FAS 158, resulted in the Company recognizing an after-tax decrease in accumulated other comprehensive income/loss. The change in the year-end deferred tax balance includes the effect of recording this additional obligation in addition to the annual provision for deferred income tax asset/liability, as discussed in Note 13.

In June 2006, the FASB issued FIN 48 “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109.” FIN 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. This Interpretation is effective as of September 1, 2007 and the cumulative effects, if any, of applying this Interpretation will be recorded as an adjustment to retained earnings as of September 1, 2007. The Company is uncertain if the adoption of FIN 48 will have a material impact on its consolidated results of operations or financial condition.

The Company’s depreciation expense for the years ended August 31, 2007, 2006 and 2005 was $7,953,469, $7,750,601 and $7,368,561, respectively.

The Company is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control. The Company conducts an ongoing and expanding control program designed to meet these environmental laws and regulations. While the Company will continue to have ongoing environmental compliance issues, currently there are no pending regulatory enforcement actions and the Company believes that it is in substantial compliance with applicable environmental laws and regulations.

The Company cannot predict whether future changes in environmental laws or regulations might increase the cost of operating its facilities and conducting its business. Any such changes could have financial consequences for the Company and its members.

During 2000, the Company sold certain notes receivable with recourse. The Company’s contingent liability related to these notes totaled $283,618 as of August 31, 2007.

The Company has commitments of approximately $2,500,000 as of August 31, 2007 related to future capital improvements.

The Company is a party to various operating leases for vehicles and equipment. Future minimum payments for the years ending August 31, under these obligations, are as follows:

Operating lease and contract expenses for the years ended August 31, 2007, 2006, and 2005, totaled $1,834,441, $869,310, and $1,005,937, respectively.

The Company has a qualified 401(k) employee benefit plan that covers all employees meeting eligibility requirements. The Company’s matching contribution to the plan is at a level of 100% of employee contributions, with a maximum of 4% of compensation for the years ended August 31, 2007, 2006, and 2005. Employer contributions to the plan for the years ended August 31, 2007, 2006, and 2005, totaled $570,045, $511,936, and $499,862, respectively.

The Company has a non-contributory defined benefit plan, which covers substantially all employees who meet certain requirements of age, hours worked per year, years of service, and age at retirement or termination. The pension funding policy is to deposit with independent trustees amounts allowable by law. Trust funds and deposits with insurance companies are maintained to provide pension benefits to plan participants and their beneficiaries. The Company’s measurement date for the years ended August 31, 2007, 2006, and 2005 have been May 31, 2007, 2006, and 2005 respectively. For the year ended August 31, 2009, the Company will be required to change the measurement date to August 31, 2009.

The Company has various non-qualified plans for those employees who meet certain requirements.

The Supplemental Executive Retirement Plan (SERP) is designed to make an employee whole should one exceed the annual compensation limit of the Company ‘s defined benefit plan. This plan is unfunded; therefore there are no assets for this plan.

The Non-Qualified Deferred Compensation plan allows an employee to defer wages to a future date. The deferment becomes part of the company assets. To receive payments under this plan, the participant must meet the requirements of the plan or separate from the Company.

Non-Qualified key-life insurance. The Company has life insurance policies on a former executive sufficient to cover a $500,000 obligation to the former executive’s estate. The policies are self sufficient, and requiring no additional funding for the term of the policies.

In August 2006, the Pension Protection Act (PPA) was signed into law. The PPA modified the funding requirements for defined benefit pension plans by subjecting defined benefit plans to 100% of the current liability-funding target. Defined benefit plans with a funding status of less than 80% of the current liability are defined as being “at risk”. The PPA is effective for the 2008 plan year. The Company’s qualified defined benefit plan is funded in excess of 80%, and therefore the Company expects that the plan will not be subject to the “at risk” funding requirements of the PPA and that the law will not have a material impact on future contributions.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132R”. This standard requires employers to recognize the under funded or over funded status of defined benefit pension and postretirement plans as an asset or liability in its statement of financial position, and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive loss, which is a component of stockholders’ equity. This standard also eliminates the requirement for Additional Minimum Pension Liability (AML) require under SFAS No. 87. As a result of the application of SFAS No. 158 as of August 31, 2007 the Company increased liabilities by $ 3.95 million. These liabilities were offset to accumulate other comprehensive loss and long-term deferred tax assets. As a result of implementation of SFAS No. 158, the Company recognized an after-tax decrease in accumulated other comprehensive loss of $2.37 million.

