AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 1996

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICAN CRYSTAL SUGAR COMPANY
(Exact name of Registrant as specified in its charter)

MINNESOTA 2063 84-0004720
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)

101 NORTH THIRD STREET, MOORHEAD, MINNESOTA 56560-1990
(218) 236-4400
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

MR. SAMUEL S.M. WAI
AMERICAN CRYSTAL SUGAR COMPANY
TREASURER
101 NORTH THIRD STREET
MOORHEAD, MINNESOTA 56560-1990
(218) 236-4400

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
RONALD D. MCFALL, Esq.
Doherty, Rumble & Butler Professional Association
2800 Minnesota World Trade Center
30 East Seventh Street
St. Paul, Minnesota 55101
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Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE

PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE

Common Stock, par value $10.00....... 500 $10.00 $5,000 $1.72
Preferred Stock, par value $76.77.... 20,729 $1,500.00 $31,093,500 $10,721.90

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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AMERICAN CRYSTAL SUGAR COMPANY
CROSS REFERENCE SHEET
PURSUANT TO S-K ITEM 501(B)

ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
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1. Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus................................... Outside Front Cover

2. Inside Front and Outside Back Cover Pages Outside Back Cover

3. Summary Information, Risk Factors, and Ratio of Earnings to
Fixed Charges.............................................. Summary, Selected Financial Data, Factors to be
Considered

4. Use of Proceeds.............................................. Use of Proceeds

5. Determination of Offering Price.............................. Determination of Offering Price

6. Dilution..................................................... Dilution

7. Selling Security Holders..................................... Not Applicable

8. Plan of Distribution......................................... Plan of Distribution

9. Description of Securities to be Registered................... Description of Common Stock and Preferred Stock

10. Interests of Named Experts and Counsel....................... Not Applicable

11. Information with Respect to the Registrant...................

(a) Description of Business........................... Description of Business

(b) Description of Property........................... Property and Processing Facilities

(d) Market Price, Dividends, etc...................... Description of Common Stock and Preferred Stock

(e) Financial Statements.............................. Financial Statements

(f) Selected Financial Data........................... Selected Financial Data

(g) Supplementary Financial Information............... Not Applicable

(h) Management's Discussion........................... Management's Discussion and Analysis of Financial
Condition and Results of Operations

(i) Disagreements with Accountants.................... Not Applicable

(j) Directors and Executive Officers.................. Management

(k) Executive Compensation............................ Executive Compensation

(l) Security Ownership................................ Not Applicable

(m) Certain Relationships and Related Transactions.... Related Party Transactions

12. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................. Not Applicable

SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 1996

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

PROSPECTUS
DATE , 1996

AMERICAN CRYSTAL SUGAR COMPANY

500 SHARES OF COMMON STOCK AND 20,729 SHARES OF PREFERRED STOCK

The shares of Common Stock (the "Common Stock") and Preferred Stock (the
"Preferred Stock") offered hereby are available for purchase only by members of
the Company or "farmer-producers" who wish to become members of the Company,
which is a cooperative of sugarbeet growers. Members of the Company as of July
31, 1996 will be granted the first right to purchase their pro rata portion of
the Preferred Stock. Only if such members do not purchase all of the Preferred
Stock offered hereby will other parties, who were not members of the Company on
July 31, 1996, be able to purchase Common Stock and Preferred Stock in this
offering. (See "Plan of Distribution," "Summary" and "Description of Business.")
There is only a limited, private market for the Common Stock and the Preferred
Stock; such shares may be transferred only with the consent of the Company's
Board of Directors. (See "Determination of Offering Price" and "Plan of
Distribution"). The Company does not have a commitment from any party to
purchase all or any portion of the Preferred Stock offered hereby. Consequently,
less than all of the Preferred Stock may be sold. The Company has not
established a minimum number of shares of Preferred Stock which must be sold.
Instead, the Company will accept subscriptions for, and complete sales of, any
portion of the Preferred Stock offered hereby.

SEE "FACTORS TO BE CONSIDERED" FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK AND PREFERRED
STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)

Common Stock(3).................................... $10 $0 $5,000
Preferred Stock.................................... $1,500 $0 $31,093,500
Total.............................................. $-- $0 $31,098,500

(1) The Company will offer and sell the Shares itself and will not pay any
discounts or commissions. Certain of the Company's officers will be
responsible for completing offers and sales of the Shares. Such activities
will be considered part of the services provided by such officers in their
capacity as officers of the Company.

(2) Before deducting expenses of the offering payable by the Company, estimated
at $150,000.

(3) As described in "Description of Common Stock and Preferred Stock," each
prospective purchaser wishing to become a member of the Company must acquire
one (1) share of Common Stock, which share is required for membership in the
Company, and such number of shares of Preferred Stock as may be desired. If
the prospective purchaser is already a member of the Company, he or she will
already own a share of Common Stock and will not be required to acquire an
additional share of Common Stock. Ownership of Preferred Stock creates
obligations and rights with respect to the delivery of sugarbeets to the
Company. See "Description of Common Stock and Preferred Stock."

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The Preferred Stock is being offered by the Company subject to pro rata sale
to existing shareholders. The Common Stock and Preferred Stock will not be
represented by certificates as all of the Company's shares are uncertificated.
However, confirmation of the purchase of any Common Stock or Preferred Stock is
expected to be delivered to subscribers on or before January 17, 1997.

SUMMARY

THIS SUMMARY OF CERTAIN PROVISIONS OF THIS PROSPECTUS IS INTENDED ONLY FOR
QUICK REFERENCE AND IS NOT A COMPLETE PRESENTATION OF ALL RELEVANT FACTS. IT IS
QUALIFIED IN ITS ENTIRETY BY THE OTHER INFORMATION PROVIDED IN THIS PROSPECTUS.

AMERICAN CRYSTAL SUGAR COMPANY

American Crystal Sugar Company ("American Crystal" or the "Company") is a
Minnesota agricultural cooperative corporation owned by approximately 2,443
sugarbeet growers in the Minnesota and North Dakota portions of the Red River
Valley. (The Red River Valley, the largest sugarbeet growing area in the United
States, forms a band approximately 35 miles on either side of the North Dakota
and Minnesota border and extends approximately 200 miles south from the border
of the United States and Canada.) The Company currently processes sugarbeets
from a base level of approximately 415,000 acres, subject to tolerances for
overplanting and underplanting established by the Board of Directors each year.
By owning and operating five sugarbeet processing facilities in the Red River
Valley, the Company provides its shareholders with the ability to process their
sugarbeets into sugar and by-products, such as molasses and beet pulp. The sugar
is pooled and then marketed through the services of a marketing agent under
contract with the Company. The sugar marketing agent, United Sugars Corporation,
is a cooperative owned by its members, American Crystal, Southern Minnesota Beet
Sugar Cooperative and Minn-Dak Farmers Cooperative. The Company's molasses, beet
pulp and Concentrated Separated By-product (a by-product of the molasses
desugarization process) are also marketed through a marketing agent, Midwest
Agri-Commodities Company. Midwest Agri-Commodities Company is a cooperative
whose members are the Company, Minn-Dak Farmers Cooperative and Southern
Minnesota Beet Sugar Cooperative. The Company is also one of three members of
ProGold Limited Liability Company, a joint venture the purpose of which is to
construct and operate a corn wet milling plant in Wahpeton, North Dakota.

American Crystal was organized in 1973 by sugarbeet growers to acquire the
business and assets of American Crystal Sugar Company, then a publicly held New
Jersey corporation in operation since 1899.

American Crystal's corporate headquarters are located at 101 North Third
Street, Moorhead, Minnesota 56560 (telephone number (218) 236-4400). Its fiscal
year ends August 31. See "Description of Business."

SECURITIES OFFERED

The Company is offering a total of 500 shares of its Common Stock, $10 par
value, and 20,729 shares of its Preferred Stock, $76.77 par value, for sale to
sugarbeet farm operators in the territory in which the Company is engaged in
business. To become a member of the Company, each sugarbeet farm operator must
acquire (or already own) a share of the Company's Common Stock. Members of the
Company as of July 31, 1996 will be granted the first right to purchase their
pro rata portion of the Preferred Stock. (Such rights will grant each of the
current members the right to purchase an additional number of shares of
Preferred Stock equal to approximately 4.7% of the number of shares of Preferred
Stock owned by such member on July 31, 1996.) Only if such members do not
purchase all of the Preferred Stock offered hereby will either (i) other
parties, who were not members of the Company on July 31, 1996, be able to
purchase Common Stock and Preferred Stock in this offering or (ii) other current
shareholders be able to purchase Preferred Stock in addition to those which they
are entitled to purchase under their pro rata purchase rights. Each member is
entitled to one vote, based upon ownership of a share of Common Stock. Ownership
of Preferred Stock entitles a member to grow sugarbeets for sale to the Company.
Each share of Preferred Stock will entitle the holder to grow one acre of
sugarbeets for the Company. (Under the Company's By-laws, the Board of Directors
has the authority to adjust the ratio of Preferred Stock owned by a member to
the number of acres of sugarbeets which may be planted by virtue of ownership of
those shares. However, it is management's current intention and recommendation
to the Board of Directors that the relationship between the shares of Preferred
Stock and acres of sugarbeet production be maintained at

a ratio of 1 to 1 for the foreseeable future, subject to tolerances for
overplanting and underplanting established by the Board each year. Those
tolerances can and will vary from year to year; for the 1996 sugarbeet crop, the
Board of Directors established a tolerance of plus 12% or minus 2% of the number
of acres represented by issued and outstanding shares of Preferred Stock.) In
connection with the purchase of Preferred Stock, each purchaser will be required
to enter into a Uniform Growers' Agreement, obligating the member to sell the
sugarbeets grown on one acre of farm land to the Company for each share of
Preferred Stock owned by such member. The transfer of both the Common Stock and
Preferred Stock is subject to approval by the Board of Directors and may only be
transferred to another sugarbeet farm operator. Neither the Common Stock nor the
Preferred Stock bear dividends. See "Plan of Distribution" and "Description of
Common Stock and Preferred Stock."

CERTAIN FACTORS

A decision to purchase Preferred Stock subjects the purchaser to certain
risks and immediate dilution. Accordingly, a decision to purchase Preferred
Stock may not be appropriate for persons who cannot afford to be subjected to
such risks. See "Factors to be Considered."

PAYMENTS TO MEMBERS FOR CROPS

Sugarbeets delivered to American Crystal by its members are processed and
the resulting sugar is marketed on a cooperative basis. A particular member's
share of the net proceeds from the sale of sugar is a function of the amount of
sugar recoverable from the sugarbeets the member delivers to the Company. All
members of American Crystal are credited with the same unit price per
hundredweight (100 pounds) of recoverable sugar delivered, a price which is
determined when the sugarbeets of all of the members have been processed and
most of the sugar has been sold. The price paid for sugarbeets is determined by
reducing the adjusted value of recovered sugar from the beets a member delivers
by the member's share of the Company's member business operating expenses and
any unit retains. Each member also receives a pro rata share of net revenues
from by-product sales, based on the tonnage of sugarbeets delivered by the
member. See "Description of Business" and "Business--Growers' Contracts."

SELECTED FINANCIAL DATA

The selected financial data of the Company should be read in conjunction
with the financial statements and related notes included elsewhere in this
Prospectus.

FISCAL YEAR ENDED AUGUST 31
MAY 31, ----------------------------------------------
1996(6) 1995 1994 1993 1992
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(IN THOUSANDS, EXCEPT FOR RATIOS)

Revenues......................................... $ 511,592 $ 605,960 $ 563,420 $ 542,665 $ 545,220
Net Proceeds Before Accounting Change............ $ 302,406 $ 320,549 $ 273,785 $ 303,842 $ 269,388
Cumulative Effect of Accounting
Change(1)...................................... -- -- (12,214) -- --
Net Proceeds(2).................................. $ 302,406 $ 320,549 $ 261,571 $ 303,842 $ 269,388
Total Assets..................................... $ 586,623 $ 420,890 $ 324,469 $ 303,318 $ 278,989
Long-Term Debt, including current maturities..... $ 159,819 $ 119,029 $ 115,834 $ 98,039 $ 91,615
Members' Investments............................. $ 132,395 $ 142,047 $ 115,609 $ 120,113 $ 107,679
Property and Equipment Additions, net of
retirements.................................... $ 20,678 $ 48,394 $ 50,824 $ 35,659 $ 42,046
Working Capital.................................. $ 17,243 $ 28,046 $ 30,859 $ 32,819 $ 27,254
Ratio of Long-Term Debt to Equity(3)............. 1.10:1 .75:1 .88:1 .71:1 .71:1
Ratio of Net Proceeds to Fixed
Charges(4)..................................... 14.2 11.6 15.0 14.2 15.0

FISCAL YEAR ENDED AUGUST 31
MAY 31, -----------------------------------------------------
PRODUCTION DATA(5) 1996(6) 1995 1994 1993 1992 1991
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Acres harvested..................................... 429 413 396 400 397 400
Tons purchased...................................... 8,029 8,332 6,450 6,748 6,915 5,345
Tons purchased per acre harvested................... 18.7 20.2 16.3 16.9 17.4 13.4
Net beet payment per ton of sugarbeets purchased,
plus unit retains.................................. (7) $ 39.15 $ 42.59 $ 45.11 $ 39.21 $ 48.81
Sugar hundredweight--
Produced.......................................... 20,162 21,369 18,093 18,979 16,474 15,057
Sold, including purchased sugar................... 22,388 19,702 19,450 17,957 17,262 14,936
Purchased sugar sold.............................. 658 509 293 81 195 15
Pulp and molasses tons--
Produced.......................................... 400 643 488 667 724 570
Sold.............................................. 400 659 472 688 706 569

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(1) During 1994, the Company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Post-retirement Benefits Other than
Pensions" and Financial Accounting Standards No. 112, "Employers Accounting
for Post-employment Benefits."

(2) Net Proceeds are the Company's gross revenues, less the costs and expenses
of producing and marketing sugar, by-products and beet seed, but before
payments to members for sugarbeets. Payments to be made to members for the
delivery of sugarbeets are liabilities of the Company. (For a more complete
description of the calculation of Net Proceeds, see "Description of
Business-Growers' Contracts.")

(3) Calculated by dividing the Company's long term debt, exclusive of the
current maturities of such debt, by members' investments.

(4) Computed by dividing (i) the sum of Net Proceeds plus interest plus
depreciation by (ii) the sum of interest plus principal payments. Although
the Company does lease certain items, such as some office furniture, office
equipment and computers, due to the proportionately small amounts involved,
such lease payments have not been included in the total of the Company's
Fixed Charges or the calculation of this ratio.

(5) Information for a fiscal year relates to the crop planted and harvested in
the preceding calendar year (e.g., information for the fiscal year ended
August 31, 1995 relates to the crop of 1994).

(6) Represents information for the nine month period beginning on September 1,
1995 and ending on May 31, 1996.

(7) Not yet available.

FACTORS TO BE CONSIDERED

INTRODUCTION

The financial results of American Crystal's operations and the payments made
to its members for their beets may be directly and materially affected by many
factors, including prevailing prices of sugar and by-products, American
Crystal's ability to market its sugar competitively, the weather, government
programs and regulations, and costs and expenses, including those related to
energy and transportation.

COMPETITION

American Crystal sells sugar through United Sugars Corporation in all of its
markets in direct competition with beet and cane sugar produced by other sugar
companies. Because sugar is a fungible commodity, competition for sales volume
is based primarily upon customer service, price and reliability, though
differences in proximity to various geographic markets within the United States
result in differences in freight and shipping costs which in turn affect pricing
and competitiveness in general.

In addition to sugar, the overall sweetener market also includes corn-based
sweeteners, such as regular and high fructose corn syrups, and non-nutritive,
high-intensity sweeteners such as aspartame. Differences in functional
properties and prices have tended to define the use of these various sweeteners.
For example, corn sweeteners are generally limited to applications where a
liquid sweetener can be used. Non-nutritive sweeteners presently do not provide
the bulk and other physical properties of sugar. Although the various sweeteners
are not interchangeable in all applications, the substitution of other
sweeteners for sugar has occurred in certain products, such as soft drinks. The
Company is not able to predict the availability, development or potential use of
these sweeteners and their possible impact on the Company and its members.

According to U.S. Department of Agriculture (USDA) statistics, the Red River
Valley is generally one of the most cost efficient sugarbeet producing areas in
the nation. As a result, the Company's management believes that it possesses the
ability to compete successfully with other producers of sugar in the United
States. In spite of this competitive advantage, substitute products and sugar
imports could have a material and adverse effect on the Company's operations in
the future.

WEATHER AND OTHER FACTORS

The sugarbeet, as with most other crops, is affected by weather conditions
during the growing season. Additionally, weather conditions during the
processing season affect the Company's ability to store beets held for
processing. As of the date hereof, the Company expects to process as its 1996
crop sugarbeets from approximately 458,000 acres, with an average yield of just
over 17 tons of sugarbeets per acre. The Company expects these sugarbeets to
have an average sugar content of between 17% and 18%. From the 1996 sugarbeet
crop, the Company expects to produce approximately 21 million hundredweight of
sugar. Growing and storage conditions different from the Company's expectations
may change the quantity and quality of sugarbeets available for processing and
therefore may affect the quantity of sugar produced by the Company. See
"Description of Business--Growers' Contracts" for more information regarding
such variations in crops and production.

A significant reduction in the quantity or quality of sugarbeets harvested
due to adverse weather conditions, disease or other factors could result in
increased per unit processing costs and decreased production, with adverse
financial consequences to the Company and its members.

GOVERNMENT PROGRAMS AND REGULATIONS

Act of 1996 (the "FAIR Act"), the price of sugar is required to be maintained
above the price at which producers could forfeit sugar to repay nonrecourse
loans obtained through the Commodity Credit Corporation (CCC). The USDA
maintains sugar prices without cost to the U.S. Treasury by regulating the
quantity of sugar imports. Under the "Tariff Rate Quota" implemented October 1,
1990, sugar producing countries are assigned a fixed quantity of imports
duty-free or subject to minimal duties. Unlimited additional quantities may be
imported upon payment of a tariff of 16 cents per pound prior to shipment. (To
date, only minute quantities of sugar have been imported under this higher
tariff level.)

The Uruguay Round agreement under the General Agreement on Tariffs and Trade
(GATT) mandates imports of at least 1,257,000 short tons of sugar per year into
the United States. The FAIR Act maintains the basic 18 cent per pound loan rate
for raw sugar and puts in place a 22.90 cent per pound loan rate for refined
beet sugar. Both loan rates are effective for crop years 1996 through 2002.
Price support loans are to be made on a non-recourse basis provided that US
sugar imports for domestic usage exceed 1.5 million short tons raw value in a
given fiscal (October through September) year. Loans made on a non-recourse
basis enable the sugar processor to forfeit sugar to the CCC if sugar prices are
below the loan rate. If imports during a given year are less than 1.5 million
short tons, loans must be made on a recourse basis, meaning that processors will
not be able to forfeit sugar to the CCC at its full loan value. In order to
recover the full value of a recourse loan, the CCC could require that cash or
other assets be provided in addition to the sugar used as collateral when the
loan is made. Another new provision of the FAIR Act is a one cent per pound
penalty paid by processors if the processor defaults on sugar price support
loans.

The nature and scope of future legislation affecting the sugar market cannot
be predicted and there can be no assurance that price supports will continue in
their present form. As a result of uncertainty regarding the impact of the
absence of price supports, the Company is not able to predict if such changes in
legislation would have an adverse impact on the Company or the magnitude of such
impact.

ENERGY AND TRANSPORTATION

American Crystal uses large quantities of energy in its operations,
principally for heating the cossettes (sliced beets), evaporating water from
juices containing sugar, drying wet beet pulp, and generating electrical power.
Each of the Company's five factories currently burn low sulphur coal as their
primary source of energy. However, the Company is in the process of converting
certain of its dryer facilities to operate with natural gas as the energy
source. The Company presently obtains all of its coal from Montana under a
supply contract expiring July 31, 2005. The Company has also entered into a
contract with a gas marketing company to meet the dryer facilities' natural gas
requirements primarily from Canadian sourced gas supplies, with an initial term
ending October 31, 2001. The Company has also entered into a related contract,
with a term ending November, 2011, for firm transportation of gas from the
Canadian border. Although certain contingincies remain to be satisfied under the
gas supply and transportation contracts, it is anticipated that the contracts
will become effective in the Fall of 1996.

Changes in the cost and sources of energy may affect the financial results
of the Company's operations and the Net Beet Payment to members for their crops.

Transportation is another significant expense. Transportation costs include
the delivery costs of beets, sugar and the Company's major operating supplies,
including coal, coke, limerock and chemicals. Transportation costs for the
delivery of operating supplies are included in the cost of the supplies and
represent a major part of the Company's operating costs in connection with the
production of sugar and sugarbeet by-products.

As described elsewhere in this Prospectus, the Company markets its sugar
through United Sugars Corporation and its sugarbeet by-products through Midwest
Agri-Commodities Company. While those entities are responsible for marketing and
distributing the Company's products, the costs involved in such marketing and
distribution reduce the proceeds received by the Company from those
organizations in exchange for sugar and sugarbeet by-products. Most of the
Company's products are now quoted and sold

to customers for a price which includes the cost of delivery. As noted above,
the cost of transporting sugar has a significant impact on the geographic
markets into which the Company is able to sell its products. A significant
change in transportation costs could have an adverse impact on the Company.

