1177314--3/16/2007--NORTHERN_GROWERS

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Risks Related to Operations Our financial performance is dependent on market prices for ethanol and distillers grains and corn, and our financial condition and results of operation are directly affected by changes in these market prices . Our business is highly sensitive to corn prices, and we generally cannot pass on increases in corn prices to our customers. Fluctuations in the selling price and production cost of gasoline may reduce our profit margins . The price of distillers grains is affected by the price of other commodity products, such as soybeans, and decreases in the price of these commodities could decrease the price of distillers grains Our business is subject to seasonal fluctuations. Hedging transactions involve risks that could harm our profitability. Our business is not diversified because it is limited to the fuel grade ethanol industry, which may limit our ability to adapt to changing business and market conditions. We are heavily dependent upon the Broin Companies, LLC. We are dependent upon Ethanol Products, LLC to purchase and market all of the ethanol produced at the plant . Interruptions in energy supplies could delay or halt production at the plant, which will reduce our profitability. We are dependent upon Big Stone Plant for steam, and the plant may incur increased operating costs if the steam supply is terminated or interrupted. To produce ethanol, we need a significant supply of water . We have restrictive loan covenants with our lender. Risks Related to the Industry As more ethanol plants are built, ethanol production will increase and, if demand does not sufficiently increase, the price of ethanol and distillers grains may decrease . We operate in an intensely competitive industry and there is no assurance that we will be able to compete effectively. The effect of the Renewable Fuels Standard, or RFS, in the Energy Policy Act of 2005 on the ethanol industry is uncertain . Competition from the advancement of technology may lessen the demand for ethanol and negatively impact our profitability . Corn-based ethanol may compete with cellulose-based ethanol in the future, which could make it more difficult for us to produce ethanol on a cost-effective basis Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds to air pollution, harms engines and takes more energy to produce than it contributes, may affect the demand for ethanol which could affect our ability to market our product . We may need to increase cost estimates for construction of the plant s expansion, and such increase could reduce our revenue stream and make the expansion unprofitable. Construction delays could increase our costs. Delays and defects in construction relating to the plant s expansion could impair the plant s ability to operate. Government, Regulatory and Other Risks Government regulation could increase costs and reduce profitability . Tariffs effectively limit imported ethanol into the United States, and their reduction or elimination could undermine the ethanol industry in the United States. Federal and state laws, regulations and tax incentives concerning ethanol could expire or change, which could harm our business . If Northern Growers is treated as a corporation for federal income tax purposes, its capital units could decline in value. There are significant restrictions on transferring the capital units.

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1177314--3/16/2007--NORTHERN_GROWERS_LLC