The following table discloses the adjustments to the balance sheet to record the funded status of the defined benefit pension plan as of August 31, 2007.

	2007			2006			2005

Change in benefit obligation
Benefit obligation at beginning of year	$	23,525,263		$	21,732,459		$	18,713,083
Service cost		958,696			858,210			810,489
Interest cost		1,530,008			1,401,578			1,316,496
Experience (gain)/loss due to participant changes		447,986			537,767			1,498,023
Benefits paid		(749,614	)		(1,004,751	)		(605,632	)

Benefit obligation at end of year		25,712,339			23,525,263			21,732,459

Change in plan assets
Fair value of plan assets at beginning of year		16,961,551			15,469,222			13,632,176
Actual return on plan assets		2,990,887			1,377,080			1,232,678
Employer contribution		1,075,000			1,120,000			1,210,000
Benefits paid		(749,614	)		(1,004,751	)		(605,632	)

Fair value of plan assets at end of year		20,277,824			16,961,551			15,469,222

Funded status		(5,434,515	)		(6,563,712	)		(6,263,237	)
Unrecognized net actuarial loss		—			5,165,493			4,977,404
Unrecognized prior service cost		—			258,737			345,642
Unrecognized transition (asset) obligation		—			—			175

Accrued benefit cost liability	$	(5,434,515	)	$	(1,139,482	)	$	(940,016	)

The accumulated benefit obligation for all defined benefit pension plans was $18,725,646 and $17,037,625 at August 31, 2007 and 2006, respectively.

The net periodic pension cost for the years ended August 31, includes the following components:

The Company’s pension plan weighted-average asset allocation at August 31, 2007, by asset category is as follows:

The Company’s investment philosophy to achieve acceptable returns with reasonable risks involves diversification into different investment asset classes, which in turn, mitigates an over exposure to any one segment of investment alternatives, avoids market timing, and controls fees.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

The fair value of a financial instrument is generally defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale. Quoted market prices are generally not available for the Company’s financial instruments. Accordingly, fair values are based on judgments regarding anticipated cash flows, future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. Changes in the assumptions could significantly affect the estimates.

The following methods and assumptions were used by the Company to estimate fair value of the financial instruments, and the estimated fair values of the Company’s financial instruments as of August 31, 2007, 2006, and 2005, are as follows:

Investments - The investments in CoBank, Dakota Valley Electric Cooperative, Inc. and all other cooperatives are stated at cost, plus the cooperative’s share of allocated patronage and capital credits. The investments in United Sugars Corporation and Midwest Agri-Commodities are accounted for using the equity method, wherein the investments are recorded at the amount of the underlying equity in the net assets of the investments and adjusted to recognize the cooperative’s share of the undistributed earnings or losses. The Company believes it is not practicable to estimate the fair value without incurring excessive costs because there is no established market for this stock and it is inappropriate to estimate future cash flows, which are largely dependent on future patronage earnings of the investment.

Long-term debt and bonds payable - The fair value of obligations under long-term debt and bonds payable are estimated based on the quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities. The carrying amount on the financial statements approximates fair market value.

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DUTIES INDICATED.

SIGNATURE	TITLE	REPORT DATE

/s/ David H. Roche	President and	11-27-07
David H. Roche	Chief Executive Officer

/s/ Steven M. Caspers	Executive Vice President and	11-27-07
Steven M. Caspers	Chief Financial Officer

/s/ Allen E. Larson	Controller and	11-27-07
Allen E. Larson	Chief Accounting Officer

/s/ Dale Blume		11-27-07
Dale Blume	Director

/s/ Dennis Butenhoff		11-27-07
Dennis Butenhoff	Director

/s/ Brent Davison		11-27-07
Brent Davison	Director

/s/ Doug Etten		11-27-07
Doug Etten	Director

/s/ Michael Hasbargen		11-27-07
Michael Hasbargen	Director

/s/ Dennis Klosterman		11-27-07
Dennis Klosterman	Director

/s/ Russell Mauch		11-27-07
Russell Mauch	Director

/s/ Charles Steiner		11-27-07
Charles Steiner	Director

/s/ Alton Theede		11-27-07
Alton Theede	Director

North Dakota	23-7222188
(State of incorporation)	(I.R.S. Employer Identification Number)