ENVIRONMENTAL MATTERS

American Crystal is subject to extensive federal and state environmental
laws and regulations with respect to water and air quality, solid waste disposal
and odor and noise control. The Company conducts an on-going and expanding
control program designed to meet these environmental laws and regulations.
American Crystal believes that it is in substantial compliance with applicable
environmental laws and regulations.

The Company cannot predict whether future changes in environmental laws or
regulations might increase the cost of operating its facilities and conducting
its business. Any such changes could have adverse financial consequences for the
Company and its members.

DETERMINATION OF OFFERING PRICE

There is only a very limited, private market for the Company's Preferred
Stock and no market for shares of the Company's Common Stock. The price for the
Common Stock offered hereby is the par value of such shares as established by
the Company's Articles of Incorporation. Ownership of the Company's Preferred
Stock provides a shareholder with the opportunity to (1) produce sugarbeets on
the farm, (2) participate in the Company's value added processing and (3) market
sugar and by-products through the Company's marketing agents, United Sugars
Corporation and Midwest Agri-Commodities Company. The price for the Preferred
Stock offered hereby has been determined by the Company's Board of Directors
after giving consideration to many complex factors. Although many factors have
been considered, the specific offering price for the preferred stock does not
have any direct relationship to the assets, earnings, book value, or other
measurable criteria of the Company. The Company makes no representations,
whether express or implied, as to the value of the Preferred Stock offered
hereby. There can be no assurance that such shares can be sold at either the
offering price or any other price in the future.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Preferred Stock offered
hereby, after payment of expenses of the offering totalling approximately
$150,000, are estimated to be approximately $30.8 million if the maximum number
of shares of Preferred Stock is sold. The Company intends to use such proceeds
as working capital for the Company's business activities. Such amounts will be
used in connection with the Company's other sources of working capital, for the
purposes described below.

The Company's sources of working capital during the fiscal year beginning on
September 1, 1996 are projected as follows:

APPROXIMATE AMOUNT
CATEGORY (IN MILLIONS)
- ------------------------------------------------------------------------- -------------------

Net Proceeds of Offering................................................. $ 30.8
Unit Retains............................................................. $ 15.4
Depreciation and Amortization............................................ $ 25.9
Long Term Debt........................................................... $ 70.0
------
$ 142.1
------
------

During the upcoming fiscal year, the Company intends to use such working
capital for the following purposes:

APPROXIMATE AMOUNT
CATEGORY (IN MILLIONS)
- ------------------------------------------------------------------------- -------------------

Property Additions and Improvements...................................... $ 99.7
Investment in United Sugars.............................................. $ 12.8
Investment in ProGold Limited Liability Company.......................... $ .8
Current Maturities of Long Term Debt..................................... $ 15.0
Payments to Estates of Deceased Members.................................. $ .4
Revolvement of Unit Retains.............................................. $ 7.7
Miscellaneous............................................................ $ 5.4
-------
$ 141.80
-------
-------

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(1) In the event that the Company sells less than all of the Preferred Stock
available in this offering, the Company will increase its borrowing to the
extent reasonably necessary to obtain the working capital required for the
Company's planned activities. The Company is in the process of negotiating
with its lenders to obtain financing for the fiscal year beginning on
September 1, 1996. Although the Company does not have a binding commitment
from its banks to provide the specified amount, the Company believes that
its relationships with its lenders are good.

The foregoing use of the Company's working capital is based upon the
Company's assumptions concerning its business objectives, finances and other
matters affecting the Company. It also assumes that all of the Preferred Stock
offered hereby will be sold. If current assumptions are not accurate, other
unforeseen conditions affecting the Company's business arise, or if less than
all of the shares of Preferred Stock offered are sold, there could be material
changes to the Company's projections. The Company would first seek debt
financing to allow it to complete its planned activities during the fiscal year
beginning on September 1, 1996. If such debt financing is not available or is
not available on appropriate terms, the Company could find it advisable to
allocate its working capital, including the offering proceeds, in a manner
different from that described above. Such adjustments may involve deferral or
reduction of certain capital expenditures.

Based on the Company's current financial resources and assuming the
availability of (i) the proceeds from the sale of all of the Preferred Stock and
(ii) debt financing in amounts and on terms and conditions acceptable to the
Company, the Company would not be required to raise additional equity capital
(other than through Unit Retains) to continue conducting its business at current
capacity. However, the Company may consider obtaining additional equity capital
through future sales of its securities in order to pursue its strategic
objectives.

Pending application of the proceeds of this offering, the Company will use
the funds to reduce its borrowings or invest in short-term interest-bearing
securities.

DILUTION

The net tangible book value of the Company, based on the Company's audited
financial statements as of May 31, 1996 was $128,835,062 or approximately
$310.26 per share of Preferred Stock. "Net tangible book value per share"
represents the tangible assets of the Company less total liabilities divided by
the number of shares of Preferred Stock outstanding. Without taking into account
changes in net tangible book value subsequent to May 31, 1996 other than to give
effect to (i) the sale of the Preferred Stock offered hereby and (ii) the
application of the net proceeds of such sales, the pro forma net tangible book
value of the Company at May 31, 1996 would increase to $159,728,562, or
approximately $366.36 per share if the maximum number of Shares are sold.
Accordingly, the net tangible book value of the shares of Preferred Stock held
by the present shareholders of the Company will be increased by approximately
$56.10 per share if the maximum number of shares of Preferred Stock is sold. The
new investors will incur dilution of approximately $1,133.64 per share of
Preferred Stock if the maximum number of such shares are sold.

Dilution per share of Preferred Stock represents the difference between the
price for each share of Preferred Stock to be paid by new investors and the net
tangible book value per share as of May 31, 1996, as adjusted to give effect to
the offering of shares of Preferred Stock made hereby. The dilution per share of
Preferred Stock, calculated as described above, is illustrated in the following
table:

Offering price per share......................................... $ 1,500

Net tangible book value (deficit) before offering................ 310.26(1)
Increase to current stockholders in net tangible book value per
share due to offering.......................................... 56.10

Net tangible book value (deficit) after offering................. 366.36
---------
Dilution per share to new investors.............................. 1,133.64
---------
---------

In the event that the Company sells less than the maximum number of shares
of Preferred Stock offered hereby, each purchaser in this offering can expect to
incur dilution in excess of that described above.

The following table summarizes, as of the date of this Prospectus, the
differences among current stockholders and new members with respect to the
number of shares of Preferred Stock purchased from the Company, the total
consideration paid, and the average consideration paid per share, assuming the
sale of the maximum number of shares of Preferred Stock. See "Plan of
Distribution."

PRESENT PURCHASERS IN
STOCKHOLDERS THIS OFFERING
------------------- -------------------

Average cost per share.............................. $ 140.86 $ 1,500
Percent of outstanding shares owned after
offering.......................................... 95.3%(1) 4.7%(1)
Total investment of group........................... $ 58,495,500 $ 30,750,000
Percentage of total investment...................... 65.5% 34.5%

- ------------------------

(1) Reflects the effects of the recapitalization which became effective on May
31, 1994. In that recapitalization, each share of Preferred Stock
outstanding was changed and reclassified into approximately .65 shares of
Preferred Stock. See "Description of Common Stock and Preferred Stock."

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS:

LIQUIDITY AND CAPITAL RESOURCES

Because American Crystal operates as a cooperative, payments for member
delivered sugarbeets, the principal raw material used in producing the sugar and
agri-products it sells, are subordinated to all member business expenses. In
addition, actual cash payments to members are spread over a period of
approximately one year following delivery of their sugarbeet crops to American
Crystal and are net of unit retains allocated to them, both of which remain
available to meet American Crystal's capital requirements. This member financing
arrangement may result in an additional source of liquidity and reduced outside
financing requirements in comparison to a similar business operated on a
non-cooperative basis. However, because sugar is sold throughout the year (while
sugarbeets are processed primarily in the fall and winter) and because
substantial amounts of equipment are required for its operations, American
Crystal has utilized substantial outside financing on both a seasonal and
long-term basis to fund such operations. The majority of such financing has been
provided by the St. Paul Bank for Cooperatives (the "Bank"). American Crystal
has a short-term line of credit with the Bank in 1996 of $210 million.

RESULTS OF OPERATIONS

INDUSTRY ENVIRONMENT

During most of the 1970s and 1980s, the sweetener industry witnessed two
significant trends: the increase in consumption of non-nutritive sweeteners,
principally aspartame, and the increased use of high fructose corn syrup (HFCS)
in place of refined sugar (sucrose) in certain food products, primarily
beverages.

During the late 1980s and the early 1990s, the domestic consumption of
refined sugar continuously increased, from 146 million hundredweights in 1986 to
174 million hundredweights in 1995. The growth has been at a compounded rate of
approximately 2% a year during that period. The Company believes that this
recent market trend has been due to population growth and general acceptability
of sugar as a desirable natural ingredient of a normal diet.

The Company's results of operations are substantially dependent on market
factors, including domestic prices for refined sugar. These market factors are
influenced by a variety of forces, including weather conditions and United
States farm and trade policy, that the company is unable to predict. See
"Business--Government Programs and Regulations." In addition, weather conditions
during the growing, harvesting and processing seasons, as well as diseases and
insects, may materially affect the quality and quantity of sugarbeets available
for purchase as well as the unit costs of raw materials and processing.

COMPARISON OF THE NINE MONTHS ENDED MAY 31, 1996 AND 1995

The Company has not yet distributed to its members the initial installment
of the projected net beet payment for the 1996 sugarbeet crop to be delivered to
the Company by its members in the fall of 1996. That initial payment will be
made in November, 1996. The Company has not yet distributed estimates of the
annual aggregate net beet payment, but will do so prior to the close of the
offering of Preferred Stock distributed in this Prospectus. There can be no
assurance that, when released, the Company's estimates of the selling price for
its sugar or the average sugar recovery from the sugarbeets delivered by the
Company's members will be accurate; the Company assumes that there will be
adjustments in its estimates throughout the fiscal year and that successive
installments of the beet payment to the Company's members will reflect such
adjustments.

Revenue for the nine months ended May 31, 1996, was $511.6 million, an
increase of $71.9 million from 1995. Revenue from total sugar sales increased
19.9% reflecting a 2.1% increase in the average selling price per hundredweight
and a 17.5% increase in hundredweight sold. Revenue from pulp sales

decreased 25.1% due to a 32.8% decrease in the volume of pulp sold, partially
offset by an 11.5% increase in the average selling price per ton. Revenue from
molasses sales increased 40.6% due to a 37.1% increase in the volume of molasses
sold and a 2.6% increase in the average selling price per ton. Revenue from the
sales of Concentrated Separated By-Product (CSB), a by-product of the molasses
desugarization process, increased 32.8% due to a 18.9% increase in sales volume
and an 11.7% increase in the average selling price per ton.

Cost of product sold, exclusive of payments for sugarbeets, increased $57.7
million. Direct processing costs for sugar and pulp decreased 4.1% primarily due
to the harvesting and processing of a 3.6% smaller crop. Fixed and committed
expenses decreased 4.9% reflecting decreased depreciation due to a change to a
straight line method from double-declining. Changes in product inventory levels
between 1996 and 1995, impacted the cost of product sold unfavorably by $67.6
million. The cost associated with sugar purchased to meet customer needs was
down $3.8 million due to decreased sales volume.

Selling expenses increased $12.3 million due primarily to the increased
freight and storage expense and the increases in the sales volumes of sugar and
by-products. General and Administrative expenses increased $1.5 million
reflecting higher personnel costs and other general cost increases.

The increase in accrued continuing costs was due primarily to changes in
sugar sales and production, differences in the timing of incurring processing
costs and member tax accounting adjustments.

Interest expense increased from $8.6 million to $11.7 million due to higher
average borrowing levels for short and long-term debt. The proceeds of this debt
were used to fund increased inventories of sugar and capital expenditures.

Non-member activities resulted in a loss of $2,444,000 for the nine months
ended May 31, 1996 as compared to a loss of $872,000 for the same period last
year. This increased loss was primarily due to lower profits from the sale of
beet seed and additional costs for the Company's outside beet seed sales
offices.

Net payments to/due members for sugarbeets decreased by $28.6 million from
$333.4 million for the first nine months in 1995, to $304.9 million for the
first nine months in 1996. This decrease was due to a 3.1% decrease in the
number of tons of beets sliced this year as compared to last year along with a
slightly lower projected per ton beet payment.

COMPARISON OF THE YEARS ENDED AUGUST 31, 1995, AND 1994

Revenue for the year ended August 31, 1995, was $606 million, an increase of
$42.5 million from 1994. Revenue from total sugar sales increased 4.6%
reflecting a .7% increase in the average selling price per hundredweight and a
3.9% increase in hundredweights sold. Revenue from pulp sales increased 42.8%
due to a 41.6% increase in the volume of pulp sold and an .8% increase in the
average selling price per ton. Revenue from molasses sales increased 49.9% due
to a 35.1% increase in the volume of molasses sold and an 10.9% increase in the
average selling price per ton. Revenue from the sales of CSB increased 97.1% due
to a 49.1% increase in sales volume and a 32.2% increase in the average selling
price per ton.

Cost of product sold, exclusive of payments for sugarbeets, decreased $25.4
million. Direct processing costs for sugar and pulp increased 28% primarily due
to the harvesting and processing of a 29.2% larger crop. Fixed and committed
expenses increased 12.5% reflecting the longer processing campaign, higher
maintenance costs and increased depreciation. Changes in product inventory
levels between 1995 and 1994, impacted the cost of product sold favorably by
$61.2 million. The cost associated with sugar purchased to meet customer needs
was up $7.3 million due to increased sales volume.

Selling expenses increased $17.0 million due primarily to increases in the
sales volumes of by-products and purchased sugar. General and Administrative
expenses increased $3.1 million reflecting higher personnel costs and other
general cost increases.

Interest expense increased from $7.9 million in 1994, to $14.5 million in
1995, due to higher average borrowing levels for short and long-term debt and
higher short-term interest rates.

On September 1, 1993, American Crystal adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Post-retirement
Benefits Other Than Pensions" and Financial Accounting Standards No. 112
"Employers' Accounting for Post-employment Benefits." The new standards changed
the method of accounting for post retirement and post-employment benefits from a
cash basis to an accrual basis. Prior fiscal years were not restated and the
cumulative effect of the change on prior periods totaling $12.2 million was
charged, net of tax, against net proceeds resulting from member and non-member
business for the year ended August 31, 1994. This change had no effect on the
Growers' 1994 or 1995 net beet payment.

Non-member activities resulted in a loss of $15,000 for the year ended
August 31, 1995 as compared to a loss of $544,000 for 1994. This decrease was
primarily due to the provision for deferred income taxes, partially offset by
lower profits from the sale of both beet seed and purchased sugar.

Net payments to/due members for sugarbeets increased by $54.1 million from
$255.4 million in 1994, to $309.5 million in 1995. This increase was due to a
28.1% increase in the number of tons of beets sliced in fiscal 1995 as compared
to fiscal 1994, partially offset by a lower per ton beet payment.

COMPARISON OF THE YEARS ENDED AUGUST 31, 1994 AND 1993

Revenue for the year ended August 31, 1994, was $563.4 million, an increase
of $20.7 million from 1993. Revenue from total sugar sales increased 6.0%
reflecting an 8.3% increase in hundredweights sold, partially offset by a 2.2%
decrease in average selling price per hundredweight. Revenue from pulp sales
decreased 12.1% due to a 12.8% decrease in the volume of pulp sold partially
offset by an 0.8% increase in the average selling price per ton. Revenue from
molasses sales decreased 45.5% due to a 53.6% decrease in the volume of molasses
sold partially offset by a 17.5% increase in the average selling price per ton.

Cost of product sold, exclusive of payments for sugarbeets, increased $46.1
million. Direct processing costs for sugar and pulp decreased 1.4% primarily due
to lower personnel costs. Fixed and committed expenses increased 5.4% reflecting
general increases in cost. Changes in product inventory levels between 1994 and
1993, impacted the cost of product sold unfavorably by $37.7 million. The cost
associated with sugar purchased to meet customer needs was up $3.1 million due
to increased sales volume.

Selling expenses increased $9.7 million due primarily to the increases in
the sales volume of sugar partially offset by lower pulp and molasses selling
expenses associated with lower sales volumes of these products. General and
Administrative expenses decreased $5.2 million reflecting lower personnel costs
and reorganization costs incurred in 1993.

Interest expense increased from $7.2 million in 1993, to $7.9 million in
1994, due to higher average borrowing levels for long-term debt partially offset
by lower average interest rates for long-term debt and lower average borrowings
for short-term debt.

On September 1, 1993, American Crystal adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Post-Retirement
Benefits Other Than Pensions" and Financial Accounting Standards No. 112
"Employers' Accounting for Post-Employment Benefits." The new standards changed
the method of accounting for post-retirement and post-employment benefits from a
cash basis to an accrual basis. Prior fiscal years were not restated and the
cumulative effect of the change on prior periods totaling $12.2 million was
charged, net of tax, against net proceeds resulting from member and non-member
business for the year ended August 31, 1994. This change had no effect on the
Growers' 1994 net beet payment.

Non-member activities resulted in a loss of $544,000 for the year ended
August 31, 1994 as compared to a loss of $77,000 for 1993. This decrease was
primarily due to lower profits from sales of beet seed.

Net payments to/due members for sugarbeets decreased by $28.7 million from
$284.1 million in 1993, to $255.4 million in 1994. This decrease was due to a
decrease in the number of tons of beets harvested and lower sugar content.

DESCRIPTION OF BUSINESS

GENERAL

American Crystal is a Minnesota agricultural cooperative corporation owned
by approximately 2,443 sugarbeet growers in the Minnesota and North Dakota
portions of the Red River Valley. (The Red River Valley, the largest sugarbeet
growing area in the United States, forms a band approximately 35 miles on either
side of the North Dakota and Minnesota border and extends approximately 200
miles south from the border of the United States and Canada.) The Company
currently processes sugarbeets from a base level of approximately 415,000 acres,
subject to tolerances for overplanting and underplanting established by the
Board of Directors each year. By owning and operating five sugarbeet processing
facilities in the Red River Valley, the Company provides its shareholders with
the ability to process their sugarbeets into sugar and by-products, such as
molasses and beet pulp. The sugar is pooled and then marketed through the
services of a marketing agent under contract with the Company. The sugar
marketing agent, United Sugars Corporation, is a cooperative owned by its
members, American Crystal, Southern Minnesota Beet Sugar Cooperative and
Minn-Dak Farmers Cooperative. The Company's molasses, beet pulp and Concentrated
Separated By-Product (CSB) (a by-product of the molasses desugarization process)
are also marketed through a marketing agent, Midwest Agri-Commodities Company.
Midwest Agri-Commodities Company is a cooperative whose members are the Company,
Minn-Dak Farmers Cooperative and Southern Minnesota Beet Sugar Cooperative. The
Company is also one of three members of ProGold Limited Liability Company, a
joint venture the purpose of which is to construct and operate a corn wet
milling plant in Wahpeton, North Dakota.

American Crystal was organized in 1973 by sugarbeet growers to acquire the
business and assets of American Crystal Sugar Company, then a publicly held New
Jersey corporation in operation since 1899.

American Crystal's corporate headquarters are located at 101 North Third
Street, Moorhead, Minnesota 56560 (telephone number (218) 236-4400). Its fiscal
year ends August 31.

PRODUCTS AND PRODUCTION

American Crystal is engaged primarily in the production and marketing of
sugar from sugarbeets. American Crystal also markets beet pulp, molasses and
CSB, which are by-products of the sugar it produces, and sugarbeet seed.

American Crystal processes sugarbeets grown by its members in five factories
located in the Red River Valley area of Minnesota and North Dakota. The growing
area is divided into five factory districts, each containing one sugar
processing plant.

The period during which the Company's plants are in operation to process
sugarbeets into sugar and by-products is referred to as the "campaign." During
the campaign, each of the Company's factories is operated twenty-four hours per
day, seven days per week. The campaign is expected to begin in September, when a
small portion of the sugarbeet crop is harvested, and continues until the
available supply of beets has been depleted, which generally occurs in March or
April of the following year. Based on current processing capacity, an average
campaign lasts approximately 226 days, assuming normal crop yields.

Once the sugarbeets are harvested, rapid processing is important to maximize
sugar extraction and minimize spoilage. Members transport their crop by truck to
receiving stations designated by the Company and receive a hauling allowance
under the Grower's Contract. Beets are then stored in factory yards and at
outlying piling stations until processing.

American Crystal's total sugar production is presently influenced by the
amount and quality of sugarbeets grown by its members, the processing capacity
of the Company's plants and by the ability to store harvested beets. Most of the
beet harvest is stored in piles. Although frozen sugarbeets may be stored for
extended periods, beets stored in unprotected piles at temperatures above
freezing must be processed

within approximately 150 days. In most years, therefore, the cold weather in
North Dakota and Minnesota offers an advantage to the Company as it permits the
outdoor storage of sugarbeets in below-freezing weather conditions. By contrast,
unprotected piles of sugarbeets would experience cycles of freezing and thawing
and, therefore, be subject to some deterioration. Subject to such freeze and
thaw cycles, beets on the exterior of piles freeze naturally. Beets near the
center of the piles, however, may not freeze and thus may be more subject to
spoilage. The Company utilizes a process called "split pile storage" in which
beets from the center of the piles are removed for processing first. Split pile
storage permits more of the stored beets to freeze naturally.

