UNITED STATES SECURITIES AND EXCHANGE ~~COMMISSION~~COMMISSIONWASHINGTON, D. C. 20549 FORM 10-Q

~~WASHINGTON,~~x QUARTERLY D.REPORT C.PURSUANT ~~20549~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended: February 29, 2012

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: November 30, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 AND 15(d) OF THE
SECURITES EXCHANGE ACT OF 1934

Commission file: No. 33-94644

MINN-DAK FARMERS COOPERATIVE (Exact named of Registrant as specified in its charter)

(Exact named of Registrant as specified in its charter)


North Dakota	23-7222188
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

North Dakota	23-7222188
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)
7525 Red River Road Wahpeton, North Dakota	58075
(Address of principal executive offices)	(Zip Code)

(701) 642-8411 (Registrant’s telephone number, including area code)

Not Applicable (~~Registrant’s~~Former ~~telephone~~name, ~~number~~former address and former fiscal year, ~~including area~~if ~~code~~changed since last report)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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, and (2) has been subject to such filing requirements for the past 90 days.


YES x	NO o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.

YES ox NO o

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


Large Accelerated Filer o	Accelerated Filer o	Non-Accelerated Filer x	Smaller Reporting Co o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


YES o	NO x

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

	Class of Common Stock			Outstanding at ~~January~~April 1213, 2012
$250 Par Value	~~$250 Par Value~~		480	~~475~~

Minn-Dak Farmers Cooperative (“The Company” or the “Registrant”) 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.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MINN-DAK FARMERS COOPERATIVE CONSOLIDATED BALANCE SHEETS ASSETS (In Thousands)

	Nov 30, 2011 (Unaudited)				Aug 31, 2011 (Audited)
	Feb 29, 2012 (Unaudited)			Aug 31, 2011 (Audited)
ASSETS
CURRENT ASSETS
Cash	$	~~161~~146		$	$46	46
Current bond trust		~~561~~—			1,644	~~1,644~~
Receivables
Trade accounts		1814,~~482~~723			19,288	~~19,288~~
Patrons		~~1,548~~—			15,460	~~15,460~~
Receivable from affiliates		~~806~~5,465			4,456	~~4,456~~
Other receivables		109			109	~~109~~
Total Receivables		20,~~945~~297			39,313	~~39,313~~
Inventories
Refined sugar, in-process sugar, pulp and molasses to be sold on a pooled basis		69132,~~208~~708			38,834	~~38,834~~
Non-member refined sugar		~~455~~2,409			4,730	~~4,730~~
Sugarbeet inventory		7710,~~060~~935			—	—
Yeast		~~183~~177			157	~~157~~
Beet chemicals		4,063				4,063
Materials and supplies		13,149			15,761
Materials and supplies		15,644				15,761
Total Inventories		159,378			59,482
Total Inventories		166,613				63,545
Deferred charges		847			1,693
Deferred charges		143				1,693
Prepaid expenses		2,049			2,111
Prepaid expenses		2,271				2,111
Prepaid beet seed		8,642			—
Current deferred income tax asset		1127			11	11
Total Current Assets		~~190~~191,~~705~~386			104,300	~~108,363~~
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		29,622			28,742	~~28,742~~
Buildings		37,964			37,883	~~37,883~~
Factory/Agricultural equipment		163,884			159,371	~~159,371~~
Other equipment		6,~~620~~633			6,620	~~6,620~~
Capitalized leases		3,~~353~~331			3,353	~~3,353~~
Construction in progress		1011,~~318~~120			13,917	~~13,917~~
Total Property, Plant and Equipment		~~251~~252,~~761~~554			249,886	~~249,886~~
Less accumulated depreciation		(~~146~~149,~~777~~176	)		(144,527	~~(144,527~~)	)
Net Property, Plant and Equipment		~~104~~103,~~984~~378			105,359	~~105,359~~
OTHER ASSETS
Investment in other cooperatives and other corporations		10,~~945~~721			10,921	~~10,921~~
Investment in unconsolidated marketing subsidiaries		~~201~~226			181	~~181~~
Bond trust		102				1,912
Beet chemicals		3,388			4,063
Bond financing costs		487				297
Bond trust		—			1,912
Other long-term assets		1,854				3,446
Bond financing costs - net of amortization		282			297
Total Other Assets		13,589				16,757
Other long-term assets		2,053			3,446
TOTAL ASSETS	$	309,278			$	230,479
Total Other Assets		16,670			20,820
TOTAL ASSETS	$	311,434		$	230,479

See Notes to Consolidated Financial Statements.

MINN-DAK FARMERS COOPERATIVE CONSOLIDATED BALANCE SHEETS LIABILITIES AND PATRONS’ INVESTMENT (In Thousands)

	Nov 30, 2011 (Unaudited)				Aug 31, 2011 (Audited)
	Feb 29, 2012 (Unaudited)			Aug 31, 2011 (Audited)
LIABILITIES AND PATRONS’ INVESTMENT
CURRENT LIABILITIES
Short-term notes payable	$	7276,~~014~~812		$	$40,646	~~40,646~~
Current portion of long-term debt and capital leases		32,~~012~~991			3,012	~~3,012~~
Accounts payable:
Trade		117,~~577~~734			18,459	~~18,459~~
Checks outstanding		1,~~861~~009			928	~~928~~
Patrons		7048,~~221~~765			24,377	~~24,377~~
Total Accounts Payable		8357,~~659~~508			43,764	~~43,764~~
Income tax		469			—	—
Payable to affiliates		1,~~837~~503			1,674	~~1,674~~
Accrued liabilities		39,~~837~~190			3,788	~~3,788~~
Total Current Liabilities		~~164~~148,~~363~~073			92,884	~~92,884~~
LONG-TERM DEBT, CAPITAL LEASES, AND BONDS PAYABLE, NET OF CURRENT PORTION		4140,~~945~~997			42,901	~~42,901~~
LONG-TERM DEFERRED INCOME TAX LIABILITY		~~155~~133			177	~~177~~
OTHER LONG-TERM LIABILITIES		~~681~~657			753	~~753~~
LONG-TERM PENSION LIABILITY		1716,~~916~~115			17,050	~~17,050~~
COMMITMENTS AND CONTINGENCIES
Total Liabilities		~~225~~205,~~060~~975			153,765	~~153,765~~
PATRONS’ INVESTMENT
Preferred stock:
Class A - 100,000 shares authorized, $105 par value; 72,200 shares issued and outstanding		7,581			7,581	~~7,581~~
Class B - 100,000 shares authorized, $75 par value; 72,200 shares issued and outstanding		5,415			5,415	~~5,415~~
Class C - 100,000 shares authorized, $76 par value; 72,200 shares issued and outstanding		5,487			5,487	~~5,487~~
Total Preferred stock		18,483			18,483	~~18,483~~
Common stock, 600 shares authorized, $250 par value; issued and outstanding, 476 shares at November 30, 2011 and 476 shares at August 31, 2011		119				119
Common stock, 600 shares authorized, $250 par value; issued and outstanding, 476 shares at February 29, 2012 and 476 shares at August 31, 2011		119			119
Paid in capital in excess of par value		32,094			32,094	~~32,094~~
Unit retention capital		3,104			3,104	~~3,104~~
Nonqualified allocated patronage		3557,~~717~~004			28,299	~~28,299~~
Accumulated other comprehensive loss-interest swap		(~~858~~951	)		(903	~~(903~~)	)
Accumulated other comprehensive loss-pension		(15,~~556~~541	)		(15,571	~~(15,571~~)	)
Retained earnings		11,~~115~~147			11,089	~~11,089~~
Total Patrons’ Investment		84105,~~218~~459			76,714	~~76,714~~
TOTAL LIABILITIES AND PATRONS’ INVESTMENT	$	~~309~~311,~~278~~434		$	$230,479	~~230,479~~

See Notes to Consolidated Financial Statements.

MINN-DAK FARMERS COOPERATIVE CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands) (Unaudited)

	Three-Months Ended					Six-Months Ended
	Nov 30, 2011			Nov 30, 2010
	Feb 29, 2012		Feb 28, 2011			Feb 29, 2012		Feb 28, 2011
REVENUE:
Sales of sugar, co-products and yeast, net of discounts	$	7670,~~861~~936	$	$82,988	~~74,379~~	$	147,797	$	157,367
Changes in finished goods inventory and in-process sugar at NRV		3063,~~374~~500		19,346	~~50,517~~		93,874		69,863
Total Revenue		~~107~~134,~~235~~436		102,334	~~124,896~~		241,671		227,230
EXPENSES:
Production costs of sugar, in-process sugar, co-products and yeast sold		24,~~305~~494		23,875	~~29,504~~		48,799		53,379
Sales and distribution costs		1710,~~805~~486		13,234	~~15,089~~		28,291		28,323
General and administrative		12,~~953~~247		2,069	~~2,025~~		4,201		4,093
Interest		~~636~~599		759	~~581~~		1,235		1,340
(Gain) loss on disposition of property and equipment		41		—	(1	)	4		(1	)
Total Expenses		4437,~~703~~827		39,937	~~47,198~~		82,530		87,134
TOLLING & OTHER REVENUE		~~178~~630		17	71		808		190
NET PROCEEDS RESULTING FROM PATRON AND NON-PATRON BUSINESS BEFORE INCOME TAXES		6297,~~710~~239		62,516	~~77,769~~		159,949		140,286
INCOME TAX BENEFIT (EXPENSE)		174		17	22		21		39
NET PROCEEDS RESULTING FROM PATRON AND NON-PATRON BUSINESS	$	6297,~~727~~243	$	$62,533	~~77,791~~	$	159,970	$	140,325
DISTRIBUTION OF NET PROCEEDS
Credited to patrons’ investment
Components of net income
Income from non-patron business	$	2731	$	$21	23	$	58	$	44
Patronage income		721,~~418~~288		10,100	~~9,709~~		28,706		19,810
Net income credited to patrons’ investment		721,~~445~~319		10,121	~~9,732~~		28,764		19,854
Allocated costs of sugarbeets paid or payable to patrons for production to date	$	5575,~~282~~924	$	$52,412	~~68,059~~	$	131,206	$	120,471
NET PROCEEDS RESULTING FROM PATRON AND NON-PATRON BUSINESS	$	6297,~~727~~243	$	$62,533	~~77,791~~	$	159,970	$	140,325

See Notes to Consolidated Financial Statements.