7525 Red River Road Wahpeton, North Dakota 58075	(701) 642-8411
(Address of principal executive offices)	(Registrant’s telephone number)

	2007	2006	2005
Discount Rate	6.5%	6.5%	6.5%
Expected return on plan assets	8.0%	8.0%	8.0%
Rate of total Compensation Increase	4.3%	4.3%	4.5%

	Payments Due by Period
Contractual Obligations	Total	Less Than 1 Year	1 - 3 Years	4 –5 Years	After 5 Years
Long-term debt	$19.5MM	$2.6MM	$10.2MM	$6.7MM	0
Long-Term Debt Interest	$ 3.3MM	$1.0MM	$ 2.0MM	$ .3MM
Bonds Payable	$17.4MM	$1.9MM	$ 6.4MM	$1.9MM	$7.2MM
Bond Payable Interest	$ 4.1MM	$ .7MM	$ 1.6MM	$ .7MM	$1.1MM
Operating/Capital leases	$ 3.3MM	$1.5MM	$ 1.8MM	0	0
Unconditional Purchase obligations	0	0	0	0	0
Other long-term Obligations	0	0	0	0	0
Total contractual cash Obligations	$47.6MM	$7.7MM	$22.0MM	$9.6MM	$8.3MM

Named Executive Officer	2007 Annual Base Salary	2006 Annual Base Salary	% Increase 2007 Over 2006
Steven M. Caspers	$165,300	$160,300	3.1%
John Haugen	$115,500	$112,000	3.1%
Thomas D. Knudsen	$121,000	$117,500	3.0%
Jeffrey L. Carlson	$125,600	$121,600	3.3%

Return Per Acre to Growers		Profit Sharing Bonus Amount
$700 - $749		$10,000
$750 - $799		$20,000
$800 - $849		$30,000
$850 - $899		$40,000
Over $900		$50,000

Name	Age	Position
David H. Roche	60	President and Chief Executive Officer
Steven M. Caspers	57	Executive Vice President and Chief Financial Officer
Jeffrey L. Carlson	52	Vice President Operations
John Haugen	55	Vice President Engineering
Thomas D. Knudsen	53	Vice President Agriculture
Richard D. Ames	50	Operations Manager of Minn Dak Yeast
Susan Johnson	60	Communications Manager
Allen E. Larson	52	Controller and Chief Accounting Officer
John S Nyquist	52	Purchasing Manager
Greg J. Schmalz	56	Director Human Resources
Kevin R. Shannon	53	Safety Director

Named Executive Officer	2007 Performance Bonus	% Of 2007 Annual Base Salary
David H. Roche	$70,000	22%
Steven M. Caspers	$65,000	39%
John Haugen	$36,000	31%
Thomas D. Knudsen	$36,000	30%
Jeffrey L. Carlson	$36,000	29%

Name and Position	Year	Salary (1)		Bonus (2)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (3)		All Other Compensation (4)		Total
David H. Roche, President & CEO	2007	$	322,232	$	120,000	$	58,625	$	20,459	$	521,316
Steven M. Caspers, Exe. VP & CFO	2007	$	165,701	$	65,000	$	49,408	$	19,476	$	299,585
John Haugen, VP Engineering	2007	$	115,808	$	36,000	$	25,231	$	23,190	$	200,229
Thomas D. Knudsen, VP Agriculture	2007	$	121,528	$	36,000	$	22,045	$	6,264	$	185,837
Jeffrey L. Carlson, VP Operations	2007	$	126,113	$	36,000	$	15,021	$	6,488	$	183,622

Name	Registrant Contributions to Defined Contribution Plans (a)	Insurance Premiums (b)	Other (c)
David H. Roche	$8,963	$11,495	—
Steven M. Caspers	$7,198	$ 2,742	$ 9,537
John Haugen	$4,952	$ 1,579	$16,659
Thomas D. Knudsen	$5,161	$ 1,026	—
Jeffrey L. Carlson	$5,364	$ 1,124	—

Name	Plan Name	Number of Years Credited Service (1)	Present Value of Accumulated Benefit (2)
David H. Roche	MDFC Pension Plan	7	$145,672
	MDFC SERP	7	$144,697
Steven M. Caspers	MDFC Pension Plan	34	$528,161
John Haugen	MDFC Pension Plan	32	$270,603
Thomas D. Knudsen	MDFC Pension Plan	31	$236,912
Jeffrey L. Carlson	MDFC Pension Plan	17	$130,210