American Crystal also utilizes a ventilation technique to further reduce
spoilage. In this process, fans circulate air through ventilation channels
constructed within beet piles in order to precool and then deep freeze the
beets. Approximately 11% of an average crop may be stored in ventilated storage
sites. Enclosed cold storage facilities are also used to extend the beet storage
period at each of the Company's factory locations. Cold storage sites presently
have the capacity to cover approximately 8% of an average crop.

Once the sugarbeets arrive in the factory, the basic steps in producing
sugar from them include: washing; slicing into thin strips called "cossettes";
extracting the sugar from the cossettes in a diffuser; purifying the resulting
"raw juice" and boiling it, first in an evaporator to thicken it and then in
vacuum pans to crystalize the sugar; separating the sugar crystals in a
centrifuge; drying the sugar; storing sugar in bulk form and grading and
screening the crystals for packaging and bulk shipping.

The Company's sugarbeet by-products include molasses and beet pulp. After
the extraction of raw juice from the cossettes, the remaining pulp is dried and
processed into animal feeds. The Company processes approximately one-half of its
molasses through its molasses desugarization facility to extract additional
sugar. The remaining molasses and CSB from the molasses desugarization process
are marketed through Midwest Agri-Commodities and are sold primarily to yeast
and pharmaceutical manufacturers and for use in animal feeds.

The Company also has its own Seed Division which has been in existence since
the 1920s. The goal of the Seed Division is to ensure that the Company's
shareholders have the highest quality sugarbeet hybrids available to maximize
their production. Since the mid-1970s, American Crystal has had an effective
working arrangement with Danisco Seed of Denmark. Exchange of germplasm between
American Crystal and Danisco provides a wide genetic base in developing hybrids
by both companies. The Seed Division markets its seed to sugarbeet growers in
Michigan, Ohio, Montana, Wyoming, Colorado, Nebraska, Idaho, Oregon and
Washington.

RECENT CROPS

American Crystal's members harvested approximately 8.0 million tons of
sugarbeets from 430,000 acres for the 1995 crop. The approximately 18.7 ton per
acre crop yield was higher than the 16.6 ton per acre 10 year average. Sugar
content for the 1995 crop was approximately 16.4%, which is 1.1% lower than the
ten year average of 17.5%. Beet processing began on September 7, 1995 and the
Company produced 20.2 million hundredweights of sugar during the 1995-1996
campaign.

For a discussion of the 1994, 1993 and 1992 crops and results of operations
for fiscal years 1995, 1994 and 1993, see "Management's Discussion and Analysis
of Financial Condition of the Results of Operations".

MARKET AND COMPETITION

According to United States government estimates, the United States market
for sugar during the year beginning on October 1, 1995 and ending on September
30, 1996 will total approximately 176 million hundredweights of sugar. That
estimate suggests the continuation of a trend of growth in the market in recent
years at a compounded rate of approximately 2% per year. For example, from a
market of

approximately 146 million hundredweights in 1986, the total domestic market grew
to a total of approximately 174 million hundredweights in 1995. Given the size
of the total market, the Company's sugar production and sales represented
slightly more than 11.1% of the total domestic market for refined sugar in 1994
and 1995.

The growth in the market for refined sugar in the late 1980s and the early
1990s is a reversal of trends in the 1970s and early 1980s which resulted in a
reduced market for refined sugar. During the 1970s and early 1980's, high
fructose corn syrup was increasingly used as a replacement for refined sugar in
certain food products. (The prime example of this trend was the use of high
fructose corn syrup in beverages such as soft drinks.) In addition,
non-nutritive sweeteners such as aspartame were developed and used in food
products. While high fructose corn syrup and non-nutritive sweeteners constitute
a large portion of the overall sweetener market, the Company believes that the
recent trend of increased use of refined sugar results from population growth
and increased acceptance of the use of sugar as a desirable natural ingredient
in a normal diet.

The trends described in the preceding paragraph are illustrated by the
following chart:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

MILLION SHORT TONS RAW VALUE

81/2 9.206
82/3 8.874
83/4 8.578
84/5 8.097
85/6 7.794
86/7 8.046
87/8 8.193
88/9 8.264
89/0 8.531
90/1 8.901
91/2 9.006
92/3 9.197
93/4 9.333
94/5 9.337
95/6 9.700

The Company's main competitors in the domestic market are beet sugar
processors including Holly Sugar Corporation (a division of Imperial Holly
Corporation), Western Sugar Company (a subsidiary of Tate & Lyle, Inc.),
Amalgamated Sugar Company, Michigan Sugar Company (wholly-owned by Savannah
Foods and Industries, Inc.) and Monitor Sugar Company, Inc. The Company's
products also compete with cane sugar refined by Savannah Foods and Industries,
Inc., California and Hawaiian Sugar Company, Imperial Holly Corporation and
Domino Sugar (a subsidiary of Tate & Lyle, Inc.) Because sugar is a

fungible commodity, competition for sales volume is based primarily upon price,
customer service and reliability.

According to USDA statistics, the Red River Valley is generally one of the
most cost efficient sugarbeet producing areas in the nation. As a result, the
Company's management believes that it possesses the ability to compete
successfully with other producers of sugar in the United States. In spite of
this competitive advantage, substitute products and sugar imports could have a
material and adverse effect on the Company's operations in the future.

GOVERNMENT PROGRAMS AND REGULATION

Domestic sugar prices are supported under a program administered by the
USDA. Under the current program, which was initiated in 1981 and extended under
the Food Security Act of 1985, the Food, Agriculture, Conservation and Trade Act
of 1990 and the Federal Agriculture Improvement and Reform Act of 1996 (the
"FAIR Act"), the price of sugar is required to be maintained above the price at
which producers could forfeit sugar to repay nonrecourse loans obtained through
the Commodity Credit Corporation. The USDA maintains sugar prices without cost
to the U.S. Treasury by regulating the quantity of sugar imports. Under the
"Tariff Rate Quota" implemented October 1, 1990, sugar producing countries are
assigned a fixed quantity of imports duty-free or subject to minimal duties.
Unlimited additional quantities may be imported upon payment of a tariff of 16
cents per pound prior to shipment. (To date, only minute quantities of sugar
have been imported under this higher tariff level.)

MARKETING, CUSTOMERS AND PRICES

Since January, 1994, American Crystal's sugar has been marketed by United
Sugars Corporation, a cooperative common marketing agency. United Sugars
Corporation was formed in late 1993, at which time American Crystal contributed
approximately $6,880,000, in the form of certain assets, to the capital of
United Sugars Corporation. In exchange for that capital contribution, the
Company received an ownership interest of approximately 69%. (American Crystal's
representatives on the United Sugars Corporation Board of Directors total
one-third of the members of the United Sugars Board and, therefore, American
Crystal does not possess a controlling interest in the day-to-day affairs of
United Sugars Corporation, except to the extent that certain Board actions must
also be approved by the members of the association, for example mergers or
consolidations, sales or liquidations of substantially all of the association's
assets, and dissolution of the association.) Upon completion of the
incorporation and capitalization of United Sugars Corporation, American Crystal
entered into a "Uniform Member Marketing Agreement" with

United Sugars. Under that agreement, the sugar produced by American Crystal is
pooled with sugar produced by Minn-Dak Farmers Cooperative and Southern
Minnesota Beet Sugar Cooperative and is then sold through the efforts of United
Sugars. The Company receives payment for its sugar by receiving its pro rata
share of the net proceeds from the sale of the pooled sugar. The net proceeds of
such sales represent the gross proceeds of sale of the sugar, adjusted for the
various costs and expenses of marketing the pooled sugar, including the
Company's pro rata share of the marketing and sales expenses incurred by United
Sugars Corporation. Any net proceeds from the operation of United Sugars
Corporation are distributed to the various members on a patronage basis.

In 1993 and earlier years, American Crystal marketed most of its sugar
through direct sales efforts, supplemented by the efforts of sugar brokers
retained by the Company. Since 1994, the Company has marketed its sugar
exclusively through United Sugars Corporation. The Company's sugar is sold in
bulk, as liquid sugar and in cartons and bags ranging in size from 1 to 100
pounds.

The Company's sugar is marketed by United Sugars Corporation primarily to
industrial users such as confectioners, breakfast cereal manufacturers and
bakeries. For the fiscal year ended August 31, 1995, 84% (by weight) of the
Company's sugar production was sold to industrial users. The remaining portion
is marketed by United Sugars Corporation through sugar brokers to wholesalers
and retailers under the "Crystal Sugar" brand name and various private labels
for household consumption.

Customers are located primarily in Illinois, Minnesota, Iowa, Wisconsin,
Pennsylvania, Michigan, Indiana, Ohio, Missouri and Tennessee. During fiscal
1995, the Company's 10 largest customers purchased approximately 46% (by weight)
of the Company's sugar sold.

The prices at which United Sugars Corporation sells the Company's sugar
fluctuates periodically based on changes in domestic sugar supply and demand.
The largest proportion of American Crystal's sales are contracted one or more
quarters in advance, with the effect of stabilizing fluctuations in revenue from
quarter to quarter. Retail (grocery) products are sold on a spot price basis.

American Crystal markets dried beet pulp, molasses and CSB through Midwest
Agri-Commodities Company, a cooperative whose members are American Crystal,
Minn-Dak Farmers Cooperative and Southern Minnesota Beet Sugar Cooperative. Beet
pulp is marketed to livestock feed mixers and livestock feeders in the United
States and foreign markets. For the year ended August 31, 1995, approximately
95% of American Crystal's pulp production was exported to Japan and Europe. The
market for beet pulp is affected by the availability and quality of competitive
feedstuffs. Beet molasses is marketed primarily to yeast manufacturers,
pharmaceutical houses, livestock feed mixers and livestock feeders. By-product
sales accounted for approximately 9% of the Company's total revenues during
fiscal 1995. This relationship is primarily a function of the average market
prices for sugar, pulp and molasses and is not necessarily indicative of future
relationships between by-product and sugar revenues, because prices of these
commodities fluctuate independently of each other.

For a short period of time in the early 1990s, the Company (through United
Sugars) sold a portion of its sugar in the Canadian market. Due to the
imposition of significant duties, the Company does not currently consider Canada
to be a market for its products. The Company believes that consumption in the
United States represents an adequate market for the Company's sugar.

GROWERS' CONTRACTS

American Crystal purchases virtually all of its sugarbeets from members
under contract with the Company. All members have five-year contracts with the
Company covering the growing seasons of 1993 through 1997 (the "Growers'
Contracts"). In addition, each member has an annual contract with the Company
specifying the number of acres the member is obligated to grow. Each share of
Preferred Stock held by a member entitles that member to grow one acre of
sugarbeets for sale to the Company. The Company's Board of Directors has the
discretion to adjust the acreage which may be planted for each

share of Preferred Stock held by the members. However, it is management's
current intention and recommendation to the Board of Directors that the
relationship between shares of Preferred Stock and acres of sugarbeet production
be maintained at a ratio of 1 to 1 for the foreseeable future, subject to
tolerances for overplanting and underplanting established by the Board each
year.

The total price for sugarbeets paid to a member (the "Net Beet Payment") is
based on the "Gross Beet Payment," as adjusted by certain allowances, costs and
deductions. The Gross Beet Payment is the value of recovered sugar from the
beets a member delivers plus the member's share of by-product revenues, minus
the member's share of member business operating costs, including depreciation
and interest. The following allowances, costs and deductions, if applicable, are
used to adjust the Gross Beet Payment to arrive at the Net Beet Payment: hauling
allowance program costs, early delivery allowance program costs, minimum payment
allowance program costs, and unit retains. Growers are paid a hauling allowance
based on the distance they must transport beets for delivery to the Company and
may also receive minimum beet payments and an allowance for early delivery of
beets prior to the commencement of the stockpiling of harvested sugarbeets. The
costs of these programs are shared among members on the basis of the net tonnage
of beets delivered by each member.

Under the current Growers' Contracts, payments to members for sugarbeets
must be made in at least four installments: (i) on or about November 15, 60% of
the Company's estimate of the grower's Net Beet Payment; (ii) on or about March
31, an amount which combined with the November payment equals 85% of the
estimated Net Beet Payment; (iii) on or about September 30, an amount which
combined with the November and March payments equals 95% of the estimated Net
Beet Payment; and (iv) not more than 15 days after completion and acceptance of
the audit of the Company's annual financial statements, the remainder of the
member's Net Beet Payment. Except for unit retains, the Company must pay to
members for their sugarbeets all proceeds from the sale of sugar and by-products
in excess of related member business operating costs, as described above.

The following tables summarize the "Gross Beet Payment" and "Net Beet
Payment" and the "Sugar Content of Sugarbeets" for each of the last 10 completed
fiscal years, respectively:

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

DISTRIBUTION OF NET PROCEEDS--TOTALS (IN THOUSANDS)

Net Proceeds.......... $174,368 $222,816 $270,736 $216,878 $209,510 $259,229 $269,388 $303,842 $261,571 $320,549

Non-Member (Income)/
Loss................ (5,238) 328 (802) 844 698 1,058 1,075 77 544 15

Hauling Allowance..... 4,365 5,115 5,769 3,482 3,900 4,140 5,522 5,413 4,531 6,144
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Gross Beet Payment.... $173,495 $228,259 $275,703 $221,204 $214,108 $264,427 $275,985 $309,332 $266,646 $326,708

Unit Retains.......... (7,283) (8,745) (9,610) (7,316) (7,995) (8,010) (10,364) (20,223) (19,328) (16,648)

Member Tax ADJ, Net... (3,606) (524) (3,141) 1,908 1,922 589 676 447 12,585 5,621

Hauling Allowance..... (4,365) (5,115) (5,769) (3,482) (3,900) (4,140) (5,522) (5,413) (4,531) (6,144)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Net Beet Payment...... $158,241 $213,875 $257,183 $212,314 $204,135 $252,866 $260,775 $284,143 $255,372 $309,537
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

DISTRIBUTION OF NET PROCEEDS--PER TON HARVESTED(1)

Net Proceeds.......... $ 35.88 $ 38.19 $ 42.22 $ 44.44 $ 39.27 $ 48.50 $ 38.95 $ 45.03 $ 40.55 $ 38.47

Non-Member (Income)/
Loss................ (1.08) 0.05 (0.12) 0.17 0.13 0.20 0.16 0.01 0.09 0.00

Hauling Allowance..... 0.90 0.88 0.90 0.71 0.73 0.77 0.80 0.80 0.70 0.74
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Gross Beet Payment.... $ 35.70 $ 39.12 $ 43.00 $ 45.32 $ 40.13 $ 49.47 39.91 $ 45.84 $ 41.34 $ 39.21

Unit Retains.......... (1.50) (1.50) (1.50) (1.50) (1.50) (1.50) (1.50) (3.00) (3.00) (2.00)

Member Tax ADJ, Net... (0.74) (0.09) (0.49) 0.39 0.36 0.11 0.10 0.07 1.95 0.67

Hauling Allowance..... (0.90) (0.88) (0.90) (0.71) (0.73) (0.77) (0.80) (0.80) (0.70) (0.74)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Net Beet Payment...... $ 32.56 $ 36.65 $ 40.11 $ 43.50 $ 38.26 $ 47.31 $ 37.71 $ 42.11 $ 39.59 $ 37.15
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
SUGAR CONTENT OF SUGARBEETS(1)

Tons Harvested (In
Thousands): 4860 5835 6413 4881 5336 5345 6915 6748 6450 8332

Tons Purchased Per
Acre Harvested: 16.6 17.6 19.3 13.4 14.5 13.4 17.4 16.9 16.3 20.2

Sugar Content of
Beets: 16.7% 17.1% 18.1% 18.2% 16.7% 18.6% 17.0% 18.0% 17.6% 16.8%

- ------------------------
(1) Information provided with respect to net proceeds, gross beet payment, net
beet payment, tons harvested per acre and sugar content of beets represents
an average of the financial and production results experienced by the
Company's members. As described elsewhere in this prospectus, the return to
members for their sugarbeets is based upon the value of the recovered sugar
from the beets delivered to the Company by each member. As a result of
variations in the sugar content of the sugarbeets delivered by the various
members to the Company, the payments received by the various members also
vary.

RESEARCH AND DEVELOPMENT

American Crystal operates a research complex in Moorhead, Minnesota. The
Research Center is primarily involved in the development of technologies related
to improved factory operations and development of process efficiency technology.
The Company's research and development expenses for 1995, 1994, and 1993 were
approximately $4,669,000, $4,566,000, and $5,264,000, respectively.

In recent years research conducted by the Company has been diversified into
technical services and agriculture research. Technical services has focused
primarily on the testing and evaluation of technologies related to improved
factory operations and development of process efficiency concepts. Technical
services research also concentrates on developing tests and recommending
instrumentation for use in monitoring beet sugar processes, including molasses
desugarization. The results of these efforts will allow plant operators to be
proactive and to react to problems quickly thereby improving the overall
recovery of sugar from the beets.

The Company is also engaged in ongoing research with respect to beet seed.
This research focuses primarily on the development of agricultural practices for
the piling and storage of sugarbeets, as well as the monitoring and treatment of
sugarbeet diseases and insect infestations. Additionally, coded variety testing
and reporting are key services this area provides for the growers. The results
of this testing is critical in assisting growers decision making during the
selection of beet seed for planting. The Company and its members also contribute
resources to a number of public research institutions for general research
related to sugarbeets and their use. Those institutions include North Dakota
State University, University of Minnesota, University of Minnesota--Crookston,
the Beet Sugar Development Foundation and programs operated by the USDA.

ENVIRONMENTAL MATTERS

The Company was cited in July 1994 by the State of Minnesota for
non-compliance with nitrous oxide emissions from the pulp driers at the East
Grand Forks facility. The notice of violation indicated that the operation of
the East Grand Forks facility created emissions in excess of those described in
the permit previously granted by the Minnesota Pollution Control Agency ("MPCA")
for that facility. The Company submitted an application to the MPCA requesting
that the limits be changed. The MPCA has not yet responded to this request. The
Company believes that the request will be granted.

The Company is in the process of converting the pulp drier operations at its
Moorhead and Crookston facilities. The conversion from coal to natural gas will
allow the Company to operate the driers in compliance with state and federal
requirements. Permits have been issued by the MPCA for the conversion. The
conversion for East Grand Forks was completed in 1995. The conversion for the
Moorhead and Crookston facilities is expected to be completed in 1996.

A notice of violation was received in April 1995, from the State of North
Dakota regarding emissions from the pulp drier at the Hillsboro factory. The
Company retested emissions from the drier and is in compliance with North Dakota
emission limits. Plans are also in place to improve pulp drier emission controls
at the Drayton factory, through the use of natural gas as an energy source, to
ensure compliance with North Dakota emission limits.

JOINT VENTURE WITH PROGOLD LIMITED LIABILITY COMPANY

American Crystal is one of three members of ProGold Limited Liability
Company ("ProGold"). ProGold was formed in July, 1994 as a limited liability
company to serve as a joint venture mechanism for the Company, Minn-Dak Farmers
Cooperative and Golden Growers Cooperative ("Golden Growers"), a North Dakota
cooperative association comprised of corn producers. The proposed purpose of the
joint venture is to construct and operate a corn wet milling plant capable of
processing corn to produce corn sweeteners (including high fructose corn
syrups), corn starch, corn oil, ethanol and various by-products.

American Crystal contributed a total of approximately $48 million for its
membership interest in ProGold and received a 46% interest in ProGold. Golden
Growers contributed approximately $51 million in exchange for a 49% interest in
ProGold, while Minn-Dak Farmers Cooperative made a capital contribution of
approximately $5.2 million in exchange for a 5% interest in ProGold. Under the
terms of the ProGold Member Control Agreement, in each year after September 1,
1997, the ProGold Board of Governors can require that the three members of
ProGold provide additional capital contributions in an aggregate amount not to
exceed $5 million per year, with each member obligated to provide a portion of
that capital contribution proportionate to its ownership interest in ProGold. As
a result, the Company could be required to make annual contributions in an
amount not greater than $2.3 million per year, based on the Company's ownership
of a 46% interest in ProGold. Any other capital contributions can be required
only with the prior written consent of all of ProGold's members.

Representatives of ProGold, the Company, Minn-Dak Farmers Cooperative and
Golden Growers have entered into various agreements relating to the ownership
and operation of ProGold and the corn wet-milling plant. The contracts include
(i) contract marketing agreements under which United Sugars Corporation and
Midwest Agri-Commodities Company would market various products on behalf of
ProGold, (ii) Uniform Member Marketing Agreements under which American Crystal,
Minn-Dak and Golden Growers are obligated to deliver to ProGold the corn to be
processed at the processing plant and (iii) administrative services agreements
under which the Company provides services such as accounting, financial planning
support and human resources services to both ProGold and Golden Growers. When
ProGold's corn wet-milling facility is fully operational, it is expected to
require 30 million bushels of corn for processing each year. The Company will be
responsible for providing corn to ProGold in proportion to the Company's
ownership interest in ProGold. As a result, the Company will need to provide 46%
of the corn used at ProGold's facility. In years when the ProGold facility is
operating at full capacity, the Company would be required to deliver
approximately 13.8 million bushels of corn to ProGold. Under the Company's
agreements with ProGold, the Company does not receive payment for the corn upon
delivery. Instead, the Company will receive payment of its proportionate share
of ProGold's revenues from the sale of corn sweeteners and related products,
less its proportionate share of ProGold's operating expenses (which will not
include the cost of corn.) The distribution of ProGold's net revenues is
intended to provide both compensation for the corn delivered to ProGold by the
Company and the Company's share of ProGold's profits, if any. While ProGold
intends to distribute net revenues to its members as soon as possible following
receipt of proceeds from the sale of its products, the Company anticipates that
it will

receive periodic distributions from ProGold during each year, with a final
distribution to be made following the close of ProGold's fiscal year. The
Company believes that ProGold could suffer a loss during its initial operations
of the corn wet-milling facility.