MINN-DAK FARMERS COOPERATIVE CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)

	Three-Months Ended
	Six-Months Ended
	Nov 30, 2011				Nov 30, 2010
	Feb 29, 2012			Feb 28, 2011
OPERATING ACTIVITIES
Net income credited to patrons’ investment	$	728,~~445~~764		$	$19,854	~~9,732~~
Accumulated other comprehensive gain/(loss)-interest swap		45				—
Accumulated other comprehensive (loss)-interest swap		(48	)		—
Add (deduct) noncash items:
Depreciation		24,~~405~~812			4,341	~~2,162~~
Amortization		~~174~~251			246	~~154~~
(Gain) loss on property and equipment disposals		4			(1	(1)	)
Loss allocated from unconsolidated marketing subsidiaries		(5	)			(1	)
(Gain) Loss allocated from unconsolidated marketing subsidiaries		(14	)		1
Noncash portion of patronage capital credits		(23212	)		(194	~~(32~~)	)
Deferred income taxes		(2260	)		(55	~~(22~~)	)
Changes in operating assets and liabilities
Accounts receivable and advances		1819,~~368~~015			2,500	~~6,067~~
Inventory and prepaid expenses		(~~103~~108,~~229~~476	)		(110,098	~~(146,677~~)	)
Deferred charges and other assets		2,~~777~~677			765	~~3,370~~
Accounts payable, accrued liabilities and other liabilities		4624,~~164~~125			35,015	~~72,064~~
Net cash (used in)/provided by operating activities		(2529,~~897~~162	)		(47,626	~~(53,184~~)	)
INVESTING ACTIVITIES
Proceeds from disposition of property, plant and equipment		—			1	1
Tax exempt bond trust draw		23,~~893~~556			6,782	~~4,731~~
Capital expenditures		(2,~~034~~849	)		(6,318	~~(3,662~~)	)
Net cash (used in)/provided by investing activities		859				1,070
Patronage received from other coops		413			412
FINANCING ACTIVITIES
Net cash (used in)/provided by investing activities		1,120			877
Net proceeds from issuance of short-term debt		31,368				57,233
FINANCING ACTIVITIES
Checks outstanding		933				206
Net proceeds from issuance of short-term debt		36,166			52,217
Payment of long-term debt and capital leases		(956	)			(950	)
Checks outstanding		81			978
Payment of financing fees		—				(390	)
Payment of long-term debt and capital leases		(1,913	)		(1,901	)
Equity payment to estate		—				(10	)
Payment of financing fees		—			(390	)
Payment of allocated patronage		(6,192	)			(4,020	)
Equity payment to estate		—			(10	)
Net cash (used in)/provided by financing activities		25,153				52,069
Payment of allocated patronage		(6,192	)		(4,020	)
NET INCREASE/(DECREASE) IN CASH		115				(45	)
Net cash (used in)/provided by financing activities		28,142			46,874
CASH, BEGINNING OF YEAR		46				129
NET INCREASE/(DECREASE) IN CASH		100			125
CASH, END OF PERIOD	$	161			$	84
CASH, BEGINNING OF YEAR		46			129
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH, END OF PERIOD	$	146		$	254
Cash payments for (Receipts from)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest	$	426			$	381
Cash payments for (Receipts from)
Income taxes, net of refunds	$	1			$	548
Interest	$	830		$	975
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Income taxes, net of refunds	$	3		$	574
Unit retain deductions from patron payable	$	—			$	2,456
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Proceeds for bond issuance transferred to restricted investment	$	—			$	8,815
Unit retain deductions from patron payable	$	—		$	3,108
Proceeds for bond issuance transferred to restricted investment	$	—		$	8,815

See Notes to Consolidated Financial Statements.

MINN-DAK FARMERS COOPERATIVE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2012 and FEBRUARY 28, 2011 (Unaudited)

~~NOTES~~1. TOThe ~~CONSOLIDATED~~consolidated ~~FINANCIAL~~financial ~~STATEMENTS~~statements of the Company and that of its wholly owned subsidiary companies Minn-Dak Yeast Company (“Minn-Dak Yeast”) and Link Acquisition Company LLC (“Link”) for the three-month and six-month periods ended February 29, 2012 and February 28, 2011 are unaudited and reflect all adjustments consisting of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2011. The results of operations for the three-month and six-month periods ended February 29, 2012 and February 28, 2011 are not necessarily indicative of the results for the entire fiscal year ending August 31, 2012. 2. Inventories of refined sugar, in-process sugar, pulp and molasses to be sold on a pooled basis are valued at Net Realizable Value (“NRV”), while third-party purchased refined sugar to be sold on a pooled basis is valued at the lower of cost or market. Third-party refined sugar costs include product, delivery, poll adjustment, and refining fee costs. Inventory of yeast is valued at the lower of average cost or market. Materials and supplies (including conventional seed and chemicals) are valued at most recent purchase price that approximates cost. During the periods when sugarbeets are purchased from shareholder/patrons and/or non-members, but not yet converted into refined sugar or in-process sugar, that sugarbeet inventory is valued at patron and/or non-members payment cost. In valuing inventories at NRV, the Company, in effect sells the remaining inventory to the subsequent period’s sugar and co-product pool. Pooled product inventories will normally increase to a peak valuation at the end of the processing campaign and decrease to a low point of valuation at or near fiscal year end. 3. In September 2011, and effective as of August 31, 2011, the Company revolved the remaining 76.0 percent of the allocated patronage for the fiscal year ended August 31, 2005 totaling $3,706,906 and 59.0 percent of the allocated patronage for the fiscal year ended August 31, 2006, totaling $2,485,193. In addition, for the fiscal period ending August 31, 2011 the Company revolved $23,830 of allocated patronage and $4,451 of unit retains to certain deceased members’ estates. 4. In November 2011, the Company allocated to shareholders $6.2 million of patronage from the 2010-crop in the form of non-qualified allocated patronage credits. 5. Short term credit capacity as of February 29, 2012 totaled $108.3 million; $41.6 million has been borrowed from CoBank (the “Bank”) and $35.2 million from the USDA Commodity Credit Corporation “CCC”. That leaves the Company with a remaining short-term credit capacity totaling $31.5 million. The increase in seasonal debt from August 31, 2011 to February 29, 2012 is due to normal seasonal operations for a 1.95 million ton crop.

FOR THE THREE MONTHS ENDED


Source	Capacity		Utilized		Unused Capacity
	(In Millions)
Co-Bank	$	65.0	$	41.6	$	23.4
CCC		43.3		35.2		8.1
Total	$	108.3	$	76.8	$	31.5

NOVEMBER 30, 2011 and 2010


6.	On December 22, 2011, the Company and the Bank agreed to establish the seasonal line of credit from January 1, 2012 through December 31, 2012 at $65.0 million. The letters of credit were also renewed on December 22, 2011 through December 31, 2012.

7.	Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

~~(Unaudited)~~7

1. The ~~consolidated~~fair ~~financial~~value ~~statements~~hierarchy requires of the Company ~~and~~to ~~that~~maximize ofthe ~~its~~use ~~wholly~~of ~~owned~~observable ~~subsidiary~~inputs ~~companies Minn-Dak Yeast Company (“Minn-Dak Yeast”)~~ and ~~Link~~minimize ~~Acquisition Company LLC (“Link”) for~~ the ~~three-month period ended November~~ ~~30,~~use ~~2011 and 2010 are unaudited and reflect all adjustments consisting~~ of ~~normal~~unobservable ~~recurring~~inputs ~~adjustments~~when ~~which~~measuring ~~are, in the opinion of management, necessary for a~~ fair ~~presentation~~value. ofA ~~the~~ financial ~~position~~instrument’s categorization ~~and~~within ~~operating results for~~ the ~~interim~~fair ~~period.~~value ~~The~~hierarchy ~~condensed consolidated~~is ~~financial~~based ~~statements~~upon ~~should be read in conjunction with~~ the ~~consolidated~~lowest ~~financial statements and notes thereto, contained~~level inof ~~the~~input ~~Company’s~~that ~~Annual~~is ~~Report~~significant onto ~~Form 10-K for~~ the ~~fiscal~~fair ~~year~~value ~~ended August 31, 2011~~measurement. ~~The~~Three ~~results~~levels of ~~operations for the~~ ~~three-month~~inputs ~~period~~may ~~ended~~be ~~November~~used ~~30,~~to ~~2011~~measure ~~are~~fair ~~not~~value: ~~necessarily indicative of the results for the entire fiscal year ending August 31, 2012.~~

2. Inventories of refined sugar, in-process sugar, pulp and molasses to be sold on a pooled basis are valued at Net Realizable Value (“NRV”), while third-party purchased refined sugar to be sold on a pooled basis is valued at the lower of cost or market. Third-party refined sugar costs include product, delivery, poll adjustment, and refining fee costs. Inventory of yeast is valued at the lower of average cost or market. Materials and supplies (including conventional seed and chemicals) are valued at most recent purchase price that approximates cost. During the periods when sugarbeets are purchased from shareholder/growers and/or non-members, but not yet converted into refined sugar or in-process sugar, that sugarbeet inventory is valued at grower and/or non-members payment cost. In valuing inventories at NRV, the Company, in effect sells the remaining inventory to the subsequent period’s sugar and co-product pool. Pooled product inventories will normally increase to a peak valuation at the end of the processing campaign and decrease to a low point of valuation at or near fiscal year end.


Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Includes the following inputs:
	•	Quoted prices in active markets for similar assets or liabilities
	•	Quoted prices for identical or similar assets or liabilities in markets that are not active
	•	Or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.

•	Long-Term Debt, Inclusive of Current Maturities - Based upon discounted cash flows and current borrowing rates with similar maturities, the book value of the Bank debt of approximately $14.1 million and $15.8 million compares to fair values of $14.1 million and $15.8 million respectively as of February 29, 2012 and August 31, 2011. Also included in the Company’s long-term debt was $28.1 million and $28.1 million in tax exempt bonds, in comparison to the fair value of $28.1 million and $28.1 million respectively as of February 29, 2012 and August 31, 2011.

•	Proceeds for Bond Issuance Transferred to Restricted Investment – included in the Company’s current bond trust and restricted long-term other assets was $0.0 million and $3.6 million in comparison to the fair value of $0.0 million and $3.6 million respectively as of February 29, 2012 and August 31, 2011.

•	Investments in Other Cooperatives and Other Corporations - The Company believes it is not practical to estimate the fair value of these investments without incurring excessive costs because there is no established market for these securities and equity interests, and it is inappropriate to estimate future cash flows which are largely dependent on future earnings of these organizations.

