1177314--3/2/2009--NORTHERN_GROWERS

related topics

{gas, price, oil}

{condition, economic, financial}

{competitive, industry, competition}

{cost, regulation, environmental}

{property, intellectual, protect}

{financial, litigation, operation}

{loss, insurance, financial}

{stock, price, operating}

Risks Related to Our Business Our financial performance is dependent on market prices for ethanol, 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. Decreasing gasoline prices may negatively impact the selling price of ethanol. The spread between ethanol and corn prices can vary significantly. The price of distillers grains is affected by the price of other commodity products, and decreases in the price of these commodities could decrease the price of distillers grains Hedging transactions involve risks that could harm our profitability. Our business is subject to seasonal fluctuations. 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 POET , LLC. We are dependent upon POET Ethanol Products, LLC to purchase and market all of the ethanol produced at our plant Interruptions in energy supplies could delay or halt production at our plant, which will reduce our profitability. We have limited natural gas available for operations and rely heavily on the adjacent Big Stone Plant. Risks Related to the Industry Overcapacity in the industry may result in further decreases in the price of ethanol and distillers grains. Ethanol prices may be impacted by wholesale gasoline prices through the economics of discretionary blending. Lower wholesale gasoline prices tend to discourage discretionary blending which could lead to an imbalance in the capacity utilization of ethanol leading to lower ethanol prices. The global financial crisis may have impact on our business and financial condition that we currently cannot predict. We operate in an intensely competitive industry and there is no assurance that we will be able to compete effectively. 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 Negative media attention associated with the use of corn in the ethanol production process may lead to decreases in demand for the ethanol we produce, which could negatively affect our profitability. Risks Related to Governmental and Regulatory Action A change in government policies favorable to ethanol may cause demand for ethanol to decline. Tariffs effectively limit imported ethanol into the U.S., and their reduction or elimination could undermine the ethanol industry in the U.S. Government incentives for ethanol production may be eliminated in the future. Changes in environmental regulations or violations of the regulations could reduce our profitability.

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1177314--3/2/2009--NORTHERN_GROWERS_LLC