In connection with its involvement with ProGold, the Company provides a
variety of services related to corn procurement. Doing business under the name
"ProGold Grain", the Company, acting through certain of its employees, procures
corn to satisfy the obligations of the Company and Minn-Dak Farmers Cooperative
to deliver corn to ProGold. In addition, the Company also manages the corn
procurement function and corn pool arrangements for Golden Growers. In the
performance of those services, the Company purchases large quantities of corn,
as well as entering into various commodities contracts (including hedge and
futures contracts) with the goal of reducing price, delivery and other risks
associated with the purchase of corn and sale of corn sweetener. The Company
anticipates that its ProGold Grain activities will increase after the corn
wet-milling plant begins operations.

Construction of the corn wet-milling plant has begun and is nearly complete,
with testing procedures due to commence during October, 1996. ProGold expects
that the plant will begin operations in late 1996. If there are significant
delays in completion of the plant, ProGold may not be able to obtain
certification of the plant by various customers on a schedule which will permit
ProGold to perform certain contractual obligations for the delivery of
sweeteners to those customers in a timely manner; as a result, a substantial
delay in commencement of operational activities could have a material, adverse
effect on ProGold.

If, through the operation of the corn wet-milling facility, ProGold is
successful in generating profits for distribution to is members, those
distributions would become the property of the Company. Under the Company's
Articles of Incorporation and By-laws, the return, if any, from the Company's
involvement with ProGold would be classified as amount received from
"non-patronage" sources. The Company's By-laws currently provide that any
non-patronage net income is to become the property of the Company and is not to
be distributed directly to the members of the Company. Distributions from
ProGold could, in the discretion of the Company's Board of Directors, redound to
the benefit of the Company's members through such means as future reductions of
annual unit retain amounts, repayment of unit retains in advance of the current
seven year repayment schedule and the use of such returns, if any, for capital
investment in the Company. To date, the Company's Board of Directors has not
adopted any resolutions or made any commitments regarding the distribution of
non-patronage revenues directly to the Company's members or the application of
any such amounts for the indirect benefit of the Company's members. As described
above, any decisions regarding the application of distributions received by the
Company from ProGold will be made in the discretion of the Company's Board of
Directors.

PROPERTY AND PROCESSING FACILITIES

American Crystal operates five sugarbeet processing factories in the Red
River Valley. The factories are located in Crookston, East Grand Forks and
Moorhead, Minnesota and Drayton and Hillsboro, North Dakota. American Crystal
owns all of its factories and the land on which they are located. The factories
range in size from 150,000 to 400,000 square feet and have a combined beet
processing capacity, expressed in terms of quantity of sugarbeets which may be
sliced into strips or "cossettes," of approximately 30,400 tons per day. The
Crookston, Minnesota plant has a capacity of 5,300 tons of sugarbeets per day,
the East Grand Forks, Minnesota plant has a capacity of 8,000 tons of sugarbeets
per day and the Moorhead plant has a capacity of 5,300 tons of sugarbeets per
day. The Company's Hillsboro, North Dakota plant has a capacity of 5,900 tons of
sugarbeets per day, while the Drayton, North Dakota plant has a capacity of
5,900 tons of sugarbeets per day. Each of the processing factories includes the
physical facilities and equipment necessary to process sugarbeets into sugar.
Each factory has space for sugarbeet storage, including ventilated and cold
storage sites. However, only approximately 20% of the sugarbeet crop is stored
in either ventilated storage sites or cold storage facilities. Each processing
factory includes the washing and slicing equipment necessary to cut the
sugarbeets into cossettes, the diffusers necessary to extract sugar from the
cossettes in the form of "raw juice" and the purification systems necessary to
remove impurities

from the raw juice. The factories also contain the evaporators and vacuum pans
necessary to thicken the raw juice and then to crystalize the sugar. Each
factory also contains the centrifuges and dryers necessary to complete the
process. The Company's sugar packaging facilities are located at the Moorhead,
Hillsboro, Crookston and East Grand Forks factories. Each of the Company's
facilities is currently operating at or near its capacity.

The Company has recently completed a number of capital improvements to its
sugar factories. For example, at both the Hillsboro and Drayton factories beet
storage facilities and refined sugar conditioning/ storage bins were added. (The
beet storage facilities allow for expanding acres by extending the length of the
beet slicing campaign. The sugar conditioning/storage bins are used to condition
and store refined sugar.) A clarifier mud press was added to the Moorhead
factory to help reduce odors. The Moorhead factory also completed a sugar
screening station project designed to improve the packaging operations there. A
new beet piler was purchased for the Drayton factory district to increase beet
receiving capacity and efficiency. New juice purification stations have been
added at Drayton, Crookston and Moorhead. Evaporation equipment at Hillsboro and
East Grand Forks has been upgraded.

The Board of Directors recently approved funding for a number of capital
expenditures aimed at enhancing the Company's processing capacity. During the
period ending on August 31, 1999, the Company proposes to spend a total of up to
$82.5 million on a new molasses desugarization facility. The new facility is
expected to increase the Company's sugar production significantly. From the date
hereof until August 31, 1998, the Company proposes to spend a total of up to
$56.9 million on increasing the ability of the current Hillsboro processing
facility to slice sugarbeets by approximately 1,800 tons per day.

American Crystal's corporate office is located in a 30,000 square foot,
two-story office building in Moorhead, Minnesota. The Company also has a 100,000
square foot research center situated on approximately 200 acres in Moorhead,
Minnesota, a portion of which is used for the offices of United Sugars
Corporation, the Company's marketing agent. (United Sugars Corporation does own
certain facilities separate from the facilities owned by the Company.) The
Company owns both facilities, and owns numerous sites as sugarbeet receiving and
storage stations. All the Company's property, plant and equipment is mortgaged
or pledged as collateral for its indebtedness to the St. Paul Bank for
Cooperatives.

EMPLOYEES

As of August 31, 1996, American Crystal had 1,187 full-time employees, of
which 877 were hourly, 310 were salaried and 31 were temporary workers. The
Company also employs approximately 1,250 additional hourly seasonal workers
during the sugarbeet harvest and approximately 575 hourly seasonal workers
during the remainder of the sugarbeet processing campaign.

Substantially all of the hourly employees at the factories, including
full-time and seasonal employees, are represented by the American Federation of
Grain Millers, AFL-CIO, and are covered by a collective bargaining agreement
expiring July 31, 1999. Office, clerical and management employees are not
unionized, except for certain office employees at the Moorhead and Crookston,
Minnesota, and Hillsboro, North Dakota, factories who are covered by the
collective bargaining agreement with the Grain Millers. The Company considers
its employee relations to be excellent.

Substantially all employees who meet eligibility requirements of age and
length of service are covered by one of the Company's two retirement plans. Plan
A (nonunion employees) and Plan B (union employees) are defined benefit,
noncontributory plans. The plans provide for vesting in five years with benefits
for early retirement, normal retirement and disability or death. The Company's
policy is to fund pension costs accrued, and the plans were fully funded for
vested benefits as of February 29, 1996, the end of the most recent plan year.
Union and nonunion employees are also eligible to participate in 401(k) savings
plans.

MANAGEMENT

BOARD OF DIRECTORS

The table below lists the current directors of American Crystal. The Board
of Directors consists of three directors from each of the five factory
districts. Directors must be common shareholders or representatives of common
shareholders belonging to the district they represent and are elected by the
members of that district. In the case of a common shareholder who is other than
a natural person, a duly appointed or elected representative of such common
shareholder may serve as a director. The directors have been elected to serve
three-year terms expiring in December of the years indicated in the table below.
One director is elected each year from each factory district. Brief biographies
for each of the directors are included after the table.

TERM
YEAR DIRECTOR EXPIRES
NAME AND ADDRESS OF BIRTH FACTORY DISTRICT SINCE IN DEC.
- ------------------------------------------ ----------- -------------------- ----------- -----------

Paul Borgen .............................. 1947 Moorhead 1985 1997
R.R. 1, Box 43
Georgetown, MN 56546

Thomas Bryl .............................. 1947 Hillsboro 1993 1996
P.O. Box 171
Hillsboro, ND 58045-0171

Aime J. Dufault .......................... 1954 East Grand Forks 1990 1997
R.R.1, Box 162
Argyle, MN 56713

Steven M. Goodwin ........................ 1958 East Grand Forks 1995 1998
R.R. 3, Box 116
Angus, MN 56712

Court G. Hanson .......................... 1948 Hillsboro 1993 1998
R.R. 2, Box 1
Blanchard, ND 58009

Lonn M. Kiel ............................. 1953 Crookston 1994 1997
R.R. 3, Box 71
Crookston, MN 56716

David J. Kragnes ......................... 1952 Moorhead 1995 1998
R.R. 1, Box 100
Felton, MN 56536

Wayne Langen ............................. 1939 Drayton 1988 1997
P.O. Box 133
Kennedy, MN 56733

Duane Lien ............................... 1931 Crookston 1984 1996
R.R. 1, Box 57
Crookston, MN 56716

Patrick D. Mahar ......................... 1942 Drayton 1993 1996
R.R. 1, Box 363
Cavalier, ND 58220-9789

Barry W. Malme ........................... 1947 Crookston 1986 1998
R.R. 1, Box 19K
Shelly, MN 56581

TERM
YEAR DIRECTOR EXPIRES
NAME AND ADDRESS OF BIRTH FACTORY DISTRICT SINCE IN DEC.
- ------------------------------------------ ----------- -------------------- ----------- -----------
Robert Nyquist, Chairman ................. 1933 Moorhead 1984 1996
R.R. 2, Box 176
Moorhead, MN 56560

G. Terry Stadstad ........................ 1943 East Grand Forks 1993 1996
R.R. 2, Box 98
Grand Forks, ND 58203-9644

Robert Vivatson .......................... 1949 Drayton 1992 1998
P.O. Box 63
Cavalier, ND 58220

Michael Warner ........................... 1949 Hillsboro 1988 1997
R.R. 2, Box 119
Hillsboro, ND 58045

- ------------------------

PAUL BORGEN. Mr. Borgen has been a director since 1985 and has been a
farmer since 1968. Mr. Borgen's operations are near Georgetown, Minnesota and
Mr. Borgen serves as President of Paul Borgen Farms, Inc. Mr. Borgen serves on
the Boards of Directors of American Bank, Moorhead, Minnesota, United Sugars
Corporation and American Sugarbeet Growers Association, Washington, D.C.

THOMAS BRYL. Mr. Bryl has been a director since 1993 and a farmer since
1973. Mr. Bryl is president of T.M. Bryl, Inc. and operates its farming
operations near Hillsboro, North Dakota.

AIME J. DUFAULT. Mr. Dufault has been a director since 1990. He has farmed
near Argyle, Minnesota since 1974.

STEVEN M. GOODWIN. Mr. Goodwin has been a director since 1995. Mr. Goodwin
has been a farmer since 1980 and owns and operates a farm near Angus, Minnesota.

COURT G. HANSON. Mr. Hanson has been a director since 1993 and has been a
farmer since 1971. Mr. Hanson is president of C. Hanson Farm, Inc., operating
near Blanchard, North Dakota. Prior to farming, Mr. Hanson was an assistant
national bank examiner from 1970 to 1973.

LONN M. KIEL. Mr. Kiel has been a director since 1994 and has been farming
near Crookston, Minnesota since 1982. He is the President of Kiel Corporation
and also serves on the Board of Directors of the Crookston Fuel Company.

DAVID J. KRAGNES. Mr. Kragnes has been a director since 1995. Mr. Kragnes
has been a farmer since 1972, with his farming operation located near Felton,
Minnesota.

WAYNE LANGEN. Mr. Langen has been a director since 1988 and a farmer since
1963. Mr. Langen is a partner of Langen Bros. Joint Venture and operates its
farming operations near Kennedy, Minnesota. Mr. Langen serves on the board of
directors of Kennedy Farmers Elevator Company, United Sugars Corporation and
Midwest Agri-Commodities Company.

DUANE LIEN. Mr. Lien has been a director since 1984 and has been a farmer
since 1949. As a stockholder of Double D Inc., Mr. Lien operates near Crookston,
Minnesota. Mr. Lien serves on the Board of Directors of Midwest Agri-Commodities
Company.

PATRICK D. MAHAR. Mr. Mahar has been a director since 1993 and has been a
farmer since 1962. He is currently a partner of Mahar Farms near Cavalier, North
Dakota. Mr. Mahar previously served as president of the Red River Valley
Sugarbeet Growers Association, Fargo, North Dakota and as president

of the American Sugarbeet Growers Association, Washington, D.C. Mr. Mahar is
currently serving on the boards of directors of First State Bank and Farmers
Coop Elevator, both of Cavalier, North Dakota.

BARRY W. MALME. Mr. Malme has been a director since 1986. Mr. Malme has
been a farmer near Shelly, Minnesota since 1974. Mr. Malme is a director of
Midwest Agri-Commodities Company.

ROBERT NYQUIST. Mr. Nyquist has been a director since 1984 and is currently
chairman of the Company's board of directors. Mr. Nyquist has been a farmer
since 1952 and currently owns and operates Robert Nyquist Farms near Moorhead,
Minnesota. Mr. Nyquist serves on the boards of directors of United Sugars
Corporation and Midwest Agri-Commodities Company and on the board of governors
of ProGold Limited Liability Company.

G. TERRY STADSTAD. Mr. Stadstad has been a director since 1993 and has been
farming near Grand Forks, North Dakota since 1965. Mr. Stadstad serves on the
Board of Directors of United Sugars Corporation.

ROBERT VIVATSON. Mr. Vivatson has been a director since 1992. Operating as
a farmer near Cavalier, North Dakota, since 1975, Mr. Vivatson is a partner of
Vivatson Bros. and president of Vivatson Farms Inc. Mr. Vivatson is serving on
the board of directors of First State Bank, Cavalier, North Dakota and on the
board of governors of ProGold Limited Liability Company.

MICHAEL WARNER. Mr. Warner has been a director since 1988. Mr. Warner has
been a farmer since 1967 and is currently owner/operator of Mike Warner Farm
near Hillsboro, North Dakota. Mr. Warner is Chairman of the Board of Directors
of Northern Plains Consortium, a regional development group. He also serves on
the Boards of Directors of Dakota Growers Pasta Cooperative of Carrington, North
Dakota, Meritcare Health Systems of Fargo, North Dakota and United Spring Wheat
Processors Cooperative of Hillsboro, North Dakota.

The Board of Directors meets monthly. The Company provides its directors
with minimal compensation, consisting of (i) a payment of $200 per month, (ii) a
per diem payment of $200 for each day spent on Company activities, including
board meetings and other Company functions, and (iii) reimbursement of expenses
for attendance at Board of Directors' meetings. The Chairman of the Board of
Directors receives a payment of $500 per month, rather than $200 per month; the
Chairman also receives a per diem in the amount of $200 for each day spent on
Company activities.

EXECUTIVE OFFICERS

The table below lists the principal officers of the Company, none of whom
owns any common or preferred shares. Officers are elected annually by the Board
of Directors.

YEAR
NAME OF BIRTH POSITION
- ---------------------------------- ----------- --------------------------------------------------------------------

Daniel J. McCarty................. 1952 Chief Executive Officer
Marcus F. Richardson.............. 1941 Chief Operating Officer
Robert W. Levos................... 1943 Vice President--Agriculture
James J. Horvath.................. 1945 Chief Financial Officer
Lawrence L. Mathias............... 1941 Vice President--Human Resources and Public Relations
David A. Berg..................... 1954 Vice President--Strategic Planning
James Dudley...................... 1950 Vice President--Operations
Ralph K. Morris................... 1940 Secretary
Samuel S.M. Wai................... 1953 Treasurer
Mark L. Lembke.................... 1955 Assistant Secretary & Assistant Treasurer
David L. Malmskog................. 1957 Assistant Treasurer
Daniel C. Mott.................... 1959 Assistant Secretary
Joseph J. Talley.................. 1960 Finance Director, Assistant Secretary and Assistant Treasurer

DANIEL J. MCCARTY. Mr. McCarty was named Chief Executive Officer in April,
1996. Mr. McCarty has over fifteen years of experience in managing major
agricultural businesses. From 1992 through 1995, he was with Pet, Inc. as Group
Vice-President and President of the William Underwood subsidiary. He was
previously with Del Monte Foods for over ten years, where he was Director of the
flagship Del Monte Vegetable brand. Mr. McCarty serves on several Boards of
Directors, including United Sugars, Midwest Agri-Commodities Company, the Sugar
Association, Inc. and the U.S. Beet Sugar Association.

MARCUS F. RICHARDSON. Mr. Richardson has been Chief Operating Officer since
1995. Mr. Richardson has served in various manufacturing positions with the
Company since 1980 including, from 1986 to 1995, Vice President--Operations. Mr.
Richardson currently serves as a director of the Beet Sugar Development
Foundation, a non-profit industry association, and on the Board of Governors of
ProGold Limited Liability Company. Mr. Richardson also serves on the Board of
Directors of the Moorhead Economic Development Authority.

ROBERT W. LEVOS. Mr. Levos as been Vice President--Agriculture since 1986.
From 1981 to 1986 he was General Agriculturalist. He has been employed by the
Company since 1965. Mr. Levos currently serves on the Boards of Directors of
West Coast Beet Seed Company and the Beet Sugar Development Foundation.

JAMES J. HORVATH. Mr. Horvath was named Chief Financial Officer in March,
1996. From June, 1994 to March, 1996, Mr. Horvath served as the Company's Vice
President--Joint Ventures as well as Chief Manager and Chief Operating Officer
of ProGold Limited Liability Company. Mr. Horvath also served as the Company's
Vice President--Finance from 1985-1994.

LAWRENCE L. MATHIAS. Mr. Mathias has been Vice President--Human Resources
and Public Relations since 1990. He was Industrial Relations Manager with the
Company from 1976 to 1990. He currently serves on the board of directors of Blue
Cross Blue Shield of Minnesota.

DAVID A. BERG. Mr. Berg was named Vice President--Business Development in
1996. He served as the Company's Vice President--Strategic Planning from 1994 to
1996, Director-Market Information from 1992-1994, Manager of Marketing and
Analysis from 1990 to 1992 and Manager--Economic Research from 1987 to 1990. He
currently serves on the Regulatory Task Force of the U.S. Beet Sugar Association
and the Domestic Sugar Committee of the New York Coffee, Sugar and Cocoa
Exchange.

JAMES DUDLEY. Mr. Dudley has been Vice President--Operations since 1995.
From 1993 until August of 1995, Mr. Dudley served as Regional Manager and then
as Factory Operations Manager. Mr. Dudley served as Operations Manager at the
Company's Crookston factory from 1985 through 1993.

RALPH K. MORRIS. Mr. Morris has been Secretary of the Company since 1995.
He is a shareholder and the Chief Executive Officer of the law firm of Doherty,
Rumble & Butler Professional Association. The firm acts as corporate counsel to
American Crystal. Mr. Morris is not an employee of the Company.

SAMUEL S.M. WAI. Mr. Wai has been Treasurer since 1985 and held various
financial positions with the Company from 1979 to 1985.

JOSEPH J. TALLEY. Mr. Talley was named Finance Director, Assistant
Treasurer and Assistant Secretary in March 1996. From July 1994 to March 1996,
Mr. Talley served as Finance Director of Progold Limited Liability Company. He
currently serves as Treasurer and Assistant Secretary of ProGold Limited
Liability Company as well as Assistant Treasurer and Assistant Secretary of
Golden Growers Cooperative. Prior to July 1994, Mr. Talley was a partner with
the accounting firm of Eide Helmeke PLLP.

MARK L. LEMBKE. Mr. Lembke was named Assistant Secretary and Assistant
Treasurer in March 1996. Mr. Lembke also served as the company's Corporate
Accounting Manager since August 1995. From July 1987 through July 1995, Mr.
Lembke served as Factory Accounting Supervisor.

DAVID L. MALMSKOG. Mr. Malmskog has been Assistant Treasurer since 1993 and
has also been Financial Planning and Analysis Manager since 1991. Mr. Malmskog
has held various financial positions with the Company since 1980.

DANIEL C. MOTT. Mr. Mott has been Assistant Secretary of the Company since
1995. He is a shareholder in the law firm of Doherty, Rumble & Butler
Professional Association. The firm acts as corporate counsel to American
Crystal. Mr. Mott is not an employee of the Company.