•	Investments in Unconsolidated Marketing Subsidiaries - The Company believes it is not practical to estimate the fair value of these investments without incurring excessive costs because there is no established market for these securities and equity interests, and it is inappropriate to estimate future cash flows which are largely dependent on future earnings of these organizations.

•	Interest Rate Contracts — Based on the zero coupon method in which the term, notional amount, and repricing date of the interest rate swap match the term, re-pricing date, and principal amount of the interest-bearing liability on which the hedging interest payments are due, the fair value of the interest rate contracts as of February 29, 2012 was a liability of $1.0 million and August 31, 2011 was a liability of $0.9 million. The current portion of the liability ($0.3 million as of February 29, 2012 and $0.2 million as of August 31, 2011) is included in accrued liabilities and the long-term portion of the liability ($0.7 million as of February 29, 2012 and $0.7 million as of August 31, 2011) is included in other long-term liabilities. Inputs used to measure the fair value of the interest rate swap contracts are quoted prices in active markets for similar assets or liabilities and therefore are contained within level 2 of the fair value hierarchy. Because the critical terms of the swap contracts and the notes payable are the same, the swap contracts effectively hedge the risk of changes in interest payments. Due to this, the changes in the fair value of the swap contracts have been excluded from the statement of operations. Financial instruments recorded at fair value on a recurring basis are as follows:

3. In September 2011, and effective as of August 31, 2011, the Company revolved the remaining 76% of the allocated patronage for the fiscal year ended August 31, 2005 totaling $3,706,906 and 59% of the allocated patronage for the fiscal year ended August 31, 2006, totaling $2,485,193. In addition, for the fiscal period ending August 31, 2011 the Company revolved $23,830 of allocated patronage and $4,451 of unit retains to certain deceased members estates.8

4. In November 2011, the Company allocated to shareholders $6.2 million of patronage from the 2010-crop in the form of non-qualified allocated patronage credits.


Interest Rate Swaps (In Millions)						Fair Value of Liabilities as of February 29, 2012

Fiscal Year	Notional Amt.		Ave Interest Rate			Level 1		Level 2		Level 3		Total

2012	$	45.0 Million		0.663	%	$	—	$	0.1	$	—	$	0.1
2013	$	40.0 Million		1.607	%		—		0.4		—		0.4
2014	$	30.0 Million		2.305	%		—		0.3		—		0.3
2015	$	5.0 Million		3.685	%		—		0.2		—		0.2

Total						$	—	$	1.0	$	—	$	1.0

5. Short term credit capacity as of November 30, 2011 totaled $93.0 million; $56.0 million has been borrowed from CoBank (the “Bank”) and $16.0 million from the USDA Commodity Credit Corporation “CCC”. That leaves the Company with a remaining short-term credit capacity totaling $21.0 million. The increase in seasonal debt from August 31, 2011 to November 30, 2011 is due to normal seasonal operations for a 1.9 million ton crop.


Interest Rate Swaps (In Millions)						Fair Value of Liabilities as of August 31, 2011

Fiscal Year	Notional Amt.		Ave Interest Rate			Level 1		Level 2		Level 3		Total

2012	$	30.0 Million		0.853	%	$	—	$	0.2	$	—	$	0.2
2013	$	25.0 Million		1.870	%		—		0.3		—		0.3
2014	$	15.0 Million		2.879	%		—		0.3		—		0.3
2015	$	5.0 Million		3.685	%		—		0.1		—		0.1

Total						$	—	$	0.9	$	—	$	0.9

Source		Capacity		Utilized		Unused Capacity
8.	The Company’s shareholder/patrons harvested 1,954,638 tons of sugarbeets from the 2011-crop, which created a revised (in March 2012) estimated payment liability of $142.1 million. As a result of increased net sales, the estimate was revised to $72.72 per ton (average quality beets) or $0.24643011 per harvested/bonus extractible pound of sugar.
		(In Millions)
9.	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/patrons 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/patrons 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.
Co-Bank		$	65.0	$	56.0	$	9.0
	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/patrons.
CCC		$	28.0	$	16.0	$	12.0
	The Company has incurred $4.1 million in costs related to the raising of conventional sugarbeet seed. $0.7 million of the $4.1 million in cost was expensed in fiscal year 2012. The remaining $3.4 million in cost is reflected as other assets and the method of allocating these costs to the 2012 or 2013 crop has yet to be determined. Management believes these assets are not impaired as of February 29, 2012 and August 31, 2011.
Total		$	93.0	$	72.0	$	21.0

6. On November 15, 2011, the Company and its Bank agreed to a temporary increase in the seasonal line of credit from $45.0 million to $65.0 million through December 31, 2011. On December 22, 2011, the Company and the Bank agreed to establish the seasonal line of credit from January 1, 2012 through December 31, 2012 at $65.0 million. 9

710. The following schedule provides the components of Net Periodic Benefit Cost for the Six-Months Ended, February 29, 2012 and February 28, 2011.

7. On November 30, 2010, the Company applied for and received approval from Richland County to sell $8.8 million of new tax-exempt bonds, which are also exempt from alternative minimum taxes, to finance future capital expenditures. These variable rate bonds (currently at 0.16 percent interest rate) were issued on November 30, 2010 with a single maturity date of November 1, 2025. The letters of credit from the Bank associated with all of the bonds were also renewed as of the date of the issuance of the November 30, 2010 bonds, with the letters of credit increasing $9.1 million, representing the $8.8 million in principal plus interest. These tax-exempt bond proceeds are held as a restricted investment in a bond trust until qualified expenditures related to the bonds have been expended by the Company.


(In 000’s)	Pension Plan						Other Than Pension Plan
	FY 2012			FY 2011			FY 2012		FY 2011
Service Cost	$	653		$	640		$	—	$	—
Interest Cost		1,050			996			—		—
Expected return on plan assets		(986	)		(833	)		—		—
Amoritzation of prior service cost		16			16			—		—
Amortization of transition cost		—			—			—		—
Amoritzation of net (gain) loss		442			542			—		—
Net periodic benefit cost	$	1,175		$	1,361		$	—	$	—

8Through the six-months ended February 29, 2012, the Company has made $2. ~~Fair~~4 ~~value~~million isof ~~defined~~contributions as compared to $0.4 million through the ~~price~~six-months ~~that~~ended ~~would~~February be28, ~~received~~2011. ~~from~~The ~~selling~~Company ananticipates ~~asset~~contributing or$1.9 ~~paid~~million in additional funds to ~~transfer~~its pension plan in Fiscal Year 2012, for a ~~liability~~total of $4.3 million. Contributions in ~~an orderly~~Fiscal ~~transaction~~Year ~~between~~2011 ~~market~~totaled ~~participants~~$1.8 atmillion. 11. Recently Issued Accounting Pronouncements: In December 2011 the ~~measurement~~FASB ~~date~~issued ASU 2011-11. ~~When~~The ~~determining~~amendments ~~the~~in ~~fair~~this ~~value~~Update ~~measurements~~require ~~for~~an ~~assets~~ entity to disclose information about offsetting and ~~liabilities~~related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. An entity is required to beapply ~~recorded~~the atamendments ~~fair~~for ~~value~~annual reporting periods beginning on or after January 1, ~~the~~2013, and interim periods within those annual periods. The Company ~~considers~~is currently evaluating the ~~principal~~impact orof ~~most~~this ~~advantageous~~accounting ~~market~~standard update. In December, 2011 the FASB issued ASU 2011-12 deferring the effective date for amendments to the presentation and reclassification of items out of accumulated other comprehensive income in ~~which it~~ASU ~~would~~2011-05. ~~transact~~This update is effective for fiscal years, and ~~considers~~interim ~~assumptions~~periods ~~that~~within ~~market~~those ~~participants~~years, ~~would~~beginning ~~use~~after ~~when~~December ~~pricing~~15, 2011. In June, 2011, the ~~asset~~FASB orissued ~~liability~~ASU 2011-5. The objective of this amendment is to improve the comparability, ~~such~~consistency, asand ~~inherent risk~~transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This guidance is effective for fiscal years, ~~transfer~~and ~~restrictions~~interim periods within those years, beginning after December 15, 2011. The Company does not expect that this authoritative guidance will have any material effect on the Company’s financial statements as it only requires a change the format of the Consolidated Statements of Changes in Members’ Investment and ~~risk~~Comprehensive Income. 12. Change in Accounting Standards: There were no changes to Accounting Standards for the quarter ending February 29, 2012. 13. Certain reclassifications of ~~nonperformance~~amounts previously reported have been made to the accompanying financial statements to maintain consistency between periods presented. The reclassification had no impact on net income or member’s equity. 14. Subsequent Events: The Company has considered subsequent events through the date the financial statements were issued.

~~The~~ITEM ~~fair value hierarchy requires the Company to maximize~~2. ~~the~~ ~~use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument~~MANAGEMENT’~~s categorization~~S ~~within~~DISCUSSION ~~the~~AND ~~fair~~ANALYSIS ~~value~~OF ~~hierarchy~~FINANCIAL isCONDITION ~~based~~AND ~~upon~~RESULTS ~~the lowest level of input that is significant to the fair value measurement.~~OF ~~Three~~ ~~levels~~OPERATIONS ~~of inputs may be used to measure fair value:~~

~~Level~~This 1:Discussion ~~Quoted~~should ~~prices~~be read in ~~active~~conjunction ~~markets~~with ~~for~~information ~~identical~~contained in the Consolidated Financial ~~assets~~ orStatements ~~liabilities~~and Notes thereto and in the Company’s Annual Report on Form 10-K for fiscal year ended August 31, 2011.

~~Level~~OVERVIEW ~~2: Includes the following inputs:~~

· The following discussion ~~Quoted~~ ~~prices~~and inanalysis ~~active~~relates ~~markets~~to ~~for~~the ~~similar~~financial ~~assets~~condition and results of operations of Minn-Dak Farmers Cooperative (the “Company” or ~~liabilities~~the “Registrant”) for the three-month and six-month periods ended February 29, 2012 (the second quarter of the Company’s 2012 fiscal year). The Company’s fiscal year runs from September 1 to August 31.