Name	Executive Contributions in Fiscal Year 2007 (1)	Aggregate Earning in Fiscal Year 2007 (2)	Aggregate Balance at 8-31-07 (3)
David H. Roche	$24,231	$10,141	$94,302
Steven M. Caspers	$ 855	$ 6,521	$56,241
John Haugen	—	$ 2,445	$15,241
Thomas D. Knudsen	—	$ 2,211	$19,448
Jeffrey L. Carlson	—	—	—

Name of Director	Fees Earned or Paid in Cash (1)	Total
Dale Blume	$ 9,745	$ 9,745
Dennis Butenhoff	$13,505	$13,505
Brent Davison	$11,180	$11,180
Doug Etten	$18,300	$18,300
Michael Hasbargen	$26,650	$26,650
Dennis Klosterman	$12,765	$12,765
Russell Mauch	$16,325	$16,325
Charles Steiner	$14,685	$14,685
Alton Theede	$ 8,985	$ 8,985

Name	Position with Company	No. of Shares	% of Shares
Dale Blume	Director	213	less than 1%
Dennis Butenhoff	Director	370	less than 1%
Brent Davison	Director	1,000	1.4%
Douglas Etten	Director	430	less than 1%
Michael Hasbargen	Director	350	less than 1%
Dennis Klosterman	Director	235	less than 1%
Russell Mauch	Director	474	less than 1%
Charles Steiner	Director	380.5	less than 1%
Alton Theede	Director	325	less than 1%
All Directors		3,777.5	5.23%

	Preferred Stock		Common Stock			Paid in Capital In Excess of Par Value		Unit Retention Capital			Qualified Allocated Patronage			Non-Qualified Allocated Patronage			Accumulated Other Comprehensive Loss			Retained Earnings		Total			Comprehensive Income/ (Loss)

BALANCE, AUGUST 31, 2004	$	18,483,200	$	122,000		$	32,094,407	$	3,048,825		$	1,638,011		$	20,510,179		$	—		$	6,253,833	$	82,150,455		$	—
Stock - Sales - common (4 shares)				1,000																			1,000
Repurchases - common (15 shares)				(3,750	)																		(3,750	)
Revolvement of unit retention capital									(1,669,027	)													(1,669,027	)
Revolvement of prior years’ allocated patronage												(915,320	)		(2,007,461	)							(2,922,781	)
Net income for the year ended August 31, 2005															5,191,808						662,191		5,853,999			5,853,999
Comprehensive Income (Loss)																									$	5,853,999

BALANCE, AUGUST 31, 2005		18,483,200		119,250			32,094,407		1,379,798			722,691			23,694,526			—			6,916,024		83,409,896
Stock - Sales - common (14 shares)				3,500																			3,500
Repurchases - common (11 shares)				(2,750	)																		(2,750	)
Revolvement of unit retention capital									(1,379,798	)													(1,379,798	)
Revolvement of prior years’ allocated patronage												(722,691	)		(1,838,041	)							(2,560,732	)
Net income for the Year ended August 31, 2006															4,220,538						260,282		4,480,820			4,480,820
Comprehensive Income (Loss)																									$	4,480,820

BALANCE, AUGUST 31, 2006		18,483,200		120,000			32,094,407		—			—			26,077,023			—			7,176,306		83,950,936
Stock - Sales - common (10 shares)				2,500																			2,500
Repurchases - common (6 shares)				(1,500	)																		(1,500	)
Revolvement of unit retention capital																							—
Revolvement of prior years’ allocated patronage															(6,038,860	)							(6,038,860	)
Net income for the Year ended August 31, 2007															7,560,504						267,785		7,828,289			7,828,289
Pension liability adjustment																		(2,368,458	)				(2,368,458	)		(2,368,458	)
Comprehensive Income (Loss)																									$	5,459,831

BALANCE, AUGUST 31, 2007	$	18,483,200	$	121,000		$	32,094,407	$	—		$	—		$	27,598,667		$	(2,368,458	)	$	7,444,091	$	83,372,907

Items acquired are:
New working capital	$	1,011,804
Machinery and equipment		1,008,313
Land and buildings		276,576
Other assets		77,000
Customer relations		514,000
Non-compete agreement		62,000
Goodwill		110,152
Long-term liabilities		(291,462	)
	$	2,768,383

