2. Industrial Beet Production: Revenue, Costs, and Returns
David Ripplinger
March 18-20, 2014

3. Agenda
Project Background/Update Production Economics

4. Industrial Beet Background
A project to convert beet to biofuels and other products is moving toward commercialization Economic, environmental, and engineering studies have and are being conducted Identified five potential sites: Cando, Carrington, Jamestown, Langdon, Valley City Critical factor: feedstock availability

5. Industrial Beet Background
Production/operation as soon as 2016 No grower contracts or securities offering at this time

6. Other US Projects Tracy, CA/Delta Distillers Arranging financing
Has growers contract
Will use waste steam/energy from desalinization plant
Spring of 2015 Start
Mendota, CA group also active
- Received $5 million grant from State of CA in 2013

7. A non-beet sugar project
Solazyme has partnered with ADM to develop a commercial scale facility next to ADM’s Clinton Corn Wet Mill The search is for low-cost, low-carbon sugar

8. NDSU Activities
ARPA-E Grant Extension Proposal

9. Industrial beet production economics

10. What are the costs of production? What are the expected returns?
The Big Question(s)
What are the costs of production? What are the expected returns?

11. How we’re going to get there.
Information
-Yields
-Historical cost and returns for beet production
Tools
-Enterprise budget
-Partial budget

12. Yield Data (Handout 1) Litchville Dryland Notes 2012 33.2 2013 16.2
2013
16.2
Saline
24.7
Langdon
Dryland
2011
26.5
2012
31.3
2013
29.1
29.0
Carrington
Irrigated
2009
23.9
2010
37.8
2011
25.2
2012
31.2
2013
28.1
29.2
Carrington
Dryland
2009
23.4
2010
25.2
2011 25
2012
21.4
2013
23.6
23.7

13. Historical Returns (Handout 2)
2007
2008
2009
2010
2011
2012
Yield per acre (ton)
12.99
14.5
27.6
17.07
25.39
19.19
Value per ton
40.13
37.6
50.1
64.63
66.53
52.64
Total product return per acre
521.21
545.14
1,382.58
1,102.91
1,688.87
1,009.93
Crop insurance per acre
234.34
149.19
2.01
99.23 -
101.75
Other crop income per acre
1.76
7.55
12.01
5.76
12.25
7.64
Gross return per acre
757.3
701.88
1,396.59
1,207.90
1,701.11
1,119.32
Source: FINBIN, North Dakota Averages,
Beet price includes returns to processing/marketing

14. Total direct expenses per acre 691.23 616.1 800.04 942.84 1,055.60
2007
2008
2009
2010
2011
2012
Seed
91.15
140.43
159.78
168.78
179.41
146.57
Fertilizer
90.84
101.51
81.6
104.21
140.07
101.09
Crop chemicals
121.45
36.76
66.93
72.05
100.92
77.33
Crop insurance 25
21.87
25.07
26.11
35.88
26.13
Fuel & oil
83.67
44.15
53.44
72.36
72.02
64.32
Repairs
80.2
70.21
77.55
99.5
109.03
85.81
Custom hire
13.11
6.74
6.83
18.23
24.01
13.03
Hired labor
21.35
26.24
18.2
26.56
49.86
26.93
Land rent
100.05
95.5
100.24
88.61
111.95
98.28
Stock/quota lease
53.81
61.55
190.86
231.77
210.68
147.11
Machinery leases -
1.39
0.31
Hauling and trucking
19.04
4.19
Operating interest
10.59
10.5
19.53
10.4
21.5
14.05
Miscellaneous
0.64
3.82
0.27
1.02
Total direct expenses per acre
691.23
616.1
800.04
942.84
1,055.60
806.16
Return over direct exp per acre
66.08
85.78
596.56
265.06
645.52
313.16
Seed technology and chemical costs are likely higher due to stronger pressure from long-term production
Source: FINBIN, North Dakota Averages,

15. Dues & professional fees 3.56 2.11 2.87 4.68 3.93 3.39 Interest 8.42
Overhead Expenses
2007
2008
2009
2010
2011
2012
Custom hire
0.04 -
0.41
14.15
2.12
Hired labor
36.97
33.29
49.73
45.77
39.2
41.23
Machinery leases
3.29
5.38
4.73
6.02
4.48
4.83
Farm insurance
4.72
4.17
6.98
6.48
8.91
6.08
Utilities
2.69
2.58
3.55
3.78
4.71
3.38
Dues & professional fees
3.56
2.11
2.87
4.68
3.93
3.39
Interest
8.42
7.64
6.21
5.56
4.54
6.58
Mach & bldg depreciation
68.27
51.78
77.35
87.5
66.55
70.68
Miscellaneous
3.94
6.3
17.69
3.17
7.34
Total overhead expenses per acre
131.91
110.73
157.72
177.9
149.64
145.64
Total dir & ovhd expenses per acre
823.13
726.83
957.76
951.8
Net return per acre
-65.83
-24.95
438.83
87.16
495.88
167.52
Source: FINBIN, North Dakota Averages,