~~· Quoted prices for identical or similar assets or liabilities in markets that are not active~~10

· Any statements regarding Or future market prices, anticipated costs, agricultural results, operating results and other ~~inputs~~statements that are ~~observable~~not orhistorical ~~can~~facts becontained ~~corroborated~~in bythis ~~observable~~Quarterly Report on Form 10-Q are forward-looking statements. The words “expect”, “project”, “estimate”, “believe”, “anticipate”, “plan”, “intend”, “could”, “may”, “predict” and similar expressions are also intended to identify forward-looking statements. Such statements involve risks, uncertainties and assumptions, including, without limitation, market ~~data~~factors, ~~for~~the ~~substantially~~effect of weather and economic conditions, farm and trade policy, the ~~full~~available ~~term~~supply of sugar, available quantity and quality of sugarbeets and other risks, including those set forth in the ~~assets~~Company’s reports filed with the Securities and Exchange Commission, including Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended August 31, 2011. Should one or ~~liabilities~~more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. These forward-looking statements are made as of the date of this report and the Company assumes no obligation to update such forward-looking statements, or to update the reasons why actual results could differ materially from those anticipated in such forward-looking statements.

~~Level~~Critical 3:Accounting ~~Unobservable~~Policies ~~inputs that are supported by little or no market activity~~ and ~~that~~Estimates ~~are significant to the fair value of assets or liabilities.~~

~~· Long-Term~~There ~~Debt,~~have ~~Inclusive~~been ofno ~~Current Maturities – Based upon discounted cash flows and current borrowing rates with~~material ~~similar~~ ~~maturities,~~changes ~~the book value of the Bank debt of approximately $15.0 million and $15.8 million compares~~ to ~~fair values of $15.0 million and $15.8 million respectively as of November 30, 2011 and August 31, 2011. Also included in~~ the Company’s ~~long-term~~ ~~debt~~critical ~~was~~accounting ~~$28.1~~policies ~~million~~ and ~~$28.1,~~estimates ~~million~~since ~~in tax exempt bonds, in comparison to~~ the ~~fair~~filing ~~value~~ of ~~$28.1~~its ~~million~~Annual ~~and~~Report ~~$28.1 million~~on ~~respectively~~form as10-K offor ~~November~~the ~~30,~~year ~~2011~~ended ~~and~~ August 31, 2011.

· ESTIMATED ~~Proceeds~~FISCAL ~~for~~YEAR ~~Bond~~2012/ ~~Issuance~~CROP ~~Transferred~~YEAR to Restricted Investment – included in the Company’s current bond trust and restricted long-term other assets was $0.7 million and $3.6 million in comparison to the fair value of $0.7 million and $3.6 million as of November 30, 2011 ~~and~~INFORMATION ~~August 31, 2011.~~

· This discussion contains a ~~Investments~~ insummary ~~Other~~of ~~Cooperatives~~the ~~and~~Company’s ~~Other~~current ~~Corporations~~estimates –of ~~The~~the financial results to be obtained from the Company’s ~~believes~~processing itof isthe ~~not~~2011 ~~practical~~sugarbeet tocrop. ~~estimate~~Given the ~~fair~~ ~~value~~nature of ~~these~~the ~~investments~~estimates ~~without~~required ~~incurring~~in ~~excessive~~connection ~~costs~~with ~~because~~the ~~there~~payments isto noshareholder/patrons ~~established~~for ~~market~~their ~~for~~sugarbeets, ~~these~~this ~~securities~~discussion ~~and~~includes ~~equity~~ ~~interests~~forward-looking statements regarding the quantity of sugar to be produced from the 2011 sugarbeet crop, the net selling price for the sugar and itco-products isproduced ~~inappropriate~~by tothe ~~estimate~~Company ~~future~~and ~~cash~~the ~~flows~~Company’s ~~which~~operating costs. These forward-looking statements are based largely ~~dependent~~upon onthe Company’s expectations and estimates of future ~~earnings~~events; as a result, they are subject to a variety of ~~these~~risks and uncertainties. Some of those estimates, such as the selling price ~~organizations~~ 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 ~~Investments~~ inshareholder/patrons ~~Unconsolidated~~harvested ~~Marketing~~1.95 ~~Subsidiaries~~million –tons ~~The~~of ~~Company~~sugarbeets ~~believes~~from itthe is2011-crop, ~~not~~approximately ~~practical~~20.0 topercent ~~estimate~~less than the ~~fair~~most recent 5-year ~~value~~ average. Sugar content of ~~these~~the ~~investments~~2011-crop ~~without~~was ~~incurring~~5.0 ~~excessive~~percent ~~costs~~above ~~because~~the ~~there~~average isof nothe ~~established~~five ~~market~~most ~~for~~recent ~~these~~years. ~~securities~~Due to the lower harvested tons and ~~equity~~higher sugar ~~interests~~ content, ~~and~~the itCompany’s production of sugar from the 2011-Crop sugarbeets, after processing, but prior to the completion of granulation from thick juice, is ~~inappropriate~~expected to ~~estimate~~be ~~future~~16.0 ~~cash~~percent ~~flows~~less ~~which~~than ~~are~~the ~~largely~~average ~~dependent~~of onthe ~~future~~five ~~earnings~~most recent years of ~~these~~sugar ~~organizations~~production.

· The Company’s initial ~~Foreign~~ ~~Currency~~sugarbeet ~~Forward~~payment ~~Contracts~~estimate –totaled ~~there~~$64.72 ~~were~~per noton ~~open~~or ~~foreign~~$0.2196174 ~~currency~~per ~~forward~~harvested ~~contracts~~/bonus asextractible pound of ~~November~~sugar. 30As a result of increased net sales, the ~~2011~~ estimate has been revised to $72.72 per ton (average quality beets) or ~~August~~$0.24643011 31per harvested/bonus extractible pound of sugar. This revised projected payment is 25.2 percent more than the final 2010-crop payment per ton and 24.5 percent more per pound of extractible sugar. The higher projected 2011-crop payment per ton results from higher sugar content in the sugarbeets, improved sugar prices, offset by some degree by; increased operating and fixed costs per ton, less total tons of beets processed, offset by less beet discards, versus the prior year. The price per pound of extractible sugar was diluted by 0.7 percent due to bonus sugar for the 2011-crop vs. 6.5 percent for the 2010-crop. Bonus sugar is an incentive payment to shareholder/patrons to deliver sugarbeets prior to main harvest. Harvest for the 2011-crop began on September 21, 2011 vs. the 2010-crop beginning on August 18, 2010.

8As of the date of this report, the Company has taken into consideration key indicators of actual results vs. projections used for the revised sugarbeet payment estimate. Consideration has been given to beet inventory storage conditions, projected net selling prices, factory operation costs, and sugar, pulp and molasses production. No change in the revised estimated beet payment has resulted from this review. It is the Company’s policy to update its estimate of yearly crop payments only when a material change is sufficiently certain and the amount of such change is reasonably calculable.

· Interest Rate Contracts – Based on the zero coupon method in which the term, notional amount, and re-pricing date of the interest rate swap match the term, re-pricing date, and principal amount of the interest-bearing liability on which the hedging interest payments are due, the fair value of the interest rate contracts as of November 30, 2011 was a liability of $0.9 million and August 31, 2011 was a liability of $0.9 million. The current portion of the liability ($0.2 million as of November 30, 2011 and $0.2 million as of August 31, 2011) is included in accrued liabilities and the long-term portion of the liability ($0.7 million as of November 30, 2011 and $0.7 million as of August 31, 2011) is included in other long-term liabilities. Inputs used to measure the fair value of the interest rate swap contracts are quoted prices in active markets for similar assets or liabilities and therefore are contained within level 2 of the fair value hierarchy. Because the critical terms of the swap contracts and the notes payable are the same, the swap contracts effectively hedge the risk of changes in interest payments. Due to this, the changes in the fair value of the swap contracts have been excluded from the statement of operations. Financial instruments recorded at fair value on a recurring basis are as follows: 11

Interest Rate Swaps (In Millions)				Fair Value of Liabilities as of November 30, 2011
Fiscal Year	Notional Amt		Ave Interest Rate	Level 1		Level 2		Level 3		Total
2012	$	45.0 Million	0.587%	$	—	$	0.1	$	—	$	0.1
2013	$	40.0 Million	1.607%	$	—	$	0.4	$	—	$	0.4
2014	$	30.0 Million	2.305%	$	—	$	0.3	$	—	$	0.3
2015	$	5.0 Million	3.685%	$	—	$	0.1	$	—	$	0.1
Total				$	—	$	0.9	$	—		0.9

RESULTS OF OPERATIONS

Interest Rate Swaps (In Millions)				Fair Value of Liabilities as of August 31, 2011
Fiscal Year	Notional Amt		Ave Interest Rate	Level 1		Level 2		Level 3		Total
2012	$	30.0 Million	0.853%	$	—	$	0.2	$	—	$	0.2
2013	$	25.0 Million	1.870%	$	—	$	0.3	$	—	$	0.3
2014	$	15.0 Million	2.879%	$	—	$	0.3	$	—	$	0.3
2015	$	5.0 Million	3.685%	$	—	$	0.1	$	—	$	0.1
Total				$	—	$	0.9	$	—	$	0.9

Comparison of the three-months ended February 29, 2012 and February 28, 2011

9. In the ~~The~~Consolidated ~~Company’s~~Statements ~~shareholder/growers~~of ~~harvested~~Operations, 1Distribution of Net Proceeds,~~954,638~~ ~~tons~~allocated costs of sugarbeets ~~from~~paid ~~the~~or ~~2011-crop,~~payable ~~which~~to ~~created~~shareholder/patrons afor ~~revised~~production to ~~(in~~date ~~December~~totaled ~~2011)~~$75.9 ~~estimated~~million, ~~payment~~an ~~liability~~increase of $~~130~~23.85 million or 44.9 Aspercent afrom the ~~result~~prior year period. As of ~~increased~~the ~~net~~date ~~sales~~of this report, the ~~estimate~~Board ~~was~~of Directors has revised the estimated Fiscal 2012 payment to shareholder/patrons for sugarbeets to $66142.911 ~~per~~million, ~~ton~~which ~~(average~~is ~~quality~~$38.4 ~~beets)~~million or $021.~~2267457~~3 ~~per~~percent ~~harvested/bonus~~less ~~extractible~~than the ~~pound~~prior ~~of sugar~~year.