EXECUTIVE COMPENSATION

The following table summarizes the amount of compensation paid for services
rendered to the Company during the fiscal year ended August 31, 1995 and the two
prior fiscal years to those persons serving as the Company's Chief Executive
Officer and to the four other most highly compensated executive officers of the
Company whose cash compensation exceeded $100,000 per annum.

SUMMARY COMPENSATION TABLE

LONG TERM COMPENSATION AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------------------------------
------------------------------------- RESTRICTED
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#) ($) ($)
- ----------------------------------- ---- -------- ------- ------------ ---------- -------- ------- ------------

Daniel J. McCarty(2) .............. 1996
Chief Executive Officer

Joseph P. Famalette(3) ............ 1995 $296,966 $ 0 $48,904 $83,333(4)
Chief Executive Officer 1994 $250,000 $ 0 $34,001 $83,333(4)
1993 $250,000 $ 0 $27,132 $83,333(4)

Marcus F. Richardson(5) ........... 1995 $268,000 $81,104 $31,220
Chief Operating Officer 1994 $190,700 $76,286 $13,767
1993 $176,550 $26,500 $11,637

James J. Horvath .................. 1995 $175,000 $61,250 $17,603
Chief Financial Officer 1994 $147,552 $52,500 $18,511
1993 $136,610 $54,600 $11,584

Robert W. Levos ................... 1995 $163,750 $57,313 $19,192
Vice President--Agriculture 1994 $155,948 $46,785 $ 7,683
1993 $148,500 $52,000 $ 7,565

Lawrence L. Mathias ............... 1995 $148,710 $52,049 $20,084
Vice President--Human Resources 1994 $131,600 $52,640 $12,366
and Public Relations 1993 $125,320 $37,600 $ 9,816

- ------------------------------

(1) Includes the cost of additional life insurance coverage, use of a company
car, costs of tax return preparation, imputed interest, taxable moving
expenses reimbursed, the Company's matching contribution for 401(k) and SERP
and pension valuations.

(2) Mr. McCarty's employment with the Company began on March 28, 1996.
Calculated on an annualized basis, Mr. McCarty's salary for the fiscal year
ending on August 31, 1996 is to be $410,000.

(3) Mr. Famalette's employment with the Company ended on May 31, 1995.

(4) Represents forgiveness of an installment payment due under a loan from the
Company to Mr. Famalette. The loan arrangement and related agreements are
described below.

(5) Mr. Richardson also served as interim Chief Executive Officer between June
1995 and March 1996.

Effective April 8, 1996, the Company and Mr. McCarty entered into an
"Employment Agreement" regarding Mr. McCarty's employment by the Company. The
agreement provides that such employment is for an initial term of three years,
after which Mr. McCarty shall serve as an "at will" employee at the pleasure of
the Board of Directors. Among other terms, the agreement establishes Mr.
McCarty's base compensation at $410,000 per year, and also provides that he may
participate in other benefit plans offered by the Company. Pursuant to the
agreement, Mr. McCarty was paid a signing bonus by the Company of $70,000 (less
applicable deductions), in lieu of participation in the Company's annual
management incentive plan through August 31, 1996. If during the initial term
the Board of Directors terminates Mr. McCarty's employment with the Company
without cause, Mr. McCarty is entitled to receive a severance payment equal to
$7,884.62 times the number of weeks between the date of termination and April 7,
1999.

During Mr. Famalette's tenure with the Company, the Company entered into
certain contractual arrangements with Mr. Famalette regarding his employment by
the Company. Although the agreements specifically indicate that Mr. Famalette is
an employee at will, they were intended to govern both (i) Mr. Famalette's
bonuses during the period prior to 1996 and (ii) severance payments due Mr.
Famalette should his employment with the Company be terminated.

Effective March 2, 1992, the Company and Mr. Famalette entered into a
"Compensation, Loan and Severance Agreement". Among other terms, that agreement
established Mr. Famalette's initial compensation at $250,000 per year. The
agreement also provided for a loan of $250,000 to Mr. Famalette. Evidenced by a
promissory note, the loan was to be repaid in three equal installments of
$83,333.33. The first such installment was due on March 2, 1993, the next
installment was due on March 2, 1994 and the final installment became due on
March 2, 1995. However, the "Compensation, Loan and Severance Agreement"
provides that for each full year in which Mr. Famalette remained employed as the
President and Chief Executive Officer of the Company, the sum of $83,333.33 due
under the note would be forgiven. As a result, on March 2, 1993, March 2, 1994,
and March 2, 1995 the Company forgave the installment payments due under the
promissory note. The "Compensation, Loan and Severance Agreement" specified that
the loan and any amounts forgiven under the terms of the agreement were provided
to Mr. Famalette in lieu of any other severance benefits to be paid upon
termination of Mr. Famalette's employment with the Company.

Effective October 1, 1993, the Company entered into a Compensation and Loan
Agreement with Mr. Famalette. The agreement governed Mr. Famalette's
compensation as of Mr. Famalette's employment by the Company. The Compensation
and Loan Agreement stated that Mr. Famalette's annual base compensation during
the period was to be $250,000, unless adjusted by the Board of Directors of the
Company. Effective October 1, 1994, Mr. Famalette's annual base compensation was
established as $359,500. The agreement further provided that Mr. Famalette was
not eligible for any executive incentive compensation or bonuses, but would
receive the loan described in this paragraph. Instead of participating in the
executive incentive program described below, Mr. Famalette received a loan in
the amount of $420,000. The loan bore no interest and was due in full on January
2, 1997; provided, that the loan was to be foregiven on January 2, 1997 if Mr.
Famalette remained in the employ of the Company through September 30, 1996. Upon
Mr. Famalette's departure from the Company, an Amendment to the Compensation and
Loan Agreement was mutually agreed upon providing that $140,000 of the loan
would be foregiven at such time as Mr. Famalette repaid the other $280,000 of
the loan. Mr. Famalette has since repaid the whole $280,000.

On March 11, 1994, a loan was made to Mr. Famalette. The amount of the loan
was $420,000 and bore interest at a rate of 4% per annum. Mr. Famalette repaid
the loan in full on August 29, 1994.

Certain management employees are entitled to participate in an incentive
program that provides for cash awards based partially on the performance of the
Company and partially on achievement of certain management performance
objectives. Those performance objectives are determined by the Board of

Directors. An executive is not eligible for any awards under the incentive
program unless that executive's performance for the applicable fiscal year is
rated as "fully satisfactory" or better. Depending on the executive's
responsibilities, the performance of the Company (measured in terms of percent
of sugar revenues returned to the members) and the results of the executive's
evaluation for the fiscal year, the program provides for an incentive bonus in
amounts ranging from 4% to 40% of the eligible executive's base salary.

The Company has also adopted a Long Term Incentive Plan ("LTIP") which
provides deferred compensation to certain key executives of American Crystal
effective September 1, 1995. The LTIP creates financial incentives that reward
executives for long-term commitment to the Company and for successfully
implementing the Company's long-term growth strategies. Such incentives are
based upon contract rights which are available to the executive under the terms
of the LTIP, the value of which is related to the value of preferred shares of
the Company. The LTIP allows participants to purchase a limited number of
contract rights at the end of each three-year cycle. The LTIP establishes both
minimum and maximum ownership levels. When an executive reaches his minimum
ownership level, he may sell any vested shares over the minimum to any qualified
grower. The executive or his estate may also sell any vested shares at the time
of his termination, disability or death. At the point of sale, the contract
right becomes a share of Preferred Stock which the Company issues to the
purchasing grower. The executive receives the proceeds of the sale, less
appropriate taxes. The long-term cost of the stock will not be to the Company,
but to the grower who eventually purchases the stock from the executive.

Management employees are also eligible to participate in the Company's
Retirement Plan "A," a 401(k) savings plan and, beginning on September 1, 1994,
a "Supplemental Executive Plan." Those plans are described below.

RETIREMENT PLANS

The Company has established noncontributory, defined benefit retirement
plans which are available to all eligible employees of the Company. Those
employees who are covered by a collective bargaining agreement participate in
one plan, while employees who are not subject to a collective bargaining
agreement, including the executive officers listed on the Summary Compensation
Table, participate in another pension plan. That plan is known as Retirement
Plan "A." The benefits of the plan are funded by periodic Company contributions
to a retirement trust which invests the Company's contributions and the earnings
from such contributions in order to pay the benefits to the employees. The plan
provides for the payment of monthly retirement benefits determined under a
calculation based on years of service and a participant's compensation.
Retirement benefits are paid to participants upon normal retirement at the age
of 65 or later or upon early retirement. The plan also provides for the payment
of certain disability and death benefits.

The following table reflects the estimated annual benefits payable to a
fully-vested executive officer of the Company under Retirement Plan "A," upon
retirement at age 65, after 15, 20, 25, 30 and 35 years of annual service at the
remuneration levels set forth in the table:

American Crystal Sugar Company
1996 Calculation
PLAN A-QUALIFIED BENEFITS

YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------------------------------------------- --------- --------- --------- --------- ---------

$125,000......................................... $ 24,595 $ 32,794 $ 40,993 $ 49,191 $ 49,191
$150,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691
$175,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691
$200,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691
$225,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691
$250,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691
$300,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691
$400,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691
$500,000......................................... $ 29,846 $ 39,794 $ 49,743 $ 59,691 $ 59,691

The five executive officers named in the Summary Compensation Table have
years of service under the plan as follows: Mr. McCarty has served for less than
1 year; Mr. Richardson has served for 16 years; Mr. Horvath has served for 12
years; Mr. Levos has served for 31 years; and Mr. Mathias has served for 21
years.

The Company maintains a Section 401(k) plan that permits employees to elect
to set aside, on a pre-tax basis, a portion of their gross compensation in trust
to pay future retirement benefits. The Company matches 100% of the employee's
first 4% of compensation. The total annual pre-income tax addition to any
employees account in any calendar year may not exceed the lesser of (i) $30,000
or (ii) 25% of annual compensation less the amount of the contribution and any
salary conversion. During 1996, the employee pre-income tax contribution is
limited to $9,500. An employee may also contribute up to 10% of his annual
compensation on an after-tax basis. Benefits under the 401(k) plan begin to be
paid to the employee upon the close of the plan year in which one of the
following events has occurred: the date the employee attains age 65, the date
the employee terminates his service with the employer and the date specified in
a written election made by the employee to receive benefits no later than April
1 of the year following the calendar year in which the employee retires, dies,
becomes disabled, reaches age 70 1/2 or is terminated.

Effective September 1, 1994, certain executive employees of the Company
became eligible to participate in a "Supplemental Executive Retirement Plan."
That plan was adopted by the Company's Board of Directors on June 30, 1994.
Subject to the discretion of the Board of Directors, the plan provides for the
Company to credit to the account of each executive eligible to participate in
the Supplemental Plan amounts equal to (i) the difference between amounts
actually contributed to the Company's 401(k) plan on behalf of the executive and
the amounts which could have been contributed if certain provisions of the
Internal Revenue Code did not prohibit the contribution of such amounts and (ii)
the difference between the benefits actually payable to the executive under the
provisions of Retirement Plan "A" and the amounts which would be payable under
Retirement Plan "A" if certain provisions of the Internal Revenue Code did not
prohibit the payment of such benefits. In addition, the executive may elect to
defer a portion of his or her compensation, ranging from 2% to 16%, by regular
payroll deductions under the Supplemental Plan, and may also so defer 100% of
all bonus and profits-per-acre payments. The Supplemental Plan is an "unfunded"
plan, with all amounts to be paid under the Supplemental Plan to be paid from
the general assets of the Company when due and also to be subject to the claims
of the Company's creditors.

The following table reflects the estimated annual benefits payable to a
fully-vested executive officer of the Company under the Supplemental Plan, upon
retirement at age 65, after 15, 20, 25, 30 and 35 years of annual service at the
remuneration levels set forth in the table:

PLAN A-NON QUALIFIED BENEFITS 1996 CALCULATION

YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 35
- --------------------------------------------- --------- --------- ---------- ---------- ----------

$125,000..................................... $ 0 $ 0 $ 0 $ 0 $ 0
$150,000..................................... $ 0 $ 0 $ 0 $ 0 $ 0
$175,000..................................... $ 5,250 $ 7,000 $ 8,750 $ 10,500 $ 10,500
$200,000..................................... $ 10,500 $ 14,000 $ 17,500 $ 21,000 $ 21,000
$225,000..................................... $ 15,750 $ 21,000 $ 26,250 $ 31,500 $ 31,500
$250,000..................................... $ 21,000 $ 28,000 $ 35,000 $ 42,000 $ 42,000
$300,000..................................... $ 31,500 $ 42,000 $ 52,500 $ 63,000 $ 63,000
$400,000..................................... $ 52,500 $ 70,000 $ 87,500 $ 105,000 $ 105,000
$450,000..................................... $ 63,000 $ 84,000 $ 105,000 $ 126,000 $ 126,000
$500,000..................................... $ 73,500 $ 98,000 $ 122,500 $ 147,000 $ 147,000

DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK

AUTHORIZED AND OUTSTANDING STOCK

As of August 31, 1996, American Crystal was authorized to issue 4,000 shares
of Common Stock, $10 par value, and 600,000 shares of Preferred Stock, $76.77
par value. As of August 31, 1996, there were 2,443 shares of Common Stock and
415,255 shares of Preferred Stock issued and outstanding.

QUALIFICATIONS FOR SHARE OWNERSHIP

Ownership of both Common Stock and Preferred Stock is restricted to
sugarbeet farm operators in the territory in which the Company is engaged in
business. The term "operator" means a person, firm, partnership or corporation
who is the legal owner of the sugarbeet crop, has a majority financial interest
in the crop, has general control of the sugarbeet operations of the farm where
the sugarbeet crop is grown, and is a "bona fide farmer" as that term is defined
in the United States Farm Credit Administration regulations (12 C.F.R. Section
613.3020). As used in this Prospectus, "member" means a farm operator who is a
common shareholder of the Company.

COMMON STOCK

No member may own more than one share of Common Stock. Only holders of a
share of Common Stock are entitled to vote for the election of directors and on
other matters relating to the management and affairs of the Company determined
by shareholders. Each member has an equal vote in the election of directors (but
only from the member's district) and on other matters, regardless of the number
of acres grown or volume of business done with American Crystal. Three directors
are elected from each of the Company's five factory districts by the members
(common shareholders) in each such district.

The Board of Directors, may, by resolution, determine that a member is no
longer eligible to be a holder of Common Stock. Upon such determination, the
Board may refund the par value of the member's share of Common Stock and, upon
such payment, the member will cease to have voting rights as a shareholder.

PREFERRED STOCK

Ownership of Preferred Stock entitles a member to grow sugarbeets for sale
to American Crystal. The Board of Directors determines the acreage that may be
grown for each share of Preferred Stock owned. However, as noted above, after
November 30, 1994, each share of Preferred Stock has represented the right to
sell the sugarbeets produced on one acre of land to the Company. Management's
current intention is that a 1 to 1 ratio between shares and acres be maintained
for the foreseeable future, subject to tolerances for overplanting and
underplanting established by the Board each year. Those tolerances vary from
year to year, in the discretion of the Board of Directors. Shares of Preferred
Stock have no voting rights. The Company has no obligation to repurchase the
Preferred Stock of a grower found to be ineligible for continued membership.

SALE AND TRANSFER OF SHARES

A member desiring to sell his or her Common Stock or Preferred Stock must
first offer them to the Company for purchase at par value. If the Company
declines to purchase such shares, either class may be sold to a new member
(i.e., another farm operator not already a member) and Preferred Stock may be
sold to one or more existing members or farm operators approved for membership,
in each case subject to approval by the Board of Directors. Because the number
of acres of sugarbeets a member may grow for sale to the Company is directly
related to the number of shares of Preferred Stock owned, a limited, private
market for Preferred Stock exists. To date, the Company's Board of Directors has
not exercised the Company's right of first refusal to purchase shares offered
for sale by its members. In the absence of the exercise of such right of first
refusal, the Company is aware of sales of Preferred Stock at prices in excess of
the par value of those shares. However, as the Company does not require parties
seeking approval for transfers to provide information regarding the transfer
price, the Company does not possess verifiable information regarding the
transfer price involved in recent transfers of the Company's Preferred Stock.

NO DIVIDENDS

The Company's By-laws prohibit the payment of dividends on the Common Stock
and Preferred Stock. Shareholders receive distributions from the Company in the
form of beet payments and the return of unit retains.

DISTRIBUTION OF ASSETS UPON DISSOLUTION

The Company's By-laws establish the following order and priority for
distribution of the Company's assets upon dissolution, each category to be
satisfied in full before any distribution is made to the next: first, all debts
and liabilities of the Company must be paid; second, the par value of the
Preferred Stock must be returned to the holders thereof; third, all capital
furnished through patronage and unit retains must be retired without priority as
to year on a pro rata basis; fourth, all paid-in surplus theretofore allocated
to particular shareholders or former shareholders must be returned; and fifth,
the par value of the Common Stock must be returned to the holders thereof. The
liquidation value of any property and assets of the Company remaining after such
priority distributions are then to be distributed among the holders of Preferred
Stock in proportion to the Preferred Stock held by each.

AMENDMENTS TO BY-LAWS

The Company's By-laws may be amended by a majority of shareholders present
at any regular or special meeting at which a quorum is present or represented by
mail vote. The notice of such meeting must contain a summary of the proposed
amendment.

UNIT RETAINS

As a means of raising capital, an agricultural cooperative may retain a
portion of the payments otherwise due members for their crops. This is called a
"unit retain" or "unit retention capital." A unit retain "qualified" under the
Internal Revenue Code is not taxable income to the cooperative under federal law
and is taxable income to the cooperative's members, but is available for the
general business purposes of the cooperative, including debt service. (Unit
retains which are not "qualified" are taxable to the cooperative at the time
when declared but are not taxed again when distributed to the cooperative's
members.)

American Crystal's Board of Directors may set a variable unit retain
annually. Under the Company's By-laws, the unit retain may be up to 10% of the
weighted average gross per ton payment to all members for sugarbeets. For the
fiscal years ended August 31, 1989, 1990, 1991 and 1992, American Crystal's unit
retain was $1.50 per ton of sugarbeets delivered. The unit retain for the years
ended August 31, 1993 and 1994 was $3.00 per ton, while the unit retain in the
year ended August 31, 1995 was $2.00 per ton of sugarbeets delivered.

Cooperatives often have programs to return excess unit retains in subsequent
years. American Crystal's unit retains may be returned to members if the
Company's Board of Directors, in its discretion, finds the aggregate amount of
outstanding unit retains to be in excess of the amounts needed for operating the
Company's business and servicing its debts. The Company's By-laws provide that
it is the general policy to pay the oldest outstanding unit retains first. In
recent years, the practice of the Company's Board of Directors has been to
return unit retains after seven years.

American Crystal has a policy of refunding all accumulated unit retains of
disabled or deceased former members. During the years ended August 31, 1995,
1994, and 1993, such payments were approximately $361,000, $552,000, and
$389,000, respectively.

TAX TREATMENT

Subchapter T of the Internal Revenue Code sets forth rules for the tax
treatment of cooperatives and applies both to cooperatives exempt from tax under
Section 521 of the Internal Revenue Code and to non-exempt corporations
operating on a cooperative basis. American Crystal is a non-exempt cooperative.

As a cooperative, American Crystal is not taxed on amounts withheld from its
members in the form of qualified unit retains or on the amounts distributed to
its members in the form of payments for sugarbeets. Consequently, such amounts
are taxed only at the member level.

Income derived by American Crystal from non-member business is not entitled
to the "single tax" benefit of Subchapter T and is taxed to the cooperative at
corporate income tax rates. For the fiscal year ended August 31, 1995, American
Crystal had approximately $15,000 of net gain (loss) after taxes from its
non-member business.

PLAN OF DISTRIBUTION

The Company is offering and selling the Common Stock and Preferred Stock
without the assistance of any underwriter or agent. Instead, certain of the
Company's officers and directors will be responsible for completing the offer
and sale of the Common Stock and Preferred Stock. Such officers will not receive
any commission or compensation for such activities, other than their normal
compensation as employees of the Company.

With this Prospectus, each current member of the Company will receive a
subscription agreement. That document will indicate the number of shares of
Preferred Stock he or she owned as of July 31, 1996. Based upon ownership of
those shares of Preferred Stock, such member will be entitled to purchase in
this offering his or her pro rata portion of the Preferred Stock offered hereby.
That number of shares of

Preferred Stock will equal 4.7% of the number of shares of Preferred Stock owned
as of July 31, 1996 rounded up to the nearest whole share of Preferred Stock.
(In addition to indicating the number of shares of Preferred Stock owned by a
member as of July 31, 1996, the subscription agreement will also indicate the
number of Preferred Stock which the member is entitled to purchase in this
Offering.) The member must either purchase the entire number of shares of
Preferred Stock which he or she is entitled to purchase or refrain from
purchasing any Preferred Stock in this Offering. Each such member will have
until 5:00 p.m., December 20, 1996 to indicate to the Company that he or she
wishes to purchase his or her portion of the Preferred Stock offered hereby. To
indicate his or her desire to purchase such Shares, each member must return to
the Company an executed original of the subscription agreement, along with a
check in full payment for the Preferred Stock which the member desires to
purchase. (A member may return his response to the Company's corporate
headquarters by personal delivery or by certified or other mail. However, as all
responses must be received prior to the designated time, members choosing to
mail their response to the Company are cautioned to allow adequate time for
American Crystal's receipt of the response.) If the Company has not received a
response fully complying with the requirements described in this section from
any member by 5:00 p.m. on December 20, 1996, he or she will be conclusively
presumed to have waived his or her right to participate in this offering.

