Milling & Baking News - April 19, 2011 - 12

Financial Results 

Strong ag results boost CHS income in quarter
ST. PAUL, MINN. — Net income at CHS Inc. in the second quarter ended Feb. 28 rose to $194,598,000, up 135% from $82,668,000 in the second quarter of fiscal 2010. Revenues for the period also advanced, rising 31% to $7,706,119,000 from $5,878,493,000 in the same period a year ago. Higher sales reflected increased values for the energy, grain and crop nutrients products CHS handles. The company’s Ag Business segment, which consists of CHS’s agronomy, grain marketing and retail operations, posted operating earnings of $82,883,000, up 45% from $57,358,000 in the second quarter of fiscal 2010. Sales in the segment totaled $5,215,991,000, up 34% from $3,897,632,000 a year ago. “Grain revenues in our Ag Business segment totaled $4.2 billion and $3 billion during the three months ended Feb. 28, 2011, and 2010, respectively,” CHS said in an April 8 filing with the Securities and Exchange Commission. “Of the grain revenues increase of $1.2 billion (38%), $938.3 million is due to increased average grain selling prices, and $216.5 million is due to a 7% net increase in volumes, during the three months ended Feb. 28, 2011, compared to the same period in the prior fiscal year. “The average sales price of all grain and oilseed commodities sold reflected an increase of $1.92 per bu (29%) over

the same three-month period in fiscal 2010. Soybeans, wheat and corn all had increased volumes compared to the three months ended Feb. 28, 2010.” CHS said oilseed processing revenues increased 18% during the third quarter to $310.6 million. The increase included $39.1 million from an increase in the average selling price of the company’s oilseed products and a net increase of $8.3 million related to increased volumes. Energy earnings rose sharply to $107,038,000 from $18,232,000, while sales increased 26% to $2,558,415,000 from $2,037,528,000. For the six months ended Feb. 28, CHS posted net income of $418,154,000, up 100% from $208,694,000 in the same period a year ago. Sales increased 31% to $15,841,223,000 from $12,073,734,000. MBN

Washington 

Wheat summit groups commit to cooperate on biotechnology
CHICAGO — Representatives from across the U.S. wheat value chain met last week in Chicago for the fourth Wheat Summit. While past summits have focused on a wide range of issues, the most recent gathering had a decidedly pointed focus on biotechnology. “The Wheat Summit process started with a call to the industry on wheat’s competitiveness crisis,” said Dana Peterson, chief executive officer of the National Association of Wheat Growers; Alan Tracy, president of U.S. Wheat Associates; Mary Waters, president of the North American Millers’ Association; and Lee Sanders, senior vice-president of the American Bakers Association, in a joint statement. “In the five years since that first meeting, we have seen a true resurgence of interest and investment by the public and private sectors in research and development of wheat. Some of this new engagement stems from grower support for the eventual commercialization of biotechnology traits in wheat, and some is a reaction to increased demand for plentiful, affordable and nutritious grains from a growing world population. “Together we have identified a number of critical areas of agreement when it comes to paving the way for the responsible introduction of biotechnology — this follows our
12 / April 19, 2011 Milling & Baking News

theme for the 2011 Summit — Moving Forward Together.” The groups said they value the importance of choice for both the grower and the consumer, and are committed to guarding the quality of wheat through all technological innovations. Additionally, the groups said they recognize the need for reasonable tolerances to be set for biotech wheat in future non-biotech shipments. “Our organizations will continue to work together on biotechnology issues in a variety of capacities, including work to track developments on the scientific and regulatory fronts; to educate stakeholders about the need for innovation in wheat; and to keep open the dialogue with all Waters wheat chain participants on emerging technologies,” they said. The group first met in September 2006 as a concerted response to the drop of U.S. acreage by a third over the course of a single generation, and last met in October 2009, when biotechnology also was a key topic. Since the last meeting the leadership has changed at both NAWG (Daren Coppock had been c.e.o.) and NAMA (Elizabeth A. (Betsy) Faga had been president), but Ms. Waters said the

transition to new leadership has been seamless as the different industry groups have worked together very closely on such projects as the Urban Wheat Field in Washington, the National School Lunch and School Breakfast Programs, and the 2010 Dietary Guidelines for Americans. While nutrition and promotion were discussed at this year’s summit, biotechnology took center stage primarily because a number of private companies have recently stepped-up research efforts in the field, a new development since the last time the summit convened, Ms. Waters said. “To be successful, we need a collaborative effort,” Ms. Waters said. “If we start talking now, we think it will make a more successful launch.” When that launch may occur remains up in the air, but Ms. Waters said biotechnology companies have given a general time frame of 8 to 10 years. And while technology companies are back on board dedicating resources to research, consumer surveys also suggest a willingness to accept bioengineered wheat. The next step will be a cooperative stance between the different groups within the U.S. wheat value chain. “I think the challenge we have now is we represent broad organizations,” Ms. Waters said. “What can we agree on and what can we educate people on. How is that in line with the needs of consumers and the general public.” MBN
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Milling & Baking News - April 19, 2011

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