11 TH ANNUAL FARMER COOPERATIVES CONFERENCE UNIVERSITY OF WISCONSIN CENTER FOR COOPERATIVES

1. 11TH ANNUAL FARMER COOPERATIVES CONFERENCE UNIVERSITY OF WISCONSIN CENTER FOR COOPERATIVES Cooperative Strategy, Structure andFinance November 18-19, 2008 Michael L. Weaver, Chair Agribusiness and Energy Group Lindquist & Vennum P.L.L.P. Minneapolis, Minnesota 612-371-3987 mweaver@lindquist.com

2. 11th Annual Farmer Cooperatives Conference Perspectives on Cooperative Finance Michael L. Weaver SETTING THE STAGE • Unprecedented Volatility in Commodity Prices (input costs!) • Dramatic Increases in Working Capital Requirements • Financial Markets Crisis • Risk Assessment of Biofuels Industries • Bankruptcy Filings

3. 11th Annual Farmer Cooperatives Conference Perspectives on Cooperative Finance Michael L. Weaver COOPERATIVE MODEL • Non-profit Marketing Association: grade, process, ship, market • Net proceeds less expenses • Principal/agent relationship vs. buyer/seller relationship • Marketing agreement/Bylaws are key documents • Losses constitute “overpayment” on delivered product

4. 11th Annual Farmer Cooperatives Conference Perspectives on Cooperative Finance Michael L. Weaver COOPERATIVE MODEL – cont. • Supply Cooperative Association • Losses constitute “instant” patronage dividends • Asset Evaluation • Pursue Growth Opportunities • Cash is King

5. 11th Annual Farmer Cooperatives Conference Perspectives on Cooperative Finance Michael L. Weaver COOPERATIVES – BACK TO THE BASICS • Equity Primer • Wall Street vs. Farm Operations • $300 per acre/$250 per head • Tools for Cooperative Boards • Pricing (“at-cost” operations) • Loss Financing • Efficiency • Balanced Dividend/Revolvement Policies • Nonqualified Unit Retains

6. 11th Annual Farmer Cooperatives Conference Perspectives on Cooperative Finance Michael L. Weaver COOPERATIVES: BACK TO THE BASICS • Assets owned collectively to Supply or Market Products of Farmers • Ownership Based on Patronage (“Need”) • Democratic Principles • Deeper Equity Pool • Stronger Balance Sheet • Cooperatives: Back in Vogue (or never left!)

7. 11th Annual Farmer Cooperatives Conference Perspectives on Cooperative Finance Michael L. Weaver COOPERATIVES: THOUGHTS TO STRENGTHEN • What Can We Do? • Strengthen Agency Principles in Subch. T. (Bot case) • Extend Securities’ Exemptions • Direct USDA Loans/Investment into Qualifying Cooperatives • Expand Sec. 1042(g) concept to Asset Sales to Qualifying Cooperatives (e.g. “1031” concept)

8. 11th Annual Farmer Cooperatives Conference Perspectives on Cooperative Finance Michael L. Weaver • 190+ attorneys, offices in Minneapolis and Denver • Corporate Finance Group, representing both private and public companies in equity and debt financing transactions • Mergers & Acquisitions Group, assisting clients buy and sell companies in industry groups • Agribusiness and Energy Group, representing cooperatives and businesses in the agricultural, food processing, manufacturing, and energy industries • Formation, financing, and construction or acquisition of processing and manufacturing facilities is core competency • Our clients have been instrumental in biofuels industry, as well as wind energy, livestock, and cooperative services industries • We assist companies with governance, strategic planning, and financing, and are recognized nationally for our tax planning work with cooperatives

9. Michael L. WeaverLindquist & Vennum PLLP4200 IDS Center80 South Eighth StreetMinneapolis, MN 55402(612) 371-3987mweaver@lindquist.com