A current member of the Company can also indicate, by returning a completed
"Indication of Interest in Purchasing Additional Shares" to the Company, that he
or she is willing to purchase up to 75 shares of Preferred Stock in addition to
the Preferred Stock which he or she has a right to purchase in this offering.
Such response card must also be received by the Company before 5:00 p.m. on
December 20, 1996. The member must purchase his or her pro rata portion of this
Offering in order to be eligible to purchase any additional Preferred Stock.
However, the member will be entitled to purchase any such additional Preferred
Stock only if the procedure with respect to "Remaining Shares" described below
results in the member being granted the opportunity to acquire additional
Preferred Stock.

Any prospective purchaser who is not currently a member of the Company may
indicate that he or she would like to become a member of the Company by
returning (i) a completed "Indication of Interest in Purchasing Shares of
Preferred Stock" specifying the number of shares of Preferred Stock which he or
she desires to purchase and (ii) an executed subscription agreement for the
purchase of a share of Common Stock and a specified number of shares of
Preferred Stock. Such prospective new member will be asked to indicate that he
or she is willing to purchase from 1 to 75 shares of Preferred Stock and the
required share of Common Stock. The Indication of Interest and subscription
agreement must also be received by the Company before 5:00 p.m., December 20,
1996.

After December 20, 1996, representatives of the Company will examine all
responses received from prospective purchasers of Preferred Stock. All members
who have indicated that they desire to acquire their pro rata portion of this
offering will be allocated such portion of the Preferred Stock offered hereby.
Any Preferred Stock remaining for sale after the Preferred Stock has been
allocated to current members (the "Remaining Shares") will be available for
purchase by (i) those current members who indicated that they wish to purchase
Preferred Stock in excess of the amount constituting their pro rata portion of
the Company's offering and (ii) parties who are not currently members of the
Company who have indicated that they wish to become members of the Company by
the purchase a share of Common Stock and a specified number of shares of
Preferred Stock. The Remaining Shares will be allocated to such prospective
purchasers in a random drawing to be held in December 1996, until no additional
shares of Preferred Stock remain for sale. After completion of the drawing,
those current members and prospective new members whose Indications of Interest
have been drawn in the random drawing will be notified in writing of the number
of shares of Preferred Stock which they are eligible to purchase. Full payment
for such Preferred Stock (and the membership share of Common Stock, if
applicable) will be due in full within two calendar weeks of the date of the
Company's notice to such parties. If payment for such shares is not received by
the Company by the applicable due date, such prospective purchaser's ability to
purchase any portion of the Remaining Shares will be terminated; the Company
will then randomly draw a response card

from another prospective purchaser or purchasers, who will be granted the
opportunity to purchase the applicable portion of the Remaining Shares. The
Company will continue with such procedure until all Remaining Shares have been
purchased or until the Company elects, in its sole discretion, to cease efforts
to sell the Remaining Shares. All parties who have purchased shares of Common
Stock and/or Preferred Stock in this offering will receive confirmation of such
purchase on or about January 17, 1997.

Pursuant to the Company's Articles of Incorporation and By-laws, the Company
reserves the right to reject subscriptions from any party, in the Company's sole
discretion. As described in "Description of Common and Preferred Stock," each
prospective purchaser of Common Stock and Preferred Stock must also satisfy the
requirements for membership in the Company contained in the Company's Articles
of Incorporation and By-laws.

LEGAL PROCEEDINGS

From time to time and in the ordinary course of its business, the Company is
named as a defendant in legal proceedings related to various issues, including
worker's compensation claims, tort claims and contractual disputes. The Company
is currently involved in certain legal proceedings which have arisen in the
ordinary course of American Crystal's business; the Company is also aware of
certain other potential claims which could result in the commencement of legal
proceedings. The Company carries insurance which provides protection against
certain types of claims. With respect to current litigation and potential claims
of which the Company is aware, the Company's management believes that (i) the
Company has insurance protection to cover all or a portion of any judgments
which may be rendered against the Company with respect to certain claims or
actions and (ii) any judgments which may be entered against the Company and
which may exceed such insurance coverage or which may arise in actions involving
potential liabilities not covered by insurance policies are not likely to have a
material adverse effect upon the Company, or its assets or operations.

RELATED PARTY TRANSACTIONS

Each of the Company's directors is also a sugarbeet farmer and a shareholder
member or representative of a shareholder member of American Crystal. By virtue
of their status as such members of the Company, each director or the member he
represents sells sugarbeets to the Company and receives payments for those
sugarbeets. Such payments for sugarbeets often exceed $60,000. However, such
payments are received by the directors or the entities they represent on exactly
the same basis as payments are received by other members of the Company for the
delivery of their sugarbeets. Except for the sugarbeets sales described in the
preceding sentences, none of the directors or executive officers of the Company
have engaged in any other transactions with the Company involving amounts in
excess of $60,000.

FINANCIAL STATEMENTS

The financial statements of the Company for the fiscal years ended August
31, 1995, 1994 and 1993 have been audited by Eide Helmeke & Co., Fargo, North
Dakota, independent certified public accountants. Such financial statements have
been included herein in reliance upon the report of Eide Helmeke PLLP.

INDEX TO FINANCIAL STATEMENTS

AMERICAN CRYSTAL SUGAR COMPANY

FINANCIAL STATEMENTS:

Report of Independent Auditors................................................... F-3

Balance Sheets as of May 31, 1996 (Unaudited) and August 31, 1995, and 1994...... F-4

Statements of Operations for the Nine Months Ended May 31, 1996, and 1995
(Unaudited) and the Years Ended August 31, 1995, 1994, and 1993................. F-6

Statements of Changes in Members' Investment for the Nine Months Ended May 31,
1996, and 1995, (Unaudited) and the Years Ended August 31, 1995, 1994, and
1993............................................................................ F-7

Statement of Cash Flows for the Nine Months Ended May 31, 1996, and 1995
(Unaudited) and the Years Ended August 31, 1995, 1994, and 1993................. F-8

Notes to Consolidated Financial Statements....................................... F-10

F-1

(This page has been left blank intentionally.)

F-2

REPORT OF INDEPENDENT AUDITORS

To the Members of American Crystal Sugar Company

Moorhead, Minnesota

We have audited the accompanying balance sheets of the American Crystal
Sugar Company (a Minnesota cooperative corporation) as of August 31, 1995, and
1994, and the related statements of operations, changes in members' investments
and cash flows for the years ended August 31, 1995, 1994, and 1993. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the American Crystal Sugar
Company as of August 31, 1995, and 1994, and the results of its operations and
its cash flows for the years ended August 31, 1995, 1994, and 1993, in
conformity with generally accepted accounting principles.

October 13, 1995

Fargo, North Dakota

F-3

AMERICAN CRYSTAL SUGAR COMPANY

BALANCE SHEETS

(DOLLARS IN THOUSANDS)
ASSETS

MAY 31 AUGUST 31
----------- --------------------
1996 1995 1994
----------- --------- ---------
(UNAUDITED)

Current Assets:
Cash and Cash Equivalents................................ $ 4,073 $ 3,420 $ 14,414
Accounts Receivable:
Trade.................................................... 47,945 48,113 33,993
Members.................................................. 4,127 4,207 4,215
Other.................................................... 3,321 5,194 2,172
Advances to Related Parties................................ 19,730 6,091 4,193
Inventories (Note 7)....................................... 216,191 103,291 53,780
Prepaid Expenses........................................... 3,017 3,825 5,552
----------- --------- ---------
Total Current Assets....................................... 298,404 174,141 118,319
----------- --------- ---------
Property and Equipment:
Land..................................................... 11,875 11,876 11,540
Buildings and Equipment.................................. 535,587 535,587 499,920
Construction-in-Progress................................. 57,765 36,934 25,722
Less: Accumulated Depreciation........................... (392,780) (373,709) (347,072)
----------- --------- ---------
Net Property and Equipment................................. 212,447 210,688 190,110
----------- --------- ---------
Other Assets:
Investments in Banks for Cooperatives (Note 1)........... 15,044 13,932 13,049
Investments in Marketing Cooperatives (Note 6)........... 8,704 5,545 840
Investment in ProGold LLC (Note 1)....................... 48,194 12,452 190
Other Assets............................................. 3,830 4,132 1,961
----------- --------- ---------
Total Other Assets......................................... 75,772 36,061 16,040
----------- --------- ---------
Total Assets............................................... $ 586,623 $ 420,890 $ 324,469
----------- --------- ---------
----------- --------- ---------

The Accompanying Notes are an Integral Part of These Financial Statements.

F-4

AMERICAN CRYSTAL SUGAR COMPANY

BALANCE SHEETS

(DOLLARS IN THOUSANDS)
LIABILITIES AND MEMBERS' INVESTMENTS

MAY 31 AUGUST 31
----------- --------------------
1996 1995 1994
----------- --------- ---------
(UNAUDITED)

Current Liabilities:
Short-Term Debt (Note 3)................................. $ 134,761 $ 53,932 $ --
Current Maturities of Long-Term Debt (Note 3)............ 14,300 12,115 14,110
Accounts Payable:
Trade.................................................. 2,224 21,029 14,493
Other.................................................. 7,124 4,864 1,569
Accrued Continuing Costs (Note 1)........................ 50,122 -- --
Other Current Liabilities................................ 15,224 13,918 13,393
Amounts Due Members...................................... 57,406 40,237 43,895
----------- --------- ---------
Total Current Liabilities.................................. 281,161 146,095 87,460
Long-Term Debt, Excluding Current Maturities (Note 3) 145,519 106,914 101,724
Deferred Income Taxes (Note 1)............................. 1,029 1,029 4,657
Other Liabilities.......................................... 26,519 24,805 15,019
Commitments and Contingencies (Note 5)..................... -- -- --
----------- --------- ---------
Total Liabilities.......................................... 454,228 278,843 208,860
----------- --------- ---------
Members' Investments (Note 1):
Preferred Stock.......................................... 31,879 31,879 30,429
Common Stock............................................. 24 23 24
Additional Paid-in Capital............................... 32,417 32,417 5,558
Unit Retains............................................. 81,278 88,487 81,433
Pension Liability Adjustment............................. (5,674) (5,674) (2,386)
Retained Earnings........................................ (7,529) (5,085) 551
----------- --------- ---------
Total Members' Investments................................. 132,395 142,047 115,609
----------- --------- ---------
Total Liabilities and Members' Investments................. $ 586,623 $ 420,890 $ 324,469
----------- --------- ---------
----------- --------- ---------

The Accompanying Notes are an Integral Part of These Financial Statements.

F-5

AMERICAN CRYSTAL SUGAR COMPANY

STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS)

NINE MONTHS ENDED YEAR ENDED
MAY 31 AUGUST 31
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------

(UNAUDITED)
Net Revenue............................................ $ 511,592 $ 439,693 $ 605,960 $ 563,420 $ 542,665
Cost of Product Sold................................... 41,833 (15,840) 143,652 169,112 123,048
---------- ---------- ---------- ---------- ----------
Gross Proceeds......................................... 469,759 455,533 462,308 394,308 419,617
Selling, General & Administrative Expenses............. 110,009 96,192 132,752 113,679 109,195
Accrued Continuing Costs (Note 1)...................... 50,122 17,854 -- -- --
---------- ---------- ---------- ---------- ----------
Operating Proceeds..................................... 309,628 341,487 329,556 280,629 310,422
---------- ---------- ---------- ---------- ----------
Other Income (Expenses):
Interest Income...................................... 319 265 281 641 493
Interest Expense..................................... (11,703) (8,633) (14,532) (7,859) (7,212)
Other Income......................................... 4,210 1,867 1,934 2,081 387
Other Expenses....................................... (48) (200) (612) (1,419) (190)
---------- ---------- ---------- ---------- ----------
Other Income (Expense)............................... (7,222) (6,701) (12,929) (6,556) (6,522)
---------- ---------- ---------- ---------- ----------
Proceeds before Income Taxes........................... 302,406 334,787 316,627 274,073 303,900
Income Taxes (Provision)/Benefit....................... -- 286 3,922 (288) (58)
---------- ---------- ---------- ---------- ----------
Net Proceeds Before Cummulative Effect of Changes in
Accounting Principle.................................. 302,406 335,073 320,549 273,785 303,842
Cummulative Effect of Changes in Accounting
Principle............................................. -- -- -- (12,214) --
---------- ---------- ---------- ---------- ----------
Net Proceeds Resulting from Member and Non-Member
Business.............................................. $ 302,406 $ 335,073 $ 320,549 $ 261,571 $ 303,842
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Distribution of Net Proceeds:
Credited/(Charged) to Members' Investments:
Member Tax Accounting Adjustment, Net.............. $ -- $ 2,518 $ (5,621) $ (12,585) $ (447)
Non-Member Business Income/(Loss).................. (2,444) (872) (15) (544) (77)
Unit Retains Declared to Members................... 16,648 19,328 20,223
---------- ---------- ---------- ---------- ----------
Net Credit/(Charge) to Members' Investments............ (2,444) 1,646 11,012 6,199 19,699
Payments to/due Members for Sugarbeets, Net of Unit
Retains Declared...................................... 304,850 333,427 309,537 255,372 284,143
---------- ---------- ---------- ---------- ----------
Total.................................................. $ 302,406 $ 335,073 $ 320,549 $ 261,571 $ 303,842
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

The Accompanying Notes are an Integral Part of These Financial Statements.

F-6

AMERICAN CRYSTAL SUGAR COMPANY

STATEMENTS OF CHANGES IN MEMBERS' INVESTMENTS

(IN THOUSANDS)

ADDITIONAL PENSION
PREFERRED COMMON PAID-IN UNIT LIABILITY RETAINED
STOCK STOCK CAPITAL RETAINS ADJUSTMENT EARNINGS TOTAL
--------- ------ ---------- ------- ---------- --------- --------

BALANCE, AUGUST 31,
1993.................... $30,429 $21 $ 5,558 $71,076 $ (651) $ 13,680 $120,113
Member Tax Accounting
Adjustment, Net...... -- -- -- -- -- (12,585) (12,585)
Non-Member Business
(Loss)............... -- -- -- -- -- (544) (544)
Unit Retains Withheld
from Members
($3.00/Ton).......... -- -- -- 19,328 -- -- 19,328
Payments to Estates and
Disabled
Individuals.......... -- -- -- (552) -- -- (552)
Payments of 1986 Crop
Unit Retains to
Members.............. -- -- -- (8,419) -- -- (8,419)
Pension Liability
Adjustment........... -- -- -- (1,735) -- (1,735)
Common Stock
Issued/(Redeemed),
Net.................. -- 3 -- -- -- -- 3
--------- ------ ---------- ------- ---------- --------- --------
BALANCE, AUGUST 31,
1994.................... 30,429 24 5,558 81,433 (2,386) 551 115,609
Member Tax Accounting
Adjustment, Net...... -- -- -- -- -- (5,621) (5,621)
Non-Member Business
(Loss)............... -- -- -- -- -- (15) (15)
Unit Retains Withheld
from Members
($2.00/Ton).......... -- -- -- 16,648 -- -- 16,648
Payments to Estates and
Disabled
Individuals.......... -- -- -- (374) -- -- (374)
Payments of 1987 Crop
Unit Retains to
Members.............. -- -- -- (9,220) -- -- (9,220)
Contributed Capital of
Investee............. -- -- 460 -- -- 460
Pension Liability
Adjustment........... -- -- -- -- (3,288) -- (3,288)
Stock
Issued/(Redeemed),
Net.................. 1,450 (1) 26,399 -- -- -- 27,848
--------- ------ ---------- ------- ---------- --------- --------
BALANCE, AUGUST 31,
1995.................... 31,879 23 32,417 88,487 (5,674) (5,085) 142,047
Member Tax Accounting
Adjustment, Net...... -- -- -- -- -- (2,444) (2,444)
Payments to Estates and
Disabled
Individuals.......... -- -- -- (153) -- -- (153)
Payments of 1988 Crop
Unit Retains to
Members.............. -- -- -- (7,056) -- -- (7,056)
Stock
Issued/(Redeemed),
Net.................. -- -- -- -- -- 1 1
--------- ------ ---------- ------- ---------- --------- --------
BALANCE, MAY 31, 1996
(UNAUDITED)............. $31,879 $23 $32,417 $81,278 $(5,674) $ (7,528) $132,395
--------- ------ ---------- ------- ---------- --------- --------
--------- ------ ---------- ------- ---------- --------- --------

The Accompanying Notes are an Integral Part of These Financial Statements.

F-7

AMERICAN CRYSTAL SUGAR COMPANY

STATEMENT OF CASH FLOWS

(DOLLARS IN THOUSANDS)

NINE MONTHS YEAR ENDED
ENDED MAY 31 AUGUST 31
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------

(UNAUDITED)
Cash Provided by/(Used in) Operations:
Net Proceeds Resulting from Member and Non-Member
Business........................................... $ 302,406 $ 335,073 $ 320,549 $ 261,571 $ 303,842
Payments to/due Members for Sugarbeets, Net of Unit
Retains............................................ (304,850) (333,427) (309,537) (255,372) (284,143)
Add/(Deduct) Noncash Items:
Depreciation and Amortization........................ 19,482 27,224 28,174 25,117 20,145
Deferred Income Taxes................................ -- -- (3,629) 175 (4)
(Gain)/loss on the Disposition of Property and
Equipment.......................................... (143) (123) 50 48 30
Noncash Portion of Patronage Dividend from Banks for
Cooperatives....................................... (1,884) (1,147) (1,653) (1,111) (1,124)
Deferred Gain Recognition............................ (168) (168) (223) (149) --
Changes in Certain Elements of Working Capital Accounts
Receivable:
Trade................................................ 169 (3,365) (14,120) (1,261) 8,415
Members.............................................. 79 (354) 8 (231) (293)
Other................................................ 1,594 (1,382) (2,827) (579) (140)
Inventories.......................................... (112,900) (184,398) (49,511) 16,243 (20,277)
Prepaid Expenses..................................... 1,098 1,943 1,727 540 (1,069)
Advances to Related Parties.......................... (13,928) (5,167) (1,898) 3,073 (4,302)
Accounts Payable:
Trade.............................................. (18,806) (1,902) 6,536 (2,638) (559)
Other.............................................. 2,260 (10,349) 3,295 (120) (31)
Other Current Liabilities............................ 51,428 19,861 525 1,675 526
Amount Due Growers................................... 17,169 20,232 (3,658) (232) 1,074
---------- ---------- ---------- ---------- ----------
Net Cash Provided by/(Used In) Operations.............. (56,994) (137,449) (26,192) 46,749 22,090
---------- ---------- ---------- ---------- ----------
Cash Provided by/(Used In) Investing Activities:
Purchases of Property and Equipment.................. (20,831) (24,772) (48,636) (50,015) (35,822)
Proceeds from the Sale of Property and Equipment..... 143 123 191 135 132
Investment in Banks for Cooperatives................. 773 710 770 1,178 902
Investment in Marketing Coops........................ (2,992) (147) (4,482) (405) (214)
Investment in ProGold LLC............................ (35,742) (5,422) (12,262) (190) --
Changes in Other Assets.............................. 175 286 178 (449) (501)
---------- ---------- ---------- ---------- ----------
Net Cash (Used In) Investing Activities................ (58,474) (29,222) (64,241) (49,746) (35,503)
---------- ---------- ---------- ---------- ----------

F-8

AMERICAN CRYSTAL SUGAR COMPANY

STATEMENT OF CASH FLOWS (CONTINUED)

(DOLLARS IN THOUSANDS)

NINE MONTHS YEAR ENDED
ENDED MAY 31 AUGUST 31
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)

Cash Provided by/(Used In) Financing Activities:
Net Proceeds (Payments) on Short-Term Debt........... $ 80,829 $ 144,266 $ 53,932 $ (4,568) $ 4,568
Proceeds from Long-Term Debt......................... 52,900 10,000 20,300 30,100 23,000
Long-Term Debt Repayment............................. (12,115) (16,110) (17,110) (12,310) (16,583)
Changes in Other Long-Term Liabilities............... 1,715 667 3,601 10,734 28
Changes in Preferred Stock........................... -- 1,450 1,450 -- --
Changes in Common Stock.............................. 1 (0) 1 3 (1)
Changes in Additional Paid-In Capital................ -- 26,399 26,859 -- --
Payment of Unit Retains.............................. (7,209) (9,573) (9,594) (8,971) (7,394)
---------- ---------- ---------- ---------- ----------
Net Cash Provided by Financing Activities.............. 116,121 157,099 79,439 14,988 3,618
---------- ---------- ---------- ---------- ----------
Decrease in Cash and Cash Equivalents.................. 653 (9,572) (10,994) 11,991 (9,795)
Cash and Cash Equivalents Beginning of Period.......... 3,420 14,414 14,414 2,423 12,218
---------- ---------- ---------- ---------- ----------
Cash and Cash Equivalents End of Period................ $ 4,073 $ 4,842 $ 3,420 $ 14,414 $ 2,423
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

The Accompanying Notes are an Integral Part of These Financial Statements.