~~10.~~ The ~~sugar~~decrease in ~~beet~~payments ~~industry~~to ~~and~~shareholder/patrons ~~the~~is ~~Company~~based ~~have~~upon ~~been~~(i) ora ~~are~~total ~~currently~~shareholder/patron sugarbeet ~~involved~~crop into ~~various~~process ~~litigation concerning the approval~~ of ~~Roundup~~1.95 ~~Ready®~~million ~~sugarbeets~~tons ~~for~~with ~~planting~~no indiscarded ~~2012 and forward. The legal proceedings~~sugarbeets towhich ~~date~~is ~~have~~a ~~resulted~~37.1 inpercent ~~the~~decrease ~~finding~~from ~~that, for~~ the ~~2012~~2010-crop, it(ii) isan ~~legal~~average ~~for the Company’s shareholder/growers to plant~~delivered ~~Roundup~~sugar-content ~~Ready®~~of ~~sugarbeet seed~~17.61 ~~However~~percent, ~~the~~which ~~Company~~is ~~believes~~a ~~that~~4.8 ~~there~~percent ~~will~~increase ~~continue~~from tothe 2010-crop beand ~~legal~~(iii) ~~challenges to~~ the ~~USDA~~Company’s ~~partial~~ ~~deregulation~~increased ofprojected ~~the~~selling ~~Roundup~~price ~~Ready®~~for ~~sugarbeet seed. The ability of shareholder/growers to plant Roundup Ready® sugarbeets~~its insugar, ~~subsequent years will be based upon actions by the USDA~~pulp, ~~which~~molasses ~~may~~and beyeast ~~subject~~when compared to ~~further challenge by certain groups who oppose~~ the ~~partial~~previous ~~deregulation~~year.

~~Environmental~~Sales ~~law~~for ~~restrictions on~~ the ~~use of Roundup Ready®~~ ~~sugarbeet~~three-month ~~seeds~~period orended ~~other~~February ~~restriction~~29, ~~relating~~2012 towere ~~sugarbeet~~comprised ~~seeds~~of orSugar ~~herbicides~~79.8 percent, ~~could~~Pulp ~~have~~11.0 ~~a significant~~percent, ~~negative~~Molasses ~~financial~~4.5 ~~impact on~~percent ~~the Company~~ and ~~its~~Yeast ~~shareholder/growers~~4.7 percent.

~~The~~Consolidated revenue ~~Company~~for ~~has~~the ~~incurred~~three-month ~~$4.1~~period ~~million~~ended inFebruary ~~costs~~29, ~~related~~2012 tofrom the ~~raising~~ sales of Sugar, ~~conventional~~Pulp, ~~seed~~Molasses ~~for~~and ~~the~~Yeast ~~2012-crop~~as ~~year.~~well ~~These~~as ~~costs~~changes ~~are~~in ~~reflected~~finished asgoods inventory and in-process sugar at NRV, increased $32.1 million or 31.4 percent from the three-month ~~method~~period ofended ~~allocating~~February ~~these~~28, ~~costs~~2011. ~~back~~The table below reflects the percentage tochanges in product revenues, prices and volumes for the ~~2012~~three-~~crop~~month ~~patrons~~period ended ~~has~~February ~~not~~29, ~~been determined~~2012.


	Revenue $ Million		Change vs. 2011			Revenue Percent Change			Selling Price Percent Change			Volume Percent Change

Sugar	$	56.6	$	(13.2	)		-18.8	%		7.7	%		-26.5	%
Pulp		7.8		2.9			58.0	%		64.4	%		-6.3	%
Molasses		3.2		(1.9	)		-37.4	%		10.2	%		-47.6	%
Yeast		3.3		0.2			4.9	%		3.7	%		1.2	%
Finished Goods/NRV		63.5		44.1

Total	$	134.4	$	32.1			31.4	%

~~11.~~ The decrease in volume of sugar sold is attributable to a smaller 2011-crop, delivered by shareholder/patrons. The ~~following~~net ~~schedule~~decrease ~~provides~~in volume of co-products sold is attributable to a smaller 2011-crop. Overall returns per ton for Pulp and Molasses are projected to be higher for the ~~components~~Fiscal ofYear ~~Net~~ended ~~Periodic~~August ~~Benefit~~31, ~~Cost~~2012. Returns for Pulp and Molasses throughout the ~~Three~~fiscal year will be impacted by prior period carry-~~Months~~over ~~Ended~~sales, ~~November 30~~inventory levels, ~~2011~~product mix and ~~2010~~timing of sales. Yeast sales volume increased due to existing customers’ increased demand for yeast in the 2012 period.

(In 000’s)	Pension Plan						Other Than Pension Plan
	FY2012			FY2011			FY2012		FY2011
Service Cost	$	326		$	320		$	—	$	—
Interest Cost		525			498			—		—
Expected return on plan assets		(493	)		(416	)		—		—
Amortization of prior service cost		8			8			—		—
Amortization of transition cost		—			—			—		—
Amortization of net (gain) loss		221			271			—		—
Net periodic benefit cost	$	587		$	681		$	—	$	—

The value of finished product inventories for the three-month period ended February 29, 2012 increased $63.5 million, $44.1 million more than the three-month period ended February 28, 2011. The change in Sugar and Juice inventories accounted for substantially all of the change vs. 2011.

~~Through~~Expenses for the three-~~months~~month period ended ~~November~~February 3029, ~~2011,~~2012 ~~the Company~~decreased ~~has made~~ $02.01 million. ~~of contributions as compared to~~ $0.0 7 million ~~through~~increased ~~the~~due ~~three-months~~to ~~ended~~conventional ~~November~~seed 30costs, ~~2010. The Company anticipates contributing~~ $42.37 million indecreased ~~additional~~due ~~funds~~ to Sales ~~its~~and ~~pension~~Distribution ~~plan~~Costs, inand ~~Fiscal~~less ~~Year~~than ~~2012,~~$0.1 ~~for~~million adecreased ~~total~~due ofto ~~$4.3~~other ~~million.~~Production ~~Contributions~~Costs, inGeneral, ~~Fiscal~~Administrative, ~~Year~~and ~~2011~~Interest ~~totaled $1~~costs.8 ~~million.~~

~~12.~~ Comparison of the six-months ended February ~~Recently~~29, ~~Issued~~2012 ~~Accounting~~and ~~Pronouncements:~~February 28, 2011

In ~~May, 2011,~~ the Consolidated ~~FASB~~Statements ~~issued~~of ~~ASU 2011-4~~Operations, ~~amendments to~~Distribution ~~achieve~~of ~~common~~Net ~~Fair~~Proceeds, ~~Value~~allocated costs ~~Measurement~~of ~~and~~sugarbeets ~~Disclosure~~paid ~~requirements~~or inpayable ~~U.S~~to ~~GAAP~~shareholder/patrons ~~and~~for ~~IFRSs.~~production ~~This amendment is~~ to ~~ensure that fair~~ ~~value~~date ~~has~~totaled ~~the same meaning in U~~$131.S.2 ~~GAAP~~million, ~~and~~an ~~International~~increase ~~Financial~~of ~~Reporting~~$10.7 ~~Standards~~million ~~(IFRSs)~~or ~~and~~8.9 ~~that~~percent ~~their respective fair~~from ~~value~~the ~~measurement~~prior ~~and~~year ~~disclosure requirements are the same~~period. ~~This~~As ~~guidance~~of isFebruary ~~effective~~29, ~~during~~2012, the ~~interim~~Board ~~and~~of ~~annual~~Directors ~~periods beginning~~has ~~after~~revised ~~December~~the ~~15,~~estimated ~~2011.~~Fiscal ~~The~~2012 ~~Company~~payment ~~does~~to ~~not~~shareholder/patrons ~~expect~~for ~~that~~sugarbeets to ~~this~~$142.1 ~~authoritative~~million, ~~guidance~~which ~~will~~is ~~have~~$38.4 ~~any~~million ~~material~~or ~~effect~~21.3 onpercent less than the ~~Company’s financial~~prior ~~statements~~year.

~~In December, 2011 the FASB issued ASU 2011-~~12 deferring the effective date for amendments to the presentation and reclassification of items out of accumulated other comprehensive income in ASU 2011-05. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. In June, 2011, the FASB issued ASU 2011-5. The objective of this amendment is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not expect that this authoritative guidance will have any material effect on the Company’s financial statements as it only requires a change the format of the Consolidated Statements of Changes in Members’ Investment and Comprehensive Income.

InThe ~~September,~~decrease in ~~2011,~~payments ~~the~~to ~~FASB~~shareholder/patrons ~~issued~~is ~~ASU~~based ~~2011-08.~~upon ~~The objective~~(i) ofa ~~this~~total ~~amendment~~shareholder/patron sugarbeet iscrop to ~~simplify~~process ~~how~~of ~~entities~~1.95 ~~test~~million ~~goodwill~~tons ~~for~~with ~~impairment~~no ~~allowing~~discarded ansugarbeets which ~~entity~~is ~~to use~~ a ~~qualitative~~37.1 ~~approach to~~percent ~~test~~decrease ~~goodwill~~from ~~for~~the ~~impairment.~~2010-crop, ~~This~~(ii) ~~guidance~~an isaverage ~~effective~~delivered sugar-content ~~for~~of ~~annual~~17.61 ~~and~~percent, ~~interim~~which ~~goodwill~~is ~~impairment~~a ~~tests~~4.8 ~~performed~~percent ~~for~~increase ~~fiscal~~from the ~~years~~2010-crop ~~beginning~~and ~~after~~(iii) ~~December~~the ~~15, 2011. The~~ Company’s ~~does~~increased ~~not~~projected ~~expect~~selling ~~that~~price ~~this~~for ~~authoritative~~its sugar, ~~guidance~~pulp, onmolasses ~~impairment~~and ~~testing~~yeast ~~will have~~when acompared ~~material~~to ~~effect on~~ the ~~Company’s~~previous ~~financial statements~~year.

InSales ~~December,~~for ~~2011,~~ the ~~FASB issued ASU 2011-10. The objective~~ ~~of this amendment is to resolve the diversity in practice about whether the guidance in Subtopic 360~~six-20month ~~applies~~period toended aFebruary ~~parent~~29, ~~that ceases~~2012 towere ~~have~~comprised ~~a controlling financial interest in a subsidiary that is in substance real-estate as a result~~ of ~~default~~Sugar on82.9 ~~the~~percent, ~~subsidiary’s~~Pulp ~~nonrecourse debt~~8.0 ~~This guidance is effective for fiscal years ending after June 15~~percent, ~~2012,~~Molasses ~~and~~4.9 ~~interim~~percent and ~~annual periods~~Yeast ~~thereafter~~4.2 ~~This authoritative guidance will not have any effect on the Company’s financial statements~~percent.

