1. North Dakota Grain Dealers Asssociation Annual Convention January 20-22, 2013

2. AGENDA  Capital Management  Risk Management  Board of Directors - Top Ten List 2

3. CAPITAL NEEDS!!!! ASSETS

4. Capitalization (Funding) Assets  Two Types of Capital Equity Capital = No Interest Paid –Allocated (Individual owners) –Unallocated (Retained Savings) = Permanent Equity Debt Capital = Interest Paid –Current Liabilities –Long Term Liabilities

5.  Operational Risks  Natural disasters Insurance– Are you adequately covered?  Management disasters  Employee issues - Succession planning  Inventory valuations & quality  Human Error/Safety  Fraud  Financial Performance & Capital Management Risks  Profitability  Liquidity Do you know your borrowing capacity?  Leverage Spend $ (capital) on the right things Four Cornerstones of Risk at Your Coop…  Legal Risks  Contracting Practices - Is the contract binding?  Environmental – Do you know what they are and have you taken measures to mitigate them?  You could be “debt free”; but you will never be “liability free”!  Counter Party Risk  Buyers/Sellers  Suppliers/Contractors  Partners Confidential and Proprietary 5

6. TOP TEN  Be team oriented and improve your meeting facilitation skills  Everyone’s perspective is important (Offer, seek, and if need be, force it out!)  Watch over the coop’s equity like it was your own, because…  Insist on feasibility studies, projections, budgets, competitive bids, etc…  Rigorously ask questions and challenge management strategies in the board room, but support Board decisions outside the board room.  Get rid of the rubber stamp and communicate with one voice  No Sacred Cows  Be willing to walk away, or challenge the “old way” 6

7. TOP TEN CONT…  Respect the duties and responsibilities of the Board and Management—they are different  As a director you don’t get paid enough to deal with employee or operational issues.  Seek outside expertise (Advisors, appointed directors, industry experts, etc…)  Preferably someone without a dog in the fight.  Implement sound risk management practices and monitor them  Market conditions change rapidly; don’t get caught wearing shorts in a blizzard.  Spend 70% of the board meeting on strategic issues and 30% on operational issues  Map the trip and hold management accountable to keep it on the road.  Understand the business, its financial position, and monitor results  Know the assets you have to work with and their limitations (Fixed, Human, & Financial) 7

8. Did you catch it…? #10) HAVE FUN AND ENJOY WHAT YOU DO!! 8

9. Thank You!!!