F-9

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION

American Crystal Sugar Company (American Crystal) is a Minnesota
agricultural cooperative corporation, which processes and markets sugar and
sugar beet pulp, molasses and seed. Business done with its shareholders
(members) constitutes "patronage business" as defined by the Internal Revenue
Code and the net proceeds therefrom are credited to members' investments in the
form of unit retains or distributed to members in the form of payments for sugar
beets. Members are paid the net amounts realized from the current year's
production less member operating costs determined on a tax basis.

The financial statements of American Crystal as of May 31, 1996, and for the
nine month periods ended May 31, 1996, and 1995, and all information subsequent
to August 31, 1995, are unaudited. All adjustments and accruals consisting only
of normal recurring adjustments have been made which, in the opinion of
management, are necessary for a fair presentation of the financial position and
operating results of American Crystal for the interim periods presented.

At a special meeting of the shareholders held on April 26, 1995, a
resolution was adopted to amend the Bylaws of the Company and the Grower
Agreement between the Company and each of its shareholders. The resolution
changes the method by which the Company calculates the Cooperative's income for
purposes of the grower beet payment. Under the current method, the Company's
income for the purposes of the grower beet payment is calculated on the basis of
the Company's taxable income. The adopted resolution provides that effective
with the fiscal year beginning September 1, 1995, income, for the purposes of
the grower beet payment, will be calculated on the basis of the Company's
financial statement income in conformity with generally accepted accounting
principles.

CASH AND CASH EQUIVALENTS

American Crystal considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents. American Crystal
places its temporary cash investments with high credit quality financial
institutions. At times, such investments may be in excess of the FDIC insurance
limit.

RECEIVABLES

American Crystal grants credit, individually and through its marketing
cooperatives, to its customers which are primarily companies in the food
processing industry located throughout the United States. Ongoing credit
evaluations of customers' financial condition were performed and the company
maintains a reserve for potential credit losses. American Crystal does not
believe it is dependent upon one or a few customers as no one customer accounted
for more than 10% of sales.

INVENTORIES

Sugar, pulp and molasses inventories are valued at estimated net realizable
value. Maintenance parts and supplies and beet seed inventories are valued at
the lower of average cost or market.

F-10

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
ACCRUED CONTINUING COSTS

For interim reporting, the net proceeds from member business is determined
based on the forecasted beet payment and the percentage of the tons of sugar
beets processed to the total estimated tons of sugar beets to process for a
given crop year. Accrued continuing costs represent the difference between the
projected net proceeds from member business and actual member business crop year
revenues realized and expenses incurred through the end of the reporting period.
Accrued continuing costs are reflected in the interim Financial Statements as a
cost on the Statements of Operations and as a current liability on the Balance
Sheet.

PROPERTY, EQUIPMENT AND DEPRECIATION

Property and equipment acquired prior to September 1, 1995, was depreciated
for financial statement purposes, principally using declining balance methods
with estimated useful lives ranging from 3 to 45 years. Effective September 1,
1995, property and equipment was depreciated using the straight-line method. The
straight-line method of depreciation was adopted during fiscal 1996 to more
accurately reflect the allocation of the cost of the property and equipment in
the proper period and to conform with general industry practice. The effect of
the change on proceeds before income taxes and net proceeds resulting from
member and non-member business for the nine-month period ended May 31, 1996, was
$9.3 million and $19.4 thousand, respectively.

Indirect costs capitalized were $845,000, $1.1 million and $776,000 in 1995,
1994, and 1993, respectively, and $688,000 and $695,000 for the nine-month
period ended May 31, 1996, and 1995. Construction-period-interest capitalized
was $1.5 million, $1.4 million and $1.8 million in 1995, 1994, and 1993
respectively, and $1.1 million and $1.3 million for the nine-month period ended
May 31, 1996, and 1995, respectively.

INVESTMENTS IN THE BANKS FOR COOPERATIVES

Investments in the Banks for Cooperatives are stated at cost plus unredeemed
patronage refunds received or estimated to be received in the form of capital
stock. American Crystal believes it is not practicable to estimate the fair
value of the securities of non-subsidiary cooperatives without incurring
excessive costs because there is no established market for these securities and
it is inappropriate to estimate future cash flows which are largely dependent on
future patronage earnings of the non-subsidiary cooperatives.

INVESTMENTS IN MARKETING COOPERATIVES AND PROGOLD LLC

Investments in marketing Cooperatives and ProGold LLC are accounted for
using the equity method

F-11

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
PROGOLD LLC SUMMARY INFORMATION:

MAY 31 1996 MAY 31 1995
-------------- -------------

Current assets.......................................................... $ 2,175,000 $ 12,608,000
Fixed assets............................................................ 143,875,000 36,090,000
Other assets............................................................ $ 4,566,000 $ 388,000
-------------- -------------
Total assets.......................................................... $ 150,616,000 $ 49,086,000
-------------- -------------
-------------- -------------
Current liabilities..................................................... 11,748,000 11,050,000
Long term liabilities................................................... 34,220,000
-------------- -------------
Total liabilities..................................................... 45,968,000 11,050,000
Equity.................................................................. 104,648,000 38,036,000
-------------- -------------
Total liability and equity............................................ $ 150,616,000 $ 49,086,000
-------------- -------------
-------------- -------------
Sales revenue........................................................... $ -- $ --
Cost of sales........................................................... -- --
-------------- -------------
Gross margins........................................................... -- --
Other income............................................................ 350,000 381,000
Expenses................................................................ (987,000) (1,099,000)
-------------- -------------
Net income.............................................................. $ (637,000) $ (718,000)
-------------- -------------
-------------- -------------

As of May 31, 1996, ProGold LLC was in the process of constructing a corn
wet milling plant. ProGold LLC is anticipated to begin production in the fall of
1996. As of May 31, 1996, American Crystal has invested approximately $48.2
million as a 46% partner in ProGold LLC.

MEMBERS' INVESTMENTS

PREFERRED AND COMMON STOCK--The ownership of common and preferred stock is
restricted to a "farm operator" as defined by the bylaws of American Crystal.
Each "farm operator" may own only one share of common stock and is entitled to
one vote in the affairs of American Crystal. Each "farm operator" is entitled to
grow a specified number of acres of sugar beets in proportion to the shares of
preferred stock owned. The preferred shares are non-voting. All transfers of
stock must be approved by American Crystal's board of directors and any
shareholder desiring to sell stock must first offer it to American Crystal for

F-12

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
repurchase at its par value. American Crystal has never exercised this
repurchase option. The bylaws do not allow dividends to be paid on either the
common or preferred stock.

SHARES
SHARES PAR ISSUED &
VALUE AUTHORIZED OUTSTANDING
----------- ----------- -------------

Preferred Stock:
May 31, 1996......................................... $ 76.77 600,000 415,255
August 31, 1995...................................... 76.77 600,000 415,255
August 31, 1994...................................... 50.00 600,000 608,582
Common Stock:
May 31, 1996......................................... $ 10.00 4,000 2,441
August 31, 1995...................................... 10.00 4,000 2,343
August 31, 1994...................................... 10.00 4,000 2,363

UNIT RETAINS--The bylaws authorize American Crystal's board of directors to
require additional direct capital investments by members in the form of a
variable unit retain of up to a maximum of 10% of the weighted average gross
per-ton beet payment.

American Crystal has a policy whereby the company refunds to the entity
legally entitled thereto, the unit retains attributable to a deceased or totally
and permanently disabled former shareholder.

RETAINED EARNINGS--Retained earnings represent the cumulative net
income/(loss) resulting from non-member business and the difference between
member income as determined for financial reporting purposes and federal income
tax reporting purposes. The non-member net loss was $15,000, $544,000, and
$77,000 in 1995, 1994, and 1993, respectively, and $2,444,000 and $872,000 for
the nine-month period ending May 31, 1996, and 1995, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments is estimated based upon market
trading information, where available. Absent published market values for an
investment, management estimates fair values based upon quotations from
broker/dealers or interest rate information for similar instruments. The
carrying amount of cash and cash equivalents, accounts receivable, accounts
payable, short-term debt and other current liabilities approximates fair value
because of the short maturity and/or frequent repricing of those instruments.

INCOME TAXES

American Crystal is a non-exempt cooperative for federal income tax
purposes. As such, American Crystal is subject to corporate income taxes on its
net income from nonpatronage sources. The provision for income taxes relates to
the results of operations from nonpatronage business, state income taxes and
certain other permanent differences between financial and income tax reporting.
Deferred income taxes are provided for timing differences between financial and
income tax reporting.

Examinations of the federal income tax returns for the years ended on or
before August 31, 1992, were conducted by the Internal Revenue Service (IRS) in
prior years. Statutory notices of deficiency had

F-13

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
been issued by the IRS, proposing additional income taxes of $5,438,000, plus
accrued interest. Petitions were filed with the Tax Court to contest the
proposed increase in income taxes.

During the nine months ended May 31, 1996, issues involving $4,356,000 of
proposed taxes were resolved in favor of American Crystal. A tax payment of
$642,000, plus interest of $695,000, was made with respect to issues conceded by
American Crystal. The issues involved with the remaining proposed deficiency of
$440,000 are still awaiting trial in the Tax Court. At this time, it is not
possible to determine the additional taxes and interest, if any, that may become
due upon the resolution of the remaining contested matters. The eventual
resolution of these income tax matters, based on existing income tax liability
reserves, will not have a material effect on these financial statements.

During the nine months ended May 31, 1996, the deferred tax asset of $3.9
million was reduced to $352,000 as a result of the favorable settlement of the
outstanding tax cases. The $3.5 million reduction was netted against the $4.9
reserve that had been established in prior years for the potential settlement of
the tax cases. The $352,000 deferred income tax asset is attributable to
alternative minimum tax credits which may be carried forward indefinitely and
used to offset regular income taxes payable in future years. None of the changes
to the deferred tax asset had an effect on net proceeds during the nine months
ended May 31, 1996. No valuation allowance has been recorded against the
deferred tax asset.

Net income tax payments for the years ended August 31, 1995, 1994, and 1993
were $63,000, $183,000 and $51,000, respectively. There were no net income tax
payments for the nine month period ended May 31, 1996.

At this time, it is not possible to determine the additional taxes and
interest, if any, that may become due upon the resolution of the contested
matters. The eventual resolution of these income tax matters, based on existing
income tax liability reserves and deferred income tax assets will not have a
material effect on the financial statements.

Deferred income taxes are primarily comprised of depreciation timing
differences.

During fiscal year 1993, American Crystal implemented SFAS 109, "Accounting
for Income Taxes." The effect of implementing SFAS 109 did not have a material
impact on the financial statements. The provision for income taxes during the
interim period are estimates adjusted to actual at end of the fiscal year.

(2) EMPLOYEE BENEFIT PLANS:

COMPANY-SPONSORED DEFINED BENEFIT PENSION PLANS

Substantially all employees who meet eligibility requirements of age and
length of service are covered by a company-sponsored retirement plan. Plan A
(nonunion employees) and Plan B (union employees) are defined benefit,
noncontributory plans. The plans provide for vesting after 5 years of service
with benefits for early retirement, normal retirement and disability or death.

The assets of the plans are held by an insurance company. American Crystal's
funding policy for Plan A is to contribute the normal cost of the plan
determined under the entry age normal actuarial cost

F-14

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(2) EMPLOYEE BENEFIT PLANS: (CONTINUED)
method, plus amounts necessary to amortize changes over 30 years. The funding
policy for Plan B is to contribute the minimum required amount determined under
the frozen initial liability actuarial cost method. The actuarial assumptions
are shown below:

1995 1994 1993
----- --------- -----

Discount Rate...................................................................... 7.5% 8.25% 8.5%
Compensation Rate Increase (Plan A Only)........................................... 5.0% 5.0% 5.0%
Rate of Return..................................................................... 9.0% 9.0% 9.0%

During 1996, the Company adopted a non-qualified Supplemental Executive
Retirement Plan for a select group of management and employees. The plan is
unfunded and provides for vesting after 5 years of service with benefits for
early retirement, normal retirement and disability or death.

The plans' status as of August 31, 1995 and 1994, is shown below:

1995 1994
---------- ---------
(IN THOUSANDS)

Normal Service Cost.............................................................. $ 1,281 $ 1,071
Interest Cost on Projected Benefit Obligation.................................... 3,388 3,050
Return on Plan Assets............................................................ (3,458) (1,456)
Multiple Employer Adjustment..................................................... (21) --
Net Amortization (Deferral)...................................................... 511 (1,674)
---------- ---------
Net Pension Expense.............................................................. $ 1,701 $ 991
---------- ---------
---------- ---------
Actuarial Present Value of Benefit Obligations:
Estimated Present Value of Vested Benefits....................................... $ 41,855 $ 30,055
Estimated Present Value of Non-Vested Benefits................................... 2,901 3,963
---------- ---------
Accumulated Benefit Obligation................................................... 44,756 34,018
Value of Future Pay Increases.................................................... 6,086 4,108
---------- ---------
Projected Benefit Obligation..................................................... 50,842 38,126
Estimated Market Value of Plan Assets............................................ 37,385 34,453
---------- ---------
Projected Benefit Obligation in Excess of Plan Assets............................ 13,457 3,673
Unrecognized Net Costs........................................................... (17,262) (8,004)
Unrecognized Net Assets.......................................................... 2,345 2,604
Minimum Pension Liability Adjustment............................................. 9,043 2,858
---------- ---------
Net Pension Liability............................................................ $ 7,583 $ 1,131
---------- ---------
---------- ---------

As required by Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions," American Crystal has recognized, as of
August 31, 1995, a minimum pension liability of $9.0 million, an intangible
pension asset of $3.3 million and a direct equity reduction of $5.7 million.

For the period ended May 31, 1996, American Crystal has recognized a minimum
pension liability of $9.0 million and a pension expense of $1.7 million. The
liability and expense recorded for the interim

F-15

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(2) EMPLOYEE BENEFIT PLANS: (CONTINUED)
period ended May 31, 1996, has been based upon management's best estimate as
actuarial information is not available.

LONG TERM INCENTIVE PLAN

The Long Term Incentive Plan provides deferred compensation to certain key
executives of American Crystal Sugar Company effective September 1, 1995. The
Plan creates financial incentives that reward executives for long-term
commitment to the Company and for successfully implementing the Company's
long-term growth strategies. Such incentives are based upon contract rights
which are available to the executive under the terms of the Plan, the value of
which is related to the value of preferred shares of the Company.

The plan allows participants to purchase a limited number of contract rights
at the end of each three-year cycle. The plan establishes both minimum and
maximum ownership levels. When an executive reaches his minimum ownership level
he may sell any vested shares over the minimum to any qualified grower. The
participant may also sell any vested shares at the time of his termination,
disability or death. At the point of sale, the contract right becomes a share of
preferred stock which the Company issues to the purchasing grower. The executive
receives the proceeds of the sale less appropriate taxes. The long-term cost of
the stock will not be to the Company, but to the grower who eventually purchases
the stock from the executive.

POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS

The components of accumulated other postretirement and postemployment
benefit (OPEB) obligations and the periodic OPEB cost are set forth in the
following table. The rates used in determining the actuarial present value of
the accumulated OPEB obligations at August 31, 1995 and 1994, were a discount
rate of 7.5% and 8.0% respectively, a trend rate for the increase in future
health care costs of 10.5% and 11.25% respectively, and an ultimate health care
trend rate in 2002 of 5.5% and 6.0% respectively. If the health care cost trend
rate was increased by one percentage point for each year, OPEB expense would

F-16

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(2) EMPLOYEE BENEFIT PLANS: (CONTINUED)
have increased approximately $216,000 in 1995, and the actuarial present value
of accumulated OPEB obligations at August 31, 1995, would have increased
approximately $1.6 million.

1995 1994
--------- ---------
(IN THOUSANDS)

Actuarial Present Value of Accumulated OPEB Obligations:
Retiree Benefits................................................................ $ 3,261 $ 3,509
Other Fully Eligible Active Plan Participants................................... 1,934 1,961
Other Active Plan Participants.................................................. 5,292 5,579
--------- ---------
Present Value of Accumulated OPEB Obligations................................... 10,487 11,049
Unrecognized Net Gain from Experience Different from Actuarial Assumptions........ 2,627 1,202
--------- ---------
Total Accrued OPEB Obligation................................................. 13,114 12,251
Less Current Portion.......................................................... 397 437
--------- ---------
Noncurrent Accrued OPEB Obligation............................................ $ 12,717 $ 11,814
--------- ---------
--------- ---------
Net Periodic OPEB Cost:
Service Cost.................................................................... $ 770 $ 245
Interest Cost................................................................... 802 800
Amortization.................................................................... (11) --
Transition Obligation........................................................... -- 12,214
--------- ---------
Net Periodic OPEB Cost.......................................................... $ 1,561 $ 13,259
--------- ---------
--------- ---------

A medical plan and a Medicare supplement plan are available to substantially
all American Crystal retirees. The cost of this program is shared with the
retirees. Prior to 1994, American Crystal's portion of this benefit cost was
charged to expense as paid and amounted to $246,000 for the year ended August
31, 1993. In December 1990, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 106 entitled "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The new standard
required that American Crystal change its method of accounting for these
postretirement benefits from the cash basis to the accrual basis. American
Crystal implemented the accrual method of accounting for these postretirement
benefits in fiscal 1994. Under the accrual method, the cost of these benefits is
recognized as earned during the active service life of employees. During the
nine month period ended May 31, 1996, the amount charged to expense was $700,000
and the amount accrued was $12.9 million.

American Crystal also has a medical plan that covers disabled employees who
have not attained retirement age. The cost of this program is paid by the
company. The amount charged to expense was $124,000 for the year ended August
31, 1993. In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, entitled "Employers'
Accounting for Postemployment Benefits." The new standard requires that American
Crystal change its method of accounting for these postemployment benefits from a
cash basis to the accrual basis no later than fiscal 1995. The Company adopted
the accrual method of accounting for these postemployment benefits in fiscal
1994.

F-17

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(2) EMPLOYEE BENEFIT PLANS: (CONTINUED)
DEFINED CONTRIBUTION PLANS

American Crystal also has qualified 401(k) plans for all eligible employees.
The plans provide for immediate vesting of benefits. Participants contribute a
percentage of their gross earnings each pay period as provided in the
participation agreement. The Company matches the nonunion and union
participants' contribution up to 4% and 1% respectively, of their gross
earnings. The company's contributions to this plan were $887,000, $580,000 and
$702,000 for the years ended August 31, 1995, 1994, and 1993 respectively, and
$653,000 and $659,000 for the nine-month period ended May 31, 1996, and 1995
respectively.

REORGANIZATION

During 1993, the company's management structure was reorganized. As a
result, the company incurred $1.9 million of expenses associated with severance
and early retirement benefits and the relocation of employees.

(3) LONG-TERM AND SHORT-TERM DEBT:

The long-term debt outstanding as of May 31, 1996, and August 31, 1995, and
1994, is summarized below:

MAY 31, AUGUST 31,
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)

Term loans from the St. Paul Bank for Cooperatives, due in varying
amounts through 2006, interest at 6.07% to 9.7%, with first lien
on substantially all property and equipment....................... $ 136,700 $ 94,900 $ 87,700

Term loans from the First Bank, Minneapolis, due in equal amounts
through 2002, interest at 7.60% to 8.25%.......................... 7,000 7,000 9,000

Term loan from the National Bank for Cooperatives, due in equal
amounts through 1994, interest at 9.26%........................... -- -- 1,000

Term loan from the Bank of North Dakota due in equal amounts
through 2009, with interest at 6.34%.............................. 10,400 11,200 12,000

Pollution control and industrial development revenue bonds, due in
varying amounts through 2018, interest at 6.00% to 8.00%.......... 5,719 5,929 6,134
---------- ---------- ----------

159,819 119,029 115,834

Less current maturities.......................................... (14,300) (12,115) (14,110)
---------- ---------- ----------

Total long-term debt........................................... $ 145,519 $ 106,914 $ 101,724
---------- ---------- ----------
---------- ---------- ----------

F-18

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(3) LONG-TERM AND SHORT-TERM DEBT: (CONTINUED)
Aggregate maturities of long-term debt are as follows:

MAY 31,
- ------------------------------------------------------------------------

1997.................................................................... $ 14,525
1998.................................................................... 14,300
1999.................................................................... 14,300
2000.................................................................... 14,415
2001.................................................................... 14,425
Thereafter.............................................................. 87,854
----------
Total............................................................... $ 159,819
----------
----------

The unused term loan line of credit with the St. Paul Bank for Cooperatives
was $25.6 million as of May 31, 1996, and $32.7 million as of August 31, 1995.

The fair value of the term loans as of May 31, 1996, approximate of market.
Management believes it is not practicable to estimate the fair value of the
revenue bonds which have a limited market.

During the nine months ended May 31, 1996, and the year ended August 31,
1995. American Crystal borrowed from the St. Paul Bank for Cooperatives, the
Commodity Credit Corporation and issued commercial paper to meet its short-term
borrowing requirements. As of May 31, 1996, and August 31, 1995, American
Crystal had outstanding short-term debt with the Commodity Credit Corporation of
$99.8 million and $11.9 million, respectively. As of May 31, 1996, and August
31, 1995, American Crystal had short-term debt with the St. Paul Bank for
Cooperatives of $10 million and $42 million, respectively. As of May 31, 1996,
American Crystal had commercial paper issues outstanding of $25 million. There
was no outstanding issues as of August 31, 1995. As of August 31, 1994, there
was no outstanding short term debt. During the nine months ended May 31, 1996,
and the year ended August 31, 1995, American Crystal had available short-term
lines of credit totaling $220 million and $180 million respectively.