16. Historical Price Review
Beet price includes returns to processing/ marketing
Yields averaged less than 20 tons/acre
Seed and chemicals averaged more than $220/acre over the six year period
Two years with very high returns (>$450/acre)

17. Custom Beet Work Rates 2010 Average 2013 Average
Planting with Fertilizer
16.73
19.51
Planting without Fertilizer
15.32
19.19
Topping
20.98 *
Lifting
47.75
Hauling ($/ton)
5.07
* Not reported due to small sample size
Source: Custom Farm Work Rates, North Dakota State University, EC499

18. Industrial Beet Enterprise Budget Langdon
Per Acre
Your Numbers
Notes:
Market Yield 25 29
Based on yield trials & historical records
Market Price
33.00
 33.00
8x Corn
Market Revenue
825.00
DIRECT COSTS
-Seed
150.00
-Crop Chemicals
75.00
-Fertilizer
100.00
80.00
Fertilizer credit
-Crop Insurance
25.00
-Fuel & Lubrication
65.00
-Repairs
90.00
-Miscellaneous
45.00
-Operating Interest
15.00
SUM OF LISTED DIRECT COSTS
565.00
545.00
INDIRECT (FIXED) COSTS
-Misc. Overhead
60.00
-Machinery Int. & Dep.
Some used equipment
-Land Charge
55.50
SUM OF LISTED INDIRECT COSTS
229.00
180.00
SUM OF ALL LISTED COSTS
725.00
RETURN TO LABOR & MGMT
69.50
232.00
LISTED COSTS PER BUDGET UNIT
(t) :
-Direct Costs
22.60
-Indirect Costs
9.16
-Total Listed Costs
31.76

19. Industrial Beet Comparison Tool Cando/Langdon
Handout 5
Industrial Beet Comparison Tool Cando/Langdon
Prices which provide the same Return over Variable Costs between crops - North East N.D.
Select reference crop
Canola
Enter the
futures price
$0.19
<= enter cash price if no futures market
Enter expected local basis (cash-futures)
-$0.01
<= enter 0 basis if no futures market
Expected
local cash price
Beet
S. Wht
Durum
Barley
Corn
Soybean
Drybeans
Oil Snflr
Conf Snflr
Yield 25 45 40 64
104 29
1500
1340
1170
1720
Relative Price
$22.60
$3.87
$4.13
$2.58
$2.95
$6.17
$0.17
$0.13
$0.18
Income
$565.00
$174.16
$165.33
$165.34
$306.29
$178.93
$248.23
$169.14
$205.24
$320.61
Variable costs:
Seed
$150.00
$21.44
$22.50
$22.00
$83.78
$69.60
$45.00
$31.24
$46.55
$48.50
Herbicide
75.00
21.80
19.00
20.00
45.30
26.70
28.90
20.50
Fungicide
0.00
5.50
Operating Int.
15.00
Total Var.Costs
$200.28
Return Over
$0.00
$120.33
Variable Costs
Note: - Only variable costs are considered in this comparison. You can include an amount under "misc."
to account for any differences between crops in fixed costs, labor, management and risk.

20. Industrial Beet Compare Tool (Handout 5)
Based on the Crop Compare Tool (A. Swenson, NDSU) Will be available online Considers variable cost – which isn’t the right way to frame the decision to grow beets for the first time

21. Partial Budget Langdon
Scale
160
acres
A. Added Income
C. Added Costs
Yield 25
700
Price 33
Revenue
132000
112000
B. Reduced Costs
D. Reduced Income
244
1720 .2
38960
55040
 Net Change
A+B-C-D
3920
Per Acre
24.50

22. Partial Budget Langdon
Scale
160
acres
Added Income
Added Costs
Yield 29
665
Price 33
Revenue
153120
106400
Reduced Costs
Reduced Income
244
1720
0.20
38960
55040
Net Change
30640
Per Acre
191.50

23. Shortcomings
No prices (grower contract) Imprecise data (inaccurate!?!) Risk! (Yield, harvest activity, inputs) Equipment – depreciation/interest Transport to pile? Application to your operation Long term commitment More detailed analysis (change in rotation/not crop) Insurance!

24. What returns do you require to grow?
A question for you
What returns do you require to grow?

25. Thank You.
Questions?