InConsolidated revenue ~~December,~~for ~~2011,~~ the ~~FASB issued ASU 2011~~six-~~11.~~month ~~The~~period ~~amendments in~~ended ~~this~~February ~~Update~~29, ~~require~~2012 anfrom ~~entity~~the tosales ~~disclose~~of Sugar, ~~information~~Pulp, ~~about~~Molasses ~~offsetting~~ and ~~related~~Yeast ~~arrangements~~as towell ~~enable~~as ~~users~~changes ofin ~~its~~finished ~~financial~~goods inventory ~~statements~~and toin-process ~~understand~~sugar ~~the~~at ~~effect~~NRV, ofincreased ~~those~~$14.4 ~~arrangements~~million onor ~~its financial position~~6.4 Anpercent ~~entity~~from isthe six-month ~~required~~period toended ~~apply~~February ~~the~~28, ~~amendments for~~2011. ~~annual~~The ~~reporting~~table ~~periods~~below ~~beginning~~reflects onthe percentage orchanges ~~after~~in ~~January~~product 1revenues, ~~2013,~~prices and ~~interim~~volumes ~~periods~~for ~~within~~the ~~those~~six-month ~~annual~~period ended ~~periods~~February 29, 2012.


	Revenue $ Million		Change vs. 2011			Revenue Percent Change			Selling Price Percent Change			Volume Percent Change

Sugar	$	122.6	$	(9.5	)		-7.2	%		12.0	%		-19.2	%
Pulp		11.8		1.3			12.8	%		37.2	%		-24.4	%
Molasses		7.2		(1.1	)		-13.4	%		8.6	%		-22.0	%
Yeast		6.3		(0.2	)		-3.8	%		-0.3	%		-3.5	%
Finished Goods/NRV		93.8		23.9

Total	$	241.7	$	14.4			6.4	%

13The decrease in volume of sugar sold is attributable to a smaller 2011-crop, delivered by shareholder/patrons. The net decrease in volume of co-products sold is ~~Change~~attributable to a smaller 2011-crop. Overall returns per ton for Pulp and Molasses are projected to be higher for the Fiscal Year ended August 31, 2012. Returns for Pulp and Molasses throughout the fiscal year will be impacted by prior period carry-over sales, inventory levels, product mix and timing of sales. Yeast sales volume decreased due to existing customers’ decreased demand for yeast in ~~Accounting~~the ~~Standards:~~six-month period ending February 29, 2012.

~~There~~The ~~were~~value noof finished ~~changes~~product toinventories ~~Accounting Standards~~ for the six-month period ended February 29, 2012 ~~quarter~~increased ~~ending~~$93.8 ~~November~~million, 30$23.9 million more than the six-month period ended February 29, 2012. The change in Sugar and Juice inventories accounted for substantially all of the change vs. 2011.

14Expenses for the six-month period ended February 2012 decreased $4. 6 million. $5.2 million ~~Subsequent~~decreased ~~Events:~~due to fewer operating days, $0.7 million increased due to conventional seed costs, and less than $0.1 million decreased due to Sales and Distribution costs, General, Administrative, and Interest costs.

~~The~~LIQUIDITY ~~Company has considered subsequent events through the date the~~AND ~~financial~~CAPITAL ~~statements~~RESOURCES ~~were issued.~~

~~ITEM~~Because 2the Company operates as a cooperative, payment for shareholder/patron-delivered sugarbeets, the principal raw material used in producing the sugar and co-products it sells, are subordinated to all Company business expenses. ~~MANAGEMENT~~In addition, actual cash payments to shareholder/patrons are spread over a period of approximately one year following delivery of sugarbeet crops to the Company and are net of per unit retains and patronage allocated to them, both of which remain available to meet the Company’Ss ~~DISCUSSION~~capital ~~AND~~requirements. ~~ANALYSIS~~This OFshareholder financing ~~FINANCIAL~~arrangement ~~CONDITION~~may ~~AND~~result ~~RESULTS~~in OFan ~~OPERATIONS~~additional source of liquidity and reduce 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-term financing has been primarily provided by Co-Bank (the Bank). Long-term financing has been a combination of conventional loans with the Bank and tax exempt bonds whose required letters of credit have been provided by The Bank. The Company also has the ability to borrow money on a short-term basis from the USDA Commodity Credit Corporation “CCC” using the Company’s sugar inventory as collateral.

This Discussion should be read in conjunction with information contained in the Consolidated Financial Statements and Notes thereto and in the Company’s Annual Report on Form 10-K for fiscal year ended August 31, 2011.13

~~OVERVIEW~~On December 22, 2011, the Company and the Bank agreed to establish the seasonal line of credit from January 1, 2012 through December 31, 2012 at $65.0 million.

~~The~~February following discussion and analysis relates to the financial condition and results of operations of Minn-Dak Farmers Cooperative (the “Company” or the “Registrant”) for the three-month period ended November 3029, ~~2011 (the first quarter of the Company’s~~ 2012 ~~fiscal~~Seasonal ~~year).~~Debt ~~The~~Information: ~~Company’s fiscal year runs from September 1 to August 31.~~

Any statements regarding future market prices, anticipated costs, agricultural results, operating results and other statements that are not historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. The words “expect”, “project”, “estimate”, “believe”, “anticipate”, “plan”, “intend”, “could”, “may”, “predict” and similar expressions are also intended to identify forward-looking statements. 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 risks, including those set forth in the Company’s reports filed with the Securities and Exchange Commission, including Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended August 31, 2011. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. These forward-looking statements are made as of the date of this report and the Company assumes no obligation to update such forward-looking statements, or to update the reasons why actual results could differ materially from those anticipated in such forward-looking statements.


Source	Capacity		Utilized		Unused Capacity
	(In Millions)

Co-Bank	$	65.0	$	41.6	$	23.4
CCC		43.3		35.2		8.1
Total	$	108.3	$	76.8	$	31.5

~~Critical~~During ~~Accounting~~the six-month ~~Policies~~period ~~and~~ended ~~Estimates~~February 29, 2012 the Company was reimbursed from the bond trust for qualified capital expenditures in the amount of $3.6 million in accordance with the sale of $8.8 million in tax exempt bonds during fiscal 2011. The Company has now drawn all the available funds from the tax exempt bond activity.

~~There~~The ~~have~~loan agreements ~~been~~between nothe ~~material~~Bank ~~changes~~and to the Company’s ~~critical accounting~~obligate ~~policies and estimates since~~ the ~~filing~~Company ofto ~~its~~maintain, “In ~~Annual~~accordance ~~Report~~with onGAAP”, ~~form 10-K for~~ the ~~year~~following ~~ended~~financial ~~August~~covenants: ~~31, 2011.~~

~~ESTIMATED~~• ~~FISCAL~~Maintain ~~YEAR~~a ~~2012/~~current ~~CROP~~ratio ~~YEAR~~of ~~2011 INFORMATION~~no less than 1.10 for the first quarter of a fiscal year and 1.15 for all other quarter and fiscal year ends; • Maintain a long-term debt and capitalized leases to equity ratio of not greater than .8:1; • Maintain available cash flow to current long-term debt ratio as defined in the agreement of not less than 1.25:1, as measured at fiscal year-end.

~~This~~As ~~discussion contains a summary~~ of ~~the Company’s current~~February ~~estimates~~29, of2012 the ~~financial results to be obtained from the~~ Company’s ~~processing~~was ~~of the 2011 sugarbeet crop. Given the nature of the estimates required~~ in ~~connection~~compliance with ~~the~~its ~~payments~~loan toagreement ~~shareholder/growers~~covenants ~~for their sugarbeets, this discussion includes~~with ~~forward-looking statements regarding~~ the ~~quantity of sugar to be produced from the 2011 sugarbeet crop, the net selling price for the sugar and co-products produced by the Company and the Company’s operating costs~~Bank. 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~~Net ~~Company’s~~Cash ~~shareholder/growers~~used in ~~harvested~~operations 1totaled $29.952 million ~~tons of~~for ~~sugarbeets from~~ the ~~2011~~six-~~crop,~~month ~~approximately~~period 20ended ~~percent~~February ~~less~~29, 2012, ~~than~~compared ~~the~~to ~~most recent 5-year average~~$47.6 ~~Sugar~~million ~~content~~used offor the ~~2011~~six-~~crop was~~months ~~5.0~~ended ~~percent~~February ~~above~~28, 2011. ~~the~~This ~~average~~decrease of ~~the~~$18.4 ~~five~~million ~~most~~in ~~recent~~net ~~years.~~cash ~~Due~~used tovs. the ~~lower~~prior ~~harvested~~period ~~tons~~was primarily ~~and~~due ~~higher~~to ~~sugar content,~~ the ~~Company’s~~ ~~production~~differences ofin ~~sugar~~the ~~from~~sugarbeet ~~the~~projected ~~2011-Crop~~payments ~~sugarbeets~~recorded liability, isactual ~~expected~~payments to beshareholder/patrons, ~~20.0~~and ~~percent~~the ~~less~~associated additional ~~than~~inventory ~~the~~needs ~~average~~for ofprocessing ~~the~~materials ~~five most~~from ~~recent~~the ~~years~~record of2010-crop vs. ~~sugar~~the ~~production~~2011-crop.

11The net cash provided by investing activities totaled $1.1 million for the six-month period ended February 29, 2012, compared to $0.9 million provided by for the six-month period ended February 28, 2011. The primary change was Tax Exempt Bond Trust draws exceeded Capital Expenditures.

The ~~Company’s~~net ~~initial~~cash provided ~~sugarbeet~~by ~~payment~~financing ~~estimate~~activities totaled $6428.~~72 per~~1 ~~ton~~million orfor ~~$0.2196174~~the ~~per~~six-month ~~harvested~~period ended ~~/bonus~~February ~~extractible pound of sugar. As a result of increased net sales~~29, ~~the~~2012 ~~estimate~~compared ~~was revised~~ to $6646.919 ~~per~~million ~~ton~~for ~~(average~~the ~~quality~~six-month ~~beets) or $0.2267457 per harvested/bonus extractible pound of sugar and it is anticipated this~~period ~~revision~~ended ~~to the beet payment estimate will be approved by the board of directors prior to the~~ February ~~2012~~28, ~~beet payment~~2011. This ~~revised~~ ~~projected~~decrease ~~payment~~of is$18.8 28million ~~percent~~was ~~more~~primarily ~~than~~due ~~the~~to ~~final 2010-crop payment per ton and 15 percent more per pound of extractible~~a ~~sugar~~$16.1 ~~The~~million ~~higher~~decrease ~~projected~~in ~~2011-crop~~short ~~payment~~term ~~per~~debt ~~ton~~obligations ~~results~~required ~~from~~for ~~higher sugar content in~~ the ~~sugarbeets, improved sugar prices,~~payment ~~offset by some degree by; increased operating and fixed costs per ton, less total tons~~ of ~~beets~~sugarbeets ~~processed,~~from ~~offset by less beet discards, versus~~ the ~~prior~~record ~~year. The price per pound of extractible sugar was diluted by 0.7 percent due to bonus sugar for the 2011~~2010-crop vs. ~~6.5 percent for the 2010~~2011-crop. ~~Bonus~~All ~~sugar~~other ~~is an incentive payment to shareholder/growers to deliver sugarbeets prior~~factors tototaled ~~main harvest~~$2.7 ~~Harvest for the 2011-crop began on September 21, 2011 vs~~million. ~~the 2010-crop beginning on August 18, 2010.~~

AsThe ~~of the date of this report, the~~ Company ~~has taken into consideration~~ ~~key~~anticipates ~~indicators~~that ofthe ~~actual~~funds ~~results~~necessary ~~vs. projections used~~ for ~~the~~working ~~revised~~capital ~~sugarbeet~~requirements ~~payment estimate. Consideration has been given~~and tofuture ~~beet~~capital ~~inventory~~expenditures ~~storage~~will ~~conditions,~~be ~~projected~~derived ~~net~~from ~~selling prices~~operations, ~~factory operation costs~~short-term borrowings, ~~and sugar~~depreciation, ~~pulp~~patronage and ~~molasses~~long-term ~~production~~borrowings. No change in the revised estimated beet payment has resulted from this review. It is the Company’s policy to update its estimate of yearly crop payments only when a material change is sufficiently certain and the amount of such change is reasonably calculable.