Years ending August 31,
2008	$	2,493,103
2009		3,324,138
2010		3,324,138
2011		3,324,138
2012		3,324,138
2013		3,324,138
	$	19,113,793

Years ending August 31,
2008	$	117,983
2009		67,149
2010		67,149
2011		67,149
2012		139,483
Total minimum lease payments	$	458,913
Less: Amount representing interest		57,041
Present value of net minimum lease payment	$	401,872

Years ending August 31,
2008		1,543,830
2009		956,999
2010		745,221
2011		68,497
2012		34,249
	$	,348,796

Description	Pre- SFAS No. 158		SFAS No. 158 adoption adjustments		Post SFAS No. 158
Accrued pension liability	$	1,487,085	$	3,947,430	$	5,434,515

Deferred tax asset		—		1,578,972		1,578,972

Accumulated other comprehensive loss, net of tax		—		2,368,458		2,368,458

Accumulated other comprehensive loss, pre-tax	$	—	$	3,947,430	$	3,947,430

	Pension Benefits
	2007			2006		2005
Non-current assets	$	—		$	—	$	—
Current liabilities		(660,125	)		—		—
Noncurrent liabilities		(4,774,390	)		—		—
	$	(5,434,515	)	$	—	$	—

Equity securities	69.00	%
Debt securities	27.40	%
Other	3.60	%

Total	100	%

2008	$	660,125
2009		697,399
2010		726,347
2011		728,308
2012		806,407
Thereafter, through 2017		5,560,803

Index

3(i)	Articles of Amendment to the Articles of Incorporation of Minn-Dak Farmers Cooperative. Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 1996 as filed on November 21, 1996.
3(ii)	Articles of Incorporation of Minn-Dak Farmers Cooperative. Incorporated by reference from the Company’s Registration Statement on Form S-1 (File No. 33-94644), declared effective September 11, 1995.
3(iii)	Amended Bylaws of Minn-Dak Farmers Cooperative. Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 1997 as filed on November 25, 1997.
10(a)	Growers’ Agreement (three-year Agreement) (example of agreement which each Shareholder is required to sign).
10(b)	Amended and Restated Uniform Member Marketing Agreement by and between United Sugars Corporation and Minn-Dak Farmers Cooperative
10(e)	Memorandum of Understanding and Uniform Member Agreement by and between Midwest Agri-Commodities Company and Minn-Dak Farmers Cooperative. Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2006 as filed on November 28, 2006.
10(k)	Agreement for Electrical Service. Incorporated by reference from the Company’s Registration Statement on Form S-1 (File No. 33-94644), declared effective September 11, 1995.
10(l)	Master Coal Purchase and Sale Agreement and Railroad Equipment Lease Agreement (Confidential Treatment has been requested as to certain provisions). Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2006 as filed on November 28, 2006.
10(m)*	Minn-Dak Farmers Cooperative Pension Plan. Incorporated by reference from the Company’s Registration Statement on Form S-1 (File No. 33-94644), declared effective September 11, 1995.
10(p)*	Amendment to Minn-Dak Farmers Cooperative Pension Plan. Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 1997 as filed on November 25, 1997.
10(q)*	Amendment to Minn-Dak Farmers Cooperative Pension Plan. Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 1998 as filed on November 24, 1998.
10(r)*	David H. Roche Employment Agreement. Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2001 as filed on November 29, 2001 and Renewal Agreement, dated August 28, 2007.
12	Statement re Computation of Ratio of Net Proceeds to Fixed Charges.
21	Subsidiaries of the Registrant. Incorporated by reference from the Company’s Registration Statement on Form S-1 (File No. 33-94644), declared effective September 11, 1995.
31.1	Certification of the President/Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act.
31.2	Certification of the Executive Vice President/Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act.
31.3	Certification of the Controller/Chief Accounting Officer in accordance with Section 302 of the Sarbanes-Oxley Act.
32	Certification of the President/Chief Executive Officer and the Executive Vice President/Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act.
99.1	Audit Committee Charter. Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2003 as filed on November 26, 2003.

			MINN-DAK FARMERS COOPERATIVE
			By:	/S/ David H. Roche
				DAVID H. ROCHE, PRESIDENT AND CHIEF EXECUTIVE OFFICER