10.

The sugar beet industry and the Company have been or are currently involved in various litigation concerning the approval of Roundup Ready® sugarbeets for planting in 2012 and forward. The legal proceedings to date have resulted in the finding that, for the 2012-crop, it is legal for the Company's shareholder/growers to plant Roundup Ready® sugarbeet seed. However, the Company believes that there will continue to be legal challenges to the USDA's partial deregulation of the Roundup Ready® sugarbeet seed. The ability of shareholder/growers to plant Roundup Ready® sugarbeets in subsequent years will be based upon actions by the USDA, which may be subject to further challenge by certain groups who oppose the partial deregulation.

Environmental law restrictions on the use of Roundup Ready® sugarbeet seeds or other restriction relating to sugarbeet seeds or herbicides could have a significant, negative financial impact on the Company and its shareholder/growers.

The Company has incurred $4.1 million in costs related to the raising of conventional seed for the 2012-crop year. These costs are reflected as inventory and the method of allocating these costs back to the 2012-crop patrons has not been determined.