~~RESULTS~~Working capital OFincreased ~~OPERATIONS~~$31.9 million for the six-month period ended February 29, 2012. The Company funds its capital expenditure and debt retirement needs primarily from operating activities.

~~Comparison~~Cash ofincreased $0.1 million for the ~~three~~six-~~months~~month period ended ~~November~~February 3029, ~~2011~~2012. ~~and 2010~~

InCapital expenditures ~~the~~for ~~Consolidated~~fiscal ~~Statements~~year of2012 ~~Operations,~~have ~~Distribution~~been ofapproved ~~Net Proceeds,~~at ~~allocated~~$9.0 ~~costs~~million. ofThe capital ~~sugarbeets~~expenditures ~~paid~~are orfor ~~payable~~equipment to ~~shareholder/growers~~improve ~~for~~efficiency, ~~production~~improved tobeet storage, ~~date~~improved ~~totaled~~rail ~~$55.3~~facilities ~~million,~~and ~~a decrease~~safety ofand ~~$12~~replacement activities.8 Failure ~~million~~by orthe ~~18.8~~Company ~~percent~~to ~~from~~make ~~the~~capital ~~prior~~expenditures ~~year~~over a period. As of ~~November~~years could ~~30,~~result ~~2011,~~in ~~Management~~the ~~has~~Company ~~revised~~being ~~the~~less ~~estimated Fiscal~~competitive ~~2012~~due ~~payment~~ to ~~shareholder/growers~~its ~~for~~failure ~~sugarbeets~~ to ~~$130.8 million~~reduce costs, ~~which~~increase isoperating ~~$49.8~~efficiencies ~~million~~ or ~~27.6~~increase ~~percent less than the prior year~~revenues.

The decrease in payments to shareholder/growers is based upon (i) a total shareholder/grower sugarbeet crop to process of 1.95 million tons with no discarded sugarbeets which is a 37 percent decrease from the 2010-crop, (ii) an average delivered sugar-content of 17.4 percent, which is a 3.5 percent increase from the 2010-crop and (iii) the Company’s increased projected selling price for its sugar, pulp, molasses and yeast when compared to the previous year.14

~~Revenues~~The ~~for~~Bonds ~~the~~are secured ~~three-month~~by ~~period~~a ~~ended~~Letters ~~November~~of ~~30,~~Credit ~~2011~~from ~~were comprised~~the ofBank. ~~Sugar~~The 86letter ~~percent,~~of ~~Pulp~~credit 5is ultimately ~~percent,~~secured ~~Molasses~~by 5the ~~percent~~plant and ~~Yeast~~property 4of ~~percent~~the Company’s facility at Wahpeton, ND.

~~Consolidated~~The ~~revenue~~Company ~~for the three-month period ended November 30,~~is ~~2011~~not ~~from~~aware ~~the~~of ~~sales~~any ofknown ~~Sugar~~trends, ~~Pulp~~demands, ~~Molasses and Yeast as well as changes in finished goods inventory and in-process sugar at NRV~~commitments, ~~decreased~~ ~~$17.7~~events ~~million~~ or ~~14.1~~uncertainties that ~~percent~~will ~~from~~likely ~~the~~result ~~three-month period ended November 30, 2010. The table below reflects the percentage changes~~ in ~~product revenues, prices and volumes for~~ the ~~three-month~~Company’s ~~period~~liquidity ~~ended~~increasing ~~November~~or ~~30, 2011~~decreasing materially.

	Revenue $ Million			Change vs. 2010				Revenue Percent Change		Selling Price Percent Change		Volume Percent Change
Sugar		$	66.0		$	3.6		5.8	%	16.9	%	(11.1	%)
Pulp			4.0			(1.5	)	(27.7	)	22.6		(50.3	)
Molasses			4.0			0.8		25.4		4.2		21.2
Yeast			2.9			(0.4	)	(12.0	)	(4.0	)	(8.0	)
Finished Goods/NRV			30.3			(20.2	)
Total		$	107.2		$	(17.7	)	(14.1	%)

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.

12OTHER

~~The~~Estimated decrease in volume of sugar sold is attributable to a smaller 2011-crop, delivered by shareholder/growers coupled with a very high demand from customers. The net decrease in volume of co-products sold is attributable to a smaller 2011-crop causing a later start to manufacturing on a pool wide basis. Overall returns per ton for Pulp and Molasses are projected to be higher for the Fiscal Year ~~ended~~2013 ~~August~~Information 31, 2012. Returns for Pulp and Molasses throughout the fiscal year will be impacted by prior period carry-over sales, inventory levels, product mix and timing of sales. Yeast sales volume decreased due to existing customers’ decreased demand for yeast in the 2011 period.

The ~~value~~Company’s Board of ~~finished~~Directors ~~product~~initial ~~inventories~~planting level for the ~~three~~2012-~~month~~crop ~~period~~has been ~~ended~~established ~~November~~at ~~30,~~a ~~2011~~minimum ~~increased~~of ~~$30~~140.30 ~~million,~~percent ~~$20.2~~and ~~million~~a ~~less~~maximum ~~than~~of ~~the~~160.0 ~~three-month~~percent ~~period~~times units ~~ended~~of ~~November 30, 2010~~stock. The ~~change in~~Company’s ~~Sugar~~Board ~~and~~of ~~Juice~~Directors ~~inventories~~is ~~accounted~~authorized ~~for~~to ~~substantially~~modify ~~all~~the Company’s ofplanting ~~the~~level ~~change~~based ~~vs.~~upon ~~2010~~changing facts and circumstances.

~~Expenses~~A ~~for the three-month period ended November 30, 2011 decreased~~substantial ~~$2.5~~portion ~~million.~~of ~~$5.2~~the ~~million~~projected ~~decreased~~2012-crop ~~due~~sugar toproduction ~~fewer~~has ~~operating~~been ~~days,~~contracted ~~$2.7 million increased due to Sales and Distribution Costs associated~~for ~~with~~sale ~~third~~at ~~party~~average ~~sugar~~prices ~~purchases~~slightly ~~and~~lower ~~less~~ than ~~$0.1~~the ~~million~~projected ~~decreased~~2011-crop ~~due to General~~sales prices, ~~Administrative,~~but ~~and~~higher ~~Interest~~than ~~costs~~historic averages.

~~LIQUIDITY~~Environmental ~~AND CAPITAL RESOURCES~~

~~Because~~The ~~the~~ Company ~~operates as a cooperative, payment for shareholder/grower-delivered~~is ~~sugarbeets,~~subject ~~the~~to ~~principal~~extensive ~~raw~~federal ~~material~~and ~~used~~state inenvironmental ~~producing~~laws ~~the sugar~~ and ~~co-products~~regulations itwith respect ~~sells, are subordinated~~ to ~~all~~water ~~Company~~and ~~business expenses.~~air ~~In addition~~quality, ~~actual~~solid ~~cash~~waste ~~payments~~disposal toand ~~shareholder/growers~~odor ~~are~~control. ~~spread over a period of approximately one year following~~The ~~delivery of sugarbeet crops to the~~ Company ~~and~~conducts ~~are~~an ~~net~~ongoing ofcompliance ~~per~~program ~~unit~~designed ~~retains and patronage allocated~~ to ~~them,~~meet ~~both of which remain~~these ~~available~~environmental tolaws ~~meet~~and ~~the Company’s capital requirements~~regulations. ~~This~~The ~~shareholder~~Company ~~financing~~believes ~~arrangement~~that ~~may~~it ~~result~~is in ~~an additional~~ ~~source~~substantial ofcompliance ~~liquidity~~with ~~and~~applicable ~~reduce~~environmental ~~outside~~laws ~~financing~~and ~~requirements~~regulations. inFrom time ~~comparison~~ to atime, ~~similar business operated on a non-cooperative basis. However~~however, ~~because sugar is sold throughout~~ the ~~year~~Company ~~(while~~may ~~sugarbeets~~be ~~are~~involved ~~processed~~in ~~primarily~~investigations ~~between September and April)~~or ~~and~~determinations ~~because~~regarding ~~substantial~~matters ~~amounts~~that ofmay ~~equipment~~arise ~~are~~in ~~required for its operations,~~ the ~~Company~~ordinary ~~has~~course ~~utilized substantial outside financing~~of ~~on both a seasonal and long-term basis to fund such operations~~business. The ~~short-term~~Company ~~financing~~works ~~has~~closely ~~been~~with ~~primarily~~all ~~provided~~affected bygovernment ~~Co-Bank~~agencies to ~~(the~~resolve ~~Bank).~~environmental ~~Long-term~~issues ~~financing~~that ~~has~~have ~~been~~arisen ~~a combination of conventional loans with the Bank~~ and ~~tax~~believes ~~exempt~~such ~~bonds~~issues ~~whose~~will ~~required~~be ~~letters~~resolved ofwithout ~~credit~~any ~~have~~material ~~been~~adverse ~~provided~~effect ~~by The Bank. The Company also has the ability to borrow money~~ on ~~a short-term basis from~~ the ~~USDA~~ ~~Commodity Credit Corporation “CCC” using the~~ Company~~’s sugar inventory as collateral~~.