Average interest rates for short-term debt for the years ended August 31,
1995, and 1994, and nine months ended May 31, 1996, are shown below:

AUGUST 31,
MAY 31, -------------
1996 1995 1994
----------- ----- -----

Average interest rates...................................... 5.9% 6.8% 4.0%

The terms of the loan agreements with the St. Paul Bank for Cooperatives
contain certain covenants related to, among other matters, the: level of working
capital; ratio of term liabilities to members' investments; ratio of short-term
debt balances to working capital; level of term debt to net funds generated; and
investment in bank stock in amounts prescribed by the bank. As of May 31, 1996,
American Crystal was in compliance with the terms of the loan agreements.

Interest paid was $16.8 million, $10.3 million, $ 10.1 million for the years
ended August 31, 1995, 1994, and 1993, respectively, and $14.6 million and $11.6
million for the nine months ended May 31, 1996, and 1995, respectively. Interest
expense incurred was $ 14.5 million, $ 7.9 million and $ 7.2 million for the
years ended August 31, 1995, 1994, and 1993, respectively, and $11.7 million and
$8.6 million for the nine months ended May 31, 1996, and 1995, respectively.

F-19

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(4) ENVIRONMENTAL MATTERS:

American Crystal is subject to extensive federal and state environmental
laws and regulations with respect to water pollution, discharge permits, air
pollution, noise pollution and solid waste disposal. American Crystal conducts
an on-going pollution control program designed to meet these environmental laws
and regulations. American Crystal was cited in May, 1994, by the State of
Minnesota for noncompliance with nitrous oxide emissions for the pulp driers at
the East Grand Forks facility. The Company was assessed a penalty of $61,000 by
virtue of noncompliance with the air quality permit. This amount was charged to
expense in 1995. The Company began the installation of natural gas pulp driers
at the East Grand Forks facility at a cost of approximately $1.4 million. These
driers are designed to bring the East Grand Forks facility into compliance with
emission standards as well as provide operational efficiencies.

(5) COMMITMENTS AND CONTINGENCIES:

American Crystal had outstanding letters of credit totaling $3.5 million and
$4.2 million at May 31, 1996, and August 31, 1995, respectively.

American Crystal has invested approximately $48.2 million as a 46% partner
in ProGold LLC as of May 31, 1996. ProGold LLC is to construct and operate a
corn wet milling plant, which intends to produce high-fructose corn syrup
sweetener. Construction of the plant began in May, 1995, with the anticipated
start-up set for the Fall of 1996.

During 1995, the United Sugars' Board of directors authorized the
construction of a sugar storage facility at the Crookston factory at a total
estimated cost of approximately $6.5 million. American Crystal is responsible
for the construction of this asset and all costs incurred are reimbursed by
United Sugars. As of May 31, 1996, costs incurred related to the sugar storage
facility were $2.5 million. The company was also committed to an additional $4.0
million for the sugar storage facility.

American Crystal is subject to various lawsuits and claims which arise in
the ordinary course of its business. Management believes the disposition of all
such proceedings, individually or in the aggregate, should not have a material
adverse effect on the Company's financial condition.

(6) INVESTMENT IN MARKETING COOPERATIVES:

American Crystal has a one-third ownership interest in Midwest
Agri-Commodities Company (Midwest). The amount of the investment is accounted
for using the equity method. Earnings are returned to the company in the form of
patronage dividends. All beet pulp and molasses produced is sold by Midwest as
an agent for American Crystal. The amount of sales and related costs to be
recognized by each owner is allocated based on their pro-rata share of
production for the year. The owners provide Midwest with cash advances on an
on-going basis for operating and marketing expenses incurred by Midwest. As of
May 31, 1996, and August 31, 1995, and 1994, American Crystal advanced Midwest
$33.4 million, $34.4 million and $30.4 million, respectively. American Crystal
had outstanding advances to Midwest of $15.4 million, $(545,000) and $4 million
as of May 31, 1996, and August 31, 1995, and 1994, respectively. The owners are
guarantors of the short-term line of credit Midwest has with the St. Paul Bank
for Cooperatives (Bank). As of May 31, 1996, and August 31, 1995, Midwest had
outstanding short-term debt with the Bank of $1.8 million and $2.5 million,
respectively, of which $1.3 million and $1.7 million, respectively, was
guaranteed by American Crystal Company.

F-20

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(6) INVESTMENT IN MARKETING COOPERATIVES: (CONTINUED)
As of January 1, 1994, American Crystal entered into a marketing agreement
with United Sugars Corporation (United), whereby United will market the
cooperative's production of sugar. The amount of the investment is accounted for
using the equity method. American Crystal's investment in United was comprised
of contributed assets with a net book value of $1.7 million and transferred
liabilities of $1.1 million. Upon transfer, certain assets were revalued based
on appraisals that increased the value of those assets by $4.2 million. This
increased value was recorded by United as a capital contribution from American
Crystal. American Crystal has recorded this $4.2 million as a deferred gain, net
of deferred income taxes, and will amortize it over a period of 31 years. The
investment in United is reported net of the unamortized deferred gain. During
the nine-month period ended May 31, 1996, American Crystal invested an
additional $3.2 million in United. This investment was associated with the
funding of United's current capital projects. All sugar produced is sold by
United as an agent for American Crystal. As of May 31, 1996, American Crystal
has a 73% ownership interest in United, however, American Crystal has only
one-third voting rights.

The amount of sales and related costs to be recognized by each owner is
allocated based on their prorata share of production for the year. The owners
provide United with cash advances on an ongoing basis for operating and
marketing expenses incurred by United. During the nine months ended May 31,
1996, and the years ended August 31, 1996, and 1995, American Crystal advanced
United $49.1 million, $59.5 million and $34.5 million respectively. American
Crystal had net advances to United of $4.5 million, $6.6 million and $189,000 as
of May 31, 1996, and August 31 1995, and 1994, respectively.

American Crystal provides administrative services for United and is
reimbursed for costs incurred. American Crystal was reimbursed $448,000,
$655,000 and $485,000 for services provided during the nine months ended May 31,
1996, and the years ended August 31, 1995, and 1994, respectively.

American Crystal believes it is not practicable to estimate the fair value
of investments in marketing cooperatives without incurring excessive costs
because there is no established market and it is inappropriate to estimate
future cash flows which are largely dependent on future patronage earnings of
the marketing cooperatives.

(7) INVENTORIES:

The major components of inventories are as follows (dollars in thousands):

AUGUST 31,
MAY 31, ---------------------
1996 1995 1994
---------- ---------- ---------

Refined Sugar, Pulp, Molasses and Beet Seed.......................... $ 191,197 $ 78,440 $ 33,703
Maintenance Parts and Supplies....................................... 24,994 24,851 20,077
---------- ---------- ---------
Total Inventories.................................................... $ 216,191 $ 103,291 $ 53,780
---------- ---------- ---------
---------- ---------- ---------

(8) CHANGE IN ACCOUNTING PRINCIPLE:

During 1994, American Crystal adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions" and Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." The new standards changed

F-21

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION WITH RESPECT TO THE NINE-MONTH
PERIODS ENDED MAY 31, 1996, AND 1995, IS UNAUDITED)

(8) CHANGE IN ACCOUNTING PRINCIPLE: (CONTINUED)
the method of accounting for the postretirement and postemployment benefits from
a cash basis to the accrual basis. The result of these changes in accounting
principle resulted in a reduction of net proceeds resulting from member and
non-member business of $13.6 million in 1994. Prior fiscal years were not
restated and the cumulative effect of the change on periods prior to the year
ended August 31, 1994, totaling $12.2 million was charged, net of tax, against
1994 net proceeds resulting from member and nonmember business. This change had
no effect on the growers' 1994 or 1995 net beet payments.

(9) SUPPLEMENTARY INCOME STATEMENT INFORMATION:

MAY 31, AUGUST 3,
---------------------------- -------------------------------------------
1996 1995 1995 1994 1993
------------- ------------- ------------- ------------- -------------

Selling, general and administrative
expenses:
Maintenance and repairs............ $ 19,381,000 $ 18,920,000 $ 30,641,223 $ 29,524,000 $ 27,721,000
Research and development........... 3,112,000 2,798,000 3,899,000 4,566,000 5,264,000
Advertising........................ * * * * 3,040,000
Other income (expense):
Marketing cooperative earnings..... (74,014) 149,001 (647,311) (97,420) 214,000
Sale of sugarbeets to Minn-Dak
Farmers Cooperative.............. 4,463,000
Supplemental pension
expense.......................... (60,669) (59,529) (244,027) 82,042 (175,302)
Reorganization costs............... 2,454 (84,061) (98,315) 41,823 (427,747)
Employee relocation costs.......... (13,144) (30,789) (30,972) (28,211) (132,485)
Losses on disposition of property
and equipment.................... (143,000) (123,000) (50,000) (48,000) (30,000)

- ------------------------

* During 1994, American Crystal's advertising expense was paid by United Sugars
Corporation. See Note 6 for further discussion regarding United Sugars
Corporation.

# # # # #

F-22

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR AN OFFER TO PURCHASE ANY
SECURITIES OTHER THAN THE COMMON STOCK AND PREFERRED STOCK TO WHICH IT RELATES
OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

PAGE
-----

Summary........................................ 2
Selected Financial Data........................ 4
Factors to be Considered....................... 5
Determination of Offering Price................ 7
Use of Proceeds................................ 7
Dilution....................................... 9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 10
Description of Business........................ 13
Property and Processing Facilities............. 22
Employees...................................... 23
Management..................................... 24
Executive Compensation......................... 29
Description of Common Stock and Preferred
Stock......................................... 33
Plan of Distribution........................... 35
Legal Proceedings.............................. 37
Related Party Transactions..................... 37
Financial Statements........................... 37

500 SHARES
OF COMMON STOCK
AND
20,729 SHARES
OF PREFERRED STOCK

AMERICAN CRYSTAL SUGAR COMPANY

COMMON STOCK
AND
PREFERRED STOCK

---------------------

PROSPECTUS

---------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS:

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

SEC registration fee.............................................. $ 10,725
NASD review fee................................................... $ 0
Accounting fees and expenses...................................... $ 25,000
Legal fees and expenses........................................... $ 60,000
Printing expenses................................................. $ 40,000
Blue Sky fees and expenses........................................ $ 1,000
Miscellaneous..................................................... $ 13,275
---------
Total......................................................... $ 150,000
---------
---------

Except for the SEC registration fee, all of the foregoing expenses have been
estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's By-laws provide for the indemnification of certain corporate
agents, including the Company's directors, officers and employees. Such
indemnification is provided to the full extent provided by Minnesota Statutes
Section 300.082 and acts amendatory thereof or supplementary thereto. The
indemnification provided to the Company's directors, officers and employees
includes coverage for amounts actually and reasonably incurred by such
individuals in connection with proceedings arising by reason of each such
individual's status as an officer, director or employee. The amount for which
the director, employee or officer is to be indemnified includes expenses,
including attorney's fees, judgments, fines and amounts paid in settlement of
claims.

The Registrant also carries a directors' and officers' liability insurance
policy in the amount of $15,000,000.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Company has not itself issued any unregistered securities in the past
five years. However, the Company has borrowed a total principal amount of
$5,500,000 from the City of East Grand Forks, Minnesota; the funds required for
the City of East Grand Forks to provide such a loan were obtained from the
issuance of "Pollution Control Revenue Refunding Bonds", in transactions exempt
from the registration requirements of the federal and state securities laws.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

*3(i) Restated Articles of Incorporation of American Crystal Sugar Company.

*3(ii) Restated By-laws of American Crystal Sugar Company.

5.1 Opinion of Doherty, Rumble & Butler Professional Association (to be filed by
amendment).

*10(f) Growers' Contract (5-year Agreement).

*10(g) Growers' Contract (Annual Contract).

*10(h) Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated
August 1, 1986.

II-1

*10(i) Coal Transportation Agreement between Registrant and Northern Coal
Transportation Company, dated August 1, 1986.

*10(j) Beet Loading and Hauling Agreement between Registrant and Transystems, Inc.,
dated May 18, 1993.

*10(k) Form of Uniform Member Marketing Agreement between Registrant and United Sugars
Corporation, dated January 1, 1994.

*10(l) Trademark License Agreement between Registrant and United Sugars Corporation,
dated November 1, 1993.

*10(m) Uniform Member Marketing Agreement, Pool Basis between Registrant and Midwest
Agri-Commodities Company, dated April 14, 1992.

*10(n) Stipulation Agreement between Registrant and State of Minnesota Pollution
Control Agency.

*10(o) Master Agreement between Registrant, United Sugars Corporation, American
Federation of Grain Millers, AFL-CIO, CLC, et al.

*10(p) Loan Agreement between Registrant and St. Paul Bank for Cooperatives, dated
December 20, 1993.

*10(q) Amended and Restated Loan Agreement between Registrant and First Bank National
Association, dated November 22, 1993.

*10(r) Pension Contract and Amendments.

*10(s) Compensation, Severance and Loan Agreement with Mr. J. Famalette, dated March
2, 1992.

*10(t) Compensation and Loan Agreement with Mr. J. Famalette, dated October 1, 1993.

*10(u) Form of Operating Agreement between Registrant and ProGold Limited Liability
Company.

*10(v) Form of Member Control Agreement between Registrant and ProGold Limited
Liability Company.

*10(w) Administrative Services Agreement between Registrant and ProGold Limited
Liability Company

*10(x) Uniform Member Marketing Agreement.

10(y) Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated
August 25, 1995 (Confidential treatment requested as to certain provisions).

10(z) Coal Transportation Agreement between Registrant and Northern Coal
Transportation Company, dated August 25, 1995 (Confidential treatment requested
as to certain provisions).

10(aa) Gas Sales Contract between Registrant and Coastal Gas Marketing Company, dated
as of March 20, 1996 (Confidential treatment requested as to certain
provisions.)

10(bb) Employment Agreement with Mr. Daniel McCarty, dated as of April 8, 1996.

10(cc) Form of Subscription Agreement for Preferred Stock (Current Members).

10(dd) Form of Indication of Interest in Purchasing Additional Shares of Preferred
Stock (Current Members).

10(ee) Form of Indication of Interest in Purchasing Shares of Preferred Stock
(Prospective Members).

10(ff) Form of Subscription Agreement (Prospective Members).

II-2

23 Consent of Independent Public Accountant.

24 Power of Attorney (included in the signature page to the Registration
Statement).

- ------------------------

* Incorporated by reference from the Company's Registration Statement on Form
S-1 (File No. 33-83868), declared effective November 23, 1994.

(b) Financial Statement Schedules.

None.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(2) for purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(3) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
initial bona fide offering thereof.

II-3

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MOORHEAD, STATE OF
MINNESOTA ON SEPTEMBER 9, 1996.

AMERICAN CRYSTAL SUGAR COMPANY

BY /S/ DANIEL J. MCCARTY
-----------------------------------------
Daniel J. McCarty,
CHIEF EXECUTIVE OFFICER
Dated: September 9, 1996

EACH OF THE UNDERSIGNED OFFICERS AND DIRECTORS OF AMERICAN CRYSTAL SUGAR
COMPANY HEREBY APPOINTS DANIEL J. MCCARTY, SAMUEL S.M. WAI, JAMES J. HORVATH AND
JOSEPH J. TALLEY, AND EACH OF THEM (WITH FULL POWER TO ACT ALONE), AS ATTORNEYS
AND AGENTS FOR THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, FOR AND IN THE
NAME, PLACE AND STEAD OF THE UNDERSIGNED, TO SIGN AND FILE WITH THE SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 ANY AND ALL AMENDMENTS
(INCLUDING POST-EFFECTIVE AMENDMENTS) AND EXHIBITS TO THIS REGISTRATION
STATEMENT AND ANY AND ALL APPLICATIONS, INSTRUMENTS, OR DOCUMENTS TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PERTAINING TO THE REGISTRATION OF
THE SECURITIES COVERED HEREBY, WITH FULL POWER AND AUTHORITY TO DO AND PERFORM
ANY AND ALL ACTS AND THINGS WHATSOEVER REQUISITE AND NECESSARY OR DESIRABLE.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- ------------------

/s/ DANIEL J. MCCARTY
- ------------------------------ Chief Executive Officer September 9, 1996
Daniel J. McCarty

/s/ SAMUEL S.M. WAI
- ------------------------------ Treasurer September 9, 1996
Samuel S.M. Wai

/s/ PAUL BORGEN
- ------------------------------ Director September 9, 1996
Paul Borgen

/s/ THOMAS BRYL
- ------------------------------ Director September 9, 1996
Thomas Bryl

/s/ AIME J. DUFAULT
- ------------------------------ Director September 9, 1996
Aime J. Dufault

/s/ STEVEN M. GOODWIN
- ------------------------------ Director September 9, 1996
Steven M. Goodwin

II-4

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- ------------------

/s/ COURT H. HANSON
- ------------------------------ Director September 9, 1996
Court G. Hanson

/s/ LONN M. KIEL
- ------------------------------ Director September 9, 1996
Lonn M. Kiel

/s/ DAVID KRAGNES
- ------------------------------ Director September 9, 1996
David Kragnes

/s/ WAYNE LANGEN
- ------------------------------ Director September 9, 1996
Wayne Langen

/s/ DUANE LIEN
- ------------------------------ Director September 9, 1996
Duane Lien

/s/ PATRICK D. MAHAR
- ------------------------------ Director September 9, 1996
Patrick D. Mahar

/s/ BARRY W. MALME
- ------------------------------ Director September 9, 1996
Barry W. Malme

/s/ ROBERT NYQUIST
- ------------------------------ Chairman September 9, 1996
Robert Nyquist

/s/ G. TERRY STADSTAD
- ------------------------------ Director September 9, 1996
G. Terry Stadstad

/s/ ROBERT VIVATSON
- ------------------------------ Director September 9, 1996
Robert Vivatson

/s/ MICHAEL WARNER
- ------------------------------ Director September 9, 1996
Michael Warner

II-5

INDEX TO EXHIBITS

EXHIBITS PAGE
- ------------- ---------

*3(i) Restated Articles of Incorporation of American Crystal Sugar Company.

*3(ii) Restated By-laws of American Crystal Sugar Company.

5.1 Opinion of Doherty, Rumble & Butler Professional Association (to be filed by amendment).

*10(f) Growers' Contract (5-year Agreement).

*10(g) Growers' Contract (Annual Contract).

*10(h) Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 1, 1986.

*10(i) Coal Transportation Agreement between Registrant and Northern Coal Transportation Company,
dated August 1, 1986.

*10(j) Beet Loading and Hauling Agreement between Registrant and Transystems, Inc., dated May 18,
1993.

*10(k) Form of Uniform Member Marketing Agreement between Registrant and United Sugars Corporation,
dated January 1, 1994.

*10(l) Trademark License Agreement between Registrant and United Sugars Corporation, dated November
1, 1993.

*10(m) Uniform Member Marketing Agreement, Pool Basis between Registrant and Midwest Agri-Commodities
Company, dated April 14, 1992.

*10(n) Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency.

*10(o) Master Agreement between Registrant, United Sugars Corporation, American Federation of Grain
Millers, AFL-CIO, CLC, et al.

*10(p) Loan Agreement between Registrant and St. Paul Bank for Cooperatives, dated December 20, 1993.

*10(q) Amended and Restated Loan Agreement between Registrant and First Bank National Association,
dated November 22, 1993.

*10(r) Pension Contract and Amendments.

*10(s) Compensation, Severance and Loan Agreement with Mr. J. Famalette, dated March 2, 1992.

*10(t) Compensation and Loan Agreement with Mr. J. Famalette, dated October 1, 1993.

*10(u) Form of Operating Agreement between Registrant and ProGold Limited Liability Company.

*10(v) Form of Member Control Agreement between Registrant and ProGold Limited Liability Company.

*10(w) Administrative Services Agreement between Registrant and ProGold Limited Liability Company

*10(x) Uniform Member Marketing Agreement.

10(y) Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 25, 1995
(Confidential treatment requested as to certain provisions).

II-6

EXHIBITS PAGE
- ------------- ---------

10(z) Coal Transportation Agreement between Registrant and Northern Coal Transportation Company,
dated August 25, 1995 (Confidential treatment requested as to certain provisions).

10(aa) Gas Sales Contract between Registrant and Coastal Gas Marketing Company, dated as of March 20,
1996 (Confidential treatment requested as to certain provisions.)

10(bb) Employment Agreement with Mr. Daniel McCarty, dated as of April 8, 1996.

10(cc) Form of Subscription Agreement for Preferred Stock (Current Members).

10(dd) Form of Indication of Interest in Purchasing Additional Shares of Preferred Stock (Current
Members).

10(ee) Form of Indication of Interest in Purchasing Shares of Preferred Stock (Prospective Members).

10(ff) Form of Subscription Agreement (Prospective Members).

23 Consent of Independent Public Accountant.

24 Power of Attorney (included in the signature page to the Registration Statement).

- ------------------------

* Incorporated by reference from the Company's Registration Statement on Form
S-1 (File No. 33-83868), declared effective November 23, 1994.

II-7