OnThe ~~November~~Company cannot ~~15,~~predict ~~2011,~~whether ~~the~~future ~~Company~~changes ~~and~~in ~~its~~environmental ~~Bank~~laws ~~agreed~~or ~~to a temporary~~regulations might increase in the ~~seasonal~~cost ~~line~~ of ~~credit~~operating ~~from~~its ~~$45.0~~facilities ~~million~~and toconducting ~~$65~~its business.0 ~~million~~Any ~~through~~such ~~December~~changes ~~31,~~could ~~2011.~~have Onfinancial ~~December~~consequences ~~22,~~for ~~2011,~~ the ~~Company~~ Company and ~~the~~its ~~Bank agreed to establish the seasonal line of credit from January 1, 2012 through December 31, 2012 at $65~~members.0 ~~million.~~

~~November~~ITEM ~~30,~~3. QUANTITATIVE ~~2011~~AND ~~Seasonal~~QUALITATIVE ~~Debt~~DISCLOSURES ~~Information:~~ABOUT MARKET RISK

Source	Capacity		Utilized		Unused Capacity
		(In Millions)
Co-Bank	$	65.0	$	56.0	$	9.0
CCC	$	28.0	$	16.0	$	12.0
Total	$	93.0	$	72.0	$	21.0

There have been no material changes to the Company’s Quantitative and Qualitative Disclosures About Market Risk since the filing of the Company’s 10-K for the Fiscal Year ended August 31, 2011.

~~During~~ITEM ~~the three-month period ended November 30, 2011 the Company was reimbursed from the bond trust for qualified capital expenditures in the amount of $2~~4.~~9 million in accordance with the sale~~ ofCONTROLS ~~$8.8~~AND ~~million~~PROCEDURES in tax exempt bonds during fiscal 2011. In addition, the Company is eligible to have an additional $0.6 million reimbursed from the bond trust as of November 30, 2011 as an additional source of available cash.

~~The~~Evaluation ~~loan~~of ~~agreements~~Disclosure ~~between~~Controls and Procedures As required by Rule 13a-15(b) under the ~~Bank~~Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the Company’s ~~obligate~~management, including its Chief Executive Officer and Chief Financial Officer (together the “Certifying Officers”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of February 29, 2012, the end of the period covered by this report. Based upon that evaluation, the Certifying Officers concluded that the Company’s disclosure controls and procedures were effective. Inherent Limitations on Effectiveness of Controls Management is responsible for establishing and maintaining adequate internal control over financial reporting to ~~maintain~~provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, ~~“In~~in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with ~~GAAP”~~U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the ~~following~~management and the Board; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Company assets that could have a material effect on the financial ~~covenants:~~statements.

~~• Maintain a current ratio of no less than 1.10 for the first quarter of a fiscal year and 1.~~15 for all other quarter and fiscal year ends; • Maintain a long-term debt and capitalized leases to equity ratio of not greater than .8:1; • Maintain available cash flow to current long-term debt ratio as defined in the agreement of not less than 1.25:1, as measured at fiscal year-end.

AsManagement ofpersonnel, ~~November~~including 30the Certifying Officers, ~~2011~~recognize that the Company’s ~~was~~internal control over financial reporting cannot prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in ~~compliance~~all ~~with~~control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its ~~loan agreement~~stated ~~covenants~~goals ~~with~~under all potential future conditions. Changes in Internal Control over Financial Reporting There have been no material changes to the ~~Bank~~Company’s internal control over financial reporting since the filing of the Company’s Form 10-K for the period ended August 31, 2011 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

13PART II. OTHER INFORMATION

~~Net~~Item ~~Cash used in operations totaled $25~~1.~~9 million for the three-month~~ ~~period~~Legal ~~ended~~Proceedings November 30, 2011, compared to $53.2 million used for the previous period. This decrease of $27.3 million in net cash used vs. the period ended November 30, 2011; was primarily due to the differences in the sugarbeet projected payments recorded liability, actual payments to shareholder/growers , and the associated additional inventory needs for processing materials from the record 2010-crop vs. the 2011-crop.

~~The~~See ~~net~~Item ~~cash provided by investing activities totaled $0~~3.~~9 million~~ ~~for~~Legal ~~the~~Proceedings ~~three-month~~in ~~period~~the ~~ended~~Company’s ~~November 30,~~ 2011, ~~compared~~Annual toReport ~~$1.1~~on ~~million~~Form ~~provided by for the period ended November 30, 2010~~10-K. ~~The~~ ~~primary change was the result of less Capital Expenditures and less Tax Exempt Bond Trust draws.~~

~~The~~Item ~~net cash provided by financing activities totaled $25~~1A.~~2 million~~ ~~for~~Risk ~~the three-month period ended November 30, 2011 compared to $52~~Factors.1 million for the period ended November 30, 2010. This decrease of $26.9 million was primarily due to a $25.9 million decrease in short term debt obligations required for the payment of sugarbeets from the record 2011-crop vs. 2010-crop. All other factors totaled $1.1 million.

~~The~~There ~~Company~~have been ~~anticipates~~no ~~that~~material ~~the~~changes ~~funds~~from ~~necessary~~risk ~~for~~factors ~~working~~as ~~capital~~previously disclosed in the ~~requirements~~Company’s ~~and~~Form ~~future~~10-K. ~~capital~~For ~~expenditures~~a ~~will~~detailed bediscussion ~~derived~~of ~~from~~certain risk factors that could affect the Company’s operations, ~~short-term~~financial ~~borrowings~~condition or results for future periods, ~~depreciation~~see Item 1 A, ~~patronage~~Risk ~~and~~factors in the Company’s 2011 Annual Report ~~long-term~~on ~~borrowings~~Form 10-K.

~~Working~~Item ~~capital~~2. ~~increased~~Unregistered ~~$10.9~~Sales ~~million~~of ~~for~~Equity ~~the~~Securities ~~for~~and ~~the~~Use ~~three-month period~~of ~~ended~~Proceeds. ~~November~~None ~~30,~~Item ~~2011~~3. ~~The~~Defaults ~~Company~~Upon ~~funds~~Senior ~~its~~Securities ~~capital~~None ~~expenditure~~Item ~~and~~4. ~~debt~~Mine ~~retirement~~Safety ~~needs~~Disclosures ~~primarily~~None ~~from~~Item ~~operating~~5. ~~activities~~Other Information None. Item 6. Exhibits a) Exhibits

~~Cash~~Item ~~increased $0~~#31.1 ~~million~~Section ~~for~~302 Certification of the ~~for~~President and Chief Executive Officer Item #31.2 Section 302 Certification of the ~~three-month~~Vice ~~period~~President ~~ended November~~and ~~30,~~Chief ~~2011~~Financial Officer Item #32.1 Section 906 Certification of the President and Chief Executive Officer Item #32.2 Section 906 Certification of the Vice President and Chief Financial Office

Capital expenditures for fiscal year 2012 have been approved at $9.0 million. The capital expenditures are for equipment to improve efficiency, improved beet storage, improved rail facilities and safety and replacement activities. Failure by the Company to make capital expenditures over a period of years could result in the Company being less competitive due to its failure to reduce costs, increase operating efficiencies or increase revenues.16

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

~~The~~Pursuant ~~Company~~to the isrequirement ~~not~~of ~~aware~~the ofSecurities ~~any~~Exchange ~~known~~Act ~~trends,~~of ~~demands~~1934, ~~commitments, events~~the orRegistrant ~~uncertainties~~has ~~that~~duly caused ~~will~~this ~~likely~~report ~~result~~to inbe ~~the~~signed ~~Company’s~~on ~~liquidity~~its ~~increasing~~behalf orby ~~decreasing~~the ~~materially~~undersigned thereunto duly authorized.


		MINN-DAK FARMERS COOPERATIVE
		(Registrant)

Date:	APRIL 13, 2012	/s/ DAVID H. ROCHE
		David H. Roche
		President and Chief Executive Officer

Date:	APRIL 13, 2012	/s/ RICHARD J. KASPER
		Richard J. Kasper
		Vice President and Chief Financial Officer

~~OTHER~~17

Estimated Fiscal Year 2013 Information

The Company’s Board of Directors initial planting level for the 2012-crop has been established at a minimum of 140% and a maximum of 160% times units of stock. The Company’s Board of Directors is authorized to modify the Company’s planting level based upon changing facts and circumstances.

Environmental

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 control. The Company conducts an ongoing compliance program designed to meet these environmental laws and regulations. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. From time to time, however, the Company may be involved in investigations or determinations regarding matters that may arise in the ordinary course of business. The Company works closely with all affected government agencies to resolve environmental issues that have arisen and believes such issues will be resolved without any material adverse effect on the Company.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the Company’s Quantitative and Qualitative Disclosures About Market Risk since the filing of the Company’s 10-K for the Fiscal Year ended August 31, 2011.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer (together the “Certifying Officers”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of November 30, 2011, the end of the period covered by this report. Based upon that evaluation, the Certifying Officers concluded that the Company’s disclosure controls and procedures were effective.

Inherent Limitations on Effectiveness of Controls

Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the management and the Board; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Company assets that could have a material effect on the financial statements.

Management personnel, including the Certifying Officers, recognize that the Company’s internal control over financial reporting cannot prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There have been no material changes to the Company’s internal control over financial reporting since the filing of the Company’s Form 10-K for the period ended August 31, 2011 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Item 3. Legal Proceedings in the Company’s 2011 Annual Report on Form 10-K.

Item 1A. Risk Factors

There have been no material changes from risk factors as previously disclosed in the Company’s Form 10-K. For a detailed discussion of certain risk factors that could affect the Company’s operations, financial condition or results for future periods, see Item 1 A, Risk factors in the Company’s 2011 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

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

None

Item 5. Other Information

None

Item 6. Exhibits

a) Exhibits

Item #31.1 Section 302 Certification of the President and Chief Executive Officer

Item #31.2 Section 302 Certification of the Vice President and Chief Financial Officer

Item #32.1 Section 906 Certification of the President and Chief Executive Officer

Item #32.2 Section 906 Certification of the Vice President and Chief Financial Officer

b) Bylaws

Item 3(iv) Amended Bylaws of Minn-Dak Farmers Cooperative. Incorporated by reference as filed on Form 8-k on December 12, 2011.

SIGNATURES

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

		MINN-DAK FARMERS COOPERATIVE
		(Registrant)
Date:	JANUARY 12, 2012	/s/ DAVID H. ROCHE
		David H. Roche
		President and Chief Executive Officer
Date:	JANUARY 12, 2012	/s/ RICHARD J. KASPER
		Richard J. Kasper
		Vice President and Chief Financial Officer

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